Delaware International Value Equity Fund

Opportunity through adversity — international value investing at Delaware Investments

"Buying stocks that appear risky, when in fact they are far less risky than people think” is at the heart of the Global and International Value Equity team's philosophy. Watch the team elaborate on its investment process as well as the unique chemistry that helps make the team work.

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Objective

Delaware International Value Equity Fund seeks long-term growth without undue risk to principal.

Strategy

The Fund invests primarily in equity securities that are organized, have a majority of their assets, or generate the majority of their operating income outside the United States, and that provide the potential for capital appreciation.

Fund information
Inception date10/31/1991
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDEGIX
CUSIP245914106
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
CheckwritingNo
Payroll DeductionYes
IRAsYes

On Sept. 25, 2014, Class B shares of the Fund converted to Class A shares.

The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.

Total returns may reflect waivers and/or expense reimbursements by the manager and/or distributor for some or all of the periods shown. Performance would have been lower without such waivers and reimbursements.

Average annual total return as of month-end (04/30/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)11.71%0.79%9.62%5.90%4.40%6.52%10/31/1991
Max offer price5.26%-5.01%7.47%4.65%3.78%6.26%
MSCI EAFE Index (Gross)9.37%2.10%11.71%7.89%6.10%n/a
MSCI EAFE Index (Net)9.16%1.66%11.22%7.40%5.62%n/a
Average annual total return as of quarter-end (03/31/2015)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)5.74%5.74%-3.04%6.81%4.55%3.60%6.30%10/31/1991
Max offer price-0.37%-0.37%-8.59%4.74%3.31%2.99%6.03%
MSCI EAFE Index (Gross)5.00%5.00%-0.48%9.52%6.64%5.43%n/a
MSCI EAFE Index (Net)4.88%4.88%-0.92%9.02%6.16%4.95%n/a

Returns for less than one year are not annualized.

Class A shares have a maximum up-front sales charge of 5.75% and are subject to an annual distribution fee.

Expense ratio
Gross1.42%
Net1.42%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20155.74%n/an/an/an/a
2014-0.56%5.58%-6.68%-6.92%-8.82%
20136.46%-2.39%11.37%5.72%22.33%
201211.07%-7.71%6.39%5.24%14.76%
20117.46%2.26%-25.22%4.39%-14.22%
20102.03%-13.31%17.65%5.47%9.75%
2009-11.63%22.07%20.91%4.28%36.02%
2008-8.40%-6.54%-16.81%-19.30%-42.52%
20073.92%6.80%-2.08%-3.72%4.63%
20068.02%-1.29%4.95%9.86%22.93%
20050.65%-0.18%8.81%2.30%11.84%
Portfolio characteristics - as of 04/30/2015
Number of holdings47
Market cap (median)$23.75 billion
Market cap (weighted average)$53.86 billion
Portfolio turnover (last fiscal year)26%
Beta (relative to MSCI EAFE Index (Gross)) (view definition)0.94
Annualized standard deviation, 3 years (view definition)12.86
Portfolio composition as of 04/30/2015Total may not equal 100% due to rounding.
International equities & depositary receipts97.3%
Cash and cash equivalents2.7%
Top 10 holdings as of 04/30/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Teva Pharmaceutical Industries Ltd.4.2%
Mitsubishi UFJ Financial Group Inc.3.9%
Novartis AG3.6%
ARYZTA AG3.5%
Toyota Motor Corp.3.5%
AXA S.A.3.4%
Nordea Bank AB3.3%
Sanofi3.2%
Nitori Holdings Co. Ltd.3.2%
Nippon Telegraph & Telephone Corp.3.1%
Total % Portfolio in Top 10 holdings34.9%

Holdings are as of the date indicated and subject to change.

Top 10 countries as of 04/30/2015List excludes cash and cash equivalents.
Country% of portfolio
Japan22.9%
France16.1%
United Kingdom11.7%
Switzerland7.1%
Canada6.5%
Sweden5.3%
Netherlands4.3%
Hong Kong4.3%
Germany4.2%
Israel4.2%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20150.0000.000
20140.0000.267
20130.0000.145
20120.0000.153
20110.0000.193
20100.0000.105
20090.0000.232
20080.0000.307
20070.7190.204
20065.3370.174
20050.7250.412

1If a Fund makes a distribution from any source other than net income, it is required to provide shareholders with a notice disclosing the source of such distribution (each a "Notice"). The amounts and sources of distributions reported above and in each Notice are only estimates and are not provided for tax reporting purposes. Each Fund will send each shareholder a Form 1099 DIV for the calendar year that will provide definitive information on how to report the Fund's distributions for federal income tax purposes. The information in the table above will not be updated to reflect any subsequent recharacterization of dividends and distributions. Click here to see recent Notices pertaining to the Fund (if any).

2Information on return of capital distributions (if any) is only provided from June 1, 2014 onward.

3Includes both short- and long-term capital gains.

Ned Gray

Ned A. Gray, CFA

Senior Vice President, Chief Investment Officer — Global and International Value Equity

Start date on the Fund: May 2006

Years of industry experience: 29

(View bio)


Todd Bassion

Todd A. Bassion, CFA

Vice President, Portfolio Manager

Start date on the Fund: May 2006

Years of industry experience: 14

(View bio)


You may qualify for sales-charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Delaware Investments® Funds. More information about these and other discounts is available from your financial advisor, in the Fund's prospectus under the section entitled "About your account," and in the Fund's statement of additional information (SAI) under the section entitled "Purchasing Shares."

The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder fees
Maximum sales charge (load) imposed on purchases as a percentage of offering price5.75%
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.85%
Distribution and service (12b-1) fees0.25%
Other expenses0.32%
Total annual fund operating expenses1.42%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.42%

1The Fund's investment manager, Delaware Management Company (Manager), has contractually agreed to waive all or a portion of its investment advisory fees and/or pay/reimburse expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) in order to prevent total annual fund operating expenses from exceeding 1.21% of the Fund’s average daily net assets from March 30, 2015 through March 30, 2016. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.

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Delaware International Value Equity Fund Quarterly commentary March 31, 2015

Within the Fund

Delaware International Value Equity Fund (Institutional Class shares and Class A shares at net asset value) outperformed its benchmark, the MSCI EAFE Index, for the quarter ended March 31, 2015 due to strong stock selection and favorable regional and sector allocation.

Positive stock selection in financials, information technology, and telecommunications more than offset weakness in consumer staples and industrials. Sector allocation was positive primarily due to a favorable underweight exposure to utilities.

On a regional basis, strong stock selection in Japan and the United Kingdom more than offset weakness in continental Europe. Regional allocation was positive primarily due to an underweight exposure to the U.K. and strong performance by emerging market holdings. Net currency effect was negative primarily due to an adverse exposure to the Canadian dollar.

Prospective global market drivers and general outlook

Equity market strength was nearly universal in the first quarter. Every developed market in the MSCI World Index produced positive local-currency returns, with the United States, in low single digits, bringing up the rear. Given the subdued and inconsistent nature of global economic growth, however, the market’s strength has come in part through expanding valuations. With most major markets now selling above their long-term mean valuations on both earnings and book value, what could drive further upside? In Europe, high earnings valuations reflect in part the cyclical weakness that still prevails. Normalization of profitability under a scenario of economic recovery could support stock prices even without further expansion of valuations.

In Japan, a steep valuation discount to global norms on book value suggests there is room for further gains if the gap were to close, but a structural caveat stands in the way — Japanese returns on equity have historically lagged those of other regions. Though progress on this front is among the targets of the government reform plans, success is not assured.

The United States does not appear to share the cyclical recovery potential of Europe or the structural potential of Japan. U.S. stocks are already among the most profitable and highly valued in the world. However, the U.S. does have certain qualities going for it, including the strength of its underlying secular growth and the security of a relatively business-friendly regulatory regime. Assuming these conditions persist, low prevailing interest rates could justify further expansion of valuations.

Beyond these market-level considerations, we find that two other major factors that transcend national borders deserve particular attention due to their potential to affect the operating performance of individual companies worldwide. The first of these is the appreciation of the U.S. dollar versus most other currencies, a pattern that has been in effect for the better part of a year. The second factor, related to the first to some degree, is the collapse of the price of oil. As bottom-up stock pickers, we bring these to your attention not because of their relatively obvious direct effects — translational adjustments to revenues of multi-national companies or costs shifts depending on energy intensiveness — but because of the power of their more nuanced and subtle impacts on the global competitive landscape. Even the relatively discrete regional observations cited above carry dramatically different implications at the company level, depending on variations in companies’ industry positioning and global footprint. In an interconnected global market, domicile does not limit opportunity. As global equity managers taking a contrarian approach to bottom-up stock selection, we use the uncertainty of macroeconomic and valuation cycles to bring to light exceptional opportunities at the company level, because it is there that close analysis can provide the best and most consistent returns.

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The views expressed represent the Manager’s assessment of the Fund and market environment as of the date indicated, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Information is as of the date indicated and subject to change.

Document must be used in its entirety.

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by clicking the prospectus link located in the right-hand sidebar or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

International investments entail risks not ordinarily associated with U.S. investments including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.

Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.

All third-party marks cited are the property of their respective owners.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 05/28/2015)

Class APriceNet changeYTD
NAV$14.20-0.0611.55%
Max offer price$15.07n/an/a

Total net assets (as of 04/30/2015)

$274.6 million all share classes

Lipper ranking (as of 04/30/2015)

YTD ranking13 / 196
1 year56 / 173
3 years98 / 142
5 years67 / 114
10 years43 / 73
Lipper classificationInternational Multi-Cap Value

(View Lipper disclosure)

Benchmark, peer group

MSCI World Index (view)

Lipper International Multi-Cap Value Funds Average (view definition)

Additional information