The International Equity Portfolio (closed to new investors)

Objective

The International Equity Portfolio seeks maximum long-term total return.

Strategy

The Portfolio invests primarily in equity securities of companies that are organized, have a majority of their assets, or derive most of their operating income outside the United States, and that, in the opinion of Mondrian Investment Partners Limited, the Portfolio's sub-advisor (Sub-advisor), are undervalued at the time of purchase based on its fundamental analysis. Investments will be made mainly in marketable securities of companies located in developed countries.

Under normal circumstances, the Portfolio will invest at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities (80% Policy). The Portfolio's 80% Policy may be changed without shareholder approval. However, shareholders will be given notice at least 60 days prior to any such change. Under normal circumstances, the Portfolio will invest at least 40% of its total assets in securities of non-U.S. issuers. This policy is in addition to the 80% Policy.

Equity securities include, but are not to be limited to, common stocks, securities convertible into common stock, securities having common stock characteristics, such as rights and warrants to purchase common stocks, and preferred securities. To the extent that this Portfolio invests in convertible debt securities, those securities will be purchased on the basis of their equity characteristics, and ratings of those securities, if any, will not be an important factor in their selection. Additionally, the Portfolio may, from time to time, hold its assets in cash (which may be U.S. dollars or foreign currencies, including the euro), or may invest in short-term debt securities or other money market instruments. Except when the Sub-advisor believes a temporary defensive approach is appropriate, the Portfolio generally will not hold more than 5% of its assets in cash or such short-term instruments.

The Sub-advisor's approach in selecting investments for the Portfolio is oriented to individual stock selection and is value driven. In selecting stocks for the Portfolio, the Sub-advisor considers movement in the price of individual securities, and the impact of currency adjustment on a U.S.-domiciled, dollar-based investor. The Sub-advisor also conducts research on a global basis in an effort to identify securities that have the potential for long-term total return. The center of the research effort is a value-oriented dividend discount methodology applied to individual securities and market analysis that isolates value across country boundaries. This approach focuses on future anticipated dividends and discounts the value of those dividends back to what they would be worth if they were being paid today. Comparisons of the values of different possible investments are then made. The Sub-advisor's approach is long-term in orientation, and it is expected that the annual turnover rate of the Portfolio will not exceed 75% under normal circumstances.

In an international portfolio, currency returns can be an integral component of an investment's total return. The Sub-advisor will use a purchasing power parity approach to assess the value of individual currencies. Purchasing power parity attempts to identify the amount of goods and services that a dollar will buy in the U.S. and compares that to the amount of a foreign currency required to buy the same amount of goods and services in another country. Eventually, currencies should trade at levels that would make it possible for the dollar to buy the same amount of goods and services overseas as in the United States. When the dollar buys less, the foreign currency may be overvalued. When the dollar buys more, the foreign currency may be undervalued. Securities available in an undervalued currency may offer greater return potential and may be an attractive investment.

Currency considerations carry a special risk for a portfolio of international securities, and the Sub-advisor uses a purchasing power parity approach to evaluate currency risk. In this regard, the Portfolio may actively carry on hedging activities, and may invest in forward foreign currency exchange contracts to hedge currency risks associated with the purchase of individual securities denominated in a particular currency.

From time to time, the Portfolio may invest up to 30% of its net assets in securities of issuers in the commercial banking industry; to the extent the Portfolio invests 30% of its net assets in such securities, it may be slightly more sensitive to movement in the commercial banking industry.

The Portfolio may make limited use (not more than 15% of its assets) of foreign fixed income securities when, in the Sub-advisor's opinion, attractive opportunities exist relative to those available through equity securities or the short-term investments described above. The foreign fixed income securities in which the Portfolio may invest may be U.S. dollar or foreign currency denominated, including the euro, and may include obligations of foreign governments, foreign government agencies, supranational organizations or corporations, and other private entities. Such governmental fixed income securities will be, at the time of purchase, of the highest quality (for example, AAA by Standard & Poor's (S&P) or Aaa by Moody's or of comparable quality. Corporate fixed income securities will be, at the time of purchase, rated in one of the top two rating categories (for example, AAA and AA by S&P or Aaa and Aa by Moody’s) or of comparable quality.

Portfolio information
Inception date02/04/1992
Dividends paid (if any)Annually
Capital gains paid (if any)December
Portfolio identifiers
NASDAQDPIEX
CUSIP246248306

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 (11/30/2014)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.26%1.94%10.08%6.26%5.76%8.05%02/04/1992
MSCI EAFE Index (Gross)-1.08%0.41%12.52%6.86%5.73%n/a
MSCI EAFE Index (Net)-1.49%-0.02%12.01%6.38%5.25%n/a
Average annual total return as of quarter-end (09/30/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-5.88%2.51%9.12%12.73%6.80%6.81%8.17%02/04/1992
MSCI EAFE Index (Gross)-5.83%-0.99%4.70%14.16%7.04%6.80%n/a
MSCI EAFE Index (Net)-5.88%-1.38%4.26%13.65%6.56%6.32%n/a

Returns for less than one year are not annualized.

Expense ratio
Gross0.88%
Net0.88%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20143.56%5.16%-5.88%n/an/a
20133.29%1.67%9.25%6.45%22.13%
20126.67%-6.25%5.27%4.05%9.53%
20114.25%3.85%-14.92%4.48%-3.76%
2010-1.81%-13.49%16.65%3.50%2.57%
2009-17.17%20.51%18.44%2.67%21.38%
2008-8.57%-4.19%-15.14%-15.19%-36.95%
20073.77%6.19%1.40%-0.32%11.38%
20068.17%2.97%6.37%10.01%30.34%
20050.99%-0.05%9.05%2.52%12.84%
20042.06%1.65%2.46%13.86%21.02%
Portfolio characteristics - as of 11/30/2014
Share assets$452.4 million
Number of holdings55
Market cap (median)$35.77 billion
Market cap (weighted average)$71.22 billion
Portfolio turnover (last fiscal year)20%
Beta (relative to MSCI EAFE Index (Gross)) (view definition)0.91
Annualized standard deviation, 3 years (view definition)12.49
Top 10 holdings as of 11/30/2014
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Deutsche Telekom AG3.5%
Iberdrola S.A.3.4%
GlaxoSmithKline PLC3.1%
Unilever PLC3.0%
Sanofi2.9%
Telefonica S.A.2.8%
Novartis AG2.8%
National Grid PLC2.8%
Zurich Insurance Group AG2.8%
Canon Inc.2.7%
Total % Portfolio in Top 10 holdings29.8%
Top 10 countries as of 11/30/2014List excludes cash and cash equivalents.
Country% of portfolio
United Kingdom19.4%
Japan17.1%
Switzerland13.0%
France11.2%
Germany7.7%
Spain7.3%
Netherlands6.1%
Singapore4.6%
Sweden2.8%
Australia2.3%
Distribution history - annual distributions (Original Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20140.0000.678
20130.0000.420
20120.0000.537
20110.0000.538
20100.0000.435
20090.0000.418
20081.7951.383
20072.1570.574
20062.7350.707
20050.5170.531
20040.0000.244

1If a Portfolio 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 Portfolio will send each shareholder a Form 1099 DIV for the calendar year that will provide definitive information on how to report the Portfolio'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 Portfolio (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.

Investment manager

Delaware Management Company, a series of Delaware Management Business Trust.

Sub-advisors

Mondrian Investment Partners Ltd.

Elizabeth A. Desmond

Elizabeth A. Desmond  

Director/Chief Investment Officer, International Equities

(View bio)


Clive Gillmore

Clive A. Gillmore 

Chief Executive Officer

(View bio)


Nigel G. May

Nigel G. May 

Deputy Chief Executive Officer

(View bio)


Melissa J. A. Platt, CFA

Melissa J. A. Platt CFA  

Portfolio Manager

(View bio)


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

Shareholder fees
Maximum sales charge (load) imposed on purchases as a percentage of offering pricenone
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Purchase reimbursement feesnone
Redemption reimbursement feesnone
Annual portfolio operating expenses
Management fees0.75%
Distribution and service (12b-1) feesnone
Other expenses0.13%
Total annual portfolio operating expenses0.88%
Fee waivers and expense reimbursementsnone
Total annual portfolio operating expenses after fee waivers and expense reimbursements0.88%

Carefully consider the Portfolio's investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Portfolio's prospectus, if available, its summary prospectus, which may be obtained by clicking the prospectus link located in the right-hand sidebar or calling 800 231-8002. Investors should read the prospectus, and, if available, 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.

If and when the Portfolio invests in forward foreign currency contracts or use other investments to hedge against currency risks, the Portfolio will be subject to special risks, including counterparty risk.

From time to time, the Portfolio may invest up to 30% of its net assets in securities of issuers in the commercial banking industry; to the extent that the Portfolio invests 30% of its net assets in such securities, it may be slightly more sensitive to movement in the commercial banking industry.

The MSCI EAFE Index measures equity market performance across developed market countries in Europe, Australasia, and the Far East.

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

The Portfolio is distributed by Delaware Distributors L.P., an affiliate of Delaware Management Holdings, Inc., and Macquarie Group Limited, not affiliated with Mondrian Investment Partners Ltd.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 12/26/2014)

Original ClassPriceNet changeYTD
NAV$14.31no chg-1.04%
Max offer price$14.31n/an/a

Total net assets (as of 11/30/2014)

$452.4 million all share classes

Lipper ranking (as of 11/30/2014)

YTD ranking5 / 71
1 year5 / 68
3 years28 / 65
5 years2 / 59
10 years8 / 21
Lipper classificationInternational Large-Cap Value

(View Lipper disclosure)

Benchmark, peer group

MSCI EAFE (Europe, Australasia, Far East) Index (view)

Lipper International Large-Cap Value Funds Average (view)

Additional information