Delaware Focus Global Growth Fund

Objective

Delaware Focus Global Growth Fund seeks long-term capital appreciation.

Strategy

The Fund invests primarily in common stocks of U.S. and non-U.S. companies, which may include companies located or operating in developed or emerging markets. Under normal circumstances, the Fund will invest in equity securities of issuers located throughout the world, including the United States, and the Fund will invest at least 40% of its net assets in non-U.S. securities. The Fund may invest in companies across all market capitalizations but will primarily invest in mid- and large-cap equity securities.

Fund information
Inception date12/29/2008
Dividends paid (if any)Annually
Capital gains paid (if any)December
Fund identifiers
NASDAQDGGIX
CUSIP246118517

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

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 (09/30/2014)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-1.08%6.50%15.63%13.35%n/a18.46%12/29/2008
MSCI World Index (Gross)4.33%12.80%18.60%11.47%n/an/a
MSCI World Index (Net)3.89%12.20%17.93%10.86%n/an/a
Average annual total return as of quarter-end (09/30/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-3.83%-1.08%6.50%15.63%13.35%n/a18.46%12/29/2008
MSCI World Index (Gross)-2.05%4.33%12.80%18.60%11.47%n/an/a
MSCI World Index (Net)-2.16%3.89%12.20%17.93%10.86%n/an/a

Returns for less than one year are not annualized.

Prior to Dec. 29, 2010, the Fund had not engaged in a broad distribution of its shares and had been subject to limited redemption requests. The returns reflect expense limitations that were in effect during certain periods and that may have been lower than the Fund's current expenses. The returns would have been lower without the expense limitations.

Expense ratio
Gross1.26%
Net1.26%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
2014-1.33%4.26%-3.83%n/an/a
20135.41%-1.53%10.67%7.66%23.67%
201216.58%-6.36%5.38%2.49%17.90%
20114.13%3.49%-15.32%7.19%-2.20%
20104.40%-8.51%18.42%8.32%22.53%
2009-0.46%21.59%15.55%8.24%51.36%

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

Portfolio characteristics - as of 09/30/2014
Share assets$94.9 million
Number of holdings38
Market cap (median)$26.50 billion
Market cap (weighted average)$70.99 billion
Portfolio turnover (last fiscal year)36%
Beta (relative to MSCI World Index (Gross)) (view definition)1.08
Annualized standard deviation, 3 years (view definition)13.13
Portfolio composition as of 09/30/2014Total may not equal 100% due to rounding.
Domestic equities55.8%
International equities & depository receipts43.3%
Cash and cash equivalents0.8%
Top 10 holdings as of 09/30/2014
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Celgene Corp.4.6%
Priceline Group Inc.3.9%
Microsoft Corp.3.8%
Baidu Inc.3.7%
Allergan Inc.3.6%
QUALCOMM Inc.3.5%
eBay Inc.3.2%
EOG Resources Inc.3.2%
MasterCard Inc.3.0%
Intercontinental Exchange Inc.2.9%
Total % Portfolio in Top 10 holdings35.4%

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

Top 10 countries as of 09/30/2014List excludes cash and cash equivalents.
Country% of portfolio
United States55.8%
United Kingdom10.3%
Japan7.8%
Brazil4.1%
Switzerland3.8%
China3.7%
Denmark2.8%
India2.6%
Taiwan2.3%
Finland2.1%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20140.0000.000
20130.3230.014
20120.0000.000
20110.1110.000
20100.4060.028
20091.1700.027
20080.0000.000
20070.0000.000
20060.0000.000
20050.0000.000
20040.0000.000

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 is only provided from June 1, 2014 onward.

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

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

Investment manager

Delaware Management Company, a series of Delaware Management Business Trust

Sub-advisors

Jackson Square Partners, LLC


Greg Heywood

Gregory M. Heywood, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: December 2008

Years of industry experience: 21

(View bio)


Patrick Fortier

Patrick G. Fortier, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: December 2008

Years of industry experience: 19

(View bio)


Chris Bonavico

Christopher J. Bonavico, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: December 2008

Years of industry experience: 26

(View bio)


Institutional Class shares are only available to certain investors. See the prospectus for more information. 

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 pricenone
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) feesnone
Other expenses0.41%
Total annual fund operating expenses1.26%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.26%

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

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, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, acquired fund fees and expenses, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) in order to prevent annual fund operating expenses from exceeding 1.30% of the Fund's average daily net assets from March 28, 2014 through March 30, 2015. This waiver and/or reimbursement may only be terminated by agreement of the Manager and the Fund.

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Delaware Focus Global Growth Fund Quarterly commentary June 30, 2014 Class A (DGGAX)

Within the Fund

For the second quarter of 2014, Delaware Focus Global Growth Fund (Class A shares at net asset value) posted a positive return but underperformed its benchmark, the MSCI World Index (net). Strong relative performance in the healthcare and consumer discretionary sectors was unable to overcome weak relative performance in the information technology and energy sectors.

Allergan was a strong contributor to the Fund’s performance during the quarter. The stock appreciated sharply as a Canadian pharmaceutical company, Valeant Pharmaceuticals International, made an offer to acquire Allergan that was rejected. Since its initial offer, Valeant has increased its bid and­ it remains to be seen how aggressively Valeant will pursue an acquisition of Allergan. Currently, our discussions are focused on both what we believe to be fair value for Allergan as a stand-alone business and the potential value of a combined Valeant-Allergan entity. 

Celgene was also a contributor to performance during the quarter. While the company reported financial results that were relatively in-line, the stock appreciated as the company affirmed forward guidance, continued to buy back shares, and had a 2-for-1 stock split during the quarter. Celgene continues to be a leading player in the treatment of blood cancers with a growing product pipeline in breast, lung, and pancreatic cancer treatments. Additionally, the company continues to benefit from large growth prospects driven by additional indications of its drugs, by increased usage of existing drugs, and by international growth opportunities. 

InterContinental Hotels Group also contributed to performance during the quarter. The stock rose as the company announced a special dividend and reported strong gains in revenue per available room in the United States and Europe. Investors seem optimistic that hotel occupancy rates should continue to rise as the economy improves.  Additionally, the stock rose amidst rumors and subsequent confirmation of a takeout bid by a major hotel chain that was rejected by InterContinental Hotels Group. We continue to find the company attractive given its strategic plans to further reduce the capital intensity of its business and to return excess cash to shareholders.

Core Laboratories detracted from performance during the quarter. The stock fell as the company reduced its second quarter and full-year revenue and earnings forward guidance downward as Core expects less use of its services by North American clients in the near term. We are willing to live with a certain degree of cyclicality in the energy cycle given that this company’s solutions of site analysis are valuable in various parts of the cycle. In our view, this is a well-owned stock with little historical controversy and volatility and therefore believe that investors may have overreacted to a reasonable conservative assessment to industry conditions.

eBay was a detractor from performance during the quarter. The company reported mixed financial results and an increased sense of uncertainty surrounding its near-term capital allocation plans. The stock had appreciated in the previous quarter as high-profile activists increased pressure on the company to unlock value by spinning out the PayPal business.  Conversely, the stock gave back those gains as eBay’s management stayed the course on keeping PayPal in the current organizational structure. We are not convinced that PayPal needs to be separated from the company in order to drive the highest long-term shareholder value. We continue to own the stock as we believe the eBay app for PayPal should continue to help strengthen its competitive position as a mobile e-commerce leader which should continue to be increasingly meaningful. We are also attracted to the PayPal business which has been a major success in online commerce and now, in our opinion, has the opportunity to grow market share in the physical commerce market.

Teradata also detracted from performance during the quarter. Despite reporting solid financial results, the stock declined as Teradata gave forward revenue guidance at the low end of its previous estimate. Additionally there are growing concerns related to increased competition and the company’s ability to further expand margins in the face of continued competitive pricing pressure. We believe the database warehousing market is large and growing, and can likely accommodate several competitors; however, the company may experience some competitor headwinds going forward. We continue to believe in the company’s long term potential; however, we decided to exit the Fund’s position due to its changing risk/reward profile and allocate to what we view as more attractive ideas. 

Outlook

Despite positive absolute returns in the equity market during the past few years, we believe the relatively tepid market sentiment demonstrates that there are more than just fundamental factors affecting stock prices.  A lack of significant bull market sentiment suggests to us that many investors appear to be struggling with accurately predicting the pace of global economic recovery and are assessing factors that threaten economic fundamentals (for example, central bank actions and fiscal policy debates across the globe). While some fundamentals in various geographies may be trending in a positive direction (from a very low base during the global financial crisis in 2008-2009), we don’t believe we are entering into a typical post-recessionary global boom cycle.  Rather, we believe the lingering effects of the credit crisis years ago could lead to moderate growth, at best, for the intermediate term.

Our conversations with senior management of companies we hold in the portfolio show a general sense that conditions are improving slightly but not yet strong enough to meaningfully change strategic plans for capital and investment spending. An increasing number of companies in the Fund’s portfolio are considering merger and acquisition or tax inversion strategies (or these strategies have been forced upon them in response to merger overtures by other companies). This is consistent in today’s market environment where many companies — often influenced by large or aggressive shareholders — are seeking value-creating or growth opportunities as they are not always available under current economic conditions. The Fund’s portfolio holdings are often the type of businesses that can be targets for such potential value-creating opportunities. In such an uncertain macroeconomic environment, we believe the quality of a company’s business model, competitive position, and management may prove to be of utmost importance.

Regardless of the economic outcome, we remain consistent in our long-term investment philosophy: We want to own what we view as strong secular-growth companies with solid business models and competitive positions that we believe can grow market share and have the potential to deliver shareholder value in a variety of market environments.

[12905]

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.

Jackson Square Partners, LLC (JSP) is the sub-advisor to the Fund. As sub-advisor, JSP is responsible for day-to-day management of the Fund’s assets. Although JSP serves as sub-advisor, the investment manager, Delaware Management Company, a series of Delaware Management Business Trust, has ultimate responsibility for all investment advisory services with JSP.

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 800 362-7500. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

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.

The Funds are distributed by Delaware Distributors L.P., an affiliate of Delaware Management Holdings, Inc., and Macquarie Group Limited.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 10/20/2014)

Institutional ClassPriceNet changeYTD
NAV$18.670.24-4.40%
Max offer price$18.67n/an/a

Total net assets (as of 09/30/2014)

$128.3 million all share classes

Lipper ranking (as of 09/30/2014)

YTD ranking204 / 253
1 year194 / 250
3 years130 / 213
5 years19 / 160
10 yearsn/a
Lipper classificationGlobal Multi-Cap Growth

(View Lipper disclosure)

Benchmark, peer group

MSCI World Index (view)

Lipper Global Multi-Cap Growth Funds Average (view)

Additional information