Delaware Limited-Term Diversified Income Fund

Key features

  • A flexible short-term bond fund designed to weather market cycles
  • An actively managed bond portfolio emphasizing risk control and liquidity
  • An experienced management team with a long history of managing short-term portfolios
Fund information
Inception date06/01/1992
Dividends paid (if any)Monthly
Capital gains paid (if any)November or December
Fund identifiers

Institutional Class shares are available only to certain investors.

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 (10/31/2019)

as of quarter-end (09/30/2019)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)4.57%4.51%1.75%1.80%1.89%3.97%06/01/1992
Bloomberg Barclays 1-3 Year US Government/Credit Index3.78%4.89%1.95%1.60%1.52%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.09%3.91%1.66%1.85%1.95%3.98%06/01/1992
Bloomberg Barclays 1-3 Year US Government/Credit Index0.69%4.64%1.82%1.59%1.52%n/a

Returns for less than one year are not annualized.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

Expense ratio

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from April 30, 2019 through April 30, 2020. Please see the fee table in the Fund's prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return

Institutional Class shares are available only to certain investors.

Portfolio characteristics - as of 10/31/2019Bloomberg Barclays 1-3 Year US Government/Credit Index
Number of holdings4421,659
Number of credit issuers193
Portfolio turnover (last fiscal year)130%n/a
Effective duration (weighted average) (view definition)2.07 yearsn/a
Effective maturity (weighted average) (view definition)3.21 yearsn/a
Yield to maturity (view definition)2.52%n/a
Average market price (view definition)$97.24n/a
Average coupon (view definition)3.23%n/a
Yield to worst (view definition)2.40%n/a
SEC 30-day yield with waiver (view definition)2.42%
SEC 30-day yield without waiver (view definition)2.10%
Annualized standard deviation, 3 years (view definition)1.23n/a
Portfolio composition as of 09/30/2019Total may not equal 100% due to rounding.
Asset-backed securities26.3%
Mortgage-backed securities17.4%
U.S. government securities/Short term13.6%
Commercial mortgage-backed securities0.4%
Top 10 fixed income holdings as of 10/31/2019

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

List excludes cash and cash equivalents.

Holding% of portfolio
Treasury Note 1.250 1/31/20208.61%
FNCL 5 11/192.26%
Treasury Note 1.625 8/15/20292.18%
Treasury Note 1.000 11/30/20191.94%
FN AL99031.16%
Total % Portfolio in Top 10 holdings25.55%
Fixed income sectors as of 09/30/2019

List may exclude cash, cash equivalents, and exchanged-traded funds (ETFs) that are used for cash management purposes. Please see the Fund’s complete list of holdings for more information.

Investment grade credits31.8%
Asset-backed securities26.3%
MBS and CMOs17.4%
U.S. Treasury securities11.9%
High yield credits5.7%
Emerging markets4.8%
Commercial mortgage-backed securities0.4%
Credit quality as of 10/31/2019

Total may not equal 100% due to rounding. The Fund’s investment manager, Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust, receives “Credit Quality” ratings for the underlying securities held by the Fund from three “nationally recognized statistical rating organizations” (NRSROs): Standard & Poor’s (S&P), Moody’s Investors Service, and Fitch, Inc. The credit quality breakdown is calculated by DMC based on the NRSRO ratings. If two or more NRSROs have assigned a rating to a security the higher rating (lower value) is used. If only one NRSRO rates a security, that rating is used. For securities rated by an NRSRO other than S&P, that rating is converted to the equivalent S&P credit rating. Securities that are unrated by any of the three NRSROs are included in the “not rated” category when applicable. Unrated securities do not necessarily indicate low quality. More information about securities ratings is contained in the Fund’s Statement of Additional Information.

Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
Return of

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.

Institutional Class shares are available only to certain investors.

Roger Early

Roger A. Early, CPA, CFA

Senior Managing Director, Chief Investment Officer – US Fixed Income

Start date on the Fund: May 2007

Years of industry experience: 43

(View bio)

Adam Brown

Adam H. Brown, CFA

Managing Director, Senior Portfolio Manager

Start date on the Fund: October 2013

Years of industry experience: 21

(View bio)

John McCarthy

John P. McCarthy, CFA

Managing Director, Senior Portfolio Manager

Start date on the Fund: July 2016

Years of industry experience: 32

(View bio)

Brian McDonnell

Brian C. McDonnell, CFA

Senior Managing Director, Head of US Core Fixed Income

Start date on the Fund: April 2012

Years of industry experience: 30

(View bio)

Institutional Class shares are available only to certain investors.

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 fees0.50%
Distribution and service (12b-1) feesnone
Other expenses0.19%
Total annual fund operating expenses0.69%
Fee waivers and expense reimbursements(0.30%)
Total annual fund operating expenses after fee waivers and expense reimbursements0.39%

Institutional Class shares are available only to certain investors.

1 The 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 dividend and 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 0.39% of the Fund’s average daily net assets from April 30, 2019 through April 30, 2020. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.

This commentary is currently not available. Please check back later.

Delaware Limited-Term Diversified Income Fund Quarterly commentary March 31, 2018

Market review

“In like a lamb and out like a lion.” In terms of the first quarter of 2018, we could be talking about the weather in the Northeast after four nor’easters in March. But instead, we are referring to volatility in the financial markets. After markets experienced almost no volatility in 2017 — and a steady rise in equity prices and a fall in lower-quality credit spreads in January 2018 — volatility returned with a vengeance in early February and continued through the remainder of the first quarter. This change in the markets did not cause the US Federal Reserve to alter its plans for hiking interest rates, as it increased the federal funds rate by 0.25 percentage points in March, and all signs point to at least two more increases in 2018. Other global central banks have not so clearly shifted away from their accommodative policies, and the dispersion between global central bank policy plans should create forecasting challenges for both economists and financial market strategists.

Whatever the underlying cause, the return of volatility to the financial markets has been headline news. On the other hand, little notice has been given to recent signs of moderation in economic growth. The strong synchronized global growth trend that dominated the second half of 2017 was expected to continue or even strengthen during 2018. The Trump tax bill showed every sign of adding momentum to the strong economic growth story. But, as we look back on the first quarter of 2018, growth statistics have been more mixed, and first-quarter 2018 gross domestic product (GDP) appears likely to meaningfully underperform originally optimistic forecasts. On top of this, some financial restraint in China and the potential for trade-related conflict among superpowers could create real and immediate headwinds to growth. As often happens, late-cycle growth encourages optimism or even euphoria among CEOs and investors, but this optimism often peaks at the same time that economic growth begins to slow. In this expansion, we have seen multiple moments since the global financial crisis when central bank actions, or more recently fiscal policy actions, have led to the market conclusion that “all has been fixed…back to normal.” Possibly the most obvious conclusion all along has been that “normal” is actually quite far away and unlikely to return any time soon.

US economic indicators were fairly static to slightly weaker during the first quarter. The Citigroup® Economic Surprise Index moved lower, pulling back after a strong second half of 2017. In the fourth quarter of 2017, US GDP expanded at a 2.9% annualized pace, compared to 3.2% for the third quarter. Monthly nonfarm payroll growth, which has averaged about 200,000 since 2011, averaged 276,000 in the first quarter. Core personal consumption expenditures (PCE) — the Fed’s preferred inflation gauge — moved up as expected to 1.6% year over year from 1.5%, and the Consumer Price Index (core CPI) rose slightly, to 1.8% during the first quarter. Inflation continued to remain below the Fed’s 2% target.

The Institute for Supply Management’s total Manufacturing and Non-Manufacturing New Orders Index rose and continued to indicate expansion while sentiment indicators generally moved higher. The National Federation of Independent Business (NFIB) Small Business Optimism Index showed that small business owners have continued to feel confident about the economy, as the indicator moved to the highest levels since the early 1980s. The regional Fed surveys moved lower but remained in expansionary territory. The market is pricing in two more rate increases by the Federal Open Market Committee (FOMC) in 2018.

The Bloomberg Barclays US Aggregate Index recorded a negative return for the first quarter, with lower-quality, BBB-rated bonds underperforming the higher-rated investment grade credit tiers within that index. Although most broad-market fixed income indices produced negative returns domestically, ex-US global bonds as represented by the Bloomberg Barclays Global Treasury ex US Index, were a significant outperformer for the period.

Within the Fund

The Fund’s underperformance was driven primarily by the slight overweight to and security selection within high grade corporate credit, with the Fund’s corporate positions returning -0.82% versus -0.31% for the sector within the benchmark, the Bloomberg Barclays 1–3 Year US Government/Credit Index. Within structured credit, exposure in asset-backed securities (ABS) contributed to relative performance; however, this was partially offset by the allocation to mortgage-backed securities (MBS). The Fund’s out-of-benchmark exposure to bank loans was positive for the quarter.


The capital markets offered scant refuge during the first quarter, as virtually every major fixed income and equity class, including Treasurys, posted negative returns for the period. This was hardly the consensus forecast as 2017 ended, a year which saw record S&P 500® Index earnings and equity prices, historically low market volatility (measured by the CBOE Volatility Index® or VIX®), the end of quantitative easing (QE), a significant reduction in corporate tax rates, and signs of the first synchronized global expansion since 2007. The first quarter actually delivered a benign and fundamentally supportive backdrop, with strong corporate earnings and tamer-than-expected growth, inflation, and consumer spending, yet the markets took a rollercoaster ride that spurred the VIX to heights not seen since 2015.

We believe two policy developments in Washington jolted the markets into an entirely technical selloff in the first quarter. The first was the budget deal reached in early February that averted a government shutdown, but which came at the expense of a spending bill that returned the United States to $1 trillion-plus deficits. The second development, in early March, was the poorly communicated rollout of tariffs on steel and aluminum imports, which initially seemed to target some important US allies, including Canada, Mexico, and Germany, in addition to China. While it was later clarified that only China would be targeted, the prospect of deliberate trade tensions between the US and its largest trading partner did not seem to reassure markets.

Fixed income sectors are often subject to technical conditions and liquidity concerns, particularly over-the-counter sectors such as high yield, emerging markets, and municipals, but over the long term, fundamentals drive returns. In 2015, the market selloff and sharp rise in volatility came against the backdrop of financial sector concerns in China, slowing global growth, collapsing commodity prices, a rising US dollar, rising corporate defaults, and sharply wider credit spreads in the investment grade, high yield, and emerging market segments. In contrast, the current selloff arrives against expanding global GDP, accelerating earnings and growth prospects in the US, broadly improving credit metrics, rising commodity prices, a weaker US dollar, historically low defaults, tight credit spreads, and strong bank balance sheets. While virtually all fixed income sectors are arguably fully valued, given the backdrop outlined above, we believe that valuations are fundamentally supported and, outside of individual issues and subsectors, not yet stretched. Nevertheless, we believe base-case returns will likely consist entirely of income and, with narrow spread cushions, the potential for higher rates and elevated US political risk, above-average volatility should be anticipated as well.

Past performance is not a guarantee of future results.

Index definitions

The Bloomberg Barclays US Aggregate Index is a broad composite that tracks the investment grade domestic bond market.

The Bloomberg Barclays Global Treasury ex US Index tracks fixed-rate, local currency government debt of investment grade countries, including both developed and emerging markets, but excluding the United States.

The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the US stock market.

The CBOE Volatility Index is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices.

The NFIB Small Business Optimism Index is a survey asking small business owners a battery of questions related to their expectations for the future and their plans to hire, build inventory, borrow, and expand.

The Citigroup Economic Surprise Index is a rolling measure of beats and misses of indicators relative to consensus expectations.

The Institute for Supply Management (ISM) Manufacturing and Non-Manufacturing New Orders Index monitors new order volume based on the ISM’s surveys of manufacturing and non-manufacturing firms.

The US Consumer Price Index is a measure of inflation that is calculated by the US Department of Labor, representing changes in prices of all goods and services purchased for consumption by urban households.

Index performance returns do not reflect management fees, transaction costs, or expenses. Indices are unmanaged, and one cannot invest directly in an index.

[470303] 04/18

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.

The Fund's investment manager, Delaware Management Company (Manager), may seek investment advice and recommendations from its affiliates: Macquarie Investment Management Europe Limited, Macquarie Investment Management Austria Kapitalanlage AG, and Macquarie Investment Management Global Limited (together, the “Affiliated Sub-Advisors”). The Manager may also permit these Affiliated Sub-Advisors to execute Fund security trades on behalf of the Manager and exercise investment discretion for securities in certain markets where DMC believes it will be beneficial to utilize an Affiliated Sub-Advisor’s specialized market knowledge.

Investing involves risk, including the possible loss of principal.

Fixed income securities and bond funds can lose value, and investors can lose principal, as interest rates rise. They also may be affected by economic conditions that hinder an issuer’s ability to make interest and principal payments on its debt.

The Fund may also be subject to prepayment risk, the risk that the principal of a bond that is held by a portfolio will be prepaid prior to maturity, at the time when interest rates are lower than what the bond was paying. A portfolio may then have to reinvest that money at a lower interest rate.

High yielding, non-investment-grade bonds (junk bonds) involve higher risk than investment grade bonds.

The high yield secondary market is particularly susceptible to liquidity problems when institutional investors, such as mutual funds and certain other financial institutions, temporarily stop buying bonds for regulatory, financial, or other reasons. In addition, a less liquid secondary market makes it more difficult for the Fund to obtain precise valuations of the high yield securities in its portfolio.

The Fund may invest in derivatives, which may involve additional expenses and are subject to risk, including the risk that an underlying security or securities index moves in the opposite direction from what the portfolio manager anticipated. A derivatives transaction depends upon the counterparties’ ability to fulfill their contractual obligations.

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

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

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

Diversification may not protect against market risk.

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 11/11/2019)

Institutional ClassPriceNet change
NAV$8.27no chg
Max offer price$8.27n/a

Total net assets (as of 10/31/2019)

$449.8 million all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 10/31/2019)
RatingNo. of funds
3 Yrs2491
5 Yrs3439
10 Yrs3277
Morningstar categoryMorningstar Short-Term Bond Category

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 10/31/2019)

YTD ranking222 / 574
1 year377 / 559
3 years357 / 491
5 years216 / 439
10 years160 / 277
Morningstar categoryMorningstar Short-Term Bond Category

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 10/31/2019)

YTD ranking104 / 180
1 year147 / 177
3 years112 / 153
5 years87 / 146
10 years69 / 85
Lipper classificationLipper Short-Intermediate Investment-Grade Debt Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

Bloomberg Barclays 1–3 Year US Government/Credit Index (view definition)

Morningstar Short-Term Bond Category (view definition)

Lipper Short-Intermediate Investment Grade Debt Funds Average (view definition)

Additional information