Delaware VIP® High Yield Series

Objective

Delaware VIP High Yield Series seeks total return and, as a secondary objective, high current income.

Strategy

The Series primarily invests in high yield corporate bonds. The Series' portfolio management team engages thorough credit research to attempt to capture the high yield bond market's premium return potential.

Series information
Inception date05/01/2000
Dividends paid (if any)Annually
Capital gains paid (if any)Annually
Series identifier
CUSIP246493829

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 (09/30/2017)

as of quarter-end (09/30/2017)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)6.64%8.33%2.63%4.71%6.40%6.23%05/01/2000
BofA Merrill Lynch US High Yield Constrained Index7.04%9.05%5.88%6.39%7.81%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)2.18%8.33%2.63%4.71%6.40%6.23%05/01/2000
BofA Merrill Lynch US High Yield Constrained Index2.04%9.05%5.88%6.39%7.81%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
Gross1.05%
Net1.00%

Net expense ratio reflects contractual fee waivers from May 1, 2017 to May 1, 2018. Please see the fee table in the Series' prospectus for more information.

The performance and expense ratio information shown represent the performance and fees as they relate to actual shares of the Series. These examples do not include any fees or sales charges imposed by the variable insurance contract for which the Series is an investment option. If they were included, your costs would be higher and performance would be lower. Investors should consult the contract prospectus or disclosure documents for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20172.34%1.97%2.18%n/an/a
20162.46%3.53%4.78%1.59%12.91%
20152.30%-0.75%-5.84%-2.60%-6.87%
20142.76%2.45%-2.01%-3.58%-0.54%
20133.61%-1.47%2.59%4.05%8.98%
20126.70%1.31%4.81%3.57%17.35%
20114.15%0.68%-8.78%6.98%2.33%
20104.77%-0.71%6.42%3.79%14.91%
20095.33%18.44%12.84%5.60%48.65%
2008-2.65%0.94%-7.45%-16.90%-24.43%
20072.89%1.01%0.00%-1.33%2.55%
Portfolio characteristics - as of 09/30/2017
Number of holdings217
Effective maturity (weighted average) (view definition)5.91 years
Effective duration (weighted average) (view definition)4.30 years
Annualized standard deviation, 3 years (view definition)5.70
SEC 30-day yield with waiver (view definition)4.47%
SEC 30-day yield without waiver (view definition)4.41%
Portfolio turnover (last fiscal year)112%
Portfolio composition as of 09/30/2017Total may not equal 100% due to rounding.
Corporate bonds81.0%
Foreign bonds14.6%
Cash and cash equivalents4.4%
Top 10 fixed income holdings as of 09/30/2017

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

List excludes cash and cash equivalents.

Holding% of portfolio
Prime Security Services Borrower LLC Prime Finance Inc. 9.250 5/15/20231.29%
Murphy Oil USA Inc. 5.625 5/1/20271.08%
Calpine Corp. 5.750 1/15/20251.02%
HCA Inc. 5.375 2/1/20251.00%
VTR Finance BV 6.875 1/15/20241.00%
CSC Holdings LLC 10.875 10/15/20251.00%
Freeport-McMoRan Inc. 6.875 2/15/20230.95%
Zekelman Industries Inc. 9.875 6/15/20230.90%
Sprint Corp. 7.125 6/15/20240.85%
Scientific Games International Inc. 10.000 12/1/20220.83%
Total % Portfolio in Top 10 holdings9.92%

Top sectors as of 09/30/2017

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.
Sector% of portfolio
Energy14.6%
Basic industry14.1%
Media9.3%
Services7.9%
Healthcare7.6%
Telecommunications6.7%
Leisure5.2%
Technology & electric5.0%
Retail4.4%
Banking3.8%
Utility3.3%
Emerging markets3.0%
Capital goods3.0%
Insurance2.4%
Consumer goods2.1%
Financial services1.6%
Automotive0.8%
Transportation0.7%
Credit quality as of 09/30/2017
RatingFundBenchmark
AAA4.4%0.4%
BBB3.5%0.0%
BB46.8%47.7%
B36.5%37.6%
CCC8.9%13.5%

Total may not equal 100% due to rounding. The Series’ 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 Series’ Statement of Additional Information.

Adam Brown

Adam H. Brown, CFA

Senior Vice President, Senior Portfolio Manager, Co-Head of High Yield — Macquarie Investment Management, Americas

Start date on the Fund: November 2014

Years of industry experience: 19

(View bio)


Craig Dembeck

Craig C. Dembek, CFA

Senior Vice President, Head of Credit Research — Macquarie Investment Management, Americas

Start date on the Fund: December 2012

Years of industry experience: 23

(View bio)


Paul Matlack

Paul A. Matlack, CFA

Senior Vice President, Senior Portfolio Manager, Fixed Income Strategist

Start date on the Fund: December 2012

Years of industry experience: 32

(View bio)


John McCarthy

John P. McCarthy, CFA

Senior Vice President, Senior Portfolio Manager, Co-Head of High Yield — Macquarie Investment Management, Americas

Start date on the Fund: December 2012

Years of industry experience: 30

(View bio)


The following table describes the fees and expenses that you may pay if you buy and hold shares of the Series. The fee table does not reflect any fees or sales charges imposed by variable insurance contracts. If it did, the expenses would be higher.

Annual series operating expenses
Management fees0.65%
Distribution and service (12b-1) fees0.30%
Other expenses0.10%
Total annual series operating expenses1.05%
Fee waivers and expense reimbursements(0.05%)
Total annual series operating expenses after fee waivers and expense reimbursements1.00%

1The Series' 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 annual series operating expenses from exceeding 0.74% of the Series' average daily net assets from April 29, 2016 through May 1, 2017. The Series' distributor, Delaware Distributors, L.P. (Distributor), has contracted to limit the 12b-1 fees to no more than 0.25% of average daily net assets from April 29, 2016 through May 1, 2017. These waivers and reimbursements may only be terminated by agreement of the Manager or the Distributor and the Series.

Carefully consider the Series' investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Series' prospectus and its summary prospectus, which may be obtained by visiting delawarefunds.com/vip/literature 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.

Fixed income securities and bond portfolios 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 Series may also be subject to prepayment risk, the risk that the principal of a fixed income security that is held by the Series may be prepaid prior to maturity, potentially forcing the Series 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 Series to obtain precise valuations of the high yield securities in its portfolio.

The Series 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.

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. 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.

Delaware VIP Series refers to Delaware VIP Funds. Delaware VIP Funds are not available for direct investment except for issuers of variable insurance product contracts. They are only available through the purchase of certain variable insurance products.

The Series is distributed by Delaware Distributors L.P., an affiliate of Macquarie Investment Management Business Trust (MIMBT), Macquarie Management Holdings, Inc., and Macquarie Group Limited. Macquarie Investment Management (MIM), a member of Macquarie Group, refers to the companies comprising the asset management division of Macquarie Group Limited and its subsidiaries and affiliates worldwide.

Fund Finder

Daily pricing (as of 10/20/2017)

Service ClassPriceNet change
NAV$5.180.01
Max offer price$5.18n/a

Total net assets (as of 09/30/2017)

$268.3 million all share classes

Benchmark, peer group

BofA Merrill Lynch US High Yield Constrained Index (view definition)

Lipper High Yield Funds Average (view definition)

Additional information