Delaware Floating Rate II Fund

Key features

A floating-rate bank loan fund designed to generate high current income

An actively managed portfolio built on a foundation of strong fundamental research

Experienced team with an average of nearly 25 years' industry experience

Daily pricing as of 06/16/2021

NAV
$9.43
NAV 1-day net change
-0.01
Max offer price
$9.43

Total net assets as of 05/31/2021

All share classes
$47.2 million

Overview

Fund information
Inception date 10/21/2013
Dividends paid (if any) Monthly
Capital gains paid (if any) November or December
Fund identifiers
NASDAQ FRFEX
CUSIP 24611D599

Benchmark and peer group

The S&P/LSTA (Loan Syndications and Trading Association) Leveraged Loan Index (view definition)

Morningstar Bank Loan Category (view definition)

Lipper Loan Participation Funds Average (view definition)

Performance

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 (05/31/2021)

Returns for less than one year are not annualized.

Benchmark lifetime returns are as of the month end following the Fund's inception date.

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

Performance shown prior to Oct. 4, 2019, are as of the predecessor fund and investment team.

Average annual total return as of quarter-end (03/31/2021)

Returns for less than one year are not annualized.

Benchmark lifetime returns are as of the month end following the Fund's inception date.

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

Performance shown prior to Oct. 4, 2019, are as of the predecessor fund and investment team.

Overall Morningstar RatingTM

Institutional Class shares - as of 05/31/2021

MorningstarMorningstarMorningstar
Rating No. of funds
Overall 3 231
3 years 4 231
5 years 3 208
Morningstar category Bank Loan
 

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking - as of 05/31/2021
1 year 176 / 245
3 years 71 / 231
5 years 115 / 208
10 years n/a
Morningstar category Bank Loan

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking - as of 05/31/2021
1 year 166 / 247
3 years 62 / 227
5 years 109 / 205
10 years n/a
Lipper classification Lipper Loan Participation Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Expense ratio

Gross
1.01%
Net
0.80%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Jan. 28, 2021 through Jan. 31, 2022. Please see the fee table in the Fund's prospectus for more information.

Calendar year total returns @ NAV

Year
Annual return
Year
Annual return
2020
2.72%
2019
7.12%
2018
0.19%
2017
3.06%
2016
6.41%
2015
0.62%
2014
-0.73%

Portfolio

Portfolio characteristics as of 05/31/2021

Number of holdings
115
Number of credit issuers
98
Portfolio turnover (last fiscal year)
176%
Effective duration (weighted average) (view definition)
1.43 years
Effective maturity (weighted average) (view definition)
4.54 years
Yield to maturity (view definition)
4.86%
Average market price (view definition)
$97.05
Average coupon (view definition)
4.87%
Yield to worst (view definition)
4.58%
SEC 30-day yield with waiver (view definition)
3.85%
SEC 30-day yield without waiver (view definition)
3.68%
Annualized standard deviation, 3 years (view definition)
6.78

Portfolio composition as of 05/31/2021
Total may not equal 100% due to rounding.

Bank loans
92.6%
High yield corporate bonds
4.5%
Cash and cash equivalents
1.6%
Investment grade corporate bonds
1.3%

Top 10 fixed income holdings as of 05/31/2021

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

List excludes cash and cash equivalents.

Holding
% of portfolio
Holding
% of portfolio
Applied Systems Inc. 6.250 9/19/2025
2.16
Milano Acquisition Corp. 4.750 8/17/2027
2.01
United Airlines Inc. 4.500 4/14/2028
2.00
Global Medical Response Inc. 5.750 9/24/2025
1.94
Heartland Dental LLC 3.500 4/30/2025
1.93
BW Gas & Convenience Holdings LLC 4.000 3/17/2028
1.86
Realpage Inc. 3.750 2/18/2028
1.82
Verscend Holding Corp. 4.000 8/27/2025
1.81
Solenis International LP 8.500 6/26/2026
1.78
Truck Hero Inc. 4.500 1/20/2028
1.71

Total % Portfolio in Top 10 holdings - 19.02%

List of monthly holdingsList of quarterly holdings

Fixed income sectors as of 04/30/2021

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

Sector
Fund
Sector
Fund
Electronic/electric
19.2%
Healthcare
9.0%
Chemical / plastics
7.6%
Business equipment and services
7.2%
Air transportation
5.0%
Building and development
4.9%
Insurance
4.8%
Retailers (other than food/drug)
4.4%
Telecommunication/cellular communication
3.4%
Financial intermediaries
3.3%
Utilities
3.0%
Hotels/motels/inns and casinos
2.9%
Beverage & tobacco
2.8%
Broadcast radio and television
2.7%
Containers and glass products
2.6%
Automotive
2.5%
Surface transportation
1.9%
Food/drug retailers
1.8%
Drugs
1.6%
Aerospace and defense
1.5%
Leisure
1.4%
Forest products
1.3%
Cable television
1.2%
Industrial equipment
0.9%
Equipment leasing
0.5%
Food services
0.5%
Food products
0.5%
Oil and gas
0.4%
Publishing
0.1%

Credit quality as of 05/31/2021

Rating
Fund
Rating
Fund
AAA
1.6%
BBB
5.0%
BB
25.0%
B
52.0%
CCC
16.5%

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)

Year
Capital gains3
Net investment income
Year
Capital gains3
Net investment income
2021
0.000
0.176
2020
0.000
0.412
2019
0.000
0.436
2018
0.000
0.364
2017
0.000
0.312
2016
0.000
0.315
2015
0.000
0.313
2014
0.000
0.302
2013
0.000
0.041
2012
0.000
0.000
2011
0.000
0.000

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 (if any) is only provided from June 1, 2014 onward.

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

Management

Adam Brown

Adam H. Brown, CFA

  • Managing Director, Senior Portfolio Manager
  • Start date on the Fund: October 2019
  • Years of industry experience: 22
  • Read bio
John McCarthy

John P. McCarthy, CFA

  • Managing Director, Senior Portfolio Manager
  • Start date on the Fund: October 2019
  • Years of industry experience: 34
  • Read bio

Fees

Shareholder fees
Maximum sales charge (load) imposed on purchases as a percentage of offering price none
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lower none
Annual fund operating expenses
Management fees 0.50%
Distribution and service (12b-1) fees none
Other expenses 0.51%
Total annual fund operating expenses 1.01%
Fee waivers and expense reimbursements1 (0.21%)
Total annual fund operating expenses after fee waivers and expense reimbursements 0.80%

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 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 0.80% of the Fund’s average daily net assets from Jan. 28, 2021 through Jan. 31, 2022. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.

Resources

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

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 under the Resources section, or calling 877 693-3546. Investors should read the prospectus and the summary prospectus carefully before investing.

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 are located under the Resources section, 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 (MIMEL), Macquarie Investment Management Austria Kapitalanlage AG (MIMAK), and Macquarie Investment Management Global Limited (MIMGL) (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.

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.

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

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.

Because the Fund may invest in bank loans and other direct indebtedness, it is subject to the risk that the Fund will not receive payment of principal, interest, and other amounts due in connection with these investments, which primarily depend on the financial condition of the borrower and the lending institution.

Liquidity risk is the possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has valued them.

IBOR risk is the risk that changes related to the use of the London interbank offered rate (LIBOR) or similar rates (such as EONIA) could have adverse impacts on financial instruments that reference these rates. The abandonment of these rates and transition to alternative rates could affect the value and liquidity of instruments that reference them and could affect investment strategy performance.

Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis, and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and can be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Fund’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries. These disruptions could prevent the Fund from executing advantageous investment decisions in a timely manner and could negatively impact the Fund’s ability to achieve its investment objective. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund.

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

Not FDIC Insured • No Bank Guarantee • May Lose Value

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