Delaware VIP® Diversified Income Series

Key features

A flexible core bond portfolio designed to weather market cycles

An actively managed bond portfolio emphasizing risk control and income generation

An experienced management team with nearly 30 years of industry experience

Daily pricing as of 06/01/2020

NAV
NAV 1-day net change
Max offer price
$10.87

Total net assets as of 04/30/2020

All share classes
$2.5 billion

Overview

Series information
Inception date05/16/2003
Dividends paid (if any)Annually
Capital gains paid (if any)Annually
Series identifiers
CUSIP246493548

Benchmark

Bloomberg Barclays US Aggregate Index (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 (04/30/2020)

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.

Performance shown prior to Oct. 4, 2019, are as of the predecessor fund and investment team. Please see the Updated Significant Fund Event and prospectus for more information.

Average annual total return as of quarter-end (03/31/2020)

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.

Performance shown prior to Oct. 4, 2019, are as of the predecessor series and investment team. Please see the Updated Significant Series Event and prospectus for more information.

Expense ratio

Gross
0.64%
Net
0.60%

Net expense ratio reflects contractual fee waivers from April 29, 2020 to April 30, 2021. 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.

Calendar year total returns @ NAV

Year
Annual return
Year
Annual return
2019
10.43%
2018
-2.12%
2017
5.22%
2016
3.52%
2015
-1.08%
2014
5.32%
2013
-1.26%
2012
7.20%
2011
6.39%
2010
8.06%

Portfolio

Portfolio characteristics as of 04/30/2020

Number of holdings
866
Portfolio turnover (last fiscal year)
171%
Effective duration (weighted average) (view definition)
5.96 years
Effective maturity (weighted average) (view definition)
7.97 years
SEC 30-day yield with waiver (view definition)
2.67%
SEC 30-day yield without waiver (view definition)
2.63%
Annualized standard deviation, 3 years (view definition)
4.30

Portfolio composition as of 04/30/2020
Total may not equal 100% due to rounding.

High-grade securities
84.4%
High yield securities
8.4%
Emerging markets
7.2%

Top 10 fixed income holdings as of 04/30/2020

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

List excludes cash and cash equivalents.

Holding
% of portfolio
Holding
% of portfolio
Treasury Note 0.500 3/31/2025
5.58
Treasury (cpi) Note 0.125 1/15/2030
5.55
FN MA3686
1.33
FG G61809
1.23
Treasury Strip (prin) 0.000 5/15/2044
1.13
FN MA3835
0.90
FN BO5032
0.87
FN MA3638
0.87
FN 890877
0.80
FN FM1936
0.77

Total % Portfolio in Top 10 holdings - 19.03%

List of monthly holdingsList of quarterly holdings

Sector allocation as of 04/30/2020

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

Sector
% of portfolio
Sector
% of portfolio
Investment grade corporates
33.4%
MBS and CMOs
23.4%
U.S. Treasury securities
13.4%
Commercial mortgage-backed securities
9.2%
Emerging markets
7.2%
High yield corporates
5.0%
Asset-backed securities/CLO
4.1%
Bank loans
3.5%
U.S. Municipal bonds
0.1%
Government related
0.1%

Credit quality as of 04/30/2020

Rating
Series
Rating
Series
AAA
46.6%
AA
2.5%
A
15.6%
BBB
23.0%
BB
7.4%
B
3.6%
CCC
0.7%
D
0.1%
Not rated
0.5%

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.

Management

David Hillmeyer

David Hillmeyer, CFA

  • Senior Managing Director, Head of Global and Multi-Asset Credit
  • Start date on the Fund: February 2011
  • Years of industry experience: 27
  • Read bio
Daniela Mardarovici

Daniela Mardarovici, CFA

  • Managing Director, Co-Head of US Multisector/Core Plus Fixed Income
  • Start date on the Fund: March 2019
  • Years of industry experience: 19
  • Read bio
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
  • Read bio
Adam Brown

Adam H. Brown, CFA

  • Managing Director, Senior Portfolio Manager
  • Start date on the Fund: November 2015
  • Years of industry experience: 21
  • Read bio
John McCarthy

John P. McCarthy, CFA

  • Managing Director, Senior Portfolio Manager
  • Start date on the Fund: July 2016
  • Years of industry experience: 33
  • Read bio
Brian McDonnell

Brian C. McDonnell, CFA

  • Senior Managing Director, Head of US Core Fixed Income
  • Start date on the Fund: February 2015
  • Years of industry experience: 31
  • Read bio

Fees

Annual series operating expenses
Management fees0.58%
Distribution and service (12b-1) feesnone
Other expenses0.06%
Total annual Series operating expenses0.64%
Fee waivers and expense reimbursements1(0.04%)
Total annual series operating expenses after fee waivers and expense reimbursements0.60%

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 dividend and interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducing shareholder meetings, and liquidations) in order to prevent total annual series operating expenses from exceeding 0.60% of the Series' average daily net assets from April 29, 2020 through April 30, 2021. These waivers and reimbursements may only be terminated by agreement of the Manager and the Series.

Resources

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.

The Series' 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 Series 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 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 a fund 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.

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

The Series may experience portfolio turnover in excess of 100%, which could result in higher transaction costs and tax liability.

International investments entail risks 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.

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.

LIBOR risk is the risk that potential changes related to the use of the London Interbank Offered Rate (LIBOR) could have adverse impacts on financial instruments which reference LIBOR. The potential abandonment of LIBOR could affect the value and liquidity of instruments which reference LIBOR.

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 Series’ 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 Series from executing advantageous investment decisions in a timely manner and could negatively impact the Series’ ability to achieve its investment objective. Any such event(s) could have a significant adverse impact on the value and risk profile of the Series.

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 available only through the purchase of certain variable insurance products.

Nothing presented should be construed as a recommendation to purchase or sell any security or follow any investment technique or strategy.

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