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Delaware Limited-Term Government Fund
Supplement to the current prospectus
The following supplements the section of the prospectus entitled "The securities
we typically invest in":
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Securities | How we use them
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| Delaware Limited-Term Government Fund
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Interest rate swap agreements: In an interest rate | Interest rate swaps may be used to adjust the Fund's sensitivity
swap, a fund receives payments from another party | to interest rates by changing its duration. We may also use
based on a floating interest rate in return for | interest rate swaps to hedge against changes in interest rates.
making payments based on a fixed interest rate. An |
interest rate swap can also work in reverse, with a | Interest rate swaps will be considered illiquid securities.
fund receiving payments based on a fixed interest |
rate and making payments based on a floating interest |
rate. |
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The following supplements the section of the prospectus entitled "The risks of
investing in the Fund":
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Risks | How we strive to manage them
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| Delaware Limited-Term Government Fund
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Interest rate risk: Swaps may be particularly | The Fund will not invest in interest rate swaps with maturities
sensitive to interest rate changes. Depending on the | of more than two years. Each business day we will calculate the
actual movements of interest rates and how well the | amount the Fund must pay for any swaps it holds and will
portfolio manager anticipates them, a fund could | segregate enough cash or other liquid securities to cover that
experience a higher or lower return than | amount.
anticipated. For example, if a fund holds interest |
rate swaps and is required to make payments based on | When selecting dealers with whom we would make interest rate or
variable interest rates, it will have to make | index swap agreements, we focus on those with high quality
increased payments if interest rates rise, which will | ratings and do careful credit analysis before investing.
not necessarily be offset by the fixed-rate payments |
it is entitled to receive under the swap agreement. |
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Liquidity risk (see prospectus for discussion of this | Swap agreements will be treated as illiquid securities, but most
risk) | swap dealers will be willing to repurchase interest rate swaps.
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