N-CSR 1 vmf3475244-ncsr.htm CERTIFIED SHAREHOLDER REPORT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number:        811-07742
 
Exact name of registrant as specified in charter: Voyageur Mutual Funds
 
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
 
Name and address of agent for service: David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
 
Registrant’s telephone number, including area code:   (800) 523-1918
 
Date of fiscal year end: August 31
 
Date of reporting period: August 31, 2018

Item 1. Reports to Stockholders

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Fixed income mutual funds

Delaware Tax-Free Minnesota Fund

Delaware Tax-Free Minnesota Intermediate Fund

Delaware Minnesota High-Yield Municipal Bond Fund

August 31, 2018

Carefully consider the Funds’ investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds’ prospectus and their summary prospectuses, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

You can obtain shareholder reports and prospectuses online instead of in the mail.

Visit delawarefunds.com/edelivery.

 

LOGO

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Experience Delaware Funds® by Macquarie

Macquarie Investment Management (MIM) is a global asset manager with offices throughout the United States, Europe, Asia, and Australia. We are active managers who prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for our clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 75 years in existence.

If you are interested in learning more about creating an investment plan, contact your financial advisor.

You can learn more about Delaware Funds or obtain a prospectus for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund at delawarefunds.com/literature.

 

Manage your account online

 

•   Check your account balance and transactions

 

•   View statements and tax forms

 

•   Make purchases and redemptions

Visit delawarefunds.com/account-access.

Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following registered investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, and Macquarie Capital Investment Management LLC.

The Funds are distributed by Delaware Distributors, L.P.

(DDLP), an affiliate of MIMBT and Macquarie Group Limited.

Other than Macquarie Bank Limited (MBL), none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Funds are governed by US laws and regulations.

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Portfolio management review

      1  

Performance summaries

      6  

Disclosure of Fund expenses

      18  

Security type / sector / state / territory allocations

      21  

Schedules of investments

      24  

Statements of assets and liabilities

      57  

Statements of operations

      59  

Statements of changes in net assets

      60  

Financial highlights

      66  

Notes to financial statements

      84  

Report of independent registered public accounting firm

      100  

Other Fund information

      101  

Board of trustees / directors and officers addendum

      106  

About the organization

      112  

Unless otherwise noted, views expressed herein are current as of Aug. 31, 2018, and subject to change for events occurring after such date.

The Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.

Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.

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

© 2018 Macquarie Management Holdings, Inc.

 

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Portfolio management review       

Delaware Funds® by Macquarie Minnesota municipal bond funds

      September 11, 2018  

 

Performance preview (for the year ended August 31, 2018)      

 

Delaware Tax-Free Minnesota Fund (Institutional Class shares)    1-year return      +0.51%  

 

Delaware Tax-Free Minnesota Fund (Class A shares)    1-year return      +0.26%  

 

Bloomberg Barclays Municipal Bond Index (benchmark)    1-year return      +0.49%  

 

Lipper Minnesota Municipal Debt Funds Average    1-year return      +0.20%  

 

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free Minnesota Fund, please see the table on page 6. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Minnesota Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation in Minnesota (double tax-exempt) or a city in Minnesota (triple tax-exempt).

Please see page 9 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

 

Delaware Tax-Free Minnesota Intermediate Fund (Institutional Class shares)    1-year return      +0.23%  

 

Delaware Tax-Free Minnesota Intermediate Fund (Class A shares)    1-year return      -0.01%  

 

Bloomberg Barclays 3–15 Year Blend Municipal Bond Index (benchmark)    1-year return      +0.04%  

 

Lipper Other States Intermediate Municipal Debt Funds Average    1-year return      -0.60%  

 

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free Minnesota Intermediate Fund, please see the table on page 10. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Other States Intermediate Municipal Debt Funds Average compares funds that invest in municipal debt issues with dollar-weighted average maturities of 5 to 10 years and are exempt from taxation on a specified city or state basis.

Please see page 13 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

 

Delaware Minnesota High-Yield Municipal Bond Fund (Institutional Class shares)    1-year return      +1.30%  

 

Delaware Minnesota High-Yield Municipal Bond Fund (Class A shares)    1-year return      +0.95%  

 

Bloomberg Barclays Municipal Bond Index (benchmark)    1-year return      +0.49%  

 

Lipper Minnesota Municipal Debt Funds Average    1-year return      +0.20%  

 

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Minnesota High-Yield Municipal Bond Fund, please see the table on page 14. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Minnesota Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation in Minnesota (double tax-exempt) or a city in Minnesota (triple tax-exempt).

Please see page 17 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

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Portfolio management review

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

Economic backdrop

US economic data remained healthy throughout the Funds’ fiscal year ended Aug. 31, 2018, although concern about the longer-term impact of global trade conflict emerged toward period end.

US gross domestic product (GDP), a measure of the goods and services the nation produces, increased throughout the 12-month time frame. In the third quarter of 2017, for example, US GDP expanded by an annualized 2.8% rate, followed by a 2.3% increase in the final three months of 2017. US GDP grew by 2.2% in the first quarter of 2018 and an estimated 4.2% in the second quarter. That 4.2% annual pace was the largest quarterly gain in nearly four years. Employment trends also remained healthy, with the US jobless rate finishing August 2018 at 3.9%, down half a percentage point from a year earlier.

(Sources: US Bureau of Economic Analysis and US Bureau of Labor Statistics.)

Against this backdrop of steady economic expansion, job growth, and manageable inflation, the US Federal Reserve continued to gradually raise interest rates. The Fed increased its target short-term interest rate by 0.25 percentage points on three separate occasions during the Funds’ fiscal year – in December 2017 and in March and June 2018. On Aug. 31, 2018, the federal funds rate ranged from 1.75% to 2.00%, up from 1.00% to 1.25% a year earlier.

(Source: Bloomberg.)

Municipal bond market conditions

In this strong economic environment, the US municipal bond market, as measured by the Bloomberg Barclays Municipal Bond Index, returned +0.49% for the year ended Aug. 31, 2018. Longer-term municipal bonds outpaced their shorter-term counterparts as the yield curve flattened, meaning yields on short-term bonds rose more than those on long-term issues. Short-term yields rose in line with the Fed’s

interest rate increases, while fairly benign inflation kept a lid on long-term municipal yields.

To indicate the outperformance of longer-dated municipal debt relative to shorter-maturity municipal debt, the following table shows municipal bond returns by maturity for the 12 months ended Aug. 31, 2018:

 

Returns by maturity

       

5 years

      – 0.74%  

10 years

      – 0.10%  

22+ years

      1.28%  

Source: Bloomberg.

   

Much of the yield curve’s flattening took place in the fourth quarter of 2017, as investors sought to understand the potential market impact of federal tax reform legislation, which ultimately passed in late December. During this time, the supply of municipal bonds increased sharply, as issuers, anticipating unfavorable tax-policy changes, rushed debt to market. One of these expected changes – the ability to issue so-called private-activity bonds, a broad category that includes healthcare, private education, and toll road bonds, among others – didn’t make it into the final legislation.

However, another proposed change did come to pass: the elimination of advance refundings. Under the new legislation, issuers wishing to refinance bonds through the issuance of newer debt must do so within 90 days of the bonds’ call dates. Many issuers ultimately opted to bring their debt to market ahead of the law’s passage. This led to tighter bond supply in the second half of the Funds’ fiscal year, which, coupled with solid investor demand, provided a tailwind for the municipal bond market.

Continuing a trend in place for several years, bonds of lower-rated municipal issuers again outperformed bonds of higher-quality issuers – a situation known as credit spread narrowing. As investors anticipated that interest rates would continue to rise slowly, lower-rated, higher yielding

 

 

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municipal bonds remained attractive to investors in a continued low-rate environment. Bonds rated below investment grade (below BBB) performed especially well amid strong demand coupled with limited supply of the securities.

The following table, which provides municipal bond performance by credit quality rating for the Funds’ fiscal year, further highlights this trend:

 

Returns by credit rating

       

AAA

      – 0.23%  

AA

      0.22%  

A

      0.78%  

BBB

      2.76%  

BB and below

      6.21%  

Source: Bloomberg.

   

Focused on credit research

For the three Funds discussed in this report, we maintained a consistent management strategy, which we do regardless of market conditions. We have a bottom-up investment approach, meaning we evaluate individual securities one at a time. We rely on individual credit research to find securities that we believe provide a desirable risk-reward balance.

This approach often leads to substantial allocations within the Funds to bonds in the lower-investment-grade or below-investment-grade credit tiers, where we seek to add value for shareholders through higher yielding bonds that, in our view, display solid underlying credit.

As of the fiscal year end on Aug. 31, 2018, approximately 27% of the net assets of Delaware Tax-Free Minnesota Fund was invested in bonds with credit ratings of A and BBB, the two lowest credit tiers of the investment grade bond universe. Roughly 35% of the net assets of Delaware Tax-Free Minnesota Intermediate Fund was held in these credit tiers.

In addition, both Funds had allocations to high yield municipal bonds, securities with credit ratings below BBB. By prospectus, these Funds

have the latitude to invest a portion of the portfolio in these credit tiers. When investing in this segment of the market, we pay close attention to credit risk, focusing on securities that we believe offer sufficiently attractive income relative to the added risk.

Consistent with its mandate, Delaware Minnesota High-Yield Municipal Bond Fund had the largest exposure to below-investment-grade bonds of the three Funds. As of Aug. 31, 2018, 33% of the Fund’s net assets was invested in bonds rated below BBB, including nonrated bonds.

Portfolio positioning

We entered this fiscal year generally comfortable with the Funds’ positioning. As a result, we were highly selective about making new purchases, seeking securities that provided what we saw as a compelling risk-reward trade-off.

In all three Funds, and particularly in the longer-maturity Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, many of our holdings were originally purchased a decade or more ago when significantly higher yields were available. Thus, we have tended not to replace many existing positions with newer bonds, unless we believe they offer sufficient value to justify such an exchange. Once again, that remained our strategy over the past 12 months, and we expect to continue this approach as long as most of the Funds’ existing holdings remain more attractive to us than the new bonds available for purchase.

During the fiscal year, we periodically saw bonds exit the Funds’ portfolios, either via bond calls or advance refundings. Some of these departing bonds were of lower credit quality, and we sought to replace them with other lower-quality issues. However, because we remained highly selective in our purchases – we will not invest in higher yielding bonds that we do not find sufficiently creditworthy – we sometimes found this

 

 

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Portfolio management review

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

strategy difficult to execute in the relatively small Minnesota municipal market, which tends to have a limited supply of lower-rated bonds. In such an environment, our approach was to temporarily invest in higher-quality, liquid municipal bonds offering maturities comparable to the bonds exiting the portfolios. We expect that when suitable lower-rated bonds become available, these higher-rated issues will become attractive sales candidates to finance new purchases more suited to our long-term criteria.

Notable performance factors

As indicated earlier, bonds with longer maturities tended to outperform shorter-maturity bonds, while lower-rated issues generally performed better than bonds of higher credit quality. Accordingly, many of the Funds’ strongest- and weakest-performing securities during this fiscal year followed this trend.

The leading individual performer in both Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, for example, was a longer-dated, lower-quality corporate-backed bond issue for Gerdau Ameristeel in St. Paul, a steel manufacturer that demonstrated solid financial performance. Delaware Tax-Free Minnesota Fund further benefited from a position in continuing care retirement community (CCRC) bonds for Minnesota Senior Living, a nonrated issue with a very long maturity date in 2052. In Delaware Minnesota High-Yield Municipal Bond Fund, a nonrated CCRC position for the Oakgreen Commons project also performed well, reflecting its lower credit rating and longer-term maturity date.

In Delaware Tax-Free Minnesota Intermediate Fund, the biggest individual contribution came from a lower-rated, longer-dated position in bonds for the St. John’s Lutheran Community senior housing facility in Albert Lea, Minn. A position in student housing bonds for the Riverton

Community of the University of Minnesota also added value in this Fund.

The biggest individual detractor in Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund was a bond issue for Stride Academy Charter School in St. Cloud, Minn. Earlier management challenges caused the school’s certifying organization to put it on probation. Although the school’s management has demonstrated better results more recently, investors apparently were looking for a longer track record of improvement. These bonds, rated CCC-, declined more than 8%.

Both Delaware Tax-Free Minnesota Fund and Delaware Tax-Free Minnesota Intermediate Fund were also hurt by our investment in pre-refunded bonds for HealthEast Care System. These securities’ near-term maturity and high credit quality, due to their backing by escrowed US government bonds, resulted in a modestly negative return. What also detracted in Delaware Tax-Free Minnesota Intermediate Fund was Minnesota general obligation debt maturing in 2026, while Northern Municipal Power Agency bonds maturing that same year weighed on the performance of Delaware Minnesota High-Yield Municipal Bond Fund.

Minnesota economic backdrop

Minnesota has a fundamentally sound economy and is not dependent on any one sector. Employment is diverse, with a mix of manufacturing, services, and trade similar to the United States. Other relevant notes:

 

●   July 2018 nonfarm employment of 3.0 million grew 2.0% from a year earlier.

 

●   The state’s unemployment rate of 3.0% in July 2018 was well below the national average of 3.9%.

 

●  

Over the past five years, per capita personal income levels for the state have consistently

 

 

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been above the national average, ranging between 105% and 108%.

 

●   Minnesota operates on a biennial basis. Fiscal year 2018 General Fund revenues are estimated to total $22.03 billion, 1.6% above projections and 5.1% above the prior year.

 

●   Strong income tax receipts surpassed the budget by 2.9% and more than offset weak sales taxes, which were 1% below estimates.

The state approved a biennial budget for fiscal 2018 and 2019 of $45.56 billion, an 8.9% increase over the prior biennial budget.

 

●   The state now projects a $329 million surplus for the current budget, with revenues projected to grow 3.7% for the 2020-2021 biennium, leading to a modest $313 million projected structural balance.
 

 

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Performance summaries   
Delaware Tax-Free Minnesota Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1, 2

      Average annual total returns through August 31, 2018  
     

 

1 year

 

    

5 years

 

    

10 years

 

    

Lifetime

 

  

Class A (Est. Feb. 27, 1984)

         

Excluding sales charge

      +0.26 %      +3.80 %      +3.98 %      +6.15 % 

Including sales charge

      -4.25 %      +2.86 %      +3.50 %      +6.01 % 

Class C (Est. May 4, 1994)

         

Excluding sales charge

      -0.49 %      +3.03 %      +3.20 %      +3.96 % 

Including sales charge

      -1.45 %      +3.03 %      +3.20 %      +3.96 % 

Institutional Class (Est. Dec. 31, 2013)

         

Excluding sales charge

      +0.51 %      n/a       n/a       +3.85 % 

Including sales charge

      +0.51 %      n/a       n/a       +3.85 % 

Bloomberg Barclays Municipal Bond Index

      +0.49 %      +4.12 %      +4.32 %      +3.87 %* 

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

 

1 Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 7. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. Performance for Class A shares,

excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

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Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s,

Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

2 The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.60% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.** Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

Fund expense ratios     

Class A

 

   

Class C

 

   

Institutional Class

 

Total annual operating expenses

      0.95%    1.70%    0.70%

(without fee waivers)

           

Net expenses

      0.85%    1.60%    0.60%

(including fee waivers, if any)

           

Type of waiver

 

      Contractual

 

    Contractual

 

    Contractual

 

**The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

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Performance summaries

Delaware Tax-Free Minnesota Fund

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

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1 The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

 

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 7. Please note additional details on pages 6 through 9.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 
      Nasdaq symbols    CUSIPs                  

Class A

    DEFFX       928918101        

Class C

    DMOCX      928918408        

Institutional Class

    DMNIX       928918705                    

 

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Performance summaries   
Delaware Tax-Free Minnesota Intermediate Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1, 2     

 

 Average annual total returns through August 31, 2018

 

  

 

     

1 year

 

    

5 years

 

    

10 years

 

    

Lifetime

 

  

Class A (Est. Oct. 27, 1985)

         

Excluding sales charge

      -0.01 %      +3.04 %      +3.32 %      +4.66 % 

Including sales charge

      -2.80 %      +2.46 %      +3.04 %      +4.57 % 

Class C (Est. May 4, 1994)

         

Excluding sales charge

      -0.86 %      +2.17 %      +2.45 %      +3.19 % 

Including sales charge

      -1.82 %      +2.17 %      +2.45 %      +3.19 % 

Institutional Class (Est. Dec. 31, 2013)

         

Excluding sales charge

      +0.23 %      n/a       n/a       +3.00 % 

Including sales charge

      +0.23 %      n/a       n/a       +3.00 % 
Bloomberg Barclays 3–15 Year Blend Municipal Bond Index      +0.04 %      +3.43 %      +4.00 %      +3.20 %* 

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

 

1 Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 11. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 2.75%, and have an annual distribution and service fee of 0.25% of average daily net assets. This fee was contractually limited

to 0.15% of average daily net assets from Sept. 1, 2017 through Aug. 31, 2018.** Performance for Class A shares, excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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

 

 

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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.

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical

rating organizations (NRSROs) Standard & Poor’s, Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

 

2 The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.56% of the Fund’s average daily net assets during the period from April 1, 2018 to Aug. 31, 2018.*** Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios

 

   

Class A

 

  

Class C

 

  

Institutional Class

 

     

Total annual operating expenses

    0.99%   1.74%   0.74%  

(without fee waivers)

         

Net expenses

    0.71%   1.56%   0.56%  

(including fee waivers, if any)

         

Type of waiver

    Contractual   Contractual   Contractual    

**The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

***For the period Sept. 1, 2017 to March 31, 2018, the waiver was set at 0.69% of the Fund’s average daily net assets. The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through April 1, 2019.

 

11

Table of Contents
Performance summaries   
Delaware Tax-Free Minnesota Intermediate Fund   

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

12

Table of Contents
  

 

 

1 The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 2.75% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays 3–15 Year Blend Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays 3–15 Year Blend Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

 

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 11. Please note additional details on pages 10 through 13.

The Bloomberg Barclays 3–15 Year Blend Municipal Bond Index measures the total return performance of investment grade, US tax-exempt bonds with maturities from 2 to 17 years.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 
      Nasdaq symbols    CUSIPs                  

    Class A

    DXCCX      928930106        

    Class C

    DVSCX      928930205        

    Institutional Class

    DMIIX         92910U109                    

 

13

Table of Contents
Performance summaries   
Delaware Minnesota High-Yield Municipal Bond Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1, 2

     

 

 Average annual total returns through August 31, 2018

 

  

 

     

1 year

 

    

5 years

 

    

10 years

 

    

Lifetime

 

  

Class A (Est. June 4, 1996)

         

Excluding sales charge

      +0.95 %      +4.21 %      +4.42 %      +4.95 % 

Including sales charge

      -3.57 %      +3.26 %      +3.94 %      +4.74 % 

Class C (Est. June 7, 1996)

         

Excluding sales charge

      +0.19 %      +3.43 %      +3.64 %      +4.18 % 

Including sales charge

      -0.79 %      +3.43 %      +3.64 %      +4.18 % 

Institutional Class (Est. Dec. 31, 2013)

         

Excluding sales charge

      +1.30 %      n/a       n/a       +4.32 % 

Including sales charge

      +1.30 %      n/a       n/a       +4.32 % 

Bloomberg Barclays Municipal Bond Index

      +0.49 %      +4.12 %      +4.32 %      +3.87 %* 

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

 

1 Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 15. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. Performance for Class A shares,

excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

14

Table of Contents
  

 

 

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s,

Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

 

2 The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.64% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.** Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios    Class A   Class C   Institutional Class     

Total annual operating expenses

    0.99%   1.74%   0.74%  

(without fee waivers)

         

Net expenses

    0.89%   1.64%   0.64%  

(including fee waivers, if any)

         

Type of waiver

    Contractual   Contractual   Contractual    

**The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

15

Table of Contents

Performance summaries

Delaware Minnesota High-Yield Municipal Bond Fund

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

16

Table of Contents
  

 

 

1 The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

 

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 15. Please note additional details on pages 14 through 17.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 
      Nasdaq symbols    CUSIPs                  

Class A

    DVMHX      928928316        

Class C

    DVMMX      928928282        

Institutional Class

    DMHIX        928928175                    

 

17

Table of Contents

Disclosure of Fund expenses

For the six-month period from March 1, 2018 to August 31, 2018 (Unaudited)

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. These following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from March 1, 2018 to Aug. 31, 2018.

Actual expenses

The first section of the tables shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The second section of the tables shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Funds’ expenses shown in the tables reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions.

 

18

Table of Contents

 

 

Delaware Tax-Free Minnesota Fund

Expense analysis of an investment of $1,000

 

     

Beginning
Account Value
3/1/18

 

     

Ending
Account Value

 

8/31/18

     

Annualized

Expense Ratio

 

    

Expenses

Paid During Period

3/1/18 to 8/31/18*

 

  

Actual Fund return†

           

Class A

      $1,000.00          $1,012.70          0.85%         $4.31    

Class C

      1,000.00        1,008.90        1.60%         8.10  

Institutional Class

      1,000.00        1,014.00        0.60%         3.05  

Hypothetical 5% return (5% return before expenses)

           

Class A

      $1,000.00          $1,020.92          0.85%         $4.33    

Class C

      1,000.00        1,017.14        1.60%         8.13  

Institutional Class

      1,000.00        1,022.18        0.60%         3.06  

Delaware Tax-Free Minnesota Intermediate Fund

Expense analysis of an investment of $1,000

 

     

Beginning
Account Value

3/1/18

 

   

Ending
Account Value

8/31/18

 

   

Annualized

Expense Ratio

 

  

Expenses
Paid During Period

3/1/18 to 8/31/18*

 

Actual Fund return†

           

Class A

    $1,000.00      $1,012.90      0.74%   $3.75

Class C

    1,000.00    1,008.60    1.59%   8.05

Institutional Class

    1,000.00    1,013.60    0.59%   2.99

Hypothetical 5% return (5% return before expenses)

           

Class A

    $1,000.00      $1,021.48      0.74%   $3.77  

Class C

    1,000.00    1,017.19    1.59%   8.08

Institutional Class

    1,000.00    1,022.23    0.59%   3.01

 

19

Table of Contents

Disclosure of Fund expenses

For the six-month period from March 1, 2018 to August 31, 2018 (Unaudited)

Delaware Minnesota High-Yield Municipal Bond Fund

Expense analysis of an investment of $1,000

 

     

Beginning
Account Value

3/1/18

 

     

Ending
Account Value

8/31/18

 

     

Annualized

Expense Ratio

 

    

Expenses
Paid During Period

3/1/18 to 8/31/18*

 

  

Actual Fund return†

           

Class A

      $1,000.00        $1,017.10        0.89%       $4.52  

Class C

        1,000.00          1,013.20        1.64%         8.32  

Institutional Class

        1,000.00          1,018.30        0.64%         3.26  

Hypothetical 5% return (5% return before expenses)

           

Class A

      $1,000.00        $1,020.72        0.89%       $4.53  

Class C

        1,000.00          1,016.94        1.64%         8.34  

Institutional Class

        1,000.00          1,021.98        0.64%         3.26  

 

*

“Expenses Paid During Period” are equal to the relevant Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

 

† 

Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns.

 

20

Table of Contents

Security type / sector / state / territory allocations

Delaware Tax-Free Minnesota Fund    As of August 31, 2018 (Unaudited)

Sector designations may be different than the sector designations presented in other fund materials.

 

Security type / sector

 

   

Percentage of net assets

 

          

Municipal Bonds*

      98.97%                 

Corporate Revenue Bond

      0.62%                 

Education Revenue Bonds

      16.11%                 

Electric Revenue Bonds

      10.12%                 

Healthcare Revenue Bonds.

      24.77%                 

Housing Revenue Bonds

      0.47%                 

Lease Revenue Bonds

      2.96%                 

Local General Obligation Bonds.

      9.69%                 

Pre-Refunded/Escrowed to Maturity Bonds

      14.33%                 

Special Tax Revenue Bonds

      1.47%                 

State General Obligation Bonds

      10.95%                 

Transportation Revenue Bonds

      3.51%                 

Water & Sewer Revenue Bonds

      3.97%                       

Short-Term Investments

      1.25%                       

Total Value of Securities

      100.22%                       

Liabilities Net of Receivables and Other Assets

      (0.22%)                       

Total Net Assets

      100.00%                       

* As of the date of this report, Delaware Tax-Free Minnesota Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets          

Guam

      0.72%                 

Minnesota

      99.11%                 

US Virgin Islands

      0.39%                       

Total Value of Securities

      100.22%                       

 

21

Table of Contents

Security type / sector / state / territory allocations

Delaware Tax-Free Minnesota Intermediate Fund    As of August 31, 2018 (Unaudited)

Sector designations may be different than the sector designations presented in other fund materials.

 

Security type / sector

 

   

Percentage of net assets

 

          

Municipal Bonds*

      99.57%                 

Corporate Revenue Bond

      0.30%                 

Education Revenue Bonds

      13.81%                 

Electric Revenue Bonds

      12.15%                 

Healthcare Revenue Bonds

      29.73%                 

Housing Revenue Bond

      0.37%                 

Lease Revenue Bonds

      5.25%                 

Local General Obligation Bonds.

      6.41%                 

Pre-Refunded/Escrowed to Maturity Bonds

      13.29%                 

Special Tax Revenue Bonds

      0.71%                 

State General Obligation Bonds

      8.70%                 

Transportation Revenue Bonds

      6.41%                 

Water & Sewer Revenue Bonds

      2.44%                       

Short-Term Investments

      1.45%                       

Total Value of Securities

      101.02%                       

Liabilities Net of Receivables and Other Assets

      (1.02%)                      

Total Net Assets

      100.00%                       

* As of the date of this report, Delaware Tax-Free Minnesota Intermediate Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory

 

   

Percentage of net assets

 

          

Guam

      0.88%                 

Minnesota

      100.14%                       

Total Value of Securities

      101.02%                       

 

22

Table of Contents

Security type / sector / state / territory allocations

Delaware Minnesota High-Yield Municipal Bond Fund

    As of August 31, 2018 (Unaudited)

Sector designations may be different than the sector designations presented in other fund materials.

 

Security type / sector

 

   

Percentage of net assets

 

          

Municipal Bonds*

      99.66%                  

Corporate Revenue Bond

      1.04%                  

Education Revenue Bonds

      20.82%                  

Electric Revenue Bonds

      9.54 %                  

Healthcare Revenue Bonds.

      30.55%                  

Housing Revenue Bonds

      1.50%                  

Lease Revenue Bonds

      2.67%                  

Local General Obligation Bonds.

      10.26%                  

Pre-Refunded/Escrowed to Maturity Bonds

      9.25%                  

Special Tax Revenue Bonds

      1.59%                  

State General Obligation Bonds

      7.00%                  

Transportation Revenue Bonds

      3.22%                  

Water & Sewer Revenue Bonds

      2.22%                        

Short-Term Investment

      1.48%                        

Total Value of Securities

      101.14%                        

Liabilities Net of Receivables and Other Assets

      (1.14%)                       

Total Net Assets

      100.00%                        

* As of the date of this report, Delaware Minnesota High-Yield Municipal Bond Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory

 

   

Percentage of net assets

 

          

Guam

      0.69%                 

Minnesota

      100.45%                       

Total Value of Securities

      101.14%                       

 

23

Table of Contents

Schedules of Investments

Delaware Tax-Free Minnesota Fund    August 31, 2018

 

     Principal amount°      Value (US $)  

Municipal Bonds – 98.97%

                  

Corporate Revenue Bond – 0.62%

      

St. Paul Port Authority Solid Waste Disposal Revenue

      

(Gerdau St. Paul Steel Mill Project)

      

Series 7 144A 4.50% 10/1/37 (AMT)#

      3,565,000      $         3,372,526  
     

 

 

  
        3,372,526  
     

 

 

  

Education Revenue Bonds – 16.11%

      

Bethel Charter School Lease Revenue

      

(Spectrum High School Project)

      

Series A 4.00% 7/1/32

      840,000        844,309  

Series A 4.25% 7/1/47

      1,250,000        1,247,525  

Series A 4.375% 7/1/52

      400,000        400,412  

Brooklyn Park Charter School Lease Revenue

      

(Prairie Seeds Academy Project)

      

Series A 5.00% 3/1/34

      2,260,000        2,320,410  

Series A 5.00% 3/1/39

      385,000        390,324  

Cologne Charter School Lease Revenue

      

(Cologne Academy Project)

      

Series A 5.00% 7/1/34

      250,000        258,155  

Series A 5.00% 7/1/45

      1,390,000        1,396,867  

Deephaven Charter School Lease Revenue

      

(Eagle Ridge Academy Project) Series A 5.50% 7/1/50

      2,000,000        2,119,840  

Duluth Housing & Redevelopment Authority Revenue

      

(Public Schools Academy) Series A 5.875% 11/1/40

      3,500,000        3,576,335  

Forest Lake Charter School Lease Revenue Fund

      

(Lakes International Language Academy Project)

      

Series A 5.50% 8/1/36

      580,000        614,783  

Series A 5.75% 8/1/44

      1,190,000        1,264,887  

Ham Lake Charter School Lease Revenue

      

(Davinci Academy Project)

      

Series A 5.00% 7/1/36

      765,000        779,826  

Series A 5.00% 7/1/47

      2,290,000        2,309,007  

Hugo Charter School Lease Revenue

      

(Noble Academy Project)

      

Series A 5.00% 7/1/34

      580,000        604,627  

Series A 5.00% 7/1/44

      1,770,000        1,820,250  

Minneapolis Charter School Lease Revenue

      

(Hiawatha Academies Project)

      

Series A 5.00% 7/1/31

      885,000        907,391  

Series A 5.00% 7/1/47

      2,300,000        2,289,397  

Minneapolis Student Housing Revenue

      

(Riverton Community Housing Project)

      

5.25% 8/1/39

      470,000        494,553  

5.50% 8/1/49

      2,260,000        2,395,193  

 

24

Table of Contents
  

 

 

     Principal amount°      Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Education Revenue Bonds (continued)

   

Minnesota Colleges & Universities Revenue Fund

   

Series A 5.00% 10/1/26

      4,990,000      $       5,868,789  

Minnesota Higher Education Facilities Authority Revenue

   

(Bethel University)

   

5.00% 5/1/32

      1,375,000        1,527,804  

5.00% 5/1/37

      1,250,000        1,371,300  

5.00% 5/1/47

      250,000        271,555  

(Carleton College)

   

4.00% 3/1/35

      1,000,000        1,050,700  

4.00% 3/1/36

      415,000        434,787  

5.00% 3/1/34

      225,000        260,512  

5.00% 3/1/44

      2,085,000        2,378,693  

(College of St. Benedict) Series 8-K 4.00% 3/1/43

      1,000,000        1,010,970  

(Gustavus Adolphus College) 5.00% 10/1/47

      4,850,000        5,411,193  

(St. Catherine University)

   

Series 7-Q 5.00% 10/1/23

      350,000        388,689  

Series 7-Q 5.00% 10/1/24

      475,000        527,507  

Series 7-Q 5.00% 10/1/27

      200,000        222,108  

Series A 4.00% 10/1/36

      925,000        947,320  

Series A 5.00% 10/1/35

      875,000        994,123  

Series A 5.00% 10/1/45

      2,120,000        2,379,806  

(St. John’s University)

   

Series 8-I 5.00% 10/1/32

      500,000        563,625  

Series 8-I 5.00% 10/1/33

      250,000        280,965  

(St. Olaf College)

   

Series 8-G 5.00% 12/1/31

      670,000        768,785  

Series 8-G 5.00% 12/1/32

      670,000        767,364  

Series 8-N 4.00% 10/1/35

      500,000        527,520  

(St. Scholastica College) Series 7-J 6.30% 12/1/40

      1,800,000        1,872,270  

(Trustees of The Hamline University)

   

Series B 5.00% 10/1/37

      955,000        1,040,234  

Series B 5.00% 10/1/38

      580,000        630,501  

Series B 5.00% 10/1/39

      170,000        184,678  

Series B 5.00% 10/1/40

      625,000        678,056  

Series B 5.00% 10/1/47

      1,060,000        1,143,857  

(University of St. Thomas)

   

Series 8-L 5.00% 4/1/35

      1,250,000        1,409,175  

Series A 4.00% 10/1/34

      400,000        419,228  

Series A 4.00% 10/1/36

      500,000        520,860  

 

25

Table of Contents
Schedules of investments   

Delaware Tax-Free Minnesota Fund

 

 

     Principal amount°      Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Education Revenue Bonds (continued)

   

Otsego Charter School Lease Revenue

   

(Kaleidoscope Charter School)

   

Series A 5.00% 9/1/34

      520,000      $ 526,973  

Series A 5.00% 9/1/44

      1,165,000              1,167,982  

Rice County Educational Facilities Revenue

   

(Shattuck-St. Mary’s School) Series A 144A 5.00% 8/1/22 #

      2,855,000        3,011,739  

St. Cloud Charter School Lease Revenue

   

(Stride Academy Project) Series A 5.00% 4/1/46

      875,000        525,831  

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

   

(Academia Cesar Chavez School Project) Series A 5.25% 7/1/50

      1,945,000        1,847,011  

(Great River School Project)

   

Series A 144A 4.75% 7/1/29 #

      150,000        152,261  

Series A 144A 5.50% 7/1/52 #

      735,000        755,624  

(Nova Classical Academy Project) Series A 4.125% 9/1/47

      1,750,000        1,716,593  

(Twin Cities Academy Project) Series A 5.30% 7/1/45

      1,440,000        1,480,522  

University of Minnesota

   

Series A 5.00% 4/1/34

      925,000        1,062,973  

Series A 5.00% 9/1/34

      2,500,000        2,932,225  

Series A 5.00% 4/1/35

      3,175,000        3,636,931  

Series A 5.00% 4/1/36

      2,650,000        3,027,784  

Series A 5.00% 4/1/37

      1,125,000        1,282,916  

Series A 5.00% 9/1/40

      1,560,000        1,801,566  

Series A 5.00% 9/1/41

      1,000,000        1,153,150  
     

 

 

  
     87,969,146  
     

 

 

  

Electric Revenue Bonds – 10.12%

   

Chaska Electric Revenue

   

(Generating Facilities) Series A 5.00% 10/1/30

      1,150,000        1,297,119  

Minnesota Municipal Power Agency Electric Revenue

   

4.00% 10/1/41

      1,000,000        1,037,730  

5.00% 10/1/29

      395,000        449,830  

5.00% 10/1/30

      500,000        568,200  

5.00% 10/1/33

      1,205,000        1,363,566  

5.00% 10/1/47

      2,000,000        2,246,700  

Series A 5.00% 10/1/30

      1,060,000        1,204,584  

Series A 5.00% 10/1/34

      750,000        846,893  

Series A 5.00% 10/1/35

      1,525,000        1,719,285  

 

26

Table of Contents
  

 

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Electric Revenue Bonds (continued)

      

Northern Municipal Power Agency Electric System Revenue

      

5.00% 1/1/27

      540,000      $ 620,060  

5.00% 1/1/28

      560,000        643,884  

5.00% 1/1/29

      220,000        253,935  

5.00% 1/1/30

      520,000        588,988  

5.00% 1/1/31

      200,000        228,624  

5.00% 1/1/32

      210,000        238,896  

5.00% 1/1/35

      160,000        180,765  

5.00% 1/1/36

      180,000        202,939  

5.00% 1/1/41

      400,000        448,188  

Series A 5.00% 1/1/25

      125,000        137,831  

Series A 5.00% 1/1/26

      425,000        467,891  

Series A 5.00% 1/1/31

      520,000        565,141  

Rochester Electric Utility Revenue

   

Series A 5.00% 12/1/42

      1,395,000        1,586,352  

Series A 5.00% 12/1/47

      2,265,000        2,566,879  

Series B 5.00% 12/1/27

      295,000        333,934  

Series B 5.00% 12/1/28

      275,000        310,137  

Series B 5.00% 12/1/31

      1,365,000        1,534,397  

Series B 5.00% 12/1/33

      300,000        335,196  

Southern Minnesota Municipal Power Agency Revenue Capital Appreciation Series A

      

6.70% 1/1/25 (NATL)^

      5,000,000        4,217,550  

Series A 5.00% 1/1/41

      1,310,000        1,465,497  

Series A 5.00% 1/1/42

      1,500,000        1,712,190  

Series A 5.00% 1/1/46

      2,000,000        2,230,480  

Series A 5.00% 1/1/47

      3,130,000        3,559,248  

St. Paul Housing & Redevelopment Energy Revenue

      

Series A 4.00% 10/1/30

      1,235,000        1,294,366  

Series A 4.00% 10/1/31

      885,000        922,621  

Series A 4.00% 10/1/33

      365,000        378,209  

Western Minnesota Municipal Power Agency Revenue

      

Series A 5.00% 1/1/33

      1,000,000        1,120,650  

Series A 5.00% 1/1/34

      4,000,000        4,480,480  

Series A 5.00% 1/1/40

      3,935,000        4,366,315  

Series A 5.00% 1/1/46

      3,000,000        3,325,680  

Series A 5.00% 1/1/49

      3,675,000        4,218,606  
     

 

 

  
            55,269,836  
     

 

 

  

 

27

Table of Contents

Schedules of investments

Delaware Tax-Free Minnesota Fund

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds – 24.77%

      

Anoka Healthcare & Housing Facilities Revenue

      

(The Homestead at Anoka Project)

      

5.125% 11/1/49

      1,100,000      $ 1,132,967  

5.375% 11/1/34

      320,000        339,834  

Apple Valley Senior Housing Revenue

      

(PHS Apple Valley Senior Housing, Inc. - Orchard Path Project)

      

5.00% 9/1/43

      465,000        490,449  

5.00% 9/1/58

      3,220,000        3,327,097  

Apple Valley Senior Living Revenue

      

(Senior Living LLC Project)

      

2nd Tier Series B 5.00% 1/1/47

      1,725,000        1,771,040  

4th Tier Series D 7.00% 1/1/37

      1,665,000        1,667,880  

4th Tier Series D 7.25% 1/1/52

      2,500,000        2,529,150  

Bethel Senior Housing Revenue

      

(The Lodge at The Lakes at Stillwater Project)

      

5.00% 6/1/38

      450,000        464,148  

5.00% 6/1/48

      1,000,000        1,017,080  

5.00% 6/1/53

      600,000        606,798  

Breckenridge Catholic Health Initiatives

      

Series A 5.00% 5/1/30

      2,125,000        2,146,463  

Center City Health Care Facilities Revenue

      

(Hazelden Betty Ford Foundation Project)

      

5.00% 11/1/26

      500,000        567,530  

Dakota County Community Development Agency Senior Housing Revenue

      

(Walker Highview Hills Project)

      

Series A 144A 5.00% 8/1/36 #

      280,000        284,550  

Series A 144A 5.00% 8/1/46 #

      2,380,000        2,404,252  

Deephaven Housing & Healthcare Revenue

      

(St. Therese Senior Living Project)

      

Series A 5.00% 4/1/38

      730,000        735,606  

Series A 5.00% 4/1/40

      705,000        709,836  

Series A 5.00% 4/1/48

      315,000        316,263  

Duluth Economic Development Authority

      

(St. Luke’s Hospital of Duluth Obligated Group)

      

5.75% 6/15/32

      1,850,000        2,007,583  

6.00% 6/15/39

      3,570,000        3,917,504  

Fergus Falls HealthCare Facilities Revenue

      

(Lake Region Health Care)

      

5.15% 8/1/35

      1,250,000        1,250,913  

5.40% 8/1/40

      1,000,000        1,001,220  

 

28

Table of Contents
  

 

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Glencoe Health Care Facilities Revenue

      

(Glencoe Regional Health Services Project)

      

4.00% 4/1/24

      500,000      $ 517,840  

4.00% 4/1/25

      660,000        681,285  

4.00% 4/1/31

      60,000        61,079  

Hayward Health Care Facilities Revenue

      

(American Baptist Homes Midwest Obligated Group)

      

5.375% 8/1/34

      660,000        669,794  

5.75% 2/1/44

      500,000        512,780  

(St. John’s Lutheran Home of Albert Lea Project)

      

5.375% 10/1/44

      900,000        940,914  

Maple Grove Health Care Facilities Revenue

      

(Maple Grove Hospital Corporation)

      

4.00% 5/1/37

      2,000,000        2,021,820  

5.00% 5/1/27

      1,400,000        1,627,066  

5.00% 5/1/29

      1,000,000        1,144,870  

5.00% 5/1/30

      850,000        966,909  

5.00% 5/1/31

      500,000        565,130  

5.00% 5/1/32

      500,000        562,720  

(North Memorial Health Care)

   

5.00% 9/1/31

      1,000,000        1,104,670  

5.00% 9/1/32

      1,000,000        1,101,400  

Minneapolis Health Care System Revenue

      

(Fairview Health Services)

      

Series A 5.00% 11/15/33

      500,000        564,950  

Series A 5.00% 11/15/34

      500,000        563,570  

Series A 5.00% 11/15/44

      1,000,000        1,108,710  

Series B Unrefunded Balance 6.50% 11/15/38 (AGC)

      1,730,000        1,746,677  

Minneapolis Senior Housing & Healthcare Revenue

      

(Ecumen-Abiitan Mill City Project)

      

5.00% 11/1/35

      500,000        514,385  

5.25% 11/1/45

      1,950,000        2,018,153  

5.375% 11/1/50

      455,000        472,299  

Minneapolis – St. Paul Housing & Redevelopment Authority

      

Health Care Facilities Revenue

      

(Allina Health System) Series A 5.00% 11/15/28

      1,550,000        1,816,693  

(Children’s Health Care) Series A 5.25% 8/15/35

      2,085,000        2,211,518  

Minnesota Agricultural & Economic Development Board Revenue

      

(Essenthia Health Obligated Group)

      

Series C-1 5.00% 2/15/30 (AGC)

      5,725,000        5,978,274  

 

29

Table of Contents

Schedules of investments

Delaware Tax-Free Minnesota Fund

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Minnesota Agricultural & Economic Development Board Revenue

      

(Essenthia Health Obligated Group)

      

Series C-1 5.25% 2/15/23 (AGC)

      5,000,000      $ 5,258,050  

Series C-1 5.50% 2/15/25 (AGC)

      5,120,000        5,389,619  

Red Wing Senior Housing

      

(Deer Crest Project)

      

Series A 5.00% 11/1/27

      430,000        451,285  

Series A 5.00% 11/1/32

      330,000        344,150  

Series A 5.00% 11/1/42

      1,250,000        1,297,500  

Rochester Health Care & Housing Revenue

      

(The Homestead at Rochester Project) Series A

      

6.875% 12/1/48

      2,980,000        3,376,578  

Rochester Health Care Facilities Revenue

      

(Mayo Clinic)

      

4.00% 11/15/41

      4,515,000        4,627,062  

Series D Remarketing 5.00% 11/15/38

      6,405,000        6,722,304  

(Olmsted Medical Center Project)

   

5.00% 7/1/24

      295,000        330,721  

5.00% 7/1/33

      650,000        707,629  

5.875% 7/1/30

      1,850,000        1,971,749  

Sartell Health Care Facilities Revenue

      

(Country Manor Campus Project)

      

Series A 5.25% 9/1/27

      1,280,000        1,399,091  

Series A 5.30% 9/1/37

      1,200,000        1,306,680  

Sauk Rapids Health Care Housing Facilities Revenue

      

(Good Shepherd Lutheran Home) 5.125% 1/1/39

      1,350,000        1,377,931  

Shakopee Health Care Facilities Revenue

      

(St. Francis Regional Medical Center)

      

4.00% 9/1/31

      915,000        947,528  

5.00% 9/1/24

      575,000        647,680  

5.00% 9/1/25

      750,000        841,275  

5.00% 9/1/26

      575,000        640,613  

5.00% 9/1/27

      405,000        449,801  

5.00% 9/1/28

      425,000        470,539  

5.00% 9/1/29

      425,000        468,826  

5.00% 9/1/34

      730,000        794,452  

St. Cloud Health Care Revenue

      

(Centracare Health System Project)

      

Series A 4.00% 5/1/37

      965,000        1,003,706  

Series A 5.00% 5/1/46

      3,715,000        4,109,905  

Unrefunded Balance 5.125% 5/1/30

      740,000        778,695  

 

30

Table of Contents
  

 

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

      

(Allina Health System) Series A-1 Unrefunded Balance

      

5.25% 11/15/29

      2,825,000      $ 2,956,786  

(Fairview Health Services)

      

Series A 4.00% 11/15/43

      2,450,000        2,506,742  

Series A 5.00% 11/15/47

      1,560,000        1,752,972  

(HealthPartners Obligated Group Project)

   

Series A 5.00% 7/1/29

      2,200,000        2,507,384  

Series A 5.00% 7/1/32

      3,000,000        3,387,300  

Series A 5.00% 7/1/33

      1,260,000        1,418,508  

St. Paul Housing & Redevelopment Authority Housing & Health Care Facilities Revenue

      

(Episcopal Homes Project) 5.125% 5/1/48

      3,100,000        3,109,331  

St. Paul Housing & Redevelopment Authority Multifamily Housing Revenue

      

(Marian Center Project)

      

Series A 5.30% 11/1/30

      500,000        492,920  

Series A 5.375% 5/1/43

      500,000        479,860  

Wayzata Senior Housing Revenue

      

(Folkestone Senior Living Community)

      

Series A 5.50% 11/1/32

      1,050,000        1,085,081  

Series A 5.75% 11/1/39

      2,365,000        2,445,623  

Series A 6.00% 5/1/47

      3,685,000        3,814,307  

West St. Paul Housing and Health Care Facilities Revenue

      

(Walker Westwood Ridge Campus Project)

      

4.50% 11/1/40

      250,000        252,885  

4.75% 11/1/52

      750,000        766,845  

Winona Health Care Facilities Revenue

      

(Winona Health Obligation Group)

      

4.50% 7/1/25

      850,000        871,233  

4.65% 7/1/26

      540,000        554,040  

Woodbury Housing & Redevelopment Authority Revenue

      

(St. Therese of Woodbury)

      

5.00% 12/1/34

      500,000        521,165  

5.125% 12/1/44

      1,605,000        1,670,436  

5.25% 12/1/49

      750,000        783,570  
     

 

 

  
            135,252,026  
     

 

 

  

Housing Revenue Bonds – 0.47%

      

Minnesota Housing Finance Agency Homeownership

      

Finance (Mortgage-Backed Securities Program)

      

Series D 4.70% 1/1/31 (GNMA) (FNMA) (FHLMC)

      1,170,000        1,208,692  

 

31

Table of Contents

Schedules of investments

Delaware Tax-Free Minnesota Fund

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Housing Revenue Bonds (continued)

      

Northwest Multi-County Housing & Redevelopment Authority

      

(Pooled Housing Program) 5.50% 7/1/45

      1,330,000      $ 1,354,086  
     

 

 

  
            2,562,778  
     

 

 

  

Lease Revenue Bonds – 2.96%

      

Minnesota General Fund Revenue Appropriations

      

Series A 5.00% 6/1/38

      1,250,000        1,383,487  

Series A 5.00% 6/1/43

      3,835,000        4,233,725  

Series B 5.00% 3/1/28

      2,500,000        2,743,550  

Minnesota Housing Finance Agency

      

(State Appropriation – Housing Infrastructure)

      

Series C 5.00% 8/1/34

      1,565,000        1,768,450  

Series C 5.00% 8/1/35

      1,645,000        1,856,925  

University of Minnesota Special Purpose Revenue

      

(State Supported Biomed Science Research Facilities Funding Project)

      

Series A 5.00% 8/1/35

      3,960,000        4,180,968  
     

 

 

  
            16,167,105  
     

 

 

  

Local General Obligation Bonds – 9.69%

      

Anoka County Capital Improvement

      

Series A 5.00% 2/1/22

      500,000        506,630  

Brainerd Independent School District No. 181

      

(School Building)

      

Series A 4.00% 2/1/23

      5,990,000        6,044,629  

Series A 4.00% 2/1/38

      1,500,000        1,563,060  

Series A 4.00% 2/1/43

      3,500,000        3,608,360  

Burnsville-Eagan-Savage Independent School District No. 191

      

(Alternative Facilities)

   

Series A 4.00% 2/1/28

      920,000        991,585  

Series A 4.00% 2/1/29

      1,800,000        1,935,666  

Chaska Independent School District No. 112

      

(School Building) Series A 5.00% 2/1/27

      1,905,000        2,225,097  

Duluth

      

(DECC Improvement)

      

Series A 5.00% 2/1/32

      1,000,000        1,148,360  

Series A 5.00% 2/1/33

      3,585,000        4,103,965  

Duluth Independent School District No. 709

      

Series A 4.00% 2/1/27

      160,000        170,880  

Series A 4.00% 2/1/28

      1,250,000        1,327,300  

Edina Independent School District No. 273

      

Series A 5.00% 2/1/27

      1,500,000        1,739,910  

 

32

Table of Contents
  

 

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Local General Obligation Bonds (continued)

      

Hennepin County

      

Series A 5.00% 12/1/26

      1,885,000      $ 2,258,682  

Series A 5.00% 12/1/36

      940,000        1,091,180  

Series A 5.00% 12/1/37

      2,850,000        3,321,846  

Series A 5.00% 12/1/38

      3,310,000        3,846,385  

Series B 5.00% 12/1/30

      1,000,000        1,179,360  

Series C 5.00% 12/1/28

      1,500,000        1,838,370  

Series C 5.00% 12/1/30

      1,245,000        1,468,303  

Series C 5.00% 12/1/37

      3,000,000        3,475,290  

Mounds View Independent School District No. 621

      

(Minnesota School District Credit Enhancement Program)

Series A 4.00% 2/1/43

      3,000,000        3,110,550  

Mountain Iron-Buhl Independent School District No. 712

      

(School Building) Series A 4.00% 2/1/26

      1,315,000        1,450,379  

St. Michael-Albertville Independent School District No. 885

      

(School Building) Series A 5.00% 2/1/27

      1,865,000        2,186,638  

Wayzata Independent School District No. 284

      

Series A 5.00% 2/1/28

      1,950,000        2,317,477  
     

 

 

  
            52,909,902  
     

 

 

  

Pre-Refunded/Escrowed to Maturity Bonds – 14.33%

      

Anoka Health Care Facilities Revenue

      

(The Homestead at Anoka Project)

      

Series A 7.00% 11/1/40-19§

      1,000,000        1,067,890  

Series A 7.00% 11/1/46-19§

      1,220,000        1,302,826  

Anoka Housing Facilities Revenue

      

(Senior Homestead Anoka Project)

      

Series B 6.875% 11/1/34-19§

      2,015,000        2,152,544  

Dakota & Washington Counties Housing & Redevelopment Authority Single Family Residential Mortgage Revenue

      

(City of Anoka) 8.45% 9/1/19 (GNMA) (AMT)

      9,000,000        9,581,220  

(City of Bloomington)

   

Series B 8.375% 9/1/21 (GNMA) (AMT)

      14,115,000        16,506,646  

Minneapolis Health Care System Revenue

      

(Fairview Health Services)

      

Series A 6.625% 11/15/28-18§

      3,000,000        3,029,880  

Series B 6.50% 11/15/38-18 (AGC)§

      175,000        176,701  

Minnesota Higher Education Facilities Authority Revenue

      

(University of St. Thomas) Series 7-A 5.00% 10/1/39-19§

      2,000,000        2,069,160  

Rochester Healthcare & Housing Revenue

      

(Samaritan Bethany Project) Series A

      

7.375% 12/1/41-19§

      5,220,000        5,574,751  

 

33

Table of Contents

Schedules of investments

Delaware Tax-Free Minnesota Fund

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

St. Cloud Health Care Revenue

      

(Centracare Health System Project)

      

5.375% 5/1/31-19 (AGC)§

      1,000,000      $ 1,024,100  

5.50% 5/1/39-19 (AGC)§

      6,000,000        6,149,460  

St. Louis Park Health Care Facilities Revenue

      

(Park Nicollet Health Services) 5.75% 7/1/39-19§

      12,025,000        12,425,673  

St. Paul Housing & Redevelopment Authority Hospital Facility Revenue

      

(Healtheast Care System Project)

   

Series A 5.00% 11/15/29-25§

      910,000        1,067,421  

Series A 5.00% 11/15/30-25§

      670,000        785,903  

University of Minnesota

      

Series A 5.25% 12/1/29-20§

      1,850,000        1,991,932  

Series A 5.50% 7/1/21

      12,500,000        13,312,625  
     

 

 

  
            78,218,732  
     

 

 

  

Special Tax Revenue Bonds – 1.47%

      

Minneapolis Development Revenue

      

(Limited Tax Supported Common Bond Fund)

      

Series 2-A 6.00% 12/1/40

      3,000,000        3,259,290  

Minneapolis Revenue

      

(YMCA Greater Twin Cities Project) 4.00% 6/1/30

      250,000        262,903  

St. Paul Sales Tax Revenue

      

Series G 5.00% 11/1/30

      655,000        739,095  

Series G 5.00% 11/1/31

      1,500,000        1,689,870  

Virgin Islands Public Finance Authority

      

(Matching Fund Senior Lien) 5.00% 10/1/29 (AGM)

      2,000,000        2,096,600  
     

 

 

  
            8,047,758  
     

 

 

  

State General Obligation Bonds – 10.95%

      

Minnesota

      

5.00% 10/1/26

      3,395,000        4,044,701  

Series A 5.00% 8/1/27

      7,590,000        8,849,257  

Series A 5.00% 8/1/29

      2,500,000        2,899,250  

Series A 5.00% 10/1/33

      1,000,000        1,181,310  

Series A Unrefunded Balance 5.00% 10/1/24

      4,555,000        4,970,097  

Series A Unrefunded Balance 5.00% 10/1/27

      5,200,000        5,660,876  

Series D 5.00% 8/1/26

      6,000,000        7,131,360  

Series D 5.00% 8/1/27

      2,500,000        2,961,525  

(State Trunk Highway) Series B 5.00% 10/1/29

      5,000,000        5,436,950  

(Various Purposes)

      

Series A 5.00% 8/1/25

      5,545,000        6,383,737  

Series A 5.00% 8/1/30

      4,200,000        4,800,348  

Series A 5.00% 8/1/32

      3,875,000        4,419,709  

 

34

Table of Contents
  

 

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

State General Obligation Bonds (continued)

      

Minnesota

      

(Various Purposes)

      

Series A Unrefunded Balance 4.00% 8/1/27

      955,000      $ 1,017,132  
     

 

 

  
            59,756,252  
     

 

 

  

Transportation Revenue Bonds – 3.51%

      

Minneapolis – St. Paul Metropolitan Airports Commission

      

Revenue

      

Senior

   

Series A 5.00% 1/1/28

      1,250,000        1,301,000  

Series C 5.00% 1/1/29

      350,000        411,625  

Series C 5.00% 1/1/33

      850,000        983,153  

Series C 5.00% 1/1/36

      600,000        687,774  

Series C 5.00% 1/1/41

      600,000        682,560  

Series C 5.00% 1/1/46

      1,595,000        1,808,220  

Subordinate

   

Series A 5.00% 1/1/35

      1,000,000        1,106,480  

Series B 5.00% 1/1/26

      575,000        626,675  

Series B 5.00% 1/1/27

      1,160,000        1,263,472  

Series B 5.00% 1/1/28

      2,750,000        2,993,457  

Series B 5.00% 1/1/29

      120,000        130,543  

Series B 5.00% 1/1/30

      1,675,000        1,809,318  

Series B 5.00% 1/1/31

      1,750,000        1,888,583  

St. Paul Housing & Redevelopment Authority Revenue

      

(Parking Enterprise) Series A 3.125% 8/1/34

      130,000        124,397  

St. Paul Port Authority Revenue

      

(Amherst H. Wilder Foundation) Series 3 5.00% 12/1/36

      3,200,000        3,343,104  
     

 

 

  
        19,160,361  
     

 

 

  

Water & Sewer Revenue Bonds – 3.97%

      

Guam Government Waterworks Authority

      

5.00% 7/1/40

      1,930,000        2,131,048  

5.00% 1/1/46

      1,670,000        1,819,749  

Metropolitan Council General Obligation Wastewater

      

Revenue (Minneapolis-St. Paul Metropolitan Area)

      

Series B 4.00% 9/1/27

      2,400,000        2,547,120  

Series B 5.00% 9/1/25

      2,000,000        2,228,120  

Series C 4.00% 3/1/31

      3,120,000        3,371,722  

Series C 4.00% 3/1/32

      3,225,000        3,460,103  

Series E 5.00% 9/1/23

      2,000,000        2,233,000  

Minnesota Public Facilities Authority

      

Series B 4.00% 3/1/26

      3,500,000        3,902,080  
     

 

 

  
        21,692,942  
     

 

 

  

Total Municipal Bonds (cost $528,948,159)

         540,379,364  
     

 

 

  

 

35

Table of Contents

Schedules of investments

Delaware Tax-Free Minnesota Fund

 

     Principal amount°              Value (US $)  

 

  

Short-Term Investments – 1.25%

      

 

  

Variable Rate Demand Notes – 1.25%¤

      

Minneapolis – St. Paul Housing & Redevelopment Authority

      

Health Care Facilities Revenue

      

(Allina Health System)

      

Series B-1 1.46% 11/15/35

      

(LOC – JPMorgan Chase Bank N.A.)

      2,800,000      $ 2,800,000  

Series B-2 1.43% 11/15/35

      

(LOC – JPMorgan Chase Bank N.A.)

      850,000        850,000  

(Children’s Hospitals & Clinics)

      

Series A 1.53% 8/15/34 (AGM) (SPA – US Bank N.A.)

      1,090,000        1,090,000  

Series A 1.53% 8/15/37 (AGM) (SPA – US Bank N.A.)

      2,075,000        2,075,000  
     

 

 

  

Total Short-Term Investments (cost $6,815,000)

         6,815,000  
     

 

 

  

Total Value of Securities – 100.22%
(cost $535,763,159)

       $     547,194,364  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $9,980,952, which represents 1.83% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

^

Zero coupon security. The rate shown is the effective yield at the time of purchase.

 

36

Table of Contents

 

 

 

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

FHLMC – Federal Home Loan Mortgage Corporation collateral

FNMA – Federal National Mortgage Association collateral

GNMA – Government National Mortgage Association collateral

LOC – Letter of Credit

N.A. – National Association

NATL – Insured by National Public Finance Guarantee Corporation

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

37

Table of Contents
Schedules of investments   
Delaware Tax-Free Minnesota Intermediate Fund    August 31, 2018

 

     Principal amount°              Value (US $)  

Municipal Bonds – 99.57%

                  

Corporate Revenue Bond – 0.30%

      

St. Paul Port Authority Solid Waste Disposal Revenue

      

(Gerdau St. Paul Steel Mill Project) Series 7 144A

      

4.50% 10/1/37 (AMT)#

      255,000      $ 241,233  
     

 

 

  
            241,233  
     

 

 

  

Education Revenue Bonds – 13.81%

      

Bethel Charter School Lease Revenue

      

(Spectrum High School Project) Series A 4.00% 7/1/32

      425,000        427,180  

Brooklyn Park Charter School Lease Revenue

      

(Prairie Seeds Academy Project) Series A 5.00% 3/1/34

      485,000        497,964  

Cologne Charter School Lease Revenue

      

(Cologne Academy Project) Series A 5.00% 7/1/29

      305,000        322,507  

Forest Lake Charter School Lease Revenue Fund

      

(Lakes International Language Academy Project)

      

Series A 5.50% 8/1/36

      420,000        445,187  

Hugo Charter School Lease Revenue

      

(Noble Academy Project) Series A 5.00% 7/1/29

      530,000        560,077  

Minneapolis Charter School Lease Revenue

      

(Hiawatha Academies Project) Series A 5.00% 7/1/31

      500,000        512,650  

Minneapolis Student Housing Revenue

      

(Riverton Community Housing Project) 5.25% 8/1/39

      525,000        552,426  

Minnesota Higher Education Facilities Authority Revenue

      

(Bethel University) 5.00% 5/1/32

      525,000        583,343  

(Carleton College) 5.00% 3/1/34

      275,000        318,403  

(Gustavus Adolphus College)

      

5.00% 10/1/34

      435,000        497,327  

5.00% 10/1/35

      555,000        630,302  

(St. Catherine University)

      

Series 7-Q 5.00% 10/1/22

      425,000        471,980  

Series A 5.00% 10/1/35

      565,000        641,919  

(St. Johns University) Series 8-I 5.00% 10/1/31

      130,000        146,719  

(St. Olaf College)

      

Series 8-G 5.00% 12/1/31

      125,000        143,430  

Series 8-G 5.00% 12/1/32

      125,000        143,165  

(St. Scholastica College) Series H 5.125% 12/1/30

      1,000,000        1,033,280  

(Trustees of The Hamline University) Series B

      

5.00% 10/1/38

      420,000        456,569  

(University of St. Thomas) Series 7-U 4.00% 4/1/26

      1,400,000        1,488,928  

Rice County Educational Facilities Revenue

      

(Shattuck-St. Mary’s School) Series A 144A

      

5.00% 8/1/22 #

      325,000        342,843  

 

38

Table of Contents
  

 

 

     Principal amount°              Value (US $)  

Municipal Bonds (continued)

                  

Education Revenue Bonds (continued)

      

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

      

(Academia Cesar Chavez School Project) Series A 5.25% 7/1/50

      340,000      $ 322,871  

(Great River School Project) Series A 144A 5.25% 7/1/33 #

      140,000        144,682  

(Twin Cities Academy Project) Series A 5.30% 7/1/45

      260,000        267,316  
     

 

 

  
        10,951,068  
     

 

 

  

Electric Revenue Bonds – 12.15%

      

Central Minnesota Municipal Power Agency

      

(Brookings Twin Cities Transmission Project)

      

Series E 5.00% 1/1/21

      1,095,000        1,167,861  

Series E 5.00% 1/1/23

      1,000,000        1,087,860  

Chaska Electric Revenue

      

Series A 5.00% 10/1/28

      250,000        284,545  

Minnesota Municipal Power Agency Electric Revenue

      

Series A 5.00% 10/1/29

      500,000        569,405  

Series A 5.00% 10/1/30

      240,000        272,736  

Northern Municipal Power Agency Electric System Revenue

      

5.00% 1/1/29

      150,000        170,640  

5.00% 1/1/30

      235,000        269,937  

5.00% 1/1/31

      350,000        394,716  

Series A 5.00% 1/1/25

      200,000        220,530  

Rochester Electric Utility Revenue

      

Series A 5.00% 12/1/28

      300,000        350,652  

Series A 5.00% 12/1/29

      500,000        582,010  

Series A 5.00% 12/1/31

      575,000        665,183  

St. Paul Housing & Redevelopment Energy Revenue

      

Series A 4.00% 10/1/30

      425,000        445,430  

Western Minnesota Municipal Power Agency Revenue

      

Series A 5.00% 1/1/33

      2,250,000        2,521,463  

(Red Rock Hydroelectric Project) Series A 5.00% 1/1/49

      550,000        631,356  
     

 

 

  
        9,634,324  
     

 

 

  

Healthcare Revenue Bonds – 29.73%

      

Anoka Healthcare & Housing Facilities Revenue

      

(The Homestead at Anoka Project) 5.375% 11/1/34

      270,000        286,735  

Apple Valley Senior Housing Revenue

      

(PHS Senior Housing, Inc. – Orchard Path Project)

      

4.375% 9/1/48

      645,000        643,387  

5.00% 9/1/43

      535,000        564,281  

 

39

Table of Contents
Schedules of investments   
Delaware Tax-Free Minnesota Intermediate Fund   

 

     Principal amount°              Value (US $)  

Municipal Bonds (continued)

                  

Healthcare Revenue Bonds (continued)

      

Apple Valley Senior Living Revenue

      

(Senior Living LLC Project)

      

3rd Tier Series C 4.25% 1/1/27

      500,000      $ 499,975  

3rd Tier Series C 5.00% 1/1/32

      420,000        422,906  

Bethel Senior Housing Revenue

      

(The Lodge at the Lakes at Stillwater Project)

      

5.00% 6/1/38

      250,000        257,860  

Center City Health Care Facilities Revenue

      

(Hazelden Betty Ford Foundation Project)

      

5.00% 11/1/24

      600,000        690,984  

Dakota County Community Development Agency Senior Housing Revenue

      

(Walker Highview Hills Project) Series A 144A

      

5.00% 8/1/36 #

      480,000        487,800  

Duluth Economic Development Authority

      

(St. Luke’s Hospital of Duluth Obligated Group)

      

5.75% 6/15/32

      750,000        813,885  

Fergus Falls Health Care Facilities Revenue

      

(Lake Region Health Care) 4.75% 8/1/25

      500,000        500,810  

Glencoe Health Care Facilities Revenue

      

(Glencoe Regional Health Services Project)

      

4.00% 4/1/26

      270,000        277,322  

Hayward Health Care Facilities Revenue

      

(American Baptist Homes Midwest Obligated Group)

      

4.25% 8/1/24

      653,442        658,064  

(St. John’s Lutheran Home of Albert Lea Project)

      

5.375% 10/1/44

      185,000        193,410  

Maple Grove Health Care Facilities Revenue

      

(Maple Grove Hospital Corporation)

      

4.00% 5/1/37

      500,000        505,455  

5.00% 5/1/28

      1,000,000        1,150,610  

(North Memorial Health Care) 5.00% 9/1/31

      320,000        353,494  

Minneapolis Health Care System Revenue

      

(Fairview Health Services)

      

Series A 5.00% 11/15/33

      500,000        564,950  

Series A 5.00% 11/15/34

      500,000        563,570  

Series B Unrefunded Balance 6.50% 11/15/38 (AGC)

      700,000        706,748  

Minneapolis Senior Housing & Healthcare Revenue

      

(Ecumen-Abiitan Mill City Project) 5.00% 11/1/35

      530,000        545,248  

Minneapolis – St. Paul Housing & Redevelopment Authority

      

Health Care Facilities Revenue

      

(Allina Health System) Series A 5.00% 11/15/27

      1,205,000        1,418,454  

(Children’s Health Care) Series A 5.25% 8/15/25

      1,000,000        1,060,880  

 

40

Table of Contents
  

 

 

     Principal amount°              Value (US $)  

Municipal Bonds (continued)

                  

Healthcare Revenue Bonds (continued)

      

Minnesota Agricultural & Economic Development Board Revenue

      

(Essenthia Health Obligated Group) Series C-1

      

5.50% 2/15/25 (AGC)

      2,500,000      $ 2,631,650  

Rochester Health Care Facilities Revenue

      

(Mayo Clinic) Series C 4.50% 11/15/38 •

      925,000        993,811  

(Olmsted Medical Center Project) 5.125% 7/1/20

      430,000        448,954  

Sartell Health Care Facilities Revenue

      

(Country Manor Campus Project) Series A 5.00% 9/1/21

      1,050,000        1,138,715  

Sauk Rapids Health Care Housing Facilities Revenue

      

(Good Shepherd Lutheran Home) 5.125% 1/1/39

      575,000        586,897  

St. Cloud Health Care Revenue

      

(Centracare Health System Project) Unrefunded Balance

      

5.125% 5/1/30

      360,000        378,824  

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

      

(Allina Health System) Unrefunded Balance Series A-2

      

5.25% 11/15/28

      975,000        1,016,204  

(Fairview Health Services) Series A 5.00% 11/15/47

      275,000        309,018  

(HealthPartners Obligated Group Project)

      

5.00% 7/1/32

      1,000,000        1,129,100  

5.00% 7/1/33

      200,000        225,160  

St. Paul Housing & Redevelopment Authority Housing & Health Care Facilities Revenue

      

(Episcopal Homes Project) 5.00% 5/1/33

      500,000        507,430  

West St. Paul, Housing and Health Care Facilities Revenue

      

(Walker Westwood Ridge Campus Project)

      

5.00% 11/1/37

      500,000        523,530  

Woodbury Housing & Redevelopment Authority Revenue

      

(St. Therese of Woodbury) 5.00% 12/1/34

      500,000        521,165  
     

 

 

  
        23,577,286  
     

 

 

  

Housing Revenue Bond – 0.37%

      

Northwest Multi-County Housing & Redevelopment Authority

      

(Pooled Housing Program) 5.50% 7/1/45

      285,000        290,161  
     

 

 

  
        290,161  
     

 

 

  

Lease Revenue Bonds – 5.25%

      

Minnesota General Fund Revenue Appropriations

      

Series A 5.00% 6/1/38

      1,100,000        1,217,469  

Series A 5.00% 6/1/43

      715,000        789,339  

Series B 5.00% 3/1/27

      1,000,000        1,097,770  

 

41

Table of Contents

Schedules of investments

Delaware Tax-Free Minnesota Intermediate Fund

 

     Principal amount°              Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Lease Revenue Bonds (continued)

      

St. Paul Housing & Redevelopment Authority

      

(Minnesota Public Radio Project) 5.00% 12/1/25

      1,000,000      $ 1,061,260  
     

 

 

  
        4,165,838  
     

 

 

  

Local General Obligation Bonds – 6.41%

      

Duluth Independent School District No. 709

      

Series A 4.00% 2/1/28

      250,000        265,460  

Hennepin County

      

Series A 5.00% 12/1/36

      2,125,000        2,466,764  

Series C 5.00% 12/1/30

      1,500,000        1,769,040  

St. Michael-Albertville Independent School District No. 885

      

(School Building) Series A 5.00% 2/1/27

      500,000        586,230  
     

 

 

  
        5,087,494  
     

 

 

  

Pre-Refunded/Escrowed to Maturity Bonds – 13.29%

      

Anoka Housing Facilities Revenue

      

(Senior Homestead Anoka Project) Series B

      

6.875% 11/1/34-19§

      750,000        801,195  

Mankato Independent School District No. 77

      

(School Building) Series A 4.125% 2/1/22

      1,000,000        1,009,250  

Minneapolis Health Care System Revenue

      

(Fairview Health Services) Series A

      

6.625% 11/15/28-18§

      1,500,000        1,514,940  

Minnesota Higher Education Facilities Authority Revenue

      

(St. Johns University)

      

Series 6-U 4.40% 10/1/21-18§

      325,000        325,683  

Series 6-U 4.50% 10/1/23-18§

      265,000        265,575  

Rochester Healthcare & Housing Revenue

      

(Samaritan Bethany Project) Series A

      

6.875% 12/1/29-19§

      950,000        1,008,767  

St. Louis Park Health Care Facilities Revenue

      

(Park Nicollet Health Services) 5.50% 7/1/29-19§

      1,000,000        1,031,290  

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

      

(Allina Health System) Series A-2 5.25% 11/15/28-19§

      1,025,000        1,067,322  

(Gillette Children’s Specialty Project) 5.00% 2/1/27-19§

      1,000,000        1,013,590  

St. Paul Housing & Redevelopment Authority Hospital Revenue

      

(Healtheast Care System Project)

      

Series A 5.00% 11/15/29-25§

      165,000        193,543  

Series A 5.00% 11/15/30-25§

      120,000        140,759  

University of Minnesota

      

Series A 5.00% 12/1/23-20§

      1,000,000        1,071,250  

 

42

Table of Contents
  

 

 

     Principal amount°      Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

University of Minnesota

      

Series D 5.00% 12/1/26-21§

      1,000,000      $ 1,098,890  
     

 

 

  
              10,542,054  
     

 

 

  

Special Tax Revenue Bonds – 0.71%

      

Minneapolis Revenue

      

(YMCA Greater Twin Cities Project) 4.00% 6/1/27

      100,000        107,429  

St. Paul Sales Tax Revenue

      

Series G 5.00% 11/1/28

      400,000        454,268  
     

 

 

  
        561,697  
     

 

 

  

State General Obligation Bonds – 8.70%

      

Minnesota

      

5.00% 10/1/26

      500,000        595,685  

Series D 5.00% 8/1/26

      2,500,000        2,971,400  

Series D 5.00% 8/1/27

      1,500,000        1,776,915  

(State Trunk Highway) Series B 5.00% 10/1/22

      400,000        437,204  

(Various Purposes) Series F 5.00% 10/1/22

      1,000,000        1,117,580  
     

 

 

  
        6,898,784  
     

 

 

  

Transportation Revenue Bonds – 6.41%

      

Minneapolis – St. Paul Metropolitan Airports Commission

      

Revenue

      

Senior Series B 5.00% 1/1/22 (AMT)

      1,000,000        1,010,000  

Subordinate

      

Series B 5.00% 1/1/26

      710,000        773,808  

Series B 5.00% 1/1/31

      750,000        809,393  

Series D 5.00% 1/1/22 (AMT)

      1,000,000        1,039,730  

St. Paul Housing & Redevelopment Authority

      

(Parking Enterprise)

      

Series A 4.00% 8/1/26

      450,000        489,582  

Series A 4.00% 8/1/27

      545,000        588,638  

Series A 4.00% 8/1/28

      350,000        375,515  
     

 

 

  
        5,086,666  
     

 

 

  

Water & Sewer Revenue Bonds – 2.44%

      

Guam Government Waterworks Authority

      

5.00% 7/1/35

      330,000        367,013  

5.00% 1/1/46

      305,000        332,349  

Metropolitan Council General Obligation Wastewater

      

Revenue (Minneapolis – St. Paul Metropolitan Area)

      

Series C 4.00% 3/1/31

      565,000        610,584  

Series C 4.00% 3/1/32

      585,000        627,647  
     

 

 

  
        1,937,593  
     

 

 

  

Total Municipal Bonds (cost $77,402,664)

         78,974,198  
     

 

 

  

 

43

Table of Contents

Schedules of investments

Delaware Tax-Free Minnesota Intermediate Fund

 

 

  

Short-Term Investments – 1.45%

      

 

  

Variable Rate Demand Notes – 1.45%¤

      

Minneapolis – St. Paul Housing & Redevelopment Authority

      

Health Care Facilities Revenue

      

(Children’s Hospitals and Clinics)

      

Series A-l 1.53% 8/15/37 (AGM) (SPA – US Bank N.A.)

      475,000      $ 475,000  

Series A-ll 1.53% 8/15/37 (AGM) (SPA – US Bank N.A.)

      675,000        675,000  
     

 

 

  

Total Short-Term Investments (cost $1,150,000)

         1,150,000  
     

 

 

  

Total Value of Securities – 101.02%
(cost $78,552,664)

       $   80,124,198  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $1,216,558, which represents 1.53% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

●

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at Aug. 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

 

44

Table of Contents
  

 

 

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

ICE – Intercontinental Exchange

LIBOR – London Interbank Offered Rate

LIBOR03M – ICE LIBOR USD 3 Month

LIBOR06M – ICE LIBOR USD 6 Month

SPA – Stand-by Purchase Agreement

USD – US Dollar

See accompanying notes, which are an integral part of the financial statements.

 

45

Table of Contents
Schedules of investments   
Delaware Minnesota High-Yield Municipal Bond Fund    August 31, 2018

 

     Principal amount°      Value (US $)  

Municipal Bonds – 99.66%

                  

Corporate Revenue Bond – 1.04%

      

St. Paul Port Authority Solid Waste Disposal Revenue

      

(Gerdau St. Paul Steel Mill Project)

      

Series 7 144A 4.50% 10/1/37 (AMT) #

      1,920,000      $       1,816,339  
     

 

 

  
        1,816,339  
     

 

 

  

Education Revenue Bonds – 20.82%

      

Bethel Charter School Lease Revenue

      

(Spectrum High School Project) Series A 4.00% 7/1/37

      850,000        836,697  

Brooklyn Park Charter School Lease Revenue

      

(Prairie Seeds Academy Project) Series A 5.00% 3/1/39

      1,270,000        1,287,564  

Cologne Charter School Lease Revenue

      

(Cologne Academy Project)

      

Series A 5.00% 7/1/34

      250,000        258,155  

Series A 5.00% 7/1/45

      230,000        231,136  

Deephaven Charter School Lease Revenue

      

(Eagle Ridge Academy Project) Series A 5.50% 7/1/50

      1,000,000        1,059,920  

Duluth Housing & Redevelopment Authority Revenue

      

(Public Schools Academy) Series A 5.875% 11/1/40

      1,000,000        1,021,810  

Forest Lake Charter School Lease Revenue Fund

      

(Lakes International Language Academy)

      

Series A 5.75% 8/1/44

      585,000        621,814  

Ham Lake Charter School Lease Revenue

      

(Davinci Academy Project)

      

Series A 5.00% 7/1/36

      235,000        239,554  

Series A 5.00% 7/1/47

      710,000        715,893  

(Parnassus Preparatory School Project) Series A 5.00% 11/1/47

      650,000        664,371  

Hugo Charter School Lease Revenue

      

(Noble Academy Project)

      

Series A 5.00% 7/1/34

      165,000        172,006  

Series A 5.00% 7/1/44

      495,000        509,053  

Minneapolis Charter School Lease Revenue

      

(Hiawatha Academies Project)

      

Series A 5.00% 7/1/36

      1,000,000        1,008,950  

Series A 5.00% 7/1/47

      800,000        796,312  

Minneapolis Student Housing Revenue

      

(Riverton Community Housing Project)

      

144A 4.75% 8/1/43 #

      750,000        770,363  

144A 5.00% 8/1/53 #

      500,000        516,790  

5.25% 8/1/39

      800,000        841,792  

Minnesota Higher Education Facilities Authority Revenue

      

(Bethel University) 5.00% 5/1/47

      1,500,000        1,629,330  

(Carleton College) 4.00% 3/1/37

      635,000        663,842  

 

46

Table of Contents
  

 

 

     Principal amount°      Value (US $)  

Municipal Bonds (continued)

                  

Education Revenue Bonds (continued)

      

Minnesota Higher Education Facilities Authority Revenue

      

(Gustavus Adolphus College) 5.00% 10/1/47

      750,000      $ 836,783  

(Minneapolis College of Art & Design)

      

4.00% 5/1/24

      250,000        265,360  

4.00% 5/1/25

      200,000        209,778  

4.00% 5/1/26

      100,000        103,827  

(St. Catherine University)

      

Series 7-Q 5.00% 10/1/25

      325,000        360,925  

Series 7-Q 5.00% 10/1/26

      280,000        310,951  

Series A 4.00% 10/1/37

      580,000        592,528  

Series A 5.00% 10/1/45

      670,000        752,109  

(St. John’s University) Series 8-I 5.00% 10/1/34

      215,000        240,903  

(St. Olaf College)

      

Series 8-G 5.00% 12/1/31

      205,000        235,225  

Series 8-G 5.00% 12/1/32

      205,000        234,791  

Series 8-N 4.00% 10/1/34

      800,000        846,368  

Series 8-N 4.00% 10/1/35

      590,000        622,474  

(St. Scholastica College) Series H 5.125% 12/1/40

      750,000        763,327  

(Trustees of the Hamline University of Minnesota)

      

Series B 5.00% 10/1/37

      300,000        326,775  

Series B 5.00% 10/1/39

      770,000        836,482  

(University of St. Thomas) Series A 4.00% 10/1/35

      400,000        417,956  

Otsego Charter School Lease Revenue

      

(Kaleidoscope Charter School) Series A 5.00% 9/1/44

      1,435,000        1,438,674  

Rice County Educational Facilities Revenue

      

(Shattuck-St. Mary’s School) Series A 144A 5.00% 8/1/22 #

      770,000        812,273  

St. Cloud Charter School Lease Revenue

      

(Stride Academy Project) Series A 5.00% 4/1/46

      750,000        450,713  

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

      

(Academia Cesar Chavez School Project) Series A 5.25% 7/1/50

      1,750,000        1,661,835  

(Great River School Project) Series A 144A 5.50% 7/1/52 #

      265,000        272,436  

(Hmong College Preparatory Academy Project)

      

Series A 5.75% 9/1/46

      500,000        529,850  

Series A 6.00% 9/1/51

      500,000        534,635  

(Nova Classical Academy Project)

      

Series A 4.00% 9/1/36

      1,270,000        1,253,947  

Series A 4.125% 9/1/47

      500,000        490,455  

(St. Paul Conservatory for Performing Artists) Series A 4.625% 3/1/43

      445,000        422,185  

 

47

Table of Contents

Schedules of investments

Delaware Minnesota High-Yield Municipal Bond Fund

 

      Principal amount°      Value (US $)  

Municipal Bonds (continued)

                  

Education Revenue Bonds (continued)

      

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

      

(Twin Cities Academy Project) Series A 5.375% 7/1/50

      1,500,000      $ 1,541,655  

University of Minnesota

      

Series A 5.00% 4/1/34

      2,115,000        2,430,473  

Series A 5.00% 9/1/40

      900,000        1,039,365  

Series A 5.00% 9/1/41

      1,370,000        1,579,815  
     

 

 

  
            36,260,225  
     

 

 

  

Electric Revenue Bonds – 9.54%

      

Central Minnesota Municipal Power Agency

      

(Brookings Twin Cities Transmission Project) 5.00% 1/1/42

      1,500,000        1,596,570  

Chaska Electric Revenue

      

Series A 5.00% 10/1/28

      350,000        398,363  

Hutchinson Utilities Commission Revenue

      

Series A 5.00% 12/1/22

      490,000        548,173  

Series A 5.00% 12/1/26

      360,000        396,734  

Minnesota Municipal Power Agency Electric Revenue

      

5.00% 10/1/27

      165,000        188,202  

5.00% 10/1/47

      745,000        836,896  

Series A 5.00% 10/1/28

      500,000        570,010  

Northern Municipal Power Agency Electric System Revenue

      

5.00% 1/1/26

      500,000        578,440  

5.00% 1/1/28

      500,000        571,635  

5.00% 1/1/29

      470,000        534,672  

5.00% 1/1/33

      225,000        255,256  

5.00% 1/1/34

      200,000        226,424  

Series A 5.00% 1/1/24

      335,000        369,388  

Rochester Electric Utility Revenue

      

Series A 5.00% 12/1/34

      450,000        515,601  

Series A 5.00% 12/1/35

      500,000        572,100  

Series A 5.00% 12/1/36

      520,000        593,356  

Southern Minnesota Municipal Power Agency Revenue

      

Series A 5.00% 1/1/41

      400,000        447,480  

St. Paul Housing & Redevelopment Energy Revenue

      

Series A 4.00% 10/1/32

      800,000        832,112  

Western Minnesota Municipal Power Agency Revenue

      

Series A 5.00% 1/1/30

      500,000        561,385  

Series A 5.00% 1/1/33

      1,750,000        1,961,137  

Series A 5.00% 1/1/34

      450,000        504,054  

Series A 5.00% 1/1/40

      2,000,000        2,219,220  

 

48

Table of Contents
  

 

 

     Principal amount°      Value (US $)  

Municipal Bonds (continued)

                  

Electric Revenue Bonds (continued)

      

Western Minnesota Municipal Power Agency Revenue

      

(Red Rock Hydroelectric Project) Series A 5.00% 1/1/49

      1,165,000      $ 1,337,327  
     

 

 

  
            16,614,535  
     

 

 

  

Healthcare Revenue Bonds – 30.55%

      

Anoka Healthcare & Housing Facilities Revenue

      

(The Homestead at Anoka Project) 5.125% 11/1/49

      400,000        411,988  

Anoka Housing & Redevelopment Authority Revenue

      

(Fridley Medical Center Project) Series A 6.875% 5/1/40

      1,000,000        1,025,670  

Apple Valley Senior Housing Revenue

      

(PHS Senior Housing, Inc. Orchard Path Project)

      

4.375% 9/1/48

      355,000        354,113  

4.50% 9/1/53

      1,000,000        993,010  

5.00% 9/1/58

      1,175,000        1,214,081  

Apple Valley Senior Living Revenue

      

(Senior Living LLC Project)

      

2nd Tier Series B 5.00% 1/1/47

      525,000        539,012  

4th Tier Series D 7.00% 1/1/37

      515,000        515,891  

4th Tier Series D 7.25% 1/1/52

      1,500,000        1,517,490  

Bethel Senior Housing Revenue

      

(The Lodge at the Lakes at Stillwater Project) 5.25% 6/1/58

      725,000        740,609  

Breckenridge Catholic Health Initiatives Series A 5.00% 5/1/30

      1,675,000        1,691,917  

Brooklyn Center Multifamily Housing Revenue

      

(Sanctuary at Brooklyn Center Project) Series A 5.50% 11/1/35

      750,000        751,875  

City of West St. Paul Minnesota

      

(Walker Westwood Ridge Campus Project) 5.00% 11/1/49

      1,500,000        1,559,310  

Cloquet Housing Facilities

      

(HADC Cloquet Project) Series A 5.00% 8/1/48

      850,000        862,113  

Dakota County Community Development Agency Senior Housing Revenue

      

(Walker Highview Hills Project) Series A 144A 5.00% 8/1/51 #

      870,000        877,325  

Deephaven Housing & Healthcare Revenue

      

(St. Therese Senior Living Project)

      

Series A 5.00% 4/1/38

      335,000        337,573  

Series A 5.00% 4/1/40

      315,000        317,161  

Series A 5.00% 4/1/48

      185,000        185,742  

 

49

Table of Contents
Schedules of investments   
Delaware Minnesota High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

Municipal Bonds (continued)

                  

Healthcare Revenue Bonds (continued)

      

Duluth Economic Development Authority

      

(St. Luke’s Hospital of Duluth Obligated Group)

      

5.75% 6/15/32

      750,000      $ 813,885  

6.00% 6/15/39

      1,000,000              1,097,340  

Glencoe Health Care Facilities Revenue

      

(Glencoe Regional Health Services Project) 4.00% 4/1/31

      185,000        188,326  

Hayward Health Care Facilities Revenue

      

(American Baptist Homes Midwest Obligated Group) 5.375% 8/1/34

      750,000        761,130  

(St. John’s Lutheran Home of Albert Lea Project) 5.375% 10/1/44

      265,000        277,047  

Maple Grove Health Care Facilities Revenue

      

(Maple Grove Hospital Corporation)

      

4.00% 5/1/37

      1,155,000        1,167,601  

5.00% 5/1/26

      1,300,000        1,498,705  

5.00% 5/1/29

      500,000        572,435  

(North Memorial Health Care) 5.00% 9/1/30

      610,000        675,856  

Minneapolis Health Care System Revenue

      

(Fairview Health Services)

      

Series A 5.00% 11/15/33

      1,200,000        1,355,880  

Series A 5.00% 11/15/34

      500,000        563,570  

Series A 5.00% 11/15/44

      1,000,000        1,108,710  

Series B Unrefunded Balance 6.50% 11/15/38 (AGC)

      210,000        212,024  

Minneapolis Senior Housing & Healthcare Revenue

      

(Ecumen-Abiitan Mill City Project) 5.375% 11/1/50

      1,700,000        1,764,634  

Minneapolis – St. Paul Housing & Redevelopment Authority

      

Health Care Facilities Revenue

      

(Allina Health System) Series A 5.00% 11/15/29

      415,000        482,226  

Oakdale Senior Housing

      

(Oak Meadows Project) 5.00% 4/1/34

      500,000        505,990  

Rochester Health Care & Housing Revenue

      

(The Homestead at Rochester Project)

      

Series A 5.25% 12/1/23

      175,000        192,523  

Series A 6.875% 12/1/48

      800,000        906,464  

Rochester Health Care Facilities Revenue

      

(Mayo Clinic) 4.00% 11/15/41

      1,790,000        1,834,428  

(Olmsted Medical Center Project)

      

5.00% 7/1/22

      350,000        386,267  

5.00% 7/1/27

      245,000        271,597  

5.00% 7/1/28

      225,000        248,886  

 

50

Table of Contents
  

 

 

     Principal amount°      Value (US $)  

Municipal Bonds (continued)

                  

Healthcare Revenue Bonds (continued)

      

Sartell Health Care Facilities Revenue

      

(Country Manor Campus Project) Series A 5.25% 9/1/22

      1,080,000      $     1,206,889  

Sauk Rapids Health Care Housing Facilities Revenue

      

(Good Shepherd Lutheran Home) 5.125% 1/1/39

      825,000        842,069  

Shakopee Health Care Facilities Revenue

      

(St. Francis Regional Medical Center)

      

4.00% 9/1/31

      130,000        134,621  

5.00% 9/1/34

      105,000        114,270  

St. Cloud Health Care Revenue

      

(Centracare Health System Project)

      

Unrefunded Balance 5.125% 5/1/30

      15,000        15,784  

Series A 4.00% 5/1/37

      1,440,000        1,497,758  

Series A 5.00% 5/1/46

      2,000,000        2,212,600  

St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue

      

(Fairview Health Services)

      

Series A 4.00% 11/15/43

      645,000        659,938  

Series A 5.00% 11/15/47

      485,000        544,995  

(HealthPartners Obligated Group Project)

      

Series A 4.00% 7/1/33

      1,320,000        1,365,368  

Series A 5.00% 7/1/29

      1,000,000        1,139,720  

Series A 5.00% 7/1/32

      900,000        1,016,190  

Series A 5.00% 7/1/33

      1,540,000        1,733,732  

St. Paul Housing & Redevelopment Authority Housing & Health Care Facilities Revenue

      

(Episcopal Homes Project)

      

5.125% 5/1/48

      1,700,000        1,705,117  

Series A 5.15% 11/1/42

      775,000        777,767  

St. Paul Housing & Redevelopment Authority Multifamily Housing Revenue

      

(Marian Center Project) Series A 5.375% 5/1/43

      1,000,000        959,720  

Twin Valley Congregate Housing Revenue

      

(Living Options Project) 5.95% 11/1/28

      1,825,000        1,825,018  

Victoria Health Care Facilities Revenue

      

(Augustana Emerald Care Project) 5.00% 8/1/39

      1,500,000        1,531,620  

Wayzata Senior Housing Revenue

      

(Folkestone Senior Living Community)

      

Series A 5.50% 11/1/32

      260,000        268,687  

Series A 5.75% 11/1/39

      590,000        610,113  

Series A 6.00% 5/1/47

      920,000        952,283  

 

51

Table of Contents

Schedules of investments

Delaware Minnesota High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

Municipal Bonds (continued)

                  

Healthcare Revenue Bonds (continued)

      

Woodbury Housing & Redevelopment Authority Revenue

      

(St. Therese of Woodbury) 5.25% 12/1/49

      1,250,000      $ 1,305,950  
     

 

 

  
              53,200,613  
     

 

 

  

Housing Revenue Bonds – 1.50%

      

Minneapolis Multifamily Housing Revenue

      

(Olson Townhomes Project) 6.00% 12/1/19 (AMT)

      440,000        440,774  

Minneapolis – St. Paul Housing Finance Board Single

      

Family Mortgage-Backed Securities Program

      

(City Living Project) Series A-2

      

5.00% 12/1/38 (GNMA) (FNMA) (FHLMC) (AMT)

      12,249        12,266  

Minnesota Housing Finance Agency State Appropriation

      

(Housing Infrastructure) Series C 5.00% 8/1/33

      100,000        113,116  

Northwest Multi-County Housing & Redevelopment Authority

      

(Pooled Housing Program) 5.50% 7/1/45

      1,275,000        1,298,090  

Stillwater Multifamily Housing Revenue

      

(Orleans Homes Project) 5.50% 2/1/42 (AMT)

      750,000        750,105  
     

 

 

  
        2,614,351  
     

 

 

  

Lease Revenue Bonds – 2.67%

      

Minnesota General Fund Revenue Appropriations

      

Series A 5.00% 6/1/38

      1,750,000        1,936,883  

Series A 5.00% 6/1/43

      1,000,000        1,103,970  

Minnesota Housing Finance Agency State Appropriation

      

(Housing Infrastructure) Series C 5.00% 8/1/32

      1,415,000        1,603,082  
     

 

 

  
        4,643,935  
     

 

 

  

Local General Obligation Bonds – 10.26%

      

Chaska Independent School District No. 112

      

(School Building) Series A 5.00% 2/1/28

      2,240,000        2,604,874  

Duluth General Obligation Entertainment Convention Center Improvement

      

Series A 5.00% 2/1/34

      1,000,000        1,141,880  

Duluth Independent School District No. 709

      

Series A 4.00% 2/1/27

      440,000        469,920  

Foley Independent School District No. 51

      

(School Building) Series A 5.00% 2/1/21

      1,105,000        1,107,829  

Hennepin County

      

Series A 5.00% 12/1/26

      750,000        898,680  

Series A 5.00% 12/1/36

      1,500,000        1,741,245  

Series A 5.00% 12/1/37

      910,000        1,060,660  

Series A 5.00% 12/1/38

      1,055,000        1,225,963  

Series C 5.00% 12/1/37

      2,500,000        2,896,075  

 

52

Table of Contents
  

 

 

     Principal amount°      Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Local General Obligation Bonds (continued)

      

Mahtomedi Independent School District No. 832

      

(School Building)

      

Series A 5.00% 2/1/28

      1,000,000      $ 1,149,020  

Series A 5.00% 2/1/29

      1,000,000        1,144,560  

Series A 5.00% 2/1/30

      445,000        507,353  

Series A 5.00% 2/1/31

      1,000,000        1,136,960  

Wayzata Independent School District No. 284

      

(School Building) Series A 5.00% 2/1/28

      650,000        772,493  
     

 

 

  
              17,857,512  
     

 

 

  

Pre-Refunded/Escrowed to Maturity Bonds – 9.25%

      

Anoka Health Care Facilities Revenue

      

(The Homestead at Anoka Project) Series A 7.00% 11/1/46-19§

      1,650,000        1,762,019  

Deephaven Charter School Lease Revenue

      

(Eagle Ridge Academy Project) Series A 5.50% 7/1/43-23§

      500,000        576,570  

Minneapolis Health Care System Revenue

      

(Fairview Health Services) Series A 6.625% 11/15/28-18§

      1,100,000        1,110,956  

Minnesota Higher Education Facilities Authority Revenue

      

(University of St. Thomas) Series 7-A 5.00% 10/1/39-19§

      1,000,000        1,034,580  

Oak Park Heights Housing Revenue

      

(Oakgreen Commons Project) 7.00% 8/1/45-20§

      1,500,000        1,643,355  

Rochester Healthcare & Housing Revenue

      

(Samaritan Bethany Project)

      

Series A 6.875% 12/1/29-19§

      1,000,000        1,061,860  

Series A 7.375% 12/1/41-19§

      375,000        400,485  

St. Cloud Health Care Revenue

      

(Centracare Health System Project)

      

5.50% 5/1/39-19 (AGC)§

      1,500,000        1,537,365  

St. Louis Park Health Care Facilities Revenue

      

(Park Nicollet Health Services) 5.75% 7/1/39-19§

      2,005,000        2,071,807  

St. Paul Housing & Redevelopment Authority Charter School Lease Revenue

      

(Nova Classical Academy Project) Series A 6.625% 9/1/42-21§

      1,500,000        1,703,580  

St. Paul Housing & Redevelopment Authority Hospital Facility Revenue

      

(Healtheast Care System Project)

      

Series A 5.00% 11/15/29-25§

      275,000        322,572  

Series A 5.00% 11/15/30-25§

      205,000        240,463  

University of Minnesota

      

Series A 5.125% 4/1/34-19§

      1,000,000        1,020,330  

 

53

Table of Contents

Schedules of investments

Delaware Minnesota High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

Municipal Bonds (continued)

                  

Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

University of Minnesota

      

Series A 5.25% 12/1/28-20§

      1,500,000      $ 1,615,080  
     

 

 

  
              16,101,022  
     

 

 

  

Special Tax Revenue Bonds – 1.59%

      

Minneapolis Revenue

      

(YMCA Greater Twin Cities Project) 4.00% 6/1/31

      250,000        261,335  

Minneapolis Tax Increment Revenue

      

(Giant Park Project)

      

4.00% 3/1/27

      200,000        204,410  

4.00% 3/1/30

      260,000        263,091  

(Village of St. Anthony Falls Project)

      

4.00% 3/1/24

      700,000        714,420  

4.00% 3/1/27

      650,000        644,917  

St. Paul Sales Tax Revenue

      

Series G 5.00% 11/1/28

      600,000        681,402  
     

 

 

  
        2,769,575  
     

 

 

  

State General Obligation Bonds – 7.00%

      

Minnesota

      

Series A 5.00% 8/1/24

      500,000        578,025  

Series A 5.00% 8/1/27

      1,000,000        1,165,910  

Series A 5.00% 8/1/29

      1,000,000        1,159,700  

Series A 5.00% 10/1/33

      2,000,000        2,362,620  

Series A Unrefunded Balance 5.00% 10/1/24

      985,000        1,074,763  

Series D 5.00% 8/1/26

      1,000,000        1,188,560  

Series D 5.00% 8/1/27

      1,000,000        1,184,610  

Series E 5.00% 10/1/26

      1,085,000        1,292,636  

(Various Purposes) Series A 5.00% 8/1/32

      1,915,000        2,184,192  
     

 

 

  
        12,191,016  
     

 

 

  

Transportation Revenue Bonds – 3.22%

      

Minneapolis – St. Paul Metropolitan Airports Commission

      

Revenue

      

Senior

      

Series A 5.00% 1/1/32

      1,245,000        1,445,022  

Series C 5.00% 1/1/46

      185,000        209,731  

Subordinate

      

Series A 5.00% 1/1/22

      1,000,000        1,069,600  

Series A 5.00% 1/1/32

      500,000        556,115  

Series B 5.00% 1/1/29

      2,130,000        2,317,142  
     

 

 

  
        5,597,610  
     

 

 

  

Water & Sewer Revenue Bonds – 2.22%

      

Guam Government Waterworks Authority 5.00% 7/1/37

      575,000        636,732  

 

54

Table of Contents
  

 

 

     Principal amount°      Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Water & Sewer Revenue Bonds (continued)

      

Guam Government Waterworks Authority 5.00% 1/1/46

      515,000      $ 561,180  

Metropolitan Council General Obligation Wastewater

      

Revenue (Minneapolis – St. Paul Metropolitan Area)

      

Series C 4.00% 3/1/31

      965,000        1,042,856  

Series C 4.00% 3/1/32

      1,000,000        1,072,900  

Minnesota Public Facilities Authority Series B 4.00% 3/1/26

      500,000        557,440  
     

 

 

  
        3,871,108  
     

 

 

  

Total Municipal Bonds (cost $171,422,626)

         173,537,841  
     

 

 

  
                   

Short-Term Investment – 1.48%

      

 

  

Variable Rate Demand Note—1.48%¤

      

Minneapolis – St. Paul Housing & Redevelopment Authority Health Care Facilities Revenue (Children’s Hospitals and Clinics) Series A

      

1.53% 8/15/34 (AGM) (SPA – US Bank N.A.)

      2,575,000        2,575,000  
     

 

 

  

Total Short-Term Investment (cost $2,575,000)

         2,575,000  
     

 

 

  

Total Value of Securities – 101.14%

    (cost $173,997,626)

       $   176,112,841  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $5,065,526, which represents 2.91% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

55

Table of Contents
Schedules of investments   
Delaware Minnesota High-Yield Municipal Bond Fund   

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

FHLMC – Federal Home Loan Mortgage Corporation collateral

FNMA – Federal National Mortgage Association collateral

GNMA – Government National Mortgage Association collateral

N.A. – National Association

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

56

Table of Contents

Statements of assets and liabilities

August 31, 2018

 

    

Delaware

Tax-Free

Minnesota

Fund

    

Delaware

Tax-Free
Minnesota
Intermediate
Fund

    

Delaware
Minnesota
High-Yield
Municipal

Bond Fund

  

Assets:

       

Investments, at value1

    $ 547,194,364     $ 80,124,198     $ 176,112,841  

Cash

      1,287,149       447,877       133,145  

Interest receivable

      6,862,604       857,952       2,125,107  

Receivable for fund shares sold

      464,180       2,940       206,659  
  

 

 

    

 

 

    

 

 

  

Total assets

      555,808,297       81,432,967       178,577,752  
  

 

 

    

 

 

    

 

 

  

Liabilities:

       

Payable for securities purchased

      8,116,793       1,839,689       3,885,054  

Payable for fund shares redeemed

      812,409       144,272       267,919  

Distribution payable

      394,218       55,659       125,937  

Investment management fees payable to affiliates

      242,102       36,351       76,137  

Distribution fees payable to affiliates

      113,717       14,947       39,834  

Other accrued expenses

      96,251       22,783       40,827  

Dividend disbursing and transfer agent fees and expenses payable to affiliates

      8,884       1,294       2,837  

Audit and tax fees payable

      4,727       4,727       4,727  

Trustees’ fees and expenses payable to affiliates

      3,148       463       1,005  

Accounting and administration expenses payable to affiliates

      2,075       593       894  

Legal fees payable to affiliates

      905       129       287  

Reports and statements to shareholders expenses payable to affiliates

      351       51       112  
  

 

 

    

 

 

    

 

 

  

Total liabilities

      9,795,580       2,120,958       4,445,570  
  

 

 

    

 

 

    

 

 

  

Total Net Assets

    $ 546,012,717     $ 79,312,009     $ 174,132,182  
  

 

 

    

 

 

    

 

 

  

Net Assets Consist of:

       

Paid-in capital

    $ 535,249,687     $ 77,847,870     $ 172,916,359  

Distributions in excess of net investment income

      (240,388 )      (4,190 )      —  

Accumulated net realized loss on investments

      (427,787 )      (103,205 )      (899,392 ) 

Net unrealized appreciation of investments

      11,431,205       1,571,534       2,115,215  
  

 

 

    

 

 

    

 

 

  

Total Net Assets

    $ 546,012,717     $ 79,312,009     $ 174,132,182  
  

 

 

    

 

 

    

 

 

  

 

57

Table of Contents

Statements of assets and liabilities

 

    

Delaware

Tax-Free
Minnesota

Fund

    

Delaware

Tax-Free
Minnesota
Intermediate
Fund

     Delaware
Minnesota
High-Yield
Municipal
Bond Fund		  

Net Asset Value

       

Class A:

       

Net assets

    $ 390,476,795     $ 59,283,983     $ 98,980,384  

Shares of beneficial interest outstanding, unlimited authorization, no par

      32,152,896       5,478,236       9,284,014  

Net asset value per share

    $ 12.14     $ 10.82     $ 10.66  

Sales charge

      4.50 %      2.75 %      4.50 % 

Offering price per share, equal to net asset value per share/(1 – sales charge)

    $ 12.71     $ 11.13     $ 11.16  

Class C:

       

Net assets

    $ 35,641,559     $ 8,558,485     $ 21,651,242  

Shares of beneficial interest outstanding, unlimited authorization, no par

      2,925,280       789,238       2,026,814  

Net asset value per share

    $ 12.18     $ 10.84     $ 10.68  

Institutional Class:

       

Net assets

    $ 119,894,363     $ 11,469,541     $ 53,500,556  

Shares of beneficial interest outstanding, unlimited authorization, no par

      9,874,511       1,059,502       5,019,773  

Net asset value per share

    $ 12.14     $ 10.83     $ 10.66  

 

       

1 Investments, at cost

    $ 535,763,159     $ 78,552,664     $ 173,997,626  

See accompanying notes, which are an integral part of the financial statements.

 

58

Table of Contents

Statements of operations

Year ended August 31, 2018

 

    

Delaware

Tax-Free
Minnesota

Fund

     Delaware
Tax-Free
Minnesota
Intermediate
Fund		     Delaware
Minnesota
High-Yield
Municipal
Bond Fund		  

Investment Income:

       

Interest

    $ 21,132,875     $ 3,207,777     $ 6,808,329  
  

 

 

    

 

 

    

 

 

  

Expenses:

       

Management fees

      3,001,023       449,857       967,349  

Distribution expenses — Class A

      1,015,423       159,610       243,018  

Distribution expenses — Class C

      457,646       107,143       296,891  

Dividend disbursing and transfer agent fees and expenses

      397,026       71,560       140,739  

Accounting and administration expenses

      127,403       45,095       60,441  

Reports and statements to shareholders expenses

      53,122       17,185       21,066  

Registration fees

      44,986       16,352       15,829  

Audit and tax fees

      44,480       44,480       44,480  

Legal fees

      44,193       8,448       14,280  

Trustees’ fees and expenses

      25,704       4,222       8,213  

Custodian fees

      13,956       3,335       5,530  

Other

      45,512       19,602       27,345  
  

 

 

    

 

 

    

 

 

  
     5,270,474       946,889       1,845,181  

Less expenses waived

      (491,841 )      (102,749 )      (178,304 ) 

Less waived distribution expenses — Class A

      —       (63,844 )      —  

Less expenses paid indirectly

      (2,998 )      (936 )      (962 ) 
  

 

 

    

 

 

    

 

 

  

Total operating expenses

      4,775,635       779,360       1,665,915  
  

 

 

    

 

 

    

 

 

  

Net Investment Income

      16,357,240       2,428,417       5,142,414  
  

 

 

    

 

 

    

 

 

  

Net Realized and Unrealized Gain (Loss):

       

Net realized gain (loss)

      299,568       72,266       (71,151 ) 

Net change in unrealized appreciation (depreciation) of investments

      (15,406,873 )      (2,687,546 )      (3,485,137 ) 
  

 

 

    

 

 

    

 

 

  

Net Realized and Unrealized Loss

      (15,107,305 )      (2,615,280 )      (3,556,288 ) 
  

 

 

    

 

 

    

 

 

  

Net Increase (Decrease) in Net Assets Resulting from Operations

    $ 1,249,935     $ (186,863 )    $ 1,586,126  
  

 

 

    

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

59

Table of Contents

Statements of changes in net assets

Delaware Tax-Free Minnesota Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $ 16,357,240     $ 17,071,341  

Net realized gain

      299,568       3,679,670  

Net change in unrealized appreciation (depreciation)

      (15,406,873 )      (18,824,613 ) 
  

 

 

    

 

 

  

Net increase in net assets resulting from operations

      1,249,935       1,926,398  
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (12,134,393 )      (13,728,190 ) 

Class C

      (1,024,249 )      (1,216,526 ) 

Institutional Class

      (3,183,679 )      (2,215,895 ) 

Net realized gain:

     

Class A

      (2,113,066 )      —  

Class C

      (249,964 )      —  

Institutional Class

      (454,513 )      —  
  

 

 

    

 

 

  
     (19,159,864 )      (17,160,611 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      38,349,082       34,147,763  

Class C

      2,636,660       6,466,911  

Institutional Class

      54,835,728       59,311,879  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      12,235,255       11,416,767  

Class C

      1,195,247       1,104,881  

Institutional Class

      3,287,427       1,976,859  
  

 

 

    

 

 

  
     112,539,399       114,425,060  
  

 

 

    

 

 

  

 

60

Table of Contents
  

 

 

     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $ (70,209,949 )    $ (90,242,074 ) 

Class C

      (17,670,338 )      (8,627,762 ) 

Institutional Class

      (24,104,373 )      (24,653,789 ) 
  

 

 

    

 

 

  
     (111,984,660 )      (123,523,625 ) 
  

 

 

    

 

 

  

Increase (decrease) in net assets derived from capital share transactions

      554,739       (9,098,565 ) 
  

 

 

    

 

 

  

Net Decrease in Net Assets

      (17,355,190 )      (24,332,778 ) 

Net Assets:

     

Beginning of year

      563,367,907       587,700,685  
  

 

 

    

 

 

  

End of year

    $ 546,012,717     $ 563,367,907  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (240,388 )    $ (215,430 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

61

Table of Contents

Statements of changes in net assets

Delaware Tax-Free Minnesota Intermediate Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $ 2,428,417     $ 2,724,683  

Net realized gain

      72,266       272,027  

Net change in unrealized appreciation (depreciation)

      (2,687,546 )      (2,617,465 ) 
  

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

      (186,863 )      379,245  
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (1,771,652 )      (2,003,337 ) 

Class C

      (205,693 )      (241,177 ) 

Institutional Class

      (450,722 )      (480,415 ) 

Net realized gain:

     

Class A

      (260,008 )      (106,466 ) 

Class C

      (44,209 )      (18,615 ) 

Institutional Class

      (68,175 )      (18,418 ) 
  

 

 

    

 

 

  
     (2,800,459 )      (2,868,428 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      4,764,864       2,977,155  

Class C

      670,790       1,326,646  

Institutional Class

      5,446,733       11,040,900  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      1,731,184       1,808,316  

Class C

      237,000       247,603  

Institutional Class

      499,540       468,456  
  

 

 

    

 

 

  
     13,350,111       17,869,076  
  

 

 

    

 

 

  

 

62

Table of Contents
  

 

 

     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $ (14,067,022 )    $ (13,609,683 ) 

Class C

      (3,881,824 )      (2,669,175 ) 

Institutional Class

      (12,720,892 )      (5,221,186 ) 
  

 

 

    

 

 

  
     (30,669,738 )      (21,500,044 ) 
  

 

 

    

 

 

  

Decrease in net assets derived from capital share transactions

      (17,319,627 )      (3,630,968 ) 
  

 

 

    

 

 

  

Net Decrease in Net Assets

      (20,306,949 )      (6,120,151 ) 

Net Assets:

     

Beginning of year

      99,618,958       105,739,109  
  

 

 

    

 

 

  

End of year

    $ 79,312,009     $ 99,618,958  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (4,190 )    $ (786 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

63

Table of Contents

Statements of changes in net assets

Delaware Minnesota High-Yield Municipal Bond Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $ 5,142,414     $ 5,269,932  

Net realized gain (loss)

      (71,151 )      809,652  

Net change in unrealized appreciation (depreciation)

      (3,485,137 )      (5,379,286 ) 
  

 

 

    

 

 

  

Net increase in net assets resulting from operations

      1,586,126       700,298  
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (2,914,141 )      (3,365,896 ) 

Class C

      (667,362 )      (788,348 ) 

Institutional Class

      (1,591,025 )      (1,142,511 ) 
  

 

 

    

 

 

  
     (5,172,528 )      (5,296,755 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      16,270,537       11,398,520  

Class C

      3,339,629       2,597,707  

Institutional Class

      24,537,706       32,544,758  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      2,338,287       2,697,626  

Class C

      598,928       681,425  

Institutional Class

      1,536,871       1,029,137  
  

 

 

    

 

 

  
     48,621,958       50,949,173  
  

 

 

    

 

 

  

 

64

Table of Contents
  

 

 

     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $ (16,152,757 )    $ (33,747,538 ) 

Class C

      (13,869,963 )      (5,963,054 ) 

Institutional Class

      (16,399,941 )      (19,247,512 ) 
  

 

 

    

 

 

  
     (46,422,661 )      (58,958,104 ) 
  

 

 

    

 

 

  

Increase (decrease) in net assets derived from capital share transactions

      2,199,297       (8,008,931 ) 
  

 

 

    

 

 

  

Net Decrease in Net Assets

      (1,387,105 )      (12,605,388 ) 

Net Assets:

     

Beginning of year

      175,519,287       188,124,675  
  

 

 

    

 

 

  

End of year (there was no undistributed net investment income at either year end)

    $ 174,132,182     $ 175,519,287  
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

65

Table of Contents

Financial highlights

Delaware Tax-Free Minnesota Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

66

Table of Contents
  

 

 

 

    Year ended  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 12.54       $ 12.87       $ 12.60       $ 12.67       $ 11.97  
                 
    0.37         0.38         0.41         0.44         0.45  
    (0.34 )        (0.32 )        0.28         (0.06 )        0.73  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.03         0.06         0.69         0.38         1.18  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.37 )        (0.39 )        (0.42 )        (0.45 )        (0.44 ) 
    (0.06 )        —         —         —         (0.04 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.43 )        (0.39 )        (0.42 )        (0.45 )        (0.48 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 12.14       $ 12.54       $ 12.87       $ 12.60       $ 12.67  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.26%         0.49%         5.52%         3.02%         10.03%  
                 
  $ 390,477       $ 423,497       $ 481,066       $ 479,275       $ 503,072  
    0.85%         0.85%         0.85%         0.87%         0.90%  
    0.94%         0.95%         0.95%         0.96%         0.95%  
    2.99%         3.08%         3.25%         3.51%         3.61%  
    2.90%         2.98%         3.15%         3.42%         3.56%  
      16%           17%           15%           11%           10%  

 

67

Table of Contents

Financial highlights

Delaware Tax-Free Minnesota Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

68

Table of Contents
  

 

 

 

    Year ended  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 12.58       $ 12.91       $ 12.64       $ 12.71       $ 12.01  
                 
    0.28         0.29         0.32         0.35         0.35  
    (0.34 )        (0.33 )        0.27         (0.07 )        0.74  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.06 )        (0.04 )        0.59         0.28         1.09  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.28 )        (0.29 )        (0.32 )        (0.35 )        (0.35 ) 
    (0.06 )        —         —         —         (0.04 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.34 )        (0.29 )        (0.32 )        (0.35 )        (0.39 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 12.18       $ 12.58       $ 12.91       $ 12.64       $ 12.71  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.49%)         (0.25%)         4.73%         2.25%         9.19%  
                 
  $ 35,642       $ 51,045       $ 53,502       $ 45,393       $ 41,612  
    1.60%         1.60%         1.60%         1.62%         1.65%  
    1.69%         1.70%         1.70%         1.71%         1.70%  
    2.24%         2.33%         2.50%         2.76%         2.86%  
    2.15%         2.23%         2.40%         2.67%         2.81%  
      16%           17%           15%           11%           10%  

 

69

Table of Contents

Financial highlights

Delaware Tax-Free Minnesota Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

 

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

2 

The average shares outstanding have been applied for per share information.

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

5 

Portfolio turnover is representative of the Fund for the entire year.

See accompanying notes, which are an integral part of the financial statements.

 

70

Table of Contents
  

 

 

    Year ended         12/31/131
to		  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 12.54       $ 12.87       $ 12.59       $ 12.66       $ 12.07  
                 
    0.40         0.41         0.45         0.48         0.34  
    (0.34 )        (0.32 )        0.28         (0.07 )        0.59  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.06         0.09         0.73         0.41         0.93  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.40 )        (0.42 )        (0.45 )        (0.48 )        (0.34 ) 
    (0.06 )        —         —         —         —  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.46 )        (0.42 )        (0.45 )        (0.48 )        (0.34 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 12.14       $ 12.54       $ 12.87       $ 12.59       $ 12.66  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.51%         0.75%         5.87%         3.27%         7.74%  
                 
  $ 119,894       $ 88,826       $ 53,133       $ 32,084       $ 17,533  
    0.60%         0.60%         0.60%         0.62%         0.65%  
    0.69%         0.70%         0.70%         0.71%         0.70%  
    3.24%         3.33%         3.50%         3.76%         3.84%  
    3.15%         3.23%         3.40%         3.67%         3.79%  
      16%           17%           15%           11%           10%5  

 

71

Table of Contents

Financial highlights

Delaware Tax-Free Minnesota Intermediate Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

72

Table of Contents
  

 

 

 

    Year ended  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 11.17       $ 11.44       $ 11.22       $ 11.32       $ 10.84  
                 
    0.30         0.31         0.33         0.34         0.34  
    (0.31 )        (0.25 )        0.22         (0.10 )        0.49  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.01 )        0.06         0.55         0.24         0.83  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.30 )        (0.31 )        (0.33 )        (0.34 )        (0.34 ) 
    (0.04 )        (0.02 )        —         —         (0.01 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.34 )        (0.33 )        (0.33 )        (0.34 )        (0.35 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 10.82       $ 11.17       $ 11.44       $ 11.22       $ 11.32  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.01%)         0.55%         4.98%         2.12%         7.79%  
                 
  $ 59,284       $ 68,934       $ 79,730       $ 84,663       $ 90,571  
    0.79%         0.84%         0.84%         0.85%         0.84%  
    1.00%         0.99%         0.97%         0.98%         0.98%  
    2.77%         2.79%         2.92%         2.98%         3.08%  
    2.56%         2.64%         2.79%         2.85%         2.94%  
      17%           22%           14%           14%           14%  

 

73

Table of Contents

Financial highlights

Delaware Tax-Free Minnesota Intermediate Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

74

Table of Contents
  

 

 

 

    Year ended  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 11.19       $ 11.47       $ 11.24       $ 11.35       $ 10.86  
                 
    0.21         0.22         0.24         0.24         0.25  
    (0.31 )        (0.26 )        0.23         (0.11 )        0.50  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.10 )        (0.04 )        0.47         0.13         0.75  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.21 )        (0.22 )        (0.24 )        (0.24 )        (0.25 ) 
    (0.04 )        (0.02 )        —         —         (0.01 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.25 )        (0.24 )        (0.24 )        (0.24 )        (0.26 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 10.84       $ 11.19       $ 11.47       $ 11.24       $ 11.35  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.86%)         (0.39%)         4.17%         1.16%         6.96%  
                 
  $ 8,558       $ 11,885       $ 13,315       $ 11,740       $ 12,651  
    1.64%         1.69%         1.69%         1.70%         1.69%  
    1.75%         1.74%         1.72%         1.73%         1.73%  
    1.92%         1.94%         2.07%         2.13%         2.23%  
    1.81%         1.89%         2.04%         2.10%         2.19%  
      17%           22%           14%           14%           14%  

 

75

Table of Contents

Financial highlights

Delaware Tax-Free Minnesota Intermediate Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

 

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

2 

The average shares outstanding have been applied for per share information.

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

5 

Portfolio turnover is representative of the Fund for the entire year.

See accompanying notes, which are an integral part of the financial statements.

 

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    Year ended         12/31/131
to		  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 11.17       $ 11.45       $ 11.22       $ 11.33       $ 10.95  
                 
    0.32         0.33         0.35         0.35         0.26  
    (0.30 )        (0.26 )        0.23         (0.11 )        0.38  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.02         0.07         0.58         0.24         0.64  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.32 )        (0.33 )        (0.35 )        (0.35 )        (0.26 ) 
    (0.04 )        (0.02 )        —         —         —  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.36 )        (0.35 )        (0.35 )        (0.35 )        (0.26 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 10.83       $ 11.17       $ 11.45       $ 11.22       $ 11.33  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.23%         0.61%         5.22%         2.18%         5.85%  
                 
  $ 11,470       $ 18,800       $ 12,694       $ 4,402       $ 2,376  
    0.64%         0.69%         0.69%         0.70%         0.69%  
    0.75%         0.74%         0.72%         0.73%         0.73%  
    2.92%         2.94%         3.07%         3.13%         3.21%  
    2.81%         2.89%         3.04%         3.10%         3.17%  
      17%           22%           14%           14%           14%5  

 

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Financial highlights

Delaware Minnesota High-Yield Municipal Bond Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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    Year ended  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 10.88       $ 11.13       $ 10.84       $ 10.88       $ 10.25  
                 
    0.32         0.33         0.36         0.38         0.40  
    (0.22 )        (0.25 )        0.29         (0.04 )        0.63  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.10         0.08         0.65         0.34         1.03  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.32)         (0.33 )        (0.36 )        (0.38 )        (0.40 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.32)         (0.33 )        (0.36 )        (0.38 )        (0.40 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 10.66       $ 10.88       $ 11.13       $ 10.84       $ 10.88  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.95%         0.84%         6.12%         3.20%         10.25%  
                 
  $ 98,980       $ 98,491       $ 121,168       $ 122,618       $ 119,044  
    0.89%         0.89%         0.89%         0.91%         0.89%  
    0.99%         0.99%         0.98%         1.01%         0.99%  
    2.98%         3.08%         3.23%         3.52%         3.82%  
    2.88%         2.98%         3.14%         3.42%         3.72%  
      14%           19%           15%           16%           15%  

 

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Financial highlights

Delaware Minnesota High-Yield Municipal Bond Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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    Year ended  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 10.90       $ 11.15       $ 10.87       $ 10.90       $ 10.27  
                 
    0.24         0.25         0.27         0.30         0.33  
    (0.22 )        (0.25 )        0.29         (0.03 )        0.62  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.02         —         0.56         0.27         0.95  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.24 )        (0.25 )        (0.28 )        (0.30 )        (0.32 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.24 )        (0.25 )        (0.28 )        (0.30 )        (0.32 ) 
  $ 10.68       $ 10.90       $ 11.15       $ 10.87       $ 10.90  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.19%         0.09%         5.22%         2.53%         9.41%  
                 
  $ 21,651       $ 32,223       $ 35,751       $ 32,174       $ 32,279  
    1.64%         1.64%         1.64%         1.66%         1.64%  
    1.74%         1.74%         1.73%         1.76%         1.74%  
    2.23%         2.33%         2.48%         2.77%         3.07%  
    2.13%         2.23%         2.39%         2.67%         2.97%  
      14%           19%           15%           16%           15%  

 

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Financial highlights

Delaware Minnesota High-Yield Municipal Bond Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

 

Net asset value, beginning of period

   

Income (loss) from investment operations:

   

Net investment income2

   

Net realized and unrealized gain (loss)

   

Total from investment operations

   

Less dividends and distributions from:

   

Net investment income

   

Total dividends and distributions

   

Net asset value, end of period.

   

Total return3

   

Ratios and supplemental data:

   

Net assets, end of period (000 omitted)

   

Ratio of expenses to average net assets

   

Ratio of expenses to average net assets prior to fees waived4

   

Ratio of net investment income to average net assets

   

Ratio of net investment income to average net assets prior to fees waived4

   

Portfolio turnover

   

 

  

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

2 

The average shares outstanding have been applied for per share information.

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

5 

Portfolio turnover is representative of the Fund for the entire year.

See accompanying notes, which are an integral part of the financial statements.

 

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    Year ended         12/31/131
to		  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  
  $ 10.87       $ 11.12       $ 10.84       $ 10.88       $ 10.35  
                 
    0.35         0.36         0.38         0.41         0.31  
    (0.21 )        (0.25 )        0.29         (0.04 )        0.53  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    0.14         0.11         0.67         0.37         0.84  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
                 
    (0.35 )        (0.36 )        (0.39 )        (0.41 )        (0.31 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    (0.35 )        (0.36 )        (0.39 )        (0.41 )        (0.31 ) 
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
  $ 10.66       $ 10.87       $ 11.12       $ 10.84       $ 10.88  
 

 

 

      

 

 

      

 

 

      

 

 

      

 

 

  
    1.30%         1.09%         6.28%         3.46%         8.21%  
                 
  $ 53,501       $ 44,805       $ 31,206       $ 14,841       $ 6,470  
    0.64%         0.64%         0.64%         0.66%         0.64%  
    0.74%         0.74%         0.73%         0.76%         0.74%  
    3.23%         3.33%         3.48%         3.77%         4.04%  
    3.13%         3.23%         3.39%         3.67%         3.94%  
      14%           19%           15%           16%           15%5  

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds      August 31, 2018  

Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund. Voyageur Tax-Free Funds is organized as a Delaware statutory trust and offers Delaware Tax-Free Minnesota Fund. Voyageur Intermediate Tax-Free Funds is organized as a Delaware statutory trust and offers Delaware Tax-Free Minnesota Intermediate Fund. Voyageur Mutual Funds, Voyageur Tax-Free Funds, and Voyageur Intermediate Tax-Free Funds are each referred to as a Trust, or collectively, as the Trusts. These financial statements and the related notes pertain to Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund (each a Fund, or collectively, the Funds). Each Fund is an open-end investment company. The Funds are considered diversified under the Investment Company Act of 1940, as amended (1940 Act), and offer Class A, Class C, and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of 4.50% for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and 2.75% for Delaware Tax-Free Minnesota Intermediate Fund. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) instead of a front-end sales charge of 1.00% if redeemed during the first year, and 0.50% during the second year for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and 0.75% for Delaware Tax-Free Minnesota Intermediate Fund, if redeemed within the first year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1.00%, which will be incurred if redeemed during the first 12 months. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.

The investment objective of Delaware Tax-Free Minnesota Fund is to seek as high a level of current income exempt from federal income tax and from Minnesota state personal income taxes as is consistent with preservation of capital.

The investment objective of Delaware Tax-Free Minnesota Intermediate Fund is to seek to provide investors with preservation of capital and, secondarily, current income exempt from federal income tax and Minnesota state personal income taxes, by maintaining a dollar-weighted average effective portfolio maturity of 10 years or less.

The investment objective of Delaware Minnesota High-Yield Municipal Bond Fund is to seek a high level of current income exempt from federal income tax and from Minnesota state personal income taxes, primarily through investment in medium- and lower-grade municipal obligations.

1. Significant Accounting Policies

The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Funds. Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services - Investment Companies.

Security Valuation — Debt securities are valued based upon valuations provided by an independent pricing service or broker and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well

 

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as transactions in comparable securities. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Trust’s Board of Trustees (each, a Board, or collectively, the Boards). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Boards.

Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Each Fund evaluates tax positions taken or expected to be taken in the course of preparing each Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed each Fund’s tax positions taken or expected to be taken on each Fund’s federal income tax returns through the year ended Aug. 31, 2018 and for all open tax years (years ended Aug. 31, 2015–Aug. 31, 2017), and has concluded that no provision for federal income tax is required in each Fund’s financial statements. If applicable, each Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in other expenses on the “Statements of operations.” During the year ended Aug. 31, 2018, the Funds did not incur any interest or tax penalties.

Class Accounting — Investment income and common expenses are allocated to the various classes of each Fund on the basis of “settled shares” of each class in relation to the net assets of each Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of each Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.

Use of Estimates — Each Fund is an investment company, whose financial statements are prepared in conformity with US GAAP. Therefore, each Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.

Other — Expenses directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Each

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

 

 

1. Significant Accounting Policies (continued)

 

Fund declares dividends daily from net investment income and pays the dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually. Each Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.

Each Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expenses paid under this arrangement is included on the “Statements of operations” under “Custodian fees” with the corresponding expense offset included under “Less expenses paid indirectly.” For the year ended Aug. 31, 2018, each Fund earned the following amounts under this arrangement:

 

          Delaware Tax-Free    Delaware Minnesota
     Delaware Tax-Free    Minnesota    High-Yield Municipal
     Minnesota Fund    Intermediate Fund    Bond Fund
   $2,524    $849    $791

Each Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expense paid under this arrangement is included on the “Statements of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expense offset included under “Less expenses paid indirectly.” For the year ended Aug. 31, 2018, each Fund earned the following amounts under this arrangement:

 

          Delaware Tax-Free    Delaware Minnesota
     Delaware Tax-Free    Minnesota    High-Yield Municipal
     Minnesota Fund    Intermediate Fund    Bond Fund
   $474    $87    $171

2. Investment Management, Administration Agreements, and Other Transactions with Affiliates

In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly based on each Fund’s average daily net assets as follows:

 

     Delaware
Tax-Free
Minnesota Fund		   Delaware Tax-Free
Minnesota
Intermediate Fund		   Delaware Minnesota
High-Yield Municipal
Bond Fund

On the first $500 million

    0.550%   0.500%   0.550%

On the next $500 million

    0.500%   0.475%   0.500%

On the next $1.5 billion

    0.450%   0.450%   0.450%

In excess of $2.5 billion

    0.425%   0.425%   0.425%

DMC has contractually agreed to waive that portion, if any, of its management fees and/or pay/reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding any distribution and service (12b-1) fees, taxes, interest, acquired fund fees and expenses, inverse floater program expenses, short sale, dividend and interest expenses, brokerage fees, certain

 

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insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations), do not exceed the following percentage of each Fund’s average daily net assets from Sept. 1, 2017 through Aug. 31, 2018.* These waivers and reimbursements apply only to expenses paid directly by each Fund and may only be terminated by agreement of DMC and each Fund. The waivers and reimbursements are accrued daily and received monthly.

 

     Delaware   Delaware Tax-Free   Delaware Minnesota
     Tax-Free   Minnesota   High-Yield Municipal
     Minnesota Fund   Intermediate Fund   Bond Fund

Operating expense limitation as a percentage of average daily net assets
(April 1, 2018 through Aug. 31, 2018)

    0.60%   0.56%   0.64%

Operating expense limitation as a percentage of average daily net assets
(Sept. 1, 2017 through March 31, 2018)

    0.60%   0.69%   0.64%

Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these services, DIFSC’s fees were calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each Fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each Fund then pays its portion of the remainder of the Total Fee on a relative net asset value (NAV) basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the year ended Aug. 31, 2018, the Funds were charged for these services as follows:

 

     Delaware    Delaware Tax-Free    Delaware Minnesota
     Tax-Free    Minnesota    High-Yield Municipal
     Minnesota Fund    Intermediate Fund    Bond Fund
   $24,797    $7,402    $10,648

DIFSC is also the transfer agent and dividend disbursing agent of the Funds. For these services, DIFSC’s fees were calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds from Sep. 1, 2017 through June 30, 2018 at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% of average daily net assets in excess of $30 billion. Effective July 1, 2018, each Fund as well as the other Delaware Funds entered into an amendment to the DIFSC agreement. Under the amendment to the DIFSC agreement, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rate: 0.014% of the first

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

 

 

2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)

 

$20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the transfer agent agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. These amounts are included on the “Statements of operations” under “Dividend disbursing and transfer agent fees and expenses.” For the year ended Aug. 31, 2018, each Fund was charged for these services as follows:

 

     Delaware    Delaware Tax-Free    Delaware Minnesota
     Tax-Free    Minnesota    High-Yield Municipal
     Minnesota Fund    Intermediate Fund    Bond Fund
   $107,114    $17,525    $34,239

Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to each Fund. Sub-transfer agency fees are paid by each Fund and are also included on the “Statements of operations” under “Dividend disbursing and transfer agent fees and expenses.”

Pursuant to a distribution agreement and distribution plan, each Fund pays DDLP, the distributor and an affiliate of DMC, an annual 12b-1 fee of 0.25% of the average daily net assets of the Class A shares and 1.00% of the average daily net assets of the Class C shares. DDLP has contracted to waive Delaware Tax-Free Minnesota Intermediate Fund’s Class A shares 12b-1 fee to 0.15% of average daily net assets from Sept. 1, 2017 through Aug. 31, 2018.* The fees are calculated daily and paid monthly. Institutional Class shares pay no 12b-1 fees.

As provided in the investment management agreement, each Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to each Fund. These amounts are included on the “Statements of operations” under “Legal fees.” For the year ended Aug. 31, 2018, each Fund was charged for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees as follows:

 

     Delaware    Delaware Tax-Free    Delaware Minnesota
     Tax-Free    Minnesota    High-Yield Municipal
     Minnesota Fund    Intermediate Fund    Bond Fund
   $11,574    $2,481    $3,411

For the year ended Aug. 31, 2018, DDLP earned commissions on sales of Class A shares for each Fund as follows:

 

     Delaware    Delaware Tax-Free    Delaware Minnesota
     Tax-Free    Minnesota    High-Yield Municipal
     Minnesota Fund    Intermediate Fund    Bond Fund
   $21,136    $3,346    $13,796

 

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For the year ended Aug. 31, 2018, DDLP received gross CDSC commissions on redemptions of each Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares. The amounts received were as follows:

 

     Delaware    Delaware Tax-Free    Delaware Minnesota
     Tax-Free    Minnesota    High-Yield Municipal
    

Minnesota Fund

    Intermediate Fund    Bond Fund

Class A

    $4,334     $—    $—

Class C

    3,430    327    453

Trustees’ fees include expenses accrued by each Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DIFSC, and DDLP are officers and/or Trustees of the Trusts. These officers and Trustees are paid no compensation by the Funds.

Cross trades for the year ended Aug. 31, 2018, were executed by each Fund pursuant to procedures adopted by the Boards designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/or common officers. At their regularly scheduled meetings, the Boards review such transactions for compliance with the procedures adopted by the Boards. Pursuant to these procedures, for the year ended Aug. 31, 2018, the Funds engaged in the following Rule 17a-7 securities purchases and securities sales, which resulted in net realized losses as follows:

 

     Delaware     Delaware Tax-Free     Delaware Minnesota  
     Tax-Free     Minnesota     High-Yield Municipal  
     Minnesota Fund     Intermediate Fund     Bond Fund  

Purchases

    $ 34,894,482       $14,285,119       $15,814,911  

Sales

      37,503,810       18,050,246       18,070,781  

Net realized losses

      (397,426 )      (123,817 )      (150,486 ) 

 

*For Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, the aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018. For Delaware Tax-Free Minnesota Intermediate Fund, the aggregate contractual waiver period covering this report is from Dec. 29, 2016 through April 1, 2019.

3. Investments

For the year ended Aug. 31, 2018, each Fund made purchases and sales of investment securities other than short-term investments as follows:

 

     Delaware      Delaware Tax-Free      Delaware Minnesota  
     Tax-Free      Minnesota      High-Yield Municipal  
     Minnesota Fund      Intermediate Fund      Bond Fund  

Purchases

    $ 91,294,553        $14,661,963        $29,744,168  

Sales

      85,952,472        30,456,962        25,032,722  

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

 

 

3. Investments (continued)

 

The tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. At Aug. 31, 2018, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes for each Fund were as follows:

 

     Delaware     Delaware Tax-Free     Delaware Minnesota  
     Tax-Free     Minnesota     High-Yield Municipal  
     Minnesota Fund     Intermediate Fund     Bond Fund  

Cost of investments

    $ 536,019,816     $ 78,552,576     $ 174,076,537  
  

 

 

    

 

 

    

 

 

  

Aggregate unrealized appreciation of investments

    $ 13,696,242     $ 1,731,925     $ 3,589,638  

Aggregate unrealized depreciation of investments

      (2,521,694 )      (160,303 )      (1,553,334 ) 
  

 

 

    

 

 

    

 

 

  

Net unrealized appreciation of investments

    $ 11,174,548     $ 1,571,622     $ 2,036,304  
  

 

 

    

 

 

    

 

 

  

US GAAP defines fair value as the price that each Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below.

 

Level  1  –

Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, exchange-traded options contracts)

 

Level  2  –

Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates), or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities)

 

Level  3  –

Significant unobservable inputs, including each Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, fair valued securities)

 

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Level 3 investments are valued using significant unobservable inputs. Each Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.

The following tables summarize the valuation of each Fund’s investments by fair value hierarchy levels as of Aug. 31, 2018:

 

     Delaware
Tax-Free
Minnesota Fund
    

Level 2

Securities

     

Assets:

     

Municipal Bonds

      $ 540,379,364

Short-Term Investments

        6,815,000
    

 

 

  

Total Value of Securities

      $ 547,194,364
    

 

 

  
     Delaware Tax-Free
Minnesota
Intermediate Fund
    

Level 2

Securities

     

Assets:

     

Municipal Bonds

      $ 78,974,198

Short-Term Investments

        1,150,000
    

 

 

  

Total Value of Securities

      $ 80,124,198
    

 

 

  
     Delaware Minnesota
High-Yield Municipal
Bond Fund
    

Level 2

Securities

     

Assets:

     

Municipal Bonds

      $ 173,537,841

Short-Term Investments

        2,575,000
    

 

 

  

Total Value of Securities

      $ 176,112,841
    

 

 

  

During the year ended Aug. 31, 2018, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments that had a significant impact to each Fund. Each Fund’s policy is to recognize transfers between levels based on fair value at the beginning of the reporting period.

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

 

 

3. Investments (continued)

 

A reconciliation of Level 3 investments is presented when each Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to net assets. During the year ended Aug. 31, 2018, there were no Level 3 investments.

4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the years ended Aug. 31, 2018 and 2017 was as follows:

 

     Delaware      Delaware Tax-Free      Delaware Minnesota  
     Tax-Free      Minnesota      High-Yield Municipal  
     Minnesota Fund      Intermediate Fund      Bond Fund  

Year ended 8/31/18

         

Ordinary income

    $ 24,273      $ —      $ 30,002  

Tax-exempt income

      16,367,225        2,431,471        5,142,526  

Long-term capital gains

      2,768,366        368,988        —  
  

 

 

     

 

 

     

 

 

  

Total

    $ 19,159,864      $ 2,800,459      $ 5,172,528  
  

 

 

     

 

 

     

 

 

  

Year ended 8/31/17

         

Ordinary income

    $ 86,993      $ —      $ 29,439  

Tax-exempt income

      17,073,618        2,724,929        5,267,316  

Long-term capital gains

      —        143,499        —  
  

 

 

     

 

 

     

 

 

  

Total

    $ 17,160,611      $ 2,868,428      $ 5,296,755  
  

 

 

     

 

 

     

 

 

  

 

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5. Components of Net Assets on a Tax Basis

As of Aug. 31, 2018, the components of net assets on a tax basis were as follows:

 

     Delaware     Delaware Tax-Free     Delaware Minnesota  
     Tax-Free     Minnesota     High-Yield Municipal  
     Minnesota Fund     Intermediate Fund     Bond Fund  

Shares of beneficial interest

    $ 535,249,687     $ 77,847,870     $ 172,916,359  

Undistributed tax-exempt income

      153,830       51,469       125,937  

Qualified late year loss deferrals

      (171,130 )      (103,293 )      —  

Capital loss carryforwards

      —       —       (820,481 ) 

Distributions payable

      (394,218 )      (55,659 )      (125,937 ) 

Unrealized appreciation of investments

      11,174,548       1,571,622       2,036,304  
  

 

 

    

 

 

    

 

 

  

Net assets

    $ 546,012,717     $ 79,312,009     $ 174,132,182  
  

 

 

    

 

 

    

 

 

  

The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of market discount and premium on debt instruments and tax deferral of losses due to wash sales, if applicable.

Qualified late year capital losses represent losses realized from Nov. 1, 2017 through Aug. 31, 2018, that in accordance with federal income tax regulations, Delaware Tax-Free Minnesota Fund and Delaware Tax-Free Minnesota Intermediate Fund have elected to defer and treat as having arisen in the following fiscal year.

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments, redesignation of distributions, and expiration of capital loss carryforwards. Results of operations and net assets were not affected by these reclassifications.

For the year ended Aug. 31, 2018, each Fund recorded the following reclassifications:

 

     Delaware     Delaware Tax-Free     Delaware Minnesota  
     Tax-Free     Minnesota     High-Yield Municipal  
     Minnesota Fund     Intermediate Fund     Bond Fund  

Distributions in excess of net investment income

    $ (39,877 )    $ (3,754 )    $ 30,114  

Accumulated net realized gain (loss)

      39,877       3,754       2,944,398  

Paid-in capital

      —       —       (2,974,512 ) 

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

 

 

5. Components of Net Assets on a Tax Basis (continued)

 

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. At Aug. 31, 2018, $2,974,512 of capital loss carryforwards expired for Delaware Minnesota High-Yield Municipal Bond Fund.

Under the Regulated Investment Company Modernization Act of 2010 (Act), net capital losses recognized for tax years beginning after Dec. 22, 2010 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses. At Aug. 31, 2018, Delaware Tax-Free Minnesota Fund and Delaware Tax-Free Minnesota Intermediate Fund did not have any capital loss carryforwards.

At Aug. 31, 2018, capital loss carryforwards available to offset future realized capital gains for Delaware Minnesota High-Yield Municipal Bond Fund were as follows:

 

    

No expiration
Post-enactment capital loss character

     
    

Short-term

   

Long-term

   

Total

Delaware Minnesota High-Yield Municipal Bond Fund

      $ 820,481      $ —      $ 820,481

 

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6. Capital Shares

Transactions in capital shares were as follows:

 

                 Delaware Tax-Free     Delaware Minnesota  
     Delaware Tax-Free     Minnesota     High-Yield Municipal  
     Minnesota Fund     Intermediate Fund     Bond Fund  
    

 

Year ended

 

    

 

Year ended

 

    

 

Year ended

 

  
     8/31/18     8/31/17     8/31/18     8/31/17     8/31/18     8/31/17  

Shares sold:

             

Class A

      3,125,082       2,747,811       436,654       269,504       1,521,905       1,060,326  

Class C

      213,991       517,770       61,309       119,496       310,619       241,813  

Institutional Class

      4,490,186       4,787,117       499,420       1,004,436       2,291,763       3,027,526  

Shares issued upon reinvestment of dividends and distributions:

 

Class A

      996,278       917,146       158,251       163,261       218,090       250,746  

Class C

      96,954       88,474       21,615       22,320       55,726       63,226  

Institutional Class

      267,851       158,787       45,617       42,296       143,414       95,656  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     9,190,342       9,217,105       1,222,866       1,621,313       4,541,517       4,739,293  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Shares redeemed:

             

Class A

      (5,728,359 )      (7,273,577 )      (1,288,814 )      (1,227,248 )      (1,510,584 )      (3,146,683 ) 

Class C

      (1,441,859 )      (692,757 )      (355,611 )      (240,858 )      (1,296,104 )      (555,354 ) 

Institutional Class

      (1,965,838 )      (1,991,890 )      (1,168,219 )      (472,778 )      (1,535,704 )      (1,808,540 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (9,136,056 )      (9,958,224 )      (2,812,644 )      (1,940,884 )      (4,342,392 )      (5,510,577 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease)

      54,286       (741,119 )      (1,589,778 )      (319,571 )      199,125       (771,284 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

 

 

6. Capital Shares (continued)

 

Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the tables on the previous page and on the “Statements of changes in net assets.” For the years ended Aug. 31, 2018 and 2017, the Funds had the following exchange transactions:

 

     Year ended
8/31/18		  
    

Exchange

Redemptions

     

Exchange

Subscriptions

         
     Class A
Shares		      Class C
Shares		      Class A
Shares		      Institutional
Class
Shares		      Value  

Delaware Tax-Free Minnesota Fund

      179,677        324,507        282,986        222,704      $ 6,195,653  

Delaware Tax-Free Minnesota Intermediate Fund

      24,209        52,010        43,368        33,036        833,306  

Delaware Minnesota High-Yield Municipal Bond Fund

      47,282        241,837        232,144        57,805        3,092,167  

 

     Year ended
8/31/17		  
     Exchange Redemptions      Exchange
Subscriptions		         
     Class A
Shares		      Class C
Shares		      Institutional
Class
Shares		      Class A
Shares		      Institutional
Class
Shares		      Value  

Delaware Tax-Free Minnesota Fund

      1,100,450        32,124        3,022        6,248        1,131,525      $ 14,020,023  

Delaware Tax-Free Minnesota Intermediate Fund

      181,773        2,496        —        —        184,436        2,027,196  

Delaware Minnesota High-Yield Municipal Bond Fund

      723,695        16,753        —        —        742,303        7,897,713  

7. Line of Credit

Each Fund, along with certain other funds in the Delaware Funds (Participants), was a participant in a $155,000,000 revolving line of credit intended to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee of 0.15%, which was generally allocated across the Participants based on a weighted average of the respective net assets of each Participant. The Participants were permitted to borrow up to a maximum of one-third of their net assets under the agreement. Each Participant was individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the agreement expired on Nov. 6, 2017.

 

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On Nov. 6, 2017, each Fund, along with the other Participants, entered into an amendment to the agreement for a $155,000,000 revolving line of credit. The line of credit is to be used as described above and operates in substantially the same manner as the original agreement. The line of credit available under the agreement expires on Nov. 5, 2018.

The Funds had no amounts outstanding as of Aug. 31, 2018, or at any time during the year then ended.

8. Geographic, Credit, and Market Risks

The Funds concentrate their investments in securities issued by municipalities, mainly in Minnesota, and may be subject to geographic concentration risk. In addition, the Funds have the flexibility to invest in issuers in US territories and possessions such as the Commonwealth of Puerto Rico, the US Virgin Islands, and Guam, whose bonds are also free of federal and individual state income taxes.

The value of the Funds’ investments may be adversely affected by new legislation within the US state or territories, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons, and there is no certainty that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in each Fund. At Aug. 31, 2018, the percentages of each Fund’s net assets insured by bond insurers are listed below, and these securities have been identified in the “Schedules of investments.”

 

     Delaware   Delaware Tax-Free   Delaware Minnesota
     Tax-Free   Minnesota   High-Yield Municipal
     Minnesota Fund   Intermediate Fund   Bond Fund

Assured Guaranty Corporation

        4.71 %       4.21 %       1.00 %

Assured Guaranty Municipal Corporation

        0.96 %       1.45 %       1.48 %

National Public Finance Guarantee Corporation

        0.77 %       —       —
    

 

 

      

 

 

      

 

 

  
       6.44 %       5.66 %       2.48 %
    

 

 

      

 

 

      

 

 

  

Each Fund invests a portion of its assets in high yield fixed income securities, which are securities rated lower than BBB- by Standard & Poor’s Financial Services LLC (S&P), lower than Baa3 by Moody’s Investors Service Inc. (Moody’s), or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.

When interest rates rise, fixed income securities (i.e., debt obligations) generally will decline in value. These declines in value are greater for fixed income securities with longer maturities or durations.

Each Fund invests in certain obligations that may have liquidity protection designed to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained by the issuer or sponsor through third parties,

 

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Notes to financial statements

Delaware Funds® by Macquarie Minnesota municipal bond funds

 

 

 

8. Geographic, Credit, and Market Risks (continued)

 

through various means of structuring the transaction or through a combination of such approaches. Each Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.

Each Fund may invest in advance refunded bonds, escrow secured bonds, or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding.” Advance refunded bonds are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities, which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.

Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s, S&P, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A, promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Board has delegated to DMC, the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. Rule 144A securities have been identified on the “Schedules of investments.” Restricted securities are valued pursuant to the security valuation procedures described in Note 1.

9. Contractual Obligations

Each Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, each

 

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Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed each Fund’s existing contracts and expects the risk of loss to be remote.

10. Recent Accounting Pronouncements

In March 2017, the FASB issued an Accounting Standards Update, ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. The ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. At this time, management is evaluating the implications of these changes on the financial statements.

In August 2018, the FASB issued an Accounting Standards Update, ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU 2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reason for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the financial statements.

11. Subsequent Events

On Sept. 6, 2018, the credit facility that each Fund participates in was reduced from $155,000,000 to a $130,000,000 revolving line of credit. This line of credit will expire on Nov. 5, 2018.

Management has determined that no other material events or transactions occurred subsequent to Aug. 31, 2018, that would require recognition or disclosure in the Funds’ financial statements.

 

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Report of independent registered

public accounting firm

To the Board of Trustees of Voyageur Tax-Free Funds, Voyageur Intermediate Tax-Free Funds and Voyageur Mutual Funds and Shareholders of Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond Fund

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Delaware Tax-Free Minnesota Fund (constituting Voyageur Tax-Free Funds), Delaware Tax-Free Minnesota Intermediate Fund (constituting Voyageur Intermediate Tax-Free Funds) and Delaware Minnesota High-Yield Municipal Bond Fund (one of the funds constituting Voyageur Mutual Funds) (hereafter collectively referred to as the “Funds”) as of August 31, 2018, the related statements of operations for the year ended August 31, 2018, the statements of changes in net assets for each of the two years in the period ended August 31, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2018, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2018 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2018 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 17, 2018

We have served as the auditor of one or more investment companies in Delaware Funds® by Macquarie since 2010.

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie Minnesota municipal bond funds

Tax Information

The information set forth below is for each Fund’s fiscal year as required by federal income tax laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of the Funds. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in January of each year. Please consult your tax advisor for proper treatment of this information.

All disclosures are based on financial information available as of the date of this annual report and, accordingly are subject to change. For any and all items requiring reporting, it is the intention of the Funds to report the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

For the fiscal year ended Aug. 31, 2018, each Fund reports distributions paid during the year as follows:

 

     (A)   (B)   (C)    
    

 

Ordinary

  

 

Tax-Exempt

  

 

Long-Term

    
     Income   Income   Capital Gain   Total
             Distributions                   Distributions                   Distributions                   Distributions        
     (Tax Basis)   (Tax Basis)   (Tax Basis)   (Tax Basis)

Delaware Tax-Free Minnesota Fund

        0.13 %       85.42 %       14.45 %       100.00 %

Delaware Tax-Free Minnesota Intermediate Fund

        —       86.82 %       13.18 %       100.00 %

Delaware Minnesota High-Yield Municipal Bond Fund

        0.58 %       99.42 %       —       100.00 %

(A), (B) and (C) are based on a percentage of each Fund’s total distributions.

Board consideration of advisory agreements for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund

At a meeting held on Aug. 15-16, 2018 (the “Annual Meeting”), the Board of Trustees (the “Board”), including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory Agreements for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund (each, a “Fund” and together, the “Funds”). In making its decision, the Board considered information furnished at regular quarterly Board meetings, including reports detailing Fund performance, investment strategies, and expenses, as well as information prepared specifically in connection with the renewal of the investment advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreement with Delaware Management Company (“DMC”), a series of Macquarie Investment Management Business Trust (“MIMBT”) included materials provided by DMC and its affiliates (collectively, “Macquarie Investment Management”) concerning, among other things, the nature, extent, and quality of services provided to the Funds; the costs of such services to the Funds; economies of scale; and the investment manager’s financial condition and profitability. In addition, in connection with

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie Minnesota municipal bond funds

Board consideration of advisory agreements for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund (continued)

the Annual Meeting, materials were provided to the Trustees in May 2018, including reports provided by Broadridge Financial Solutions (“Broadridge”). The Broadridge reports compared each Fund’s investment performance and expenses with those of other comparable mutual funds. The Independent Trustees reviewed and discussed the Broadridge reports with independent legal counsel to the Independent Trustees. In addition to the information noted above, the Board also requested and received information regarding DMC’s policy with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; comparative client fee information; and any constraints or limitations on the availability of securities for certain investment styles, which had in the past year inhibited, or which were likely in the future to inhibit, the investment manager’s ability to invest fully in accordance with Fund policies.

In considering information relating to the approval of each Fund’s advisory agreement, the Independent Trustees received assistance and advice from and met separately with independent legal counsel to the Independent Trustees and also from an experienced and knowledgeable independent fund consultant, JDL Consultants, LLC (“JDL”). Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.

Nature, extent, and quality of service. The Board considered the services provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; compliance by DMC and Delaware Distributors, L.P. (together, “Management”) personnel with the Code of Ethics adopted throughout the Delaware Funds® by Macquarie (“Delaware Funds”); and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of DMC and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of certain favorable industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenses while maintaining service levels committed to Fund matters. The Board also noted the benefits provided to Fund shareholders (a) through each shareholder’s ability to: (i) exchange an investment in one Delaware Fund for the same class of shares in another Delaware Fund without a sales charge, or (ii) to reinvest Fund dividends into additional shares of the Fund or into additional shares of other Delaware Funds, and (b) the privilege to combine holdings in other Delaware Funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent, and quality of the overall services provided by DMC.

Investment performance. The Board placed significant emphasis on the investment performance of the Funds in view of the importance of investment performance to shareholders. Although the Board considered performance reports and discussions with portfolio managers at Investment Committee meetings throughout the year, the Board gave particular weight to the Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for each Fund showed the investment performance of its Class A shares in comparison to a group of similar funds as selected by Broadridge

 

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(the “Performance Universe”). A fund with the best performance ranked first, and a fund with the poorest performance ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next 25%, the third quartile; and the poorest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for each Fund was shown for the past 1-, 3-, 5-, and 10-year periods, to the extent applicable, ended Jan. 31, 2018. The Board’s objective is that each Fund’s performance for the 1-, 3-, and 5-year periods be at or above the median of its Performance Universe.

Delaware Tax-Free Minnesota Fund – The Performance Universe for the Fund consisted of the Fund and all retail and institutional Minnesota municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, 5-, and 10-year periods was in the second quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Tax-Free Minnesota Intermediate Fund – The Performance Universe for the Fund consisted of the Fund and all retail and institutional “other states” intermediate municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, 5-, and 10-year periods was in the first quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Minnesota High-Yield Municipal Bond Fund – Broadridge currently classifies the Fund as a Minnesota municipal debt fund. However, Management believes that it is more appropriate to include the Fund in the high yield municipal debt funds category, to provide a comparison to a representative peer group based on credit quality instead of a peer group based on state of issuance. Accordingly, the Broadridge report prepared for the Fund compares the Fund’s performance to two separate Performance Universes – one consisting of the Fund and all retail and institutional Minnesota municipal debt funds and the other consisting of the Fund and all retail and institutional high yield municipal debt funds. When compared to other Minnesota municipal debt funds, the Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, 5-, and 10-year periods was in the first quartile of its Performance Universe. When compared to other high yield municipal debt funds, the Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, and 5-year periods was in the fourth quartile of its Performance Universe and the Fund’s total return for the 10-year period was in the third quartile of its Performance Universe. The Board observed that, when compared to Minnesota municipal debt funds, the Fund’s performance was in line with the Board’s objective; however, when compared to high yield municipal debt funds, the Fund’s performance results were not in line with the Board’s objective. In evaluating the Fund’s performance, the Board considered the numerous investment and performance reports and other information delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to improve comparative Fund performance and to meet the Board’s performance objective.

Comparative expenses. The Board considered expense data for the Delaware Funds. Management provided the Board with information on pricing levels and fee structures for each Fund as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and total expense ratios of each Fund versus effective management fees and total expense ratios of a group of similar funds as selected by Broadridge (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie Minnesota municipal bond funds

Board consideration of advisory agreements for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund (continued)

by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) within the Expense Group, taking into account any applicable breakpoints and fee waivers. Each Fund’s total expenses were also compared with those of its Expense Group. The Broadridge total expenses, for comparative consistency, were shown by Broadridge for Class A shares and comparative total expenses including 12b-1 and non-12b-1 service fees. The Board’s objective is for each Fund’s total expense ratio to be competitive with those of the peer funds within its Expense Group.

Delaware Tax-Free Minnesota Fund – The expense comparisons for the Fund showed that its actual management fee was in the quartile with the second lowest expenses of its Expense Group and its total expenses were in the quartile with the highest expenses of its Expense Group. The Board gave favorable consideration to the Fund’s management fee, but noted that the Fund’s total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered waivers in place through December 2018 and various initiatives implemented by Management, such as the negotiation of lower fees for fund accounting and fund accounting oversight services, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Delaware Tax-Free Minnesota Intermediate Fund – The expense comparisons for the Fund showed that its actual management fee and total expenses were in the quartile with the second highest expenses of its Expense Group. The Board noted that the Fund’s management fee and total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered waivers in place through December 2018 and various initiatives implemented by Management, such as the negotiation of lower fees for fund accounting, fund accounting oversight services, and custody, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Delaware Minnesota High-Yield Municipal Bond Fund – When compared to other Minnesota municipal debt funds, the expense comparisons for the Fund showed that its actual management fee was in the quartile with the second highest expenses in its Expense Group and its total expenses were in the quartile with the highest expenses of the Expense Group. When compared to high yield municipal debt funds, the expense comparisons for the Fund showed that its actual management fee was in the quartile with the second lowest expenses of its Expense Group and its total expenses were in the quartile with the highest expenses of the Expense. The Board noted that the Fund’s total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered fee waivers in place through December 2018 and various initiatives implemented by Management, such as the negotiation of lower fees for fund accounting, fund accounting oversight services, and custody, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Management profitability. The Board considered the level of profits realized by DMC in connection with the operation of the Funds. In this respect, the Board reviewed the Investment Management Profitability

 

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Analysis that addressed the overall profitability of DMC’s business in providing management and other services to each of the individual funds and the Delaware Funds as a whole. Specific attention was given to the methodology used by DMC in allocating costs for the purpose of determining profitability. Management stated that the level of profits of DMC, to a certain extent, reflects recent operational cost savings and efficiencies initiated by DMC. The Board considered DMC’s efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange Commission initiatives. The Board also considered the extent to which DMC might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. As part of its work, the Board also reviewed a report prepared by JDL regarding MIMBT profitability as compared to certain peer fund complexes and the Independent Trustees met with JDL personnel to discuss DMC’s profitability in such context. The Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC.

Economies of scale. The Trustees considered whether economies of scale are realized by DMC as each Fund’s assets increase and the extent to which any economies of scale are reflected in the level of management fees charged. The Trustees reviewed the Funds’ advisory fee pricing and structure, approved by the Board and shareholders, which includes breakpoints, and which applies to most funds in the Delaware Funds complex. Breakpoints in the advisory fee occur when the advisory fee rate is reduced on assets in excess of specified levels. Breakpoints result in a lower advisory fee than would otherwise be the case in the absence of breakpoints, when the asset levels specified in the breakpoints are exceeded. The Board noted that, as of March 31, 2018, assets of Delaware Tax-Free Minnesota Fund exceeded the first breakpoint level. The Board believed that, given the extent to which economies of scale might be realized by DMC and its affiliates, the schedule of fees under the Investment Management Agreement provides a sharing of benefits with the Fund and its shareholders. Although, as of March 31, 2018, Delaware Tax-Free Minnesota Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond Fund had not reached a size at which they could take advantage of any breakpoints in the applicable fee schedule, the Board recognized that each Fund’s fee was structured so that if the Fund increases sufficiently in size, then economies of scale may be shared.

 

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Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

A mutual fund is governed by a Board of Trustees/Directors (“Trustees”), which has oversight responsibility for the management of a fund’s business affairs. Trustees establish procedures and oversee and review the performance of the investment manager, the distributor, and others who perform services for the fund. The independent fund trustees, in particular, are advocates

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

 

Interested Trustee

 

      

Shawn K. Lytle1, 2

2005 Market Street

Philadelphia, PA 19103

February 1970

   

President,

Chief Executive Officer,

and Trustee

   

Trustee since

September 2015

 

President and

Chief Executive Officer

since August 2015

 

 

Independent Trustees

 

      

Thomas L. Bennett

2005 Market Street

Philadelphia, PA 19103

October 1947

    Chair and Trustee   

Trustee since

March 2005

 

Chair since

March 2015

 

Ann D. Borowiec

2005 Market Street

Philadelphia, PA 19103

November 1958

 

    Trustee    Since March 2015

Joseph W. Chow

2005 Market Street

Philadelphia, PA 19103

January 1953

 

 

    Trustee    Since January 2013

 

1 

Shawn K. Lytle is considered to be an “Interested Trustee” because he is an executive officer of the Fund’s(s’) investment advisor.

2 

Shawn K. Lytle, David F. Connor, Daniel V. Geatens, and Richard Salus serve in similar capacities for the six portfolios of the Optimum Fund Trust, which have the same investment advisor, principal underwriter, and transfer agent as the registrant. Mr. Geatens also serves as the Chief Financial Officer and Treasurer for Macquarie Global Infrastructure Total Return Fund Inc., which has an affiliated investment manager.

 

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for shareholder interests. Each trustee has served in that capacity since he or she was elected to or appointed to the Board of Trustees, and will continue to serve until his or her retirement or the election of a new trustee in his or her place. The following is a list of the Trustees and Officers with certain background and related information.

 

Principal Occupation(s)

During the Past Five Years

   

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

   

Other Directorships

Held by Trustee or Officer

     

President — Macquarie

Investment Management3

(June 2015–Present)

 

Regional Head of

Americas — UBS Global

Asset Management

(April 2010–May 2015)

    59   

Trustee — UBS

Relationship Funds,

SMA Relationship

Trust, and UBS Funds

(May 2010–April 2015)

     

Private Investor

(March 2004–Present)

    59   

None

 

Chief Executive Officer,

Private Wealth Management

(2011–2013) and

Market Manager,

New Jersey Private

Bank (2005–2011) —

J.P. Morgan Chase & Co.

    59   

Director —

Banco Santander International (October 2016–Present)

 

Director —

Santander Bank, N.A.

(December 2016–Present)

 

Private Investor

(April 2011–Present)

    59   

Director and Audit Committee

Member — Hercules

Technology Growth

Capital, Inc.

(July 2004–July 2014)

 

 

  3 

Macquarie Investment Management is the marketing name for Macquarie Management Holdings, Inc. and its subsidiaries, including the Fund’s(s’) investment advisor, principal underwriter, and its transfer agent.

 

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Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

 

Independent Trustees (continued)

 

      

John A. Fry

2005 Market Street

Philadelphia, PA 19103

May 1960

 

    Trustee    Since January 2001

Lucinda S. Landreth

2005 Market Street

Philadelphia, PA 19103

June 1947

 

    Trustee    Since March 2005

Frances A. Sevilla-Sacasa

2005 Market Street

Philadelphia, PA 19103

January 1956

 

    Trustee    Since September 2011

 

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Principal Occupation(s)

During the Past Five Years

   

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

   

Other Directorships

Held by Trustee or Officer

     

President —

Drexel University

(August 2010–Present)

 

President —

Franklin & Marshall College

(July 2002–July 2010)

    59   

Director; Compensation

Committee and

Governance Committee

Member — Community

Health Systems

 

Director — Drexel

Morgan & Co.

 

Director; Audit Committee

Member — vTv

Therapeutics LLC

 

Director; Audit Committee

Member — FS Credit Real

Estate Income Trust, Inc.

Private Investor

(2004–Present)

 

    59    None

Private Investor

(January 2017–Present)

 

Chief Executive Officer —

Banco Itaú

International

(April 2012–December 2016)

 

Executive Advisor to Dean

(August 2011–March 2012)

and Interim Dean

(January 2011–July 2011) —

University of Miami School of

Business Administration

 

    59   

Trust Manager and

Audit Committee

Chair — Camden

Property Trust

(August 2011–Present)

 

Director —

Carrizo Oil & Gas, Inc.

(March 2018–Present)

President — U.S. Trust,

Bank of America Private

Wealth Management

(Private Banking)

(July 2007–December 2008)

 

          

 

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Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

 

Independent Trustees (continued)

 

      

Thomas K. Whitford

2005 Market Street

Philadelphia, PA 19103

March 1956

 

    Trustee    Since January 2013

Janet L. Yeomans

2005 Market Street

Philadelphia, PA 19103

July 1948

 

    Trustee    Since April 1999

 

Officers

 

      

David F. Connor

2005 Market Street

Philadelphia, PA 19103

December 1963

   

Senior Vice President,

General Counsel,

and Secretary

   

Senior Vice President

since May 2013;

General Counsel

since May 2015;

Secretary since

October 2005

 

Daniel V. Geatens

2005 Market Street

Philadelphia, PA 19103

October 1972

 

   

Vice President

and Treasurer

   

Vice President and

Treasurer since October 2007

Richard Salus

2005 Market Street

Philadelphia, PA 19103

October 1963

 

   

Senior Vice President

and Chief Financial Officer

   

Senior Vice President and

Chief Financial Officer

since November 2006

The Statement of Additional Information for the Fund(s) includes additional information about the Trustees and Officers and is available, without charge, upon request by calling 800 523-1918.

 

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Principal Occupation(s)

During the Past Five Years

  

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

  

Other Directorships

Held by Trustee or Officer

   

Vice Chairman

(2010–April 2013) —

PNC Financial

Services Group

   59  

Director — HSBC Finance

Corporation and HSBC

North America Holdings Inc.

(December 2013–Present)

 

Director —

HSBC USA Inc.

(July 2014–March 2017)

Vice President and Treasurer

(January 2006–July 2012),

Vice President —

Mergers & Acquisitions

(January 2003–January 2006),

and Vice President

and Treasurer

(July 1995–January 2003) —

3M Company

   59  

Director (2009–2017);

Personnel and Compensation

Committee Chair; Member of

Nominating, Investments, and

Audit Committees for various

periods throughout

directorship —

Okabena Company

   

David F. Connor has served

in various capacities at

different times at

Macquarie Investment

Management.

 

   59   None2

Daniel V. Geatens has served

in various capacities at

different times at

Macquarie Investment

Management.

 

   59   None2

Richard Salus has served

in various executive capacities

at different times at

Macquarie Investment

Management.

 

   59   None2

 

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About the organization

 

Board of trustees         

Shawn K. Lytle

President and

Chief Executive Officer

Delaware Funds®

by Macquarie

Philadelphia, PA

 

Thomas L. Bennett

Chairman of the Board

Delaware Funds

by Macquarie

Private Investor

Rosemont, PA

   

Ann D. Borowiec

Former Chief Executive

Officer

Private Wealth Management

J.P. Morgan Chase & Co.

New York, NY

 

Joseph W. Chow

Former Executive Vice

President

State Street Corporation

Boston, MA

Boston, MA

   

John A. Fry

President

Drexel University

Philadelphia, PA

 

Lucinda S. Landreth

Former Chief Investment

Officer

Assurant, Inc.

New York, NY

    Frances A.

Sevilla-Sacasa

Former Chief Executive

Officer

Banco Itaú International

Miami, FL

 

Thomas K. Whitford

Former Vice Chairman

PNC Financial Services Group

Pittsburgh, PA

 

Janet L. Yeomans

Former Vice President and
Treasurer

3M Company

St. Paul, MN

 

Affiliated officers         
David F. Connor    Daniel V. Geatens    Richard Salus   
Senior Vice President,    Vice President and    Senior Vice President and   
General Counsel,    Treasurer    Chief Financial Officer   
and Secretary    Delaware Funds    Delaware Funds   
Delaware Funds    by Macquarie    by Macquarie   

by Macquarie

Philadelphia, PA

    Philadelphia, PA    Philadelphia, PA   

This annual report is for the information of Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.

 

 

Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. Each Fund’s Forms N-Q, as well as a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities and the Schedules of Investments included in the Funds’ most recent Forms N-Q are available without charge on the Funds’ website at delawarefunds.com/literature. Each Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.

Information (if any) regarding how the Funds voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Funds’ website at delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.

 

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LOGO

Fixed income mutual funds

Delaware Tax-Free USA Fund

Delaware Tax-Free USA Intermediate Fund

Delaware National High-Yield Municipal Bond Fund

August 31, 2018

Carefully consider the Funds’ investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds’ prospectus and their summary prospectuses, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

You can obtain shareholder reports and prospectuses online instead of in the mail.

Visit delawarefunds.com/edelivery.

 

LOGO

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Experience Delaware Funds® by Macquarie

Macquarie Investment Management (MIM) is a global asset manager with offices throughout the United States, Europe, Asia, and Australia. We are active managers who prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for our clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 75 years in existence.

If you are interested in learning more about creating an investment plan, contact your financial advisor.

You can learn more about Delaware Funds or obtain a prospectus for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund at delawarefunds.com/literature.

 

Manage your account online

 

●   Check your account balance and transactions
●   View statements and tax forms
●   Make purchases and redemptions

Visit delawarefunds.com/account-access.

Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following registered investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, and Macquarie Capital Investment Management LLC.

The Funds are distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.

Other than Macquarie Bank Limited (MBL), none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Funds are governed by US laws and regulations.

Table of contents

 

Portfolio management review

      1  

Performance summaries

      5  

Disclosure of Fund expenses

      20  

Security type / sector / state / territory allocations

      23  

Schedules of investments

      29  

Statements of assets and liabilities

      82  

Statements of operations

      84  

Statements of changes in net assets

      86  

Financial highlights

      92  

Notes to financial statements

      110  

Report of independent registered public accounting firm

      127  

Other Fund information

      128  

Board of trustees / directors and officers addendum

      134  

About the organization

      140  

Unless otherwise noted, views expressed herein are current as of Aug. 31, 2018, and subject to change for events occurring after such date.

The Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.

Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.

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

© 2018 Macquarie Management Holdings, Inc.

 

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Portfolio management review

 

Delaware Funds® by Macquarie national tax-free funds    September 11, 2018

 

 

Performance preview (for the year ended August 31, 2018)

Delaware Tax-Free USA Fund (Institutional Class shares)

    1-year return    +1.61%

Delaware Tax-Free USA Fund (Class A shares)

    1-year return    +1.44%

Bloomberg Barclays Municipal Bond Index (benchmark)

    1-year return    +0.49%

Lipper General & Insured Municipal Debt Funds Average

    1-year return    +0.84%

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free USA Fund, please see the table on page 5.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper General & Insured Municipal Debt Funds Average compares funds that either invest primarily in municipal debt issues in the top four credit ratings or invest primarily in municipal debt issues insured as to timely payment.

Please see page 9 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

Delaware Tax-Free USA Intermediate Fund (Institutional Class shares)

    1-year return    +0.75%

Delaware Tax-Free USA Intermediate Fund (Class A shares)

    1-year return    +0.57%

Bloomberg Barclays 3–15 Year Blend Municipal Bond Index (benchmark)

    1-year return    +0.04%

Lipper Intermediate Municipal Debt Funds Average

    1-year return    +0.04%

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free USA Intermediate Fund, please see the table on page 10.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Intermediate Municipal Debt Funds Average compares funds that invest in municipal debt issues with dollar-weighted average maturities of 5 to 10 years.

Please see page 14 for a description of the Index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

Delaware National High-Yield Municipal Bond Fund (Institutional Class shares)    1-year return    +4.07%
Delaware National High-Yield Municipal Bond Fund (Class A shares)    1-year return    +3.80%
Bloomberg Barclays Municipal Bond Index (benchmark)    1-year return    +0.49%
Lipper High Yield Municipal Debt Funds Average    1-year return    +3.24%

Past performance does not guarantee future results.

For complete, annualized performance for Delaware National High-Yield Municipal Bond Fund, please see the table on page 15.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper High Yield Municipal Debt Funds Average compares funds that invest at least 50% of assets in lower-rated municipal debt issues.

Please see page 19 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

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Portfolio management review

Delaware Funds® by Macquarie national tax-free funds

 

Economic backdrop

US economic data remained healthy throughout the Funds’ fiscal year ended Aug. 31, 2018, although concern about the longer-term impact of global trade conflict emerged toward period end.

US gross domestic product (GDP), a measure of the goods and services the nation produces, increased throughout the fiscal year. In the third quarter of 2017, for example, US GDP expanded by an annualized 2.8% rate, followed by a 2.3% increase in the fourth quarter of 2017. US GDP grew by 2.2% in the first quarter of 2018 and an estimated 4.2% in the second quarter. That 4.2% annual pace was the largest quarterly gain in nearly four years. Employment trends also remained healthy, with the US jobless rate finishing August 2018 at 3.9%, down half a percentage point from a year earlier. (Source: US Bureau of Economic Analysis and US Bureau of Labor Statistics.)

Against this backdrop of steady economic expansion, job growth, and manageable inflation, the US Federal Reserve continued to gradually raise interest rates. The Fed increased its target short-term interest rate by 0.25 percentage points on three separate occasions during the Funds’ fiscal year — in December 2017 and in March and June 2018. On Aug. 31, 2018, the federal funds rate ranged from 1.75% to 2.00%, up from 1.00% to 1.25% a year earlier.

(Source: Bloomberg.)

Municipal bond market conditions

In this strong economic environment, the US municipal bond market, as measured by the Bloomberg Barclays Municipal Bond Index, returned +0.49% for the fiscal year ended Aug. 31, 2018. Longer-term municipal bonds outpaced their shorter-term counterparts as the yield curve flattened, meaning yields on short-term bonds rose more than those on long-term issues. Short-term yields rose in line with the Fed’s

interest rate increases, while fairly benign inflation kept a lid on long-term municipal yields.

To indicate the outperformance of longer-dated municipal debt relative to shorter-maturity municipal debt, the following table shows municipal bond returns by maturity for the Funds’ fiscal year ended Aug. 31, 2018:

 

Returns by maturity   

5 years

    -0.74%

10 years

    -0.10%

22+ years

    1.28%

Source: Bloomberg.

   

Much of the yield curve’s flattening took place in the fourth quarter of 2017, as investors sought to understand the potential market impact of federal tax reform legislation, which ultimately passed in late December. During this time, the supply of municipal bonds increased sharply, as issuers, anticipating unfavorable tax-policy changes, rushed debt to market. One of these expected changes — the ability to issue so-called private-activity bonds, a broad category that includes healthcare, private education, and toll road bonds, among others — didn’t make it into the final legislation.

However, another proposed change did come to pass: the elimination of advance refundings. Under the new legislation, issuers wishing to refinance bonds through the issuance of newer debt must do so within 90 days of the bonds’ call dates. Many issuers ultimately opted to bring their debt to market ahead of the law’s passage. This situation led to tighter bond supply in the second half of the Funds’ fiscal year, which, coupled with solid investor demand, provided a tailwind for the municipal bond market.

Continuing a trend in place for several years, bonds of lower-rated municipal issuers again outperformed bonds of higher-quality issuers — a situation known as credit spread narrowing. As investors anticipated that interest rates would continue to rise slowly, lower-rated, higher yielding

 

 

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municipal bonds remained attractive to investors in a continued low-rate environment. Bonds rated below investment grade (below BBB) performed especially well amid strong demand coupled with limited supply of the securities.

The following table, which provides municipal bond performance by credit quality rating for the Funds’ fiscal year, further highlights this trend:

 

Returns by credit rating

   

AAA

    -0.23%

AA

    0.22%

A

    0.78%

BBB

    2.76%

BB and below

    6.21%

Source: Bloomberg.

Focused on credit research

For the three Funds discussed in this report, we maintained a consistent management strategy, which we do regardless of market conditions. We have a bottom-up investment approach, meaning we evaluate individual securities one at a time. We rely on individual credit research to find securities that we believe provide a desirable risk-reward balance.

This approach often leads to substantial allocations within the Funds to bonds in the lower-investment-grade or below-investment-grade credit tiers, where we seek to add value for shareholders through higher yielding bonds that, in our view, display solid underlying credit.

As of the fiscal year end on Aug. 31, 2018, approximately 41% of the net assets of Delaware Tax-Free USA Fund was invested in bonds with credit ratings of A and BBB, the two lowest credit tiers of the investment grade bond universe. Roughly 43% of the net assets of Delaware Tax-Free USA Intermediate Fund was held in these credit tiers.

In addition, both Funds had meaningful allocations to high yield municipal bonds, securities with credit ratings below BBB. By prospectus, these

two Funds have the latitude to invest up to 20% of the portfolio in these credit tiers, although the full allocation was not utilized throughout the period. When investing in this segment of the market, we pay close attention to credit risk, focusing on securities that we believe offer sufficiently attractive income relative to the added risk.

Consistent with its mandate, Delaware National High-Yield Municipal Bond Fund had the largest exposure to below-investment-grade bonds of the three Funds. As of Aug. 31, 2018, nearly 60% of the Fund’s net assets was invested in bonds rated below BBB, including nonrated bonds.

Portfolio positioning

We entered this fiscal year generally comfortable with the Funds’ positioning. As a result, we were highly selective about making new purchases, seeking securities that provided what we viewed as a compelling risk-reward trade-off.

In all three Funds, and particularly in the longer-maturity Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund, many of our holdings were originally purchased a decade or more ago when significantly higher yields were available. Thus, we have tended not to replace many existing positions with newer bonds, unless we believe they offer sufficient value to justify such an exchange. Once again, that remained our strategy over the past 12 months, and we expect to continue this approach as long as most of the Funds’ existing holdings remain more attractive to us than the new bonds available for purchase.

Notable performance factors

As indicated earlier, bonds with longer maturities tended to outperform shorter-maturity bonds, while lower-rated issues generally performed better than bonds of higher credit quality. Accordingly, many of the Funds’ strongest- and weakest-performing securities during this fiscal year followed this trend.

 

 

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Portfolio management review

Delaware Funds® by Macquarie national tax-free funds

 

The leading individual performer in all three Funds, for example, was a position in zero-coupon Golden State tobacco-securitization bonds. These below-investment-grade issues returned 37%, benefiting from continued strong demand coupled with a shrinking national supply of tobacco bonds as several states opted to refund their tobacco-securitization issues during the period. Investors began to anticipate that the Golden State tobacco bonds would be refunded, boosting their price. A separate California tobacco bond issue for Fresno County also performed well, adding to the results of Delaware National High-Yield Municipal Bond Fund.

Another notably strong performer in Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund was a position in nonrated tax-increment-finance bonds of Wyandotte County (Kansas). Although these bonds lacked especially long maturities, their below-investment-grade credit profile provided a tailwind for the securities’ performance. Meanwhile, in Delaware National High-Yield Municipal Bond Fund, zero-coupon bonds for the North Star Charter School in Eagle, Idaho, performed notably well, benefiting from their long maturities and lower credit rating, as well as the school’s improved financial performance relative to past years.

In contrast, the Funds’ biggest individual detractors tended to be bonds displaying some combination of short maturities, higher credit ratings, or both. In Delaware Tax-Free USA Fund, for example, the Fund was hampered by AA-rated San Antonio electric utility bonds maturing in 2024.

Pre-refunded bonds issued for Illinois healthcare provider Memorial Group also hampered this Fund, as well as Delaware Tax-Free USA Intermediate Fund. These securities’ near-term maturity and high credit quality (due to their backing by escrowed US government bonds) resulted in a modestly negative return. A position in New York City Transitional Finance Authority dedicated-tax bonds, which featured the highest possible credit rating of AAA and an eight-year maturity, also detracted from Delaware Tax-Free USA Intermediate Fund.

In Delaware National High-Yield Municipal Bond Fund, the largest detractor was a position in BB-rated Texas bonds for the Buckingham Senior Living Community. Although these securities struggled as the issuer experienced management turnover and a weakening financial position, we are hopeful that a return to an earlier management team could lead to better future financial performance for the securities.

Performance for Delaware National High-Yield Municipal Bond Fund was also hampered by a position in Encore Education charter school bonds. Despite their relatively lower credit rating and longer maturity, the issuer fell short of meeting certain academic standards, causing the bonds to lag during the period, declining more than 3%. We continued to see the issuer as creditworthy, however, and maintained the Fund’s position, anticipating better results in the future.

 

 

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Performance summaries
Delaware Tax-Free USA Fund    August 31, 2018

 

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1, 2      Average annual total returns through August 31, 2018      
        1 year          5 years        10 years        Lifetime       

Class A (Est. Jan. 11, 1984)

                    

Excluding sales charge

        +1.44%          +4.52%          +4.69%          +6.41%      

Including sales charge

        -3.12%          +3.57%          +4.21%          +6.27%      

Class C (Est. Nov. 29, 1995)

                    

Excluding sales charge

        +0.68%          +3.73%          +3.90%          +3.69%      

Including sales charge

        -0.30%          +3.73%          +3.90%          +3.69%      

Institutional Class (Est. Dec. 31, 2008)

                    

Excluding sales charge

        +1.61%          +4.76%          n/a             +5.98%      

Including sales charge

        +1.61%          +4.76%          n/a             +5.98%      

Bloomberg Barclays Municipal Bond Index

        +0.49%          +4.12%          +4.32%          +4.91%*      

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 7. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. The Board has adopted a formula for calculating 12b-1 plan fees for the Fund’s

Class A shares. The Fund’s Class A shares are currently subject to a blended 12b-1 fee equal to the sum of: (i) 0.10% of average daily net assets representing shares acquired prior to June 1, 1992, and (ii) 0.25% of average daily net assets representing shares acquired on or after June 1, 1992. All Class A shares currently bear 12b-1 fees at the same rate, the blended rate, currently 0.25% of average daily net assets, based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. Performance for Class A shares, excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that

 

 

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Performance summaries

Delaware Tax-Free USA Fund

 

contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s, Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

 

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2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating 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 (collectively, nonroutine expenses)) from exceeding 0.56% of the Fund’s average daily net assets during the period from Sept. 1, 2017 through Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios   Class A   Class C       Institutional Class    

Total annual operating expenses

   0.96%   1.71%   0.71%    

(without fee waivers)

      

Net expenses

   0.81%   1.56%   0.56%    

(including fee waivers, if any)

      

Type of waiver

       Contractual           Contractual           Contractual    

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

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Performance summaries

Delaware Tax-Free USA Fund

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

Institutional Class shares

Average annual total returns from Dec. 31, 2008 (inception date) through Aug. 31, 2018

 

LOGO

 

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1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2008, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2008.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 7. Please note additional details on pages 5 through 9.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 
     Nasdaq symbols   CUSIPs      

Class A

   DMTFX   245909106   

Class C

   DUSCX   245909700   

Institutional Class

   DTFIX     24610H104     

 

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Performance summaries
Delaware Tax-Free USA Intermediate Fund    August 31, 2018

 

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1, 2      Average annual total returns through August 31, 2018      
        1 year          5 years          10 years        Lifetime        

Class A (Est. Jan. 7, 1993)

                    

Excluding sales charge

        +0.57%          +3.09%          +3.58%          +4.60%      

Including sales charge

        -2.18%          +2.52%          +3.29%          +4.48%      

Class C (Est. Nov. 29, 1995)

                    

Excluding sales charge

        -0.28%          +2.20%          +2.70%          +3.41%      

Including sales charge

        -1.25%          +2.20%          +2.70%          +3.41%      

Institutional Class (Est. Dec. 31, 2008)

                    

Excluding sales charge

        +0.75%          +3.22%          n/a             +4.25%      

Including sales charge

        +0.75%          +3.22%          n/a             +4.25%      

Bloomberg Barclays 3–15 Year Blend

                    

Municipal Bond Index

        +0.04%          +3.43%          +4.00%          +4.21%*     

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 12. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 2.75%, and have an annual distribution and service fee of 0.25% of average

daily net assets. This fee was contractually limited to 0.15% of average daily net assets from Sept. 1, 2017 through Aug. 31, 2018.** Performance for Class A shares, excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

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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.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local taxes and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s, Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

 

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Performance summaries

Delaware Tax-Free USA Intermediate Fund

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating 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 (collectively, nonroutine expenses)) from exceeding 0.50% of the Fund’s average daily net assets during the period from April 1, 2018 to Aug. 31, 2018.*** Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section of this report for the most recent expense ratios.

 

Fund expense ratios   Class A   Class C       Institutional Class    

Total annual operating expenses

(without fee waivers)

   0.93%   1.68%   0.68%

Net expenses

(including fee waivers, if any)

   0.65%   1.50%   0.50%

Type of waiver

       Contractual           Contractual           Contractual    

**The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

***For the period Sept. 1, 2017 to March 31, 2018, the waiver was set at 0.60% of the Fund’s average daily net assets. The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through April 1, 2019.

 

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Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

Institutional Class shares

Average annual total returns from Dec. 31, 2008 (inception date) through Aug. 31, 2018

 

LOGO

 

13

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Performance summaries

Delaware Tax-Free USA Intermediate Fund

 

1The “Performance of a $10,000 investment” graph for Class A share assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 2.75% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays 3–15 Year Blend Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2008, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays 3–15 Year Blend Municipal Bond Index as of Dec. 31, 2008.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense limitations were in effect for some or all of the periods shown. Performance would have been

lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 12. Please note additional details on pages 10 through 14.

The Bloomberg Barclays 3–15 Year Blend Municipal Bond Index measures the total return performance of investment grade, US tax-exempt bonds with maturities from 2 to 17 years.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 
     Nasdaq symbols   CUSIPs          

Class A

   DMUSX   245909304    

Class C

   DUICX     245909882    

Institutional Class

   DUSIX    

24610H203

        

 

14

Table of Contents
Performance summaries
Delaware National High-Yield Municipal Bond Fund    August 31, 2018

 

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1, 2      Average annual total returns through August 31, 2018      
        1 year          5 years          10 years         Lifetime        

Class A (Est. Sept. 22, 1986)

                    

Excluding sales charge

        +3.80%          +6.88%          +6.18%          +6.22%      

Including sales charge

        -0.87%          +5.91%          +5.69%          +6.07%      

Class C (Est. May 26, 1997)

                    

Excluding sales charge

        +3.03%          +6.07%          +5.38%          +4.56%      

Including sales charge

        +2.03%          +6.07%          +5.38%          +4.56%      

Institutional Class (Est. Dec. 31, 2008)

                    

Excluding sales charge

        +4.07%          +7.14%          n/a             +9.04%      

Including sales charge

        +4.07%          +7.14%          n/a             +9.04%      

Bloomberg Barclays Municipal Bond Index

        +0.49%          +4.12%          +4.32%          +4.91%*      

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 17. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. Performance for Class A shares,

excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

15

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Performance summaries

Delaware National High-Yield Municipal Bond Fund

 

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.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local taxes and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

 

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s, Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

 

16

Table of Contents

    

    

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating 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 (collectively, nonroutine expenses)) from exceeding 0.60% of the Fund’s average daily net assets during the period from Sept. 1, 2017 through Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section of this report for the most recent expense ratios.

 

Fund expense ratios      Class A   Class C   Institutional Class    

Total annual operating expenses

(without fee waivers)

      0.94%   1.69%   0.69%    

Net expenses

(including fee waivers, if any)

      0.85%   1.60%   0.60%    

Type of waiver

          Contractual           Contractual           Contractual    

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

17

Table of Contents

Performance summaries

Delaware National High-Yield Municipal Bond Fund

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

Institutional Class shares

Average annual total returns from Dec. 31, 2008 (inception date) through Aug. 31, 2018

 

LOGO

 

18

Table of Contents

    

    

 

1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2008, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2008.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 17. Please note additional details on pages 15 through 19.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 

     Nasdaq symbols   CUSIPs             

Class A

   CXHYX    928928241    

Class C

   DVHCX   928928225             

Institutional Class

   DVHIX     24610H302        

 

19

Table of Contents

Disclosure of Fund expenses

For the six-month period from March 1, 2018 to August 31, 2018 (Unaudited)

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. These following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from March 1, 2018 to Aug. 31, 2018.

Actual expenses

The first section of the tables shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The second section of the tables shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Funds’ expenses shown in the tables reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions.

 

20

Table of Contents

    

    

 

Delaware Tax-Free USA Fund

Expense analysis of an investment of $1,000

 

     Beginning
Account Value
3/1/18		   Ending
Account Value
8/31/18		   Annualized
Expense Ratio		  

Expenses

Paid During Period
3/1/18 to 8/31/18*

Actual Fund return†

               

Class A

       $1,000.00       $1,020.10       0.81 %       $4.12

Class C

       1,000.00       1,016.20       1.56 %       7.93

Institutional Class

       1,000.00       1,020.50       0.56 %       2.85
Hypothetical 5% return (5% return before expenses)

 

        

Class A

       $1,000.00       $1,021.12       0.81 %       $4.13

Class C

       1,000.00       1,017.34       1.56 %       7.93

Institutional Class

       1,000.00       1,022.38       0.56 %       2.85
Delaware Tax-Free USA Intermediate Fund

 

        
Expense analysis of an investment of $1,000

 

        
     Beginning
Account Value
3/1/18		   Ending
Account Value
8/31/18		   Annualized
Expense Ratio		  

Expenses

Paid During Period
3/1/18 to 8/31/18*

Actual Fund return†

               

Class A

       $1,000.00       $1,017.30       0.67 %       $3.41

Class C

       1,000.00       1,012.10       1.52 %       7.71

Institutional Class

       1,000.00       1,017.20       0.52 %       2.64
Hypothetical 5% return (5% return before expenses)

 

        

Class A

       $1,000.00       $1,021.83       0.67 %       $3.41

Class C

       1,000.00       1,017.54       1.52 %       7.73

Institutional Class

       1,000.00       1,022.58       0.52 %       2.65

 

21

Table of Contents

Disclosure of Fund expenses

For the six-month period from March 1, 2018 to August 31, 2018 (Unaudited)

 

Delaware National High-Yield Municipal Bond Fund

Expense analysis of an investment of $1,000

 

     Beginning
Account Value
3/1/18		   Ending
Account Value
8/31/18		   Annualized
Expense Ratio		  

Expenses

 Paid During Period
3/1/18 to 8/31/18*

Actual Fund return†

               

Class A

     $ 1,000.00     $ 1,029.90       0.85 %     $ 4.35

Class C

       1,000.00       1,026.00       1.60 %       8.17

Institutional Class

       1,000.00       1,031.10       0.60 %       3.07
Hypothetical 5% return (5% return before expenses)

 

        

Class A

     $ 1,000.00     $ 1,020.92       0.85 %     $ 4.33

Class C

       1,000.00       1,017.14       1.60 %       8.13

Institutional Class

       1,000.00       1,022.18       0.60 %       3.06

 

*“

Expenses Paid During Period” are equal to the relevant Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

 

† 

Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns.

 

22

Table of Contents
Security type / sector / state / territory allocations
Delaware Tax-Free USA Fund    As of August 31, 2018 (Unaudited)

 

Sector designations may be different than the sector designations presented in other fund materials.

 

Security type / sector    Percentage of net assets    

Municipal Bonds*

    98.68%  

Corporate Revenue Bonds

    14.78%  

Education Revenue Bonds

      6.25%  

Electric Revenue Bonds

      2.97%  

Healthcare Revenue Bonds

    13.09%  

Lease Revenue Bonds

      3.95%  

Local General Obligation Bonds

    10.63%  

Pre-Refunded/Escrowed to Maturity Bonds

    16.76%  

Special Tax Revenue Bonds

      6.47%  

State General Obligation Bonds

      8.43%  

Transportation Revenue Bonds

    14.09%  

Water & Sewer Revenue Bonds

      1.26%  

Short-Term Investments

      1.31%  

Total Value of Securities

    99.99%  

Receivables and Other Assets Net of Liabilities

      0.01%  

Total Net Assets

    100.00%  

* As of the date of this report, Delaware Tax-Free USA Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets    

Alabama

      1.24%  

Alaska

      0.86%  

Arizona

      4.61%  

California

    17.46%  

Colorado

      2.58%  

Connecticut

      1.38%  

Delaware

      0.13%  

Florida

      0.73%  

Georgia

      1.00%  

Illinois

      7.04%  

Indiana

      0.74%  

Kansas

      0.24%  

Louisiana

      0.42%  

Maryland

      7.65%  

Massachusetts

      1.43%  

Minnesota

      1.34%  

Mississippi

      0.76%  

Missouri

      2.06%  

Nebraska

      2.04%  

New Jersey

      6.86%  

 

23

Table of Contents

Security type / sector / state / territory allocations

Delaware Tax-Free USA Fund

 

State / territory    Percentage of net assets    

New York

    13.68%  

North Carolina

      1.92%  

Ohio

      4.62%  

Oklahoma

      3.04%  

Oregon

      0.18%  

Pennsylvania

      3.13%  

Tennessee

      0.95%  

Texas

      7.75%  

US Virgin Islands

      0.06%  

Utah

      0.66%  

Virginia

      1.88%  

Wisconsin

      1.55%  

Total Value of Securities

    99.99%  

 

24

Table of Contents
Security type / sector / state / territory allocations
Delaware Tax-Free USA Intermediate Fund    As of August 31, 2018 (Unaudited)

 

Sector designations may be different than the sector designations presented in other fund materials.

 

Security type / sector    Percentage of net assets    

Municipal Bonds*

      98.97%  

Corporate Revenue Bonds

      16.26%  

Education Revenue Bonds

        5.19%  

Electric Revenue Bonds

        3.25%  

Healthcare Revenue Bonds

        9.44%  

Lease Revenue Bonds

        4.69%  

Local General Obligation Bonds

        5.72%  

Pre-Refunded/Escrowed to Maturity Bonds

      11.20%  

Special Tax Revenue Bonds

        9.22%  

State General Obligation Bonds

      14.74%  

Transportation Revenue Bonds

      16.08%  

Water & Sewer Revenue Bonds

        3.18%  

Short-Term Investments

        1.31%  

Total Value of Securities

    100.28%  

Liabilities Net of Receivables and Other Assets

       (0.28%)  

Total Net Assets

    100.00%   

 

*As of the date of this report, Delaware Tax-Free USA Intermediate Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets    

Alabama

        1.05%  

Alaska

        0.54%  

Arizona

        9.89%  

California

      15.93%  

Colorado

        3.35%  

Connecticut

        1.59%  

Delaware

        0.14%  

Florida

        1.64%  

Georgia

        0.79%  

Guam

        0.55%  

Idaho

        0.57%  

Illinois

        5.69%  

Iowa

        0.09%  

Kansas

        0.30%  

Louisiana

        2.72%  

Maryland

        2.75%  

Massachusetts

        1.27%  

Michigan

        0.79%  

Minnesota

        2.71%  

Mississippi

        1.31%  

 

25

Table of Contents

Security type / sector / state / territory allocations

Delaware Tax-Free USA Intermediate Fund

 

State / territory    Percentage of net assets    

Missouri

        1.14%  

Montana

        0.09%  

New Jersey

        4.12%  

New York

      15.88%  

Ohio

        2.17%  

Oklahoma

        0.56%  

Oregon

        1.20%  

Pennsylvania

        5.69%  

Tennessee

        0.81%  

Texas

        9.30%  

Utah

        0.45%  

Virginia

        2.40%  

Washington

        1.26%  

Wisconsin

        1.54%  

Total Value of Securities

    100.28%  

 

26

Table of Contents
Security type / sector / state / territory allocations
Delaware National High-Yield Municipal Bond Fund    As of August 31, 2018 (Unaudited)

 

Sector designations may be different than the sector designations presented in other fund materials.

 

Security type / sector    Percentage of net assets    

Municipal Bonds*

      99.11%    

Corporate Revenue Bonds

      21.76%   

Education Revenue Bonds

      13.48%   

Electric Revenue Bonds

        0.17%  

Healthcare Revenue Bonds

      27.58%  

Housing Revenue Bonds

        0.53%  

Lease Revenue Bonds

        4.53%  

Local General Obligation Bonds

        3.60%  

Pre-Refunded/Escrowed to Maturity Bonds

        6.78%  

Resource Recovery Revenue Bonds

        1.35%  

Special Tax Revenue Bonds

        6.90%  

State General Obligation Bonds

        2.84%  

Transportation Revenue Bonds

        6.78%  

Water & Sewer Revenue Bonds

        2.81%  

Short-Term Investment

        0.09%  

Total Value of Securities

      99.20%  

Receivables and Other Assets Net of Liabilities

        0.80%  

Total Net Assets

    100.00%  

 

*As of the date of this report, Delaware National High-Yield Municipal Bond Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets

Alabama

        3.38%  

Alaska

        0.65%  

Arizona

        5.47%  

California

      16.10%  

Colorado

        3.02%  

Connecticut

        0.20%  

Delaware

        0.65%  

District of Columbia

        0.52%  

Florida

        3.09%  

Georgia

        0.57%  

Hawaii

        1.09%  

Idaho

        0.64%  

Illinois

        8.98%  

Indiana

        0.95%  

Iowa

        0.51%  

Kansas

        0.56%  

Kentucky

        1.30%  

Louisiana

        1.32%  

 

27

Table of Contents

Security type / sector / state / territory allocations

Delaware National High-Yield Municipal Bond Fund

 

State / territory    Percentage of net assets    

Maine

      0.14%  

Maryland

      1.47%  

Massachusetts

      0.08%  

Michigan

      0.64%  

Minnesota

      1.94%  

Mississippi

      0.08%  

Missouri

      2.10%  

Montana

      0.10%  

Nebraska

      0.63%  

Nevada

      0.70%  

New Hampshire

      0.11%  

New Jersey

      4.60%  

New York

      8.60%  

North Carolina

      0.46%  

Ohio

      6.83%  

Oklahoma

      0.83%  

Oregon

      0.43%  

Pennsylvania

      5.31%  

Puerto Rico

      0.45%  

South Carolina

      0.07%  

Tennessee

      0.43%  

Texas

      6.44%  

Utah

      0.10%  

Vermont

      0.09%  

Virginia

      2.86%  

Washington

      1.43%  

West Virginia

      0.20%  

Wisconsin

      3.00%  

Wyoming

      0.08%  

Total Value of Securities

    99.20%  

 

28

Table of Contents
Schedules of investments
Delaware Tax-Free USA Fund    August 31, 2018

 

     Principal amount°      Value (US $)  

  Municipal Bonds – 98.68%

                  

  Corporate Revenue Bonds – 14.78%

      

Buckeye, Ohio Tobacco Settlement Financing Authority

      

(Asset-Backed Senior Turbo)

      

Series A-2 5.875% 6/1/47

      12,000,000      $     12,076,080  

Series A-2 6.50% 6/1/47

      3,160,000        3,225,507  

Central Plains, Nebraska Energy Project

      

(Project No. 3)

      

Series A 5.00% 9/1/31

      2,810,000        3,275,701  

Series A 5.00% 9/1/35

      2,160,000        2,538,799  

Series A 5.00% 9/1/42

      5,000,000        5,965,350  

Florida Development Finance Corporation Revenue

      

(Brightline Passenger Rail Project) 144A 5.625% 1/1/47 (AMT)#•

      1,570,000        1,640,477  

Golden State, California Tobacco Securitization Corporate Settlement Revenue

      

Series A-1 5.00% 6/1/47

      3,660,000        3,762,663  

Series A-1 5.25% 6/1/47

      3,860,000        4,027,138  

(Capital Appreciation-Asset-Backed) Series B

      

1.548% 6/1/47 ^

      9,410,000        1,670,557  

Lower Alabama Gas District

      

Series A 5.00% 9/1/34

      4,400,000        5,155,612  

M-S-R Energy Authority, California Gas Revenue

      

Series A 6.125% 11/1/29

      1,915,000        2,383,888  

Series B 6.50% 11/1/39

      8,485,000        11,917,946  

Series C 6.50% 11/1/39

      1,500,000        2,106,885  

New Jersey Economic Development Authority Revenue

      

(Continental Airlines Project) Series B

      

5.625% 11/15/30 (AMT)

      1,365,000        1,543,665  

New York City, New York Industrial Development Agency

      

(Brooklyn Navy Yard Cogeneration Partners)

      

5.75% 10/1/36 (AMT)

      2,475,000        2,497,894  

New York Liberty Development Corporation Revenue

      

(Goldman Sachs Headquarters) 5.25% 10/1/35

      685,000        848,092  

(Second Priority - Bank of America Tower) Class 3

      

6.375% 7/15/49

      1,000,000        1,049,430  

New York Transportation Development Corporation Special Facility Revenue

      

(American Airlines Inc. John F. Kennedy International Airport Project)

5.00% 8/1/31 (AMT)

      2,000,000        2,088,320  

(Delta Air Lines, Inc. - LaGuardia Airport Terminals C&D
Redevelopement Project)

      

4.00% 1/1/36 (AMT)

      910,000        921,994  

5.00% 1/1/36 (AMT)

      1,800,000        1,996,470  

29

 

Table of Contents

Schedules of investments

Delaware Tax-Free USA Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Corporate Revenue Bonds (continued)

      

Northern Tobacco Securitization Corporation Revenue, Alaska

      

(Tobacco Settlement Asset-Backed Bonds) Series A

      

5.00% 6/1/46

      1,785,000      $ 1,793,140  

Salt Verde, Arizona Financial Senior Gas Revenue

      

5.00% 12/1/37

      1,600,000        1,901,520  

Shoals, Indiana

      

(National Gypsum Co. Project) 7.25% 11/1/43 (AMT)

      1,940,000        2,176,253  

Tobacco Settlement Financing, New Jersey

      

Series A 5.00% 6/1/46

      800,000        874,080  

Series B 5.00% 6/1/46

      2,080,000        2,246,296  

Tobacco Settlement Financing, Virginia

      

(Capital Appreciation) Series C 2.419% 6/1/47 ^

      31,035,000        3,554,438  

Valparaiso, Indiana

      

(Pratt Paper, LLC Project) 7.00% 1/1/44 (AMT)

      1,780,000        2,084,736  
     

 

 

  
            85,322,931  
     

 

 

  

  Education Revenue Bonds – 6.25%

      

Arizona Industrial Development Authority Revenue

      

(American Charter Schools Foundation Project) 144A

      

6.00% 7/1/47 #

      1,385,000        1,457,477  

Auburn University, Alabama General Fee Revenue

      

Series A 5.00% 6/1/33

      1,720,000        2,026,074  

California Educational Facilities Authority Revenue

      

(Loma Linda University) Series A 5.00% 4/1/47

      1,000,000        1,118,880  

California State University

      

(Systemwide) Series A 5.00% 11/1/42

      700,000        808,311  

Illinois Finance Authority Revenue

      

(University of Illinois at Chicago Project)

      

Series A 5.00% 2/15/47

      1,860,000        2,011,739  

Series A 5.00% 2/15/50

      540,000        581,942  

Kent County, Delaware

      

(Delaware State University Project) Series A

      

5.00% 7/1/53

      710,000        758,486  

New Jersey Economic Development Authority

      

(Provident Group - Montclair State University)

      

5.00% 6/1/42 (AGM)

      1,250,000        1,378,175  

Pennsylvania State Higher Educational Facilities Authority Student Housing Revenue

      

(University Properties Inc. - East Stroudsburg University of Pennsylvania)

5.00% 7/1/31

      3,000,000        3,108,660  

 

30

Table of Contents

    

    

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Education Revenue Bonds (continued)

      

Phoenix, Arizona Industrial Development Authority Education Revenue

      

(Downtown Phoenix Student Housing, LLC - Arizona State University

Project) Series A 5.00% 7/1/37

      650,000      $ 717,333  

Pima County, Arizona Industrial Development Authority Education Revenue

      

(American Leadership Academy Project)

      

144A 5.00% 6/15/47 #

      655,000        661,458  

144A 5.00% 6/15/52 #

      560,000        563,595  

University of California

      

Series AZ 5.00% 5/15/48

      5,000,000        5,790,000  

Series AZ 5.25% 5/15/58

      2,860,000        3,363,474  

(Limited Project) Series M 5.00% 5/15/42

      10,190,000            11,739,084  
     

 

 

  
        36,084,688  
     

 

 

  

  Electric Revenue Bonds – 2.97%

      

Electric and Gas Systems Revenue San Antonio, Texas

      

5.25% 2/1/24

      2,500,000        2,893,450  

Long Island, New York Power Authority Electric System Revenue

      

5.00% 9/1/47

      1,605,000        1,811,740  

Salt River, Arizona Project Agricultural Improvement & Power District Electric Systems Revenue

      

Series A 5.00% 12/1/35

      4,610,000        5,262,177  

(Salt River Project Electric System) 5.00% 1/1/30

      6,000,000        7,185,060  
     

 

 

  
        17,152,427  
     

 

 

  

  Healthcare Revenue Bonds – 13.09%

      

Alachua County, Florida Health Facilities Authority

      

(Oak Hammock University) Series A 8.00% 10/1/42

      1,000,000        1,149,180  

Allegheny County, Pennsylvania Hospital Development Authority Revenue

      

(Allegheny Health Network Obligated Group Issue)

      

Series A 4.00% 4/1/44

      1,800,000        1,780,038  

Series A 5.00% 4/1/47

      1,800,000        1,970,406  

Apple Valley, Minnesota

      

(Senior Living, LLC Project Fourth Tier) Series D

      

7.25% 1/1/52

      2,500,000        2,529,150  

(Senior Living, LLC Project Second Tier) Series B

      

5.00% 1/1/47

      2,500,000        2,566,725  

California Health Facilities Financing Authority Revenue

      

(Kaiser Permanente) Series A-2 5.00% 11/1/47

      2,105,000        2,692,632  

(Sutter Health)

      

Series A 4.00% 11/15/42

      1,000,000        1,033,410  

Series A 5.00% 11/15/38

      1,000,000        1,152,680  

 

31

Table of Contents

Schedules of investments

Delaware Tax-Free USA Fund

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

California Municipal Finance Authority Revenue

      

(Community Medical Centers) Series A 5.00% 2/1/42

      2,550,000      $     2,824,405  

California Statewide Communities Development Authority Revenue

      

(Loma Linda University Medical Center)

      

Series A 144A 5.25% 12/1/43 #

      2,200,000        2,438,612  

Series A 144A 5.25% 12/1/48 #

      285,000        314,452  

Series A 144A 5.50% 12/1/58 #

      1,465,000        1,617,082  

Colorado Health Facilities Authority Revenue

      

(American Baptist) 8.00% 8/1/43

      2,040,000        2,328,701  

(Mental Health Center Denver Project) Series A

      

5.75% 2/1/44

      1,875,000        2,075,231  

Cuyahoga County, Ohio

      

(The Metro Health System)

      

5.25% 2/15/47

      2,235,000        2,416,840  

5.50% 2/15/57

      3,000,000        3,283,710  

Maricopa County, Arizona Industrial Development Authority Health Facilities Revenue

      

(Catholic Healthcare West) Series A 6.00% 7/1/39

      3,690,000        3,808,707  

Maricopa County, Arizona Industrial Development Authority Senior Living Facility Revenue Bonds

      

(Christian Care Surprise, Inc. Project) 144A

      

6.00% 1/1/48 #

      1,195,000        1,220,764  

Maryland Health & Higher Educational Facilities Authority Revenue

      

(Adventist Healthcare Obligated) Series A 5.50% 1/1/46

      2,000,000        2,225,440  

Metropolitan Government Nashville & Davidson County, Tennessee Health & Educational Facilities Building

      

(Vanderbilt University Medical Center) 5.00% 7/1/46

      5,000,000        5,491,150  

Montgomery County, Pennsylvania Industrial Development Authority Revenue

      

(Foulkeways At Gwynedd Project) 5.00% 12/1/46

      1,500,000        1,614,420  

Moon, Pennsylvania Industrial Development Authority

      

(Baptist Homes Society Obligation) 6.125% 7/1/50

      2,250,000        2,410,717  

New Hope, Texas Cultural Education Facilities

      

(Cardinal Bay - Village on the Park)

      

Series A1 4.00% 7/1/36

      310,000        314,359  

Series A1 5.00% 7/1/46

      770,000        834,149  

Series B 4.25% 7/1/36

      465,000        474,286  

Series B 5.00% 7/1/46

      770,000        814,876  

New York State Dormitory Authority

      

(Orange Regional Medical Center)

      

144A 5.00% 12/1/34 #

      400,000        441,964  

 

32

Table of Contents

    

 

    

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

New York State Dormitory Authority

      

(Orange Regional Medical Center)

      

144A 5.00% 12/1/35 #

      1,200,000      $ 1,322,100  

144A 5.00% 12/1/37 #

      800,000        877,008  

North Carolina Medical Care Commission Health Care Facilities Revenue

      

(First Mortgage - Galloway Ridge Project)

      

Series A 5.875% 1/1/31

      1,555,000        1,612,862  

Oklahoma Development Finance Authority Health System Revenue

      

(OU Medicine Project) Series B 5.50% 8/15/57

      1,970,000        2,232,936  

Orange County, New York Funding Corporation Assisted Living Residence Revenue

      

6.50% 1/1/46

      3,000,000        3,065,190  

Oregon Health & Science University Revenue

      

(Capital Appreciation Insured) Series A

      

5.757% 7/1/21 (NATL)^

      1,160,000        1,052,688  

Palm Beach County, Florida Health Facilities Authority

      

(Sinai Residences Boca Raton Project)

      

Series A 7.25% 6/1/34

      120,000        136,786  

Series A 7.50% 6/1/49

      610,000        699,676  

Pennsylvania Economic Development Financing Authority First Mortgage Revenue

      

(Tapestry Moon Senior Housing Project) Series A 144A

      

6.75% 12/1/53 #

      2,850,000        2,949,665  

Public Finance Authority, Wisconsin

      

(Bancroft Neurohealth Project) Series A 144A

      

5.00% 6/1/36 #

      540,000        551,777  

Rochester, Minnesota

      

(The Homestead at Rochester) Series A 6.875% 12/1/48

      2,350,000        2,662,738  

Tarrant County, Texas Cultural Education Facilities Finance Corporation Retirement Facility Revenue

      

(Buckner Senior Living - Ventana Project)

      

6.625% 11/15/37

      1,000,000        1,107,410  

Tempe, Arizona Industrial Development Authority Revenue

      

(Friendship Village) Series A 6.25% 12/1/46

      1,000,000        1,068,270  

(Mirabella At ASU Project) Series A 144A

      

6.125% 10/1/52 #

      690,000        760,842  

Wisconsin Health & Educational Facilities Authority Revenue

      

(Covenant Communities, Inc. Project) Series A1

      

4.00% 7/1/48

      3,715,000        3,651,213  
     

 

 

  
            75,575,247  
     

 

 

  

 

33

Table of Contents

Schedules of investments

Delaware Tax-Free USA Fund

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Lease Revenue Bonds – 3.95%

      

Metropolitan Pier & Exposition Authority, Illinois

      

(McCormick Place Expansion Project) Series A

      

5.00% 6/15/57

      1,620,000      $ 1,728,896  

New Jersey Economic Development Authority

      

(School Facilities Construction) Series GG 5.75% 9/1/23

      100,000        107,294  

(State Government Buildings Project) Series A

      

5.00% 6/15/47

      2,250,000        2,426,445  

New Jersey Transportation Trust Fund Authority

      

Series B 5.50% 6/15/31

      5,000,000        5,292,150  

(Federal Highway Reimbursement) Series A

      

5.00% 6/15/31

      2,450,000        2,714,037  

(Transportation Program) Series AA 5.00% 6/15/24

      5,000,000        5,361,800  

Public Finance Authority, Wisconsin Airport Facilities Revenue

      

(AFCO Investors II Portfolio) 144A

      

5.75% 10/1/31 (AMT)#

      2,245,000        2,263,499  

St. Louis, Missouri Industrial Development Authority Leasehold Revenue

      

(Convention Center Hotel) 5.80% 7/15/20 (AMBAC)^

      3,035,000        2,886,710  
     

 

 

  
            22,780,831  
     

 

 

  

  Local General Obligation Bonds – 10.63%

      

Anne Arundel County, Maryland

      

5.00% 10/1/25

      5,370,000        6,318,933  

Chicago, Illinois

      

Series A 5.25% 1/1/29

      2,020,000        2,159,824  

Series A 6.00% 1/1/38

      595,000        674,438  

Chicago, Illinois Board of Education

      

5.00% 4/1/42

      1,060,000        1,142,638  

5.00% 4/1/46

      1,085,000        1,166,310  

Series G 5.00% 12/1/44

      1,000,000        1,026,730  

Series H 5.00% 12/1/36

      1,395,000        1,443,950  

Series H 5.00% 12/1/46

      1,775,000        1,819,765  

Los Angeles, California Community College District

      

Series C 5.00% 8/1/25

      2,500,000        2,995,725  

Mecklenburg, North Carolina

      

Series A 5.00% 9/1/25

      8,000,000        9,438,080  

Montgomery, Maryland

      

Series A 5.00% 11/1/28

      5,755,000        6,627,688  

New York City, New York

      

Series E-1 5.00% 3/1/44

      5,000,000        5,709,550  

Series F-1 5.00% 4/1/45

      1,755,000        2,004,315  

Subseries D-1 5.00% 10/1/36

      6,500,000        7,025,655  

Subseries I-1 5.375% 4/1/36

      225,000        229,608  

 

34

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Local General Obligation Bonds (continued)

      

Prince George’s County, Maryland

      

(Consolidated Public Improvement) Series A

      

5.00% 9/15/24

      10,000,000      $ 11,597,000  
     

 

 

  
            61,380,209  
     

 

 

  

  Pre-Refunded/Escrowed to Maturity Bonds – 16.76%

      

Atlanta, Georgia Water & Wastewater Revenue

      

Series A 6.25% 11/1/39-19§

      5,500,000        5,788,915  

Bowling Green, Ohio Student Housing Revenue CFP I

      

(State University Project) 6.00% 6/1/45-20§

      5,295,000        5,680,476  

Brooklyn Arena Local Development, New York Pilot Revenue

      

(Barclays Center Project) 6.50% 7/15/30-20§

      8,230,000        8,775,237  

Butler County, Pennsylvania Hospital Authority Revenue

      

(Butler Health System Project) 7.125% 7/1/29-19§

      2,500,000        2,610,175  

California Municipal Finance Authority Mobile Home Park Revenue

      

(Caritas Projects) Series A 6.40% 8/15/45-20§

      4,440,000        4,797,509  

California State

      

Various Purposes

      

6.00% 4/1/38-19§

      1,435,000        1,473,315  

6.50% 4/1/33-19§

      1,395,000        1,436,208  

Central Texas Regional Mobility Authority Revenue

      

Senior Lien 6.00% 1/1/41-21§

      5,160,000        5,633,275  

Fairfax County, Virginia Industrial Development Authority

      

(Inova Health) 5.50% 5/15/35-19§

      1,635,000        1,678,703  

Illinois Finance Authority Revenue

      

(Silver Cross & Medical Centers) 7.00% 8/15/44-19§

      3,000,000        3,147,720  

Illinois Railsplitter Tobacco Settlement Authority

      

6.00% 6/1/28-21§

      6,000,000        6,661,800  

Koyukuk, Alaska Revenue

      

(Tanana Chiefs Conference Health Care Facility Project)

      

7.75% 10/1/41-19§

      3,000,000        3,187,650  

Louisiana Public Facilities Authority Revenue

      

(Ochsner Clinic Foundation Project) 6.50% 5/15/37-21§

      2,190,000        2,448,398  

Maryland Economic Development Corporation Revenue

      

(Transportation Facilities Project) Series A

      

5.75% 6/1/35-20§

      5,075,000        5,427,357  

Massachusetts Development Finance Agency

      

(Harvard University) Series B-2 5.25% 2/1/34-21§

      5,000,000        5,411,600  

New Jersey Economic Development Authority Revenue

      

(Provident Group - Montclair State University)

      

5.875% 6/1/42-20§

      4,225,000        4,527,341  

 

35

Table of Contents

Schedules of investments

Delaware Tax-Free USA Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

New Jersey Economic Development Authority Revenue

      

(School Facilities Construction) Series G

      

5.75% 9/1/23-21§

      900,000      $ 985,914  

New Jersey Educational Facilities Authority Revenue

      

(University of Medicine & Dentistry) Series B

      

7.50% 12/1/32-19§

      1,435,000        1,497,222  

New York City, New York

      

Subordinate Series I-1 5.375% 4/1/36-19§

      1,610,000        1,645,855  

New York State Dormitory Authority Revenue Non State Supported Debt

      

(Orange Regional Medical Center) 6.50% 12/1/21-18§

      2,260,000        2,286,713  

Oklahoma State Turnpike Authority Revenue

      

(First Senior) 6.00% 1/1/22

      13,535,000        15,299,016  

Phoenix, Arizona Civic Improvement Corporation Airport Revenue Junior Lien

      

Series A 5.00% 7/1/26-20§

      1,800,000        1,906,092  

San Juan, Texas Higher Education Finance Authority Education Revenue

      

(Idea Public Schools) Series A 6.70% 8/15/40-20§

      1,500,000        1,637,685  

Southwestern Illinois Development Authority Revenue

      

(Memorial Group Inc.) 7.125% 11/1/43-23§

      2,000,000        2,481,940  

Virgin Islands Public Finance Authority Revenue

      

Series A 7.30% 10/1/18

      330,000        331,376  
     

 

 

  
            96,757,492  
     

 

 

  

  Special Tax Revenue Bonds – 6.47%

      

Conley Road Transportation Development District, Missouri

      

5.375% 5/1/47

      2,000,000        2,038,480  

Kansas City, Missouri Land Clearance Redevelopment Authority Revenue

      

(Convention Centre Hotel Project - TIF Financing)

Series B 144A 5.00% 2/1/50 #

      725,000        740,776  

Massachusetts School Building Authority

      

Series C 5.00% 8/15/31

      2,500,000        2,863,550  

Mosaic, Virginia District Community Development Authority Revenue

      

Series A 6.875% 3/1/36

      3,980,000        4,300,470  

New Jersey Economic Development Authority Revenue

      

(Cigarette Tax) 5.00% 6/15/28

      2,695,000        2,863,249  

New York City, New York Industrial Development Agency

      

(Yankee Stadium) 7.00% 3/1/49 (AGC)

      1,000,000        1,025,290  

 

36

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Special Tax Revenue Bonds (continued)

      

New York City, New York Transitional Finance Authority

      

(Future Tax Secured Fiscal 2011)

      

Series C 5.25% 11/1/25

      4,430,000      $ 4,761,364  

Series D-1 5.00% 2/1/26

      3,000,000        3,217,620  

(Future Tax Secured Fiscal 2014) Series A-1

      

5.00% 11/1/42

      10,000,000        11,120,000  

Public Finance Authority, Wisconsin

      

(American Dream @ Meadowlands Project) 144A

      

7.00% 12/1/50 #

      2,155,000        2,494,779  

Tampa, Florida Sports Authority Revenue Sales Tax

      

(Tampa Bay Arena Project) 5.75% 10/1/20 (NATL)

      535,000        557,363  

Wyandotte County, Kansas City, Kansas Unified Government Special Obligation Revenue

      

(Sales Tax - Vacation Village Project Area 1 and 2A)

      

Series 2015A 5.75% 9/1/32

      1,280,000        1,364,762  
     

 

 

  
            37,347,703  
     

 

 

  

  State General Obligation Bonds – 8.43%

      

California State

      

5.25% 11/1/40

      3,795,000        4,073,022  

Various Purposes

      

5.00% 8/1/27

      2,500,000        2,981,350  

5.00% 10/1/29

      5,000,000        5,626,600  

5.00% 10/1/47

      2,145,000        2,438,286  

Unrefunded 6.00% 4/1/38

      2,625,000        2,690,021  

Unrefunded 6.50% 4/1/33

      1,175,000        1,207,853  

Connecticut State

      

Series B 5.00% 6/15/35

      2,475,000        2,689,385  

Series E 5.00% 9/15/35

      2,500,000        2,778,550  

Series E 5.00% 9/15/37

      2,250,000        2,486,790  

Illinois State

      

5.00% 1/1/29

      5,405,000        5,685,249  

5.00% 5/1/36

      480,000        495,950  

5.00% 11/1/36

      1,780,000        1,858,623  

5.00% 2/1/39

      830,000        853,290  

Series A 5.00% 4/1/38

      785,000        809,869  

Maryland State

      

Series A 5.00% 3/15/26

      5,000,000        5,916,850  

Series A 5.00% 3/15/28

      5,000,000        6,063,350  
     

 

 

  
        48,655,038  
     

 

 

  

  Transportation Revenue Bonds – 14.09%

      

California Municipal Finance Authority

      

(LINXS APM Project) Series A 5.00% 12/31/47 (AMT)

      3,790,000        4,225,433  

 

37

Table of Contents

Schedules of investments

Delaware Tax-Free USA Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Transportation Revenue Bonds (continued)

      

Chicago, Illinois O’Hare International Airport

      

Series B 5.00% 1/1/33

      2,345,000      $ 2,590,428  

Series D 5.25% 1/1/42

      2,000,000        2,270,800  

Dallas, Texas Love Field

      

5.00% 11/1/35 (AMT)

      1,000,000        1,117,610  

5.00% 11/1/36 (AMT)

      1,000,000        1,115,340  

Denver, Colorado City & County Airport System Revenue

      

Series A 5.00% 12/1/48 (AMT)

      7,000,000        7,826,350  

Harris County, Texas Toll Road Authority

      

Senior Lien Series A 5.00% 8/15/27

      3,750,000        4,483,913  

New Jersey Turnpike Authority

      

Series A 5.00% 1/1/28

      5,000,000        5,679,000  

New York State Thruway Authority

      

Series L 5.00% 1/1/23

      3,000,000        3,365,520  

North Texas Tollway Authority Revenue

      

(Second Tier) Series A 5.00% 1/1/34

      5,000,000        5,565,700  

Port Authority of New York & New Jersey Special Project

      

(JFK International Air Terminal)

      

Series 8 6.00% 12/1/42

      4,735,000        5,157,315  

Series 8 6.50% 12/1/28

      5,500,000        5,749,480  

Salt Lake City, Utah Airport Revenue

      

Series B 5.00% 7/1/42

      3,350,000        3,818,431  

South Jersey Port, New Jersey

      

(Subordinated Marine Terminal)

      

Series A 5.00% 1/1/49

      450,000        493,515  

Series B 5.00% 1/1/42 (AMT)

      450,000        489,087  

Series B 5.00% 1/1/48 (AMT)

      1,035,000        1,119,849  

St. Louis, Missouri Airport Revenue

      

(Lambert-St. Louis International)

      

Series A-1 6.625% 7/1/34

      5,995,000        6,221,251  

Texas Private Activity Bond Surface Transportation Corporate Senior Lien

      

(LBJ Infrastructure)

      

7.00% 6/30/40

      5,715,000        6,172,543  

7.50% 6/30/33

      1,560,000        1,703,083  

(NTE Mobility Partners)

      

6.75% 6/30/43 (AMT)

      2,490,000        2,895,845  

6.875% 12/31/39

      5,500,000        5,819,660  

7.00% 12/31/38 (AMT)

      1,830,000        2,157,533  

Virginia Small Business Financing Authority Revenue

      

(Transform 66 P3 Project) 5.00% 12/31/56 (AMT)

      1,220,000        1,324,969  
     

 

 

  
            81,362,655  
     

 

 

  

 

38

Table of Contents

    

    

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Water & Sewer Revenue Bonds – 1.26%

      

Dominion, Colorado Water & Sanitation District

      

5.75% 12/1/36

      2,500,000      $ 2,646,425  

Southern California Water Replenishment District

      

5.00% 8/1/33

      2,000,000        2,308,420  

5.00% 8/1/34

      2,000,000        2,301,580  
     

 

 

  
        7,256,425  
     

 

 

  

  Total Municipal Bonds (cost $543,732,224)

         569,675,646  
     

 

 

  

 

  

  Short-Term Investments – 1.31%

      

 

  

  Variable Rate Demand Notes – 1.31%¤

      

California Statewide Communities Development Authority Revenue (Rady Children’s Hospital - San Diego) Series B

      

1.27% 8/15/47 (LOC - Wells Fargo Bank N.A.)

      1,505,000        1,505,000  

Geisinger Authority, Pennsylvania Health System Revenue

      

(Geisinger Health System) Series A

      

1.47% 10/1/43 (SPA - Wells Fargo Bank N.A.)

      1,200,000        1,200,000  

Mississippi Business Finance Corporation Gulf Opportunity Zone Industrial Development Revenue

      

(Chevron USA) Series A

      

1.54% 12/1/30

      725,000        725,000  

(Chevron USA) Series A

      

1.54% 11/1/35

      1,700,000        1,700,000  

(Chevron USA) Series I

      

1.54% 11/1/35

      1,950,000        1,950,000  

Philadelphia, Pennsylvania Hospitals & Higher Education Facilities Authority Revenue (The Children’s Hospital Of Philadelphia Project) Series B

      

1.43% 7/1/41 (SPA - Wells Fargo Bank N.A.)

      400,000        400,000  

Phoenix, Arizona Industrial Development Authority Health Care Revenue (Mayo Clinic) Series B

      

1.52% 11/15/52 (SPA - Wells Fargo Bank N.A.)

      100,000        100,000  
     

 

 

  

  Total Short-Term Investments (cost $7,580,000)

         7,580,000  
     

 

 

  

  Total Value of Securities – 99.99%

(cost $551,312,224)

      

$

    577,255,646

 

     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $22,316,327, which represents 3.87% of the Fund’s net assets. See Note 9 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the

 

39

Table of Contents

Schedules of investments

Delaware Tax-Free USA Fund

 

issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 9 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

●

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at Aug. 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

 

^

Zero coupon security. The rate shown is the effective yield at the time of purchase.

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMBAC – Insured by AMBAC Assurance Corporation

AMT – Subject to Alternative Minimum Tax

ICE – Intercontinental Exchange

LIBOR – London Interbank Offered Rate

LIBOR03M – ICE LIBOR USD 3 Month

LIBOR06M – ICE LIBOR USD 6 Month

LOC – Letter of Credit

N.A. – National Association

NATL – Insured by National Public Finance Guarantee Corporation

SPA – Stand-by Purchase Agreement

USD – US Dollar

See accompanying notes, which are an integral part of the financial statements.

 

40

Table of Contents
Schedules of investments
Delaware Tax-Free USA Intermediate Fund    August 31, 2018

 

      Principal amount°      Value (US $)  

  Municipal Bonds – 98.97%

                  

  Corporate Revenue Bonds – 16.26%

      

Buckeye, Ohio Tobacco Settlement Financing Authority

      

(Asset-Backed Senior Turbo)

      

Series A-2 5.875% 6/1/47

      7,025,000      $       7,069,539  

Series A-2 6.50% 6/1/47

      3,570,000        3,644,006  

Chandler, Arizona Industrial Development Revenue Bonds

      

(Intel Corporation Project) 2.70% 12/1/37 (AMT)•

      3,000,000        3,009,630  

Chesterfield County, Virginia Economic Development Authority Pollution Control Revenue

      

(Virginia Electric & Power) Series A 5.00% 5/1/23

      1,460,000        1,488,733  

Commonwealth of Pennsylvania Financing Authority

      

(Tobacco Master Settlement Payment) 5.00% 6/1/27

      2,000,000        2,297,100  

Denver City & County, Colorado Special Facilities Airport Revenue

      

(United Airlines Project) 5.00% 10/1/32 (AMT)

      1,190,000        1,275,704  

Florida Development Finance Corporation Revenue

      

(Brightline Passenger Rail Project) 144A 5.625% 1/1/47 (AMT)#•

      1,785,000        1,865,129  

Golden State, California Tobacco Securitization Corporate Settlement Revenue

      

(Asset-Backed Bonds)

      

Series A-1 5.00% 6/1/26

      850,000        976,081  

Series A-1 5.00% 6/1/47

      2,000,000        2,056,100  

(Capital Appreciation Asset-Backed)

      

Series A 1.548% 6/1/47 ^

      5,885,000        1,044,764  

Houston, Texas Airport System Revenue

      

(United Airlines) 5.00% 7/1/29 (AMT)

      3,010,000        3,257,362  

Illinois Railsplitter Tobacco Settlement Authority

      

5.25% 6/1/20

      7,160,000        7,540,411  

Lower Alabama Gas District

      

Series A 5.00% 9/1/34

      4,850,000        5,682,891  

Maricopa County, Arizona Corporation Pollution Control Revenue

      

(Public Service - Palo Verde Project) Series B

      

5.20% 6/1/43 •

      6,000,000        6,291,540  

Maryland Economic Development Corporation Pollution Control Revenue

      

(Potomac Electric Project) 6.20% 9/1/22

      1,780,000        1,818,039  

Michigan Tobacco Settlement Finance Authority

      

Series A 6.00% 6/1/34

      810,000        813,815  

Nassau County, New York Tobacco Settlement

      

(Asset-Backed) Series A-3 5.125% 6/1/46

      855,000        845,877  

 

41

Table of Contents

Schedules of investments

Delaware Tax-Free USA Intermediate Fund

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Corporate Revenue Bonds (continued)

      

New Jersey Economic Development Authority Special Facilities Revenue

      

(Continental Airlines Project) Series B

      

5.625% 11/15/30 (AMT)

      1,890,000      $ 2,137,382  

New Jersey Tobacco Settlement Financing Corporation

      

Series A 5.00% 6/1/46

      755,000        824,913  

Series B 5.00% 6/1/46

      1,965,000        2,122,102  

New York City, New York Industrial Development Agency

      

(Brooklyn Navy Yard Cogeneration Partners)

      

5.75% 10/1/36 (AMT)

      1,835,000        1,851,974  

New York Transportation Development Special Facilities Revenue

      

(American Airlines John F. Kennedy International Airport Project)

5.00% 8/1/21 (AMT)

      610,000        651,761  

(Delta Airlines, Inc.-LaGuardia Airport Terminals C&D Redevelopment

Project) 5.00% 1/1/34 (AMT)

      3,000,000        3,337,500  

Northern Alaska Tobacco Securitization Corporation Revenue

      

(Tobacco Settlement Asset-Backed Bonds) Series A

      

5.00% 6/1/46

      2,900,000        2,913,224  

Public Authority for Colorado Energy Natural Gas Revenue

      

6.50% 11/15/38

      5,000,000        6,882,450  

Salt Verde, Arizona Financial Corporation Senior Gas Revenue

      

5.00% 12/1/32

      3,750,000        4,408,650  

5.25% 12/1/24

      3,050,000        3,484,290  

Tobacco Settlement Financing Corporation, Virginia

      

(Capital Appreciation Asset-Backed) Series C

      

2.419% 6/1/47 ^

      29,400,000        3,367,182  

TSASC, New York

      

Series A 5.00% 6/1/30

      475,000        531,634  

Series A 5.00% 6/1/31

      475,000        529,354  

Tulsa, Oklahoma Airports Improvement Trust

      

(American Airlines) 5.00% 6/1/35 (AMT)•

      975,000        1,046,926  

Wisconsin Public Finance Authority Exempt Facilities Revenue

      

(National Gypsum) 5.25% 4/1/30 (AMT)

      2,905,000        3,099,606  
     

 

 

  
            88,165,669  
     

 

 

  

  Education Revenue Bonds – 5.19%

      

Arizona Industrial Development Authority Revenue

      

(American Charter Schools Foundation Project) 144A

      

6.00% 7/1/37 #

      1,420,000        1,506,663  

 

42

Table of Contents

    

    

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Education Revenue Bonds (continued)

      

Bucks County, Pennsylvania Industrial Development Authority Revenue

      

(School Lane Charter School) 5.125% 3/15/36

      2,000,000      $       2,149,240  

California State University

      

(Systemwide) Series A 5.00% 11/1/31

      2,000,000        2,374,940  

California Statewide Communities Development Authority Revenue

      

(California Baptist University) Series A 6.125% 11/1/33

      2,215,000        2,559,277  

Illinois Finance Authority Revenue

      

(University of Illinois at Chicago)

      

Series A 5.00% 2/15/29

      400,000        448,012  

Series A 5.00% 2/15/31

      365,000        404,953  

Series A 5.00% 2/15/37

      430,000        469,491  

Kent County, Delaware

      

(Delaware State University Project)

      

Series A 5.00% 7/1/40

      310,000        334,409  

Series A 5.00% 7/1/48

      420,000        450,362  

Massachusetts State Health & Educational Facilities Authority Revenue

      

(Massachusetts Institute of Technology) Series M

      

5.25% 7/1/20

      3,000,000        3,194,700  

Miami-Dade County, Florida Educational Facilities Authority

      

(University of Miami)

      

Series A 5.00% 4/1/30

      520,000        588,562  

Series A 5.00% 4/1/31

      1,090,000        1,230,229  

New York City, New York Trust for Cultural Resources

      

(Whitney Museum of American Art) 5.00% 7/1/21

      3,025,000        3,248,427  

New York State Dormitory Authority Revenue

      

(Non State Supported Debt - Rockefeller University)

      

Series A 5.00% 7/1/27

      1,055,000        1,084,160  

(Touro College & University System) Series A

      

5.25% 1/1/34

      1,335,000        1,459,235  

Pennsylvania Higher Educational Facilities Authority Revenue

      

(Unrefunded Drexel University) Series A 5.25% 5/1/25

      310,000        333,253  

Phoenix, Arizona Industrial Development Authority Housing Revenue

      

(Downtown Phoenix Student Housing, LLC-Arizona State University Project)

      

Series A 5.00% 7/1/30

      350,000        396,102  

Series A 5.00% 7/1/32

      235,000        263,867  

 

43

Table of Contents

Schedules of investments

Delaware Tax-Free USA Intermediate Fund

 

     Principal amount°     Value (US $)  

  Municipal Bonds (continued)

                

  Education Revenue Bonds (continued)

    

Pima County, Arizona Industrial Development Authority Education Revenue

    

(Facility American Leadership Academy Project)

    

144A 5.00% 6/15/47 #

     745,000     $ 752,346  

144A 5.00% 6/15/52 #

     640,000       644,109  

University of Texas Permanent University Fund

    

Series B 5.00% 7/1/27

     3,715,000       4,262,925  
   

 

 

  
          28,155,262  
   

 

 

  

  Electric Revenue Bonds – 3.25%

    

California State Department of Water Resources Power Supply Revenue

    

Series N 5.00% 5/1/21

     3,580,000       3,910,828  

Long Island, New York Power Authority

    

5.00% 9/1/33

     250,000       288,500  

5.00% 9/1/35

     1,000,000       1,146,370  

New York State Utility Debt Securitization Authority

    

(Restructuring Bonds) 5.00% 12/15/33

     1,500,000       1,730,790  

Salt River, Arizona Project Agricultural Improvement & Power District Electric Systems Revenue

    

Series A 5.00% 12/1/35

     4,000,000       4,565,880  

(Salt River Project Electric System) 5.00% 1/1/30

     5,000,000       5,987,550  
   

 

 

  
      17,629,918  
   

 

 

  

  Healthcare Revenue Bonds – 9.44%

    

Arizona Health Facilities Authority

    

(Scottsdale Lincoln Hospital Project) 5.00% 12/1/30

     5,000,000       5,579,950  

Berks County, Pennsylvania Municipal Authority Revenue

    

(Reading Hospital & Medical Center Project) Series A-3

    

5.25% 11/1/24

     2,205,000       2,291,304  

California Health Facilities Financing Authority

    

(Kaiser Permanente) Series A1 5.00% 11/1/27

     4,100,000       5,016,678  

California Statewide Communities Development Authority

    

(Loma Linda University Medical Center)

    

Series A 144A 5.00% 12/1/33 #

     400,000       444,944  

Series A 144A 5.00% 12/1/41 #

     1,685,000       1,821,721  

Series A 5.25% 12/1/34

     2,790,000       3,063,001  

Series A 144A 5.25% 12/1/38 #

     600,000       669,714  

Series A 144A 5.25% 12/1/43 #

     800,000       886,768  

Capital Trust Agency, Florida

    

(Tuscan Gardens Senior Living Center) 7.00% 4/1/35

     1,630,000       1,640,937  

Cuyahoga County, Ohio

    

(The Metrohealth System) 5.00% 2/15/37

     1,000,000       1,070,300  

 

44

Table of Contents

    

    

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Dauphin County, Pennsylvania General Authority

      

(Pinnacle Health System Project) Series A 6.00% 6/1/29

      1,780,000      $       1,831,371  

Iowa Finance Authority Senior Housing Revenue Bonds

      

(PHS Council Bluffs, Inc. Project) 5.00% 8/1/33

      500,000        505,795  

Kalispell, Montana

      

(Immanuel Lutheran Corporation Project) Series A

      

5.25% 5/15/32

      435,000        460,800  

Lancaster County, Pennsylvania Hospital Authority

      

(Brethren Village Project)

      

5.00% 7/1/31

      440,000        481,659  

5.00% 7/1/32

      440,000        479,930  

(University of Pennsylvania Health System Obligation)

      

Series A 5.00% 8/15/33

      2,430,000        2,795,326  

Maricopa County, Arizona Industrial Development Authority Revenue

      

(Banner Health Obligation Group) Series A

      

5.00% 1/1/32

      3,000,000        3,448,380  

(Christian Care Surprise, Inc. Project) 144A

      

5.75% 1/1/36 #

      1,500,000        1,520,640  

Maryland Health & Higher Educational Facilities Authority Revenue

      

(Adventist Healthcare Obligated) Series A 5.50% 1/1/36

      2,000,000        2,274,160  

Moon, Pennsylvania Industrial Development Authority

      

(Baptist Homes Society Obligation) 5.625% 7/1/30

      2,440,000        2,606,945  

New York State Dormitory Authority Revenue

      

(Orange Regional Medical Center)

      

144A 5.00% 12/1/31 #

      1,000,000        1,114,430  

144A 5.00% 12/1/32 #

      1,100,000        1,223,244  

144A 5.00% 12/1/33 #

      1,000,000        1,108,070  

Oklahoma Development Finance Authority Health System Revenue

      

(OU Medicine Project) Series B 5.25% 8/15/43

      1,790,000        2,007,968  

Prince George’s County, Maryland

      

(Collington Episcopal Life Care Community)

      

5.00% 4/1/31

      2,000,000        2,121,520  

Public Finance Authority, Wisconsin

      

(Bancroft Neurohealth Project) Series A 144A

      

4.625% 6/1/36 #

      1,460,000        1,436,465  

Public Finance Authority, Wisconsin Senior Living Revenue

      

(Mary’s Woods at Marylhurst Project) 144A

      

5.00% 5/15/29 #

      500,000        547,280  

 

45

Table of Contents

Schedules of investments

Delaware Tax-Free USA Intermediate Fund

 

      Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Rochester, Minnesota Health Care Facilities Revenue

      

(Mayo Clinic) Series C 4.50% 11/15/38 •

      2,540,000      $ 2,728,951  
     

 

 

  
            51,178,251  
     

 

 

  

  Lease Revenue Bonds – 4.69%

      

California Statewide Communities Development Authority Revenue

      

(Lancer Plaza Project) 5.125% 11/1/23

      465,000        500,968  

Golden State, California Tobacco Securitization Corporate Settlement Revenue

      

(Asset-Backed Enhanced) Series A 5.00% 6/1/35

      3,000,000        3,379,080  

Idaho Building Authority Revenue

      

(Health & Welfare Project) Series A 5.00% 9/1/24

      2,800,000        3,065,468  

Los Angeles County, California

      

(Disney Concert Hall Parking) 5.00% 3/1/23

      2,395,000        2,722,971  

New Jersey State Transportation Trust Fund Authority

      

Series B 5.50% 6/15/31

      5,000,000        5,292,150  

(Highway Reimbursement) Series A 5.00% 6/15/30

      2,415,000        2,685,746  

New York Liberty Development Revenue

      

(World Trade Center Project) Class 2-3 144A

      

5.15% 11/15/34 #

      1,000,000        1,099,560  

New York State Dormitory Authority Revenue

      

(Health Facilities Improvement Program)

      

5.00% 1/15/28

      750,000        896,618  

5.00% 1/15/29

      3,100,000        3,680,568  

Public Finance Authority, Wisconsin Airport Facilities Revenue

      

(AFCO Investors II Portfolio) 144A

      

5.00% 10/1/23 (AMT)#

      2,085,000        2,105,391  
     

 

 

  
        25,428,520  
     

 

 

  

  Local General Obligation Bonds – 5.72%

      

Chesterfield County, Virginia

      

Series B 5.00% 1/1/22

      4,070,000        4,481,151  

Chicago, Illinois

      

Series A 5.25% 1/1/29

      640,000        684,301  

Series C 5.00% 1/1/26

      1,280,000        1,396,966  

Chicago, Illinois Board of Education

      

5.00% 4/1/35

      825,000        896,833  

5.00% 4/1/36

      320,000        347,373  

(Dedicated Revenues)

      

Series C 5.00% 12/1/30

      2,160,000        2,274,134  

Series C 5.00% 12/1/34

      2,160,000        2,245,730  

 

46

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Local General Obligation Bonds (continued)

      

Conroe, Texas Independent School District

      

5.00% 2/15/25 (PSF)

      3,070,000      $ 3,209,409  

Fort Worth, Texas Independent School District

      

(School Building) 5.00% 2/15/27 (PSF)

      2,000,000        2,278,120  

New York City, New York

      

Series A-1 5.00% 8/1/19

      5,000        5,027  

Series E 5.00% 8/1/23

      3,685,000        4,176,911  

Subseries D-1 5.00% 10/1/30

      4,000,000        4,342,080  

San Francisco, California Bay Area Rapid Transit District

      

(Election 2004) Series D 5.00% 8/1/31

      4,000,000        4,671,960  
     

 

 

  
            31,009,995  
     

 

 

  

  Pre-Refunded/Escrowed to Maturity Bonds – 11.20%

      

Atlanta, Georgia Water & Wastewater Revenue

      

Series A 6.00% 11/1/25-19§

      2,925,000        3,070,314  

Brooklyn Arena Local Development, New York Pilot Revenue

      

(Barclays Center Project) 6.50% 7/15/30-20§

      5,500,000        5,864,375  

Butler County, Pennsylvania Hospital Authority Revenue

      

(Butler Health System Project) 7.125% 7/1/29-19§

      2,250,000        2,349,157  

California State Department of Water Resources

      

(Water System) Series AS 5.00% 12/1/29-24§

      15,000        17,588  

Clifton, Texas Higher Education Finance Corporation Revenue

      

(Uplift Education) Series A 6.00% 12/1/30-20§

      1,100,000        1,198,615  

Conroe, Texas Independent School District

      

5.00% 2/15/25-20 (PSF)§

      795,000        832,270  

Dauphin County, Pennsylvania General Authority

      

(Pinnacle Health System Project) Series A

      

6.00% 6/1/29-19§

      1,620,000        1,671,856  

Guam Government Limited Obligation Revenue

      

(Section 30)

      

Series A 5.375% 12/1/24-19§

      1,750,000        1,828,015  

Series A 5.625% 12/1/29-19§

      1,125,000        1,178,584  

Maryland State Economic Development Corporation Revenue

      

(Transportation Facilities Project) Series A

      

5.375% 6/1/25-20§

      2,535,000        2,694,781  

Massachusetts Development Finance Agency Revenue

      

(Harvard University) Series B-1 5.25% 10/15/29-20§

      1,670,000        1,791,676  

Minneapolis, Minnesota Health Care System Revenue

      

(Fairview Health Services) Series A

      

6.375% 11/15/23-18§

      3,000,000        3,028,410  

 

47

Table of Contents

Schedules of investments

Delaware Tax-Free USA Intermediate Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

New York State Dormitory Authority Revenue

      

(North Shore Long Island Jewish Health System)

      

Series A 5.00% 5/1/23-21§

      4,000,000      $ 4,336,880  

New York State Dormitory Authority Revenue Non State Supported Debt

      

(Orange Regional Medical Center) 6.50% 12/1/21-18§

      1,650,000        1,669,503  

Pennsylvania Economic Development Financing Authority Health System Revenue

      

(Albert Einstein Healthcare) Series A

      

6.25% 10/15/23-19§

      560,000        581,403  

Pennsylvania Higher Educational Facilities Authority Revenue

      

(Drexel University) Series A 5.25% 5/1/25-21§

      4,980,000        5,419,385  

Phoenix, Arizona Civic Improvement Corporation Airport Revenue

      

(Junior Lien) Series A 5.00% 7/1/26-20§

      7,500,000        7,942,050  

San Francisco, California City & County Airports Commission

      

Series D 5.00% 5/1/25-21§

      570,000        620,439  

San Francisco, California City & County Public Utilities Commission Water Revenue

      

Subseries A 5.00% 11/1/27-21§

      7,430,000        8,204,206  

Southwestern Illinois Development Authority

      

(Memorial Group) 7.125% 11/1/30-23§

      2,190,000        2,717,724  

Virginia Commonwealth Transportation Board

      

(Gans-Garvee) 5.00% 3/15/24-23§

      3,250,000        3,671,525  
     

 

 

  
            60,688,756  
     

 

 

  

   Special Tax Revenue Bonds – 9.22%

      

Allentown, Pennsylvania Neighborhood Improvement Zone Development Authority Tax Revenue (City Center Project)

      

144A 5.00% 5/1/28 #

      750,000        838,860  

144A 5.00% 5/1/33 #

      650,000        716,943  

Celebration Pointe, Florida Community Development District

      

4.75% 5/1/24

      570,000        584,740  

5.00% 5/1/34

      880,000        895,110  

Dallas, Texas Convention Center Hotel Development Revenue

      

Series A 5.00% 1/1/24

      3,420,000        3,451,874  

Series A 5.25% 1/1/23

      5,375,000        5,430,416  

 

48

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Special Tax Revenue Bonds (continued)

      

Ernest N Morail-New Orleans, Louisiana Exhibition Hall Authority Special Tax Revenue

      

5.00% 7/15/26

      2,330,000      $ 2,547,552  

Harris County-Houston, Texas Sports Authority

      

(Senior Lien) Series A 5.00% 11/15/30

      1,805,000               2,017,340  

Kansas City, Missouri Land Clearance Redevelopment Authority Revenue

      

(Convention Center Hotel Project - TIF Financing)

      

Series B 144A 4.375% 2/1/31 #

      400,000        407,872  

Series B 144A 5.00% 2/1/40 #

      200,000        207,832  

Louisiana State Highway Improvement Revenue

      

Series A 5.00% 6/15/29

      5,195,000        5,850,765  

Massachusetts School Building Authority

      

Series C 5.00% 8/15/29

      1,630,000        1,880,417  

New Jersey Economic Development Authority Revenue

      

(Cigarette Tax)

      

5.00% 6/15/22

      1,750,000        1,898,820  

5.00% 6/15/23

      1,250,000        1,353,487  

(School Facilities Construction) Series AA

      

5.50% 12/15/29

      1,480,000        1,514,395  

New York City, New York Transitional Finance Authority Future Tax Secured

      

Subseries A-1 5.00% 11/1/23

      2,865,000        3,270,398  

Subseries C 5.00% 11/1/27

      4,150,000        4,740,919  

Subseries E-1 5.00% 2/1/26

      4,020,000        4,399,769  

New York State Local Government Assistance Corporation Subordinate Lien

      

Series A 5.00% 4/1/20

      3,360,000        3,536,635  

Public Finance Authority, Wisconsin

      

(American Dream @ Meadowlands Project) 144A

      

7.00% 12/1/50 #

      1,010,000        1,169,247  

Richmond Heights, Missouri Tax Increment & Transaction Sales Tax Revenue Refunding & Improvement

      

(Francis Place Redevelopment Project) 5.625% 11/1/25

      1,000,000        1,000,160  

St. Joseph, Missouri Industrial Development Authority Tax Increment Revenue

      

(Shoppes at North Village Project) Series B

      

5.375% 11/1/23

      655,000        655,085  

Wyandotte County, Kansas City, Kansas Unified Government Special Obligation Revenue

      

(Sales Tax - Vacation Village Project Area 1 and 2A)

      

Series 2015A 5.00% 9/1/27

      1,505,000        1,611,118  
     

 

 

  
        49,979,754  
     

 

 

  

 

49

Table of Contents

Schedules of investments

Delaware Tax-Free USA Intermediate Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  State General Obligation Bonds – 14.74%

      

California State

      

5.00% 8/1/26

      3,120,000      $ 3,750,677  

5.00% 9/1/29

      1,500,000        1,773,615  

5.00% 9/1/30

      1,715,000        2,019,670  

Series C 5.00% 9/1/30

      5,985,000               6,976,535  

(Various Purposes)

      

5.00% 9/1/32

      4,100,000        4,799,255  

5.25% 9/1/28

      7,750,000        8,546,080  

Connecticut State

      

Series E 5.00% 9/15/28

      4,710,000        5,422,293  

Series F 5.00% 9/15/27

      2,790,000        3,194,327  

Illinois State

      

4.00% 2/1/24

      1,220,000        1,234,164  

5.00% 1/1/29

      2,000,000        2,103,700  

5.00% 3/1/36

      960,000        988,128  

5.00% 11/1/36

      1,965,000        2,051,794  

Maryland State

      

(State and Local Facilities Loan) 5.00% 8/1/27

      5,000,000        6,018,900  

Minnesota State

      

(Various Purpose) Series F 5.00% 10/1/22

      8,000,000        8,940,640  

New York State

      

Series A 5.00% 2/15/28

      5,000,000        5,369,700  

Oregon State

      

Series L 5.00% 5/1/26

      6,000,000        6,487,440  

Texas State

      

(Transportation Commission Highway Improvement)

      

5.00% 4/1/29

      3,000,000        3,396,150  

Washington State

      

Series R-2015E 5.00% 7/1/31

      3,000,000        3,402,180  

(Various Purposes) Series 2015-A-1 5.00% 8/1/30

      3,000,000        3,412,860  
     

 

 

  
        79,888,108  
     

 

 

  

  Transportation Revenue Bonds – 16.08%

      

Bay Area, California Toll Authority

      

(San Francisco Bay Area) 4.00% 4/1/34

      1,000,000        1,067,280  

Broward County, Florida Airport System Revenue

      

Series O 5.375% 10/1/29

      2,000,000        2,075,560  

California Municipal Finance Authority

      

(LINXS APM Project) Series A 5.00% 12/31/43 (AMT)

      3,730,000        4,171,632  

Chicago, Illinois O’Hare International Airport Revenue

      

Series B 5.00% 1/1/32

      1,000,000        1,107,070  

Series B 5.00% 1/1/33

      1,520,000        1,679,083  

(General-Airport-Third Lien) Series C 5.25% 1/1/28

      2,150,000        2,236,365  

 

50

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Transportation Revenue Bonds (continued)

      

Denver City & County, Colorado Airport System Revenue

      

Series A 5.00% 12/1/34 (AMT)

      7,500,000      $       8,557,800  

Houston, Texas Airports Commission Revenue Series B

      

5.00% 7/1/25

      1,000,000        1,080,750  

5.00% 7/1/26

      3,000,000        3,239,670  

Memphis-Shelby County, Tennessee Airport Authority Revenue

      

Series D 5.00% 7/1/24

      4,110,000        4,407,934  

Metropolitan New York Transportation Authority Revenue

      

Series C 6.50% 11/15/28

      545,000        550,330  

New Jersey State Turnpike Authority Turnpike Revenue

      

Series A 5.00% 1/1/33

      1,770,000        2,027,517  

New Orleans, Louisiana Aviation Board

      

Series B 5.00% 1/1/32 (AGM) (AMT)

      2,900,000        3,189,536  

Series B 5.00% 1/1/33 (AGM) (AMT)

      2,900,000        3,182,576  

New York State Thruway Authority

      

Series J 5.00% 1/1/27

      5,705,000        6,457,033  

Pennsylvania State Turnpike Commission Revenue

      

Subordinate Series A-1 5.00% 12/1/29

      3,590,000        4,006,404  

Phoenix, Arizona Civic Improvement Corporation Airport Revenue

      

(Junior Lien Airport) Series A 5.00% 7/1/33

      3,355,000        3,785,916  

Port Authority of New York & New Jersey

      

(194th Series) 5.00% 10/15/32

      2,500,000        2,885,425  

(JFK International Air Terminal) Series 8 6.50% 12/1/28

      8,300,000        8,676,488  

Salt Lake City, Utah Airport Revenue

      

Series B 5.00% 7/1/31

      500,000        582,890  

Series B 5.00% 7/1/32

      600,000        696,930  

Series B 5.00% 7/1/33

      1,000,000        1,157,330  

San Francisco, California City & County Airport Commission - San Francisco International Airport

      

Series D 5.00% 5/1/25

      1,430,000        1,550,049  

South Jersey Port, New Jersey

      

(Subordinated Marine Terminal)

      

Series B 5.00% 1/1/32 (AMT)

      215,000        237,392  

Series B 5.00% 1/1/33 (AMT)

      315,000        347,023  

Series B 5.00% 1/1/34 (AMT)

      430,000        473,000  

Series B 5.00% 1/1/35 (AMT)

      430,000        472,291  

Series B 5.00% 1/1/36 (AMT)

      430,000        471,228  

Series B 5.00% 1/1/37 (AMT)

      430,000        470,166  

 

51

Table of Contents

Schedules of investments

Delaware Tax-Free USA Intermediate Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Transportation Revenue Bonds (continued)

      

St. Louis, Missouri Airport Revenue

      

(Lambert-St. Louis International) Series A-1

      

6.125% 7/1/24

      3,780,000      $ 3,911,771  

Texas Private Activity Bond Surface Transportation Corporate Senior Lien Revenue

      

(LBJ Infrastructure) 7.50% 6/30/33

      3,625,000        3,957,485  

(NTE Mobility Partners)

      

7.00% 12/31/38 (AMT)

      3,750,000        4,421,175  

7.50% 12/31/31

      3,765,000        4,024,484  
     

 

 

  
        87,157,583  
     

 

 

  

  Water & Sewer Revenue Bonds – 3.18%

      

Atlanta, Georgia Water & Wastewater Revenue

      

Series B 5.50% 11/1/23 (AGM)

      1,175,000        1,225,713  

California State Department of Water Resources

      

(Water System) Series AS 5.00% 12/1/29

      2,680,000        3,137,288  

Dominion, Colorado Water & Sanitation District

      

5.25% 12/1/27

      1,390,000        1,469,272  

Great Lakes, Michigan Water Authority Water Supply System Revenue

      

(Senior Lien Bond) Series C 5.00% 7/1/31

      3,000,000        3,456,090  

Sacramento, California Water Revenue

      

5.00% 9/1/26

      3,160,000        3,595,100  

San Antonio, Texas Water System Revenue

      

Series A 5.00% 5/15/32

      1,500,000        1,741,740  

Series A 5.00% 5/15/33

      2,250,000        2,601,360  
     

 

 

  
             17,226,563  
     

 

 

  

  Total Municipal Bonds (cost $517,294,939)

         536,508,379  
     

 

 

  

  Short-Term Investments – 1.31%

                  

  Variable Rate Demand Notes – 1.31%¤

      

Mississippi Business Finance Corporation Gulf Opportunity Zone Industrial Development Revenue

      

(Chevron USA)

      

Series A 1.54% 12/1/30

      125,000        125,000  

Series A 1.54% 11/1/35

      1,040,000        1,040,000  

Series G 1.54% 12/1/30

      3,225,000        3,225,000  

Series I 1.54% 11/1/35

      2,700,000        2,700,000  
     

 

 

  

  Total Short-Term Investments (cost $7,090,000)

         7,090,000  
     

 

 

  

  Total Value of Securities – 100.28%
  (cost $524,384,939)

       $ 543,598,379  
     

 

 

  

 

52

Table of Contents

    

    

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $22,087,228, which represents 4.07% of the Fund’s net assets. See Note 9 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 9 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

•

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at Aug. 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

 

^

Zero coupon security. The rate shown is the effective yield at the time of purchase.

Summary of abbreviations:

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

ICE – Intercontinental Exchange

LIBOR – London Interbank Offered Rate

LIBOR03M – ICE LIBOR USD 3 Month

LIBOR06M – ICE LIBOR USD 6 Month

PSF – Guaranteed by Permanent School Fund

USD – US Dollar

See accompanying notes, which are an integral part of the financial statements.

 

53

Table of Contents
Schedules of investments
Delaware National High-Yield Municipal Bond Fund    August 31, 2018

 

     Principal amount°      Value (US $)  

  Municipal Bonds – 99.11%

                  

  Corporate Revenue Bonds - 21.76%

      

Allegheny County, Pennsylvania Industrial Development Authority Revenue

      

(Environmental Improvement - US Steel Corp. Project)

      

5.75% 8/1/42 (AMT)

      2,000,000      $       2,019,340  

Buckeye, Ohio Tobacco Settlement Financing Authority

      

(Asset-Backed Senior Turbo)

      

Series A-2 5.875% 6/1/47

      36,540,000        36,771,664  

Series A-2 6.00% 6/1/42

      3,100,000        3,110,695  

Series A-2 6.50% 6/1/47

      21,205,000        21,644,580  

California County Tobacco Securitization Agency Settlement Revenue

      

(Capital Appreciation Bond - Fresno County Tobacco Funding Corporation)

0.83% 6/1/55 ^

      100,000,000        5,258,000  

California Pollution Control Financing Authority Revenue

      

(Poseidon Resources) 144A 5.00% 7/1/37 (AMT)#

      5,000,000        5,286,100  

California State Enterprise Development Authority Revenue

      

(Sunpower Corp. - Recovery Zone Facility)

      

8.50% 4/1/31

      1,000,000        1,064,570  

Central Plains Energy Project, Nebraska

      

(Project No. 3)

      

Series A 5.00% 9/1/37

      3,210,000        3,775,602  

Series A 5.00% 9/1/42

      3,745,000        4,468,047  

Chandler, Arizona Industrial Development Authority Revenue

      

(Intel Corporation Project) Series 2007 2.70% 12/1/37 (AMT)•

      4,500,000        4,514,445  

Columbus County, North Carolina Industrial Facilities & Pollution Control Financing

      

(International Paper Co. Project) Series A 5.70% 5/1/34

      1,000,000        1,060,260  

Florida Development Finance Corporation Revenue

      

(Brightline Passenger Rail Project) 144A 5.625% 1/1/47 (AMT)#•

      3,890,000        4,064,622  

Golden State, California Tobacco Securitization Corporate Settlement Revenue

      

Series A-1 5.00% 6/1/47

      16,430,000        16,890,861  

Series A-1 5.25% 6/1/47

      11,310,000        11,799,723  

(Capital Appreciation - Asset-Backed-1st Subordinate)

      

Series B 1.548% 6/1/47 ^

      30,145,000        5,351,642  

Houston, Texas Airport System Revenue

      

Series B-1 5.00% 7/15/35 (AMT)

      5,000,000        5,377,900  

(Special Facilities Continental Airlines, Inc. Terminal Improvements Projects)

Series 2011

      

6.625% 7/15/38 (AMT)

      2,000,000        2,180,600  

 

54

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Corporate Revenue Bonds (continued)

      

Houston, Texas Airport System Revenue

      

(United Airlines Inc.) 5.00% 7/1/29 (AMT)

      1,150,000      $ 1,244,507  

Louisiana Local Government Environmental Facilities & Community Development Authority Revenue

      

(Westlake Chemical Corp.) Series A-1 6.50% 11/1/35

      3,000,000               3,264,720  

Lower Alabama Gas District

      

Series A 5.00% 9/1/46

      3,565,000        4,284,346  

Main Street Natural Gas Project Revenue, Georgia

      

Series A 5.50% 9/15/23

      40,000        45,454  

Michigan Tobacco Settlement Financing Authority Revenue Asset-Backed

      

Series A 6.00% 6/1/48

      1,255,000        1,260,911  

Mission, Texas Economic Development Corporation Revenue

      

(Senior Lien - Natgasoline Project) Series B 144A

      

5.75% 10/1/31 (AMT)#

      4,500,000        4,641,345  

M-S-R Energy Authority, California Gas Revenue

      

Series A 6.50% 11/1/39

      2,500,000        3,511,475  

Series B 6.50% 11/1/39

      2,500,000        3,511,475  

Nassau County, New York Tobacco Settlement Corporation Revenue

      

(Asset-Backed) Series A-3 5.125% 6/1/46

      1,945,000        1,924,247  

Nevada State Department of Business & Industry

      

(Green Fulcrum Sierra Biofuels Project) 144A

      

6.25% 12/15/37 (AMT)#

      2,500,000        2,712,100  

New Jersey Economic Development Authority Special Facility Revenue

      

(Continental Airlines Project)

      

5.25% 9/15/29 (AMT)

      4,000,000        4,347,160  

Series B 5.625% 11/15/30 (AMT)

      1,270,000        1,436,230  

New York City, New York Industrial Development Agency

      

(Brooklyn Navy Yard Cogeneration Partners Project)

      

5.65% 10/1/28 (AMT)

      4,750,000        4,793,937  

5.75% 10/1/36 (AMT)

      5,020,000        5,066,435  

New York Liberty Development Corporation Revenue

      

(Goldman Sachs Headquarters) 5.25% 10/1/35

      7,000,000        8,666,630  

(Second Priority - Bank of America Tower) Class 3

      

6.375% 7/15/49

      2,000,000        2,098,860  

New York Transportation Development Corporation Special Facility Revenue

      

(Delta Air Lines, Inc. - LaGuardia Airport Terminals C&D Redevelopment Project)

      

Series 2018 4.00% 1/1/36 (AMT)

      1,960,000        1,985,833  

 

55

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Corporate Revenue Bonds (continued)

      

New York Transportation Development Corporation Special Facility Revenue

      

(Delta Air Lines, Inc. - LaGuardia Airport Terminals C&D Redevelopment Project)

      

Series 2018 5.00% 1/1/36 (AMT)

      3,880,000      $ 4,303,502  

Northern Tobacco Securitization Corporation Revenue, Alaska

      

(Tobacco Settlement Asset-Backed Bonds) Series A

      

5.00% 6/1/46

      6,570,000        6,599,959  

Pennsylvania Economic Development Financing Authority

      

(National Gypsum) 5.50% 11/1/44 (AMT)

      4,500,000        4,746,735  

Pima County, Arizona Industrial Development Authority Pollution Control Revenue

      

(Tucson Electric Power) Series A 5.25% 10/1/40

      500,000        530,405  

Port of Seattle, Washington Industrial Development Corporation Special Facilities Revenue

      

(Delta Airlines) 5.00% 4/1/30 (AMT)

      2,000,000        2,170,560  

Public Authority for Colorado Energy Natural Gas Revenue

      

Series 28 6.50% 11/15/38

      2,000,000        2,752,980  

Salt Verde, Arizona Financial Senior Gas Revenue

      

5.00% 12/1/37

      11,765,000        13,982,114  

5.25% 12/1/27

      2,235,000        2,608,580  

5.25% 12/1/28

      1,050,000        1,235,609  

5.50% 12/1/29

      765,000        924,327  

Shoals, Indiana

      

(National Gypsum Co. Project) 7.25% 11/1/43 (AMT)

      1,625,000        1,822,893  

Tennessee State Energy Acquisition Gas Revenue

      

Series A 4.00% 5/1/48 •

      720,000        762,941  

Series C 5.00% 2/1/27

      2,940,000        3,322,612  

Tobacco Settlement Financing Corporation, Louisiana

      

Asset-Backed Note Series A 5.25% 5/15/35

      2,540,000        2,734,513  

Tobacco Settlement Financing Corporation, New Jersey

      

Series A 5.00% 6/1/46

      1,785,000        1,950,291  

Series B 5.00% 6/1/46

      4,460,000        4,816,577  

Tobacco Settlement Financing Corporation, Virginia

      

Series B-1 5.00% 6/1/47

      2,000,000        2,000,040  

Series C 2.419% 6/1/47 ^

      66,475,000        7,613,382  

Series D 2.594% 6/1/47 ^

      137,270,000             13,526,586  

TSASC, New York

      

Series A 5.00% 6/1/41

      705,000        761,379  

Tulsa, Oklahoma Municipal Airports Improvement Trust Revenue

      

Series A 5.50% 6/1/35 (AMT)

      2,000,000        2,140,680  

 

56

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Corporate Revenue Bonds (continued)

      

Tulsa, Oklahoma Municipal Airports Improvement Trust Revenue

      

(American Airlines) 5.00% 6/1/35 (AMT)•

      3,000,000      $ 3,221,310  

Valparaiso, Indiana

      

(Pratt Paper LLC Project) 7.00% 1/1/44 (AMT)

      2,865,000        3,355,488  

Washington Economic Development Finance Authority Revenue

      

(Columbia Pulp I, LLC Project) Series 2017A 144A

      

7.50% 1/1/32 (AMT)#

      5,000,000        5,733,000  

Wisconsin Public Finance Authority

      

(National Gypsum) 4.00% 8/1/35 (AMT)

      2,000,000        1,951,860  
     

 

 

  
           285,002,639  
     

 

 

  

  Education Revenue Bonds – 13.48%

      

Arizona Industrial Development Authority Revenue

      

(Accel Schools Project) Series A 144A 5.25% 8/1/48 #

      3,200,000        3,204,736  

(American Charter Schools Foundation Project)

      

144A 6.00% 7/1/37 #

      775,000        822,298  

144A 6.00% 7/1/47 #

      4,735,000        4,982,782  

(Basis Schools Projects)

      

Series A 144A 5.125% 7/1/37 #

      750,000        781,073  

Series A 144A 5.375% 7/1/50 #

      1,000,000        1,044,350  

(Kaizen Education Foundation Project) 144A

      

5.80% 7/1/52 #

      4,000,000        4,160,120  

Arlington, Texas Higher Education Finance

      

(Arlington Classic Academy) 7.65% 8/15/40

      1,000,000        1,076,150  

(Leadership Preparatory School)

      

Series A 5.00% 6/15/36

      700,000        708,631  

Series A 5.00% 6/15/46

      1,325,000        1,336,514  

Build NYC Resource, New York

      

5.00% 11/1/39

      1,000,000        1,016,880  

5.50% 11/1/44

      2,500,000        2,600,250  

(Inwood Academy for Leadership Charter School Project)

      

Series A 144A 5.125% 5/1/38 #

      575,000        589,266  

Series A 144A 5.50% 5/1/48 #

      1,500,000        1,566,120  

Burbank, Illinois

      

(Intercultural Montessori Language) 144A

      

6.25% 9/1/45 #

      4,000,000        4,224,280  

California Educational Facilities Authority Revenue

      

(Loma Linda University) Series A 5.00% 4/1/47

      1,500,000        1,678,320  

California Municipal Finance Authority Revenue

      

(California Baptist University) Series A 144A

      

5.50% 11/1/45 #

      4,000,000        4,486,200  

 

57

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Education Revenue Bonds (continued)

      

California Municipal Finance Authority Revenue

      

(Julian Charter School Project) Series A 144A

      

5.625% 3/1/45 #

      5,650,000      $ 5,697,234  

(Partnership Uplift Community Project) Series A

      

5.25% 8/1/42

      1,700,000               1,736,584  

(Santa Rosa Academy Project) Series A 6.00% 7/1/42

      1,250,000        1,329,063  

(Southwestern Law School) 6.50% 11/1/41

      1,500,000        1,677,510  

(The Creative Center of Los Altos Project) Series B 144A

      

4.50% 11/1/46 #

      1,000,000        1,001,980  

California School Finance Authority

      

(Aspire Public Schools)

      

Series A 144A 5.00% 8/1/35 #

      585,000        631,320  

Series A 144A 5.00% 8/1/40 #

      605,000        647,955  

(Encore Education Obligated Group) Series A 144A

      

5.00% 6/1/52 #

      1,000,000        878,030  

(Escuela Popular Project) 144A 6.50% 7/1/50 #

      2,750,000        2,760,643  

(New Designs Charter School) Series A 5.50% 6/1/42

      1,750,000        1,815,573  

(View Park Elementary & Middle Schools)

      

Series A 5.875% 10/1/44

      1,000,000        1,063,030  

Series A 6.00% 10/1/49

      720,000        768,139  

California State University

      

(Systemwide)

      

Series A 5.00% 11/1/26

      2,000,000        2,430,920  

Series A 5.00% 11/1/27

      2,300,000        2,796,892  

California Statewide Communities Development Authority Charter School Revenue

      

(Green Dot Public Schools) Series A 7.25% 8/1/41

      1,915,000        2,137,504  

California Statewide Communities Development Authority Revenue

      

(California Baptist University) Series A 144A

      

5.00% 11/1/41 #

      1,875,000        2,076,563  

(Lancer Educational Student Housing Project) Series A

      

144A 5.00% 6/1/46 #

      1,500,000        1,623,810  

Capital Trust Agency, Florida

      

(River City Education Services Project)

      

Series A 5.375% 2/1/35

      870,000        863,867  

Series A 5.625% 2/1/45

      1,500,000        1,498,890  

Colorado Educational & Cultural Facilities Authority Revenue

      

(Charter School - Community Leadership Academy)

      

7.45% 8/1/48

      2,000,000        2,287,260  

(Charter School - Loveland Classical School) 144A

      

5.00% 7/1/46 #

      1,500,000        1,523,190  

 

58

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Education Revenue Bonds (continued)

      

Colorado Educational & Cultural Facilities Authority Revenue

      

(Skyview Charter School) 144A 5.375% 7/1/44 #

      500,000      $ 513,395  

(Windsor Charter Academy Project) Series 2016 144A

      

5.00% 9/1/36 #

      1,000,000        1,006,330  

Delaware State Economic Development Authority Revenue

      

(Charter School - Aspira Charter)

      

5.00% 6/1/36

      700,000        709,359  

5.00% 6/1/46

      820,000        823,067  

5.00% 6/1/51

      1,035,000        1,028,314  

District of Columbia Revenue

      

(Provident Group - Howard Properties) 5.00% 10/1/35

      2,500,000        2,537,600  

East Hempfield Township, Pennsylvania Industrial Development Authority

      

(Student Services Income - Student Housing Project)

      

5.00% 7/1/30

      1,000,000        1,071,940  

Hawaii State Department of Budget & Finance

      

(Chaminade University) Series A 144A 5.00% 1/1/45 #

      1,500,000        1,507,965  

(Hawaii Pacific University) Series A 6.875% 7/1/43

      2,000,000        2,101,880  

Henderson, Nevada Public Improvement Trust

      

(Touro College & University System) 5.50% 1/1/44

      2,000,000        2,177,040  

Idaho Housing & Finance Association

      

(Idaho Arts Charter School Inc.) 144A 5.00% 12/1/36 #

      715,000        761,825  

(North Star Charter School)

      

Series A 6.75% 7/1/48

      529,150        550,094  

Series B 144A 4.88% 7/1/49 #^

      2,888,155        383,403  

(Xavier Charter School Project) Series A 5.00% 6/1/50

      1,000,000        1,060,930  

Illinois Finance Authority Charter School Revenue

      

(Chicago International Charter School Project)

      

5.00% 12/1/47

      2,805,000        2,920,650  

(Uno Charter School) Series A 7.125% 10/1/41

      1,000,000        1,060,940  

Illinois Finance Authority Revenue

      

(Lake Forest College) Series A 6.00% 10/1/48

      1,000,000        1,067,700  

(Rogers Park Montessori)

      

6.00% 2/1/34

      675,000        708,547  

6.125% 2/1/45

      1,800,000               1,885,248  

Illinois Finance Authority Student Housing Revenue

      

(Dekalb II - Northern Illinois University Project)

      

6.875% 10/1/43

      1,000,000        1,079,300  

Indiana State Finance Authority Revenue Educational Facilities

      

(Drexel Foundation - Thea Bowman Academy Charter School) Series A

7.00% 10/1/39

      1,000,000        1,009,860  

 

59

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Education Revenue Bonds (continued)

      

Kanawha, West Virginia

      

(West Virginia University Foundation Project)

      

6.75% 7/1/45

      2,500,000      $ 2,653,325  

Kent County, Delaware Student Housing and Dining Facilities Revenue

      

(Delaware State University Project)

      

Series A 5.00% 7/1/53

      140,000        149,561  

Series A 5.00% 7/1/58

      1,250,000               1,325,425  

Louisiana Public Facilities Authority Revenue

      

(Lake Charles Charter Academy Foundation Project)

      

8.00% 12/15/41

      1,500,000        1,615,545  

Macon-Bibb County, Georgia Urban Development Authority Revenue

      

(Academy for Classical Education)

      

Series A 144A 5.875% 6/15/47 #

      1,680,000        1,733,642  

Series A 144A 6.00% 6/15/52 #

      1,530,000        1,581,469  

Maricopa County, Arizona Industrial Development Authority

      

(Paradise Schools Projects) Series 2016 144A

      

5.00% 7/1/47 #

      1,500,000        1,552,905  

Maryland State Health & Higher Educational Facilities Authority Revenue

      

(Patterson Park Public Charter School) Series A

      

6.125% 7/1/45

      1,000,000        1,008,550  

Miami-Dade County, Florida Industrial Development Authority

      

(Youth Co-Op Charter School)

      

Series A 144A 5.75% 9/15/35 #

      1,000,000        1,011,490  

Series A 144A 6.00% 9/15/45 #

      1,000,000        1,016,570  

Michigan Finance Authority Limited Obligation Revenue

      

(Public School Academy Old Redford) Series A

      

6.50% 12/1/40

      900,000        905,454  

(Public School Academy University Learning)

      

7.50% 11/1/40

      1,000,000        1,023,930  

Michigan Public Educational Facilities Authority Revenue

      

(Limited-Obligation-Landmark Academy) 7.00% 12/1/39

      950,000        950,627  

Nevada State Department of Business & Industry

      

(Somerset Academy)

      

Series A 144A 5.00% 12/15/35 #

      1,595,000        1,650,921  

Series A 144A 5.125% 12/15/45 #

      2,515,000        2,598,850  

New Jersey State Higher Education Student Assistance Authority Student Loan Revenue

      

Series 1B 5.75% 12/1/39 (AMT)

      1,250,000        1,355,725  

 

60

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Education Revenue Bonds (continued)

      

New York State Dormitory Authority

      

(Touro College & University System) Series A

      

5.50% 1/1/44

      2,875,000      $       3,151,546  

North Texas Education Finance Revenue

      

(Uplift Education) Series A 5.25% 12/1/47

      2,100,000        2,212,560  

Pennsylvania State Higher Educational Facilities Authority Revenue

      

(Foundation Indiana University) Series A 2.216%

      

(LIBOR03M + 0.67%) 7/1/39 (SGI)•

      2,400,000        2,058,384  

Philadelphia, Pennsylvania Authority for Industrial Development Revenue

      

(1st Philadelphia Preparatory) Series A 7.25% 6/15/43

      1,230,000        1,393,615  

(Global Leadership Academy Project) 6.375% 11/15/40

      1,000,000        1,028,360  

(Green Woods Charter School Project) Series A

      

5.75% 6/15/42

      1,600,000        1,653,008  

(New Foundation Charter School Project)

      

6.625% 12/15/41

      1,000,000        1,099,390  

(Tacony Academy Charter School Project)

      

7.00% 6/15/43

      1,540,000        1,683,651  

Phoenix, Arizona Industrial Development Authority Education Revenue

      

(Basic Schools Project)

      

Series 2015A 144A 5.00% 7/1/46 #

      4,000,000        4,094,880  

Series 2016A 144A 5.00% 7/1/45 #

      2,000,000        2,048,620  

(Choice Academies Project)

      

5.375% 9/1/32

      1,000,000        1,040,130  

5.625% 9/1/42

      600,000        623,952  

(Downtown Phoenix Student Housing, LLC - Arizona State University Project)

      

Series 2018A 5.00% 7/1/37

      250,000        275,897  

Series 2018A 5.00% 7/1/42

      1,400,000        1,536,570  

(Eagle College Preparatory Project) Series A

      

5.00% 7/1/43

      450,000        450,743  

(Rowan University Project) 5.00% 6/1/42

      2,000,000        2,144,040  

Pima County, Arizona Industrial Development Authority Education Revenue

      

(American Leadership Academy Project)

      

144A 5.00% 6/15/47 #

      1,630,000        1,646,072  

144A 5.00% 6/15/52 #

      1,400,000        1,408,988  

(Edkey Charter Schools Project) 6.00% 7/1/43

      2,000,000        1,907,820  

Pottsboro, Texas Higher Education Finance Authority Revenue

      

Series A 5.00% 8/15/36

      655,000        667,674  

 

61

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Education Revenue Bonds (continued)

      

Pottsboro, Texas Higher Education Finance Authority Revenue

      

Series A 5.00% 8/15/46

      1,000,000      $ 1,001,270  

Private Colleges & Universities Authority, Georgia Revenue

      

(Mercer University) Series A 5.00% 10/1/32

      1,005,000               1,048,526  

St. Paul, Minnesota Housing & Redevelopment Authority Charter School Lease Revenue

      

(Academia Cesar Chavez School Project) Series A

      

5.25% 7/1/50

      2,560,000        2,431,027  

(Hmong College Preparatory Academy Project)

      

Series A 5.75% 9/1/46

      1,000,000        1,059,700  

Series A 6.00% 9/1/51

      3,000,000        3,207,810  

University of California

      

Series AZ 5.25% 5/15/58

      6,185,000        7,273,807  

Utah State Charter School Finance Authority Revenue

      

(North Davis Preparatory) 6.375% 7/15/40

      1,290,000        1,357,145  

Wisconsin Public Finance Authority Revenue

      

(Pine Lake Preparatory) 144A 5.50% 3/1/45 #

      3,460,000        3,558,714  

(Roseman University Health Sciences Project)

      

5.75% 4/1/42

      2,000,000        2,130,540  

Wyoming Community Development Authority Student Housing Revenue

      

(CHF-Wyoming LLC) 6.50% 7/1/43

      1,000,000        1,057,530  

Yonkers, New York Economic Development Corporation Education Revenue

      

(Charter School Educational Excellence) Series A

      

6.25% 10/15/40

      595,000        616,563  
     

 

 

  
        176,491,835  
     

 

 

  

  Electric Revenue Bonds – 0.17%

      

Long Island, New York Power Authority

      

Series A 5.00% 9/1/44

      1,960,000        2,170,014  
     

 

 

  
        2,170,014  
     

 

 

  

  Healthcare Revenue Bonds – 27.58%

      

Abag, California Finance Authority for Nonprofit Corporations

      

(Episcopal Senior Communities) 6.125% 7/1/41

      1,650,000        1,798,269  

Alachua County, Florida Health Facilities Authority

      

(Oak Hammock University)

      

Series A 8.00% 10/1/42

      1,000,000        1,149,180  

Series A 8.00% 10/1/46

      1,500,000        1,717,710  

 

62

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Allegheny County, Pennsylvania Hospital Development Authority Revenue

      

(Allegheny Health Network Obligated Group Issue)

      

Series A 4.00% 4/1/44

      4,000,000      $ 3,955,640  

Series A 5.00% 4/1/47

      4,000,000               4,378,680  

Allen County, Indiana Economic Development Revenue

      

(StoryPoint Fort Wayne Project) Series A-1 144A

      

6.875% 1/15/52 #

      1,650,000        1,777,380  

Antelope Valley, California Healthcare District

      

Series A 5.00% 3/1/41

      1,000,000        1,054,890  

Apple Valley, Minnesota

      

(Minnesota Senior Living LLC, Project)

      

Series B 5.00% 1/1/47

      2,500,000        2,566,725  

Series D 7.25% 1/1/52

      7,290,000        7,375,001  

Bexar County, Texas Health Facilities Development

      

(Army Retirement Residence Foundation Project) Series

      

2010 5.875% 7/1/30

      155,000        162,978  

Birmingham, Alabama Special Care Facilities Financing Authority

      

(Methodist Home for the Aging)

      

5.50% 6/1/30

      1,850,000        2,021,421  

5.75% 6/1/35

      1,500,000        1,653,195  

5.75% 6/1/45

      2,500,000        2,738,025  

6.00% 6/1/50

      2,650,000        2,936,333  

Board of Managers Joint Guadalupe County-City of Seguin, Texas Hospital

      

5.00% 12/1/45

      1,100,000        1,115,257  

Butler County, Ohio Port Authority

      

(StoryPoint Fairfield Project) Series A-1 144A

      

6.50% 1/15/52 #

      650,000        684,145  

California Health Facilities Financing Authority Revenue

      

(Kaiser Permanente) Series A-2 5.00% 11/1/47

      4,870,000        6,229,509  

California Municipal Finance Authority Revenue

      

(Northbay Healthcare Group) Series A 5.25% 11/1/47

      500,000        544,190  

California Statewide Communities Development Authority Revenue

      

(BE Group) 144A 7.25% 11/15/41 #

      500,000        528,970  

(Loma Linda University Medical Center)

      

5.50% 12/1/54

      13,000,000        14,118,780  

Series A 5.25% 12/1/29

      1,500,000        1,667,205  

Series A 144A 5.25% 12/1/48 #

      1,615,000        1,781,894  

Series A 144A 5.25% 12/1/56 #

      3,000,000        3,239,010  

Series A 144A 5.50% 12/1/58 #

      8,135,000        8,979,494  

 

63

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Camden County, New Jersey Improvement Authority Revenue

      

(Cooper Health System Obligation Group)

      

5.75% 2/15/42

      2,500,000      $ 2,716,750  

Capital Trust Agency, Florida

      

(Elim Senior Housing Inc. Project) 144A 5.875% 8/1/52 #

      2,500,000               2,563,400  

(Tuscan Gardens Senior Living Center) Series A

      

7.00% 4/1/49

      5,000,000        4,913,050  

Chesterfield County, Virginia Economic Development Authority Revenue

      

(1st Mortgage - Brandermill Woods Project)

      

5.125% 1/1/43

      1,030,000        1,060,807  

Chesterton, Indiana

      

(StoryPoint Chesterton Project) Series A 144A

      

6.375% 1/15/51 #

      1,000,000        1,044,990  

Cobb County, Georgia Development Authority

      

(Provident Village at Creekside Project) Series A 144A

      

6.00% 7/1/51 #

      3,500,000        3,117,030  

Colorado Health Facilities Authority Revenue

      

(American Baptist) 8.00% 8/1/43

      2,500,000        2,853,800  

(Mental Health Center Denver Project) Series A

      

5.75% 2/1/44

      500,000        553,395  

(School Health Systems) Series A 5.00% 1/1/44

      1,000,000        1,086,380  

(Sunny Vista Living Center)

      

Series A 144A 5.50% 12/1/30 #

      750,000        780,330  

Series A 144A 5.75% 12/1/35 #

      1,150,000        1,196,793  

Series A 144A 6.125% 12/1/45 #

      1,200,000        1,266,132  

Series A 144A 6.25% 12/1/50 #

      560,000        593,309  

Connecticut State Health & Educational Facilities Authority Revenue

      

(Church Home of Hartford Project)

      

Series A 144A 5.00% 9/1/46 #

      1,000,000        1,042,090  

Series A 144A 5.00% 9/1/53 #

      1,500,000        1,555,965  

Cumberland County, Pennsylvania Municipal Authority Revenue

      

(Asbury Pennsylvania Obligation Group) 5.25% 1/1/41

      1,600,000        1,644,000  

(Diakon Lutheran Ministries Series) 6.375% 1/1/39

      100,000        101,145  

Cuyahoga County, Ohio Hospital Revenue

      

(The Metrohealth System)

      

5.25% 2/15/47

      5,200,000        5,623,072  

5.50% 2/15/52

      4,405,000        4,838,011  

5.50% 2/15/57

      7,250,000        7,935,633  

 

64

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Decatur, Texas Hospital Authority

      

(Wise Regional Health Systems)

      

Series A 5.00% 9/1/34

      1,000,000      $ 1,067,600  

Series A 5.25% 9/1/29

      500,000        547,185  

Series A 5.25% 9/1/44

      2,000,000               2,139,660  

Duluth, Minnesota Economic Development Authority Revenue

      

(St. Luke’s Hospital Authority Obligation Group)

      

5.75% 6/15/32

      3,750,000        4,069,425  

Florida Development Finance

      

(Tuscan Isle Champions Gate Project) Series A 144A

      

6.375% 6/1/46 #

      2,250,000        2,035,553  

(UF Health - Jacksonville Project) Series A

      

6.00% 2/1/33

      2,375,000        2,584,570  

Glendale, Arizona Industrial Development Authority Revenue

      

(Glencroft Retirement Community Project)

      

5.00% 11/15/36

      830,000        841,081  

5.25% 11/15/51

      1,350,000        1,371,451  

Guilderland, New York Industrial Development Agency

      

Series A 144A 5.875% 1/1/52 #

      6,000,000        5,943,060  

Hawaii State Department of Budget & Finance Special Purpose Senior Living Revenue

      

(Hawaii Pacific Health Obligation) Series A

      

5.50% 7/1/43

      2,990,000        3,323,146  

(Kahala Nui) 5.25% 11/15/37

      1,000,000        1,099,610  

Hospital Facilities Authority of Multnomah County, Oregon

      

(Mirabella at South Waterfront) 5.50% 10/1/49

      2,400,000        2,565,624  

Idaho Health Facilities Authority Revenue

      

(Valley Vista Care Corporation) Series A 5.00% 11/15/32

      455,000        474,733  

Illinois Finance Authority Revenue

      

(Admiral at Lake Project) 5.25% 5/15/54

      5,000,000        4,991,600  

(Lutheran Home & Services) 5.75% 5/15/46

      1,685,000        1,766,942  

Illinois Housing Development Authority

      

(Stonebridge of Gurnee Project)

      

Series A 144A 5.45% 1/1/46 #

      2,500,000        2,300,475  

Series A 144A 5.60% 1/1/56 #

      2,700,000        2,494,503  

Indiana Finance Authority Revenue

      

(King’s Daughters Hospital & Health)

      

5.50% 8/15/40

      1,000,000        1,043,200  

5.50% 8/15/45

      1,000,000        1,039,550  

(Marquette Project) 5.00% 3/1/39

      1,250,000        1,298,987  

 

65

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Iowa Finance Authority

      

(PHS Council Bluffs, Inc. Project)

      

5.125% 8/1/48

      1,650,000      $ 1,657,062  

5.25% 8/1/55

      2,500,000        2,509,925  

(Sunrise Retirement Community) 5.75% 9/1/43

      2,500,000        2,554,875  

Kalispell, Montana

      

(Immanuel Lutheran Corporation Project) Series A

      

5.25% 5/15/47

      1,300,000        1,358,955  

Kentucky Economic Development Finance Authority Healthcare Revenue

      

(Owensboro Health) Series A 5.00% 6/1/45

      1,250,000        1,333,750  

(Rosedale Green Project)

      

5.50% 11/15/35

      1,310,000        1,345,082  

5.75% 11/15/45

      2,500,000        2,592,050  

5.75% 11/15/50

      1,600,000        1,654,064  

Kentwood, Michigan Economic Development Corporation Revenue

      

(Limited Obligation - Holland Home) 5.625% 11/15/41

      1,250,000        1,339,437  

Kirkwood, Missouri Industrial Development Authority

      

(Aberdeen Heights) Series A 5.25% 5/15/50

      6,000,000        6,355,860  

Louisiana Public Facilities Authority Revenue

      

(Ochsner Clinic Foundation Project) 5.00% 5/15/46

      1,770,000        1,943,796  

Lucas County, Ohio Health Care Facilities Revenue

      

(Sunset Retirement Communities) 5.50% 8/15/30

      1,000,000        1,061,230  

Maine Health & Higher Educational Facilities Authority Revenue

      

(Maine General Medical Center) 6.75% 7/1/41

      1,700,000        1,828,180  

Maricopa County, Arizona Industrial Development Authority

      

(Christian Care Surprise, Inc. Project) Series 2016 144A

      

6.00% 1/1/48 #

      5,400,000        5,516,424  

Martin County, Florida Health Facilities Authority Revenue

      

(Martin Memorial Medical Center) 5.50% 11/15/42

      1,000,000        1,076,830  

Maryland Health & Higher Educational Facilities Authority

      

(Adventist Healthcare) Series A 5.50% 1/1/46

      5,000,000        5,563,600  

Miami-Dade County, Florida Health Facilities Authority Revenue

      

(Nicklaus Children’s Hospital Project) 5.00% 8/1/47

      2,350,000        2,600,581  

Michigan State Strategic Fund Limited Revenue

      

(Evangelical Homes) 5.50% 6/1/47

      2,750,000        2,851,117  

Missouri State Health & Educational Facilities Authority Revenue

      

(Lutheran Senior Services) 6.00% 2/1/41

      1,000,000               1,065,970  

 

66

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Montgomery County, Pennsylvania Industrial Development Authority Revenue

      

(Whitemarsh Continuing Care)

      

5.25% 1/1/40

      1,550,000      $ 1,561,485  

5.375% 1/1/50

      6,250,000        6,321,250  

Moon, Pennsylvania Industrial Development Authority

      

(Baptist Homes Society Obligation) 6.125% 7/1/50

      8,500,000        9,107,155  

New Hampshire Health & Education Facilities Authority

      

(Rivermeade) Series A 6.875% 7/1/41

      1,380,000               1,487,088  

New Hope, Texas Cultural Education Facilities Finance

      

(Cardinal Bay - Village on the Park)

      

Series A1 4.00% 7/1/36

      635,000        643,928  

Series A1 5.00% 7/1/46

      1,395,000        1,511,217  

Series A1 5.00% 7/1/51

      1,595,000        1,722,265  

Series B 4.00% 7/1/31

      635,000        643,496  

Series B 4.25% 7/1/36

      955,000        974,071  

Series B 4.75% 7/1/51

      1,915,000        1,988,383  

Series B 5.00% 7/1/46

      1,595,000        1,687,957  

Series C 5.00% 7/1/31

      250,000        268,373  

Series C 5.25% 7/1/36

      350,000        375,231  

Series C 5.50% 7/1/46

      1,250,000        1,352,113  

Series C 5.75% 7/1/51

      1,000,000        1,091,220  

Series D 6.00% 7/1/26

      135,000        136,370  

Series D 7.00% 7/1/51

      1,350,000        1,400,719  

(Legacy Midtown Park Project) Series A 5.50% 7/1/54

      2,500,000        2,484,275  

New Jersey Economic Development Authority

      

(Lions Gate Project) 5.25% 1/1/44

      2,000,000        2,075,920  

New Jersey Health Care Facilities Financing Authority Revenue

      

(Barnabas Health Services) Series A 4.00% 7/1/26

      980,000        1,034,341  

(Princeton Healthcare System) 5.00% 7/1/39

      2,500,000        2,844,325  

(St. Peters University Hospital) 6.25% 7/1/35

      2,700,000        2,879,739  

(University Hospital) Series A 5.00% 7/1/46 (AGM)

      5,000,000        5,480,050  

New York State Dormitory Authority

      

(Orange Regional Medical Center)

      

144A 5.00% 12/1/40 #

      1,100,000        1,191,366  

144A 5.00% 12/1/45 #

      800,000        863,960  

North Carolina Medical Care Commission Health Care Facilities Revenue

      

(First Mortgage - Galloway Ridge Project) 6.00% 1/1/39

      1,520,000        1,575,997  

 

67

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Northampton County, Pennsylvania Industrial Development Authority Revenue

      

(Morningstar Senior Living) 5.00% 7/1/36

      2,000,000      $ 2,040,260  

Oklahoma Development Finance Authority Health System Revenue

      

(OU Medicine Project) Series 2018B 5.50% 8/15/57

      4,255,000        4,822,915  

Orange County, New York Funding Corporation Assisted Living Residence Revenue

      

6.50% 1/1/46

      3,900,000        3,984,747  

Palm Beach County, Florida Health Facilities Authority

      

(Sinai Residences Boca Raton Project)

      

Series A 7.25% 6/1/34

      285,000        324,866  

Series A 7.50% 6/1/49

      2,920,000               3,349,269  

Palomar, California Health

      

Series 2016 5.00% 11/1/39

      1,670,000        1,804,468  

Payne County, Oklahoma Economic Development Authority

      

(Epworth Living at the Ranch) Series A 7.00% 11/1/51 ‡

      1,445,000        722,500  

Pennsylvania Economic Development Financing Authority

      

(Tapestry Moon Senior Housing Project) Series 2018A

      

144A 6.75% 12/1/53 #

      8,400,000        8,693,748  

Prince George’s County, Maryland

      

(Collington Episcopal Life Care Community)

      

5.00% 4/1/31

      1,030,000        1,092,583  

5.25% 4/1/47

      2,000,000        2,127,580  

Public Finance Authority, Wisconsin

      

(Bancroft Neurohealth Project)

      

Series A 144A 4.625% 6/1/36 #

      235,000        231,212  

Series A 144A 5.00% 6/1/36 #

      960,000        980,938  

Series A 144A 5.125% 6/1/48 #

      1,375,000        1,407,065  

(Maryland Proton Treatment Centre) Series A1 144A

      

6.375% 1/1/48 #

      2,500,000        2,537,425  

(Mary’s Woods at Marylhurst Project) 144A

      

5.25% 5/15/52 #

      2,300,000        2,491,222  

Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Authority

      

(Auxilio Mutuo) Series A 6.00% 7/1/33

      5,630,000        5,855,594  

Rochester, Minnesota

      

(The Homestead at Rochester) Series A 6.875% 12/1/48

      2,500,000        2,832,700  

Salem, Oregon Hospital Facility Authority Revenue

      

(Capital Manor) 6.00% 5/15/47

      1,500,000        1,616,940  

San Buenaventura, California Revenue

      

(Community Memorial Health System) 7.50% 12/1/41

      4,475,000        4,968,995  

 

68

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Southeastern Ohio Port Authority

      

(Memorial Health Systems)

      

5.00% 12/1/43

      805,000      $ 830,164  

5.50% 12/1/43

      1,250,000               1,334,750  

St. Louis County, Missouri Industrial Development Authority

      

(Nazareth Living Center Project)

      

Series A 5.00% 8/15/35

      600,000        622,782  

Series A 5.125% 8/15/45

      1,800,000        1,867,500  

Suffolk County, New York Economic Development Corporation Revenue

      

(Peconic Landing Southland) 6.00% 12/1/40

      575,000        613,985  

Tarrant County, Texas Cultural Education Facilities Finance

      

(Buckingham Senior Living Community) 5.50% 11/15/45

      3,000,000        2,600,400  

(Buckner Senior Living - Ventana Project)

      

6.75% 11/15/47

      1,850,000        2,056,553  

6.75% 11/15/52

      3,300,000        3,656,235  

Tempe, Arizona Industrial Development Authority Revenue

      

(Friendship Village) Series A 6.25% 12/1/46

      500,000        534,135  

(Mirabella At ASU Project) Series A 144A

      

6.125% 10/1/52 #

      1,720,000        1,896,592  

University of Colorado Hospital Authority Revenue

      

(UCHA Obligation Group) 5.00% 11/15/38 •

      3,000,000        3,243,510  

Vermont Economic Development Authority Revenue

      

(Wake Robin Corp. Project) 5.40% 5/1/33

      1,100,000        1,162,942  

Washington State Housing Finance Commission

      

(Bayview Manor Homes)

      

Series A 144A 5.00% 7/1/36 #

      700,000        730,324  

Series A 144A 5.00% 7/1/46 #

      1,450,000        1,501,141  

Series A 144A 5.00% 7/1/51 #

      2,000,000        2,063,860  

(Heron’s Key) Series A 144A 7.00% 7/1/50 #

      2,000,000        2,163,800  

(Wesley Homes at Lea Hill Project)

      

Series 2016 144A 5.00% 7/1/46 #

      1,000,000        1,033,270  

Series 2016 144A 5.00% 7/1/51 #

      2,000,000        2,059,880  

Wayzata, Minnesota Senior Housing Revenue

      

(Folkestone Senior Living Community)

      

Series A 5.50% 11/1/32

      270,000        279,021  

Series A 5.75% 11/1/39

      600,000        620,454  

Series A 6.00% 5/1/47

      920,000        952,283  

Westminster, Maryland

      

(Lutheran Village Millers Grant)

      

6.00% 7/1/34

      800,000        857,000  

 

69

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Healthcare Revenue Bonds (continued)

      

Westminster, Maryland

      

(Lutheran Village Millers Grant)

      

Series A 5.00% 7/1/24

      1,700,000      $ 1,790,134  

Series A 6.125% 7/1/39

      750,000        806,595  

Series A 6.25% 7/1/44

      2,500,000        2,704,425  

Wichita, Kansas

      

(Kansas Masonic Home)

      

Series II-A 5.00% 12/1/31

      500,000        522,620  

Series II-A 5.25% 12/1/36

      500,000        525,895  

Series II-A 5.375% 12/1/46

      1,200,000        1,268,148  

Wisconsin Health & Educational Facilities Authority

      

(Covenant Communities Project)

      

Series A1 4.00% 7/1/48

      1,510,000        1,484,073  

Series B 5.00% 7/1/48

      1,000,000        1,028,610  

Series C 7.00% 7/1/43

      900,000        892,548  

Series C 7.50% 7/1/53

      1,000,000        1,000,830  

Wisconsin Public Finance Authority

      

(Rose Villa Project) Series A 144A 5.75% 11/15/44 #

      2,000,000        2,145,980  
     

 

 

  
        361,304,466  
     

 

 

  

  Housing Revenue Bonds – 0.53%

      

California Municipal Finance Authority Mobile Home Park Revenue

      

(Caritas Affordable Housing) Senior Series A

      

5.25% 8/15/39

      1,200,000        1,313,148  

(Caritas Projects) Senior Series A 5.50% 8/15/47

      1,500,000        1,614,795  

Independent Cities Finance Authority, California

      

Series A 5.25% 5/15/44

      750,000        814,365  

Series A 5.25% 5/15/49

      3,000,000        3,249,450  
     

 

 

  
               6,991,758  
     

 

 

  

  Lease Revenue Bonds – 4.53%

      

California Municipal Finance Authority Revenue

      

(Goodwill Industry Sacramento Valley) 5.25% 1/1/45

      1,295,000        1,285,767  

(Goodwill Industry Sacramento Valley and Northern Nevada Project)

      

Series A 144A 6.625% 1/1/32 #

      500,000        532,565  

Series A 144A 6.875% 1/1/42 #

      1,500,000        1,604,850  

California Statewide Communities Development Authority Revenue

      

(Lancer Plaza Project) 5.875% 11/1/43

      1,875,000        2,101,144  

Capital Trust Agency, Florida Revenue

      

(Air Cargo - Aero Miami) Series A 5.35% 7/1/29

      765,000        790,008  

 

70

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Lease Revenue Bonds (continued)

      

Industrial Development Authority of Phoenix, Arizona

      

5.125% 2/1/34

      1,000,000      $ 933,730  

5.375% 2/1/41

      1,500,000        1,416,945  

Metropolitan Pier & Exposition Authority, Illinois

      

(Mccormick Place Expansion Project) Series A

      

5.00% 6/15/57

      3,975,000        4,242,199  

New Jersey Economic Development Authority Special Facility Revenue

      

Series WW 5.25% 6/15/30

      5,000,000        5,533,150  

New Jersey Transportation Trust Fund Authority

      

(Federal Highway Reimbursement Revenue) Series A

      

5.00% 6/15/31

      5,450,000        6,037,347  

(Transportation Program) Series AA 5.00% 6/15/25

      1,000,000        1,115,300  

New York Liberty Development Revenue

      

(Class 1-3 World Trade Center Project) 144A

      

5.00% 11/15/44 #

      5,000,000        5,263,250  

(Class 2-3 World Trade Center Project) 144A

      

5.375% 11/15/40 #

      2,410,000        2,656,832  

(Class 3-3 World Trade Center Project) 144A

      

7.25% 11/15/44 #

      9,600,000        11,382,912  

Public Finance Authority, Wisconsin Airport Facilities Revenue

      

(AFCO Investors II Portfolio) 144A

      

5.75% 10/1/31 (AMT)#

      3,775,000        3,806,106  

(Senior Obligation Group) Series B 5.00% 7/1/42 (AMT)

      4,000,000        4,220,040  

Virginia Public Building Authority

      

Series B 5.00% 8/1/20

      5,000,000        5,306,050  

Wise County, Texas

      

(Parker County Junior College District) 8.00% 8/15/34

      1,000,000        1,106,520  
     

 

 

  
        59,334,715  
     

 

 

  

  Local General Obligation Bonds – 3.60%

      

Chicago, Illinois

      

Series 2005D 5.50% 1/1/37

      2,280,000        2,444,251  

Series 2005D 5.50% 1/1/40

      3,000,000        3,207,510  

Series 2007E 5.50% 1/1/42

      2,150,000        2,296,265  

Series 2007F 5.50% 1/1/42

      1,250,000        1,335,037  

Series A 5.25% 1/1/29

      4,415,000        4,720,606  

Series A 5.50% 1/1/33

      2,000,000        2,162,520  

Series A 6.00% 1/1/38

      6,285,000        7,124,110  

Series C 5.00% 1/1/26

      2,105,000        2,297,355  

Series C 5.00% 1/1/38

      1,000,000        1,046,070  

Chicago, Illinois Board of Education

      

Series A 144A 7.00% 12/1/46 #

      2,500,000               2,990,975  

 

71

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Local General Obligation Bonds (continued)

      

Chicago, Illinois Board of Education

      

Series G 5.00% 12/1/44

      2,445,000      $ 2,510,355  

Series H 5.00% 12/1/36

      3,405,000        3,524,481  

Series H 5.00% 12/1/46

      4,225,000        4,331,555  

New York City, New York

      

Series E 5.00% 8/1/20

      3,615,000        3,830,671  

Raleigh, North Carolina

      

Series A 5.00% 9/1/22

      3,000,000        3,353,190  
     

 

 

  
        47,174,951  
     

 

 

  

  Pre-Refunded/Escrowed to Maturity Bonds – 6.78%

      

Bexar County, Texas Health Facilities Development

      

(Army Retirement Residence Foundation Project)

Series 2010 5.875% 7/1/30-20§

      845,000        904,851  

Bowling Green, Ohio Student Housing Revenue CFP I

      

(State University Project) 6.00% 6/1/45-20§

      1,215,000        1,303,452  

Brevard County, Florida Health Facilities Authority Revenue

      

(Health First Inc. Project) 7.00% 4/1/39-19§

      1,000,000        1,030,970  

Brooklyn Arena Local Development, New York Pilot Revenue

      

(Barclays Center Project)

      

6.25% 7/15/40-20§

      5,500,000        5,845,950  

6.50% 7/15/30-20§

      1,175,000        1,252,844  

Butler County, Pennsylvania Hospital Authority Revenue

      

(Butler Health System Project) 7.125% 7/1/29-19§

      900,000        939,663  

California Municipal Finance Authority Mobile Home Park Revenue

      

(Caritas Projects) Senior Series A 6.40% 8/15/45-20§

      1,690,000        1,826,079  

California Municipal Finance Authority Revenue

      

(Azusa Pacific University Project) Series B

      

7.75% 4/1/31-21§

      750,000        844,193  

(Eisenhower Medical Center) Series A 5.75% 7/1/40-20§

      1,000,000        1,074,020  

California Statewide Communities Development Authority Revenue

      

(California Baptist University Project) 7.50% 11/1/41-21§

      1,000,000        1,177,430  

Central Texas Regional Mobility Authority Revenue

      

Senior Lien 6.00% 1/1/41-21§

      1,890,000        2,063,351  

Subordinate Lien 6.75% 1/1/41-21§

      1,000,000        1,108,670  

Clifton, Texas Higher Education Finance Corporation Revenue

      

(Idea Public Schools) 5.75% 8/15/41-21§

      1,000,000        1,104,280  

(Uplift Education) Series A 6.25% 12/1/45-20§

      1,000,000               1,095,100  

 

72

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

Cumberland County, Pennsylvania Municipal Authority Revenue

      

(Diakon Lutheran Ministries Project) 6.375% 1/1/39-19§

      900,000      $ 913,698  

District of Columbia Revenue

      

(Center of Strategic & International Studies)

      

6.625% 3/1/41-21§

      2,235,000        2,498,641  

(KIPP Charter School) 6.00% 7/1/48-23§

      1,450,000        1,708,738  

Hawaii Pacific Health Special Purpose Revenue

      

Series A 5.50% 7/1/40-20§

      1,250,000        1,334,837  

Hawaii State Department of Budget & Finance Special Purpose Senior Living Revenue

      

(15 Craigside Project) Series A 9.00% 11/15/44-19§

      1,000,000        1,085,410  

Illinois Finance Authority Revenue

      

(Admiral at Lake Project)

      

Series A 7.625% 5/15/25-20§

      1,750,000        1,918,683  

Series A 7.75% 5/15/30-20§

      500,000        549,230  

Series A 8.00% 5/15/40-20§

      2,205,000        2,428,146  

Series A 8.00% 5/15/46-20§

      1,500,000        1,651,800  

(Provena Health)

      

Series A 7.75% 8/15/34-19§

      20,000        21,125  

Series A (Refunded) 7.75% 8/15/34-19§

      980,000        1,035,105  

(Silver Cross & Medical Centers) 7.00% 8/15/44-19§

      3,570,000        3,745,787  

Illinois Railsplitter Tobacco Settlement Authority

      

5.50% 6/1/23-21§

      2,010,000        2,204,990  

6.00% 6/1/28-21§

      1,455,000        1,615,487  

Kentucky Economic Development Finance Authority Hospital Revenue

      

(Owensboro Medical Health System) Series A

      

6.50% 3/1/45-20§

      4,965,000        5,359,866  

Koyukuk, Alaska Revenue

      

(Tanana Chiefs Conference Health Care Facility Project)

      

7.75% 10/1/41-19§

      1,750,000        1,859,463  

Lancaster Redevelopment Agency, California

      

(Redevelopment Project) 6.875% 8/1/39-19§

      285,000        298,774  

Unrefunded (Redevelopment Project)

      

6.875% 8/1/39-19§

      215,000        225,391  

Louisiana Public Facilities Authority Revenue

      

(Ochsner Clinic Foundation Project) 6.50% 5/15/37-21§

      1,705,000        1,906,173  

Lucas County, Ohio Improvement

      

(Lutheran Homes) Series A 7.00% 11/1/45-20§

      3,865,000        4,273,183  

Maryland Health & Higher Educational Facilities Authority

      

(Doctors Community Hospital) 5.75% 7/1/38-20§

      1,730,000               1,851,913  

 

73

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

Maryland State Economic Development Revenue

      

(Transportation Facilities Project) Series A

      

5.75% 6/1/35-20§

      1,400,000      $ 1,497,202  

Massachusetts State Health & Educational Facilities Authority Revenue

      

(Springfield College) 5.625% 10/15/40-19§

      1,000,000        1,043,230  

New Jersey Economic Development Authority Revenue

      

(Provident Group - Montclair University Student Housing Project)

5.875% 6/1/42-20§

      1,500,000        1,607,340  

New Jersey State Educational Facilities Authority Revenue

      

(University of Medicine & Dentistry) Series B

      

7.50% 12/1/32-19§

      1,000,000        1,043,360  

New York State Dormitory Authority Revenue Non State Supported Debt

      

(Orange Regional Medical Center) 6.25% 12/1/37-18§

      3,500,000        3,539,270  

Norco, California Redevelopment Agency Tax Allocation

      

(Area #1 Project) 6.00% 3/1/36-20§

      1,000,000        1,066,620  

Onondaga, New York Civic Development Revenue

      

(St. Joseph’s Hospital Health Center Project)

      

4.50% 7/1/32-22§

      1,000,000        1,094,620  

Series A 5.125% 7/1/31-19§

      1,000,000        1,029,410  

Oregon State Facilities Authority Revenue

      

(Concordia University Project)

      

Series A 144A 6.125% 9/1/30-20#§

      800,000        854,960  

Series A 144A 6.375% 9/1/40-20#§

      500,000        543,775  

Pennsylvania Economic Development Financing Authority Health System Revenue

      

(Albert Einstein Healthcare) Series A

      

6.25% 10/15/23-19§

      850,000        882,487  

Pennsylvania State Higher Educational Facilities Authority Revenue

      

(Edinboro University Foundation) 5.80% 7/1/30-20§

      1,300,000        1,391,559  

San Juan, Texas Higher Education Finance Authority Education Revenue

      

(Idea Public Schools) Series A 6.70% 8/15/40-20§

      2,000,000        2,183,580  

South Carolina Jobs - Economic Development Authority Hospital Revenue

      

(Palmetto Health) 5.75% 8/1/39-19§

      915,000        948,397  

Southwestern Illinois Development Authority Revenue

      

(Memorial Group)

      

7.125% 11/1/30-23§

      1,420,000        1,762,177  

7.125% 11/1/43-23§

      2,500,000               3,102,425  

 

74

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

St. Johns County, Florida Industrial Development Authority Revenue

      

(Presbyterian Retirement) Series A 5.875% 8/1/40-20§

      1,000,000      $ 1,075,590  

Travis County, Texas Health Facilities Development Corporation Revenue

      

(Westminster Manor Project) 7.125% 11/1/40-20§

      1,000,000        1,110,480  

University of Arizona Medical Center Hospital Revenue

      

6.00% 7/1/39-21§

      1,500,000        1,665,540  

Washington State Health Care Facilities Authority Revenue

      

(Multicare Health System) Series B

      

6.00% 8/15/39-19 (AGC)§

      1,250,000        1,299,887  
     

 

 

  
        88,799,202  
     

 

 

  

  Resource Recovery Revenue Bonds – 1.35%

      

Blythe Township, Pennsylvania Solid Waste Authority Revenue

      

7.75% 12/1/37 (AMT)

      3,000,000        3,154,860  

California Pollution Control Financing Authority Revenue

      

(Calplant I Project) 144A 8.00% 7/1/39 (AMT)#

      5,250,000        5,665,695  

Essex County, New Jersey Improvement Authority

      

144A 5.25% 7/1/45 (AMT)#

      2,500,000        2,524,875  

Mission, Texas Economic Development Corporation Revenue

      

(Dallas Clean Energy McCommas)

      

6.875% 12/1/24 (AMT)

      945,000        945,841  

Niagara, New York Area Development Corporation Revenue

      

(Covanta Project) Series A 144A 4.75% 11/1/42 (AMT)#

      3,500,000        3,517,535  

Orange County, Florida Industrial Development Authority

      

(Vitag Florida LLC Project) 144A 8.00% 7/1/36 (AMT)#‡

      3,250,000        1,885,195  
     

 

 

  
        17,694,001  
     

 

 

  

  Special Tax Revenue Bonds – 6.90%

      

Allentown, Pennsylvania Neighborhood Improvement Zone Development Authority Tax Revenue

      

(City Center Project)

      

144A 5.00% 5/1/32 #

      2,500,000        2,742,600  

144A 5.00% 5/1/42 #

      2,000,000        2,155,620  

Babcock Ranch, Florida Community Independent Special District

      

5.00% 11/1/31

      615,000        626,064  

5.25% 11/1/46

      500,000        506,505  

Canyons, Colorado Metropolitan District No. 5

      

Series A 6.125% 12/1/47

      1,000,000               1,020,660  

 

75

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Special Tax Revenue Bonds (continued)

      

Celebration Pointe, Florida Community Development District

      

5.125% 5/1/45

      2,000,000      $ 2,034,700  

Cherry Hill, Virginia Community Development Authority

      

(Potomac Shores Project)

      

144A 5.15% 3/1/35 #

      1,000,000        1,025,470  

144A 5.40% 3/1/45 #

      2,000,000        2,052,760  

Colliers Hill, Colorado Metropolitan District No. 2

      

Series A 6.50% 12/1/47

      2,000,000        2,026,200  

Conley Road Transportation Development District, Missouri

      

5.375% 5/1/47

      5,200,000        5,300,048  

Dutchess County, New York Local Development Corporation Revenue

      

(Anderson Center Services Inc. Project) 6.00% 10/1/30

      1,700,000        1,747,821  

Fountain Urban Renewal Authority, Colorado

      

(Improvement - South Academy Highland) Series A

      

5.50% 11/1/44

      4,820,000        4,948,549  

Glen Cove, New York Local Economic Assistance

      

(Garvies Point Public Improvement Project) Series A

      

5.00% 1/1/56

      2,000,000        2,077,100  

Juban Crossing Economic Development District, Louisiana

      

(General Infrastructure Projects) 144A 7.00% 9/15/44 #

      3,490,000        3,614,139  

(Road Projects) Series A 144A 7.00% 9/15/44 #

      2,195,000        2,272,593  

Kansas City, Missouri Land Clearance Redevelopment Authority Revenue

      

(Convention Centre Hotel Project - TIF Financing)

      

Series B 144A 5.00% 2/1/40 #

      935,000        971,615  

Series B 144A 5.00% 2/1/50 #

      1,825,000        1,864,712  

Memphis-Shelby County Industrial Development Board, Tennessee

      

(Graceland Project)

      

Series A 5.50% 7/1/37

      650,000        699,309  

Series A 5.625% 1/1/46

      750,000        799,575  

Midtown Miami, Florida Community Development District

      

(Parking Garage Project) Series A 5.00% 5/1/37

      1,235,000        1,298,714  

Mobile, Alabama Improvement District

      

(McGowin Park Project)

      

Series A 5.25% 8/1/30

      1,000,000        1,024,640  

Series A 5.50% 8/1/35

      1,300,000        1,330,537  

Mosaic District, Virginia Community Development Authority Revenue

      

Series A 6.875% 3/1/36

      1,500,000               1,620,780  

 

76

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Special Tax Revenue Bonds (continued)

      

Nampa Development Corporation, Idaho Revenue

      

144A 5.00% 9/1/31 #

      2,940,000      $ 3,063,215  

5.90% 3/1/30

      2,000,000        2,044,500  

New Jersey Transportation Trust Fund Authority

      

(Transportation Program)

      

Series AA 5.00% 6/15/44

      4,975,000        5,244,844  

Series AA 5.25% 6/15/41

      1,000,000        1,080,900  

New York City, New York Industrial Development Agency

      

(Pilot - Queens Baseball Stadium)

      

5.00% 1/1/22 (AMBAC)

      1,000,000        1,002,580  

(Yankee Stadium) 7.00% 3/1/49 (AGC)

      1,000,000        1,025,290  

Northampton County, Pennsylvania Industrial Development Authority

      

(Route 33 Project) 7.00% 7/1/32

      2,435,000        2,766,014  

Prairie Center Metropolitan District No 3, Colorado

      

Series A 144A 5.00% 12/15/41 #

      2,000,000        2,047,500  

Public Finance Authority Revenue, Wisconsin

      

(American Dream @ Meadowlands Project) 144A

      

7.00% 12/1/50 #

      5,065,000        5,863,598  

(Goodwill Industries of Southern Nevada Project)

      

Series A 5.50% 12/1/35 ‡

      2,500,000        1,750,000  

Series A 5.75% 12/1/45 ‡

      2,500,000        1,750,000  

Regional Transportation, Colorado District Revenue

      

(Denver Transit Partners) 6.00% 1/15/41

      1,000,000        1,044,620  

Richmond Heights, Missouri Tax Increment & Transaction Sales Tax Revenue Improvement

      

(Francis Place Redevelopment Project) 5.625% 11/1/25

      1,200,000        1,200,192  

Southglenn, Colorado Metropolitan District

      

Series 2016 5.00% 12/1/30

      1,535,000        1,591,427  

Series 2016 5.00% 12/1/36

      810,000        828,662  

Series 2016 5.00% 12/1/46

      2,100,000        2,134,692  

St. Joseph, Missouri Industrial Development Authority Tax Increment Revenue

      

(Shoppes at North Village Project)

      

Series A 5.375% 11/1/24

      1,000,000        999,990  

Series A 5.50% 11/1/27

      500,000        499,995  

St. Louis County, Missouri Industrial Development Authority

      

(Manchester Ballas Community)

      

Series A 144A 5.00% 9/1/38 #

      1,050,000        1,039,941  

Series A 144A 5.25% 9/1/45 #

      3,540,000               3,489,732  

 

77

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Special Tax Revenue Bonds (continued)

      

St. Louis, Missouri Industrial Development Authority Tax Increment Revenue Improvement

      

(Grand Center Redevelopment Project) 6.375% 12/1/25

      1,105,000      $ 1,115,652  

Wyandotte County, Kansas City, Kansas Unified Government Special Obligation Revenue

      

(Sales Tax Vacation Village Project)

      

Series A 6.00% 9/1/35

      4,690,000        5,026,554  
     

 

 

  
        90,370,609  
     

 

 

  

  State General Obligation Bonds – 2.84%

      

California State

      

5.00% 8/1/46

      2,000,000        2,285,660  

(Bid Group C) Series B 5.00% 8/1/27

      5,000,000        5,962,700  

(Various Purposes) 5.00% 10/1/47

      2,500,000        2,841,825  

Illinois State

      

5.00% 5/1/36

      1,710,000        1,766,823  

5.00% 11/1/36

      2,245,000        2,344,162  

5.00% 2/1/39

      2,980,000        3,063,619  

Series A 5.00% 12/1/34

      2,100,000        2,209,326  

Series A 5.00% 4/1/38

      2,805,000        2,893,862  

Series D 5.00% 11/1/28

      11,000,000        11,705,540  

New York State

      

Series A 5.25% 2/15/24

      2,000,000        2,166,760  
     

 

 

  
        37,240,277  
     

 

 

  

  Transportation Revenue Bonds – 6.78%

      

California Municipal Finance Authority

      

(LINXS APM Project) Series A 5.00% 12/31/47 (AMT)

      7,895,000        8,802,056  

Chicago, Illinois O’Hare International Airport Revenue

      

Series B 5.00% 1/1/33

      4,135,000        4,567,769  

Delaware Transportation Authority

      

5.00% 6/1/55

      4,105,000        4,505,155  

Foothill-Eastern Transportation Corridor Agency, California

      

Series A 5.75% 1/15/46

      5,000,000        5,694,650  

Series A 6.00% 1/15/49

      7,690,000        8,944,239  

Hawaii Airports System Revenue

      

Series A 5.00% 7/1/45 (AMT)

      3,490,000        3,845,142  

Houston, Texas Airport System Revenue Subordinate Lien

      

Series A 5.00% 7/1/25 (AMT)

      1,000,000        1,075,040  

Kentucky Public Transportation Infrastructure Authority

      

(1st Tier - Downtown Crossing)

      

Series A 5.75% 7/1/49

      3,000,000        3,271,920  

Series A 6.00% 7/1/53

      1,290,000               1,422,560  

 

78

Table of Contents

    

    

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Transportation Revenue Bonds (continued)

      

Long Beach, California Marina Revenue

      

5.00% 5/15/40

      1,000,000      $ 1,099,090  

Los Angeles, California Department of Airports

      

Series D 5.00% 5/15/41 (AMT)

      5,000,000        5,602,200  

Metropolitan New York Transportation Authority

      

(Green Bond) Series A1 5.25% 11/15/56

      5,000,000        5,614,200  

Port Authority of New York & New Jersey Special Project

      

(JFK International Air Terminal) Series 8 6.00% 12/1/42

      1,970,000        2,145,704  

Riverside County, California Transportation Senior Lien

      

Series A 5.75% 6/1/48

      1,000,000        1,106,150  

South Jersey Port, New Jersey

      

(Subordinated Marine Terminal Revenue)

      

Series A 5.00% 1/1/49

      1,110,000        1,217,337  

Series B 5.00% 1/1/42 (AMT)

      1,110,000        1,206,415  

Series B 5.00% 1/1/48 (AMT)

      2,535,000        2,742,819  

St. Louis, Missouri Airport Revenue

      

(Lambert-St. Louis International) Series A-1

      

6.625% 7/1/34

      1,090,000        1,131,137  

Texas Private Activity Bond Surface Transportation Corporate Senior Lien

      

(Blueridge Transportation)

      

5.00% 12/31/45 (AMT)

      1,270,000        1,370,762  

5.00% 12/31/50 (AMT)

      1,910,000        2,053,938  

5.00% 12/31/55 (AMT)

      1,840,000        1,975,019  

(LBJ Infrastructure)

      

7.00% 6/30/40

      7,000,000        7,560,420  

7.50% 6/30/33

      500,000        545,860  

(NTE Mobility)

      

6.75% 6/30/43 (AMT)

      1,905,000        2,215,496  

6.875% 12/31/39

      4,055,000        4,290,677  

7.00% 12/31/38 (AMT)

      1,335,000        1,573,938  

Virginia Small Business Financing Authority

      

(Transform 66 P3 Project) 5.00% 12/31/56 (AMT)

      2,975,000        3,230,969  
     

 

 

  
        88,810,662  
     

 

 

  

  Water & Sewer Revenue Bonds – 2.81%

      

Charlotte County, Florida Industrial Development Authority

      

(Town & Country Utilities Project) 144A

      

5.50% 10/1/36 (AMT)#

      500,000        487,685  

Chicago, Illinois Waterworks Revenue

      

(2nd Lien)

      

5.00% 11/1/26

      180,000                 205,168  

5.00% 11/1/28

      30,000        33,871  

 

79

Table of Contents

Schedules of investments

Delaware National High-Yield Municipal Bond Fund

 

     Principal amount°      Value (US $)  

  Municipal Bonds (continued)

                  

  Water & Sewer Revenue Bonds (continued)

      

Dominion, Colorado Water & Sanitation District Revenue

      

6.00% 12/1/46

      4,000,000      $ 4,245,400  

Jefferson County, Alabama Sewer Revenue

      

(Senior Lien-Warrants) Series A 5.50% 10/1/53 (AGM)

      2,500,000        2,776,100  

(Sub Lien-Warrants)

      

Series D 6.50% 10/1/53

      16,500,000        19,499,370  

Series D 7.00% 10/1/51

      5,000,000        6,029,500  

New York City, New York Water & Sewer System

      

(Second Generation Resolution) 5.00% 6/15/46

      3,150,000        3,525,449  
     

 

 

  
        36,802,543  
     

 

 

  

  Total Municipal Bonds (cost $1,235,361,435)

         1,298,187,672  
     

 

 

  
     

  Short-Term Investment – 0.09%

                  

  Variable Rate Demand Note – 0.09%¤

      

Mississippi Business Finance Corporation Revenue

      

(Chevron USA) Series A

      

1.54% 11/1/35

      1,100,000        1,100,000  
     

 

 

  

  Total Short-Term Investment (cost $1,100,000)

         1,100,000  
     

 

 

  

  Total Value of Securities – 99.20%
  (cost $1,236,461,435)

       $ 1,299,287,672  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $249,568,591, which represents 19.05% of the Fund’s net assets. See Note 9 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 9 in “Notes to financial statements.”     

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.     

 

‡

Non-income producing security. Security is currently in default.

 

•

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at Aug. 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference

 

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rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

 

^

Zero coupon security. The rate shown is the effective yield at the time of purchase.

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMBAC – Insured by the AMBAC Assurance Corporation

AMT – Subject to Alternative Minimum Tax

ICE – Intercontinental Exchange

LIBOR – London Interbank Offered Rate

LIBOR03M – ICE LIBOR USD 3 Month

LIBOR06M – ICE LIBOR USD 6 Month

SGI – Insured by Syncora Guarantee Inc.

USD – US Dollar

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of assets and liabilities

August 31, 2018

 

     Delaware
Tax-Free
USA Fund		   Delaware
Tax-Free USA
Intermediate Fund		   Delaware
National High-Yield
Municipal Bond Fund

Assets:

             

Investments, at value1

      $ 577,255,646     $ 543,598,379     $ 1,299,287,672

Cash

        657,883       1,717,018       —

Interest receivable

        6,977,642       6,325,896       16,252,697

Receivable for fund shares sold

        404,163       384,818       1,764,905

Receivable for securities sold

        —       —       1,506,468
    

 

 

      

 

 

      

 

 

  

Total assets

        585,295,334       552,026,111       1,318,811,742
    

 

 

      

 

 

      

 

 

  

Liabilities:

             

Cash due to custodian

        —       —       65,518

Payable for securities purchased

        6,769,583       8,547,508       5,905,325

Distribution payable

        506,739       440,230       1,383,963

Payable for fund shares redeemed

        262,706       582,644       616,382

Investment management fees payable to affiliates

        179,406       170,775       545,123

Other accrued expenses

        117,138       123,432       318,951

Distribution fees payable to affiliates

        117,006       41,497       120,663

Dividend disbursing and transfer agent fees and expense payable to affiliates

        9,355       8,797       21,130

Audit and tax fees payable

        4,727       4,727       4,727

Trustees’ fees and expenses payable

        3,763       3,670       7,459

Accounting and administration expenses payable to affiliates

        2,168       2,059       4,468

Legal fees payable to affiliates

        951       896       2,133

Reports and statements to shareholders expenses payable to affiliates

        371       349       842
    

 

 

      

 

 

      

 

 

  

Total liabilities

        7,973,913       9,926,584       8,996,684
    

 

 

      

 

 

      

 

 

  

Total Net Assets

      $ 577,321,421     $ 542,099,527     $ 1,309,815,058
    

 

 

      

 

 

      

 

 

  

Net Assets Consist of:

             

Paid-in capital

      $ 551,453,633     $ 525,834,776     $ 1,262,146,546

Distributions in excess of net investment income

        (14,723 )       (33,111 )       (4,102 )

Accumulated net realized loss on investments

        (60,911 )       (2,915,578 )       (15,153,623 )

Net unrealized appreciation of investments

        25,943,422       19,213,440       62,826,237
    

 

 

      

 

 

      

 

 

  

Total Net Assets

      $ 577,321,421     $ 542,099,527     $ 1,309,815,058
    

 

 

      

 

 

      

 

 

  

 

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     Delaware
Tax-Free
USA Fund		   Delaware
Tax-Free USA
Intermediate Fund		   Delaware
National High-Yield
Municipal Bond Fund

Net Asset Value

             

Class A:

             

Net assets

      $ 481,117,019     $ 136,652,806     $ 200,493,622

Shares of beneficial interest outstanding, unlimited authorization, no par

        42,057,830       11,620,614       18,233,577

Net asset value per share

      $ 11.44     $ 11.76     $ 11.00

Sales charge

        4.50 %       2.75 %       4.50 %

Offering price per share, equal to net asset value per share / (1 – sales charge)

      $ 11.98     $ 12.09     $ 11.52

Class C:

             

Net assets

      $ 18,808,569     $ 28,001,543     $ 92,154,787

Shares of beneficial interest outstanding, unlimited authorization, no par

        1,643,826       2,382,398       8,346,807

Net asset value per share

      $ 11.44     $ 11.75     $ 11.04

Institutional Class:

             

Net assets

      $ 77,395,833     $ 377,445,178     $ 1,017,166,649

Shares of beneficial interest outstanding, unlimited authorization, no par

        6,715,716       31,789,426       91,654,372

Net asset value per share

      $ 11.52     $ 11.87     $ 11.10

                                         

1 Investments, at cost

      $ 551,312,224     $ 524,384,939     $ 1,236,461,435

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of operations

Year ended August 31, 2018

 

     Delaware
Tax-Free
USA Fund		   Delaware
Tax-Free USA
Intermediate Fund		   Delaware
National High-Yield
Municipal Bond Fund

Investment Income:

             

Interest

      $ 24,521,697     $ 21,200,242     $ 63,370,443
    

 

 

      

 

 

      

 

 

  

Expenses:

             

Management fees

        2,994,098       2,769,696       6,408,910

Distribution expenses — Class A

        1,116,247       364,423       483,397

Distribution expenses — Class C

        246,993       358,088       957,027

Dividend disbursing and transfer agent fees and expenses

        466,618       530,878       1,145,171

Accounting and administration expenses

        127,055       128,590       253,745

Registration fees

        92,038       71,123       114,524

Audit and tax fees

        44,990       44,990       44,990

Legal fees

        41,364       45,882       96,156

Reports and statements to shareholders expenses

        35,662       35,135       68,186

Trustees’ fees and expenses

        25,646       25,898       58,633

Custodian fees

        17,120       16,259       34,593

Other

        37,181       42,535       85,828
    

 

 

      

 

 

      

 

 

  
       5,245,012       4,433,497       9,751,160

Less expenses waived

        (803,437 )       (593,765 )       (757,620 )

Less waived distribution expenses — Class A

        —       (145,769 )       —

Less expenses paid indirectly

        (5,479 )       (3,441 )       (7,395 )
    

 

 

      

 

 

      

 

 

  

Total operating expenses

        4,436,096       3,690,522       8,986,145
    

 

 

      

 

 

      

 

 

  

Net Investment Income

        20,085,601       17,509,720       54,384,298
    

 

 

      

 

 

      

 

 

  

Net Realized and Unrealized Gain (Loss):

             

Net realized gain on investments

        1,601,289       380,931       7,505,047

Net change in unrealized appreciation (depreciation) of investments

        (13,534,385 )       (14,485,267 )       (13,724,500 )
    

 

 

      

 

 

      

 

 

  

Net Realized and Unrealized Loss

        (11,933,096 )       (14,104,336 )       (6,219,453 )
    

 

 

      

 

 

      

 

 

  

Net Increase in Net Assets Resulting from Operations

      $ 8,152,505     $ 3,405,384     $ 48,164,845
    

 

 

      

 

 

      

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware Tax-Free USA Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $ 20,085,601     $ 19,077,033  

Net realized gain (loss)

      1,601,289       (780,531 ) 

Net change in unrealized appreciation (depreciation)

      (13,534,385 )      (18,435,138 ) 
  

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

      8,152,505       (138,636 ) 
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (16,632,280 )      (16,243,857 ) 

Class C

      (721,618 )      (864,022 ) 

Institutional Class

      (2,731,703 )      (1,969,154 ) 

Net realized gain:

     

Class A

      —       (4,669,336 ) 

Class C

      —       (314,280 ) 

Institutional Class

      —       (455,368 ) 
  

 

 

    

 

 

  
     (20,085,601 )      (24,516,017 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      144,964,138       20,491,013  

Class C

      2,742,284       3,820,845  

Institutional Class

      33,395,228       36,733,206  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      14,612,119       18,129,628  

Class C

      644,001       1,017,859  

Institutional Class

      2,271,556       1,881,457  
  

 

 

    

 

 

  
           198,629,326             82,074,008  
  

 

 

    

 

 

  

 

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     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $ (83,964,343 )    $ (95,346,418 ) 

Class C

      (11,372,623 )      (7,582,637 ) 

Institutional Class

      (19,620,579 )      (19,556,143 ) 
  

 

 

    

 

 

  
     (114,957,545 )      (122,485,198 ) 
  

 

 

    

 

 

  

Increase (Decrease) in net assets derived from capital share transactions

      83,671,781       (40,411,190 ) 
  

 

 

    

 

 

  

Net Increase (Decrease) in Net Assets

      71,738,685       (65,065,843 ) 

Net Assets:

     

Beginning of year

      505,582,736       570,648,579  
  

 

 

    

 

 

  

End of year

    $       577,321,421     $       505,582,736  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (14,723 )    $ (14,723 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware Tax-Free USA Intermediate Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $ 17,509,720     $ 18,059,227  

Net realized gain (loss)

      380,931       (2,085,453 ) 

Net change in unrealized appreciation (depreciation)

      (14,485,267 )      (19,485,190 ) 
  

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

      3,405,384       (3,511,416 ) 
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (4,506,606 )      (4,915,126 ) 

Class C

      (800,814 )      (921,125 ) 

Institutional Class

      (12,202,300 )      (12,182,549 ) 

Net realized gain:

     

Class A

      —       (58,508 ) 

Class C

      —       (15,746 ) 

Institutional Class

      —       (152,523 ) 
  

 

 

    

 

 

  
     (17,509,720 )      (18,245,577 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      16,752,051       35,944,973  

Class C

      1,183,828       3,230,487  

Institutional Class

      107,068,849       135,948,379  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      4,147,980       4,591,718  

Class C

      729,575       846,092  

Institutional Class

      9,272,878       8,398,061  
  

 

 

    

 

 

  
     139,155,161       188,959,710  
  

 

 

    

 

 

  

 

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     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $ (44,644,168 )    $ (59,113,240 ) 

Class C

      (13,357,830 )      (11,801,182 ) 

Institutional Class

      (98,947,892 )      (239,010,931 ) 
  

 

 

    

 

 

  
     (156,949,890 )      (309,925,353 ) 
  

 

 

    

 

 

  

Decrease in net assets derived from capital share transactions

      (17,794,729 )      (120,965,643 ) 
  

 

 

    

 

 

  

Net Decrease in Net Assets

      (31,899,065 )      (142,722,636 ) 

Net Assets:

     

Beginning of year

      573,998,592       716,721,228  
  

 

 

    

 

 

  

End of year

    $ 542,099,527     $ 573,998,592  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (33,111 )    $ (33,111 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware National High-Yield Municipal Bond Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $ 54,384,298     $ 48,622,821  

Net realized gain (loss)

      7,505,047       (7,642,108 ) 

Net change in unrealized appreciation (depreciation)

      (13,724,500 )      (36,101,039 ) 
  

 

 

    

 

 

  

Net increase in net assets resulting from operations

      48,164,845       4,879,674  
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (8,100,736 )      (8,244,874 ) 

Class C

      (3,292,016 )      (3,328,634 ) 

Institutional Class

      (43,005,882 )      (36,908,033 ) 
  

 

 

    

 

 

  
     (54,398,634 )      (48,481,541 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      50,102,652       47,160,123  

Class C

      12,793,383       14,018,914  

Institutional Class

          270,134,611           369,553,187  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      7,418,908       7,108,543  

Class C

      2,968,800       2,904,991  

Institutional Class

      36,466,522       30,936,256  
  

 

 

    

 

 

  
     379,884,876       471,682,014  
  

 

 

    

 

 

  

 

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     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $ (46,315,595 )    $ (105,174,981 ) 

Class C

      (21,101,276 )      (28,853,971 ) 

Institutional Class

      (217,319,913 )      (343,301,589 ) 
  

 

 

    

 

 

  
     (284,736,784 )      (477,330,541 ) 
  

 

 

    

 

 

  

Increase (Decrease) in net assets derived from capital share transactions

      95,148,092       (5,648,527 ) 
  

 

 

    

 

 

  

Net Increase (Decrease) in Net Assets

      88,914,303       (49,250,394 ) 

Net Assets:

     

Beginning of year

      1,220,900,755       1,270,151,149  
  

 

 

    

 

 

  

End of year

    $     1,309,815,058     $     1,220,900,755  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (4,102 )    $ (4,102 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Financial highlights

Delaware Tax-Free USA Fund Class A

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

2

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect.

3

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 11.70        $ 12.22        $ 11.83        $ 11.90        $ 11.14  
                        
       0.42          0.43          0.42          0.43          0.45  
       (0.26 )         (0.40 )         0.39          (0.07 )         0.76  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.16          0.03          0.81          0.36          1.21  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.42 )         (0.43 )         (0.42 )         (0.43 )         (0.45 ) 
       —          (0.12 )         —          —          —  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.42 )         (0.55 )         (0.42 )         (0.43 )         (0.45 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.44        $ 11.70        $ 12.22        $ 11.83        $ 11.90  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       1.44%          0.41%          7.00%          3.09%          11.02%  
                        
     $ 481,117        $ 415,314        $ 493,408        $ 504,204        $ 500,590  
       0.81%          0.81%          0.81%          0.81%          0.80%  
       0.96%          0.96%          0.95%          0.96%          0.97%  
       3.66%          3.71%          3.52%          3.63%          3.88%  
       3.51%          3.56%          3.38%          3.48%          3.71%  
       42%          33%          33%          16%          34%  

    

                         

 

  

 

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Financial highlights

Delaware Tax-Free USA Fund Class C

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 11.70        $ 12.22        $ 11.83        $ 11.91        $ 11.14  
                        
       0.34          0.34          0.33          0.34          0.36  
       (0.26 )         (0.40 )         0.39          (0.08 )         0.77  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.08          (0.06 )         0.72          0.26          1.13  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.34 )         (0.34 )         (0.33 )         (0.34 )         (0.36 ) 
       —          (0.12 )         —          —          —  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.34 )         (0.46 )         (0.33 )         (0.34 )         (0.36 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.44        $ 11.70        $ 12.22        $ 11.83        $ 11.91  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.68%          (0.35% )         6.19%          2.23%          10.28%  
                        
     $ 18,808        $ 27,397        $ 31,545        $ 30,851        $ 29,524  
       1.56%          1.56%          1.56%          1.57%          1.56%  
       1.71%          1.71%          1.70%          1.72%          1.72%  
       2.91%          2.96%          2.77%          2.88%          3.12%  
       2.76%          2.81%          2.63%          2.73%          2.96%  
       42%          33%          33%          16%          34%  

    

                         

 

  

 

95

Table of Contents

Financial highlights

Delaware Tax-Free USA Fund Institutional Class

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

96

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        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 11.79        $ 12.31        $ 11.91        $ 11.99        $ 11.22  
                        
       0.45          0.46          0.46          0.47          0.48  
       (0.27 )         (0.40 )         0.40          (0.08 )         0.77  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.18          0.06          0.86          0.39          1.25  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.45 )         (0.46 )         (0.46 )         (0.47 )         (0.48 ) 
       —          (0.12 )         —          —          —  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.45 )         (0.58 )         (0.46 )         (0.47 )         (0.48 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.52        $ 11.79        $ 12.31        $ 11.91        $ 11.99  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       1.61%          0.68%          7.32%          3.26%          11.33%  
                        
     $ 77,396        $ 62,872        $ 45,696        $ 33,323        $ 24,588  
       0.56%          0.56%          0.56%          0.57%          0.56%  
       0.71%          0.71%          0.70%          0.72%          0.72%  
       3.91%          3.96%          3.77%          3.88%          4.12%  
       3.76%          3.81%          3.63%          3.73%          3.96%  
       42%          33%          33%          16%          34%  

    

                         

 

  

 

97

Table of Contents

Financial highlights

Delaware Tax-Free USA Intermediate Fund Class A

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

For the year ended Aug. 31, 2017, net realized gain distributions of $58,508 were made by the Fund’s Class A shares, which calculated to a de minimis amount of $(0.004) per share.

 

3

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.

 

4

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

98

Table of Contents

    

    

 

 

        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 12.06        $ 12.38        $ 12.04        $ 12.21        $ 11.69  
                        
       0.37          0.35          0.35          0.35          0.34  
       (0.30 )         (0.32 )         0.34          (0.17 )         0.52  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.07          0.03          0.69          0.18          0.86  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.37 )         (0.35 )         (0.35 )         (0.35 )         (0.34 ) 
       —          —  2          —          —          —  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.37 )         (0.35 )         (0.35 )         (0.35 )         (0.34 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.76        $ 12.06        $ 12.38        $ 12.04        $ 12.21  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.57%          0.35%          5.79%          1.46%          7.47%  
                        
     $ 136,653        $ 164,154        $ 188,034        $ 184,514        $ 249,848  
       0.71%          0.75%          0.75%          0.76%          0.75%  
       0.92%          0.93%          0.92%          0.93%          0.93%  
       3.10%          2.92%          2.84%          2.85%          2.86%  
       2.89%          2.74%          2.67%          2.68%          2.68%  
       32%          26%          35%          19%          34%  

    

                         

 

  

 

99

Table of Contents

Financial highlights

Delaware Tax-Free USA Intermediate Fund Class C

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

For the year ended Aug. 31, 2017, net realized gain distributions of $15,746 were made by the Fund’s Class C shares, which calculated to a de minimis amount of $(0.004) per share.

 

3

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

4

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

100

Table of Contents

    

    

 

        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 12.05        $ 12.37        $ 12.03        $ 12.20        $ 11.69  
                        
       0.27          0.25          0.24          0.24          0.24  
       (0.30 )         (0.32 )         0.35          (0.17 )         0.51  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.03 )         (0.07 )         0.59          0.07          0.75  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.27 )         (0.25 )         (0.25 )         (0.24 )         (0.24 ) 
       —          —  2          —          —          —  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.27 )         (0.25 )         (0.25 )         (0.24 )         (0.24 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $    11.75        $ 12.05        $ 12.37        $ 12.03        $ 12.20  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.28% )         (0.50% )         4.90%          0.60%          6.48%  
                        
     $ 28,002        $ 40,402        $ 49,515        $ 48,328        $ 54,231  
       1.56%          1.60%          1.60%          1.61%          1.60%  
       1.67%          1.68%          1.67%          1.68%          1.68%  
       2.25%          2.07%          1.99%          2.00%          2.01%  
       2.14%          1.99%          1.92%          1.93%          1.93%  
       32%          26%          35%          19%          34%  

    

                         

 

  

 

101

Table of Contents

Financial highlights

Delaware Tax-Free USA Intermediate Fund Institutional Class

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

For the year ended Aug. 31, 2017, net realized gain distributions of $152,523 were made by the Fund’s Institutional Class shares, which calculated to a de minimis amount of $(0.004) per share.

 

3

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

4

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

102

Table of Contents

    

    

 

 

        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 12.17        $ 12.50        $ 12.16        $ 12.33        $ 11.81  
                        
       0.39          0.37          0.37          0.37          0.36  
       (0.30 )         (0.33 )         0.34          (0.17 )         0.52  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.09          0.04          0.71          0.20          0.88  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.39 )         (0.37 )         (0.37 )         (0.37 )         (0.36 ) 
       —          —  2          —          —          —  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.39 )         (0.37 )         (0.37 )         (0.37 )         (0.36 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.87        $ 12.17        $ 12.50        $ 12.16        $ 12.33  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.75%          0.44%          5.92%          1.62%          7.58%  
                        
     $ 377,445        $ 369,443        $ 479,172        $ 474,262        $ 434,455  
       0.56%          0.60%          0.60%          0.61%          0.60%  
       0.67%          0.68%          0.67%          0.68%          0.68%  
       3.25%          3.07%          2.99%          3.00%          3.01%  
       3.14%          2.99%          2.92%          2.93%          2.93%  
       32%          26%          35%          19%          34%  

    

                         

 

  

 

103

Table of Contents

Financial highlights

Delaware National High-Yield Municipal Bond Fund Class A

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 
 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflect a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

104

Table of Contents

    

    

 

 

        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 11.05        $ 11.42        $ 10.75        $ 10.65        $ 9.64  
                        
       0.46          0.44          0.41          0.41          0.45  
       (0.05 )         (0.37 )         0.67          0.10          1.01  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.41          0.07          1.08          0.51          1.46  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.46 )         (0.44 )         (0.41 )         (0.41 )         (0.45 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.46 )         (0.44 )         (0.41 )         (0.41 )         (0.45 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.00        $ 11.05        $ 11.42        $ 10.75        $ 10.65  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       3.80%          0.72%          10.25%          4.83%          15.42%  
                        
     $ 200,493        $ 190,211        $ 250,810        $ 227,090        $ 204,936  
       0.85%          0.85%          0.85%          0.85%          0.85%  
       0.91%          0.94%          0.94%          0.97%          0.99%  
       4.19%          4.02%          3.73%          3.80%          4.38%  
       4.13%          3.93%          3.64%          3.68%          4.24%  
       19%          27%          13%          10%          31%  

    

                         

 

  

 

105

Table of Contents

Financial highlights

Delaware National High-Yield Municipal Bond Fund Class C

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 
 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

106

Table of Contents

    

    

 

 

        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 11.09        $ 11.47        $ 10.80        $ 10.70        $ 9.68  
                        
       0.38          0.36          0.33          0.33          0.37  
       (0.05 )         (0.38 )         0.67          0.10          1.02  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.33          (0.02 )         1.00          0.43          1.39  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.38 )         (0.36 )         (0.33 )         (0.33 )         (0.37 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.38 )         (0.36 )         (0.33 )         (0.33 )         (0.37 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.04        $ 11.09        $ 11.47        $ 10.80        $ 10.70  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       3.03%          (0.11% )         9.41%          4.04%          14.63%  
                        
     $ 92,155        $ 97,974        $ 113,905        $ 91,196        $ 71,424  
       1.60%          1.60%          1.60%          1.60%          1.60%  
       1.66%          1.69%          1.69%          1.72%          1.74%  
       3.44%          3.27%          2.98%          3.05%          3.63%  
       3.38%          3.18%          2.89%          2.93%          3.49%  
       19%          27%          13%          10%          31%  

    

                         

 

  

 

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Financial highlights

Delaware National High-Yield Municipal Bond Fund Institutional Class

 

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 
 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1

The average shares outstanding have been applied for per share information.

 

2

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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        Year ended  
        8/31/18        8/31/17        8/31/16        8/31/15        8/31/14  
     $ 11.15        $ 11.53        $ 10.85        $ 10.75        $ 9.73  
                        
       0.49          0.47          0.45          0.44          0.48  
       (0.05 )         (0.38 )         0.67          0.10          1.01  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       0.44          0.09          1.12          0.54          1.49  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                        
       (0.49 )         (0.47 )         (0.44 )         (0.44 )         (0.47 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       (0.49 )         (0.47 )         (0.44 )         (0.44 )         (0.47 ) 
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     $ 11.10        $ 11.15        $ 11.53        $ 10.85        $ 10.75  
    

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
       4.07%          0.92%          10.57%          5.08%          15.71%  
                        
     $ 1,017,167        $ 932,716        $ 905,436        $ 649,455        $ 384,525  
       0.60%          0.60%          0.60%          0.60%          0.60%  
       0.66%          0.69%          0.69%          0.72%          0.74%  
       4.44%          4.27%          3.98%          4.05%          4.63%  
       4.38%          4.18%          3.89%          3.93%          4.49%  
       19%          27%          13%          10%          31%  

    

                         

 

  

 

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Notes to financial statements   
Delaware Funds® by Macquarie national tax-free funds    August 31, 2018

Delaware Group® Tax-Free Fund is organized as a Delaware statutory trust and offers two series: Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund. Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, and Delaware Tax-Free New York Fund. Delaware Group Tax-Free Fund and Voyageur Mutual Funds are each referred to as a Trust, or collectively, as the Trusts. These financial statements and the related notes pertain to Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund (each a Fund, or collectively, the Funds). Each Fund is an open-end investment company. The Funds are considered diversified under the Investment Company Act of 1940, as amended (1940 Act), and offer Class A, Class C, and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of 4.50% for Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund, and 2.75% for Delaware Tax-Free USA Intermediate Fund. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) instead of a front-end sales charge of 1.00% if redeemed during the first year and 0.50% during the second year for Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund, and 0.75% for Delaware Tax-Free USA Intermediate Fund if redeemed within the first year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1.00%, which will be incurred if redeemed during the first 12 months. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.

The investment objective of Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund is to seek as high a level of current interest income exempt from federal income taxes as is available from municipal obligations and as is consistent with prudent investment management and preservation of capital.

The investment objective of Delaware National High-Yield Municipal Bond Fund is to seek a high level of current income exempt from federal income tax primarily through investment in medium- and lower-grade municipal obligations.

1. Significant Accounting Policies

The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Funds. Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services – Investment Companies.

Security Valuation — Debt securities are valued based upon valuations provided by an independent pricing service or broker and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Trust’s Board of Trustees (each, a Board or, collectively, the Boards). In determining whether market

 

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quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Boards.

Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Each Fund evaluates tax positions taken or expected to be taken in the course of preparing each Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed each Fund’s tax positions taken or expected to be taken on each Fund’s federal income tax returns through the year ended Aug. 31, 2018 and for all open tax years (years ended Aug. 31, 2015–Aug. 31, 2017), and has concluded that no provision for federal income tax is required in each Fund’s financial statements. If applicable, each Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in other expenses on the “Statements of operations.” During the year ended Aug. 31, 2018, the Funds did not incur any interest or tax penalties.

Class Accounting — Investment income and common expenses are allocated to the various classes of each Fund on the basis of “settled shares” of each class in relation to the net assets of each Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of each Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.

Use of Estimates — Each Fund is an investment company, whose financial statements are prepared in conformity with US GAAP. Therefore, each Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.

Other — Expenses directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Each Fund declares dividends daily from net investment income and pays the dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually. Each Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

 

1. Significant Accounting Policies (continued)

Each Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expense paid under this arrangement is included on the “Statements of operations” under “Custodian fees” with the corresponding expense offset included under “Less expenses paid indirectly.” For the year ended Aug. 31, 2018, each Fund earned the following amounts under this arrangement:

 

Delaware Tax-Free

       USA Fund       

   

Delaware Tax-Free

USA Intermediate Fund

   

Delaware National High-Yield

       Municipal Bond Fund       

$5,087

    $3,296    $6,831

Each Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expense paid under this arrangement is included on the “Statements of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expense offset included under “Less expenses paid indirectly.” For the year ended Aug. 31, 2018, each Fund earned the following amounts under this arrangement:

 

Delaware Tax-Free

       USA Fund       

   

Delaware Tax-Free

USA Intermediate Fund

   

Delaware National High-Yield

       Municipal Bond Fund       

$392

    $145    $564

2. Investment Management, Administration Agreements, and Other Transactions with Affiliates

In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly based on each Fund’s average daily net assets as follows:

 

    

Delaware Tax-Free

USA Fund

   

Delaware Tax-Free

USA Intermediate Fund

   

Delaware National

High-Yield

Municipal Bond Fund

On the first $500 million

    0.550%    0.500%    0.550%

On the next $500 million

    0.500%    0.475%    0.500%

On the next $1.5 billion

    0.450%    0.450%    0.450%

In excess of $2.5 billion

    0.425%    0.425%    0.425%

DMC has contractually agreed to waive that portion, if any, of its management fee and/or pay/reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding any distribution and service (12b-1) fees, acquired fund fees and expenses, taxes, interest, inverse floater program expenses, 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) do not exceed the following percentage of each Fund’s average daily net assets from Sept. 1, 2017 through Aug. 31, 2018.* For purposes of these waivers and reimbursements, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Boards and DMC. These expense waivers and reimbursements apply only to expenses paid directly by each Fund and may only be terminated by

 

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agreement of DMC and each Fund. The waivers and reimbursements are accrued daily and received monthly.

 

    

Delaware

Tax-Free

USA Fund

   

Delaware

Tax-Free USA

Intermediate Fund

   

Delaware

National High-Yield

Municipal Bond Fund

Operating expense limitation as a percentage of average daily net assets (April 1, 2018 through Aug. 31, 2018)

    0.56%    0.50%    0.60%

Operating expense limitation as a percentage of average daily net assets (Sept. 1, 2017 through March 31, 2018)

    0.56%    0.60%    0.60%

Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each Fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each Fund then pays its portion of the remainder of the Total Fee on a relative net asset value (NAV) basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the year ended Aug. 31, 2018, each Fund was charged for these services as follows:

 

Delaware Tax-Free
USA Fund

   

Delaware Tax-Free
USA Intermediate Fund

   

Delaware National High-Yield
Municipal Bond Fund

$24,739

    $25,047    $51,526

DIFSC is also the transfer agent and dividend disbursing agent of the Funds. For these services, DIFSC’s fees were calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds from Sept. 1, 2017 through June 30, 2018 at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% of average daily net assets in excess of $30 billion. Effective July 1, 2018, each Fund as well as the other Delaware Funds entered into an amendment to the DIFSC agreement. Under the amendment to the DIFSC agreement, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rate: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the transfer agent agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. These amounts are included on the “Statements of operations” under “Dividend

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

 

2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)

disbursing and transfer agent fees and expenses.” For the year ended Aug. 31, 2018, each Fund was charged for these services as follows:

 

Delaware Tax-Free
USA Fund

   

Delaware Tax-Free
USA Intermediate Fund

   

Delaware National High-Yield
Municipal Bond Fund

$106,789

    $108,404    $244,447

Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to each Fund. Sub-transfer agency fees are paid by each Fund and are also included on the “Statements of operations” under “Dividend disbursing and transfer agent fees and expenses.”

Pursuant to a distribution agreement and distribution plan, Delaware National High-Yield Municipal Bond Fund pays DDLP, the distributor and an affiliate of DMC, an annual 12b-1 fee of 0.25% of the average daily net assets of the Class A shares. The Board for Delaware Tax-Free USA Fund has adopted a formula for calculating 12b-1 fees for the Fund’s Class A shares that went into effect on June 1, 1992. The Fund’s Class A shares are currently subject to a blended 12b-1 fee equal to the sum of: (1) 0.10% of average daily net assets representing shares acquired prior to June 1, 1992, and (2) 0.25% of average daily net assets representing shares that were acquired on or after June 1, 1992. All of the Fund’s Class A shareholders bear 12b-1 fees at the same blended rate, currently 0.25% of average daily net assets, based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. The Class A shares of Delaware Tax-Free USA Intermediate Fund were subject to a 12b-1 fee of 0.25% of average daily net assets, which was contractually waived to 0.15% of average daily net assets from Sept. 1, 2017 through Aug. 31, 2018.* Each Fund pays 1.00% of the average daily net assets of the Class C shares. The fees are calculated daily and paid monthly. Institutional Class shares pay no 12b-1 fees.

As provided in the investment management agreement, each Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to each Fund. These amounts are included on the “Statements of operations” under “Legal fees.” For the year ended Aug. 31, 2018, each Fund was charged for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees as follows:

 

Delaware Tax-Free
USA Fund

   

Delaware Tax-Free
USA Intermediate Fund

   

Delaware National High-Yield
Municipal Bond Fund

$10,838

    $11,709    $24,815

For the year ended Aug. 31, 2018, DDLP earned commissions on sales of Class A shares for each Fund as follows:

 

Delaware Tax-Free
USA Fund

   

Delaware Tax-Free
USA Intermediate Fund

   

Delaware National High-Yield
Municipal Bond Fund

$24,672

    $2,678    $39,929

For the year ended Aug. 31, 2018, DDLP received gross CDSC commissions on redemptions of each Fund’s Class A and Class C shares. These commissions were entirely used to offset upfront

 

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commissions previously paid by DDLP to broker/dealers on sales of those shares. The amounts received were as follows:

 

    

Delaware Tax-Free
USA Fund

   

Delaware Tax-Free
USA Intermediate Fund

   

Delaware National High-Yield
Municipal Bond Fund

Class A

    $2,881    $ 14    $25,059

Class C

        967     586        6,003

Trustees’ fees include expenses accrued by the Funds for each Trustee’s retainer and meeting fees. Certain officers of DMC, DIFSC, and DDLP are officers and/or Trustees of the Trusts. These officers and Trustees are paid no compensation by the Funds.

Cross trades for the year ended Aug. 31, 2018, were executed by each Fund pursuant to procedures adopted by the Boards designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/or common officers. At their regularly scheduled meetings, the Boards review such transactions for compliance with the procedures adopted by the Boards. Pursuant to these procedures, for the year ended Aug. 31, 2018, the Funds engaged in Rule 17a-7 securities purchases and securities sales, which resulted in realized losses as follows:

 

    

Delaware Tax-Free
USA Fund

   

Delaware Tax-Free
USA Intermediate Fund

   

Delaware National High-Yield
Municipal Bond Fund

Purchases

    $47,938,381    $28,124,593    $46,518,642

Sales

      44,742,597      22,005,297      37,343,543

Net realized loss

         (211,813)         (282,761)                    —

There was no realized gain (loss) as a result of Rule 17a-7 securities sales for Delaware National High-Yield Municipal Bond Fund.

 

*For Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund, the aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018. For Delaware Tax-Free USA Intermediate Fund, the aggregate contractual waiver period covering this report is from Dec. 29, 2016 through April 1, 2019.

3. Investments

For the year ended Aug. 31, 2018, each Fund made purchases and sales of investment securities other than short-term investments as follows:

 

         Delaware Tax-Free    
USA Fund		    Delaware Tax-Free
USA Intermediate Fund		    Delaware National
High-Yield
 Municipal Bond Fund 

Purchases

        $302,401,407        $174,830,098        $325,881,347

Sales

        226,493,709        189,355,858        233,762,547

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

 

3. Investments (continued)

The tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. At Aug. 31, 2018, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes for each Fund were as follows:

 

       Delaware Tax-Free  
USA Fund		   Delaware Tax-Free
USA Intermediate Fund		   Delaware National
High-Yield
Municipal Bond Fund

Cost of investments

      $ 551,500,879     $ 524,384,939     $ 1,235,691,604
    

 

 

      

 

 

      

 

 

  

Aggregate unrealized appreciation of investments

      $ 26,018,916     $ 19,235,495     $ 70,585,049

Aggregate unrealized depreciation of investments

        (264,149 )       (22,055 )       (6,988,981 )
    

 

 

      

 

 

      

 

 

  

Net unrealized appreciation of investments

      $ 25,754,767     $ 19,213,440     $ 63,596,068
    

 

 

      

 

 

      

 

 

  

US GAAP defines fair value as the price that each Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below.

 

Level 1 –   Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, exchange-traded options contracts)
Level 2 –   Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities)
Level 3 –   Significant unobservable inputs, including each Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, fair valued securities)

 

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Level 3 investments are valued using significant unobservable inputs. Each Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.

The following tables summarize the valuation of each Fund’s investments by fair value hierarchy levels as of Aug. 31, 2018:

 

     Delaware Tax-Free USA Fund  
                   Level 2  

Securities

   

Assets:

   

Municipal Bonds

          $569,675,646  

Short-Term Investments

                7,580,000  

Total Value of Securities

          $577,255,646  
     Delaware Tax-Free USA
    Intermediate Fund		  
                   Level 2  

Securities

   

Assets:

   

Municipal Bonds

          $536,508,379  

Short-Term Investments

                7,090,000  

Total Value of Securities

          $543,598,379  
     Delaware National High-Yield
    Municipal Bond Fund		  
                   Level 2  

Securities

   

Assets:

   

Municipal Bonds

          $1,298,187,672  

Short-Term Investments

                   1,100,000  

Total Value of Securities

          $1,299,287,672  

During the year ended Aug. 31, 2018, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments that had a significant impact to each Fund. Each Fund’s policy is to recognize transfers between levels based on fair value at the beginning of the reporting period.

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

 

3. Investments (continued)

A reconciliation of Level 3 investments is presented when a Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to net assets. During the year ended Aug. 31, 2018, there were no Level 3 investments.

4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the years ended Aug. 31, 2018 and 2017 was as follows:

 

        Delaware Tax-Free    
USA Fund		   Delaware Tax-Free
    USA Intermediate Fund    		   Delaware National
High-Yield
    Municipal Bond Fund    

Year ended 8/31/18

            

Tax-exempt income

     $ 20,025,612     $ 17,495,281     $ 54,048,737

Ordinary income

       59,989       14,439       349,897
   

 

 

      

 

 

      

 

 

  

Total

     $ 20,085,601     $ 17,509,720     $ 54,398,634
   

 

 

      

 

 

      

 

 

  

Year ended 8/31/17

            

Tax-exempt income

     $ 19,094,030     $ 17,933,308     $ 48,338,718

Ordinary income

       524,061       134,852       142,823

Long-term capital gains

       4,897,926       177,417       —
   

 

 

      

 

 

      

 

 

  

Total

     $ 24,516,017     $ 18,245,577     $ 48,481,541
   

 

 

      

 

 

      

 

 

  

5. Components of Net Assets on a Tax Basis

As of Aug. 31, 2018, the components of net assets on a tax basis were as follows:

 

        Delaware Tax-Free    
USA Fund		   Delaware Tax-Free
    USA Intermediate Fund    		   Delaware National
High-Yield
    Municipal Bond Fund    

Shares of beneficial interest

     $ 551,453,633     $ 525,834,776     $ 1,262,146,546

Undistributed tax-exempt income

       492,016       407,119       1,379,861

Undistributed long-term capital gains

       127,744       —       —

Distributions payable

       (506,739 )       (440,230 )       (1,383,963 )

Capital loss carryforwards

       —       (2,915,578 )       (15,923,454 )

Unrealized appreciation of investments

       25,754,767       19,213,440       63,596,068
   

 

 

      

 

 

      

 

 

  

Net assets

     $ 577,321,421     $ 542,099,527     $ 1,309,815,058
   

 

 

      

 

 

      

 

 

  

 

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The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales and tax treatment of market discount and premium on debt instruments, if applicable.

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the year ended Aug. 31, 2018, Delaware National High-Yield Municipal Bond Fund recorded the following reclassifications:

 

Distributions in excess of net investment income

      $ 14,336  

Accumulated net realized loss

      (14,336 ) 

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. At Aug. 31, 2018, Delaware National High-Yield Municipal Bond Fund utilized $7,442,137 of capital loss carryforwards.

Under the Regulated Investment Company Modernization Act of 2010, net capital losses recognized for tax years beginning after Dec. 22, 2010 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. At Aug. 31, 2018, capital loss carryforwards available to offset future realized capital gains, were as follows:

 

     No expiration         
     Post-enactment capital loss character         
                   Total capital loss  
     Short-term      Long-term      carryforwards  
Delaware Tax-Free USA Intermediate Fund    $ 2,915,578      $ —      $ 2,915,578    
Delaware National High-Yield Municipal Bond Fund      12,461,267        3,462,187        15,923,454    

At Aug. 31, 2018, there were no capital loss carryforwards for Delaware Tax-Free USA Fund.

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

6. Capital Shares

Transactions in capital shares were as follows:

 

     Delaware Tax-Free
USA Fund		     Delaware Tax-Free
USA Intermediate Fund		     Delaware National
High-Yield
Municipal Bond Fund		  
    

 

Year

ended

    

Year

ended

    

Year

ended

  
     8/31/18     8/31/17     8/31/18     8/31/17     8/31/18     8/31/17  

Shares sold:

             

Class A

      12,603,666       1,771,333       1,415,308       3,022,406       4,548,565       4,328,365  

Class C

      236,676       325,639       99,772       271,770       1,156,364       1,288,593  

Institutional Class

      2,876,073       3,141,457       8,940,604       11,329,643       24,307,805       33,863,188  

Shares issued upon reinvestment of dividends and distributions:

 

Class A

      1,268,997       1,565,318       350,140       384,829       674,320       652,446  

Class C

      55,857       87,959       61,629       70,969       268,726       265,684  

Institutional Class

      195,804       161,330       775,842       697,103       3,284,191       2,813,255  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     17,237,073       7,053,036       11,643,295       15,776,720       34,239,971       43,211,531  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Shares redeemed:

             

Class A

      (7,310,314 )      (8,219,120 )      (3,760,589 )      (4,984,764 )      (4,205,385 )      (9,726,923 ) 

Class C

      (989,856 )      (653,426 )      (1,131,893 )      (992,677 )      (1,909,980 )      (2,656,102 ) 

Institutional Class

      (1,689,696 )      (1,681,232 )      (8,276,999 )      (20,021,304 )      (19,583,617 )      (31,588,716 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (9,989,866 )      (10,553,778 )      (13,169,481 )      (25,998,745 )      (25,698,982 )      (43,971,741 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease)

      7,247,207       (3,500,742 )      (1,526,186 )      (10,222,025 )      8,540,989       (760,210 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

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Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the tables on the previous page and on the “Statements of changes in net assets.” For the years ended Aug. 31, 2018 and 2017, each Fund had the following exchange transactions:

 

          Year ended     
          8/31/18     
     Exchange    Exchange     
     Redemptions    Subscriptions     
                    Institutional     
     Class A    Class C    Class A    Class     
         Shares            Shares            Shares            Shares            Value    

Delaware Tax-Free USA Fund

        48,496        77,372        77,526        48,172      $ 1,447,435

Delaware Tax-Free USA Intermediate Fund

        24,896        31,342        31,355        24,650        662,376

Delaware National High-Yield Municipal Bond Fund

        44,817        87,060        55,968        75,762        1,459,307

 

          Year ended     
          8/31/17     
     Exchange    Exchange     
     Redemptions    Subscriptions     
               Institutional     
     Class A    Class C    Class     
           Shares                Shares                Shares                Value      

Delaware Tax-Free USA Fund

        856,362          6,306          858,276        $ 9,985,602  

Delaware Tax-Free USA Intermediate Fund

        234,870          —          232,990          2,786,921  

Delaware National High-Yield Municipal Bond Fund

        2,134,297          15,391          2,134,779          23,025,554  

7. Line of Credit

Each Fund, along with certain other funds in the Delaware Funds (Participants), was a participant in a $155,000,000 revolving line of credit intended to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee of 0.15%, which was generally allocated across the Participants based on a weighted average of the respective net assets of each Participant. The Participants were permitted to borrow up to a maximum of one-third of their net assets under the agreement. Each Participant was individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the agreement expired on Nov. 6, 2017.

On Nov. 6, 2017, each Fund, along with the other Participants, entered into an amendment to the agreement for a $155,000,000 revolving line of credit. The line of credit is to be used as described above

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

7. Line of Credit (continued)

and operates in substantially the same manner as the original agreement. The line of credit available under the agreement expires on Nov. 5, 2018.

The Funds had no amounts outstanding as of Aug. 31, 2018, or at any time during the year then ended.

8. Securities Lending

Delaware Tax-Free USA intermediate Fund, along with other funds in the Delaware Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day, which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day may be more or less than the value of the security on loan. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.

Cash collateral received by each fund of the Trust is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities, or establishments; obligations of supranational organizations; commercial paper, notes, bonds, and other debt obligations; certificates of deposit, time deposits, and other bank obligations; and asset-backed securities. A fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.

In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect

 

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to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent, and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.

The Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those circumstances, the value of each Fund’s cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.

During the year ended Aug. 31, 2018, Delaware Tax-Free USA Intermediate Fund had no securities out on loan. For the year ended Aug. 31, 2018, Delaware Tax-Fee USA Fund and Delaware National High-Yield Municipal Bond Fund were not included in the Lending Agreement.

9. Geographic, Credit, and Market Risks

When interest rates rise, fixed income securities (i.e., debt obligations) generally will decline in value. These declines in value are greater for fixed income securities with longer maturities or durations.

The Funds concentrate their investments in securities issued by municipalities, and may be subject to geographic concentration risk. In addition, the Funds have the flexibility to invest in issuers in US territories and possessions such as the Commonwealth of Puerto Rico, the US Virgin Islands, and Guam, whose bonds are also free of federal and individual state income taxes.

The value of the Funds’ investments may be adversely affected by new legislation within the US states or territories, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons and there is no certainty that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in each Fund. At Aug. 31, 2018, the percentage of each Fund’s net assets insured by bond issuers are listed below and these securities have been identified on the “Schedules of investments.”

 

     Delaware Tax-Free
USA Fund		   Delaware Tax-Free
USA Intermediate Fund		   Delaware
National High-Yield
Municipal Bond Fund
Assured Guaranty Corporation        0.18 %       —       0.18 %
Assured Guaranty Municipal Corporation        0.24 %       1.40 %       0.63 %
AMBAC Assurance Corporation        0.50 %       —       0.08 %
National Public Finance Guarantee Corporation        0.28 %       —       —
Syncora Guarantee        —       —       0.16 %
    

 

 

      

 

 

      

 

 

  

Total

        1.20 %       1.40 %       1.05 %
    

 

 

      

 

 

      

 

 

  

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

9. Geographic, Credit, and Market Risks (continued)

As of Aug. 31, 2018, Delaware Tax-Free USA Fund invested in municipal bonds issued by the states of California and New York which constituted approximately 17.46% and 13.68%, respectively, of the Fund’s net assets. As of Aug. 31, 2018, Delaware Tax-Free USA Intermediate Fund invested in municipal bonds issued by the states of California and New York, which constituted approximately 15.93% and 15.88%, respectively, of the Fund’s net assets. As of Aug. 31, 2018, Delaware National High-Yield Municipal Bond Fund invested in municipal bonds issued by the State of California which constituted approximately 16.10%, of the Fund’s net assets. These investments could make each Fund more sensitive to economic conditions in those states than other more geographically diversified national municipal income funds.

Each Fund invests a portion of its assets in high yield fixed income securities, which are securities rated lower than BBB- by Standard & Poor’s Financial Services LLC (S&P), lower than Baa3 by Moody’s Investors Service, Inc. (Moody’s), or similarly rated by another nationally recognized statistical rating organization. Investments in these higher-yielding securities are generally accompanied by a greater degree of credit risk than higher-rated securities. Additionally, lower-rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.

Each Fund invests in certain obligations that may have liquidity protection designed to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained by the issuer or sponsor through third parties, through various means of structuring the transaction or through a combination of such approaches. Each Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.

Each Fund may invest in advance refunded bonds, escrow secured bonds, or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding.” “Advance refunded bonds” are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities, which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.

Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will

 

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often receive a rating of AAA from Moody’s, S&P, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A, promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Boards have delegated to DMC, the day-to-day functions of determining whether individual securities are liquid for purposes of each Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. Rule 144A securities held by each Fund have been identified on the “Schedules of investments.” Restricted securities are valued pursuant to the security valuation procedures described in Note 1.

10. Contractual Obligations

Each Fund enters into contracts in the normal course of business that contain a variety of indemnifications. Each Fund’s maximum exposure under these arrangements is unknown. However, each Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed each Fund’s existing contracts and expects the risk of loss to be remote.

11. Recent Accounting Pronouncements

In March 2017, the FASB issued an Accounting Standards Update, ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. The ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. At this time, management is evaluating the implications of these changes on the financial statements.

In August 2018, the FASB issued an Accounting Standards Update, ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU 2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the financial statements.

12. Subsequent Events

On Sept. 6, 2018, the credit facility that each Fund participates in was reduced from a $155,000,000 to a $130,000,000 revolving line of credit. This line of credit will expire on Nov. 5, 2018.

 

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Notes to financial statements

Delaware Funds® by Macquarie national tax-free funds

 

12. Subsequent Events (continued)

Management has determined that no other material events or transactions occurred subsequent to Aug. 31, 2018, that would require recognition or disclosure in the Funds’ financial statements.

 

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Report of independent registered

public accounting firm

To the Board of Trustees of Delaware Group® Tax-Free Fund and Voyageur Mutual Funds and Shareholders of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund and Delaware National High-Yield Municipal Bond Fund

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund (constituting Delaware Group® Tax Free Fund) and Delaware National High-Yield Municipal Bond Fund (one of the funds constituting Voyageur Mutual Funds) (hereafter collectively referred to as the “Funds”) as of August 31, 2018, the related statements of operations for the year ended August 31, 2018, the statements of changes in net assets for each of the two years in the period ended August 31, 2018, including the related notes, and the financial highlights for each of the five years in the period ended August 31, 2018 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2018, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2018 and each of the financial highlights for each of the five years in the period ended August 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2018 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 17, 2018

We have served as the auditor of one or more investment companies in Delaware Funds® by Macquarie since 2010.

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie national tax-free funds

Tax Information

The information set forth below is for each Fund’s fiscal year as required by federal income tax laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of a fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in January of each year. Please consult your tax advisor for proper treatment of this information.

All disclosures are based on financial information available as of the date of this annual report and, accordingly are subject to change. For any and all items requiring reporting, it is the intention of each Fund to report the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

For the fiscal year ended Aug. 31, 2018, each Fund reports distributions paid during the year as follows:

 

     (A)
Ordinary Income
Distributions
(Tax Basis)		   (B)
Tax-Exempt
Distributions
(Tax Basis)		   Total
Distributions
(Tax Basis)

Delaware Tax-Free USA Fund

    0.30%   99.70%   100.00%

Delaware Tax-Free USA Intermediate Fund

    0.08%   99.92%   100.00%

Delaware National High-Yield Municipal Bond Fund

    0.64%   99.36%   100.00%

(A) and (B) are based on a percentage of each Fund’s total distributions.

Board consideration of advisory agreements for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund

At a meeting held on Aug. 15–16, 2018 (the “Annual Meeting”), the Board of Trustees (the “Board”), including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory Agreements for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund (each, a “Fund” and together, the “Funds”). In making its decision, the Board considered information furnished at regular quarterly Board meetings, including reports detailing Fund performance, investment strategies, and expenses, as well as information prepared specifically in connection with the renewal of the investment advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreement with Delaware Management Company (“DMC”), a series of Macquarie Investment Management Business Trust (“MIMBT”) included materials provided by DMC and its affiliates (collectively, “Macquarie Investment Management”) concerning, among other things, the nature, extent, and quality of services provided to the Funds; the costs of such services to the Funds; economies of scale; and the investment manager’s financial condition and profitability. In addition, in connection with the Annual Meeting, materials were provided to the Trustees in May 2018, including reports provided by Broadridge Financial Solutions (“Broadridge”). The Broadridge reports compared each Fund’s investment performance and expenses with those of other comparable mutual funds. The Independent Trustees reviewed and discussed the Broadridge reports with independent legal counsel to the

 

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Independent Trustees. In addition to the information noted above, the Board also requested and received information regarding DMC’s policy with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; comparative client fee information; and any constraints or limitations on the availability of securities for certain investment styles, which had in the past year inhibited, or which were likely in the future to inhibit, the investment manager’s ability to invest fully in accordance with Fund policies.

In considering information relating to the approval of each Fund’s advisory agreement, the Independent Trustees received assistance and advice from and met separately with independent legal counsel to the Independent Trustees and also from an experienced and knowledgeable independent fund consultant, JDL Consultants, LLC (“JDL”). Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.

Nature, extent, and quality of service. The Board considered the services provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; compliance by DMC and Delaware Distributors, L.P. (together, “Management”) personnel with the Code of Ethics adopted throughout the Delaware Funds® by Macquarie (“Delaware Funds”); and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of DMC and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of certain favorable industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenses while maintaining service levels committed to Fund matters. The Board also noted the benefits provided to Fund shareholders (a) through each shareholder’s ability to: (i) exchange an investment in one Delaware Fund for the same class of shares in another Delaware Fund without a sales charge, or (ii) to reinvest Fund dividends into additional shares of the Fund or into additional shares of other Delaware Funds, and (b) the privilege to combine holdings in other Delaware Funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent, and quality of the overall services provided by DMC.

Investment performance. The Board placed significant emphasis on the investment performance of the Funds in view of the importance of investment performance to shareholders. Although the Board considered performance reports and discussions with portfolio managers at Investment Committee meetings throughout the year, the Board gave particular weight to the Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for each Fund showed the investment performance of its Class A shares in comparison to a group of similar funds as selected by Broadridge (the “Performance Universe”). A fund with the best performance ranked first, and a fund with the poorest performance ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next 25%, the third quartile; and the poorest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for each Fund was shown for the past 1-, 3-, 5-, and 10-year periods, to the extent applicable, ended Jan. 31, 2018. The Board’s objective is that each Fund’s

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie national tax-free funds

Board consideration of advisory agreements for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund (continued)

performance for the 1-, 3-, and 5-year periods considered be at or above the median of its Performance Universe.

Delaware Tax-Free USA Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional general and insured municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, and 5-year periods was in the second quartile of its Performance Universe. The report further showed that the Fund’s total return for the 10-year period was in the first quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Tax-Free USA Intermediate Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional intermediate municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-year period was in the first quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3-, 5-, and 10-year periods was in the second quartile of its Performance Universe. The Board was satisfied with performance.

Delaware National High-Yield Municipal Bond Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional high yield municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1- and 10-year periods was in the first quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3- and 5-year periods was in the second quartile of its Performance Universe. The Board was satisfied with performance.

Comparative expenses. The Board considered expense data for the Delaware Funds. Management provided the Board with information on pricing levels and fee structures for each Fund as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and total expense ratios of each Fund versus effective management fees and total expense ratios of a group of similar funds as selected by Broadridge (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) within the Expense Group, taking into account any applicable breakpoints and fee waivers. Each Fund’s total expenses were also compared with those of its Expense Group. The Broadridge total expenses, for comparative consistency, were shown by Broadridge for Class A shares and comparative total expenses including 12b-1 and non-12b-1 service fees. The Board’s objective is for each Fund’s total expense ratio to be competitive with those of the peer funds within its Expense Group.

Delaware Tax-Free USA Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the lowest expenses of its Expense Group and its total expenses were in the quartile with the second lowest expenses of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group as shown in the Broadridge report.

 

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Delaware Tax-Free USA Intermediate Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the second highest expenses of its Expense Group and its total expenses were in the quartile with the lowest expenses of its Expense Group. The Board noted that the Fund’s management fee was not in line with the Board’s objective, but that the Board was satisfied with the total expenses of the Fund in comparison to those of its Expense Group as shown in the Broadridge report.

Delaware National High-Yield Municipal Bond Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the lowest expenses of its Expense Group and its total expenses were in the quartile with the second highest expenses of its Expense Group. The Board gave favorable consideration to the Fund’s management fee, but noted that the Fund’s total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered fee waivers in place through December 2018 and various initiatives implemented by Management, such as the negotiation of lower fees for fund accounting, fund accounting oversight, and custody services, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Management profitability. The Board considered the level of profits realized by DMC in connection with the operation of the Funds. In this respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of DMC’s business in providing management and other services to each of the individual funds and the Delaware Funds as a whole. Specific attention was given to the methodology used by DMC in allocating costs for the purpose of determining profitability. Management stated that the level of profits of DMC, to a certain extent, reflects recent operational cost savings and efficiencies initiated by DMC. The Board considered DMC’s efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange Commission initiatives. The Board also considered the extent to which DMC might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. As part of its work, the Board also reviewed a report prepared by JDL regarding MIMBT profitability as compared to certain peer fund complexes and the Independent Trustees met with JDL personnel to discuss DMC’s profitability in such context. The Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC.

Economies of scale. The Trustees considered whether economies of scale are realized by DMC as each Fund’s assets increase and the extent to which any economies of scale are reflected in the level of management fees charged. The Trustees reviewed the Funds’ advisory fee pricing and structure, approved by the Board and shareholders, which includes breakpoints, and which applies to most funds in the Delaware Funds complex. Breakpoints in the advisory fee occur when the advisory fee rate is reduced on assets in excess of specified levels. Breakpoints result in a lower advisory fee than would otherwise be the case in the absence of breakpoints, when the asset levels specified in the breakpoints are exceeded. The Board noted that, as of March 31, 2018, assets of Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund exceeded the first breakpoint level and assets of Delaware National High-Yield Municipal Bond Fund exceeded the second breakpoint level. The Board believed

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie national tax-free funds

 

Board consideration of advisory agreements for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund (continued)

that, given the extent to which economies of scale might be realized by DMC and its affiliates, the schedule of fees under the Investment Management Agreements provides a sharing of benefits with the Funds and their shareholders.

 

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Table of Contents

Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

A mutual fund is governed by a Board of Trustees/Directors (“Trustees”), which has oversight responsibility for the management of a fund’s business affairs. Trustees establish procedures and oversee and review the performance of the investment manager, the distributor, and others who perform services for the fund. The independent fund trustees, in particular, are advocates

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

 

        Interested Trustee

 

      
Shawn K. Lytle1, 2    President,    Trustee since
2005 Market Street    Chief Executive Officer,    September 2015
Philadelphia, PA 19103    and Trustee   
February 1970       President and
      Chief Executive Officer
      since August 2015

    

    

      

 

        Independent Trustees

 

      
Thomas L. Bennett    Chair and Trustee    Trustee since
2005 Market Street       March 2005
Philadelphia, PA 19103      
October 1947       Chair since
      March 2015
Ann D. Borowiec    Trustee    Since March 2015
2005 Market Street      
Philadelphia, PA 19103      
November 1958      

    

    

      
Joseph W. Chow    Trustee    Since January 2013
2005 Market Street      
Philadelphia, PA 19103      

January 1953

 

          

 

1

Shawn K. Lytle is considered to be an “Interested Trustee” because he is an executive officer of the Fund’s(s’) investment advisor.

2

Shawn K. Lytle, David F. Connor, Daniel V. Geatens, and Richard Salus serve in similar capacities for the six portfolios of the Optimum Fund Trust, which have the same investment advisor, principal underwriter, and transfer agent as the registrant. Mr. Geatens also serves as the Chief Financial Officer and Treasurer for Macquarie Global Infrastructure Total Return Fund Inc., which has an affiliated investment manager.

 

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for shareholder interests. Each trustee has served in that capacity since he or she was elected to or appointed to the Board of Trustees, and will continue to serve until his or her retirement or the election of a new trustee in his or her place. The following is a list of the Trustees and Officers with certain background and related information.

 

Principal Occupation(s)

During the Past Five Years

   

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

   

Other Directorships

Held by Trustee or Officer

     
President — Macquarie    59    Trustee — UBS
Investment Management3       Relationship Funds,
(June 2015–Present)       SMA Relationship
          Trust, and UBS Funds
Regional Head of       (May 2010–April 2015)
Americas —UBS Global      
Asset Management      

(April 2010–May 2015)

 

      
     
Private Investor    59    None

(March 2004–Present)

 

 

          
Chief Executive Officer,    59    Director —
Private Wealth Management       Banco Santander International
(2011–2013) and       (October 2016–Present)
Market Manager,      
New Jersey Private       Director —
Bank (2005–2011) —       Santander Bank, N.A.

J.P. Morgan Chase & Co.

 

        

(December 2016–Present)

 

Private Investor    59    Director and Audit Committee
(April 2011–Present)       Member — Hercules
      Technology Growth
      Capital, Inc.
         

(July 2004–July 2014)

 

 

3

Macquarie Investment Management is the marketing name for Macquarie Management Holdings, Inc. and its subsidiaries, including the Fund’s(s’) investment advisor, principal underwriter, and its transfer agent.

 

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Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

 

Name, Address,   Position(s)   Length of
and Birth Date   Held with Fund(s)   Time Served

    Independent Trustees (continued)

 

    
John A. Fry   Trustee   Since January 2001
2005 Market Street    
Philadelphia, PA 19103    

May 1960

 

 

    
Lucinda S. Landreth   Trustee   Since March 2005
2005 Market Street    
Philadelphia, PA 19103    
June 1947        
Frances A. Sevilla-Sacasa   Trustee   Since September 2011
2005 Market Street    
Philadelphia, PA 19103    

January 1956

 

 

        

 

 

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     Number of Portfolios in     
Principal Occupation(s)    Fund Complex Overseen    Other Directorships
During the Past Five Years    by Trustee or Officer    Held by Trustee or Officer
           
President —    59    Director; Compensation
Drexel University       Committee and
(August 2010–Present)       Governance Committee
      Member — Community
President —       Health Systems
Franklin & Marshall College      
(July 2002–July 2010)       Director — Drexel
      Morgan & Co.
      Director; Audit Committee
      Member — vTv
      Therapeutics LLC
      Director; Audit Committee
      Member — FS Credit Real
      Estate Income Trust, Inc.
Private Investor    59    None

(2004–Present)

 

      
Private Investor    59    Trust Manager and
(January 2017–Present)       Audit Committee
      Chair — Camden
Chief Executive Officer —       Property Trust
Banco Itaú       (August 2011–Present)
International      
(April 2012–December 2016)       Director —
      Carrizo Oil & Gas, Inc.
Executive Advisor to Dean       (March 2018–Present)
(August 2011–March 2012)      
and Interim Dean      
(January 2011–July 2011) —      
University of Miami School of      
Business Administration      
President — U.S. Trust,      
Bank of America Private      
Wealth Management      
(Private Banking)      
(July 2007–December 2008)          

 

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Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

 

      Independent Trustees (continued)

 

   
Thomas K. Whitford    Trustee    Since January 2013
2005 Market Street      
Philadelphia, PA 19103      

March 1956

 

      
Janet L. Yeomans    Trustee    Since April 1999
2005 Market Street      
Philadelphia, PA 19103      

July 1948

 

      

 

      Officers

 

      
David F. Connor    Senior Vice President,    Senior Vice President
2005 Market Street    General Counsel,    since May 2013;
Philadelphia, PA 19103    and Secretary    General Counsel
December 1963       since May 2015;
      Secretary since
          October 2005
Daniel V. Geatens    Vice President    Vice President and
2005 Market Street    and Treasurer    Treasurer since October 2007
Philadelphia, PA 19103      

October 1972

 

      
Richard Salus    Senior Vice President    Senior Vice President and
2005 Market Street    and Chief Financial Officer    Chief Financial Officer
Philadelphia, PA 19103       since November 2006

October 1963

 

          

The Statement of Additional Information for the Fund(s) includes additional information about the Trustees and Officers and is available, without charge, upon request by calling 800 523-1918.

 

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Principal Occupation(s)

During the Past Five Years

   

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

   

Other Directorships

Held by Trustee or Officer

          
Vice Chairman    59    Director — HSBC Finance
(2010–April 2013) —       Corporation and HSBC
PNC Financial       North America Holdings Inc.

Services Group

 

      

(December 2013–Present)

 

      Director —
      HSBC USA Inc.
     

(July 2014–March 2017)

 

Vice President and Treasurer    59    Director (2009–2017);
(January 2006–July 2012),       Personnel and Compensation
Vice President —       Committee Chair; Member of
Mergers & Acquisitions       Nominating, Investments, and
(January 2003–January 2006),       Audit Committees for various
and Vice President       periods throughout
and Treasurer       directorship —
(July 1995–January 2003) —       Okabena Company

3M Company

 

      

         
David F. Connor has served    59    None2
in various capacities at      
different times at      
Macquarie Investment      

Management.

 

      
Daniel V. Geatens has served    59    None2
in various capacities at      
different times at      
Macquarie Investment      

Management.

 

      
Richard Salus has served    59    None2
in various executive capacities      
at different times at      
Macquarie Investment      

Management.

 

          

 

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Table of Contents

About the organization

Board of trustees

 

Shawn K. Lytle

President and

Chief Executive Officer

Delaware Funds®

by Macquarie

Philadelphia, PA

Thomas L. Bennett

Chairman of the Board

Delaware Funds

by Macquarie

Private Investor

Rosemont, PA

 

Ann D. Borowiec

Former Chief Executive

Officer

Private Wealth Management

J.P. Morgan Chase & Co.

New York, NY

Joseph W. Chow

Former Executive Vice

President

State Street Corporation

Boston, MA

John A. Fry

President

Drexel University

Philadelphia, PA

Lucinda S. Landreth

Former Chief Investment

Officer

Assurant, Inc.

New York, NY

Frances A.

Sevilla-Sacasa

Former Chief Executive

Officer

Banco Itaú International

Miami, FL

Thomas K. Whitford

Former Vice Chairman

PNC Financial Services Group

Pittsburgh, PA

Janet L. Yeomans

Former Vice President and

Treasurer

3M Company

St. Paul, MN

 

 

Affiliated officers

 

David F. Connor

Senior Vice President,

General Counsel,

and Secretary

Delaware Funds

by Macquarie

Philadelphia, PA

Daniel V. Geatens

Vice President and

Treasurer

Delaware Funds

by Macquarie

Philadelphia, PA

Richard Salus

Senior Vice President and

Chief Financial Officer

Delaware Funds

by Macquarie

Philadelphia, PA

 

 

This annual report is for the information of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.

 

Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. Each Fund’s Forms N-Q, as well as a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities and the Schedules of Investments included in the Funds’ most recent Forms N-Q are available without charge on the Funds’ website at delawarefunds.com/literature. Each Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.

Information (if any) regarding how the Funds voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Funds’ website at delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.

 

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Table of Contents

LOGO

Fixed income mutual funds

Delaware Tax-Free Arizona Fund

Delaware Tax-Free California Fund

Delaware Tax-Free Colorado Fund

Delaware Tax-Free Idaho Fund

Delaware Tax-Free New York Fund

Delaware Tax-Free Pennsylvania Fund

August 31, 2018

Carefully consider the Funds’ investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds’ prospectus and their summary prospectuses, which may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

You can obtain shareholder reports and prospectuses online instead of in the mail.

Visit delawarefunds.com/edelivery.

 

LOGO

Table of Contents

Experience Delaware Funds® by Macquarie

Macquarie Investment Management (MIM) is a global asset manager with offices throughout the United States, Europe, Asia, and Australia. We are active managers who prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for our clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 75 years in existence.

If you are interested in learning more about creating an investment plan, contact your financial advisor.

You can learn more about Delaware Funds or obtain a prospectus for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund at delawarefunds.com/literature.

 

Manage your account online

 

●   Check your account balance and transactions
●   View statements and tax forms
●   Make purchases and redemptions

Visit delawarefunds.com/account-access.

Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following registered investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, and Macquarie Capital Investment Management LLC.

The Funds are distributed by Delaware Distributors, L.P.

(DDLP), an affiliate of MIMBT and Macquarie Group Limited.

Other than Macquarie Bank Limited (MBL), none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Funds are governed by US laws and regulations.

Table of contents

   

Portfolio management review

     1  

Performance summaries

      9  

Disclosure of Fund expenses

      33  

Security type / sector / state / territory allocations

      37  

Schedules of investments

      43  

Statements of assets and liabilities

      90  

Statements of operations

      94  

Statements of changes in net assets

      96  

Financial highlights

      108  

Notes to financial statements

      144  

Report of independent registered public accounting firm

      162  

Other Fund information

      163  

Board of trustees / directors and officers addendum

      170  

About the organization

      176  

Unless otherwise noted, views expressed herein are current as of Aug. 31, 2018, and subject to change for events occurring after such date.

The Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.

Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.

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

© 2018 Macquarie Management Holdings, Inc.

 

Table of Contents

Portfolio management review

Delaware Funds® by Macquarie state tax-free funds    September 11, 2018

 

Performance preview (for the year ended August 31, 2018)

                    
Delaware Tax-Free Arizona Fund (Institutional Class shares)        1-year return        +1.36%    
Delaware Tax-Free Arizona Fund (Class A shares)        1-year return        +1.11%    
Bloomberg Barclays Municipal Bond Index (benchmark)        1-year return        +0.49%    
Lipper Other States Municipal Debt Funds Average        1-year return        +0.17%    

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free Arizona Fund, please see the table on page 9. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Other States Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation on a specified city or state basis.

Please see page 12 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

Delaware Tax-Free California Fund (Institutional Class shares)

        1-year return        +1.26%    

Delaware Tax-Free California Fund (Class A shares)

        1-year return        +1.00%    

Bloomberg Barclays Municipal Bond Index (benchmark)

        1-year return        +0.49%    

Lipper California Municipal Debt Funds Average

        1-year return        +0.99%    

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free California Fund, please see the table on page 13. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper California Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation in California (double tax-exempt) or a city in California (triple tax-exempt).

Please see page 16 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

Delaware Tax-Free Colorado Fund (Institutional Class shares)

      1-year return        +1.47%    

Delaware Tax-Free Colorado Fund (Class A shares)

      1-year return        +1.22%    

Bloomberg Barclays Municipal Bond Index (benchmark)

      1-year return        +0.49%    

Lipper Other States Municipal Debt Funds Average

      1-year return        +0.17%    

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free Colorado Fund, please see the table on page 17. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Other States Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation on a specified city or state basis.

Please see page 20 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

1

Table of Contents

Portfolio management review

Delaware Funds® by Macquarie state tax-free funds

 

 

 

Delaware Tax-Free Idaho Fund (Institutional Class shares)

        1-year return        +0.82%    

Delaware Tax-Free Idaho Fund (Class A shares)

        1-year return        +0.56%    

Bloomberg Barclays Municipal Bond Index (benchmark)

        1-year return        +0.49%    

Lipper Other States Municipal Debt Funds Average

        1-year return        +0.17%    

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free Idaho Fund, please see the table on page 21. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Other States Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation on a specified city or state basis.

Please see page 24 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

Delaware Tax-Free New York Fund (Institutional Class shares)

        1-year return        +0.93%    

Delaware Tax-Free New York Fund (Class A shares)

        1-year return        +0.60%    

Bloomberg Barclays Municipal Bond Index (benchmark)

        1-year return        +0.49%    

Lipper New York Municipal Debt Funds Average

        1-year return        +0.55%    

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free New York Fund, please see the table on page 25. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper New York Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation in New York (double tax-exempt) or a city in New York (triple tax-exempt).

Please see page 28 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

Delaware Tax-Free Pennsylvania Fund (Institutional Class shares)

        1-year return        +1.16%    

Delaware Tax-Free Pennsylvania Fund (Class A shares)

        1-year return        +0.93%    

Bloomberg Barclays Municipal Bond Index (benchmark)

        1-year return        +0.49%    

Lipper Pennsylvania Municipal Debt Funds Average

        1-year return        +0.82%    

Past performance does not guarantee future results.

For complete, annualized performance for Delaware Tax-Free Pennsylvania Fund, please see the table on page 29. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

The performance of Class A shares excludes the applicable sales charge. Both Institutional Class shares and Class A shares reflect the reinvestment of all distributions.

The Lipper Pennsylvania Municipal Debt Funds Average compares funds that limit assets to those securities that are exempt from taxation in Pennsylvania (double tax-exempt) or a city in Pennsylvania (triple tax-exempt).

Please see page 32 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

 

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Economic backdrop

US economic data remained healthy throughout the Funds’ fiscal year ended Aug. 31, 2018, although concern about the longer-term impact of global trade conflict emerged toward period end.

US gross domestic product (GDP), a measure of the goods and services the nation produces, increased throughout the 12-month time frame. In the third quarter of 2017, for example, US GDP expanded by an annualized 2.8% rate, followed by a 2.3% increase in the final three months of 2017. US GDP grew by 2.2% in the first quarter of 2018 and an estimated 4.2% in the second quarter. That 4.2% annual pace was the largest quarterly gain in nearly four years. Employment trends also remained healthy, with the US jobless rate finishing August 2018 at 3.9%, down half a percentage point from a year earlier. (Sources: US Bureau of Economic Analysis and US Bureau of Labor Statistics.)

Against this backdrop of steady economic expansion, job growth, and manageable inflation, the US Federal Reserve continued to gradually raise interest rates. The Fed increased its target short-term interest rate by 0.25 percentage points on three separate occasions during the Funds’ fiscal year – in December 2017 and in March and June 2018. On Aug. 31, 2018, the federal funds rate ranged from 1.75% to 2.00%, up from 1.00% to 1.25% a year earlier. (Source: Bloomberg.)

Municipal bond market conditions

In this strong economic environment, the US municipal bond market, as measured by the Bloomberg Barclays Municipal Bond Index, returned +0.49% for the year ended Aug. 31, 2018. Longer-term municipal bonds outpaced their shorter-term counterparts as the yield curve flattened, meaning yields on short-term bonds rose more than those on long-term issues. Short-term yields rose in line with the Fed’s interest rate increases, while fairly benign inflation kept a lid on long-term municipal yields.

To indicate the outperformance of longer-dated municipal debt relative to shorter-maturity municipal debt, the following table shows municipal bond returns by maturity for the 12 months ended Aug. 31, 2018:

Returns by maturity

 

5 years

      – 0.74 % 

10 years

      – 0.10 % 

22+ years

      1.28 % 

Source: Bloomberg.

Much of the yield curve’s flattening took place in the fourth quarter of 2017, as investors sought to understand the potential market impact of federal tax reform legislation, which ultimately passed in late December. During this time, the supply of municipal bonds increased sharply, as issuers, anticipating unfavorable tax-policy changes, rushed debt to market. One of these expected changes – the ability to issue so-called private-activity bonds, a broad category that includes healthcare, private education, and toll road bonds, among others – didn’t make it into the final legislation.

However, another proposed change did come to pass: the elimination of advance refundings. Under the new legislation, issuers wishing to refinance bonds through the issuance of newer debt must do so within 90 days of the bonds’ call dates. Many issuers ultimately opted to bring their debt to market ahead of the law’s passage. This led to tighter bond supply in the second half of the Funds’ fiscal year, which, coupled with solid investor demand, provided a tailwind for the municipal bond market.

Continuing a trend in place for several years, bonds of lower-rated municipal issuers again outperformed bonds of higher-quality issuers – a situation known as credit spread narrowing. As investors anticipated that interest rates would continue to rise slowly, lower-rated, higher yielding municipal bonds remained attractive to investors in a continued low-rate environment. Bonds rated

 

 

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below investment grade (below BBB) performed especially well amid strong demand coupled with limited supply of the securities.

The following table, which provides municipal bond performance by credit quality rating for the Funds’ fiscal year, further highlights this trend:

Returns by credit rating

 

AAA

      – 0.23 % 

AA

      0.22 % 

A

      0.78 % 

BBB

      2.76 % 

BB and below

      6.21 % 

Source: Bloomberg.

   

Economic backdrop in the states

Arizona’s diverse state economy is still recovering from the global financial crisis. The rise in population overly exposed its real estate market and construction industry. July 2018 nonfarm employment of 2.78 million grew 2.7% from a year earlier. Despite improvement over prior years, the state’s unemployment rate as of July 2018 remained elevated at 4.6%, above the national average rate of 3.9%. Arizona’s per capita personal income levels are also well below average at only 82% of the national level. Fiscal 2018 General Fund revenues totaled $10.1 billion, which were 6.4% higher than 2017 and 4.2% above budget estimates. Individual income tax revenue grew 10.0% in 2018, sales tax revenue increased 6.2%, and corporate tax revenue rose 1.3%. The state ended fiscal 2018 with an operating fund balance of $2.8 billion and Budget Stabilization Fund balance of $457 million. Arizona enacted a $10.4 billion fiscal 2019 General Fund budget, a 5.5% increase over 2018. Revenues are expected to grow 3.4 % to total $10.2 billion. The budget includes increased funding for education and healthcare. (Sources: bls.gov, bea.gov, ncsl.org, Arizona Office of Strategic Planning Budgeting, Arizona Joint Legislative Budget Committee.)

California enjoys a large, diverse, and wealthy economy that mirrors that of the US. In 2015, California’s real GDP was $2.6 trillion, making California the sixth largest economy in the world. The July 2018 nonfarm employment of 17.1 million grew 2.0% from a year earlier. The unemployment rate fell to 4.2% in July 2018 but remains slightly above the national rate of 3.9%. California’s per capita personal income remained strong at 10% higher than the national average. Fiscal 2018 General Fund revenues rose by 11.5% year over year to total $136 billion, which was 1.1% above the budget forecasts. Personal income taxes rose 13.1% in fiscal 2018 to total $93.5 billion and were 1.3% above budget. Sales-and-use tax receipts were 1.5% below budget, but corporate income tax revenues were 4.4% above budget. California ended fiscal 2018 with a $8.4 billion General Fund balance and a $9.4 billion Rainy Day Fund. The California legislature enacted a $138.7 billion General Fund budget for fiscal 2019, a 9.2% increase over 2018. General Fund revenues are expected to total $133.3 billion, 2.7% more than 2018. The budget calls for personal income and corporate taxes to rise 3.3% and 9.0%, respectively. It calls for a 5.1% increase in sales tax revenues. The state expects to end fiscal 2018 with a General Fund balance of $3.1 billion and a Rainy Day Fund of $13.8 billion. (Sources: bls.gov, bea.gov, ncsl.org, ebudget.ca.gov.)

Colorado’s economy is diverse, with below-average employment concentration in manufacturing and a variety of service sector strengths. July 2018 nonfarm employment of 2.75 million grew 3.1% from a year earlier. Colorado’s unemployment rate in July 2018 was 2.8%, far below the national rate of 3.9% but up slightly from a year earlier. Colorado is a relatively wealthy state, with per capita personal income levels equal to 106% of the US average. Total estimated General Fund revenues for fiscal year 2018 were $11.6 billion, a 12.6% increase over fiscal 2017. Individual income tax revenues rose

 

 

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by 11.5% in fiscal 2018. Corporate income taxes increased 44.6% while sales and use taxes rose 9.8%. Colorado’s legislature enacted a $11.4 billion General Fund budget for 2019, a 7.6% increase over the prior year. Income tax collections are expected to increase at a more moderate rate of 4.3% in 2019, while sales-and-use tax revenue is forecast to increase 4.8%. The budget includes increased funding for education, healthcare, and transportation. The budget estimates an ending fund balance in the General Fund reserve of $943.8 million – $130.6 million above the statutory required reserve. (Sources: bls.gov, bea.gov, ncsl.org, Colorado Office of State Planning and Budgeting, Colorado Joint Budget Committee.)

Idaho’s economy has expanded and diversified in recent years, benefiting from population growth. However, an above-average dependence on the natural resource sector remains. The July 2018 nonfarm employment of 746,000 was up 3.3% from a year earlier. The unemployment rate in July 2018 held steady at 2.9%, well below the national rate of 3.9%. Per capita income levels are 79% of national levels. Idaho’s General Fund fiscal 2018 revenues totaled $3.73 billion. Total revenues came in 2.8% above budget and 8.2% higher than the prior year. Individual income taxes were 3.9% above budget while corporate and sales taxes were 10.6% and 1.3% above budget, respectively. The Idaho legislature enacted a $3.65 billion fiscal 2019 General Fund budget, a 5.9% increase over fiscal 2018. The three largest portions of the budget are public school support, Medicaid, and higher education. Total General Fund revenues are expected to rise by 4.6% to total $3.8 billion in fiscal 2019. (Sources: bls.gov, bea.gov, ncsl.org, Idaho Division of Financial Management.)

New York has a mature, broad-based, and wealthy economy that attracts a highly educated and global workforce. July 2018 nonfarm employment of 9.7 million grew 1.6% from a year earlier. The unemployment rate in July 2018 was

4.3%, slightly above the national rate of 3.9%. Per capita income levels are among the highest in the nation, 21% above national levels. Total receipts for the General Fund for fiscal 2018 were $71.4 billion, up 6.7% from fiscal 2017 but 0.02% below budget. Personal income tax receipts were $46.9 billion in fiscal 2018, 0.7% above budget forecasts. Sales tax revenues totaled $13.2 billion in 2018, about 0.08% below consensus projections. Corporate income taxes were the largest drag on General Fund revenues, coming in at $4.9 billion in fiscal 2018, short of budget projections of $5.1 billion. General Fund expenditures totaled $69.7 billion in fiscal 2018, 0.4% below the revised budget forecast. The state ended fiscal 2018 with a Budgetary General Fund balance of $9.4 billion, up from $7.7 billion in fiscal 2017. New York’s legislature enacted a $76.6 billion General Fund budget for 2019, a 9% increase over the prior year’s budget. Through the first four months of fiscal 2019, revenues totaled $31.9 billion, which was 0.2% above estimates.

Expenditures ran 0.2% below budget. (Sources: bls.gov, bea.gov, ncsl.org, New York Division of the Budget, Office of the New York State Comptroller.)

Pennsylvania has a diverse, broad, and relatively stable economy, with per capita personal income levels slightly above the national average (103%), supported by its large health and higher education sectors. July 2018 nonfarm employment of 6.02 million grew 1.7% from a year earlier. The monthly unemployment rate in July 2018 was 4.2%, higher than the national rate of 3.9% but down from the prior year. Per capital personal income levels have averaged 103% of national levels. Pennsylvania’s General Fund tax collections totaled $34.6 billion in fiscal 2018, 9.1% above the prior year. Sales tax receipts were 0.4% above budget, personal income collections were 0.7% above budget, and corporate tax revenues were 4.3% below budget projections. For the first time in a decade, the commonwealth

 

 

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is projected to make a $22 million deposit into the Budget Stabilization Reserve Fund. Pennsylvania enacted a $32.7 billion fiscal 2019 budget, a 2.2% increase over 2018. It includes increases in spending for education, higher education, the corrective system, and healthcare. (Sources: bls.gov, bea.gov, ncsl.org, Pennsylvania Office of the Budget, Pennsylvania Department of Revenue.)

Focused on credit research

For all six Funds discussed in this report, we maintained a consistent management strategy, which we do regardless of market conditions. We have a bottom-up investment approach, meaning we evaluate individual securities one at a time. We rely on individual credit research to find securities that we believe provide a desirable risk-reward balance.

This approach often leads to substantial allocations within the Funds to bonds in the lower-investment-grade or below-investment-grade credit tiers, where we seek to add value for shareholders through higher yielding bonds that, in our view, display solid underlying credit.

As of the fiscal year end on Aug. 31, 2018, approximately 41% of the net assets of

Delaware Tax-Free Arizona Fund was invested in bonds with credit ratings of A and BBB, the two lowest credit tiers of the investment grade bond universe. Roughly 47% of the net assets of Delaware Tax-Free California Fund was held in these credit segments, while Delaware Tax-Free Colorado Fund’s allocation to bonds with lower-investment-grade credit ratings stood at about 46% of net assets. Meanwhile, Delaware Tax-Free Idaho Fund’s lower-investment-grade bond allocation was just 34%, as Idaho is a relatively small municipal bond market offering fewer opportunities to buy lower-rated, higher yielding bonds. In Delaware Tax-Free New York Fund and Delaware Tax-Free Pennsylvania Fund, whose investment universes include a greater

variety of lower-rated bonds, we allocated to these types of securities as of fiscal year end.

In addition, all of the Funds had allocations to high yield municipal bonds, securities with credit ratings below BBB. By prospectus, all six Funds have the latitude to invest a portion of the portfolio in these credit tiers. When investing in high yield bonds, we pay close attention to credit risk, focusing on securities that offer sufficiently attractive income, in our view, relative to the added risk.

Portfolio positioning

We entered this fiscal year generally comfortable with the Funds’ positioning. As a result, we were highly selective about making new purchases, seeking securities that provided what we saw as a compelling risk-reward trade-off.

In all six Funds, many of our holdings were originally purchased a decade or more ago when significantly higher yields were available. Thus, we have tended not to replace many existing positions with newer bonds, unless we believe they offer sufficient value to justify such an exchange. Once again, that remained our strategy over the past 12 months, and we expect to continue this approach as long as most of the Funds’ existing holdings remain more attractive to us than the new bonds available for purchase.

During the fiscal year, we periodically saw bonds exit the portfolios, either via bond calls or advance refundings. Some of these bonds were of lower credit quality, and we sought to replace them with other lower-quality issues. However, because we remained highly selective in our purchases – we will not invest in higher yielding bonds that we do not find sufficiently creditworthy – we sometimes found this strategy difficult to execute, particularly in smaller municipal bond markets with limited supply of lower-rated bonds. (Larger municipal markets, such as California, regularly offer portfolio managers a wider assortment of

 

 

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lower- and below-investment-grade investment opportunities.)

Accordingly, our approach was to temporarily invest in higher-quality, liquid municipal bonds offering maturities comparable to the bonds exiting the portfolios. We expect that when suitable lower-rated bonds become available, these higher-rated issues will become attractive sales candidates to finance new purchases more suited to our long-term criteria.

Individual performance contributors

As we indicated earlier, bonds with longer maturities tended to outperform shorter-maturity bonds, while lower-rated issues generally performed better than bonds of higher credit quality. Accordingly, many of our strongest- and weakest-performing securities this fiscal year followed this trend.

In Delaware Tax-Free Arizona Fund, for example, the leading individual performer was a position in Pima County Arizona Industrial Development Authority bonds for Edkey charter schools. These securities gained close to 19% for the fiscal year, benefiting from their below-investment-grade credit ratings and 30-year maturities. Bonds for Christian Care Surprise, a Phoenix-based operator of senior-housing facilities also lifted performance. These nonrated bonds with a 30-year maturity returned close to 8% for the Fund.

The strongest performer for Delaware Tax-Free California Fund was a position in zero-coupon Golden State tobacco-securitization bonds. These below-investment-grade issues returned 37%, benefiting from continued strong demand coupled with a shrinking national supply of tobacco bonds as several states opted to refund their tobacco-securitization issues during the period. Investors began to anticipate that the Golden State tobacco bonds would be refunded, boosting their price. Another strong performer for this Fund was a

position in nonrated education bonds for the Creative Center of Los Altos.

In Delaware Tax-Free Colorado Fund, BB+ rated bonds of the Colorado Educational and Cultural Facilities Authority for the University Lab School, maturing in 2045, performed well, returning near 8%, as did a position in nonrated water-and-sewer bonds for the Dominion Water and Sanitation District, returning more than 7.5%.

In Delaware Tax-Free Idaho Fund, zero-coupon bonds for the North Star Charter School in Eagle, Idaho, performed well, benefiting from their long maturities and lower credit rating, as well as the school’s improved financial performance relative to past years. Corporate-backed industrial development revenue bonds for chemical manufacturer FMC Corporation also contributed. The lower-investment-grade credit rating of these bonds and their relatively high yield proved attractive to investors.

In Delaware Tax-Free New York Fund, the leading individual performers were BBB-rated airport bonds for JFK International Terminal and nonrated Glen Cove Local Economic Assistance Corporation tax-increment-financing bonds.

The strongest-performing securities in Delaware Tax-Free Pennsylvania Fund consisted of similarly structured higher-education bond issues for Carlow University and St. Francis University. Both featured a BBB credit rating, relatively high yields and long-term maturities.

Individual performance detractors

In Delaware Tax-Free Arizona Fund, the biggest individual detractors were high-quality, shorter-maturity bonds: dedicated-tax issues of the Regional Public Transportation Authority for Maricopa County and water-and-sewer bonds for the City of Phoenix Civic Improvement Corporation. Both bonds declined more than 1.5%.

 

 

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Performance for Delaware Tax-Free California Fund was hampered by a position in Encore Education charter school bonds. Despite their relatively lower credit rating and longer maturity, the issuer fell short of meeting certain academic standards, causing the bonds to lag during the period, declining more than 3%. We continued to see the issuer as creditworthy, however, and maintained the Fund’s position, anticipating better results in the future. Anaheim City School District bonds, whose credit rating of AA- and near-term maturity date proved less attractive to investors, also detracted from performance.

In Delaware Tax-Free Colorado Fund, a pair of highly rated, short-maturity issues detracted from performance: Jefferson County School District bonds (rated AA- and maturing in 2024) and Platte River Power Authority public power bonds (rated AA and maturing in 2027).

In Delaware Tax-Free Idaho Fund, a pair of highly rated, short-maturity school district bonds for Canyon County School District 131 and Madison County School District 321 declined modestly.

A couple of higher-quality, shorter-maturity bonds were notable laggards for Delaware Tax-Free New York Fund: New York State Dormitory Authority bonds and pre-refunded Onondaga Civic Development Corporation bonds for the St. Joseph’s Hospital Health Center.

Of final note, bonds for the University of Pittsburgh Medical Center, whose relatively high credit rating and 2025 maturity proved unattractive to investors, hampered performance for

Delaware Tax-Free Pennsylvania Fund.In addition, the Fund’s position in pre-refunded bonds for the Pocono Medical Center detracted from performance.

 

 

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Performance summaries   
Delaware Tax-Free Arizona Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1,2   Average annual total returns through August 31, 2018  
     1 year     5 years     10 years     Lifetime  

Class A (Est. April 1, 1991)

        

Excluding sales charge

     +1.11%       +4.50%       +4.15%       +5.16%  

Including sales charge

     -3.43%       +3.55%       +3.67%       +4.98%  

Class C (Est. May 26, 1994)

        

Excluding sales charge

     +0.36%       +3.72%       +3.37%       +3.95%  

Including sales charge

     -0.62%       +3.72%       +3.37%       +3.95%  

Institutional Class (Est. Dec. 31, 2013)

        

Excluding sales charge

     +1.36%       n/a       n/a       +4.62%  

Including sales charge

     +1.36%       n/a       n/a       +4.62%  

Bloomberg Barclays Municipal Bond Index

     +0.49%       +4.12%       +4.32%       +3.87%*  

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 10. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. Performance for Class A shares,

excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

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Performance summaries

Delaware Tax-Free Arizona Fund

 

 

 

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s,

Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.59% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios    Class A                          Class C                      Institutional Class      

Total annual operating expenses

    0.97%                   1.72%                 0.72%    

(without fee waivers)

               

Net expenses

    0.84%                   1.59%                 0.59%    

(including fee waivers, if any)

               

Type of waiver

 

    Contractual            

 

         Contractual          

 

         Contractual    

 

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

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Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

 

 

For period beginning Aug. 31, 2008 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $15,263  

LOGO Delaware Tax-Free Arizona Fund — Class A shares

      $9,550        $14,336  

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

 

For period beginning Dec. 31, 2013 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Delaware Tax-Free Arizona Fund — Institutional Class shares

      $10,000        $12,344  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $11,936  

 

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Performance summaries

Delaware Tax-Free Arizona Fund

 

 

 

1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense limitations were in

effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 10. Please note additional details on pages 9 through 12.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 

          Nasdaq symbols        CUSIPs      

Class A

    VAZIX      928916204   

Class C

    DVACX    928916501   

Institutional Class

    DAZIX      928916873   

 

 

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Performance summaries   
Delaware Tax-Free California Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1,2    Average annual total returns through August 31, 2018  
      1 year     5 years     10 years     Lifetime  

Class A (Est. March 2, 1995)

         

Excluding sales charge

      +1.00%       +5.07%       +4.97%       +5.38%  

Including sales charge

      -3.56%       +4.11%       +4.48%       +5.18%  

Class C (Est. April 9, 1996)

         

Excluding sales charge

      +0.25%       +4.30%       +4.19%       +4.52%  

Including sales charge

      -0.72%       +4.30%       +4.19%       +4.52%  

Institutional Class (Est. Dec. 31, 2013)

         

Excluding sales charge

      +1.26%       n/a       n/a       +5.12%  

Including sales charge

      +1.26%       n/a       n/a       +5.12%  

Bloomberg Barclays Municipal Bond Index

      +0.49%       +4.12%       +4.32%       +3.87%*  

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 14. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets.

Performance for Class A shares, excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

13

Table of Contents

Performance summaries

Delaware Tax-Free California Fund

 

 

 

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s,

 

Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.57% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios   Class A        Class C        Institutional Class

 

Total annual operating expenses

(without fee waivers)

  

 

1.01%

    

 

1.76%

    

 

0.76%

Net expenses

(including fee waivers, if any)

   0.82%     1.57%     0.57%

Type of waiver

       Contractual               Contractual               Contractual    

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

14

Table of Contents

    

    

 

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

 

 

For period beginning Aug. 31, 2008 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Delaware Tax-Free California Fund — Class A shares

      $9,550        $15,505  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $15,263  

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

 

For period beginning Dec. 31, 2013 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Delaware Tax-Free California Fund — Institutional Class shares

      $10,000        $12,623  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $11,936  

 

15

Table of Contents

Performance summaries

Delaware Tax-Free California Fund

 

 

 

1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or

redemptions of Fund shares. Expense limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 14. Please note additional details on pages 13 through 16.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 

      Nasdaq symbols    CUSIPs      

Class A

    DVTAX    928928829   

Class C

    DVFTX    928928795   

Institutional Class

 

    DCTIX     928928167     

 

16

Table of Contents
Performance summaries   
Delaware Tax-Free Colorado Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1,2    Average annual total returns through August 31, 2018  
      1 year     5 years     10 years     Lifetime  

Class A (Est. April 23, 1987)

         

Excluding sales charge

      +1.22%       +4.64%       +4.23%       +5.62%  

Including sales charge

      -3.32%       +3.68%       +3.75%       +5.47%  

Class C (Est. May 6, 1994)

         

Excluding sales charge

      +0.47%       +3.85%       +3.46%       +4.04%  

Including sales charge

      -0.51%       +3.85%       +3.46%       +4.04%  

Institutional Class (Est. Dec. 31, 2013)

         

Excluding sales charge

      +1.47%       n/a       n/a       +4.78%  

Including sales charge

      +1.47%       n/a       n/a       +4.78%  

 

Bloomberg Barclays Municipal Bond Index

 

   

 

 

 

 

+0.49%

 

 

 

 

  

 

 

 

 

+4.12%

 

 

 

 

  

 

 

 

 

+4.32%

 

 

 

 

  

 

 

 

 

+3.87%*

 

 

 

 

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 18. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. Performance for Class A shares,

excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

17

Table of Contents

Performance summaries

Delaware Tax-Free Colorado Fund

 

 

 

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s,

Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.59% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios   Class A          Class C              Institutional Class      

 

Total annual operating expenses

  

 

 

 

0.96%

 

 

    

 

 

 

1.71%

 

 

    

 

 

 

0.71%

 

 

(without fee waivers)

          

Net expenses

     0.84%         1.59%         0.59%  

(including fee waivers, if any)

          

Type of waiver

         Contractual                   Contractual                   Contractual      

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

18

Table of Contents

    

    

 

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

 

 

For period beginning Aug. 31, 2008 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $15,263  

LOGO Delaware Tax-Free Colorado Fund — Class A shares

      $9,550        $14,456  

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

 

For period beginning Dec. 31, 2013 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Delaware Tax-Free Colorado Fund — Institutional Class shares

      $10,000        $12,436  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $11,936  

 

19

Table of Contents

Performance summaries

Delaware Tax-Free Colorado Fund

 

 

1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 18. Please note additional details on pages 17 through 20.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 

     

 

    Nasdaq symbols     

    CUSIPs      

Class A

    VCTFX    928920107   

Class C

    DVCTX    92907R101   

Institutional Class

    DCOIX    92907R200   

 

 

20

Table of Contents
Performance summaries   
Delaware Tax-Free Idaho Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1,2    Average annual total returns through August 31, 2018  
      1 year     5 years     10 years     Lifetime  

Class A (Est. Jan. 4, 1995)

         

Excluding sales charge

      +0.56%       +3.58%       +3.43%       +4.71%  

Including sales charge

      -3.95%       +2.63%       +2.96%       +4.51%  

Class C (Est. Jan. 11, 1995)

         

Excluding sales charge

      -0.19%       +2.81%       +2.66%       +3.90%  

Including sales charge

      -1.17%       +2.81%       +2.66%       +3.90%  

Institutional Class (Est. Dec. 31, 2013)

         

Excluding sales charge

      +0.82%       n/a       n/a       +3.76%  

Including sales charge

      +0.82%       n/a       n/a       +3.76%  

Bloomberg Barclays Municipal Bond Index

      +0.49%       +4.12%       +4.32%       +3.87%*  

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 22. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. Performance for Class A shares,

 

excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

21

Table of Contents

Performance summaries

Delaware Tax-Free Idaho Fund

 

 

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s,

Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.61% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios   Class A        Class C            Institutional Class    

 

Total annual operating expenses

(without fee waivers)

  

 

1.00%

    

 

1.75%

    

 

0.75%

Net expenses

(including fee waivers, if any)

   0.86%     1.61%     0.61%

Type of waiver

       Contractual               Contractual               Contractual    

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

22

Table of Contents

    

    

 

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

 

 

For period beginning Aug. 31, 2008 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $15,263  

LOGO Delaware Tax-Free Idaho Fund — Class A shares

      $9,550        $13,384  

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

 

For period beginning Dec. 31, 2013 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $11,936  

LOGO Delaware Tax-Free Idaho Fund — Institutional Class shares

      $10,000        $11,878  

 

23

Table of Contents

Performance summaries

Delaware Tax-Free Idaho Fund

 

 

1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 22. Please note additional details on pages 21 through 24.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 

      Nasdaq symbols    CUSIPs      

Class A

    VIDAX    928928704   

Class C

    DVICX    928928803   

Institutional Class

 

    DTIDX    928928159     

 

24

Table of Contents
Performance summaries   
Delaware Tax-Free New York Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1,2    Average annual total returns through August 31, 2018  
      1 year     5 years     10 years     Lifetime  

Class A (Est. Nov. 6, 1987)

         

Excluding sales charge

      +0.60%       +4.64%       +4.53%       +5.50%  

Including sales charge

      -3.95%       +3.68%       +4.04%       +5.34%  

Class C (Est. April 26, 1995)

         

Excluding sales charge

      -0.16%       +3.86%       +3.75%       +3.87%  

Including sales charge

      -1.14%       +3.86%       +3.75%       +3.87%  

Institutional Class (Est. Dec. 31, 2013)

         

Excluding sales charge

      +0.93%       n/a       n/a       +4.72%  

Including sales charge

      +0.93%       n/a       n/a       +4.72%  

Bloomberg Barclays Municipal Bond Index

      +0.49%       +4.12%       +4.32%       +3.87%*  

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 26. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. Performance for Class A shares,

excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

 

 

25

Table of Contents

Performance summaries

Delaware Tax-Free New York Fund

 

 

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s,

Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.55% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios   Class A          Class C              Institutional Class      

 

Total annual operating expenses

  

 

 

 

1.03%

 

 

    

 

 

 

1.78%

 

 

    

 

 

 

0.78%

 

 

(without fee waivers)

          

Net expenses

     0.80%         1.55%         0.55%  

(including fee waivers, if any)

          

Type of waiver

 

    

 

     Contractual    

 

  

 

        

 

     Contractual    

 

  

 

        

 

     Contractual    

 

  

 

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

26

Table of Contents

    

    

 

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

 

 

For period beginning Aug. 31, 2008 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $15,263  

LOGO Delaware Tax-Free New York Fund — Class A shares

      $9,550        $14,860  

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

 

For period beginning Dec. 31, 2013 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Delaware Tax-Free New York Fund — Institutional Class shares

      $10,000        $12,404  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $11,936  

 

27

Table of Contents

Performance summaries

Delaware Tax-Free New York Fund

 

 

1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense

limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 26. Please note additional details on pages 25 through 28.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 

     

 

    Nasdaq symbols    

    CUSIPs      

Class A

    FTNYX    928928274   

Class C

    DVFNX    928928258   

Institutional Class

    DTNIX    928928142   

 

 

28

Table of Contents
Performance summaries   
Delaware Tax-Free Pennsylvania Fund    August 31, 2018

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. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.

 

Fund and benchmark performance1,2    Average annual total returns through August 31, 2018  
      1 year      5 years      10 years      Lifetime  

Class A (Est. March 23, 1977)

            

Excluding sales charge

      +0.93%        +4.53%        +4.36%        +5.47%  

Including sales charge

      -3.58%        +3.56%        +3.88%        +5.35%  

Class C (Est. Nov. 29, 1995)

            

Excluding sales charge

      +0.16%        +3.74%        +3.57%        +3.60%  

Including sales charge

      -0.81%        +3.74%        +3.57%        +3.60%  

Institutional Class (Est. Dec. 31, 2013)

            

Excluding sales charge

      +1.16%        n/a        n/a        +4.61%  

Including sales charge

      +1.16%        n/a        n/a        +4.61%  

Bloomberg Barclays Municipal Bond Index

      +0.49%        +4.12%        +4.32%        +3.87%*  

*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.

 

1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.

Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 30. Performance would have been lower had expense limitations not been in effect.

Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.

Class A shares are sold with a maximum front-end sales charge of 4.50%, and have an annual distribution and service fee of 0.25% of average daily net assets. The Board has adopted a formula

for calculating 12b-1 plan fees for the Fund’s Class A shares. The Fund’s Class A shares are currently subject to a blended 12b-1 fee equal to the sum of: (i) 0.10% of average daily net assets representing shares acquired prior to June 1, 1992, and (ii) 0.25% of average daily net assets representing shares acquired on or after June 1, 1992. All Class A shares currently bear 12b-1 fees at the same rate, the blended rate, currently 0.24% of average daily net assets, based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. Performance for Class A shares, excluding sales charges, assumes that no front-end sales charge applied.

Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual distribution and service fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that

 

 

29

Table of Contents

Performance summaries

Delaware Tax-Free Pennsylvania Fund

 

 

 

contingent deferred sales charges did not apply or that the investment was not redeemed.

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.

Funds that invest primarily in one state may be more susceptible to the economic, regulatory, regional, and other factors of that state than geographically diversified funds.

Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.

Duration number will change as market conditions change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.

This document may mention bond ratings published by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s, Moody’s Investors Service, and Fitch, Inc. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

 

 

2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Delaware Management Company has agreed to reimburse certain expenses and/or waive certain fees in order to prevent total annual fund operating expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and 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 (collectively, nonroutine expenses)) from exceeding 0.64% of the Fund’s average daily net assets during the period from Sept. 1, 2017 to Aug. 31, 2018.* Please see the most recent prospectus and any applicable supplement(s) for additional information on these fee waivers and/or reimbursements. Please see the “Financial highlights” section in this report for the most recent expense ratios.

 

Fund expense ratios   Class A          Class C              Institutional Class      

Total annual operating expenses

     0.94%         1.70%         0.70%  

(without fee waivers)

          

Net expenses

     0.88%         1.64%         0.64%  

(including fee waivers, if any)

          

Type of waiver

         Contractual                   Contractual                   Contractual      

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

 

30

Table of Contents

    

    

 

 

Performance of a $10,000 investment1

Class A shares

Average annual total returns from Aug. 31, 2008 through Aug. 31, 2018

 

LOGO

 

 

For period beginning Aug. 31, 2008 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $15,263  

LOGO Delaware Tax-Free Pennsylvania Fund — Class A shares

      $9,550        $14,627  

Institutional Class shares

Average annual total returns from Dec. 31, 2013 (inception date) through Aug. 31, 2018

 

LOGO

 

 

For period beginning Dec. 31, 2013 through Aug. 31, 2018

 

   

 

Starting value

 

     

 

Ending value

 

  

LOGO Delaware Tax-Free Pennsylvania Fund — Institutional Class shares

      $10,000        $12,342  

LOGO Bloomberg Barclays Municipal Bond Index

      $10,000        $11,936  

 

31

Table of Contents

Performance summaries

Delaware Tax-Free Pennsylvania Fund

 

 

 

1The “Performance of a $10,000 investment” graph for Class A shares assumes $10,000 invested in Class A shares of the Fund on Aug. 31, 2008, and includes the effect of a 4.50% front-end sales charge and the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Aug. 31, 2008.

The “Performance of a $10,000 investment” graph for Institutional Class shares assumes $10,000 invested in Institutional Class shares of the Fund on Dec. 31, 2013, and includes the reinvestment of all distributions. The graph also assumes $10,000 invested in the Bloomberg Barclays Municipal Bond Index as of Dec. 31, 2013.

The graphs do not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense limitations were in

effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 30. Please note additional details on pages 29 through 32.

The Bloomberg Barclays Municipal Bond Index measures the total return performance of the long-term, investment grade tax-exempt bond market.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.

Performance of other Fund share classes will vary due to different charges and expenses.

 

 

     Nasdaq symbols   CUSIPs     

Class A

   DELIX     233216100  

Class C

   DPTCX   233216308  

Institutional Class

 

   DTPIX     24609H701    

 

32

Table of Contents

Disclosure of Fund expenses

For the six-month period from March 1, 2018 to August 31, 2018 (Unaudited)

 

 

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. These following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from March 1, 2018 to Aug. 31, 2018.

Actual expenses

The first section of the tables shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The second section of the tables shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Funds’ expenses shown in the tables reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions.

 

33

Table of Contents

Disclosure of Fund expenses

For the six-month period from March 1, 2018 to August 31, 2018 (Unaudited)

 

 

Delaware Tax-Free Arizona Fund

Expense analysis of an investment of $1,000

 

      Beginning
Account Value
3/1/18		    Ending
Account Value
8/31/18		    Annualized
Expense Ratio		   Expenses
Paid During Period
3/1/18 to 8/31/18*		  

Actual Fund return†

 

Class A

    $1,000.00    $1,016.50    0.84%     $4.27  

Class C

      1,000.00      1,012.60    1.59%       8.07  

Institutional Class

      1,000.00      1,016.90    0.59%       3.00  

Hypothetical 5% return (5% return before expenses)

  

Class A

    $1,000.00    $1,020.97    0.84%     $4.28  

Class C

      1,000.00      1,017.19    1.59%       8.08  

Institutional Class

      1,000.00      1,022.23    0.59%       3.01  

Delaware Tax-Free California Fund

Expense analysis of an investment of $1,000

 

      Beginning
Account Value
3/1/18		    Ending
Account Value
8/31/18		    Annualized
Expense Ratio		   Expenses
Paid During Period
3/1/18 to 8/31/18*		  

Actual Fund return†

 

Class A

    $1,000.00    $1,017.10    0.82%     $4.17  

Class C

      1,000.00      1,013.30    1.57%       7.97  

Institutional Class

      1,000.00      1,018.40    0.57%       2.90  

Hypothetical 5% return (5% return before expenses)

  

Class A

    $1,000.00    $1,021.07    0.82%     $4.18  

Class C

      1,000.00      1,017.29    1.57%       7.98  

Institutional Class

      1,000.00      1,022.33    0.57%       2.91  

 

34

Table of Contents

    

    

 

 

Delaware Tax-Free Colorado Fund

Expense analysis of an investment of $1,000

 

      Beginning
Account Value
3/1/18		    Ending
Account Value
8/31/18		    Annualized
Expense Ratio		   Expenses
Paid During Period
3/1/18 to 8/31/18*		  

Actual Fund return†

 

Class A

    $1,000.00    $1,014.40    0.84%     $4.27  

Class C

      1,000.00      1,010.60    1.59%       8.06  

Institutional Class

      1,000.00      1,015.70    0.59%       3.00  

Hypothetical 5% return (5% return before expenses)

  

Class A

    $1,000.00    $1,020.97    0.84%     $4.28  

Class C

      1,000.00      1,017.19    1.59%       8.08  

Institutional Class

      1,000.00      1,022.23    0.59%       3.01  

Delaware Tax-Free Idaho Fund

Expense analysis of an investment of $1,000

 

      Beginning
Account Value
3/1/18		    Ending
Account Value
8/31/18		    Annualized
Expense Ratio		   Expenses
Paid During Period
3/1/18 to 8/31/18*		  

Actual Fund return†

 

Class A

    $1,000.00    $1,014.70    0.86%     $4.37  

Class C

      1,000.00      1,010.90    1.61%       8.16  

Institutional Class

      1,000.00      1,016.00    0.61%       3.10  

Hypothetical 5% return (5% return before expenses)

  

Class A

    $1,000.00    $1,020.87    0.86%     $4.38  

Class C

      1,000.00      1,017.09    1.61%       8.19  

Institutional Class

      1,000.00      1,022.13    0.61%       3.11  

 

35

Table of Contents

Disclosure of Fund expenses

For the six-month period from March 1, 2018 to August 31, 2018 (Unaudited)

 

 

Delaware Tax-Free New York Fund

Expense analysis of an investment of $1,000

 

      Beginning
Account Value
3/1/18		    Ending
Account Value
8/31/18		    Annualized
Expense Ratio		   Expenses
Paid During Period
3/1/18 to 8/31/18*		  

Actual Fund return†

 

Class A

    $1,000.00    $1,013.50    0.80%     $4.06  

Class C

      1,000.00      1,009.60    1.55%       7.85  

Institutional Class

      1,000.00      1,014.70    0.55%       2.79  

Hypothetical 5% return (5% return before expenses)

  

Class A

    $1,000.00    $1,021.17    0.80%     $4.08  

Class C

      1,000.00      1,017.39    1.55%       7.88  

Institutional Class

      1,000.00      1,022.43    0.55%       2.80  

Delaware Tax-Free Pennsylvania Fund

Expense analysis of an investment of $1,000

 

      Beginning
Account Value
3/1/18		    Ending
Account Value
8/31/18		    Annualized
Expense Ratio		   Expenses
Paid During Period
3/1/18 to 8/31/18*		  

Actual Fund return†

 

Class A

    $1,000.00    $1,015.30    0.88%     $4.47  

Class C

      1,000.00      1,010.10    1.64%       8.31  

Institutional Class

      1,000.00      1,015.20    0.64%       3.25  

Hypothetical 5% return (5% return before expenses)

  

Class A

    $1,000.00    $1,020.77    0.88%     $4.48  

Class C

      1,000.00      1,016.94    1.64%       8.34  

Institutional Class

      1,000.00      1,021.98    0.64%       3.26  

 

*“

Expenses Paid During Period” are equal to the relevant Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

 

† 

Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns.

 

36

Table of Contents
Security type / sector / state / territory allocations
Delaware Tax-Free Arizona Fund    As of August 31, 2018 (Unaudited)

 

 

Sector designations may be different than the sector designations presented in other Fund materials.

 

Security type / sector    Percentage of net assets     

Municipal Bonds*

        98.09 %  

Corporate Revenue Bonds

        10.77 %  

Education Revenue Bonds

        28.80 %  

Electric Revenue Bonds

        2.90 %  

Healthcare Revenue Bonds

        18.82 %  

Lease Revenue Bonds

        5.13 %  

Local General Obligation Bond

        0.35 %  

Pre-Refunded Bonds

        9.63 %  

Special Tax Revenue Bonds

        6.23 %  

Transportation Revenue Bonds

        8.43 %  

Water & Sewer Revenue Bonds

        7.03 %    

Short-Term Investment

        0.39 %    

Total Value of Securities

        98.48 %    

Receivables and Other Assets Net of Liabilities

        1.52 %    

Total Net Assets

        100.00 %    

*As of the date of this report, Delaware Tax-Free Arizona Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets     

Arizona

        95.33 %  

Guam

        2.08 %  

Puerto Rico

        1.07 %    

Total Value of Securities

            98.48 %    

 

37

Table of Contents
Security type / sector allocations
Delaware Tax-Free California Fund    As of August 31, 2018 (Unaudited)

 

 

Sector designations may be different than the sector designations presented in other Fund materials.

 

Security type / sector    Percentage of net assets     

Municipal Bonds

        99.70 %  

Corporate Revenue Bonds

        5.81 %  

Education Revenue Bonds

        19.24 %  

Electric Revenue Bond

        0.58 %  

Healthcare Revenue Bonds

        21.37 %  

Housing Revenue Bonds

        4.21 %  

Lease Revenue Bonds

        10.70 %  

Local General Obligation Bonds

        2.94 %  

Pre-Refunded Bonds

        10.05 %  

Resource Recovery Revenue Bond

        1.05 %  

Special Tax Revenue Bonds

        1.11 %  

State General Obligation Bonds

        8.50 %  

Transportation Revenue Bonds

        11.96 %  

Water & Sewer Revenue Bonds

        2.18 %    

Short-Term Investment

        0.33 %    

Total Value of Securities

        100.03 %    

Liabilities Net of Receivables and Other Assets

        (0.03 %)    

Total Net Assets

        100.00 %    

 

38

Table of Contents
Security type / sector / state / territory allocations
Delaware Tax-Free Colorado Fund    As of August 31, 2018 (Unaudited)

 

 

Sector designations may be different than the sector designations presented in other Fund materials.

 

Security type / sector    Percentage of net assets     

Municipal Bonds*

        98.84 %  

Corporate Revenue Bonds

        1.41 %  

Education Revenue Bonds

        11.15 %  

Electric Revenue Bonds

        3.74 %  

Healthcare Revenue Bonds

        24.16 %  

Housing Revenue Bonds

        0.09 %  

Lease Revenue Bonds

        3.35 %  

Local General Obligation Bonds

        14.02 %  

Pre-Refunded Bonds

        7.21 %  

Special Tax Revenue Bonds

        19.44 %  

Transportation Revenue Bonds

        12.94 %  

Water & Sewer Revenue Bonds

        1.33 %    

Short-Term Investments

        0.59 %    

Total Value of Securities

        99.43 %    

Receivables and Other Assets Net of Liabilities

        0.57 %    

Total Net Assets

        100.00 %    

*As of the date of this report, Delaware Tax-Free Colorado Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets     

Colorado

        96.02 %  

Guam

        1.89 %  

Puerto Rico

        1.00 %  

US Virgin Islands

        0.52 %    

Total

          99.43 %    

 

39

Table of Contents
Security type / sector / state / territory allocations
Delaware Tax-Free Idaho Fund    As of August 31, 2018 (Unaudited)

 

 

Sector designations may be different than the sector designations presented in other Fund materials.

 

Security type / sector    Percentage of net assets     

Municipal Bonds*

        98.53 %  

Corporate Revenue Bonds

        3.31 %  

Education Revenue Bonds

        16.10 %  

Electric Revenue Bonds

        3.36 %  

Healthcare Revenue Bonds

        12.76 %  

Housing Revenue Bonds

        1.03 %  

Lease Revenue Bonds

        9.95 %  

Local General Obligation Bonds

        25.76 %  

Pre-Refunded Bonds

        6.91 %  

Special Tax Revenue Bonds

        14.14 %  

Transportation Revenue Bonds

        4.42 %  

Water & Sewer Revenue Bonds

        0.79 %    

Short-Term Investment

        0.88 %    

Total Value of Securities

        99.41 %    

Receivables and Other Assets Net of Liabilities

        0.59 %    

Total Net Assets

        100.00 %    

*As of the date of this report, Delaware Tax-Free Idaho Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets     

Guam

        4.74 %  

Idaho

        91.97 %  

Puerto Rico

        1.10 %  

US Virgin Islands

        1.60 %    

Total

          99.41 %    

 

40

Table of Contents
Security type / sector / state / territory allocations
Delaware Tax-Free New York Fund    As of August 31, 2018 (Unaudited)

 

 

Sector designations may be different than the sector designations presented in other Fund materials.

 

Security type / sector    Percentage of net assets     

Municipal Bonds*

        100.48 %  

Corporate Revenue Bonds

        8.43 %  

Education Revenue Bonds

        22.68 %  

Electric Revenue Bonds

        3.58 %  

Healthcare Revenue Bonds

        15.16 %  

Lease Revenue Bonds

        8.68 %  

Local General Obligation Bonds

        2.24 %  

Pre-Refunded Bonds

        11.38 %  

Resource Recovery Revenue Bond

        1.75 %  

Special Tax Revenue Bonds

        16.56 %  

State General Obligation Bond

        0.58 %  

Transportation Revenue Bonds

        6.56 %  

Water & Sewer Revenue Bonds

        2.88 %    

Short-Term Investments

        0.29 %    

Total Value of Securities

        100.77 %    

Liabilities Net of Receivables and Other Assets

        (0.77 %)    

Total Net Assets

        100.00 %    

*As of the date of this report, Delaware Tax-Free New York Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets     

Guam

        0.29 %  

New York

        100.48 %    

Total Value of Securities

        100.77 %    

 

41

Table of Contents
Security type / sector / state / territory allocations
Delaware Tax-Free Pennsylvania Fund    As of August 31, 2018 (Unaudited)

 

 

Sector designations may be different than the sector designations presented in other Fund materials.

 

Security type / sector    Percentage of net assets     

Municipal Bonds*

        98.77 %  

Corporate Revenue Bonds

        5.72 %  

Education Revenue Bonds

        14.42 %  

Healthcare Revenue Bonds

        29.26 %  

Housing Revenue Bond

        0.48 %  

Lease Revenue Bonds

        3.63 %  

Local General Obligation Bonds

        4.27 %  

Pre-Refunded/Escrowed to Maturity Bonds

        21.81 %  

Resource Recovery Revenue Bonds

        0.62 %  

Special Tax Revenue Bonds

        3.71 %  

State General Obligation Bond

        0.64 %  

Transportation Revenue Bonds

        10.14 %  

Water & Sewer Revenue Bonds

        4.07 %    

Short-Term Investments

        0.60 %    

Total Value of Securities

        99.37 %    

Receivables and Other Assets Net of Liabilities

        0.63 %    

Total Net Assets

        100.00 %    

*As of the date of this report, Delaware Tax-Free Pennsylvania Fund held bonds issued by or on behalf of territories and the states of the US as follows:

 

State / territory    Percentage of net assets     

Guam

        0.79 %  

Pennsylvania

        98.58 %    

Total Value of Securities

          99.37 %    

 

42

Table of Contents
Schedules of investments
Delaware Tax-Free Arizona Fund    August 31, 2018

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds – 98.09%

      

 

  

 

Corporate Revenue Bonds – 10.77%

      

Chandler Industrial Development Authority Revenue

      

(Intel Corporation Project) 2.70% 12/1/37 (AMT)  ●

      1,000,000      $ 1,003,210  

Maricopa County Pollution Control

      

(Public Service - Palo Verde Project) Series B 5.20% 6/1/43  ●

      1,500,000        1,572,885  

(Southern California Education Co.) Series A 5.00% 6/1/35

      2,400,000        2,510,184  

Pima County Industrial Development Authority Pollution Control Revenue

      

(Tucson Electric Power) Series A 5.25% 10/1/40

      2,000,000        2,121,620  

Salt Verde Financial Senior Gas Revenue

      

5.00% 12/1/37

      870,000        1,033,952  
     

 

 

  
                8,241,851  
     

 

 

  

Education Revenue Bonds – 28.80%

      

Arizona Health Facilities Authority Healthcare Education Revenue

      

(Kirksville College) 5.125% 1/1/30

      1,500,000        1,557,615  

Arizona Industrial Development Authority Revenue

      

(Academies of Math & Science Projects) Series A 5.00% 7/1/51

      1,000,000        1,092,320  

(ACCEL Schools Project) Series A 144A 5.25% 8/1/48  #

      350,000        350,518  

(American Charter Schools Foundation Project) 144A 6.00% 7/1/47  #

      400,000        420,932  

Arizona State University Energy Management Revenue

      

(Arizona State University Tempe Campus II Project)

      

4.50% 7/1/24

      1,000,000        1,021,830  

Glendale Industrial Development Authority Revenue

      

(Midwestern University)

      

5.00% 5/15/31

      645,000        700,115  

5.125% 5/15/40

      1,305,000        1,366,100  

La Paz County Industrial Development Authority Revenue

      

(Charter School Solutions-Harmony Public Schools Project) Series A 5.00% 2/15/48

      100,000        106,422  

Maricopa County Industrial Development Authority Revenue

      

(Greathearts Arizona Projects) Series A 5.00% 7/1/52

      725,000        804,576  

(Paradise Schools Projects) 144A 5.00% 7/1/36  #

      500,000        523,010  

(Reid Traditional Schools Projects) 5.00% 7/1/47

      785,000        817,931  

McAllister Academic Village Revenue

      

(Arizona State University Hassayampa Academic Village Project) 5.00% 7/1/31

      1,000,000        1,153,550  

Northern Arizona University

      

5.00% 6/1/36

      475,000        507,271  

 

43

Table of Contents
Schedules of investments

Delaware Tax-Free Arizona Fund

 

 

   

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Education Revenue Bonds (continued)

      

Northern Arizona University

      

5.00% 6/1/41

      1,240,000      $ 1,321,530  

Phoenix Industrial Development Authority

      

(Basis School Projects) 144A 5.00% 7/1/35  #

      1,000,000        1,032,590  

(Choice Academies Project) 5.625% 9/1/42

      1,250,000        1,299,900  

(Eagle College Preparatory Project) Series A 5.00% 7/1/43

      500,000        500,825  

(Great Hearts Academic Project) 5.00% 7/1/46

      1,000,000        1,053,160  

(Rowan University Project) 5.00% 6/1/42

      2,000,000        2,144,040  

Pima County Industrial Development Authority Education Revenue

      

(American Leadership Academy Project)

      

144A 5.00% 6/15/47  #

      100,000        100,986  

144A 5.00% 6/15/52  #

      90,000        90,578  

(Edkey Charter School Project) 6.00% 7/1/48

      1,000,000        944,270  

(Tucson Country Day School Project) 5.00% 6/1/37

      750,000        685,920  

Tucson Industrial Development Authority Lease Revenue

      

(University of Arizona-Marshall Foundation) Series A

5.00% 7/15/27 (AMBAC)

      980,000        981,372  

University of Arizona Board of Regents

      

Series A 5.00% 6/1/38

      1,000,000        1,103,500  

Unrefunded Balance Series A 5.00% 6/1/25

      335,000        369,240  
     

 

 

  
        22,050,101  
     

 

 

  

Electric Revenue Bonds – 2.90%

      

Salt River Project Agricultural Improvement & Power

      

District Electric System Revenue

      

Series A 5.00% 12/1/30

      1,000,000        1,089,660  

Series A 5.00% 12/1/45

      1,000,000        1,130,930  
     

 

 

  
              2,220,590  
     

 

 

  

Healthcare Revenue Bonds – 18.82%

      

Arizona Health Facilities Authority Hospital System Revenue

      

(Banner Health)

      

Series A 5.00% 1/1/43

      1,500,000        1,615,305  

Series A 5.00% 1/1/44

      1,000,000        1,093,550  

(Phoenix Children’s Hospital) Series A 5.00% 2/1/34

      995,000        1,057,277  

(Scottsdale Lincoln Hospital Project) 5.00% 12/1/42

      1,000,000        1,099,830  

Glendale Industrial Development Authority Revenue

      

(Glencroft Retirement Community Project) 5.00% 11/15/36

      270,000        273,605  

Maricopa County Industrial Development Authority Health Facilities Revenue

      

(Banner Health) Series A 4.00% 1/1/41

      1,000,000        1,031,400  

 

44

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Maricopa County Industrial Development Authority Health Facilities Revenue

      

(Catholic Healthcare West) Series A 6.00% 7/1/39

      2,500,000      $ 2,580,425  

Maricopa County Industrial Development Authority Senior Living Facility Revenue

      

(Christian Care Surprise Project) 144A 6.00% 1/1/48  #

      405,000        413,732  

Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Authority

      

(Hospital Auxilio Mutuo Obligated Group Project) Series A 6.00% 7/1/33

      790,000        821,655  

Tempe Industrial Development Authority Revenue

      

(Friendship Village) Series A 6.25% 12/1/42

      1,200,000        1,283,424  

(Mirabella at ASU Project) Series A 144A 6.125% 10/1/52  #

      250,000        275,668  

Yavapai County Industrial Development Authority Hospital Facility

      

(Yavapai Regional Medical Center) Series A 5.25% 8/1/33

      2,000,000        2,190,420  

Yuma Industrial Development Authority Hospital Revenue

      

(Yuma Regional Medical Center)

      

Series A 5.00% 8/1/32

      295,000        329,751  

Series A 5.25% 8/1/32

      300,000        339,744  
     

 

 

  
              14,405,786  
     

 

 

  

Lease Revenue Bonds – 5.13%

      

Arizona Certificates of Participation Department Administration

      

Series A 5.25% 10/1/25 (AGM)

      1,500,000        1,553,055  

Arizona Game & Fish Department & Community Beneficial Interest Certificates

      

(Administration Building Project) 5.00% 7/1/32

      1,000,000        1,002,220  

Arizona Sports & Tourism Authority Senior Revenue

      

(Multipurpose Stadium Facility) Series A 5.00% 7/1/36

      350,000        368,483  

Maricopa County Industrial Development Authority

      

Correctional Contract Revenue

      

(Phoenix West Prison) Series B 5.375% 7/1/22 (ACA)

      1,000,000        1,002,300  
     

 

 

  
        3,926,058  
     

 

 

  

Local General Obligation Bond – 0.35%

      

Pinal County Community College District

      

4.00% 7/1/31

      250,000        265,157  
     

 

 

  
        265,157  
     

 

 

  

Pre-Refunded Bonds – 9.63%

      

Gilbert Public Facilities Municipal Property Revenue

      

5.00% 7/1/25-19  §

      1,250,000        1,284,550  

 

45

Table of Contents
Schedules of investments
Delaware Tax-Free Arizona Fund   

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Pre-Refunded Bonds (continued)

      

Phoenix Civic Improvement Airport Revenue

      

(Junior Lien) Series A 5.25% 7/1/33-20 §

      1,250,000      $         1,329,263  

Phoenix Industrial Development Authority

      

(Great Hearts Academic Project)

      

6.30% 7/1/42-21 §

      500,000        560,010  

6.40% 7/1/47-21 §

      500,000        561,380  

Pinal County Electric District No. 3

      

5.25% 7/1/41-21 §

      750,000        819,570  

University Medical Center Hospital Revenue

      

6.50% 7/1/39-19 §

      2,000,000        2,078,000  

University of Arizona Board of Regents

      

Series A 5.00% 6/1/25-22 §

      665,000        738,788  
     

 

 

  
        7,371,561  
     

 

 

  

Special Tax Revenue Bonds – 6.23%

      

Glendale Municipal Property Excise Tax Revenue

      

(Senior Lien) Series B 5.00% 7/1/33

      570,000        629,497  

Glendale Transportation Excise Tax Revenue

      

5.00% 7/1/30 (AGM)

      1,000,000        1,143,070  

Guam Government Business Privilege Tax Revenue

      

Series A 5.125% 1/1/42

      545,000        572,174  

Series A 5.25% 1/1/36

      705,000        746,292  

Mesa Excise Tax Revenue

      

5.00% 7/1/32

      1,000,000        1,093,620  

Regional Public Transportation Authority

      

(Maricopa County Public Transportation) 5.25% 7/1/24

      500,000        582,895  
     

 

 

  
        4,767,548  
     

 

 

  

Transportation Revenue Bonds – 8.43%

      

Arizona Department of Transportation State Highway Fund Revenue

      

5.00% 7/1/32

      1,500,000        1,705,440  

5.00% 7/1/35

      500,000        575,260  

Phoenix Civic Improvement Airport Revenue

      

Series B 5.00% 7/1/37

      1,000,000        1,145,630  

(Junior Lien) Series A 5.00% 7/1/45

      1,000,000        1,109,490  

(Senior Lien) 5.00% 7/1/32 (AMT)

      1,750,000        1,920,817  
     

 

 

  
        6,456,637  
     

 

 

  

Water & Sewer Revenue Bonds – 7.03%

      

Arizona Water Infrastructure Finance Authority

      

(Water Quality Revenue) Series A 5.00% 10/1/26

      1,000,000        1,156,480  

Central Arizona Water Conservation District

      

(Central Arizona Project) 5.00% 1/1/31

      600,000        691,110  

 

46

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Water & Sewer Revenue Bonds (continued)

      

Guam Government Waterworks Authority Revenue

      

5.00% 7/1/37

      250,000      $ 276,840  

Mesa Utility System Revenue

      

4.00% 7/1/31

      850,000        910,681  

Phoenix Civic Improvement Corporation

      

(Junior Lien)

      

5.00% 7/1/27

      1,000,000        1,178,140  

5.00% 7/1/31

      1,000,000        1,165,770  
     

 

 

  
        5,379,021  
     

 

 

  

Total Municipal Bonds (cost $72,592,697)

               75,084,310  
     

 

 

  
     

 

  

 

Short-Term Investment – 0.39%

      

 

  

Variable Rate Demand Note – 0.39%¤

      

Arizona Health Facilities Authority (Banner Health) Series B

      

1.45% 1/1/46 (LOC - BK TOKYO-MITSUBISHI UFJ)

      300,000        300,000  
     

 

 

  

Total Short-Term Investment (cost $300,000)

      

 

 

 

300,000

 

 

     

 

 

  

Total Value of Securities – 98.48%
(cost $72,892,697)

       $ 75,384,310  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $3,208,014, which represents 4.19% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

●

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at Aug. 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on

 

47

Table of Contents

Schedules of investments

Delaware Tax-Free Arizona Fund

 

 

  current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

Summary of abbreviations:

ACA – Insured by American Capital Access

AGM – Insured by Assured Guaranty Municipal Corporation

AMBAC – Insured by AMBAC Assurance Corporation

AMT – Subject to Alternative Minimum Tax

LOC – Letter of Credit

See accompanying notes, which are an integral part of the financial statements.

 

48

Table of Contents
Schedules of investments
Delaware Tax-Free California Fund    August 31, 2018

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds – 99.70%

 

 

  

Corporate Revenue Bonds – 5.81%

      

Chula Vista Industrial Development Revenue

      

(San Diego Gas & Electric) Series D 5.875% 1/1/34

      1,000,000      $ 1,030,120  

Golden State Tobacco Securitization Settlement Revenue (Asset-Backed)

      

Series A-1 5.00% 6/1/29

      1,000,000        1,148,550  

Series A-1 5.00% 6/1/47

      1,000,000        1,028,050  

Series A-1 5.25% 6/1/47

      1,500,000        1,564,950  

(Capital Appreciation Asset-Backed) Subordinate Series B 1.548% 6/1/47  ^

      1,615,000        286,711  

M-S-R Energy Authority Revenue

      

Series B 6.50% 11/1/39

      500,000        702,295  
     

 

 

  
                  5,760,676  
     

 

 

  

Education Revenue Bonds – 19.24%

      

California Educational Facilities Authority

      

(Loma Linda University) Series A 5.00% 4/1/47

      1,000,000        1,118,880  

California Municipal Finance Authority

      

(Bella Mente Montessori Academy Project) Series A 144A 5.00% 6/1/48  #

      500,000        527,580  

(Biola University) 5.00% 10/1/39

      1,000,000        1,130,650  

(California Baptist University) Series A 144A 5.375% 11/1/40  #

      1,000,000        1,117,060  

(Creative Center of Los Altos Project – Pinewood School & Oakwood School) Series B 144A 4.50% 11/1/46  #

      500,000        500,990  

(Julian Charter School Project) Series A 144A 5.625% 3/1/45  #

      500,000        504,180  

(Palmdale Aerospace Academy Project) Series A 144A 5.00% 7/1/46  #

      500,000        512,985  

(Southwestern Law School) 6.50% 11/1/41

      1,140,000        1,274,908  

California Public Finance Authority University Housing Revenue

      

(NCCD – Claremont Properties LLC – Claremont Colleges Project) Series A 144A 5.00% 7/1/32  #

      500,000        531,845  

California School Finance Authority

      

(Aspire Public Schools – Obligated Group) Series A 144A 5.00% 8/1/45  #

      715,000        763,527  

(Encore Education Obligated Group) Series A 144A 5.00% 6/1/42  #

      500,000        452,915  

(Escuela Popular Project) 144A 6.50% 7/1/50  #

      250,000        250,967  

(Green Dot Public Schools Project) Series A 144A 5.00% 8/1/35  #

      1,000,000        1,074,770  

(Grimmway Schools – Obligated Group) Series A 144A 5.00% 7/1/36  #

      500,000        514,970  

 

49

Table of Contents

Schedules of investments

Delaware Tax-Free California Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Education Revenue Bonds (continued)

      

California School Finance Authority

      

(ICEF - View Park Elementary & Middle Schools) Series A 5.625% 10/1/34

      575,000      $ 609,017  

(KIPP LA Projects) Series A 5.125% 7/1/44

      1,000,000        1,083,780  

(Partnerships to Uplift Communities Valley Project) Series A 144A 6.75% 8/1/44  #

      1,000,000        1,075,570  

California State University Systemwide Revenue Series A 5.00% 11/1/47

      1,000,000        1,150,610  

California Statewide Communities Development Authority Charter School Revenue

      

(Green Dot Public Schools - Animo Inglewood Charter High School Project)

Series A 7.25% 8/1/41

      800,000        892,952  

California Statewide Communities Development Authority Revenue

      

(California Baptist University) Series A 6.125% 11/1/33

      750,000        866,573  

(Culinary Institute of America Project) Series B 5.00% 7/1/46

      425,000        464,925  

California Statewide Communities Development Authority Student Housing Revenue

      

(University of California Irvine East Campus Apartments)

      

5.00% 5/15/24

      40,000        45,412  

5.375% 5/15/38

      1,000,000        1,061,520  

Mt. San Antonio Community College District Convertible

      

Capital Appreciation Election 2008

      

Series A 0.00% 8/1/28  ~

      1,000,000        971,030  

University of California General Revenue

      

Series AZ 5.25% 5/15/58

      490,000        576,260  
     

 

 

  
        19,073,876  
     

 

 

  

Electric Revenue Bond – 0.58%

      

Imperial Irrigation District Electric System Revenue

      

Series C 5.00% 11/1/36

      500,000        573,080  
     

 

 

  
                  573,080  
     

 

 

  

Healthcare Revenue Bonds – 21.37%

      

Abag Finance Authority for Nonprofit Corporations

      

(Episcopal Senior Communities) 6.125% 7/1/41

      850,000        926,381  

(Sharp HealthCare) Series A 5.00% 8/1/28

      250,000        273,185  

California Health Facilities Financing Authority Revenue

      

(Cedars-Sinai Medical Center) Series B 4.00% 8/15/36

      1,000,000        1,048,550  

(Children’s Hospital Los Angeles)

      

Series A 5.00% 11/15/34

      500,000        536,260  

Series A 5.00% 8/15/47

      500,000        557,160  

(Dignity Health) Series E 5.625% 7/1/25

      1,000,000        1,030,220  

 

50

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

California Health Facilities Financing Authority Revenue

      

(Kaiser Permanente) Subordinate Series A-2 4.00% 11/1/44

      1,005,000      $ 1,036,868  

(Lucile Salter Packard Children’s Hospital at Stanford)

      

Series A 5.00% 8/15/33

      1,000,000        1,151,870  

Series A 5.00% 11/15/56

      1,000,000        1,128,750  

(St. Joseph Health System) Series A 5.75% 7/1/39

      1,000,000        1,034,070  

(Sutter Health) Series D 5.25% 8/15/31

      1,000,000        1,093,970  

California Municipal Finance Authority Revenue

      

(Community Medical Centers)

      

Series A 5.00% 2/1/42

      750,000        830,707  

Series A 5.00% 2/1/47

      250,000        275,945  

(Northbay Healthcare Group) Series A 5.25% 11/1/47

      500,000        544,190  

California Statewide Communities Development Authority Revenue

      

(Adventist Health System/West) Series A 4.00% 3/1/48

      1,000,000        1,021,270  

(BE.Group) 144A 7.25% 11/15/41  #

      500,000        528,970  

(Covenant Retirement Communities) Series C 5.625% 12/1/36

      1,000,000        1,128,920  

(Episcopal Communities & Services) 5.00% 5/15/32

      600,000        645,126  

(Huntington Memorial Hospital) 4.00% 7/1/48

      500,000        512,240  

(Loma Linda University Medical Center)

      

Series A 144A 5.25% 12/1/48  #

      100,000        110,334  

Series A 144A 5.25% 12/1/56  #

      725,000        782,761  

Series A 144A 5.50% 12/1/58  #

      400,000        441,524  

(Marin General Hospital - Green Bonds) Series A 4.00% 8/1/45

      500,000        508,230  

(Rady Children’s Hospital - San Diego) Series B 5.00% 8/15/28

      600,000        726,636  

(Redlands Community Hospital) 5.00% 10/1/46

      1,000,000        1,097,290  

La Verne

      

(Brethren Hillcrest Homes) 5.00% 5/15/36

      750,000        786,173  

Palomar Health

      

5.00% 11/1/47 (AGM)

      500,000        561,630  

San Buenaventura

      

(Community Memorial Health Systems) 7.50% 12/1/41

      785,000        871,656  
     

 

 

  
              21,190,886  
     

 

 

  

Housing Revenue Bonds – 4.21%

      

California Municipal Finance Authority Mobile Home Park Revenue

      

(Caritas Projects)

      

Series A 4.00% 8/15/42

      1,270,000        1,281,405  

Series A 5.50% 8/15/47

      750,000        807,397  

 

51

Table of Contents

Schedules of investments

Delaware Tax-Free California Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Housing Revenue Bonds (continued)

      

Independent Cities Finance Authority Mobile Home Park Revenue

      

(Pillar Ridge) Series A 5.25% 5/15/44

      1,000,000      $ 1,085,820  

Santa Clara County Multifamily Housing Authority Revenue

      

(RiverTown Apartments Project) Series A 5.85% 8/1/31 (AMT)

      1,000,000        1,000,850  
     

 

 

  
        4,175,472  
     

 

 

  

Lease Revenue Bonds – 10.70%

      

Abag Finance Authority for Nonprofit Corporations

      

(Jackson Laboratory) 5.00% 7/1/37

      1,000,000        1,084,090  

California Infrastructure & Economic Development Bank

      

(Academy of Motion Picture Arts & Sciences Obligated Group) Series A 5.00% 11/1/41

      1,000,000        1,114,560  

(Infrastructure State Revolving Fund) Series A 5.00% 10/1/29

      1,000,000        1,178,860  

California Municipal Finance Authority

      

(Goodwill Industry of Sacramento Valley & Northern Nevada Project) 5.00% 1/1/35

      635,000        625,215  

California State Public Works Board Lease Revenue

      

(Department of Corrections and Rehabilitation) Series C 5.00% 10/1/26

      1,000,000        1,097,420  

California Statewide Communities Development Authority Revenue

      

(Lancer Plaza Project) 5.625% 11/1/33

      1,000,000        1,121,430  

Golden State Tobacco Securitization Settlement Revenue

      

(Enhanced Asset-Backed) Series A 5.00% 6/1/29

      1,000,000        1,112,920  

San Diego County

      

(Sanford Burnham Prebys Medical Discovery Institute)

      

Series A 5.00% 11/1/28

      500,000        571,560  

Series A 5.00% 11/1/30

      475,000        539,353  

San Jose Financing Authority Lease Revenue

      

(Civic Center Project) Series A 5.00% 6/1/33

      1,000,000        1,117,670  

San Mateo Joint Powers Financing Authority Lease Revenue

      

(Capital Projects) Series A 5.25% 7/15/26

      1,000,000        1,047,270  
     

 

 

  
                10,610,348  
     

 

 

  

Local General Obligation Bonds – 2.94%

      

Anaheim School District Capital Appreciation Election 2002

      

4.58% 8/1/25 (NATL)  ^

      1,000,000        823,610  

Marin Healthcare District Election 2013

      

Series A 4.00% 8/1/47

      1,000,000        1,043,400  

 

52

Table of Contents

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Local General Obligation Bonds (continued)

      

West Contra Costa Unified School District 2012 Election

      

Series C 4.00% 8/1/41

      1,000,000      $ 1,042,890  
     

 

 

  
                2,909,900  
     

 

 

  

Pre-Refunded Bonds – 10.05%

      

Abag Finance Authority for Nonprofit Corporations

      

(Sharp HealthCare) Series B 6.25% 8/1/39-19 §

      1,000,000        1,043,660  

Anaheim Public Financing Authority Revenue

      

(Anaheim Electric System Distribution Facilities) Series A 5.00% 10/1/25-21 §

      800,000        869,744  

California

      

(Various Purpose) 6.00% 4/1/38-19 §

      185,000        189,939  

California Department of Water Resources

      

(Central Valley Project) Unrefunded Series AG 5.00% 12/1/28-19 §

      75,000        78,293  

California Health Facilities Financing Authority Revenue

      

(Dignity Health) Series A 6.00% 7/1/39-19 §

      855,000        886,592  

California Municipal Finance Authority Mobile Home Park Revenue

      

(Caritas Projects) Series A 6.40% 8/15/45-20 §

      950,000        1,026,494  

Imperial Irrigation District Electric System Revenue

      

Series B 5.00% 11/1/36-20 §

      250,000        268,597  

Lancaster Redevelopment Agency

      

(Combined Redevelopment Project Areas) 6.875% 8/1/39-19 §

      285,000        298,774  

Unrefunded 6.875% 8/1/39-19 §

      215,000        225,391  

Pittsburg Unified School District Financing Authority Revenue

      

(Pittsburg Unified School District Bond Program) 5.50% 9/1/46-21 (AGM) §

      800,000        890,952  

Rancho Santa Fe Community Services District Financing Authority Revenue

      

(Superior Lien Bonds) Series A 5.75% 9/1/30-21 §

      800,000        894,280  

Riverside County Redevelopment Agency Tax Allocation Housing

      

Series A 6.00% 10/1/39-20 §

      1,000,000        1,091,890  

San Diego Public Facilities Financing Authority Lease Revenue

      

(Master Refunding Project) Series A 5.25% 3/1/40-20 §

      1,000,000        1,073,620  

San Francisco City & County Public Utilities Commission Water Revenue

      

(Water System Improvement Program) Subordinate Series A 5.00% 11/1/32-21 §

      1,015,000        1,120,763  
     

 

 

  
        9,958,989  
     

 

 

  

 

53

Table of Contents

Schedules of investments

Delaware Tax-Free California Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Resource Recovery Revenue Bond – 1.05%

      

South Bayside Waste Management Authority Revenue

      

(Shoreway Environmental Center) Series A 6.00% 9/1/36

      1,000,000      $         1,040,280  
     

 

 

  
        1,040,280  
     

 

 

  

Special Tax Revenue Bonds – 1.11%

      

San Francisco City & County Redevelopment Successor Agency

      

(Mission Bay South Redevelopment Project) Series B 5.00% 8/1/43 (NATL)

      500,000        564,275  

Yucaipa Special Tax Community Facilities District No. 98-1

      

(Chapman Heights) 5.375% 9/1/30

      500,000        533,555  
     

 

 

  
        1,097,830  
     

 

 

  

State General Obligation Bonds – 8.50%

      

California

      

(Various Purpose)

      

5.00% 9/1/26

      500,000        601,645  

5.00% 8/1/27

      750,000        894,405  

5.00% 8/1/46

      1,000,000        1,142,830  

5.00% 11/1/47

      1,000,000        1,154,710  

5.25% 3/1/30

      1,000,000        1,053,030  

5.25% 4/1/35

      1,000,000        1,108,570  

5.25% 11/1/40

      1,000,000        1,073,260  

6.00% 3/1/33

      1,000,000        1,065,090  

Unrefunded 6.00% 4/1/38

      330,000        338,174  
     

 

 

  
        8,431,714  
     

 

 

  

Transportation Revenue Bonds – 11.96%

      

Alameda Corridor Transportation Authority

      

(2nd Subordinate Lien) Series B 5.00% 10/1/37

      500,000        558,665  

California Municipal Finance Authority Senior Lien

      

(LINXS APM Project) Series A 5.00% 12/31/47 (AMT)

      1,000,000        1,114,890  

Long Beach Marina Revenue

      

(Alamitos Bay Marina Project) 5.00% 5/15/45

      500,000        548,770  

Los Angeles Department of Airports

      

(Los Angeles International Airport)

      

Senior Series D 5.00% 5/15/36 (AMT)

      1,000,000        1,125,610  

Subordinate Series B 5.00% 5/15/33

      1,000,000        1,055,210  

Riverside County Transportation Commission Senior Lien

      

(Current Interest Obligations) Series A 5.75% 6/1/44

      500,000        554,000  

Sacramento County Airport System Revenue

      

Series C 5.00% 7/1/39 (AMT)

      1,000,000        1,141,580  

Subordinate Series B 5.00% 7/1/41

      500,000        566,630  

 

54

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Transportation Revenue Bonds (continued)

      

San Diego Association of Governments South Bay Expressway Revenue

      

(1st Senior Lien) Series A 5.00% 7/1/42

      1,000,000      $ 1,148,130  

San Diego County Regional Airport Authority Revenue

      

Subordinate Series A 5.00% 7/1/47

      375,000        426,510  

San Diego Redevelopment Agency

      

(Centre City Redevelopment Project) Series A 6.40% 9/1/25

      870,000        873,228  

San Francisco City & County Airports Commission

      

(San Francisco International Airport) Second Series B 5.00% 5/1/46 (AMT)

      1,000,000        1,107,720  

San Francisco Municipal Transportation Agency Revenue

      

Series B 5.00% 3/1/37

      1,500,000        1,636,080  
     

 

 

  
        11,857,023  
     

 

 

  

Water & Sewer Revenue Bonds – 2.18%

      

San Diego Public Facilities Financing Authority Water Revenue

      

Subordinate Series A 5.00% 8/1/29

      1,000,000        1,116,140  

San Francisco City & County Public Utilities Commission Water Revenue

      

Subordinate Series A 4.00% 11/1/39

      1,000,000        1,048,200  
     

 

 

  
        2,164,340  
     

 

 

  

Total Municipal Bonds (cost $94,779,545)

               98,844,414  
     

 

 

  

 

 

  

Short-Term Investment – 0.33%

      

 

  

Variable Rate Demand Note – 0.33%¤

      

California Municipal Finance Authority

      

(Chevron USA – Recovery Zone Project)

      

Series A 1.29% 11/1/35

      325,000        325,000  
     

 

 

  

Total Short-Term Investment (cost $325,000)

         325,000  
     

 

 

  

Total Value of Securities – 100.03%
    (cost $95,104,545)

       $     99,169,414  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $9,690,948, which represents 9.78% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

55

Table of Contents

Schedules of investments

Delaware Tax-Free California Fund

 

 

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

^

Zero coupon security. The rate shown is the effective yield at the time of purchase.

 

~

Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Stated rate in effect at Aug. 31, 2018.

Summary of abbreviations:

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

ICEF – Inner City Education Foundation

NATL – Insured by National Public Finance Guarantee Corporation

See accompanying notes, which are an integral part of the financial statements.

 

56

Table of Contents
Schedules of investments
Delaware Tax-Free Colorado Fund    August 31, 2018

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds – 98.84%

      

 

  

Corporate Revenue Bonds – 1.41%

      

Denver City & County

      

(United Airlines Project) 5.00% 10/1/32 (AMT)

      415,000      $ 444,888  

Public Authority for Colorado Energy Natural Gas Revenue

      

Series 2008 6.50% 11/15/38

      1,750,000        2,408,857  
     

 

 

  
                2,853,745  
     

 

 

  

Education Revenue Bonds – 11.15%

      

Colorado Educational & Cultural Facilities Authority Revenue

      

144A 5.00% 7/1/36  #

      500,000        505,435  

5.00% 11/1/44

      890,000        894,156  

144A 5.25% 7/1/46  #

      1,350,000        1,362,987  

(Academy Charter School Project) 5.50% 5/1/36 (SGI)

      2,280,000        2,284,606  

7.45% 8/1/48

      1,000,000        1,143,630  

(Alexander Dawson School-Nevada Project) 5.00% 5/15/29

      1,490,000        1,698,823  

(Atlas Preparatory Charter School) 144A 5.25% 4/1/45  #

      1,300,000        1,281,618  

(Charter School Project) 5.00% 7/15/37

      1,150,000        1,231,052  

(Johnson & Wales University) Series A 5.25% 4/1/37

      1,790,000        1,948,057  

(Liberty Common Charter School Project) Series A 5.00% 1/15/39

      1,000,000        1,067,160  

(Littleton Preparatory Charter School Project)

      

5.00% 12/1/33

      450,000        458,739  

5.00% 12/1/42

      540,000        541,183  

(Loveland Classical Schools Project)

      

144A 5.00% 7/1/36  #

      625,000        640,400  

144A 5.00% 7/1/46  #

      500,000        507,730  

(Pinnacle Charter School Project) 5.00% 6/1/26

      700,000        767,221  

(Skyview Charter School)

      

144A 5.375% 7/1/44  #

      860,000        883,039  

144A 5.50% 7/1/49  #

      870,000        896,544  

(University of Denver Project)

      

Series A 4.00% 3/1/35

      400,000        421,188  

Series A 4.00% 3/1/36

      550,000        576,637  

(University of Lab Charter School) 5.00% 12/15/45

      500,000        523,870  

(Vail Mountain School Project) 4.00% 5/1/46

      80,000        78,276  

(Windsor Charter Academy Project) 144A 5.00% 9/1/46  #

      890,000        891,460  

(Woodrow Wilson Charter School Project)

      

5.25% 12/1/34 (SGI)

      1,960,000        1,962,195  
     

 

 

  
        22,566,006  
     

 

 

  

 

57

Table of Contents

Schedules of investments

Delaware Tax-Free Colorado Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Electric Revenue Bonds – 3.74%

      

Colorado Springs Utilities System Revenue

      

Series A 5.00% 11/15/40

      1,500,000      $ 1,700,040  

Series A 5.00% 11/15/45

      750,000        845,865  

Fort Collins City Electric Utility Enterprise Revenue

      

Series A 5.00% 12/1/42

      1,000,000        1,151,350  

Platte River Power Authority Revenue

      

Series JJ 5.00% 6/1/27

      3,300,000        3,872,022  
     

 

 

  
                  7,569,277  
     

 

 

  

Healthcare Revenue Bonds – 24.16%

      

Colorado Health Facilities Authority Revenue

      

(American Baptist)

      

7.625% 8/1/33

      150,000        169,121  

8.00% 8/1/43

      1,000,000        1,141,520  

(Catholic Health Initiatives)

      

Series A 5.00% 7/1/39

      1,540,000        1,565,148  

Series A 5.00% 2/1/41

      2,250,000        2,324,520  

Series A 5.25% 2/1/33

      1,000,000        1,048,020  

Series A 5.25% 1/1/45

      3,000,000        3,210,000  

Series D 6.25% 10/1/33

      2,000,000        2,006,960  

(Christian Living Community Project)

      

5.25% 1/1/37

      1,500,000        1,547,805  

6.375% 1/1/41

      1,000,000        1,073,130  

(Covenant Retirement Communities)

      

Series A 5.00% 12/1/33

      4,000,000        4,268,360  

Series A 5.00% 12/1/35

      1,000,000        1,081,810  

(Craig Hospital Project) 5.00% 12/1/32

      3,500,000        3,798,305  

(Evangelical Lutheran)

      

5.00% 12/1/42

      2,500,000        2,639,200  

5.625% 6/1/43

      1,150,000        1,262,113  

(Frasier Meadows Retirement Community Project)

      

Series A 5.25% 5/15/37

      485,000        529,867  

Series B 5.00% 5/15/48

      660,000        694,881  

(Mental Health Center Denver Project)

      

Series A 5.75% 2/1/44

      2,000,000        2,213,580  

(National Jewish Health Project) 5.00% 1/1/27

      300,000        308,007  

(NCMC Project) 4.00% 5/15/32

      2,000,000        2,094,380  

(SCL Health Systems) Series A 5.00% 1/1/44

      3,050,000        3,313,459  

(Sisters of Charity of Leavenworth Health System)

      

Series B 5.25% 1/1/25

      2,500,000        2,609,450  

(Sunny Vista Living Center)

      

Series A 144A 6.25% 12/1/50  #

      935,000        990,614  

(Vail Valley Medical Center Project) 5.00% 1/15/35

      1,000,000        1,117,880  

 

58

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Colorado Health Facilities Authority Revenue

      

(Valley View Hospital Association Project) Series A 4.00% 5/15/35

      685,000      $ 700,638  

Denver Health & Hospital Authority Health Care Revenue

      

(Recovery Zone Facilities) 5.625% 12/1/40

      2,500,000        2,608,350  

Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Authority

      

(Auxilio Mutuo) Series A 6.00% 7/1/33

      1,945,000        2,022,936  

University of Colorado Hospital Authority Revenue

      

Series A 6.00% 11/15/29

      2,460,000        2,576,383  
     

 

 

  
                48,916,437  
     

 

 

  

Housing Revenue Bonds – 0.09%

      

Colorado Housing & Finance Authority

      

(Single Family Program Class 1)

      

Series AA 4.50% 5/1/23 (GNMA)

      95,000        95,423  

Series AA 4.50% 11/1/23 (GNMA)

      95,000        95,286  
     

 

 

  
        190,709  
     

 

 

  

Lease Revenue Bonds – 3.35%

      

Aurora Certificates of Participation

      

Series A 5.00% 12/1/30

      2,370,000        2,457,690  

Colorado Department of Transportation Certificates of Participation

      

5.00% 6/15/34

      660,000        748,486  

5.00% 6/15/36

      1,055,000        1,186,337  

Denver Health & Hospital Authority

      

4.00% 12/1/38

      750,000        747,900  

Regional Transportation District Certificates of Participation

      

Series A 5.00% 6/1/33

      1,500,000        1,647,540  
     

 

 

  
        6,787,953  
     

 

 

  

Local General Obligation Bonds – 14.02%

      

Adams & Weld Counties School District No. 27J Brighton

      

4.00% 12/1/30

      300,000        321,804  

4.00% 12/1/31

      1,000,000        1,069,300  

5.00% 12/1/32

      500,000        586,315  

Arapahoe County School District No. 1 Englewood

      

4.00% 12/1/30

      1,500,000        1,603,950  

Beacon Point Metropolitan District

      

5.00% 12/1/30 (AGM)

      1,130,000        1,283,104  

Central Colorado Water Conservancy District

      

(Limited Tax) 5.00% 12/1/33

      1,000,000        1,110,590  

 

59

Table of Contents

Schedules of investments

Delaware Tax-Free Colorado Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Local General Obligation Bonds (continued)

      

Commerce City Northern Infrastructure General Improvement District

      

5.00% 12/1/32 (AGM)

      2,125,000      $ 2,343,641  

Denver City & County

      

(Better Denver & Zoo) Series A 5.00% 8/1/25

      3,215,000        3,309,007  

Denver International Business Center Metropolitan District No. 1

      

5.00% 12/1/30

      350,000        358,383  

Douglas County School District No. 1

      

(Douglas & Elbert Counties) 5.00% 12/15/22

      1,175,000        1,289,398  

Eaton Area Park & Recreation District

      

5.25% 12/1/34

      360,000        378,796  

5.50% 12/1/38

      455,000        483,160  

Garfield Pitkin & Eagle Counties School District No. RE-1 Roaring Fork

      

Series 1 4.00% 12/15/31

      1,300,000        1,386,138  

Grand River Hospital District

      

5.25% 12/1/35 (AGM)

      1,000,000        1,155,040  

5.25% 12/1/37 (AGM)

      325,000        373,269  

Jefferson County School District No. R-1

      

5.25% 12/15/24

      1,250,000        1,469,963  

Leyden Rock Metropolitan District No 10

      

Series A 5.00% 12/1/45

      1,000,000        1,026,320  

Rangely Hospital District

      

6.00% 11/1/26

      2,250,000        2,459,497  

Sierra Ridge Metropolitan District No. 2

      

Series A 5.50% 12/1/46

      1,000,000        1,023,740  

Weld County Reorganized School District No. RE-8

      

5.00% 12/1/31

      990,000        1,150,796  

5.00% 12/1/32

      660,000        765,620  

Weld County School District No. RE-1

      

5.00% 12/15/31 (AGM)

      1,000,000        1,151,130  

Weld County School District No. RE-3J

      

5.00% 12/15/34 (BAM)

      2,000,000        2,291,180  
     

 

 

  
                28,390,141  
     

 

 

  

Pre-Refunded Bonds – 7.21%

      

Adams & Arapahoe Counties Joint School District No. 28J

      

(Aurora) 6.00% 12/1/28-18 §

      2,500,000        2,526,700  

Colorado Building Excellent Schools Today Certificates of Participation

      

Series G 5.00% 3/15/32-21 §

      2,000,000        2,156,940  

 

60

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Pre-Refunded Bonds (continued)

      

Colorado Health Facilities Authority Revenue

      

(Total Long-Term Care)

      

Series A 6.00% 11/15/30-20 §

      2,365,000      $ 2,573,971  

Series A 6.25% 11/15/40-20 §

      750,000        820,283  

Platte River Power Authority Revenue

      

Series HH 5.00% 6/1/27-19 §

      1,795,000        1,838,672  

Series HH 5.00% 6/1/29-19 §

      2,355,000        2,412,297  

University of Colorado

      

Series A 5.00% 6/1/33-23 §

      2,000,000        2,263,160  
     

 

 

  
              14,592,023  
     

 

 

  

Special Tax Revenue Bonds – 19.44%

      

Broomfield Colorado Sales & USE Tax Revenue

      

5.00% 12/1/33

      1,000,000        1,165,560  

Canyons Metropolitan District No. 5

      

Series A 6.125% 12/1/47

      500,000        510,330  

Central Platte Valley Metropolitan District

      

5.00% 12/1/43

      725,000        768,406  

Commerce City

      

5.00% 8/1/44 (AGM)

      1,500,000        1,643,355  

Denver City & County

      

Series A 5.00% 8/1/26

      500,000        588,760  

Denver Convention Center Hotel Authority Revenue

      

5.00% 12/1/40

      2,660,000        2,897,591  

Denver International Business Center

      

Metropolitan District No. 1

      

5.375% 12/1/35

      1,750,000        1,797,145  

Denver Urban Renewal Authority

      

(Stapleton) Senior Subordinated Series B 5.00% 12/1/25

      1,250,000        1,457,513  

Fountain Urban Renewal Authority Tax Increment Revenue

      

(Academy Highlands Project) Series A 5.50% 11/1/44

      2,525,000        2,592,342  

Guam Government Business Privilege Tax Revenue

      

Series A 5.125% 1/1/42

      1,250,000        1,312,325  

Series A 5.25% 1/1/36

      1,675,000        1,773,105  

Lincoln Park Metropolitan District

      

5.00% 12/1/46 (AGM)

      1,000,000        1,119,160  

Plaza Metropolitan District No. 1

      

144A 5.00% 12/1/40 #

      1,265,000        1,304,835  

Prairie Center Metropolitan District No. 3

      

Series A 144A 5.00% 12/15/41 #

      1,000,000        1,023,750  

Regional Transportation District

      

(Fastracks Project)

      

 

61

Table of Contents

Schedules of investments

Delaware Tax-Free Colorado Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Special Tax Revenue Bonds (continued)

      

Regional Transportation District

      

Series A 5.00% 11/1/30

      670,000      $ 784,778  

Series A 5.00% 11/1/31

      1,495,000        1,745,143  

Series A 5.00% 11/1/36

      2,750,000        3,160,190  

Series B 5.00% 11/1/33

      1,865,000        2,189,342  

Certificates of Participation

      

Series A 5.375% 6/1/31

      1,540,000        1,625,085  

Regional Transportation District Sales Revenue

      

(Denver Transit Partners)

      

6.00% 1/15/34

      1,450,000        1,516,294  

6.00% 1/15/41

      2,400,000        2,507,088  

Solaris Metropolitan District No. 3

      

(Limited Tax Convertible) Series A 5.00% 12/1/46

      500,000        515,080  

Southlands Metropolitan District No. 1

      

Series A-1 5.00% 12/1/37

      300,000        322,485  

Series A-1 5.00% 12/1/47

      700,000        745,787  

Sterling Ranch Community Authority Board

      

Series A 5.75% 12/1/45

      975,000        1,001,929  

Tallyns Reach Metropolitan District No. 3

      

(Limited Tax Convertible) 5.125% 11/1/38

      740,000        780,737  

Thornton Development Authority

      

(East 144th Avenue & I-25 Project)

      

Series B 5.00% 12/1/35

      485,000        543,311  

Series B 5.00% 12/1/36

      810,000        905,426  

Virgin Islands Public Finance Authority

      

(Matching Fund Loan Senior Lien)

      

5.00% 10/1/29 (AGM)

      1,000,000        1,048,300  
     

 

 

  
              39,345,152  
     

 

 

  

Transportation Revenue Bonds – 12.94%

      

Colorado High Performance Transportation Enterprise Revenue

      

(C-470 Express Lanes) 5.00% 12/31/56

      2,000,000        2,156,960  

(Senior U.S. 36 & I-25 Managed Lanes)

      

5.75% 1/1/44 (AMT)

      2,140,000        2,346,767  

Denver City & County Airport System Revenue

      

Series A 4.00% 12/1/48 (AMT)

      1,000,000        1,002,450  

Series A 5.00% 11/15/30 (AMT)

      1,750,000        2,017,190  

Series A 5.00% 12/1/48 (AMT)

      2,000,000        2,236,100  

Series A 5.25% 11/15/36

      2,500,000        2,598,675  

Series B 5.00% 11/15/30

      1,000,000        1,101,440  

Series B 5.00% 11/15/32

      1,000,000        1,099,770  

Series B 5.00% 11/15/37

      8,000,000        8,764,720  

 

62

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Transportation Revenue Bonds (continued)

      

E-470 Public Highway Authority

      

Series C 5.25% 9/1/25

      690,000      $ 734,484  

Series C 5.375% 9/1/26

      2,000,000        2,131,780  
     

 

 

  
              26,190,336  
     

 

 

  

Water & Sewer Revenue Bonds – 1.33%

      

Dominion Water & Sanitation District

      

6.00% 12/1/46

      750,000        796,013  

Guam Government Waterworks Authority Water & Wastewater System Revenue

      

5.00% 7/1/37

      675,000        747,468  

Parker Water & Sanitation District

      

5.00% 11/1/42

      1,000,000        1,146,970  
     

 

 

  
        2,690,451  
     

 

 

  

Total Municipal Bonds (cost $192,617,496)

         200,092,230  
     

 

 

  
    

 

Number of shares

         

 

  

 

Short-Term Investments – 0.59%

      

 

  

Money Market Mutual Fund – 0.07%

      

Dreyfus AMT-Free Tax Exempt Cash Management Fund - Institutional Shares (seven-day effective yield 1.40%)

      146,537        146,537  
     

 

 

  
        146,537  
     

 

 

  
     Principal amount°         

Variable Rate Demand Note – 0.52%¤

      

Denver City & County Series A2 1.43% 12/1/29

      

(SPA-JPMorgan Chase Bank N.A.)

      1,050,000        1,050,000  
     

 

 

  
        1,050,000  
     

 

 

  

Total Short-Term Investments (cost $1,196,537)

         1,196,537  
     

 

 

  

Total Value of Securities – 99.43%
(cost $193,814,033)

       $ 201,288,767  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $10,288,412, which represents 5.08% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

63

Table of Contents

Schedules of investments

Delaware Tax-Free Colorado Fund

 

 

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

Summary of abbreviations:

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

BAM – Insured by Build America Mutual Assurance

GNMA – Government National Mortgage Association collateral

N.A. – National Association

SGI – Insured by Syncora Guarantee Inc.

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

64

Table of Contents
Schedules of investments
Delaware Tax-Free Idaho Fund    August 31, 2018

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds – 98.53%

      

 

  

Corporate Revenue Bonds – 3.31%

      

Nez Perce County Pollution Control Revenue

      

(Potlatch Project) 2.75% 10/1/24

      1,250,000      $ 1,247,900  

Power County Industrial Development Revenue

      

(FMC Project) 6.45% 8/1/32 (AMT)

      2,000,000        2,007,300  
     

 

 

  
        3,255,200  
     

 

 

  

Education Revenue Bonds – 16.10%

      

Boise State University Revenue

      

(General Project)

      

Series A 4.00% 4/1/37

      1,250,000        1,270,787  

Series A 5.00% 4/1/42

      1,350,000        1,458,864  

Series A 5.00% 4/1/47

      500,000        564,595  

Series A 5.00% 4/1/48

      750,000        850,605  

Idaho Housing & Finance Association

      

(Compass Public Charter School Project)

      

Series A 144A 6.00% 7/1/39  #

      370,000        395,301  

Series A 144A 6.00% 7/1/49  #

      595,000        629,790  

Series A 144A 6.00% 7/1/54  #

      570,000        601,088  

(Idaho Arts Charter School Project)

      

Series A 5.00% 12/1/38

      1,000,000        1,063,760  

Series A 144A 5.00% 12/1/46  #

      1,000,000        1,044,980  

(North Star Charter School Project)

      

Capital Appreciation Subordinate Series B 144A 4.88% 7/1/49  #^

      2,888,155        383,402  

Series A 6.75% 7/1/48

      529,151        550,095  

(Victory Charter School Project) Series B 5.00% 7/1/39

      1,000,000        1,061,000  

(Xavier Charter School Project) Series A 5.00% 6/1/50

      1,275,000        1,352,686  

University of Idaho

      

Series 2011 5.25% 4/1/41  ●

      1,755,000        1,885,835  

Series A 5.00% 4/1/41

      1,000,000        1,153,620  

Series B 5.00% 4/1/28

      1,000,000        1,046,350  

Series B 5.00% 4/1/32

      500,000        522,780  
     

 

 

  
              15,835,538  
     

 

 

  

Electric Revenue Bonds – 3.36%

      

Boise-Kuna Irrigation District Revenue

      

(Idaho Arrowrock Hydroelectric Project) 5.00% 6/1/34

      2,000,000        2,219,960  

Guam Power Authority Revenue

      

Series A 5.00% 10/1/40

      1,000,000        1,083,340  
     

 

 

  
        3,303,300  
     

 

 

  

Healthcare Revenue Bonds – 12.76%

      

Idaho Health Facilities Authority Revenue

      

(Madison Memorial Hospital Project) 5.00% 9/1/37

      2,350,000        2,497,768  

(St. Luke’s Health System Project)

      

 

65

Table of Contents

Schedules of investments

Delaware Tax-Free Idaho Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Idaho Health Facilities Authority Revenue

      

Series A 5.00% 3/1/47

      1,500,000      $ 1,584,900  

Series A 6.75% 11/1/37

      1,250,000        1,260,100  

(Trinity Health Center Group)

      

Series D 4.50% 12/1/37

      1,385,000        1,454,181  

Series D 5.00% 12/1/32

      1,500,000        1,635,810  

Series D 5.00% 12/1/46

      750,000        841,230  

(Valley Vista Care Corporation)

      

Series A 5.25% 11/15/37

      1,005,000        1,051,923  

Series A 5.25% 11/15/47

      1,130,000        1,164,815  

Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities Financing Authority

      

(Hospital Auxilio Mutuo Obligated Group Project) Series A 6.00% 7/1/33

      1,020,000        1,060,871  
     

 

 

  
              12,551,598  
     

 

 

  

Housing Revenue Bonds – 1.03%

      

Idaho Housing & Finance Association Single Family Mortgage Revenue

      

Series A Class II 4.375% 7/1/32

      635,000        646,385  

Series C Class II 4.95% 7/1/31

      360,000        364,500  
     

 

 

  
        1,010,885  
     

 

 

  

Lease Revenue Bonds – 9.95%

      

Boise Urban Renewal Agency

      

5.00% 12/15/31

      750,000        842,813  

5.00% 12/15/32

      750,000        841,080  

Idaho Fish & Wildlife Foundation

      

5.00% 12/1/41

      200,000        231,178  

Idaho Housing & Finance Association Revenue

      

(Grant & Revenue Anticipation Bonds) Series A 5.00% 7/15/27

      1,500,000        1,766,340  

(TDF Facilities Project-Recovery Zone)

      

Series A 6.50% 2/1/26

      1,370,000        1,508,274  

Series A 7.00% 2/1/36

      1,500,000        1,641,120  

Idaho State Building Authority Revenue

      

Series B 5.00% 9/1/40

      1,250,000        1,365,950  

(Capitol Mall Parking Project)

      

Series A 4.50% 9/1/25

      455,000        503,507  

Series A 4.50% 9/1/26

      485,000        533,578  

Series A 4.50% 9/1/27

      505,000        553,339  
     

 

 

  
        9,787,179  
     

 

 

  

 

66

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Local General Obligation Bonds – 25.76%

      

Ada & Boise Counties Independent School District Boise City

      

5.00% 8/1/33

      1,010,000      $ 1,182,791  

5.00% 8/1/34

      1,500,000        1,751,715  

5.00% 8/1/35

      1,160,000        1,350,878  

5.00% 8/1/36

      500,000        580,645  

Ada & Canyon Counties Joint School District No. 2 Meridian

      

4.50% 7/30/22

      1,500,000        1,573,665  

Ada & Canyon Counties Joint School District No. 3 Kuna

      

(Sales Tax & Credit Enhancement) 5.00% 9/15/35

      1,100,000        1,269,818  

Canyon County School District No. 131 Nampa

      

(School Board Guaranteed)

      

Series B 5.00% 8/15/23

      1,295,000        1,473,749  

Canyon County School District No. 132 Caldwell

      

Series A 5.00% 9/15/22 (AGM)

      1,725,000        1,729,261  

Series A 5.00% 9/15/23 (AGM)

      1,810,000        1,814,471  

Canyon County School District No. 139 Vallivue

      

(School Board Guaranteed)

      

5.00% 9/15/33

      1,000,000        1,121,940  

Series B 5.00% 9/15/24

      1,480,000        1,646,130  

Idaho Bond Bank Authority Revenue

      

Series A 4.00% 9/15/33

      530,000        565,091  

Series A 4.00% 9/15/37

      1,000,000        1,054,700  

Series A 5.00% 9/15/33

      1,125,000        1,227,746  

Series C 5.00% 9/15/42

      500,000        574,730  

Madison County School District No. 321 Rexburg

      

(Sales Tax & Credit Enhancement)

      

Series B 5.00% 8/15/25

      1,080,000        1,261,624  

Series B 5.00% 8/15/26

      710,000        839,412  

Nez Perce County Independent School District No. 1

      

(Sales Tax & Credit Enhancement)

      

Series B 5.00% 9/15/36

      1,500,000        1,720,590  

Series B 5.00% 9/15/37

      1,300,000        1,488,032  

Twin Falls County School District No. 411

      

(School Board Guaranteed) Series A 4.75% 9/15/37

      1,000,000        1,098,150  
     

 

 

  
              25,325,138  
     

 

 

  

Pre-Refunded Bonds – 6.91%

      

Boise State University Revenue

      

(General Project) Series A 5.00% 4/1/39-19 §

      1,000,000        1,019,620  

 

67

Table of Contents

Schedules of investments

Delaware Tax-Free Idaho Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Pre-Refunded Bonds (continued)

      

Idaho Bond Bank Authority Revenue

      

(State Intercept)

      

Series A 5.25% 9/15/26-19 §

      570,000      $ 580,950  

Unrefunded Series A 5.00% 9/15/28-19 §

      890,000        906,171  

Unrefunded Series A 5.25% 9/15/26-19 §

      500,000        509,735  

Idaho Health Facilities Authority Revenue

      

(St. Luke’s Regional Medical Center Project) 5.00% 7/1/35-20 (AGM) §

      2,500,000        2,642,725  

(Trinity Health Center Group) Series B 6.125% 12/1/28-18 §

      1,110,000        1,122,188  

Puerto Rico Sales Tax Financing Revenue First

      

Subordinate

      

Series A 5.50% 8/1/28-19 §

      15,000        15,511  
     

 

 

  
        6,796,900  
     

 

 

  

Special Tax Revenue Bonds – 14.14%

      

Guam Government Business Privilege Tax Revenue

      

Series A 5.125% 1/1/42

      545,000        572,174  

Series A 5.25% 1/1/36

      705,000        746,292  

Series B-1 5.00% 1/1/42

      1,425,000        1,487,329  

Idaho Water Resource Board

      

(Ground Water Rights Mitigation) Series A 5.00% 9/1/32

      3,565,000        3,882,962  

Ketchum Urban Renewal Agency Tax Increment Revenue

      

5.50% 10/15/34

      1,500,000        1,537,095  

Nampa Development Tax Increment Revenue

      

144A 5.00% 9/1/31 #

      1,000,000        1,041,910  

5.90% 3/1/30

      3,000,000        3,066,750  

Virgin Islands Public Finance Authority Revenue

      

(Senior Lien-Matching Fund Loan Note) 5.00% 10/1/29 (AGM)

      1,500,000        1,572,450  
     

 

 

  
        13,906,962  
     

 

 

  

Transportation Revenue Bonds – 4.42%

      

Boise City Airport Revenue

      

(Air Terminal Facilities Project)

      

5.75% 9/1/19 (AGM) (AMT)

      1,000,000        1,038,240  

5.75% 9/1/20 (AGM) (AMT)

      1,000,000        1,072,960  

(Parking Facilities Project) 4.00% 9/1/32

      2,180,000        2,230,576  
     

 

 

  
             4,341,776  
     

 

 

  

Water & Sewer Revenue Bonds – 0.79%

      

Guam Government Waterworks Authority

      

5.00% 7/1/40

      370,000        408,543  

 

68

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Water & Sewer Revenue Bonds (continued)

      

Guam Government Waterworks Authority

      

5.00% 1/1/46

      335,000      $ 365,039  
     

 

 

  
        773,582  
     

 

 

  

Total Municipal Bonds (cost $94,504,301)

             96,888,058  
     

 

 

  
     Number of shares         

 

  

 

Short-Term Investment – 0.88%

      

 

  

Money Market Mutual Fund – 0.88%

      

Dreyfus AMT-Free Tax Exempt Cash Management Fund - Institutional Shares
(seven-day effective yield 1.40%)

      861,413        861,413  
     

 

 

  

Total Short-Term Investment (cost $861,413)

         861,413  
     

 

 

  

Total Value of Securities – 99.41%

      

(cost $95,365,714)

       $ 97,749,471  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $4,096,471, which represents 4.17% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

●

Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at Aug. 31, 2018. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above.

 

^

Zero coupon security. The rate shown is the effective yield at the time of purchase.

Summary of abbreviations:

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

See accompanying notes, which are an integral part of the financial statements.

 

69

Table of Contents
Schedules of investments
Delaware Tax-Free New York Fund    August 31, 2018

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds – 100.48%

      

 

  

Corporate Revenue Bonds – 8.43%

      

Nassau County Tobacco Settlement

      

(Asset-Backed) Series A-3 5.125% 6/1/46

      1,055,000      $ 1,043,743  

New York City Industrial Development Agency

      

(Brooklyn Navy Yard Cogeneration Partners Project) 5.75% 10/1/36 (AMT)

      350,000        353,237  

New York Counties Tobacco Trust VI

      

(Tobacco Settlement Pass Through) Series C 5.00% 6/1/51

      500,000        523,470  

New York Liberty Development Revenue

      

(Second Priority - Bank of America Tower at One Bryant Park Project)

      

Class 2 5.625% 7/15/47

      500,000        525,520  

Class 3 6.375% 7/15/49

      865,000        907,757  

New York Transportation Development Corporation Special Facilities Revenue

      

(Delta Air Lines - LaGuardia Airport Terminals C&D

      

Redevelopment Project) 5.00% 1/1/36 (AMT)

      1,000,000        1,109,150  

Niagara Area Development Revenue

      

(Covanta Energy Project) Series B 144A 4.00% 11/1/24  #

      1,060,000        1,060,572  

Suffolk Tobacco Asset Securitization

      

Series B 5.25% 6/1/37

      700,000        757,085  

TSASC Revenue

      

(Senior) Series A 5.00% 6/1/41

      900,000        971,973  
     

 

 

  
              7,252,507  
     

 

 

  

Education Revenue Bonds – 22.68%

      

Albany Industrial Development Agency Civic Facilities Revenue

      

(Brighter Choice Charter School) Series A 5.00% 4/1/37

      250,000        226,903  

Buffalo & Erie County Industrial Land Development

      

(Buffalo State College Foundation Housing Project)

      

Series A 6.00% 10/1/31

      525,000        578,083  

(Tapestry Charter School Project) Series A 5.00% 8/1/52

      500,000        522,635  

Build NYC Resource

      

(Bronx Charter School for Excellence Project)

      

Series A 5.00% 4/1/33

      500,000        525,380  

Series A 5.50% 4/1/43

      500,000        529,970  

(Inwood Academy for Leadership Charter School Project) Series A 144A 5.50% 5/1/48  #

   

 

500,000

 

   

 

522,040

 

(Manhattan College Project) 5.00% 8/1/47

      500,000        557,755  

 

70

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Education Revenue Bonds (continued)

      

Build NYC Resource

      

(Metropolitan College of New York Project) 5.50% 11/1/44

      1,100,000      $ 1,144,110  

(Metropolitan Lighthouse Charter School Project) Series A 144A 5.00% 6/1/52  #

      250,000        261,693  

(The Packer Collegiate Institute Project) 5.00% 6/1/40

      750,000        825,007  

Dutchess County Local Development

      

(The Culinary Institute of America Project)

      

Series A-1 5.00% 7/1/41

      200,000        219,504  

Series A-1 5.00% 7/1/46

      300,000        328,182  

Hempstead Town Local Development

      

(Hofstra University Project) 5.00% 7/1/42

      500,000        562,540  

Madison County Capital Resource Revenue

      

(Colgate University Project) Series A 5.00% 7/1/28

      400,000        422,540  

Monroe County Industrial Development Revenue

      

(Nazareth College of Rochester Project)

      

Series A 5.00% 10/1/22

      340,000        372,711  

Series A 5.00% 10/1/23

      470,000        522,090  

(St. John Fisher College Project) Series A 5.50% 6/1/39

      300,000        340,611  

(University of Rochester Project) Series C 4.00% 7/1/43

      500,000        519,200  

New York City Trust for Cultural Resources

      

(Alvin Ailey Dance Foundation) Series A 4.00% 7/1/46

      1,000,000              1,022,900  

(Whitney Museum of American Art) 5.00% 7/1/31

      500,000        531,160  

New York State Dormitory Authority

      

(Barnard College) Series A 5.00% 7/1/35

      400,000        451,376  

(Brooklyn Law School) 5.75% 7/1/33

      340,000        348,643  

(Cornell University) Series A 5.00% 7/1/34

      170,000        174,529  

(Fordham University) 5.00% 7/1/44

      650,000        718,581  

(Marymount Manhattan College) 5.00% 7/1/24

      350,000        357,815  

(Pratt Institute) Series A 5.00% 7/1/34

      1,000,000        1,106,640  

(Rockefeller University) Series A 5.00% 7/1/27

      250,000        256,910  

(Skidmore College) Series A 5.00% 7/1/21

      325,000        353,015  

(Touro College & University) Series A 5.50% 1/1/44

      1,000,000        1,096,190  

(University of Rochester Project) Unrefunded Series A 5.125% 7/1/39

      20,000        20,533  

Onondaga Civic Development Revenue

      

(Le Moyne College Project) 5.20% 7/1/29

      500,000        524,065  

St. Lawrence County Industrial Development Agency Civic Development Revenue

      

(St. Lawrence University Project) Series A 4.00% 7/1/43

      1,000,000        1,010,680  

 

71

Table of Contents

Schedules of investments

Delaware Tax-Free New York Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Education Revenue Bonds (continued)

      

Tompkins County Development

      

(Ithaca College Project)

      

5.00% 7/1/34

      750,000      $ 837,967  

5.00% 7/1/41

      500,000        567,710  

Troy Industrial Development Authority

      

(Rensselaer Polytechnic Institute Project) Series E 5.20% 4/1/37

      500,000        538,345  

Yonkers Economic Development Educational Revenue

      

(Charter School of Educational Excellence Project)

      

Series A 6.25% 10/15/40

      600,000        621,744  
     

 

 

  
              19,519,757  
     

 

 

  

Electric Revenue Bonds – 3.58%

      

Long Island Power Authority Electric System Revenue

      

5.00% 9/1/47

      500,000        564,405  

Series A 5.00% 9/1/44

      750,000        830,363  

New York State Power Authority Revenue

      

Series A 5.00% 11/15/38

      500,000        544,560  

Utility Debt Securitization Authority

      

(Restructuring Bonds) 5.00% 12/15/37

      1,000,000        1,142,490  
     

 

 

  
        3,081,818  
     

 

 

  

Healthcare Revenue Bonds – 15.16%

      

Buffalo & Erie County Industrial Land Development

      

(Catholic Health System Project) 5.25% 7/1/35

      250,000        274,903  

Dutchess County Local Development

      

(Health Quest Systems Project)

      

Series A 5.00% 7/1/34

      350,000        385,357  

Series A 5.00% 7/1/44

      1,000,000        1,087,680  

Guilderland Industrial Development Agency

      

(Albany Place Development Project) Series A 144A 5.875% 1/1/52  #

      500,000        495,255  

Monroe County Industrial Development

      

(The Rochester General Hospital Project)

      

5.00% 12/1/36

      405,000        452,745  

5.00% 12/1/46

      540,000        591,840  

Series A 5.00% 12/1/27

      330,000        361,165  

Series A 5.00% 12/1/28

      655,000        715,483  

(The Unity Hospital of Rochester Project) 5.50% 8/15/40 (FHA)

      585,000        632,870  

Nassau County Local Economic Assistance

      

(Catholic Health Services of Long Island Obligated Group Project)

      

5.00% 7/1/29

      375,000        413,933  

 

72

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Nassau County Local Economic Assistance

      

(Catholic Health Services of Long Island Obligated Group Project)

      

5.00% 7/1/33

      725,000      $ 788,568  

New York City Health & Hospital Revenue

      

(Health System) Series A 5.00% 2/15/30

      500,000        520,590  

New York State Dormitory Authority Revenue

      

(Montefiore Obligated Group) Series A 4.00% 8/1/38

      1,000,000        1,005,670  

New York State Dormitory Authority Revenue Non-State Supported Debt

      

(Mt. Sinai Hospital) Series A 5.00% 7/1/26

      600,000        632,370  

(New York University Hospitals Center) Series A 4.00% 7/1/40

      465,000        476,286  

(Orange Regional Medical Center Obligated Group)

      

144A 5.00% 12/1/34  #

      500,000        552,455  

144A 5.00% 12/1/45  #

      700,000        755,965  

Orange County Funding Assisted Living Residence Revenue

      

(The Hamlet at Wallkill Assisted Living Project) 6.50% 1/1/46

      400,000        408,692  

Saratoga County Capital Resource Revenue

      

(The Saratoga Hospital Project) Series A 5.00% 12/1/26

      500,000        557,100  

Southold Local Development Revenue

      

(Peconic Landing at Southold Project) 5.00% 12/1/45

      750,000        780,915  

Suffolk County Economic Development Revenue

      

(Catholic Health Services) Unrefunded 5.00% 7/1/28

      430,000        461,657  

(Peconic Landing at Southhold Project) 6.00% 12/1/40

      650,000        694,070  
     

 

 

  
              13,045,569  
     

 

 

  

Lease Revenue Bonds – 8.68%

      

Hudson Yards Infrastructure

      

Unrefunded Fiscal 2012 Series A 5.75% 2/15/47

      385,000        417,540  

MTA Hudson Rail Yards Trust Obligations

      

(The Metropolitan Transportation Authority) Series A 5.00% 11/15/56

      710,000        768,561  

New York City Industrial Development Agency

      

(Senior Trips)

      

Series A 5.00% 7/1/22 (AMT)

      1,085,000        1,187,402  

Series A 5.00% 7/1/28 (AMT)

      1,500,000        1,598,580  

New York Liberty Development

      

(4 World Trade Center Project) 5.00% 11/15/31

      500,000        542,620  

(Class 1 - 3 World Trade Center Project) 144A 5.00% 11/15/44  #

      1,800,000        1,894,770  

 

73

Table of Contents

Schedules of investments

Delaware Tax-Free New York Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Lease Revenue Bonds (continued)

      

New York Liberty Development

      

(Class 2 - 3 World Trade Center Project) 144A 5.375% 11/15/40  #

      500,000      $ 551,210  

United Nations Development Revenue

      

(Senior Lien) Series A 5.00% 7/1/26

      500,000        513,070  
     

 

 

  
              7,473,753  
     

 

 

  

Local General Obligation Bonds – 2.24%

      

New York City

      

Fiscal 2011 Series E 5.00% 8/1/28

      125,000        132,313  

Fiscal 2014 Subordinate Series D-1 5.00% 8/1/31

      1,000,000            1,117,170  

Subordinate Series E-1 5.25% 3/1/35

      500,000        593,665  

Unrefunded Subordinate Series I-1 5.375% 4/1/36

      25,000        25,512  

New York State Dormitory Authority

      

(School District Financing Program)

      

Unrefunded Series A 5.00% 10/1/23

      25,000        27,302  

Unrefunded Series A 5.00% 10/1/25 (AGM)

      30,000        31,843  
     

 

 

  
        1,927,805  
     

 

 

  

Pre-Refunded Bonds – 11.38%

      

Brooklyn Arena Local Development

      

(Barclays Center Project)

      

6.25% 7/15/40-20 §

      500,000        531,450  

6.375% 7/15/43-20 §

      500,000        532,285  

6.50% 7/15/30-20 §

      500,000        533,125  

Hudson Yards Infrastructure

      

Fiscal 2012 Series A 5.75% 2/15/47-21 §

      615,000        674,384  

Long Island Power Authority Electric System Revenue

      

Series A 5.75% 4/1/39-19 §

      350,000        358,540  

Series B 5.75% 4/1/33-19 §

      250,000        256,100  

Metropolitan Transportation Authority Revenue

      

Series C 5.00% 11/15/32-22 §

      500,000        563,485  

Series C 6.50% 11/15/28-18 §

      5,000        5,049  

Series D 5.25% 11/15/27-20 §

      500,000        538,850  

Monroe County Industrial Development Revenue

      

(Nazareth College of Rochester Project)

      

5.25% 10/1/31-21 §

      500,000        550,535  

5.50% 10/1/41-21 §

      500,000        554,255  

New York City

      

Subordinate Series I-1 5.375% 4/1/36-19 §

      475,000        485,578  

New York City Transitional Finance Authority Revenue

      

(Future Tax Secured)

      

Fiscal 2011 Subordinate Series C 5.25% 11/1/25-20 §

      190,000        203,878  

Fiscal 2011 Subordinate Series D-1 5.25% 2/1/29-21 §

      305,000        329,659  

 

74

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Pre-Refunded Bonds (continued)

      

New York State Dormitory Authority

      

(School District Financing Program) Series A 5.00% 10/1/23-21 §

      475,000      $ 520,225  

New York State Dormitory Authority Revenue Non-State Supported Debt

      

(Teachers College) 5.50% 3/1/39-19 §

      250,000        254,803  

(The Northwell Health Obligated Group)

      

Series A 5.00% 5/1/41-21 §

      500,000        542,110  

Series A 5.50% 5/1/37-19 §

      500,000        513,085  

Onondaga Civic Development Revenue

      

(St. Joseph’s Hospital Health Center Project)

      

4.50% 7/1/32-22 §

      380,000        415,956  

5.00% 7/1/42-22 §

      750,000        834,720  

Series A 5.125% 7/1/31-19 §

      500,000        514,705  

Suffolk County Economic Development Revenue

      

(Catholic Health Services) 5.00% 7/1/28-21 §

      70,000        76,095  
     

 

 

  
              9,788,872  
     

 

 

  

Resource Recovery Revenue Bond – 1.75%

      

Niagara Area Development Revenue

      

(Covanta Project) Series A 144A 4.75% 11/1/42 (AMT)  #

      1,500,000        1,507,515  
     

 

 

  
        1,507,515  
     

 

 

  

Special Tax Revenue Bonds – 16.56%

      

Build NYC Resource

      

(YMCA of Greater New York Project) 5.00% 8/1/40

      450,000        489,924  

Glen Cove Local Economic Assistance

      

(Garvies Point Public Improvement Project) Series A 5.00% 1/1/56

      250,000        259,637  

Guam Government Business Privilege Tax Revenue

      

Series A 5.25% 1/1/36

      240,000        254,057  

New York City Transitional Finance Authority Revenue

      

(Building Aid)

      

Fiscal 2012 Subordinate Series S-1A 5.25% 7/15/37

      1,000,000        1,087,000  

Fiscal 2015 Series S-1 5.00% 7/15/43

      1,000,000        1,109,500  

(Future Tax Secured)

      

Fiscal 2011 Subordinate Series D-1 5.00% 2/1/26

      250,000        268,135  

Fiscal 2014 Subordinate Series A-1 5.00% 11/1/42

      750,000        834,000  

Fiscal 2014 Subordinate Series B-1 5.00% 11/1/40

      750,000        837,803  

Fiscal 2015 Subordinate Series E-1 5.00% 2/1/41

      1,000,000        1,113,270  

Fiscal 2016 Subordinate Series A-1 5.00% 8/1/33

      670,000        763,304  

Fiscal 2016 Subordinate Series A-1 5.00% 8/1/34

      1,500,000        1,703,850  

Fiscal 2017 Subordinate Series A-1 4.00% 5/1/42

      500,000        518,685  

Fiscal 2017 Subordinate Series E-1 5.00% 2/1/43

      1,000,000        1,132,500  

 

75

Table of Contents

Schedules of investments

Delaware Tax-Free New York Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Special Tax Revenue Bonds (continued)

      

New York City Transitional Finance Authority Revenue

      

(Future Tax Secured)

      

Unrefunded Fiscal 2011 Subordinate Series C 5.25% 11/1/25

      310,000      $ 333,188  

Unrefunded Fiscal 2011 Subordinate Series D-1 5.25% 2/1/29

      195,000        209,570  

New York Convention Center Development Revenue

      

(Hotel Unit Fee Secured) 5.00% 11/15/35

      1,000,000        1,135,440  

New York State Dormitory Authority Revenue

      

(General Purpose)

      

Series C 5.00% 3/15/34

      500,000        534,490  

Series E 5.00% 3/15/32

      1,000,000        1,144,950  

New York State Urban Development Revenue

      

(General Purpose) Series A 4.00% 3/15/36

      500,000        522,820  
     

 

 

  
            14,252,123  
     

 

 

  

State General Obligation Bond – 0.58%

      

New York State

      

Series A 5.00% 3/1/38

      500,000        501,235  
     

 

 

  
        501,235  
     

 

 

  

Transportation Revenue Bonds – 6.56%

      

Buffalo & Fort Erie Public Bridge Authority

      

5.00% 1/1/47

      435,000        489,423  

Metropolitan Transportation Authority Revenue

      

Series D 5.00% 11/15/32

      500,000        549,885  

Unrefunded Series C 6.50% 11/15/28

      45,000        45,440  

New York State Thruway Authority General Revenue

      

Series I 5.00% 1/1/32

      700,000        761,502  

Series L 5.00% 1/1/35

      100,000        115,276  

(Junior Indebtedness Obligation) Series A 5.25% 1/1/56

      1,000,000        1,127,960  

Port Authority of New York & New Jersey

      

(JFK International Air Terminal Project)

      

Series 8 6.00% 12/1/42

      700,000        762,433  

Series 8 6.50% 12/1/28

      550,000        574,948  

Triborough Bridge & Tunnel Authority

      

Unrefunded Series C 5.00% 11/15/24

      80,000        80,550  

(MTA Bridges and Tunnels) Series A 5.00% 11/15/47

      1,000,000        1,136,440  
     

 

 

  
        5,643,857  
     

 

 

  

 

76

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Water & Sewer Revenue Bonds – 2.88%

      

New York City Municipal Water Finance Authority Water & Sewer System Revenue

      

(Second General Resolution)

      

Fiscal 2009 Series FF-2 5.50% 6/15/40

      250,000      $ 257,243  

Fiscal 2012 Series BB 5.25% 6/15/44

      500,000        548,955  

Fiscal 2017 Series DD 5.00% 6/15/47

      1,000,000        1,133,830  

New York State Environmental Facilities Revenue

      

(New York City Municipal Water Finance Authority

      

Projects - Second Resolution) Series B 5.00% 6/15/30

      500,000        541,310  
     

 

 

  
        2,481,338  
     

 

 

  

Total Municipal Bonds (cost $84,092,297)

             86,476,149  
     

 

 

  
     

 

  

Short-Term Investments – 0.29%

      

 

  

Variable Rate Demand Notes – 0.29%¤

      

New York City Series l-2

      

1.47% 3/1/40 (SPA - JPMorgan Chase Bank N.A.)

      100,000        100,000  

New York City Transitional Finance Authority Revenue

      

(Future Tax Secured) Series E-3

      

1.47% 2/1/45 (SPA - JPMorgan Chase Bank N.A.)

      150,000        150,000  
     

 

 

  

Total Short-Term Investments (cost $250,000)

         250,000  
     

 

 

  

Total Value of Securities – 100.77%
(cost $84,342,297)

       $     86,726,149  
     

 

 

  

 

  #

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $7,601,475, which represents 8.83% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

  ¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

  §

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

  °

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

 

77

Table of Contents

Schedules of investments

Delaware Tax-Free New York Fund

 

 

Summary of abbreviations:

AGM – Insured by Assured Guaranty Municipal Corporation

AMT – Subject to Alternative Minimum Tax

FHA – Federal Housing Administration

N.A. – National Association

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

78

Table of Contents
Schedules of investments
Delaware Tax-Free Pennsylvania Fund    August 31, 2018

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds – 98.77%

      

 

  

Corporate Revenue Bonds – 5.72%

      

Pennsylvania Commonwealth Financing Authority Revenue

      

(Tobacco Master Settlement Payment Revenue)

      

4.00% 6/1/39 (AGM)

      5,045,000      $ 5,163,457  

Pennsylvania Economic Development Financing Authority

      

(National Gypsum) 5.50% 11/1/44 (AMT)

      4,000,000        4,219,320  

Pennsylvania Economic Development Financing Authority Solid Waste Disposal Revenue

      

(Proctor & Gamble Paper Project) 5.375% 3/1/31 (AMT)

      11,000,000        13,183,280  

Pennsylvania Economic Development Financing Authority Water Facility Revenue

      

(Pennsylvania-American Water Project) 6.20% 4/1/39

      2,850,000        2,917,716  
     

 

 

  
              25,483,773  
     

 

 

  

Education Revenue Bonds – 14.42%

      

Allegheny County Higher Education Building Authority Revenue

      

(Carnegie Mellon University)

      

5.00% 3/1/28

      2,000,000        2,235,400  

Series A 5.00% 3/1/24

      1,000,000        1,099,190  

(Chatham University) Series A 5.00% 9/1/30

      1,500,000        1,577,940  

(Robert Morris University)

      

5.00% 10/15/47

      1,500,000        1,620,660  

Series A 5.50% 10/15/30

      1,275,000        1,342,371  

Series A 5.75% 10/15/40

      2,200,000        2,316,776  

Bucks County Industrial Development Authority Revenue

      

(George School Project) 5.00% 9/15/36

      4,455,000        4,791,308  

(School Lane Charter School Project) Series A

      

5.125% 3/15/46

      2,500,000        2,660,600  

Chester County Industrial Development Authority Revenue

      

(Avon Grove Charter School Project)

      

Series A 5.00% 12/15/47

      1,160,000        1,208,882  

Series A 5.00% 12/15/51

      770,000        796,527  

(Renaissance Academy Charter School Project)

      

5.00% 10/1/34

      1,000,000        1,069,530  

5.00% 10/1/39

      1,250,000        1,327,137  

5.00% 10/1/44

      1,000,000        1,057,830  

Chester County Industrial Development Authority Student Housing Revenue

      

(West Chester University Project)

      

Series A 5.00% 8/1/30

      1,100,000        1,188,165  

Series A 5.00% 8/1/45

      1,250,000        1,311,375  

Delaware County Authority Revenue

      

(Cabrini University) 5.00% 7/1/47

      2,000,000        2,124,400  

 

79

Table of Contents

Schedules of investments

Delaware Tax-Free Pennsylvania Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Education Revenue Bonds (continued)

      

East Hempfield Township Industrial Development Authority

      

(Student Services - Student Housing Project at Millersville University)

      

5.00% 7/1/39

      875,000      $ 929,337  

5.00% 7/1/45

      2,500,000        2,635,425  

5.00% 7/1/46

      1,425,000        1,508,149  

5.00% 7/1/47

      1,000,000        1,062,200  

Montgomery County Higher Education & Health Authority Revenue

      

(Arcadia University)

      

5.625% 4/1/40

      2,375,000        2,456,273  

5.75% 4/1/40

      2,000,000        2,180,240  

Pennsylvania Higher Educational Facilities Authority College & University Revenue

      

(Drexel University) 5.00% 5/1/41

      1,000,000        1,117,420  

(Shippensburg University - Student Housing Project)

      

5.00% 10/1/44

      1,500,000        1,556,385  

6.25% 10/1/43

      2,000,000        2,176,100  

Philadelphia Authority for Industrial Development Revenue

      

(First Philadelphia Preparatory Charter School Project)

      

Series A 7.25% 6/15/43

      2,500,000        2,832,550  

(Green Woods Charter School Project)

      

Series A 5.50% 6/15/22

      735,000        764,951  

Series A 5.75% 6/15/42

      2,500,000        2,582,825  

(International Apartments of Temple University)

      

Series A 5.375% 6/15/30

      1,500,000        1,556,925  

Series A 5.625% 6/15/42

      3,000,000        3,088,380  

(New Foundations Charter School Project)

      

6.625% 12/15/41

      1,000,000        1,099,390  

(Philadelphia Performing Arts Charter School Project)

      

144A 6.75% 6/15/43  #

      2,550,000        2,663,169  

(Tacony Academy Charter School Project)

      

Series A-1 6.75% 6/15/33

      1,020,000        1,110,729  

Series A-1 7.00% 6/15/43

      1,535,000        1,678,185  

(Temple University Second Series) 5.00% 4/1/36

      1,145,000        1,279,205  

State Public School Building Authority

      

(Montgomery County Community College)

      

5.00% 5/1/28

      2,000,000        2,286,300  
     

 

 

  
              64,292,229  
     

 

 

  

 

80

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds – 29.26%

      

Allegheny County Hospital Development Authority Revenue

      

(Allegheny Health Network Obligated Group Issue)

      

Series A 4.00% 4/1/44

      1,350,000      $ 1,335,029  

(University of Pittsburgh Medical Center) Series A

      

5.50% 8/15/34

      3,980,000        4,102,027  

Berks County Industrial Development Authority Revenue

      

(The Highlands At Wyomissing)

      

5.00% 5/15/38

      415,000        451,653  

5.00% 5/15/43

      500,000        542,295  

5.00% 5/15/48

      1,000,000        1,081,500  

Series A 5.00% 5/15/37

      1,365,000        1,485,243  

Series A 5.00% 5/15/42

      500,000        541,735  

Series A 5.00% 5/15/47

      600,000        647,778  

Series C 5.00% 5/15/42

      1,000,000        1,089,950  

Series C 5.00% 5/15/47

      1,000,000        1,087,240  

(Tower Health Project)

      

4.00% 11/1/47

      2,500,000        2,503,700  

5.00% 11/1/50

      2,000,000        2,185,640  

Berks County Municipal Authority Revenue

      

(Reading Hospital & Medical Center Project) Unrefunded

      

Series A-3 5.50% 11/1/31

      5,005,000        5,209,254  

Butler County Hospital Authority Revenue

      

(Butler Health System Project) Series A 5.00% 7/1/39

      1,625,000        1,761,451  

Central Bradford Progress Authority

      

(Guthrie Health Issue) 5.375% 12/1/41

      1,000,000        1,091,480  

Centre County Hospital Authority Revenue

      

(Mount Nittany Medical Center Project) Series A

      

4.00% 11/15/47

      1,400,000        1,403,150  

Chester County Health & Education Facilities Authority Revenue

      

(Simpson Senior Services Project)

      

Series A 5.00% 12/1/35

      775,000        793,848  

Series A 5.25% 12/1/45

      1,360,000        1,409,572  

Cumberland County Municipal Authority Revenue

      

(Diakon Lutheran Social Ministries Project)

      

5.00% 1/1/38

      2,000,000        2,165,200  

Unrefunded 6.375% 1/1/39

      495,000        500,668  

Dauphin County General Authority Health System Revenue

      

(Pinnacle Health System Project) Unrefunded

      

6.00% 6/1/36

      795,000        816,099  

DuBois Hospital Authority

      

(Penn Highlands Healthcare) 4.00% 7/15/48

      2,000,000              1,996,460  

 

81

Table of Contents

Schedules of investments

Delaware Tax-Free Pennsylvania Fund

 

 

     Principal amount°      Value (US $)  

 

  

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Franklin County Industrial Development Authority Revenue

      

(Chambersburg Hospital Project) 5.375% 7/1/42

      4,980,000      $       5,251,559  

(Menno-Haven Project) 5.00% 12/1/53

      1,900,000        1,950,369  

Geisinger Authority Health System Revenue

      

(Geisinger Health System)

      

Series A-1 5.00% 2/15/45

      5,000,000        5,618,000  

Series A-1 5.125% 6/1/41

      4,000,000        4,249,920  

Indiana County Hospital Authority Revenue

      

(Indiana Regional Medical Center) Series A

      

6.00% 6/1/39

      1,625,000        1,752,286  

Lancaster County Hospital Authority Revenue

      

(Brethren Village Project)

      

5.25% 7/1/35

      250,000        271,593  

5.25% 7/1/41

      1,000,000        1,099,120  

5.50% 7/1/45

      1,000,000        1,098,110  

(Landis Homes Retirement Community Project) Series A

      

5.00% 7/1/45

      2,000,000        2,119,500  

(Masonic Villages Project)

      

5.00% 11/1/35

      1,000,000        1,120,750  

5.00% 11/1/36

      510,000        570,313  

5.00% 11/1/37

      250,000        278,940  

(St. Anne’s Retirement Community Project)

      

5.00% 4/1/27

      1,425,000        1,476,271  

5.00% 4/1/33

      1,830,000        1,873,151  

Lehigh County General Purpose Authority Revenue

      

(Bible Fellowship Church Homes Project)

      

5.125% 7/1/32

      1,000,000        1,013,600  

5.25% 7/1/42

      1,500,000        1,520,595  

Monroe County Hospital Authority Revenue

      

(Pocono Medical Center)

      

5.00% 7/1/36

      1,710,000        1,893,979  

5.00% 7/1/41

      1,000,000        1,099,660  

Monroeville Finance Authority

      

5.00% 2/15/25

      1,000,000        1,150,510  

Montgomery County Higher Education & Health Authority Revenue

      

(Thomas Jefferson University) Series A 4.00% 9/1/49

      2,500,000        2,502,025  

Montgomery County Industrial Development Authority Retirement Community Revenue

      

(ACTS Retirement Life Communities Obligated Group)

      

5.00% 11/15/27

      1,250,000        1,342,188  

5.00% 11/15/28

      1,600,000        1,713,952  

 

82

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     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

Montgomery County Industrial Development Authority Retirement Community Revenue

      

(ACTS Retirement Life Communities Obligated Group)

      

5.00% 11/15/29

      680,000      $ 726,947  

Montgomery County Industrial Development Authority Revenue

      

(Albert Einstein Healthcare Network) Series A

      

5.25% 1/15/45

      2,500,000                2,663,750  

(Whitemarsh Continuing Care Retirement Community Project) 5.375% 1/1/50

      4,000,000        4,045,600  

Moon Industrial Development Authority Revenue

      

(Baptist Homes Society) 6.125% 7/1/50

      4,000,000        4,285,720  

Northampton County Industrial Development Authority

      

(Morningstar Senior Living Project)

      

5.00% 7/1/27

      1,400,000        1,453,620  

5.00% 7/1/32

      1,275,000        1,307,882  

Pennsylvania Economic Development Financing Authority First Mortgage Revenue

      

(Tapestry Moon Senior Housing Project) Series A 144A

      

6.75% 12/1/53 #

      2,250,000        2,328,683  

Pennsylvania Economic Development Financing Authority Revenue

      

(University of Pittsburgh Medical Center) Series A

      

5.00% 7/1/43

      1,265,000        1,363,012  

Pennsylvania Higher Educational Facilities Authority College & University Revenue

      

(Thomas Jefferson University)

      

Series A 5.00% 9/1/45

      7,000,000        7,677,110  

Series A 5.25% 9/1/50

      2,500,000        2,770,350  

Pennsylvania Higher Educational Facilities Authority Revenue

      

(University of Pennsylvania Health System)

      

5.00% 8/15/40

      2,000,000        2,233,100  

Series A 4.00% 8/15/42

      4,000,000        4,099,800  

Philadelphia Authority for Industrial Development Revenue

      

(Children’s Hospital of Philadelphia Project)

      

5.00% 7/1/34

      5,000,000        5,765,700  

(Thomas Jefferson University) Series A

      

5.00% 9/1/47

      2,500,000        2,761,750  

(Wesley Enhanced Living Obligated Group) Series A

      

5.00% 7/1/49

      2,500,000        2,644,150  

Pocono Mountains Industrial Park Authority Revenue

      

(St. Luke’s Hospital - Monroe Project) Series A

      

5.00% 8/15/40

      4,000,000        4,333,800  

 

83

Table of Contents

Schedules of investments

Delaware Tax-Free Pennsylvania Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Healthcare Revenue Bonds (continued)

      

St. Mary Hospital Authority Health System Revenue

      

(Catholic Health East) 6.25% 11/15/34

      4,675,000      $ 4,815,811  
     

 

 

  
            130,444,148  
     

 

 

  

Housing Revenue Bond – 0.48%

      

Philadelphia Authority for Industrial Development Revenue

      

(The PresbyHomes Germantown Project) Series A

      

5.625% 7/1/35 (HUD)

      2,140,000        2,141,969  
     

 

 

  
        2,141,969  
     

 

 

  

Lease Revenue Bonds – 3.63%

      

Allegheny County Industrial Development Authority Revenue

      

(Residential Resource Project) 5.10% 9/1/26

      1,335,000        1,337,083  

5.125% 9/1/31

      540,000        540,464  

Pennsylvania Commonwealth Financing Authority Revenue

      

Series B 5.00% 6/1/31 (AGC)

      10,000,000        10,211,200  

Philadelphia Municipal Authority Revenue

      

(Juvenile Justice Services Center)

      

5.00% 4/1/37

      1,250,000        1,373,225  

5.00% 4/1/38

      1,000,000        1,096,260  

5.00% 4/1/39

      1,500,000        1,642,080  
     

 

 

  
        16,200,312  
     

 

 

  

Local General Obligation Bonds – 4.27%

      

Allegheny County

      

Series C-69 5.00% 12/1/28

      1,000,000        1,103,740  

Series C-70 5.00% 12/1/33

      2,205,000        2,416,945  

City of Philadelphia

      

5.00% 8/1/41

      1,260,000        1,395,362  

Series A 5.00% 8/1/37

      1,750,000        1,949,308  

Series A 5.25% 7/15/29

      2,500,000        2,797,575  

City of Pittsburgh

      

Series B 5.00% 9/1/26

      3,000,000        3,315,480  

Philadelphia School District

      

Series F 5.00% 9/1/36

      2,000,000        2,206,040  

Series F 5.00% 9/1/37

      1,500,000        1,651,230  

Series F 5.00% 9/1/38

      2,000,000        2,197,260  
     

 

 

  
        19,032,940  
     

 

 

  

Pre-Refunded/Escrowed to Maturity Bonds – 21.81%

      

Allegheny County Higher Education Building Authority Revenue

      

(Carlow University Project)

      

6.75% 11/1/31-21§

      750,000        858,637  

 

84

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

Allegheny County Higher Education Building Authority Revenue

      

(Carlow University Project)

      

7.00% 11/1/40-21§

      1,000,000      $         1,152,460  

Butler County Hospital Authority Revenue

      

(Butler Health System Project) Series B 7.25% 7/1/39-19§

      8,000,000        8,360,720  

Chester County

      

5.00% 11/15/32-21§

      5,725,000        6,283,588  

5.00% 11/15/33-21§

      2,625,000        2,881,121  

Cumberland County Municipal Authority Revenue

      

(Diakon Lutheran Social Ministries Project)

      

6.375% 1/1/39-19§

      4,505,000        4,573,566  

Dauphin County General Authority Health System Revenue

      

(Pinnacle Health System Project) 6.00% 6/1/36-19§

      4,205,000        4,339,602  

Delaware County Regional Water Quality Control Authority

      

5.00% 5/1/32-23§

      2,000,000        2,259,700  

Guam Government Limited Obligation Revenue

      

(Section 30) Series A 5.625% 12/1/29-19§

      90,000        94,287  

Huntingdon County General Authority Revenue

      

(Juniata College) Series A 5.00% 5/1/30-20§

      2,650,000        2,827,285  

Monroe County Hospital Authority

      

(Pocono Medical Center)

      

Series A 5.00% 1/1/32-22§

      1,150,000        1,261,101  

Series A 5.00% 1/1/41-22§

      1,500,000        1,644,915  

Montgomery County Higher Education & Health Authority Revenue

      

(Abington Memorial Hospital Obligated Group)

      

Series A 5.00% 6/1/31-22§

      4,000,000        4,428,600  

Montgomery County Industrial Development Authority Retirement Community Revenue

      

(ACTS Retirement Life Communities)

      

Series A-1 6.25% 11/15/29-19§

      700,000        737,996  

Montgomery County Industrial Development Authority Revenue

      

(New Regional Medical Center Project)

      

5.375% 8/1/38-20 (FHA)§

      995,000        1,062,869  

Pennsylvania Economic Development Financing Authority Health System Revenue

      

(Albert Einstein Healthcare) Series A

      

6.25% 10/15/23-19§

      3,930,000        4,080,205  

 

85

Table of Contents

Schedules of investments

Delaware Tax-Free Pennsylvania Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

 

Pre-Refunded/Escrowed to Maturity Bonds (continued)

      

Pennsylvania Higher Educational Facilities Authority College & University Revenue

      

(AICUP Financing Program - St. Francis University Project)

      

Series JJ2 6.25% 11/1/41-21§

      2,355,000      $       2,664,164  

(Edinboro University Foundation Student Housing Project) 6.00% 7/1/43-20§

      1,000,000        1,073,990  

(Indiana University - Student Housing Project)

      

Series A 5.00% 7/1/27-22§

      1,740,000        1,929,086  

Series A 5.00% 7/1/41-22§

      1,500,000        1,663,005  

(Philadelphia University) 5.00% 6/1/32-23§

      2,000,000        2,263,160  

(University of the Arts) 5.20% 3/15/25 (AGC)

      4,490,000        5,014,746  

Pennsylvania Higher Educational Facilities Authority Revenue

      

(Trustees of the University of Pennsylvania)

      

5.00% 9/1/29-20§

      1,000,000        1,063,860  

Series A 5.00% 9/1/29-21§

      1,000,000        1,078,560  

(University of Pennsylvania Health System)

      

Series A 5.00% 8/15/24-21§

      4,850,000        5,288,731  

Series A 5.25% 8/15/26-21§

      3,910,000        4,291,577  

Series A 5.75% 8/15/23-21§

      2,500,000        2,779,650  

Pennsylvania Turnpike Commission Revenue

      

Series E 5.00% 12/1/29-21§

      5,000,000        5,461,450  

Series E 5.00% 12/1/30-21§

      2,000,000        2,184,580  

Philadelphia Authority for Industrial Development Revenue

      

(MaST Charter School Project) 6.00% 8/1/35-20§

      1,610,000        1,732,296  

Philadelphia Hospitals & Higher Education Facilities Authority Revenue

      

(Presbyterian Medical Center) 6.65% 12/1/19

      3,915,000        4,062,478  

Philadelphia Municipal Authority Revenue

      

6.50% 4/1/39-19§

      4,000,000        4,112,520  

South Fork Municipal Hospital Authority Revenue

      

(Conemaugh Health System Project) 5.50% 7/1/29-20§

      3,500,000        3,727,780  
     

 

 

  
        97,238,285  
     

 

 

  

Resource Recovery Revenue Bonds – 0.62%

      

Delaware County Industrial Development Authority

      

(Covanta Project) Series A 5.00% 7/1/43

      2,155,000        2,178,770  

Pennsylvania Economic Development Financing Authority

      

(Colver Project) Series F

      

4.625% 12/1/18 (AMBAC) (AMT)

      560,000        564,138  
     

 

 

  
        2,742,908  
     

 

 

  

 

86

Table of Contents

    

    

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

 

Special Tax Revenue Bonds – 3.71%

      

Allentown Neighborhood Improvement Zone Development Authority Revenue

      

Series A 5.00% 5/1/42

      2,500,000      $ 2,584,100  

(City Center Project) 144A 5.00% 5/1/42  #

      2,500,000        2,715,175  

(City Center Refunding Project) 144A 5.00% 5/1/42  #

      2,500,000        2,694,525  

Chester County Industrial Development Authority Special Obligation Revenue

      

(Woodlands at Greystone Project)

      

144A 5.00% 3/1/38  #

      560,000        572,309  

144A 5.125% 3/1/48  #

      1,000,000        1,023,000  

Northampton County Industrial Development Authority

      

(Route 33 Project) 7.00% 7/1/32

      2,000,000        2,271,880  

Sports & Exhibition Authority of Pittsburgh & Allegheny County

      

(Hotel Room Excise Tax) 5.00% 2/1/35 (AGM)

      3,000,000        3,148,380  

Washington County Redevelopment Authority Revenue

      

(Victory Centre Tax Increment Financing Project)

      

5.00% 7/1/35

      1,500,000        1,536,975  
     

 

 

  
              16,546,344  
     

 

 

  

State General Obligation Bond – 0.64%

      

Commonwealth of Pennsylvania

      

(First Refunding Series) 5.00% 1/1/26

      2,500,000        2,874,250  
     

 

 

  
        2,874,250  
     

 

 

  

Transportation Revenue Bonds – 10.14%

      

Delaware River Joint Toll Bridge Commission

      

(Pennsylvania - New Jersey) 5.00% 7/1/47

      5,000,000        5,686,800  

Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue

      

(Amtrak Project)

      

Series A 5.00% 11/1/32 (AMT)

      3,500,000        3,737,545  

Series A 5.00% 11/1/41 (AMT)

      5,000,000        5,313,350  

Pennsylvania Turnpike Commission Revenue

      

Series A 5.00% 12/1/22

      2,550,000        2,852,736  

Series A 5.00% 12/1/23

      2,450,000        2,790,232  

Series C 5.00% 12/1/44

      5,000,000        5,496,200  

Subordinate Series B-1 5.25% 6/1/47

      5,000,000        5,593,700  

Subordinate Third Series 5.00% 12/1/40

      2,500,000        2,752,225  

Philadelphia Airport Revenue

      

Series B 5.00% 7/1/47 (AMT)

      3,000,000        3,326,880  

Port Authority of Allegheny County

      

5.75% 3/1/29

      5,200,000        5,668,468  

 

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Schedules of investments

Delaware Tax-Free Pennsylvania Fund

 

 

     Principal amount°      Value (US $)  

 

  

 

Municipal Bonds (continued)

      

 

  

Transportation Revenue Bonds (continued)

      

Susquehanna Area Regional Airport Authority Revenue

      

5.00% 1/1/35 (AMT)

      800,000      $ 883,984  

5.00% 1/1/38 (AMT)

      1,000,000        1,095,050  
     

 

 

  
        45,197,170  
     

 

 

  

Water & Sewer Revenue Bonds – 4.07%

      

Allegheny County Sanitary Authority

      

5.00% 12/1/28 (BAM)

      2,345,000        2,687,440  

Bucks County Water & Sewer Authority

      

5.00% 12/1/28 (AGM)

      1,000,000        1,182,430  

Series A 5.00% 12/1/37 (AGM)

      780,000        875,199  

Series A 5.00% 12/1/40 (AGM)

      1,000,000        1,118,410  

Guam Government Waterworks Authority

      

5.00% 7/1/35

      670,000        745,147  

5.00% 7/1/36

      1,000,000        1,109,760  

5.00% 1/1/46

      1,450,000        1,580,021  

Philadelphia Water & Wastewater Revenue

      

5.00% 11/1/28

      4,500,000        4,967,460  

Series A 5.00% 7/1/45

      2,500,000        2,748,350  

Series A 5.25% 10/1/52

      1,000,000        1,145,030  
     

 

 

  
        18,159,247  
     

 

 

  

Total Municipal Bonds (cost $421,351,721)

         440,353,575  
     

 

 

  
     

 

  

 

Short-Term Investments – 0.60%

      

 

  

 

Variable Rate Demand Notes – 0.60%¤

      

Philadelphia Hospitals & Higher Education Facilities Authority Revenue

      

(Children’s Hospital of Philadelphia Project)

      

Series B 1.43% 7/1/25 (SPA - Wells Fargo Bank N.A.)

      2,500,000        2,500,000  

Series B 1.43% 7/1/41 (SPA - Wells Fargo Bank N.A.)

      200,000        200,000  
     

 

 

  

Total Short-Term Investments (cost $2,700,000)

         2,700,000  
     

 

 

  

Total Value of Securities – 99.37%

(cost $424,051,721)

       $       443,053,575  
     

 

 

  

 

#

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At Aug. 31, 2018, the aggregate value of Rule 144A securities was $11,996,861, which represents 2.69% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

 

¤

Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30 days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with respect to such instrument. Each rate shown is as of Aug. 31, 2018.

 

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§

Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.”

 

°

Principal amount shown is stated in US Dollars unless noted that the security is denominated in another currency.

Summary of abbreviations:

AGC – Insured by Assured Guaranty Corporation

AGM – Insured by Assured Guaranty Municipal Corporation

AMBAC – Insured by AMBAC Assurance Corporation

AMT – Subject to Alternative Minimum Tax

BAM – Insured by Build America Mutual Assurance

FHA – Federal Housing Administration

HUD – Housing and Urban Development Section 8

N.A. – National Association

SPA – Stand-by Purchase Agreement

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of assets and liabilities

August 31, 2018

 

    Delaware Tax-Free
Arizona Fund		   Delaware Tax-Free
California Fund		   Delaware Tax-Free
Colorado Fund

Assets:

            

Investments, at value1

    $ 75,384,310     $ 99,169,414     $ 201,288,767

Interest receivable

       744,585       1,208,086       2,359,863

Receivable for securities sold

       578,560       1,063,715       —

Receivable for fund shares sold

       —       6,205       40,076
   

 

 

      

 

 

      

 

 

  

Total assets

       76,707,455       101,447,420       203,688,706
   

 

 

      

 

 

      

 

 

  

Liabilities:

            

Cash due to custodian

       19,439       42,771       142,475

Distribution payable

       61,847       81,050       166,988

Payable for fund shares redeemed

       13,196       15,007       20,667

Payable for securities purchased

       —       2,083,125       739,718

Investment management fees payable to affiliates

       24,178       32,545       77,994

Other accrued expenses

       19,114       23,637       42,653

Distribution fees payable to affiliates

       16,192       22,337       44,175

Audit and tax fees payable

       4,727       4,727       4,727

Dividend disbursing and transfer agent fees and expenses payable to affiliates

       1,252       1,608       3,298

Accounting and administration expenses payable to affiliates

       584       654       984

Trustees’ fees and expenses payable

       445       571       1,167

Legal fees payable to affiliates

       129       166       333

Reports and statements to shareholders expenses payable to affiliates

       49       64       130
   

 

 

      

 

 

      

 

 

  

Total liabilities

       161,152       2,308,262       1,245,309
   

 

 

      

 

 

      

 

 

  

Total Net Assets

     $ 76,546,303     $ 99,139,158     $ 202,443,397
   

 

 

      

 

 

      

 

 

  

Net Assets Consist of:

            

Paid-in capital

     $ 74,512,531     $ 94,913,852     $ 198,495,296

Undistributed net investment income

       19,881       18,763       352,558

Accumulated net realized gain (loss) on investments

       (477,722 )       141,674       (3,879,191 )

Net unrealized appreciation of investments

       2,491,613       4,064,869       7,474,734
   

 

 

      

 

 

      

 

 

  

Total Net Assets

     $ 76,546,303     $ 99,139,158     $ 202,443,397
   

 

 

      

 

 

      

 

 

  

 

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     Delaware Tax-Free
Arizona Fund		   Delaware Tax-Free
California Fund		   Delaware Tax-Free
Colorado Fund

Net Asset Value

       

Class A:

       

Net assets

        $ 63,326,707         $ 53,170,908         $ 164,087,320  

Shares of beneficial interest outstanding, unlimited authorization, no par

      5,635,615       4,439,311       14,865,299  

Net asset value per share

        $ 11.24         $ 11.98         $ 11.04  

Sales charge

      4.50 %      4.50 %      4.50 % 

Offering price per share, equal to net asset value per share / (1 – sales charge)

        $ 11.77         $ 12.54         $ 11.56  

Class C:

       

Net assets

        $ 3,122,304         $ 13,014,938         $ 10,922,948  

Shares of beneficial interest outstanding, unlimited authorization, no par

      277,141       1,084,700       986,888  

Net asset value per share

        $ 11.27         $ 12.00         $ 11.07  

Institutional Class:

       

Net assets

        $ 10,097,292         $ 32,953,312         $ 27,433,129  

Shares of beneficial interest outstanding, unlimited authorization, no par

      898,502       2,751,186       2,485,345  

Net asset value per share

        $ 11.24         $ 11.98         $ 11.04  

                                           

 

1Investments, at cost

        $ 72,892,697         $ 95,104,545         $ 193,814,033  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of assets and liabilities

 

     Delaware Tax-Free
Idaho Fund		   Delaware Tax-Free
New York Fund		   Delaware Tax-Free
Pennsylvania Fund

Assets:

             

Investments, at value1

     $ 97,749,471     $ 86,726,149     $ 443,053,575

Cash

        —       32,811       —

Interest receivable

        1,464,117       938,841       5,790,592

Receivable for securities sold

        932,348       —       —

Receivable for fund shares sold

        416,699       10,753       66,573
    

 

 

      

 

 

      

 

 

  

Total assets

        100,562,635       87,708,554       448,910,740
    

 

 

      

 

 

      

 

 

  

Liabilities:

             

Cash due to custodian

        376,544       —       44,054

Payable for securities purchased

        1,623,772       1,500,000       1,930,267

Distribution payable

        73,239       66,203       386,697

Payable for fund shares redeemed

        61,345       122       305,795

Investment management fees payable to affiliates

        36,097       28,235       202,050

Distribution fees payable to affiliates

        27,876       20,940       100,729

Other accrued expenses

        24,138       24,830       82,623

Audit and tax fees payable

        4,727       4,727       4,727

Dividend disbursing and transfer agent fees and expenses payable to affiliates

        1,606       1,402       7,274

Accounting and administration expenses payable to affiliates

        654       614       1,761

Trustees’ fees and expenses payable

        567       495       3,183

Legal fees payable to affiliates

        166       138       739

Reports and statements to shareholders expenses payable to affiliates

        63       55       287
    

 

 

      

 

 

      

 

 

  

Total liabilities

        2,230,794       1,647,761       3,070,186
    

 

 

      

 

 

      

 

 

  

Total Net Assets

      $ 98,331,841     $ 86,060,793     $ 445,840,554
    

 

 

      

 

 

      

 

 

  

Net Assets Consist of:

             

Paid-in capital

      $ 100,557,328     $ 84,223,048     $ 426,971,162

Distributions in excess of net investment income

        (16,709 )       (650 )       (108,965 )

Accumulated net realized loss on investments

        (4,592,535 )       (545,457 )       (23,497 )

Net unrealized appreciation of investments

        2,383,757       2,383,852       19,001,854
    

 

 

      

 

 

      

 

 

  

Total Net Assets

      $ 98,331,841     $ 86,060,793     $ 445,840,554
    

 

 

      

 

 

      

 

 

  

 

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     Delaware Tax-Free
Idaho Fund		   Delaware Tax-Free
New York Fund		   Delaware Tax-Free
Pennsylvania Fund

Net Asset Value

             

Class A:

             

Net assets

      $ 59,424,766     $ 38,139,243     $ 378,037,766

Shares of beneficial interest outstanding, unlimited authorization, no par

        5,300,490       3,365,190       47,680,217

Net asset value per share

      $ 11.21     $ 11.33     $ 7.93

Sales charge

        4.50 %       4.50 %       4.50 %

Offering price per share, equal to net asset value per share / (1 – sales charge)

      $ 11.74     $ 11.86     $ 8.30

Class C:

             

Net assets

      $ 17,596,961     $ 14,940,368     $ 26,375,882

Shares of beneficial interest outstanding, unlimited authorization, no par

        1,570,854       1,321,591       3,325,473

Net asset value per share

      $ 11.20     $ 11.30     $ 7.93

Institutional Class:

             

Net assets

      $ 21,310,114     $ 32,981,182     $ 41,426,906

Shares of beneficial interest outstanding, unlimited authorization, no par

        1,900,393       2,911,545       5,228,628

Net asset value per share

      $ 11.21     $ 11.33     $ 7.92

                                           

 

1Investments, at cost

      $ 95,365,714     $ 84,342,297     $ 424,051,721

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of operations

Year ended August 31, 2018

 

     Delaware Tax-Free
Arizona Fund		   Delaware Tax-Free
California Fund		   Delaware Tax-Free
Colorado Fund

Investment Income:

             

Interest

      $ 3,156,478     $ 4,090,782     $ 8,462,147
    

 

 

      

 

 

      

 

 

  

Expenses:

             

Management fees

        387,661       545,959       1,106,850

Distribution expenses – Class A

        161,345       131,817       409,562

Distribution expenses – Class C

        47,111       156,639       144,175

Dividend disbursing and transfer agent fees and expenses

        48,528       66,320       132,305

Audit and tax fees

        44,480       44,480       44,480

Accounting and administration expenses

        42,860       46,785       64,974

Registration fees

        16,094       12,601       12,160

Reports and statements to shareholders expenses

        15,381       16,390       26,578

Legal fees

        6,410       7,814       15,605

Trustees’ fees and expenses

        3,623       4,637       9,404

Custodian fees

        2,139       2,135       6,086

Other

        14,818       17,394       23,062
    

 

 

      

 

 

      

 

 

  
       790,450       1,052,971       1,995,241

Less expenses waived

        (123,282 )       (197,425 )       (253,572 )

Less expenses paid indirectly

        (1,090 )       (1,128 )       (197 )
    

 

 

      

 

 

      

 

 

  

Total operating expenses

        666,078       854,418       1,741,472
    

 

 

      

 

 

      

 

 

  

Net Investment Income

        2,490,400       3,236,364       6,720,675
    

 

 

      

 

 

      

 

 

  

Net Realized and Unrealized Gain (Loss):

             

Net realized gain

        379,155       507,199       124,725

Net change in unrealized appreciation (depreciation) of investments

        (2,032,054 )       (2,807,521 )       (4,554,837 )
    

 

 

      

 

 

      

 

 

  

Net Realized and Unrealized Loss

        (1,652,899 )       (2,300,322 )       (4,430,112 )
    

 

 

      

 

 

      

 

 

  

Net Increase in Net Assets Resulting from Operations

      $ 837,501     $ 936,042     $ 2,290,563
    

 

 

      

 

 

      

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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     Delaware Tax-Free   Delaware Tax-Free   Delaware Tax-Free
     Idaho Fund   New York Fund   Pennsylvania Fund

Investment Income:

             

Interest

      $ 4,043,919     $ 3,448,682     $ 19,984,197
    

 

 

      

 

 

      

 

 

  

Expenses:

             

Management fees

        570,975       486,138       2,523,191

Distribution expenses – Class A

        155,902       98,913       942,567

Distribution expenses – Class C

        239,625       164,351       315,971

Dividend disbursing and transfer agent fees and expenses

        71,950       66,956       314,643

Accounting and administration expenses

        47,563       44,843       111,018

Audit and tax fees

        44,480       44,480       44,480

Reports and statements to shareholders expenses

        15,581       22,435       48,759

Registration fees

        11,507       15,683       20,765

Legal fees

        8,198       23,795       35,606

Trustees’ fees and expenses

        4,858       4,141       21,457

Custodian fees

        3,593       2,786       11,283

Other

        14,915       21,435       34,790
    

 

 

      

 

 

      

 

 

  
       1,189,147       995,956       4,424,530

Less expenses waived

        (159,869 )       (245,313 )       (223,878 )

Less expenses paid indirectly

        (61 )       (1,035 )       (4,745 )
    

 

 

      

 

 

      

 

 

  

Total operating expenses

        1,029,217       749,608       4,195,907
    

 

 

      

 

 

      

 

 

  

Net Investment Income

        3,014,702       2,699,074       15,788,290
    

 

 

      

 

 

      

 

 

  

Net Realized and Unrealized Gain (Loss):

             

Net realized gain

        294,775       176,041       469,560

Net change in unrealized appreciation (depreciation) of investments

        (2,885,211 )       (2,366,192 )       (12,352,389 )
    

 

 

      

 

 

      

 

 

  

Net Realized and Unrealized Loss

        (2,590,436 )       (2,190,151 )       (11,882,829 )
    

 

 

      

 

 

      

 

 

  

Net Increase in Net Assets Resulting from Operations

      $ 424,266     $ 508,923     $ 3,905,461
    

 

 

      

 

 

      

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware Tax-Free Arizona Fund

 

     Year ended
     8/31/18   8/31/17

Increase (Decrease) in Net Assets from Operations:

         

Net investment income

      $       2,490,400     $       2,589,599

Net realized gain

        379,155       379,223

Net change in unrealized appreciation (depreciation)

        (2,032,054 )       (2,986,610 )
    

 

 

      

 

 

  

Net increase (decrease) in net assets resulting from operations

        837,501       (17,788 )
    

 

 

      

 

 

  

Dividends and Distributions to Shareholders from:

         

Net investment income:

         

Class A

        (2,075,708 )       (2,238,019 )

Class C

        (115,956 )       (151,025 )

Institutional Class

        (287,750 )       (189,980 )
    

 

 

      

 

 

  
       (2,479,414 )       (2,579,024 )
    

 

 

      

 

 

  

Capital Share Transactions:

         

Proceeds from shares sold:

         

Class A

        4,543,493       4,104,481

Class C

        428,738       375,483

Institutional Class

        5,486,278       6,254,164

Net asset value of shares issued upon reinvestment of dividends and distributions:

         

Class A

        1,649,081       1,713,625

Class C

        106,674       131,071

Institutional Class

        266,147       122,627
    

 

 

      

 

 

  
       12,480,411       12,701,451
    

 

 

      

 

 

  

 

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     Year ended
     8/31/18   8/31/17

Capital Share Transactions (continued):

         

Cost of shares redeemed:

         

Class A

      $ (8,330,769 )     $ (11,210,912 )

Class C

        (2,522,165 )       (1,895,123 )

Institutional Class

        (2,573,565 )       (2,881,200 )
    

 

 

      

 

 

  
       (13,426,499 )       (15,987,235 )
    

 

 

      

 

 

  

Decrease in net assets derived from capital share transactions

        (946,088 )       (3,285,784 )
    

 

 

      

 

 

  

Net Decrease in Net Assets

        (2,588,001 )       (5,882,596 )

Net Assets:

         

Beginning of year

        79,134,304       85,016,900
    

 

 

      

 

 

  

End of year

      $       76,546,303     $       79,134,304
    

 

 

      

 

 

  

Undistributed net investment income

      $ 19,881     $ 19,968
    

 

 

      

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware Tax-Free California Fund

 

     Year ended
     8/31/18   8/31/17

Increase (Decrease) in Net Assets from Operations:

         

Net investment income

      $       3,236,364     $       3,096,204

Net realized gain

        507,199       1,329,284

Net change in unrealized appreciation (depreciation)

        (2,807,521 )       (3,898,022 )
    

 

 

      

 

 

  

Net increase in net assets resulting from operations

        936,042       527,466
    

 

 

      

 

 

  

Dividends and Distributions to Shareholders from:

         

Net investment income:

         

Class A

        (1,745,468 )       (1,911,923 )

Class C

        (400,194 )       (449,450 )

Institutional Class

        (1,100,024 )       (740,915 )
    

 

 

      

 

 

  
       (3,245,686 )       (3,102,288 )
    

 

 

      

 

 

  

Capital Share Transactions:

         

Proceeds from shares sold:

         

Class A

        5,808,059       4,625,825

Class C

        1,122,941       2,019,263

Institutional Class

        11,785,738       22,253,751

Net asset value of shares issued upon reinvestment of dividends and distributions:

         

Class A

        1,550,043       1,691,220

Class C

        344,098       372,126

Institutional Class

        680,219       474,246
    

 

 

      

 

 

  
       21,291,098       31,436,431
    

 

 

      

 

 

  

 

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     Year ended
     8/31/18   8/31/17

Capital Share Transactions (continued):

         

Cost of shares redeemed:

         

Class A

      $ (7,031,840 )     $ (13,693,334 )

Class C

        (4,542,970 )       (4,192,525 )

Institutional Class

        (7,025,452 )       (11,739,212 )
    

 

 

      

 

 

  
       (18,600,262 )       (29,625,071 )
    

 

 

      

 

 

  

Increase in net assets derived from capital share transactions

        2,690,836       1,811,360
    

 

 

      

 

 

  

Net Increase (Decrease) in Net Assets

        381,192       (763,462 )

Net Assets:

         

Beginning of year

        98,757,966       99,521,428
    

 

 

      

 

 

  

End of year

      $       99,139,158     $       98,757,966
    

 

 

      

 

 

  

Undistributed net investment income

      $ 18,763     $ 18,763
    

 

 

      

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware Tax-Free Colorado Fund

 

     Year ended
     8/31/18   8/31/17

Increase (Decrease) in Net Assets from Operations:

         

Net investment income

      $       6,720,675     $       6,830,501

Net realized gain

        124,725       1,027,304

Net change in unrealized appreciation (depreciation)

        (4,554,837 )       (7,785,591 )
    

 

 

      

 

 

  

Net increase in net assets resulting from operations

        2,290,563       72,214
    

 

 

      

 

 

  

Dividends and Distributions to Shareholders from:

         

Net investment income:

         

Class A

        (5,512,421 )       (5,874,195 )

Class C

        (376,689 )       (437,092 )

Institutional Class

        (831,565 )       (583,320 )
    

 

 

      

 

 

  
       (6,720,675 )       (6,894,607 )
    

 

 

      

 

 

  

Capital Share Transactions:

         

Proceeds from shares sold:

         

Class A

        16,867,445       11,066,431

Class C

        1,730,260       1,981,732

Institutional Class

        12,748,594       10,757,917

Net asset value of shares issued upon reinvestment of dividends and distributions:

         

Class A

        4,746,976       5,009,118

Class C

        353,393       403,660

Institutional Class

        731,288       513,776
    

 

 

      

 

 

  
       37,177,956       29,732,634
    

 

 

      

 

 

  

 

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     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $         (19,482,166 )    $         (27,295,950 ) 

Class C

      (6,807,914 )      (2,336,234 ) 

Institutional Class

      (5,330,875 )      (3,397,468 ) 
  

 

 

    

 

 

  
     (31,620,955 )      (33,029,652 ) 
  

 

 

    

 

 

  

Increase (decrease) in net assets derived from capital share transactions

      5,557,001       (3,297,018 ) 
  

 

 

    

 

 

  

Net Increase (Decrease) in Net Assets

      1,126,889       (10,119,411 ) 

Net Assets:

     

Beginning of year

      201,316,508       211,435,919  
  

 

 

    

 

 

  

End of year

    $ 202,443,397     $ 201,316,508  
  

 

 

    

 

 

  

Undistributed net investment income

    $ 352,558     $ 352,558  
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware Tax-Free Idaho Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $       3,014,702     $       3,036,599  

Net realized gain

      294,775       147,991  

Net change in unrealized appreciation (depreciation)

      (2,885,211 )      (2,998,287 ) 
  

 

 

    

 

 

  

Net increase in net assets resulting from operations

      424,266       186,303  
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (1,888,287 )      (2,056,914 ) 

Class C

      (543,768 )      (675,436 ) 

Institutional Class

      (576,813 )      (312,269 ) 
  

 

 

    

 

 

  
     (3,008,868 )      (3,044,619 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      5,531,468       8,130,467  

Class C

      1,325,139       4,827,778  

Institutional Class

      14,737,822       5,875,252  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      1,651,109       1,786,007  

Class C

      512,413       635,053  

Institutional Class

      496,728       287,267  
  

 

 

    

 

 

  
     24,254,679       21,541,824  
  

 

 

    

 

 

  

 

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     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $       (14,113,035 )    $       (10,487,311 ) 

Class C

      (12,991,897 )      (6,112,419 ) 

Institutional Class

      (5,605,597 )      (4,099,476 ) 
  

 

 

    

 

 

  
     (32,710,529 )      (20,699,206 ) 
  

 

 

    

 

 

  

Increase (decrease) in net assets derived from capital share transactions

      (8,455,850 )      842,618  
  

 

 

    

 

 

  

Net Decrease in Net Assets

      (11,040,452 )      (2,015,698 ) 

Net Assets:

     

Beginning of year

      109,372,293       111,387,991  
  

 

 

    

 

 

  

End of year

    $ 98,331,841     $ 109,372,293  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (16,709 )    $ (16,644 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

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Statements of changes in net assets

Delaware Tax-Free New York Fund

 

     Year ended  
     8/31/18     8/31/17  

Increase (Decrease) in Net Assets from Operations:

     

Net investment income

    $          2,699,074     $          2,695,412  

Net realized gain

      176,041       704,914  

Net change in unrealized appreciation (depreciation)

      (2,366,192 )      (3,669,487 ) 
  

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

      508,923       (269,161 ) 
  

 

 

    

 

 

  

Dividends and Distributions to Shareholders from:

     

Net investment income:

     

Class A

      (1,233,582 )      (1,433,902 ) 

Class C

      (388,892 )      (436,795 ) 

Institutional Class

      (1,091,556 )      (879,292 ) 
  

 

 

    

 

 

  
     (2,714,030 )      (2,749,989 ) 
  

 

 

    

 

 

  

Capital Share Transactions:

     

Proceeds from shares sold:

     

Class A

      5,120,312       4,718,080  

Class C

      2,254,999       1,645,311  

Institutional Class

      8,726,165       18,813,396  

Net asset value of shares issued upon reinvestment of dividends and distributions:

     

Class A

      1,130,238       1,299,997  

Class C

      299,712       326,960  

Institutional Class

      968,692       775,993  
  

 

 

    

 

 

  
     18,500,118       27,579,737  
  

 

 

    

 

 

  

 

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     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $         (7,776,362 )    $         (18,909,422 ) 

Class C

      (4,270,778 )      (5,120,573 ) 

Institutional Class

      (8,099,299 )      (6,864,314 ) 
  

 

 

    

 

 

  
     (20,146,439 )      (30,894,309 ) 
  

 

 

    

 

 

  

Decrease in net assets derived from capital share transactions

      (1,646,321 )      (3,314,572 ) 
  

 

 

    

 

 

  

Net Decrease in Net Assets

      (3,851,428 )      (6,333,722 ) 

Net Assets:

     

Beginning of year

      89,912,221       96,245,943  
  

 

 

    

 

 

  

End of year

    $ 86,060,793     $ 89,912,221  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (650 )    $ (650 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

105

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Statements of changes in net assets

Delaware Tax-Free Pennsylvania Fund

 

     Year ended
     8/31/18   8/31/17

Increase (Decrease) in Net Assets from Operations:

         

Net investment income

      $       15,788,290     $       16,375,469

Net realized gain

        469,560       1,944,064

Net change in unrealized appreciation (depreciation)

        (12,352,389 )       (17,162,875 )
    

 

 

      

 

 

  

Net increase in net assets resulting from operations

        3,905,461       1,156,658
    

 

 

      

 

 

  

Dividends and Distributions to Shareholders from:

         

Net investment income:

         

Class A

        (13,512,474 )       (14,365,845 )

Class C

        (857,030 )       (953,417 )

Institutional Class

        (1,418,785 )       (1,056,207 )

Net realized gain:

         

Class A

        (243,116 )       —

Class C

        (20,552 )       —

Institutional Class

        (23,146 )       —
    

 

 

      

 

 

  
       (16,075,103 )       (16,375,469 )
    

 

 

      

 

 

  

Capital Share Transactions:

         

Proceeds from shares sold:

         

Class A

        28,325,061       24,022,727

Class C

        2,076,171       4,234,154

Institutional Class

        16,590,343       19,470,435

Net asset value of shares issued upon reinvestment of dividends and distributions:

         

Class A

        11,749,727       12,019,460

Class C

        840,401       882,040

Institutional Class

        1,235,791       921,495
    

 

 

      

 

 

  
       60,817,494       61,550,311
    

 

 

      

 

 

  

 

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     Year ended  
     8/31/18     8/31/17  

Capital Share Transactions (continued):

     

Cost of shares redeemed:

     

Class A

    $ (50,721,030 )    $ (63,127,978 ) 

Class C

      (8,984,224 )      (6,923,286 ) 

Institutional Class

      (8,774,119 )      (12,573,989 ) 
  

 

 

    

 

 

  
     (68,479,373 )      (82,625,253 ) 
  

 

 

    

 

 

  

Decrease in net assets derived from capital share transactions

      (7,661,879 )      (21,074,942 ) 
  

 

 

    

 

 

  

Net Decrease in Net Assets

      (19,831,521 )      (36,293,753 ) 

Net Assets:

     

Beginning of year

      465,672,075       501,965,828  
  

 

 

    

 

 

  

End of year

    $       445,840,554     $       465,672,075  
  

 

 

    

 

 

  

Distributions in excess of net investment income

    $ (108,965 )    $ (108,966 ) 
  

 

 

    

 

 

  

See accompanying notes, which are an integral part of the financial statements.

 

107

Table of Contents

Financial highlights

Delaware Tax-Free Arizona Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

 

See accompanying notes, which are an integral part of the financial statements.

 

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     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.48        $ 11.83        $ 11.44        $ 11.45        $ 10.69  
     0.36          0.37          0.38          0.38          0.43  
     (0.24 )         (0.35 )         0.39          (0.01 )         0.79  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.12          0.02          0.77          0.37          1.22  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.36 )         (0.37 )         (0.38 )         (0.38 )         (0.43 ) 
     —          —          —          —          (0.03 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.36 )         (0.37 )         (0.38 )         (0.38 )         (0.46 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.24        $ 11.48        $ 11.83        $ 11.44        $ 11.45  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     1.11%          0.24%          6.79%          3.24%          11.56%  
   $ 63,327        $ 66,839        $ 74,556        $ 77,085        $ 81,592  
     0.84%          0.84%          0.84%          0.85%          0.84%  
     1.00%          0.97%          0.96%          0.97%          0.96%  
     3.23%          3.25%          3.23%          3.28%          3.86%  

    

      3.07%          3.12%          3.11%          3.16%          3.74%  
     6%          9%          14%          12%          11%  
                      

 

  

 

109

Table of Contents

Financial highlights

Delaware Tax-Free Arizona Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.51        $ 11.87        $ 11.47        $ 11.48        $ 10.72  

            

      0.28          0.29          0.29          0.29          0.35  
     (0.24 )         (0.37 )         0.40          (0.01 )         0.78  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.04          (0.08 )         0.69          0.28          1.13  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.28 )         (0.28 )         (0.29 )         (0.29 )         (0.34 ) 
     —          —          —          —          (0.03 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.28 )         (0.28 )         (0.29 )         (0.29 )         (0.37 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.27        $ 11.51        $ 11.87        $ 11.47        $ 11.48  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.36%          (0.59% )         6.07%          2.47%          10.72%  
   $ 3,122        $ 5,215        $ 6,816        $ 6,747        $ 6,238  
     1.59%          1.59%          1.59%          1.60%          1.59%  
     1.75%          1.72%          1.71%          1.72%          1.71%  
     2.48%          2.50%          2.48%          2.54%          3.11%  
     2.32%          2.37%          2.36%          2.42%          2.99%  
     6%          9%          14%          12%          11%  
                      

 

  

 

111

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Financial highlights

Delaware Tax-Free Arizona Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

2 

The average shares outstanding have been applied for per share information.

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

5 

Portfolio turnover is representative of the Fund for the entire annual period.

See accompanying notes, which are an integral part of the financial statements.

 

112

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                                                 12/31/131   
     Year ended          to  
  

 

 

       
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.48        $ 11.84        $ 11.44        $ 11.45        $ 10.77  
     0.39          0.40          0.41          0.41          0.33  
     (0.24 )         (0.36 )         0.39          (0.01 )         0.67  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.15          0.04          0.80          0.40          1.00  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.39 )         (0.40 )         (0.40 )         (0.41 )         (0.32 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.39 )         (0.40 )         (0.40 )         (0.41 )         (0.32 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.24        $ 11.48        $ 11.84        $ 11.44        $ 11.45  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     1.36%          0.40%          7.14%          3.49%          9.39%  
   $ 10,097        $ 7,080        $ 3,645        $ 744        $ 219  
     0.59%          0.59%          0.59%          0.60%          0.59%  
     0.75%          0.72%          0.71%          0.72%          0.71%  
     3.48%          3.50%          3.48%          3.54%          4.06%  
     3.32%          3.37%          3.36%          3.42%          3.94%  
     6%          9%          14%          12%          11% 5   
                      

 

  

 

113

Table of Contents

Financial highlights

Delaware Tax-Free California Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

114

Table of Contents

    

    

 

                           Year ended                        
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 12.26        $ 12.60        $ 12.11        $ 12.08        $ 11.11  
     0.40          0.41          0.43          0.42          0.43  
     (0.28 )         (0.34 )         0.48          0.03          0.97  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.12          0.07          0.91          0.45          1.40  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.40 )         (0.41 )         (0.42 )         (0.42 )         (0.43 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.40 )         (0.41 )         (0.42 )         (0.42 )         (0.43 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.98        $ 12.26        $ 12.60        $ 12.11        $ 12.08  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     1.00%          0.63%          7.67%          3.73%          12.79%  
   $ 53,171        $ 54,076        $ 63,284        $ 60,550        $ 73,955  
     0.82%          0.82%          0.82%          0.83%          0.82%  
     1.02%          1.01%          1.01%          1.01%          1.00%  
     3.30%          3.36%          3.43%          3.42%          3.69%  
     3.10%          3.17%          3.24%          3.24%          3.51%  
     16%          27%          18%          24%          13%  
                      

 

  

 

115

Table of Contents

Financial highlights

Delaware Tax-Free California Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

116

Table of Contents

    

    

 

     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 12.28        $ 12.62        $ 12.13        $ 12.10        $ 11.12  
     0.31          0.32          0.33          0.33          0.34  
     (0.28 )         (0.34 )         0.49          0.02          0.98  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.03          (0.02 )         0.82          0.35          1.32  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.31 )         (0.32 )         (0.33 )         (0.32 )         (0.34 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.31 )         (0.32 )         (0.33 )         (0.32 )         (0.34 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 12.00        $ 12.28        $ 12.62        $ 12.13        $ 12.10  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.25%          (0.12% )         6.86%          2.95%          12.04%  
   $ 13,015        $ 16,473        $ 18,827        $ 15,853        $ 15,473  
     1.57%          1.57%          1.57%          1.58%          1.57%  
     1.77%          1.76%          1.76%          1.76%          1.75%  
     2.55%          2.61%          2.68%          2.67%          2.94%  
     2.35%          2.42%          2.49%          2.49%          2.76%  
     16%          27%          18%          24%          13%  
                      

 

  

 

117

Table of Contents

Financial highlights

Delaware Tax-Free California Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

 

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

2 

The average shares outstanding have been applied for per share information.

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

5 

Portfolio turnover is representative of the Fund for the entire annual period.

See accompanying notes, which are an integral part of the financial statements.

 

118

Table of Contents

    

    

 

         12/31/131 to  
    Year ended      
 

 

 

       
    8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
  $ 12.26        $ 12.60        $ 12.11        $ 12.08        $ 11.27  
    0.43          0.44          0.46          0.45          0.32  
    (0.28 )         (0.34 )         0.49          0.03          0.81  
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
    0.15          0.10          0.95          0.48          1.13  
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
    (0.43 )         (0.44 )         (0.46 )         (0.45 )         (0.32 ) 
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
    (0.43 )         (0.44 )         (0.46 )         (0.45 )         (0.32 ) 
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
  $ 11.98        $ 12.26        $ 12.60        $ 12.11        $ 12.08  
 

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
    1.26%          0.89%          7.94%          3.98%          10.10%  
  $ 32,953        $ 28,209        $ 17,410        $ 10,308        $ 5,983  
    0.57%          0.57%          0.57%          0.58%          0.57%  
    0.77%          0.76%          0.76%          0.76%          0.75%  
    3.55%          3.61%          3.68%          3.67%          3.89%  
    3.35%          3.42%          3.49%          3.49%          3.71%  
    16%          27%          18%          24%          13% 5   
                     

 

  

 

119

Table of Contents

Financial highlights

Delaware Tax-Free Colorado Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

120

Table of Contents

 

    

 

    

 

    

Year ended

  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.28        $ 11.65        $ 11.24        $ 11.32        $ 10.49  
                      
     0.37          0.39          0.40          0.40          0.41  
     (0.24 )         (0.37 )         0.41          (0.08 )         0.82  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.13          0.02          0.81          0.32          1.23  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.37 )         (0.39 )         (0.40 )         (0.40 )         (0.40 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.37 )         (0.39 )         (0.40 )         (0.40 )         (0.40 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
   $ 11.04        $ 11.28        $ 11.65        $ 11.24        $ 11.32  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     1.22%          0.26%          7.33%          2.87%          11.94%  
                      
   $ 164,087        $ 165,554        $ 182,764        $ 174,078        $ 183,560  
     0.84%          0.84%          0.84%          0.85%          0.84%  
                      
     0.97%          0.96%          0.96%          0.97%          0.97%  
     3.36%          3.48%          3.50%          3.54%          3.69%  
                      
     3.23%          3.36%          3.38%          3.42%          3.56%  
     6%          17%          6%          10%          22%  
                           

 

  

 

121

Table of Contents

Financial highlights

Delaware Tax-Free Colorado Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    
    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

 

Total from investment operations

 

Less dividends and distributions from:

Net investment income

 

Total dividends and distributions

 

Net asset value, end of period.

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

 

See

accompanying notes, which are an integral part of the financial statements.

 

122

Table of Contents

 

    

 

    

 

     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.31        $ 11.68        $ 11.27        $ 11.35        $ 10.52  
                      
     0.29          0.31          0.32          0.32          0.32  
     (0.24 )         (0.37 )         0.41          (0.08 )         0.83  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.05          (0.06 )         0.73          0.24          1.15  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.29 )         (0.31 )         (0.32 )         (0.32 )         (0.32 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.29 )         (0.31 )         (0.32 )         (0.32 )         (0.32 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.07        $ 11.31        $ 11.68        $ 11.27        $ 11.35  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.47%          (0.48% )         6.52%          2.10%          11.09%  
                      
   $ 10,923        $ 15,975        $ 16,461        $ 12,192        $ 12,029  
     1.59%          1.59%          1.59%          1.60%          1.59%  
     1.72%          1.71%          1.71%          1.72%          1.72%  
     2.61%          2.73%          2.75%          2.79%          2.94%  
     2.48%          2.61%          2.63%          2.67%          2.81%  
     6%          17%          6%          10%          22%  

 

  

 

123

Table of Contents

Financial highlights

Delaware Tax-Free Colorado Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

 

Total from investment operations

 

Less dividends and distributions from:

Net investment income

 

Total dividends and distributions

 

Net asset value, end of period.

 

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

    

 

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

 

2 

The average shares outstanding have been applied for per share information.

 

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

 

5 

Portfolio turnover is representative of the Fund for the entire annual period.

See accompanying notes, which are an integral part of the financial statements.

 

124

Table of Contents

 

    

 

    

 

     Year ended    12/31/131
to		  
  

 

 

    
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.28        $ 11.65        $ 11.24        $ 11.32        $ 10.59  
                      
     0.40          0.42          0.43          0.43          0.33  
     (0.24 )         (0.37 )         0.41          (0.08 )         0.71  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.16          0.05          0.84          0.35          1.04  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.40 )         (0.42 )         (0.43 )         (0.43 )         (0.31 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.40 )         (0.42 )         (0.43 )         (0.43 )         (0.31 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
   $ 11.04        $ 11.28        $ 11.65        $ 11.24        $ 11.32  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     1.47%          0.51%          7.60%          3.13%          9.89%  
                      
   $ 27,433        $ 19,788        $ 12,211        $ 5,102        $ 3,077  
     0.59%          0.59%          0.59%          0.60%          0.59%  
     0.72%          0.71%          0.71%          0.72%          0.72%  
     3.61%          3.73%          3.75%          3.79%          3.91%  
     3.48%          3.61%          3.63%          3.67%          3.78%  
     6%          17%          6%          10%          22% 5   
                           

 

  

 

125

Table of Contents

Financial highlights

Delaware Tax-Free Idaho Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    
    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

 

Total from investment operations

 

Less dividends and distributions from:

Net investment income

 

Total dividends and distributions

 

Net asset value, end of period.

 

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

126

Table of Contents

 

    

 

    

 

     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.49        $ 11.79        $ 11.51        $ 11.56        $ 10.99  
                      
     0.34          0.35          0.36          0.37          0.37  
     (0.28 )         (0.30 )         0.28          (0.06 )         0.57  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.06          0.05          0.64          0.31          0.94  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.34 )         (0.35 )         (0.36 )         (0.36 )         (0.37 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.34 )         (0.35 )         (0.36 )         (0.36 )         (0.37 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.21        $ 11.49        $ 11.79        $ 11.51        $ 11.56  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.56%          0.47%          5.66%          2.76%          8.71%  
                      
   $ 59,425        $ 67,907        $ 70,306        $ 75,163        $ 80,600  
     0.86%          0.86%          0.86%          0.88%          0.88%  
     1.01%          1.00%          0.99%          1.00%          0.99%  
     3.04%          3.03%          3.11%          3.17%          3.32%  
     2.89%          2.89%          2.98%          3.05%          3.21%  
     11%          10%          11%          7%          16%  
                      

 

  

 

127

Table of Contents

Financial highlights

Delaware Tax-Free Idaho Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    
    

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period.

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

128

Table of Contents

 

    

 

    

 

     Year ended  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.48        $ 11.78        $ 11.50        $ 11.55        $ 10.98  
                      
     0.26          0.26          0.27          0.28          0.29  
     (0.28 )         (0.30 )         0.28          (0.05 )         0.57  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.02 )         (0.04 )         0.55          0.23          0.86  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.26 )         (0.26 )         (0.27 )         (0.28 )         (0.29 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.26 )         (0.26 )         (0.27 )         (0.28 )         (0.29 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.20        $ 11.48        $ 11.78        $ 11.50        $ 11.55  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.19% )         (0.29% )         4.88%          1.99%          7.91%  
                      
   $ 17,597        $ 29,375        $ 30,834        $ 28,557        $ 31,178  
     1.61%          1.61%          1.61%          1.63%          1.63%  
     1.76%          1.75%          1.74%          1.75%          1.74%  
     2.29%          2.28%          2.36%          2.42%          2.57%  
     2.14%          2.14%          2.23%          2.30%          2.46%  
     11%          10%          11%          7%          16%  
                      

 

  

 

129

Table of Contents

Financial highlights

Delaware Tax-Free Idaho Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

 

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period.

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

    

 

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

 

2 

The average shares outstanding have been applied for per share information.

 

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

 

5 

Portfolio turnover is representative of the Fund for the entire annual period.

See accompanying notes, which are an integral part of the financial statements.

 

130

Table of Contents

 

    

 

    

 

     Year ended   

12/31/131
to

8/31/14

  
  

 

 

    
     8/31/18          8/31/17          8/31/16          8/31/15      

 

  
   $ 11.49        $ 11.79        $ 11.51        $ 11.57        $ 11.06  
                      
     0.37          0.37          0.39          0.40          0.29  
     (0.28 )         (0.29 )         0.28          (0.07 )         0.51  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.09          0.08          0.67          0.33          0.80  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.37 )         (0.38 )         (0.39 )         (0.39 )         (0.29 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.37 )         (0.38 )         (0.39 )         (0.39 )         (0.29 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.21        $ 11.49        $ 11.79        $ 11.51        $ 11.57  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.82%          0.71%          5.92%          2.92%          7.31%  
                      
   $ 21,310        $ 12,090        $ 10,248        $ 2,588        $ 1,080  
     0.61%          0.61%          0.61%          0.63%          0.63%  
     0.76%          0.75%          0.74%          0.75%          0.74%  
     3.29%          3.28%          3.36%          3.42%          3.46%  
     3.14%          3.14%          3.23%          3.30%          3.35%  
     11%          10%          11%          7%          16% 5   
                      

 

  

 

131

Table of Contents

Financial highlights

Delaware Tax-Free New York Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    
    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

132

Table of Contents

    

 

    

 

    

     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.62        $ 11.98        $ 11.48        $ 11.46        $ 10.57  
                      
     0.36          0.35          0.36          0.37          0.37  
     (0.29 )         (0.35 )         0.50          0.02          0.89  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.07          —          0.86          0.39          1.26  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.36 )         (0.36 )         (0.36 )         (0.37 )         (0.37 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.36 )         (0.36 )         (0.36 )         (0.37 )         (0.37 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.33        $ 11.62        $ 11.98        $ 11.48        $ 11.46  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.60%          0.05%          7.57%          3.41%          12.06%  
                      
   $ 38,139        $ 40,647        $ 55,418        $ 51,708        $ 52,589  
     0.80%          0.80%          0.80%          0.83%          0.80%  
     1.08%          1.03%          1.02%          1.07%          1.06%  
     3.10%          3.04%          3.06%          3.18%          3.32%  
     2.82%          2.81%          2.84%          2.94%          3.06%  
     10%          14%          8%          6%          20%  

    

                       

 

  

 

133

Table of Contents

Financial highlights

Delaware Tax-Free New York Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    
    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

134

Table of Contents

    

 

    

 

    

 

     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.59        $ 11.95        $ 11.45        $ 11.44        $ 10.54  
                      
     0.27          0.26          0.27          0.28          0.28  
     (0.29 )         (0.35 )         0.50          0.01          0.90  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.02 )         (0.09 )         0.77          0.29          1.18  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.27 )         (0.27 )         (0.27 )         (0.28 )         (0.28 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.27 )         (0.27 )         (0.27 )         (0.28 )         (0.28 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.30        $ 11.59        $ 11.95        $ 11.45        $ 11.44  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.16% )         (0.71% )         6.78%          2.55%          11.35%  
                      
   $ 14,941        $ 17,073        $ 20,899        $ 17,825        $ 18,491  
     1.55%          1.55%          1.55%          1.58%          1.55%  
     1.83%          1.78%          1.77%          1.82%          1.81%  
     2.35%          2.29%          2.31%          2.43%          2.57%  
     2.07%          2.06%          2.09%          2.19%          2.31%  
     10%          14%          8%          6%          20%  

    

                       

 

  

 

135

Table of Contents

Financial highlights

Delaware Tax-Free New York Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

    

    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

    

 

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

 

2 

The average shares outstanding have been applied for per share information.

 

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

 

5 

Portfolio turnover is representative of the Fund for the entire annual period.

See accompanying notes, which are an integral part of the financial statements.

 

136

Table of Contents

    

 

    

    

 

     Year ended    12/31/131
to		  
  

 

 

    
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 11.61        $ 11.97        $ 11.47        $ 11.46        $ 10.71  
                      
     0.39          0.38          0.39          0.40          0.28  
     (0.28 )         (0.35 )         0.50          0.01          0.75  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.11          0.03          0.89          0.41          1.03  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.39 )         (0.39 )         (0.39 )         (0.40 )         (0.28 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.39 )         (0.39 )         (0.39 )         (0.40 )         (0.28 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 11.33        $ 11.61        $ 11.97        $ 11.47        $ 11.46  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.93%          0.29%          7.84%          3.58%          9.69%  
                      
   $ 32,981        $ 32,192        $ 19,929        $ 12,667        $ 1,769  
     0.55%          0.55%          0.55%          0.58%          0.55%  
     0.83%          0.78%          0.77%          0.82%          0.80%  
     3.35%          3.29%          3.31%          3.43%          3.55%  
     3.07%          3.06%          3.09%          3.19%          3.30%  
     10%          14%          8%          6%          20% 5   

    

                       

 

  

 

137

Table of Contents

Financial highlights

Delaware Tax-Free Pennsylvania Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    
    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1 

The average shares outstanding have been applied for per share information.

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect.

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 8.14        $ 8.39        $ 8.15        $ 8.16        $ 7.59  
                      
     0.28          0.28          0.29          0.29          0.29  
     (0.20 )         (0.25 )         0.24          (0.01 )         0.57  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.08          0.03          0.53          0.28          0.86  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.28 )         (0.28 )         (0.29 )         (0.29 )         (0.29 ) 
     (0.01 )         —          —          —          —  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.29 )         (0.28 )         (0.29 )         (0.29 )         (0.29 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 7.93        $ 8.14        $ 8.39        $ 8.15        $ 8.16  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.93%          0.48%          6.60%          3.45%          11.58%  
                      
   $ 378,038        $ 399,001        $ 439,379        $ 441,904        $ 451,301  
     0.88%          0.88%          0.88%          0.89%          0.88%  
     0.93%          0.94%          0.94%          0.95%          0.95%  
     3.48%          3.51%          3.50%          3.51%          3.73%  
     3.43%          3.45%          3.44%          3.45%          3.66%  
     19%          15%          14%          13%          7%  
                           

 

  

 

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Financial highlights

Delaware Tax-Free Pennsylvania Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    
    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income1

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return2

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived3

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived3

Portfolio turnover

    

 

 

1 

The average shares outstanding have been applied for per share information.

 

2 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

3 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

See accompanying notes, which are an integral part of the financial statements.

 

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     Year ended  
  

 

 

  
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 8.14        $ 8.39        $ 8.15        $ 8.16        $ 7.59  
                      
     0.22          0.22          0.23          0.23          0.23  
     (0.20 )         (0.25 )         0.24          (0.01 )         0.57  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.02          (0.03 )         0.47          0.22          0.80  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.22 )         (0.22 )         (0.23 )         (0.23 )         (0.23 ) 
     (0.01 )         —          —          —          —  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.23 )         (0.22 )         (0.23 )         (0.23 )         (0.23 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 7.93        $ 8.14        $ 8.39        $ 8.15        $ 8.16  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.16%          (0.27% )         5.79%          2.67%          10.74%  
                      
   $ 26,376        $ 33,298        $ 36,215        $ 32,799        $ 32,096  
     1.64%          1.64%          1.64%          1.65%          1.64%  
     1.69%          1.70%          1.70%          1.71%          1.71%  
     2.72%          2.75%          2.74%          2.75%          2.97%  
     2.67%          2.69%          2.68%          2.69%          2.90%  
     19%          15%          14%          13%          7%  
                           

 

  

 

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Financial highlights

Delaware Tax-Free Pennsylvania Fund Institutional Class

Selected data for each share of the Fund outstanding throughout each period were as follows:

 

    

    

 

Net asset value, beginning of period

Income (loss) from investment operations:

Net investment income2

Net realized and unrealized gain (loss)

Total from investment operations

Less dividends and distributions from:

Net investment income

Net realized gain

Total dividends and distributions

Net asset value, end of period

Total return3

Ratios and supplemental data:

Net assets, end of period (000 omitted)

Ratio of expenses to average net assets

Ratio of expenses to average net assets prior to fees waived4

Ratio of net investment income to average net assets

Ratio of net investment income to average net assets prior to fees waived4

Portfolio turnover

    

 

 

1 

Date of commencement of operations; ratios have been annualized and total return has not been annualized.

 

2 

The average shares outstanding have been applied for per share information.

 

3 

Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

 

4 

Expenses paid indirectly were not material and had no impact on the ratios disclosed. Expenses paid indirectly for the year ended Aug. 31, 2018 are reflected on the “Statements of operations.”

 

5 

Portfolio turnover is representative of the Fund for the entire annual period.

See accompanying notes, which are an integral part of the financial statements.

 

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     Year ended    12/31/131
to		  
  

 

 

    
     8/31/18          8/31/17          8/31/16          8/31/15          8/31/14  

 

  
   $ 8.13        $ 8.38        $ 8.14        $ 8.16        $ 7.67  
                      
     0.30          0.30          0.31          0.31          0.23  
     (0.20 )         (0.25 )         0.24          (0.02 )         0.49  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     0.10          0.05          0.55          0.29          0.72  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
                      
     (0.30 )         (0.30 )         (0.31 )         (0.31 )         (0.23 ) 
     (0.01 )         —          —          —          —  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     (0.31 )         (0.30 )         (0.31 )         (0.31 )         (0.23 ) 
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
   $ 7.92        $ 8.13        $ 8.38        $ 8.14        $ 8.16  
  

 

 

       

 

 

       

 

 

       

 

 

       

 

 

  
     1.16%          0.73%          6.86%          3.57%          9.44%  
                      
   $ 41,427        $ 33,373        $ 26,372        $ 16,740        $ 3,733  
     0.64%          0.64%          0.64%          0.65%          0.64%  
     0.69%          0.70%          0.70%          0.71%          0.71%  
     3.72%          3.75%          3.74%          3.75%          3.89%  
     3.67%          3.69%          3.68%          3.69%          3.82%  
     19%          15%          14%          13%          7% 5   
                           

 

  

 

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Table of Contents
Notes to financial statements
Delaware Funds® by Macquarie state tax-free funds    August 31, 2018

 

 

Voyageur Insured Funds is organized as a Delaware statutory trust and offers one series:

Delaware Tax-Free Arizona Fund. Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund. Voyageur Mutual Funds II is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Colorado Fund. Delaware Group® State Tax-Free Income Trust is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Pennsylvania Fund. Voyageur Insured Funds, Voyageur Mutual Funds, Voyageur Mutual Funds II, and Delaware Group State Tax-Free Income Trust are each referred to as a Trust, or collectively as the Trusts. These financial statements and the related notes pertain to Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund (each a Fund, or collectively, the Funds). Each Fund is an open-end investment company. The Funds are considered diversified under the Investment Company Act of 1940, as amended (1940 Act), and offer Class A, Class C, and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of 4.50%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) instead of a front-end sales charge of 1.00%, which will be incurred if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1.00%, if redeemed during the first 12 months. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.

The investment objective of each Fund is to seek as high a level of current income exempt from federal income tax and from personal income taxes in the respective applicable state, as is consistent with preservation of capital.

1. Significant Accounting Policies

The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Funds. Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services - Investment Companies.

Security Valuation — Debt securities are valued based upon valuations provided by an independent pricing service or broker and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Open-end investment companies are valued at their published net asset value (NAV) per share. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Trust’s Board of Trustees (each, a Board or, collectively, the Boards). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Boards.

 

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Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Each Fund evaluates tax positions taken or expected to be taken in the course of preparing each Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed each Fund’s tax positions taken or expected to be taken on each Fund’s federal income tax returns through the year ended Aug. 31, 2018 and for all open tax years (years ended Aug. 31, 2015–Aug. 31, 2017), and has concluded that no provision for federal income tax is required in each Fund’s financial statements. If applicable, each Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in other expenses on the “Statements of operations.” During the year ended Aug. 31, 2018, the Funds did not incur any interest or tax penalties.

Class Accounting — Investment income and common expenses are allocated to the various classes of each Fund on the basis of “settled shares” of each class in relation to the net assets of each Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of each Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.

Use of Estimates — Each Fund is an investment company, whose financial statements are prepared in conformity with US GAAP. Therefore, each Fund follows the accounting and reporting guidelines for investment companies. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.

Other — Expenses directly attributable to each Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Each Fund declares dividends daily from net investment income and pays the dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually. Each Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.

Each Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expense paid under this arrangement is included on the “Statements of operations” under “Custodian fees” with the corresponding expense offset included under “Less expenses paid indirectly.”

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

1. Significant Accounting Policies (continued)

 

For the year ended Aug. 31, 2018, each Fund earned the following amounts under this agreement:

 

Delaware

Tax-Free
  Arizona Fund  

  Delaware
Tax-Free
 California Fund 		   Delaware
Tax-Free
 Colorado Fund 		   Delaware
Tax-Free
    Idaho Fund    		   Delaware
Tax-Free
 New York Fund 		   Delaware
Tax-Free
  Pennsylvania  
Fund

 

$1,037

   $1,085   $68   $3   $995   $4,378

Each Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expense paid under this arrangement is included on the “Statements of operations” under “Dividend disbursing and transfer agent fees and expenses” with the corresponding expense offset included under “Less expenses paid indirectly.” For the year ended Aug. 31, 2018, each Fund earned the following amounts under this agreement:

 

Delaware
Tax-Free
  Arizona  Fund  

   Delaware
Tax-Free
 California Fund 		   Delaware
Tax-Free
 Colorado Fund 		   Delaware
Tax-Free
    Idaho Fund    		   Delaware
Tax-Free
 New York Fund 		   Delaware
Tax-Free
  Pennsylvania  
Fund

 

$53

   $43   $129   $58   $40   $367

2. Investment Management, Administration Agreements, and Other Transactions with Affiliates

In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly based on each Fund’s average daily net assets as follows:

 

     Delaware
Tax-Free
Arizona Fund		      Delaware
Tax-Free
California Fund		      Delaware
Tax-Free
Colorado Fund		      Delaware
Tax-Free Idaho
Fund		      Delaware
Tax-Free
New York
Fund		      Delaware
Tax-Free
Pennsylvania
Fund		  

 

On the first $500 million

   

 

 

 

0.500% 

 

 

      0.550%        0.550%         0.550%        0.550%         0.550%   

 

On the next $500 million

      0.475%         0.500%        0.500%         0.500%        0.500%         0.500%   

 

On the next $1.5 billion

      0.450%         0.450%        0.450%         0.450%        0.450%         0.450%   

 

In excess of $2.5 billion

      0.425%         0.425%        0.425%         0.425%        0.425%         0.425%   

DMC has contractually agreed to waive that portion, if any, of its management fee and/or pay/reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding any distribution and service (12b-1) fees, acquired fund fees and expenses, taxes, interest, inverse floater program expenses, 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), do not exceed specified percentages of each Fund’s average daily net assets from Sept. 1, 2017 through Aug. 31, 2018* as shown on the next page. For purposes of these waivers and reimbursements, nonroutine expenses may also include such additional costs and expenses as may be agreed upon from time to time by the Boards and DMC. These expense waivers and reimbursements apply only to expenses paid directly by each Fund and may only

 

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be terminated by agreement of DMC and each Fund. The waivers and reimbursements are accrued daily and received monthly.

 

       Delaware  
Tax-Free
Arizona
Fund		        Delaware  
Tax-Free
California
Fund		        Delaware  
Tax-Free
Colorado
Fund		        Delaware  
Tax-Free
Idaho
Fund		        Delaware  
Tax-Free
New York
Fund		      Delaware
Tax-Free
  Pennsylvania  
Fund		  

Operating expense limitation as a percentage of average daily net assets (per annum)

      0.59%        0.57%        0.59%        0.61%        0.55%        0.64%  

Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of all Funds within the Delaware Funds at the following annual rate: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each Fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each Fund then pays its portion of the remainder of the Total Fee on a relative NAV basis. These amounts are included on the “Statements of operations” under “Accounting and administration expenses.” For the year ended Aug. 31, 2018, each Fund was charged for these services as follows:

 

Delaware
Tax-Free
    Arizona Fund    		   Delaware
Tax-Free
 California Fund 		   Delaware
Tax-Free
 Colorado Fund 		   Delaware
Tax-Free
     Idaho Fund     		   Delaware
Tax-Free
  New York Fund  		   Delaware
Tax-Free
    Pennsylvania    
Fund
$6,931   $7,752   $11,606   $7,924   $7,341   $21,341

DIFSC is also the transfer agent and dividend disbursing agent of each Fund. For these services, DIFSC’s fees were calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds from Sept. 1, 2017 through June 30, 2018 at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% of average daily net assets in excess of $30 billion. Effective July 1, 2018, each Fund as well as the other Delaware Funds entered into an amendment to the DIFSC agreement. Under the amendment to the DIFSC agreement, DIFSC’s fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rate: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the transfer agent agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. These amounts are included on the “Statements of operations” under “Dividend disbursing and transfer agent fees and expenses.” For the year ended Aug. 31, 2018, each Fund was charged for these services as follows:

 

Delaware
Tax-Free
    Arizona Fund    		   Delaware
Tax-Free
 California Fund 		   Delaware
Tax-Free
 Colorado Fund 		   Delaware
Tax-Free
     Idaho Fund     		   Delaware
Tax-Free
  New York Fund  		   Delaware
Tax-Free
    Pennsylvania    
Fund
$15,093   $19,324   $39,175   $20,214   $17,208   $89,294

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)

 

Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to each Fund. Sub-transfer agency fees are paid by each Fund and are also included on the “Statement of operations” under “Dividend disbursing and transfer agent fees and expenses.”

Pursuant to a distribution agreement and distribution plan, each Fund pays DDLP, the distributor and an affiliate of DMC, an annual 12b-1 fee of 0.25% of the average daily net assets of the Class A shares (except for Delaware Tax-Free Pennsylvania Fund). The Board for Delaware Tax-Free Pennsylvania Fund has adopted a formula for calculating 12b-1 fees for the Fund’s Class A shares that went into effect on June 1, 1992. The Fund’s Class A shares are currently subject to a blended 12b-1 fee equal to the sum of: (1) 0.10% of average daily net assets representing shares acquired prior to June 1, 1992, and (2) 0.25% of average daily net assets representing shares acquired on or after June 1, 1992. All of the Fund’s Class A shareholders bear 12b-1 fees at the same blended rate, currently 0.24% of average daily net assets, based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. Each Fund pays 1.00% of the average daily net assets of the Class C shares. The fees are calculated daily and paid monthly. Institutional Class shares pay no 12b-1 fees.

As provided in the investment management agreement, each Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to each Fund. These amounts are included on the “Statements of operations” under “Legal fees.” For the year ended Aug. 31, 2018, each Fund was charged for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees as follows:

 

Delaware
Tax-Free
  Arizona  Fund  

   Delaware
Tax-Free
 California Fund 		   Delaware
Tax-Free
 Colorado Fund 		   Delaware
Tax-Free
    Idaho Fund    		   Delaware
Tax-Free
 New York Fund 		   Delaware
Tax-Free
    Pennsylvania    
Fund
$1,533   $1,969   $3,981   $2,063   $17,711   $8,991

For the year ended Aug. 31, 2018, DDLP earned commissions on sales of Class A shares for each Fund as follows:

 

Delaware
Tax-Free
  Arizona  Fund  

   Delaware
Tax-Free
 California Fund 		   Delaware
Tax-Free
 Colorado Fund 		   Delaware
Tax-Free
    Idaho Fund    		   Delaware
Tax-Free
 New York Fund 		   Delaware
Tax-Free
    Pennsylvania    
Fund
$3,931   $4,924   $24,952   $7,317   $9,156   $30,188

For the year ended Aug. 31, 2018, DDLP received gross CDSC commissions on redemptions of each Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares. For the year

 

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ended Aug. 31, 2018, Delaware Tax-Free Arizona Fund did not receive gross CDSC commissions on redemptions for Class A and Class C shares. The amounts received were as follows:

 

    

Delaware
Tax-Free
California Fund

    Delaware
Tax-Free
Colorado Fund		    Delaware
Tax-Free
Idaho Fund		      Delaware
Tax-Free
New York Fund		      Delaware
Tax-Free
Pennsylvania Fund		  

Class A

    $—    $238      $      —          $   —            $      —      

Class C

      89      401      4,476          544            2,954      

Trustees’ fees include expenses accrued by each Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DIFSC, and DDLP are officers and/or Trustees of the Trusts. These officers and Trustees are paid no compensation by the Funds.

Cross trades for the year ended Aug. 31, 2018, were executed by the Funds pursuant to procedures adopted by the Board designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/ or common officers. At their regularly scheduled meetings, the Boards review such transactions for compliance with the procedures adopted by the Boards. Delaware Tax-Free California Fund and Delaware Tax-Free Idaho Fund did not engage in securities cross trades for the year ended Aug. 31, 2018. Pursuant to these procedures, for the year ended Aug. 31, 2018, the following Funds engaged in 17a-7 securities purchases and 17a-7 securities sales, which resulted in net realized gains (losses) as follows:

 

     Delaware
Tax-Free
Arizona Fund		      Delaware
Tax-Free
Colorado Fund		      Delaware
Tax-Free
New York Fund		      Delaware
Tax-Free
Pennsylvania Fund		  

Purchases

      $         —          $5,786,628          $         —          $2,700,728     

Sales

      100,108          7,438,401          800,262          7,142,857     

Net realized gain (loss)

      —          —          —          (86,923)    

 

*The aggregate contractual waiver period covering this report is from Dec. 29, 2016 through Dec. 29, 2018.

3. Investments

For the year ended Aug. 31, 2018, each Fund made purchases and sales of investment securities other than short-term investments as follows:

 

     Delaware
Tax-Free
Arizona
Fund		      Delaware
Tax-Free
California Fund		      Delaware
Tax-Free
Colorado Fund		      Delaware
Tax-Free
Idaho
Fund		      Delaware
Tax-Free
New York Fund
      Delaware
Tax-Free
Pennsylvania Fund		  

Purchases

    $ 4,378,216      $ 19,581,020      $ 20,453,303      $ 11,766,921        $9,081,356        $88,108,829  

Sales

      5,634,110        15,181,627        12,826,046        19,129,021        8,520,866        94,414,872  

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

3. Investments (continued)

 

The tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. At Aug. 31, 2018, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes for each Fund were as follows:

 

    Delaware
Tax-Free Arizona
Fund		     Delaware
Tax-Free
California
Fund		     Delaware
Tax-Free Colorado
Fund		     Delaware
Tax-Free
Idaho
Fund		     Delaware
Tax-Free
New York
Fund		     Delaware
Tax-Free
Pennsylvania
Fund		  

Cost of investments

   $ 72,748,059     $ 95,098,903     $ 193,814,033     $ 95,342,082     $ 84,338,397     $ 424,051,721  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Aggregate unrealized appreciation of investments

   $ 2,833,893     $ 4,318,060     $ 7,862,495     $ 2,794,396     $ 2,803,859     $ 19,175,949  

Aggregate unrealized depreciation of investments

     (197,642 )      (247,549 )      (387,761 )      (387,007 )      (416,107 )      (174,095 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net unrealized appreciation of investments

   $ 2,636,251     $ 4,070,511     $ 7,474,734     $ 2,407,389     $ 2,387,752     $ 19,001,854  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

US GAAP defines fair value as the price that each Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below and on the next page.

Level 1 – Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, and exchange-traded options contracts)

Level 2 – Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities,

 

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credit risks, and default rates), or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities)

Level 3 – Significant unobservable inputs, including each Fund’s own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, fair valued securities)

Level 3 investments are valued using significant unobservable inputs. Each Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.

The following tables summarize the valuation of each Fund’s investments by fair value hierarchy levels as of Aug. 31, 2018:

 

    

Delaware Tax-Free Arizona Fund

  
    

Level 2

  

Securities

   

Assets:

   

Municipal Bonds

      $75,084,310  

Short-Term Investments

             300,000  

Total Value of Securities

      $75,384,310  

 

    

Delaware Tax-Free California  Fund

  
    

Level 2

  

Securities

   

Assets:

   

Municipal Bonds

      $98,844,414  

Short-Term Investments

             325,000  

Total Value of Securities

      $99,169,414  

 

    

Delaware Tax-Free Colorado Fund

  
    

Level 1

     

Level 2

     

Total

  

Securities

         

Assets:

         

Municipal Bonds

      $         —        $200,092,230        $200,092,230  

Short-Term Investments1

       146,537              1,050,000              1,196,537  

Total Value of Securities

      $146,537        $201,142,230        $201,288,767  

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

3. Investments (continued)

 

    

Delaware Tax-Free Idaho Fund

  
    

Level 1

     

Level 2

     

Total

  

Securities

         

Assets:

         

Municipal Bonds

      $         —        $96,888,058        $96,888,058  

Short-Term Investments

        861,413                        —               861,413  

Total Value of Securities

      $861,413        $96,888,058        $97,749,471  
    

Delaware Tax-Free New York  Fund

  
           

Level 2

         

Securities

         

Assets:

         

Municipal Bonds

         $86,476,149     

Short-Term Investments

                250,000     

Total Value of Securities

         $86,726,149     
    

Delaware Tax-Free Pennsylvania  Fund

  
           

Level 2

         

Securities

         

Assets:

         

Municipal Bonds

         $440,353,575     

Short-Term Investments

               2,700,000     

Total Value of Securities

         $443,053,575     

 

1 

Security type is valued across multiple levels. Level 1 investments represent open-end investment company investments while Level 2 investments represent matrix-priced investments. The amounts attributed to Level 1 investments and Level 2 investments represent the following percentages of the total market value of this security type for the Funds:

 

Short-Term Investments

   

Delaware

Tax-Free

Colorado Fund

  

Level 1

      12.25 % 

Level 2

      87.75 % 
  

 

 

  

Total

      100.00 % 
  

 

 

  

During the year ended Aug. 31, 2018, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments that had a significant impact to each Fund. Each Fund’s policy is to recognize transfers between levels based on fair value at the beginning of the reporting period.

A reconciliation of Level 3 investments is presented when each Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to net assets. During the year ended Aug. 31, 2018, there were no Level 3 investments.

 

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4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the years ended Aug. 31, 2018 and 2017 were as follows:

 

     Delaware
Tax-Free
Arizona
Fund		      Delaware
Tax-Free
California
Fund		      Delaware
Tax-Free
Colorado
Fund		      Delaware
Tax-Free
Idaho
Fund		      Delaware
Tax-Free
New York
Fund		      Delaware
Tax-Free
Pennsylvania
Fund		  

Year ended 8/31/18

                  

Tax-exempt income

    $ 2,479,414      $ 3,234,507      $ 6,719,815      $ 3,008,868      $ 2,707,774      $ 15,788,289  

Ordinary income

      —        11,179        860        —        6,256        —  

Long-term capital gains

      —        —        —        —        —        286,814  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 2,479,414      $ 3,245,686      $ 6,720,675      $ 3,008,868      $ 2,714,030      $ 16,075,103  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Year ended 8/31/17

                  

Tax-exempt income

    $ 2,575,526      $ 3,091,037      $ 6,839,347      $ 3,044,565      $ 2,697,749      $ 16,370,050  

Ordinary income

      3,498        11,251        55,260        54        52,240        5,419  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 2,579,024      $ 3,102,288      $ 6,894,607      $ 3,044,619      $ 2,749,989      $ 16,375,469  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

5. Components of Net Assets on a Tax Basis

As of Aug. 31, 2018, the components of net assets on a tax basis were as follows:

 

     Delaware
Tax-Free
Arizona
Fund		     Delaware
Tax-Free
California
Fund		     Delaware
Tax-Free
Colorado
Fund		     Delaware
Tax-Free
Idaho Fund		     Delaware
Tax-Free
New York
Fund		     Delaware
Tax-Free
Pennsylvania
Fund		  

Shares of beneficial interest

    $ 74,512,531     $ 94,913,852     $ 198,495,296     $ 100,557,328     $ 84,223,048     $ 426,971,162  

Undistributed tax-exempt income

      81,729       99,813       519,546       56,530       65,553       277,732  

Undistributed long-term capital gains

      —       136,032       —       —       —       —  

Distributions payable

      (61,848 )      (81,050 )      (166,988 )      (73,239 )      (66,203 )      (386,697 ) 

Qualified late year loss deferrals

      —       —       —       —       —       (23,497 ) 

Capital loss carryforwards

      (622,360 )      —       (3,879,191 )      (4,616,167 )      (549,357 )      —  

Unrealized appreciation of investments

      2,636,251       4,070,511       7,474,734       2,407,389       2,387,752       19,001,854  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net assets

    $ 76,546,303     $ 99,139,158     $ 202,443,397     $ 98,331,841     $ 86,060,793     $ 445,840,554  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of market discount and premium on certain debt instruments and dividends payable, as applicable.

Qualified late year losses represent losses realized on investment transactions from Nov. 1, 2017 through Aug. 31, 2018 that, in accordance with federal income tax regulations, Delaware Tax-Free Pennsylvania Fund has elected to defer and treat as having arisen in the following fiscal year.

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications.

 

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For the year ended Aug. 31, 2018, the Funds recorded the following reclassifications:

 

    Delaware
Tax-Free
Arizona
Fund		     Delaware
Tax-Free
California Fund		     Delaware
Tax-Free
Idaho
Fund		     Delaware
Tax-Free
New York Fund		  

Undistributed (distributions in excess of) net investment income

   $ (11,073 )      $ 9,322     $ (5,899 )      $ 14,956  

Accumulated net realized loss on investments

     11,073       (9,322 )      5,899       (14,956 ) 

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. In 2018, the Funds utilized capital loss carryforwards as follows:

 

Delaware
Tax-Free
Arizona Fund		   Delaware
Tax-Free
California Fund		   Delaware
Tax-Free
Colorado Fund		   Delaware
Tax-Free
Idaho Fund		   Delaware
Tax-Free
New York Fund		   Delaware
Tax-Free
Pennsylvania
Fund
$379,155   $275,180   $124,725   $294,641   $167,422   $206,243

Under the Regulated Investment Company Modernization Act of 2010 (Act), net capital losses recognized for tax years beginning after Dec. 22, 2010 may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. At Aug. 31, 2018, capital loss carryforwards available to offset future realized capital gains, were as follows:

 

     No expiration
Post-enactment capital loss character		     
     Short-term    Long-term    Total

Delaware Tax-Free Arizona Fund

    $   122,999    $   499,361    $   622,360

Delaware Tax-Free Colorado Fund

      2,984,098         895,093      3,879,191

Delaware Tax-Free Idaho Fund

      1,843,008      2,773,159      4,616,167

Delaware Tax-Free New York Fund

         549,357                  —         549,357

At Aug. 31, 2018, there were no capital loss carryforwards for Delaware Tax-Free California Fund and Delaware Tax-Free Pennsylvania Fund.

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

6. Capital Shares

Transactions in capital shares were as follows:

 

     Delaware Tax-Free
Arizona Fund		     Delaware Tax-Free
California Fund		     Delaware Tax-Free
Colorado Fund		  
     Year ended     Year ended     Year ended  
     8/31/18     8/31/17     8/31/18     8/31/17     8/31/18     8/31/17  

Shares sold:

             

Class A

      401,414       359,663       481,529       383,352       1,516,496       985,610  

Class C

      37,968       33,021       92,304       165,912       154,631       175,888  

Institutional Class

      484,339       551,220       976,452       1,850,334       1,145,931       966,015  

Shares issued upon reinvestment of dividends and distributions:

 

      

Class A

      145,750       150,218       128,458       139,705       426,365       447,177  

Class C

      9,402       11,462       28,460       30,683       31,641       35,948  

Institutional Class

      23,553       10,753       56,412       39,148       65,726       45,871  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     1,102,426       1,116,337       1,763,615       2,609,134       3,340,790          2,656,509   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Shares redeemed:

             

Class A

      (735,408 )      (985,974 )      (581,599 )      (1,135,425 )      (1,750,927 )      (2,444,547 ) 

Class C

      (223,437 )      (165,678 )      (377,386 )      (347,130 )      (611,405 )      (208,668 ) 

Institutional Class

      (226,311 )      (253,082 )      (582,597 )      (970,674 )      (480,166 )      (306,096 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (1,185,156 )      (1,404,734 )      (1,541,582 )      (2,453,229 )      (2,842,498 )      (2,959,311 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease)

      (82,730 )      (288,397 )      222,033       155,905       498,292       (302,802 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     Delaware Tax-Free
Idaho Fund		     Delaware Tax-Free
New York Fund		     Delaware Tax-Free
Pennsylvania Fund		  
     Year ended     Year ended     Year ended  
     8/31/18     8/31/17     8/31/18     8/31/17     8/31/18     8/31/17  

Shares sold:

             

Class A

      491,709       712,236       446,716       408,454       3,540,085       2,984,986  

Class C

      116,633       421,970       196,498       143,125       257,821       520,671  

Institutional Class

      1,301,911       514,605       762,592       1,640,607       2,068,244       2,422,421  

Shares issued upon reinvestment of dividends and distributions:

 

      

Class A

      146,253       156,594       98,908       112,866       1,467,605       1,487,678  

Class C

      45,404       55,720       26,286       28,463       104,907       109,128  

Institutional Class

      44,060       25,155       84,790       67,421       154,540       114,073  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     2,145,970       1,886,280       1,615,790       2,400,936       7,593,202       7,638,957  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Shares redeemed:

             

Class A

      (1,248,164 )      (921,199 )      (679,446 )      (1,648,934 )      (6,343,711 )      (7,851,159 ) 

Class C

      (1,149,919 )      (536,178 )      (374,553 )      (447,347 )      (1,126,446 )      (857,681 ) 

Institutional Class

      (497,691 )      (356,651 )      (708,326 )      (600,075 )      (1,096,801 )      (1,580,938 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (2,895,774 )      (1,814,028 )      (1,762,325 )      (2,696,356 )      (8,566,958 )      (10,289,778 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net increase (decrease)

      (749,804 )      72,252       (146,535 )      (295,420 )      (973,756 )      (2,650,821 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

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Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the tables on the previous pages and the “Statements of changes in net assets.” For the years ended Aug. 31, 2018 and 2017, the Funds had the following exchange transactions.

 

                                                                                                                                           
    

Year ended

8/31/18

  
     Exchange Redemptions      Exchange Subscriptions         
     Class A
Shares		      Class C
Shares		      Class A
Shares		          Institutional    
Class
Shares		      Value  

Delaware Tax-Free Arizona Fund

      —        35,940        36,057        —        $   405,639  

Delaware Tax-Free California Fund

      —        31,170        31,265        —        374,556  

Delaware Tax-Free Colorado Fund

      25,842        65,040        65,280        25,862        1,012,424  

Delaware Tax-Free Idaho Fund

      70,345        75,131        75,134        70,345        1,632,222  

Delaware Tax-Free New York Fund

      —        2,096        2,095        —        23,755  

Delaware Tax-Free Pennsylvania Fund

      234,332        340,876        331,960        243,871        4,583,905  
    

Year ended

8/31/17

  
     Exchange Redemptions      Exchange Subscriptions         
     Class A
Shares		      Class C
Shares		      Class A
Shares		          Institutional    
Class
Shares		      Value  

Delaware Tax-Free Arizona Fund

      352,645        8,623        8,661        353,311        $4,090,914  

Delaware Tax-Free California Fund

      207,994        —        —        208,391        2,491,064  

Delaware Tax-Free Colorado Fund

      231,508        4,796        —        236,773        2,621,378  

Delaware Tax-Free Idaho Fund

      41,681        2,629        —        44,359        504,209  

Delaware Tax-Free New York Fund

      434,101        —        —        434,952        4,952,348  

Delaware Tax-Free Pennsylvania Fund

      700,054        64,109        2,538        763,686        6,134,831  

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

7. Line of Credit

Each Fund, along with certain other funds in the Delaware Funds (Participants), was a participant in a $155,000,000 revolving line of credit intended to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee of 0.15%, which was generally allocated across the Participants based on a weighted average of the respective net assets of each Participant. The Participants were permitted to borrow up to a maximum of one-third of their net assets under the agreement. Each Participant was individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the agreement expired on Nov. 6, 2017.

On Nov. 6, 2017, each Fund, along with the other Participants, entered into an amendment to the agreement for a $155,000,000 revolving line of credit. The line of credit is to be used as described above and operates in substantially the same manner as the original agreement. The line of credit available under the agreement expires on Nov. 5, 2018.

The Funds had no amounts outstanding as of Aug. 31, 2018, or at any time during the year then ended.

8. Geographic, Credit, and Market Risks

The Funds concentrate their investments in securities issued by each corresponding state’s municipalities. The Funds invest primarily in a specific state and may be subject to geographic concentration risk. In addition, the Funds have the flexibility to invest in issuers in US territories and possessions such as the Commonwealth of Puerto Rico, the US Virgin Islands, and Guam whose bonds are also free of federal and individual state income taxes. The value of the Funds’ investments may be adversely affected by new legislation within the states or US territories, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons and there is no certainty that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in each Fund.

 

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At Aug. 31, 2018, the percentages of each Fund’s net assets insured by bond insurers are listed below and these securities have been identified on the “Schedules of investments.”

 

    Delaware
Tax-Free
Arizona Fund		   Delaware
Tax-Free
California Fund		   Delaware
Tax-Free
Colorado Fund		   Delaware
Tax-Free
Idaho Fund		     Delaware
Tax-Free
New York Fund		   Delaware
Tax-Free
Pennsylvania Fund

American Capital Access

   1.31%   —   —     —         —   —

Assured Guaranty Corporation

   —   —   —     —         —   3.42%

Assured Guaranty Municipal Corporation

   3.52%   1.47%   5.00%     10.04%     0.04%   2.58%

AMBAC Assurance Corporation

   1.28%   —   —     —         —   0.13%

Build America Mutual Assurance

   —   —   1.13%     —         —   0.60%

National Public Finance Guarantee Corporation

   —   1.40%   —     —         —   —

Syncora Guarantee Inc.

   —   —   2.10%     —         —   —
 

 

  

 

  

 

  

 

 

    

 

  

 

  6.11%   2.87%   8.23%     10.04%     0.04%   6.73%
 

 

  

 

  

 

  

 

 

    

 

  

 

Each Fund invests a portion of its assets in high yield fixed income securities, which are securities rated lower than BBB- by Standard & Poor’s Financial Services LLC (S&P), lower than Baa3 by Moody’s Investors Service, Inc. (Moody’s), or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher-rated securities. Additionally, lower-rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.

When interest rates rise, fixed income securities (i.e., debt obligations) generally will decline in value. These declines in value are greater for fixed income securities with longer maturities or durations.

Each Fund invests in certain obligations that may have liquidity protection designed to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained by the issuer or sponsor through third parties, through various means of structuring the transaction, or through a combination of such approaches. Each Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.

Each Fund may invest in advanced refunded bonds, escrow secured bonds, or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the

 

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Notes to financial statements

Delaware Funds® by Macquarie state tax-free funds

 

 

8. Geographic, Credit, and Market Risks (continued)

 

issuance of the refunding issue is known as a “current refunding.” “Advance refunded bonds” are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities, which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.

Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s, S&P, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Board has delegated to DMC, the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. Rule 144A securities held by the Funds have been identified on the “Schedules of investments.” Restricted securities are valued pursuant to the security valuation procedures described in Note 1.

9. Contractual Obligations

Each Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, each Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds’ existing contracts and expects the risk of loss to be remote.

10. Recent Accounting Pronouncements

In August 2018, the FASB issued an Accounting Standards Update, ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU includes additions and modifications to disclosures for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, management is evaluating the implications of these changes on the financial statements.

 

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In March 2017, the FASB issued an Accounting Standards Update, ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. The ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. At this time, management is evaluating the implications of these changes on the financial statements.

11. Subsequent Events

On Sept. 6, 2018, the credit facility that each Fund participates in was reduced from a $155,000,000 to a $130,000,000 revolving line of credit. This line of credit will expire on Nov. 5, 2018.

Management has determined that no other material events or transactions occurred subsequent to Aug. 31, 2018, that would require recognition or disclosure in the Funds’ financial statements.

 

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Report of independent

registered public accounting firm

To the Board of Trustees of Voyageur Insured Funds, Voyageur Mutual Funds, Voyageur Mutual Funds II and Delaware Group® State Tax-Free Income Trust and Shareholders of Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, Delaware Tax-Free Colorado Fund and Delaware Tax-Free Pennsylvania Fund

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Delaware Tax-Free Arizona Fund (constituting Voyageur Insured Funds), Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund (three of the funds constituting Voyageur Mutual Funds), Delaware Tax-Free Colorado Fund (constituting Voyageur Mutual Funds II) and Delaware Tax-Free Pennsylvania Fund (constituting Delaware Group® State Tax-Free Income Trust) (hereafter collectively referred to as the “Funds”) as of August 31, 2018, the related statements of operations for the year ended August 31, 2018, the statements of changes in net assets for each of the two years in the period ended August 31, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of August 31, 2018, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended August 31, 2018 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2018 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

October 17, 2018

We have served as the auditor of one or more investment companies in Delaware Funds® by Macquarie since 2010.

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie state tax-free funds

Tax Information

The information set forth below is for the Funds’ fiscal year as required by federal income tax laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of the Funds. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in January of each year. Please consult your tax advisor for proper treatment of this information.

All disclosures are based on financial information available as of the date of this annual report and, accordingly are subject to change. For any and all items requiring reporting, it is the intention of each Fund to report the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

For the fiscal year ended Aug. 31, 2018, each Fund reports distributions paid during the year as follows:

 

     (A)
Long-Term Capital
Gains Distributions
(Tax Basis)		   (B)
Ordinary Income
Distributions
(Tax Basis)		   (C)
Tax-Exempt Income
Distributions
(Tax Basis)		   Total Distributions
(Tax Basis)

Delaware Tax-Free Arizona Fund

    —   —   100.00%   100.00%

Delaware Tax-Free California Fund

    —   0.34%     99.66%   100.00%

Delaware Tax-Free Colorado Fund

    —   0.01%     99.99%   100.00%

Delaware Tax-Free Idaho Fund

    —   —   100.00%   100.00%

Delaware Tax-Free New York Fund

    —   0.23%     99.77%   100.00%

Delaware Tax-Free Pennsylvania Fund

    1.78%   —     98.22%   100.00%

(A), (B) and (C) are based on a percentage of each Fund’s total distributions.

Board consideration of advisory agreements for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund

At a meeting held on Aug. 15–16, 2018 (the “Annual Meeting”), the Board of Trustees (the “Board”), including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory Agreements for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund (each, a “Fund” and together, the “Funds”). In making its decision, the Board considered information furnished at regular quarterly Board meetings, including reports detailing Fund performance, investment strategies, and expenses, as well as information

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie state tax-free funds

 

 

Board consideration of advisory agreements for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund (continued)

 

prepared specifically in connection with the renewal of the investment advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreement with Delaware Management Company (“DMC”), a series of Macquarie Investment Management Business Trust (“MIMBT”) included materials provided by DMC and its affiliates (collectively, “Macquarie Investment Management”) concerning, among other things, the nature, extent, and quality of services provided to the Funds; the costs of such services to the Funds; economies of scale; and the investment manager’s financial condition and profitability. In addition, in connection with the Annual Meeting, materials were provided to the Trustees in May 2018, including reports provided by Broadridge Financial Solutions (“Broadridge”). The Broadridge reports compared each Fund’s investment performance and expenses with those of other comparable mutual funds. The Independent Trustees reviewed and discussed the Broadridge reports with independent legal counsel to the Independent Trustees. In addition to the information noted above, the Board also requested and received information regarding DMC’s policy with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; comparative client fee information; and any constraints or limitations on the availability of securities for certain investment styles, which had in the past year inhibited, or which were likely in the future to inhibit, the investment manager’s ability to invest fully in accordance with Fund policies.

In considering information relating to the approval of each Fund’s advisory agreement, the Independent Trustees received assistance and advice from and met separately with independent legal counsel to the Independent Trustees and also from an experienced and knowledgeable independent fund consultant, JDL Consultants, LLC (“JDL”). Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.

Nature, extent, and quality of service. The Board considered the services provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; compliance by DMC and Delaware Distributors, L.P. (together, “Management”) personnel with the Code of Ethics adopted throughout the Delaware Funds® by Macquarie (“Delaware Funds”); and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of DMC and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of certain favorable industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenses while maintaining service levels committed to Fund matters. The Board also noted the benefits provided to Fund shareholders (a) through each shareholder’s ability to: (i) exchange an investment in one Delaware Fund for the same class of shares in another Delaware Fund without a sales charge, or (ii) to reinvest Fund dividends into additional shares of the Fund or into additional shares of other Delaware

 

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Funds, and (b) the privilege to combine holdings in other Delaware Funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent, and quality of the overall services provided by DMC.

Investment performance. The Board placed significant emphasis on the investment performance of the Funds in view of the importance of investment performance to shareholders. Although the Board considered performance reports and discussions with portfolio managers at Investment Committee meetings throughout the year, the Board gave particular weight to the Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for each Fund showed the investment performance of its Class A shares in comparison to a group of similar funds as selected by Broadridge (the “Performance Universe”). A fund with the best performance ranked first, and a fund with the poorest performance ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next 25%, the third quartile; and the poorest/ worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for each Fund was shown for the past 1-, 3-, 5-, and 10-year periods, to the extent applicable, ended Jan. 31, 2018. The Board’s objective is that each Fund’s performance for the 1-, 3-, and 5-year periods be at or above the median of its Performance Universe.

Delaware Tax-Free Arizona Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional “other states” municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, 5-, and 10-year periods was in the first quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Tax-Free California Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional California municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1- and 3-year periods was in the second quartile of its Performance Universe. The report further showed that the Fund’s total return for the 5-year period was in the third quartile of its Performance Universe and the Fund’s total return for the 10-year period was in the first quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Tax-Free Colorado Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional “other states” municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 3-, 5-, and 10-year periods was in the first quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Tax-Free Idaho Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional “other states” municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1- and 3-year periods was in the first quartile of its Performance Universe. The report further showed that the Fund’s total return for the 5- and 10-year periods was in the third quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Tax-Free New York Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional New York municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-, 5-, and 10-year periods was in the first

 

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Other Fund information (Unaudited)

Delaware Funds® by Macquarie state tax-free funds

 

 

Board consideration of advisory agreements for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund (continued)

 

quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3-year period was in the second quartile of its Performance Universe. The Board was satisfied with performance.

Delaware Tax-Free Pennsylvania Fund — The Performance Universe for the Fund consisted of the Fund and all retail and institutional Pennsylvania municipal debt funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1- and 3-year periods was in the second quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3- and 10-year periods was in the first quartile of its Performance Universe. The Board was satisfied with performance.

Comparative expenses. The Board considered expense data for the Delaware Funds. Management provided the Board with information on pricing levels and fee structures for each Fund as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and total expense ratios of each Fund versus effective management fees and total expense ratios of a group of similar funds as selected by Broadridge (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) within the Expense Group, taking into account any applicable breakpoints and fee waivers. Each Fund’s total expenses were also compared with those of its Expense Group. The Broadridge total expenses, for comparative consistency, were shown by Broadridge for Class A shares and comparative total expenses including 12b-1 and non-12b-1 service fees. The Board’s objective is for each Fund’s total expense ratio to be competitive with those of the peer funds within its Expense Group.

Delaware Tax-Free Arizona Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the second lowest expenses of its Expense Group and its total expenses were in the quartile with the second highest expenses of its Expense Group. The Board gave favorable consideration to the Fund’s management fee, but noted that the Fund’s total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered fee waivers in place through December 2018 and various initiatives implemented by Management, such as the negotiation of lower fees for fund accounting, fund accounting oversight services, and custody, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Delaware Tax-Free California Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the lowest expenses of its Expense Group and its total expenses were in the quartile with the second lowest expenses of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group as shown in the Broadridge report.

 

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Delaware Tax-Free Colorado Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the second lowest expenses of its Expense Group and its total expenses were in the quartile with the second highest expenses of its Expense Group. The Board gave favorable consideration to the Fund’s management fee, but noted that the Fund’s total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered favorably fee waivers in place through December 2018 and various initiatives implemented by Management, such as a negotiation of lower fees for fund accounting, fund accounting oversight services, and custody, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Delaware Tax-Free Idaho Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the second lowest expenses of its Expense Group and its total expenses were in the quartile with the second highest expenses of its Expense Group. The Board gave favorable consideration to the Fund’s management fee, but noted that the Fund’s total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered waivers in place through December 2018 and various initiatives implemented by Management, such as the negotiation of lower fees for fund accounting, fund accounting oversight services, and custody, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Delaware Tax-Free New York Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the lowest expenses of its Expense Group and its total expenses were in the quartile with the second lowest expenses of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group as shown in the Broadridge report.

Delaware Tax-Free Pennsylvania Fund — The expense comparisons for the Fund showed that its actual management fee was in the quartile with the second highest expenses of its Expense Group and its total expenses were in the quartile with the highest expenses of its Expense Group. The Board noted that the Fund’s management fee and total expenses were not in line with the Board’s objective. In evaluating the total expenses, the Board considered fee waivers in place through December 2018 and various initiatives implemented by Management, such as the negotiation of lower fees for fund accounting, fund accounting oversight services, and custody, which had created an opportunity for a further reduction in expenses. The Board was satisfied with Management’s efforts to improve the Fund’s total expense ratio and to bring it in line with the Board’s objective.

Management profitability. The Board considered the level of profits realized by DMC in connection with the operation of the Funds. In this respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of DMC’s business in providing management and other services to each of the individual funds and the Delaware Funds as a whole. Specific attention was given to the methodology used by DMC in allocating costs for the purpose of determining profitability. Management stated that the level of profits of DMC, to a certain extent, reflects recent operational cost savings and efficiencies initiated by DMC. The Board considered DMC’s efforts to improve services

 

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Other Fund information (Unaudited)

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Board consideration of advisory agreements for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund (continued)

 

provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange Commission initiatives. The Board also considered the extent to which DMC might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. As part of its work, the Board also reviewed a report prepared by JDL regarding MIMBT profitability as compared to certain peer fund complexes and the Independent Trustees met with JDL personnel to discuss DMC’s profitability in such context. The Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC.

Economies of scale. The Trustees considered whether economies of scale are realized by DMC as each Fund’s assets increase and the extent to which any economies of scale are reflected in the level of management fees charged. The Trustees reviewed the Funds’ advisory fee pricing and structure, approved by the Board and shareholders, which includes breakpoints, and which applies to most funds in the Delaware Funds complex. Breakpoints in the advisory fee occur when the advisory fee rate is reduced on assets in excess of specified levels. Breakpoints result in a lower advisory fee than would otherwise be the case in the absence of breakpoints, when the asset levels specified in the breakpoints are exceeded. Although, as of March 31, 2018, the Funds had not reached a size at which they could take advantage of any breakpoints in the applicable fee schedule, the Board recognized that the fee was structured so that if the Funds increase sufficiently in size, then economies of scale may be shared.

 

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Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

A mutual fund is governed by a Board of Trustees/Directors (“Trustees”), which has oversight responsibility for the management of a fund’s business affairs. Trustees establish procedures and oversee and review the performance of the investment manager, the distributor, and others who perform services for the fund. The independent fund trustees, in particular, are advocates

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

     

 

Interested Trustee

 

      

Shawn K. Lytle1, 2

    President,    Trustee since   

2005 Market Street

    Chief Executive Officer,    September 2015   

Philadelphia, PA 19103

    and Trustee      

February 1970

       President and   
      Chief Executive Officer   
      since August 2015   
        
        

 

Independent Trustees

 

      

Thomas L. Bennett

    Chair and Trustee    Trustee since   

2005 Market Street

       March 2005   

Philadelphia, PA 19103

         

October 1947

       Chair since   
      March 2015   
                

 

Ann D. Borowiec

   

 

Trustee

   

 

Since March 2015

   

2005 Market Street

         

Philadelphia, PA 19103

         

November 1958

         
        
        
                

Joseph W. Chow

    Trustee    Since January 2013   

2005 Market Street

         

Philadelphia, PA 19103

         

January 1953

         
        
                

 

1 

Shawn K. Lytle is considered to be an “Interested Trustee” because he is an executive officer of the Fund’s(s’) investment advisor.

2 

Shawn K. Lytle, David F. Connor, Daniel V. Geatens, and Richard Salus serve in similar capacities for the six portfolios of the Optimum Fund Trust, which have the same investment advisor, principal underwriter, and transfer agent as the registrant. Mr. Geatens also serves as the Chief Financial Officer and Treasurer for Macquarie Global Infrastructure Total Return Fund Inc., which has an affiliated investment manager.

 

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for shareholder interests. Each trustee has served in that capacity since he or she was elected to or appointed to the Board of Trustees, and will continue to serve until his or her retirement or the election of a new trustee in his or her place. The following is a list of the Trustees and Officers with certain background and related information.

 

Principal Occupation(s)

During the Past Five Years

   

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

   

Other Directorships

Held by Trustee or Officer

     

President — Macquarie

    59    Trustee — UBS

Investment Management3

      Relationship Funds,

(June 2015–Present)

       SMA Relationship
      Trust, and UBS Funds

Regional Head of

       (May 2010–April 2015)

Americas — UBS Global

      

Asset Management

      

(April 2010–May 2015)

      
     
     

Private Investor

    59    None

(March 2004–Present)

      
     
     
           

 

Chief Executive Officer,

   

 

59

   

 

Director —

Private Wealth Management

       Banco Santander International

(2011–2013) and

       (October 2016–Present)

Market Manager,

      

New Jersey Private

       Director —

Bank (2005–2011) —

       Santander Bank, N.A.

J.P. Morgan Chase & Co.

       (December 2016–Present)
           

 

Private Investor

   

 

59

   

 

Director and Audit Committee

(April 2011–Present)

       Member — Hercules
      Technology Growth
      Capital, Inc.
      (July 2004–July 2014)
           

 

3 

Macquarie Investment Management is the marketing name for Macquarie Management Holdings, Inc. and its subsidiaries, including the Fund’s(s’) investment advisor, principal underwriter, and its transfer agent.

 

171

Table of Contents

Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

 

 

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

     

 

Independent Trustees (continued)

 

      

John A. Fry

    Trustee    Since January 2001   

2005 Market Street

         

Philadelphia, PA 19103

         

May 1960

         
        
        
        
        
        
        
        
        
        
        
        
        
        
                

 

Lucinda S. Landreth

   

 

Trustee

   

 

Since March 2005

   

2005 Market Street

         

Philadelphia, PA 19103

         

June 1947

               

 

Frances A. Sevilla-Sacasa

   

 

Trustee

   

 

Since September 2011

   
2005 Market Street         
Philadelphia, PA 19103         
January 1956         
        
        
        
        
        
        
        
        
        
        
        
        
        
                

 

172

Table of Contents

    

    

 

 

 

Principal Occupation(s)
During the Past Five Years		   

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

   

Other Directorships

Held by Trustee or Officer

     

President —

    59    Director; Compensation

Drexel University

       Committee and

(August 2010–Present)

       Governance Committee
      Member — Community
      Health Systems

President —

      

Franklin & Marshall College

       Director — Drexel

(July 2002–July 2010)

       Morgan & Co.
     
      Director; Audit Committee
      Member — vTv
      Therapeutics LLC
     
     

Director; Audit Committee

Member — FS Credit Real

          Estate Income Trust, Inc.
Private Investor    59    None
(2004–Present)      
     
           
Private Investor    59    Trust Manager and
(January 2017–Present)       Audit Committee
      Chair — Camden

Chief Executive Officer —

       Property Trust

Banco Itaú

       (August 2011–Present)

International

      

(April 2012–December 2016)

      
     
      Director —

Executive Advisor to Dean

       Carrizo Oil & Gas, Inc.

(August 2011–March 2012)

       (March 2018–Present)

and Interim Dean

      

(January 2011–July 2011) —

      

University of Miami School of

      

Business Administration

      

President — U.S. Trust,

      

Bank of America Private

      

Wealth Management

      

(Private Banking)

      

(July 2007–December 2008)

          

 

173

Table of Contents

Board of trustees / directors and officers addendum

Delaware Funds® by Macquarie

 

 

 

Name, Address,

and Birth Date

   

Position(s)

Held with Fund(s)

   

Length of

Time Served

     

 

Independent Trustees (continued)

 

      

Thomas K. Whitford

    Trustee    Since January 2013   

2005 Market Street

         

Philadelphia, PA 19103

         

March 1956

         
                

Janet L. Yeomans

    Trustee    Since April 1999   

2005 Market Street

         

Philadelphia, PA 19103

         

July 1948

         
        

 

 

Officers

 

      
David F. Connor    Senior Vice President,    Senior Vice President   
2005 Market Street    General Counsel,    since May 2013;   
Philadelphia, PA 19103    and Secretary    General Counsel   
December 1963       since May 2015;   
      Secretary since   
      October 2005   
                
Daniel V. Geatens    Vice President    Vice President and   
2005 Market Street    and Treasurer    Treasurer since October 2007   
Philadelphia, PA 19103         
October 1972         
                
Richard Salus    Senior Vice President    Senior Vice President and   
2005 Market Street    and Chief Financial Officer    Chief Financial Officer   
Philadelphia, PA 19103       since November 2006   
October 1963         
                

The Statement of Additional Information for the Fund(s) includes additional information about the Trustees and Officers and is available, without charge, upon request by calling 800 523-1918.

 

174

Table of Contents

Principal Occupation(s)

During the Past Five Years

   

Number of Portfolios in

Fund Complex Overseen

by Trustee or Officer

   

Other Directorships

Held by Trustee or Officer

     
     

Vice Chairman

    59    Director — HSBC Finance   

(2010–April 2013) —

       Corporation and HSBC   

PNC Financial

       North America Holdings Inc.   

Services Group

       (December 2013–Present)   
      Director —   
      HSBC USA Inc.   
      (July 2014–March 2017)   
                

Vice President and Treasurer

    59    Director (2009–2017);   

(January 2006–July 2012),

       Personnel and Compensation   

Vice President —

       Committee Chair; Member of   

Mergers & Acquisitions

       Nominating, Investments, and   

(January 2003–January 2006),

       Audit Committees for various   

and Vice President

       periods throughout   

and Treasurer

       directorship —   

(July 1995–January 2003) —

       Okabena Company   

3M Company

         
        
     

David F. Connor has served

    59    None2   

in various capacities at

         

different times at

         

Macquarie Investment

         

Management.

         
                

Daniel V. Geatens has served

    59    None2   

in various capacities at

         

different times at

         

Macquarie Investment

         

Management.

         
                

Richard Salus has served

    59    None2   

in various executive capacities

         

at different times at

         

Macquarie Investment

         

Management.

         
                

 

175

Table of Contents

About the organization

 

Board of trustees

 

        

Shawn K. Lytle

President and

Chief Executive Officer

Delaware Funds®

by Macquarie

Philadelphia, PA

 

Thomas L. Bennett

Chairman of the Board

Delaware Funds

by Macquarie

Private Investor

Rosemont, PA

  

Ann D. Borowiec

Former Chief Executive

Officer

Private Wealth Management

J.P. Morgan Chase & Co.

New York, NY

 

Joseph W. Chow

Former Executive Vice

President

State Street Corporation

Boston, MA

   

John A. Fry

President

Drexel University

Philadelphia, PA

 

Lucinda S. Landreth

Former Chief Investment

Officer

Assurant, Inc.

New York, NY

   

Frances A.

Sevilla-Sacasa

Former Chief Executive

Officer

Banco Itaú International

Miami, FL

 

Thomas K. Whitford

Former Vice Chairman

PNC Financial Services Group

Pittsburgh, PA

 

Janet L. Yeomans

Former Vice President and

Treasurer

3M Company

St. Paul, MN

Affiliated officers

 

        

David F. Connor

Senior Vice President,

General Counsel,

and Secretary

Delaware Funds

by Macquarie

Philadelphia, PA

  

Daniel V. Geatens

Vice President and

Treasurer

Delaware Funds

by Macquarie

Philadelphia, PA

   

Richard Salus

Senior Vice President and

Chief Financial Officer

Delaware Funds

by Macquarie

Philadelphia, PA

   

This annual report is for the information of Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York Fund, and Delaware Tax-Free Pennsylvania Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.

 

 

Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. Each Fund’s Forms N-Q, as well as a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities and the Schedules of Investments included in the Funds’ most recent Forms N-Q are available without charge on the Funds’ website at delawarefunds.com/literature. Each Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.

Information (if any) regarding how the Funds voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Funds’ website at delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.

 

176

Item 2. Code of Ethics

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. A copy of the registrant’s Code of Business Ethics has been posted on the Delaware Funds® by Macquarie Internet Web site at www.delawarefunds.com. Any amendments to the Code of Business Ethics, and information on any waiver from its provisions granted by the registrant, will also be posted on this Web site within five business days of such amendment or waiver and will remain on the Web site for at least 12 months.

Item 3. Audit Committee Financial Expert

The registrant’s Board of Trustees/Directors has determined that certain members of the registrant’s Audit Committee are audit committee financial experts, as defined below. For purposes of this item, an “audit committee financial expert” is a person who has the following attributes:

a. An understanding of generally accepted accounting principles and financial statements;

b. The ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves;

c. Experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements, or experience actively supervising one or more persons engaged in such activities;

d. An understanding of internal controls and procedures for financial reporting; and

e. An understanding of audit committee functions.

An “audit committee financial expert” shall have acquired such attributes through:

a. Education and experience as a principal financial officer, principal accounting officer, controller, public accountant, or auditor or experience in one or more positions that involve the performance of similar functions;

b. Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions;

c. Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing, or evaluation of financial statements; or

d. Other relevant experience.

The registrant’s Board of Trustees/Directors has also determined that each member of the registrant’s Audit Committee is independent. In order to be “independent” for purposes of this item, the Audit Committee member may not: (i) other than in his or her capacity as a member of the Board of Trustees/Directors or any committee thereof, accept directly or indirectly any consulting, advisory or other compensatory fee from the issuer; or (ii) be an “interested person” of the registrant as defined in Section 2(a)(19) of the Investment Company Act of 1940.

The names of the audit committee financial experts on the registrant’s Audit Committee are set forth below:

Joseph W. Chow
John A. Fry
Lucinda S. Landreth
Thomas K. Whitford
Janet L. Yeomans

Item 4. Principal Accountant Fees and Services

(a) Audit fees.

The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $193,000 for the fiscal year ended August 31, 2018.

The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $193,000 for the fiscal year ended August 31, 2017.

(b) Audit-related fees.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended August 31, 2018.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $640,000 for the registrant’s fiscal year ended August 31, 2018. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year end audit procedures, group reporting and subsidiary statutory audits.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended August 31, 2017.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $640,000 for the registrant’s fiscal year ended August 31, 2017. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year end audit procedures, group reporting and subsidiary statutory audits.

(c) Tax fees.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant were $22,920 for the fiscal year ended August 31, 2018. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended August 31, 2018. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant were $23,635 for the fiscal year ended August 31, 2017. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended August 31, 2017. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

(d) All other fees.

The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal year ended August 31, 2018.

The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrant’s independent auditors to the registrant’s adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended August 31, 2018. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item $0 for the fiscal year ended August 31, 2017.

The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrant’s independent auditors to the registrant’s adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended August 31, 2017. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

(e) The registrant’s Audit Committee has established pre-approval policies and procedures as permitted by Rule 2-01(c)(7)(i)(B) of Regulation S-X (the “Pre-Approval Policy”) with respect to services provided by the registrant’s independent auditors. Pursuant to the Pre-Approval Policy, the Audit Committee has pre-approved the services set forth in the table below with respect to the registrant up to the specified fee limits. Certain fee limits are based on aggregate fees to the registrant and other registrants within the Delaware Funds® by Macquarie.

Service Range of Fees
Audit Services
Statutory audits or financial audits for new Funds up to $40,000 per Fund
Services associated with SEC registration statements (e.g., Form N-1A, Form N-14, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters for closed-end Fund offerings, consents), and assistance in responding to SEC comment letters up to $10,000 per Fund
Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered “audit-related services” rather than “audit services”) up to $25,000 in the aggregate
Audit-Related Services
Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered “audit services” rather than “audit-related services”) up to $25,000 in the aggregate
Tax Services
U.S. federal, state and local and international tax planning and advice (e.g., consulting on statutory, regulatory or administrative developments, evaluation of Funds’ tax compliance function, etc.) up to $25,000 in the aggregate
U.S. federal, state and local tax compliance (e.g., excise distribution reviews, etc.) up to $5,000 per Fund
Review of federal, state, local and international income, franchise and other tax returns up to $5,000 per Fund

Under the Pre-Approval Policy, the Audit Committee has also pre-approved the services set forth in the table below with respect to the registrant’s investment adviser and other entities controlling, controlled by or under common control with the investment adviser that provide ongoing services to the registrant (the “Control Affiliates”) up to the specified fee limit. This fee limit is based on aggregate fees to the investment adviser and its Control Affiliates.

Service Range of Fees
Non-Audit Services
Services associated with periodic reports and other documents filed with the SEC and assistance in responding to SEC comment letters up to $10,000 in the aggregate

The Pre-Approval Policy requires the registrant’s independent auditors to report to the Audit Committee at each of its regular meetings regarding all services initiated since the last such report was rendered, including those services authorized by the Pre-Approval Policy.

(f) Not applicable.

(g) The aggregate non-audit fees billed by the registrant’s independent auditors for services rendered to the registrant and to its investment adviser and other service providers under common control with the adviser were $11,748,000 and $11,180,000 for the registrant’s fiscal years ended August 31, 2018 and August 31, 2017, respectively.

(h) In connection with its selection of the independent auditors, the registrant’s Audit Committee has considered the independent auditors’ provision of non-audit services to the registrant’s investment adviser and other service providers under common control with the adviser that were not required to be pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X. The Audit Committee has determined that the independent auditors’ provision of these services is compatible with maintaining the auditors’ independence.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Investments

(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.

(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 11. Controls and Procedures

The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s fourth fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable.

Item 13. Exhibits

(a) (1) Code of Ethics

Not applicable.

(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.

(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.

Not applicable.

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.

VOYAGEUR MUTUAL FUNDS

SHAWN K. LYTLE
By: Shawn K. Lytle
Title:   President and Chief Executive Officer
Date:   November 6, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SHAWN K. LYTLE
By: Shawn K. Lytle
Title:   President and Chief Executive Officer
Date:   November 6, 2018
 
RICHARD SALUS
By: Richard Salus
Title:   Chief Financial Officer
Date:   November 6, 2018