Delaware Tax-Free USA Fund

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Objective

Delaware Tax-Free USA Fund seeks as high a level of current interest income exempt from federal income tax as is available from municipal obligations and as is consistent with prudent investment management and preservation of capital.

Strategy

The Fund primarily invests in U.S. state and local municipal bonds issued to raise funds for public purposes such as hospitals, schools, and general capital expense.

Fund information
Inception date01/11/1984
Dividends paid (if any)Monthly
Capital gains paid (if any)December
Fund identifiers
NASDAQDMTFX
CUSIP245909106
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
CheckwritingNo
Payroll DeductionYes
IRAsNo

On Sept. 25, 2014, Class B shares of the Fund converted to Class A shares.

The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.

Total returns may reflect waivers and/or expense reimbursements by the manager and/or distributor for some or all of the periods shown. Performance would have been lower without such waivers and reimbursements.

Average annual total return as of month-end (08/31/2014)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)8.79%11.02%6.02%6.26%4.75%6.87%01/11/1984
Max offer price3.88%6.07%4.41%5.29%4.27%6.71%
Barclays Municipal Bond Index7.47%10.14%4.88%5.39%4.77%n/a
Average annual total return as of quarter-end (06/30/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)3.23%7.20%5.50%6.20%6.85%4.92%6.86%01/11/1984
Max offer price-1.38%2.37%0.74%4.57%5.86%4.44%6.70%
Barclays Municipal Bond Index2.59%6.00%6.14%5.35%5.81%4.97%n/a

Returns for less than one year are not annualized.

Class A shares have a maximum up-front sales charge of 4.50% and are subject to an annual distribution fee.

Expense ratio
Gross0.95%
Net0.81%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Dec. 27, 2013 through Dec. 29, 2014. Please see the fee table in the Fund’s prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20143.85%3.23%1.61%n/an/a
20130.47%-4.09%-1.68%0.10%-5.16%
20123.10%2.73%3.28%1.45%10.96%
2011-0.26%4.46%3.54%2.54%10.61%
20101.79%2.25%3.83%-4.71%2.98%
20094.04%2.99%9.63%-1.14%16.14%
2008-1.04%-0.14%-2.71%-3.07%-6.81%
20070.76%-0.81%0.58%0.14%0.67%
20060.64%-0.14%3.40%1.20%5.16%
20050.41%3.44%-0.47%0.40%3.80%
20041.76%-2.28%3.80%1.94%5.22%
Portfolio characteristics - as of 08/31/2014
Share assets$500.6 million
Number of holdings154
Effective maturity (weighted average) (view definition)6.33 years
Modified duration (view definition)4.86 years
Annualized standard deviation, 3 years (view definition)4.96
SEC 30-day yield with waiver (view definition)2.04%
SEC 30-day yield without waiver (view definition)1.85%
Portfolio turnover (last fiscal year)40%
Portfolio composition as of 08/31/2014Total may not equal 100% due to rounding.
Municipal bonds97.9%
Cash and cash equivalents2.1%

Cash and cash equivalents include accruals on bonds and long-term receivables.

Top 10 holdings as of 08/31/2014
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Oklahoma Turnpike Authority 6.000 1/1/20223.2%
State of North Carolina 5.000 5/1/20202.3%
New Jersey Transportation Trust Fund Authority 5.500 6/15/20312.1%
New York City Transitional Finance Authority Future Tax Secured Revenue 5.000 11/1/20422.0%
County of Fairfax VA 5.000 10/1/20191.9%
Missouri Highway & Transportation Commission 5.000 5/1/20241.7%
Brooklyn Arena Local Development Corp. 6.500 7/15/20301.7%
City Public Service Board of San Antonio TX 5.250 2/1/20241.6%
Golden State Tobacco Securitization Corp. 5.750 6/1/20471.4%
Railsplitter Tobacco Settlement Authority 6.250 6/1/20241.3%
Total % Portfolio in Top 10 holdings19.2%
Top sectors as of 06/30/2014
List excludes cash, accruals on bonds, and cash equivalents.
Sector% of portfolio
Special Tax16.1%
Hospital12.8%
Corporate12.6%
Education12.6%
Transportation12.1%
State general obligation9.8%
Water/sewer6.0%
Local general obligation5.3%
Pre-refunded/ETM4.1%
Electric3.7%
Top 10 states as of 08/31/2014
State% of portfolio
New York18.6%
Texas11.5%
California10.2%
New Jersey9.1%
Missouri5.8%
Georgia3.8%
Illinois3.7%
Virginia3.7%
North Carolina3.5%
Oklahoma3.2%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20140.0000.334
20130.0000.446
20120.0800.485
20110.0000.485
20100.0000.528
20090.0000.491
20080.0000.466
20070.0000.466
20060.0000.461
20050.0000.495
20040.0000.535

1If a Fund makes a distribution from any source other than net income, it is required to provide shareholders with a notice disclosing the source of such distribution (each a "Notice"). The amounts and sources of distributions reported above and in each Notice are only estimates and are not provided for tax reporting purposes. Each Fund will send each shareholder a Form 1099 DIV for the calendar year that will provide definitive information on how to report the Fund's distributions for federal income tax purposes. The information in the table above will not be updated to reflect any subsequent recharacterization of dividends and distributions. Click here to see recent Notices pertaining to the Fund (if any).

2Information on return of capital distributions is only provided from June 1, 2014 onward.

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

Joe Baxter

Joe Baxter  

Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager

Start date on the Fund: January 2003

Years of industry experience: 30

(View bio)


Steve Czepiel

Steve Czepiel  

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: July 2007

Years of industry experience: 32

(View bio)


Greg Gizzi

Greg Gizzi 

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: December 2012

Years of industry experience: 30

(View bio)


You may qualify for sales-charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in Delaware Investments® Funds. More information about these and other discounts is available from your financial advisor, in the Fund's prospectus under the section entitled "About your account," and in the Fund's statement of additional information under the section entitled "Purchasing shares."

The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder fees
Maximum sales charge (load) imposed on purchases as a percentage of offering price4.50%
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.54%
Distribution and service (12b-1) fees0.25%
Other expenses0.16%
Total annual fund operating expenses0.95%
Fee waivers and expense reimbursements(0.14%)
Total annual fund operating expenses after fee waivers and expense reimbursements0.81%

1The Fund's investment manager, Delaware Management Company (Manager), is contractually waiving its investment advisory fees and/or paying expenses (excluding any 12b-1 fees, taxes, interest, inverse floater program expenses, acquired fund fees and 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) to the extent necessary to prevent total annual fund operating expenses from exceeding 0.56% of the Fund's average daily net assets from Dec. 27, 2013 through Dec. 29, 2014. These waivers and reimbursements may only be terminated by agreement of the Manager or Distributor, as applicable, and the Fund. Additionally, the Fund's Class A shares are subject to a blended 12b-1 fee of 0.10% on all shares acquired prior to June 1, 1992 and 0.25% on all shares acquired on or after June 1, 1992.

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Delaware Tax-Free USA Fund Quarterly commentary June 30, 2014 Class A (DMTFX)

Overview

Within the Fund

Outlook

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The views expressed represent the Manager's assessment of the Fund and market environment as of the date indicated, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Information is as of the date indicated and subject to change.

Document must be used in its entirety.

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by clicking the prospectus link located in the right-hand sidebar or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

Fixed income securities and bond 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 fixed income security that is held by the Fund may be prepaid prior to maturity, potentially forcing the Fund to reinvest that money at a lower interest rate.

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

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

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.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 10/01/2014)

Class APriceNet changeYTD
NAV$11.900.029.12%
Max offer price$12.46n/an/a

Total net assets (as of 08/31/2014)

$554.9 million all share classes

Overall Morningstar RatingTM

Load waived

With load

Class A shares (as of 08/31/2014)

Load waivedWith loadNo. of funds
Overall43236
3 Yrs43236
5 Yrs43213
10 Yrs43174
Morningstar categoryMuni National Long

(View Morningstar disclosure)

Lipper ranking (as of 08/31/2014)

YTD ranking105 / 268
1 year143 / 260
3 years84 / 235
5 years54 / 209
10 years28 / 161
Lipper classificationGen & Ins Muni Debt Fds

(View Lipper disclosure)

Benchmark, peer group

Barclays Municipal Bond Index (view)

Lipper General & Insured Municipal Debt Funds Average (view)

Additional information

Any Macquarie Group entity or fund noted on this page is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and that entity's obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise. 

Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds' distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.

© 2014 Delaware Management Holdings, Inc.

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