Think munis

At Delaware Funds by Macquarie, our objective is not only to select good credits but to avoid the bad ones.

The combination of our experienced, dedicated team and consistent process has led to strong long-term performance results.

Why munis?

Municipal yields have adjusted higher as the market experienced record outflows and negative returns in the first half of 2022 against the backdrop of rising interest rates.

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Taxable-equivalent yield on a municipal bond vs. taxable alternatives

40.8% tax bracket* (as of September 30, 2022)

* Taxable-equivalent yield is determined by taking the yield of a tax-exempt bond and dividing it by 1 minus an investor’s federal income tax bracket. For this chart, a 40.8% tax bracket is used (37% federal income tax + 3.8% Medicare tax), so 4.65% divided by (100% - 40.8%) = 7.85%.

Source: Municipal Market Data (MMD)/Bloomberg, as of September 30, 2022.

Chart is for illustrative purposes only.

Default rates by municipal bond issuers have remained remarkably low over the years.

Moody’s-rated debt only (1970-2021)

Cumulative default rates, average over the period of 1970-2021, over
10-year time horizons

	Municipal-rated debt	Corporated-rated debt
AAA	0.00%	0.35%
AA	0.02%	0.76%
A	0.10%	1.96%
BB	1.06%	3.45%
Below investment grade	6.94%	28.92%

Source: Moody’s Investors Service, US Municipal Bond Defaults and Recoveries 1970-2021. Most recent data available.

Over the past five years, municipals have outperformed other fixed income asset classes with lower inherent risk. The below-investment-grade category, or high yield, has been the strongest-performing asset class in fixed income, and has done so with lower risk.

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Municipals have outperformed other fixed income asset classes

5 years ended September 30, 2022

Outperforming fixed income with lower risk

Source: Morningstar Direct, September 30, 2022.

Taxable-equivalent returns assume a 37% tax bracket and 3.8% Medicare tax.

Chart is for illustrative purposes only.

Fixed income asset classes are represented by the following indices: High yield municipal – Bloomberg High-Yield Municipal Bond Index; Municipal – Bloomberg Municipal Bond Index; Taxable municipal – Bloomberg Taxable Municipal Bond Index; US corporate high yield – Bloomberg US Corporate High-Yield Index; US corporate investment grade (IG) – Bloomberg US Corporate Investment Grade Index; Eurodollar – Bloomberg Eurodollar Index; ABS – Bloomberg Asset-Backed Securities (ABS) Index; US Aggregate Bond – Bloomberg US Aggregate Index; US Agency – Bloomberg US Agency Index; US Treasury bills – Bloomberg US Treasury Bills Index; US Treasurys – Bloomberg US Treasury Index; US MBS – Bloomberg US Mortgage-Backed Securities (MBS) Index.

Index definitions

Why now?

Don't miss out on the potential rebound

Municipals tend to overcorrect on the way down but make it up on the way back.

History shows periods of significant volatility and negative returns have led to strong returns – in many cases in the double-digits – over the 12 months that follow.

Period	Peak date	Trough date	Drawdown (%)	Return (%) (12 months following trough)
Fed Rate increase 1994	2/1/91	11/30/94	-8.26	18.9
Fed Rate increase (2004-2006)	3/17/04	5/13/04	-5.29	8.65
Global financial crisis	1/23/08	10/16/08	-11.22	19.85
Meredith Whitney 60 minutes interview	10/12/10	1/17/11	-6.46	15.2
2013 taper tantrum	5/2/13	9/5/13	-6.77	10.22
Trump election victory "tantrum"	7/6/16	12/1/16	-5.71	5.95
COVID-19 pandemic	3/9/20	3/23/20	-10.94	13.18
Fed Rate increase 2022	8/4/21	?	?	?

Source: Morningstar Direct.

More musings on munis

UPCOMING WEBINAR

November 30, 2022

Municipals in focus: What’s ahead for the remainder of 2022 and beyond?

This discussion will provide a detailed overview of the municipal market and what to expect for 2023.

October 11, 2022

Municipals in focus: Why munis? Why now?

The Macquarie municipal fixed income team members discuss the current drivers of market performance in a recently recorded webinar.

Learn more

Why Delaware Funds by Macquarie for municipal bonds?

Yield focus

Credit analysis is the cornerstone of our selective, bottom-up process in which credit research drives alpha in plus sectors.

Proprietary process

Our proprietary CREDIT process checklist ensures a disciplined and repeatable process to select credits while mitigating risks.

Responsible risk

The team’s risk management approach is critical to the goal of delivering strong results over the long term.

Learn more

Municipal bond solutions from Delaware Funds by Macquarie

National municipal bond funds

	Delaware National High-Yield Municipal Bond Fund (DVHIX)	Delaware Tax-Free USA Fund (DTFIX)	Delaware Tax-Free USA Intermediate Fund (DUSIX)
Overall Morningstar Rating™
Morningstar category	High-Yield Muni	Muni National Long	Muni National Intermediate
Total net assets as of 09/30/2022, all share classes	$1.8 billion	$724.6 million	$1.0 billion
Modified duration	11.78 years	11.29 years	7.22 years
SEC 30-day yield* with waiver (Institutional Class)	4.86%	4.12%	3.65%
Distribution yield**	4.78%	4.16%	3.57%
Fund performance	Learn more	Learn more	Learn more

Source: Morningstar. Data as of 9/30/2022 unless otherwise noted. Morningstar ranking is based on Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance. Past performance is no guarantee of future results.

** The distribution yield for monthly paying Funds is calculated by annualizing actual dividends distributed for the monthly period ended on the date shown and dividing by the net asset value on the last business day for the same period. The yield does not include long- or short-term capital gains distributions.

State-specific municipal bond funds

Note: click or tap on each button below to learn more about each state fund.

Delaware Tax-Free Arizona Fund (DAZIX)

3.72%

SEC 30-day yield* with waiver (Institutional Class)

3.51%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free California Fund (DCTIX)

3.76%

SEC 30-day yield* with waiver (Institutional Class)

3.68%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free Colarado Fund (DCOIX)

3.54%

SEC 30-day yield* with waiver (Institutional Class)

3.48%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free Idaho Fund (DTIDX)

3.65%

SEC 30-day yield* with waiver (Institutional Class)

3.31%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free Minnesota Intermediate Fund (DMIIX)

3.10%

SEC 30-day yield* with waiver (Institutional Class)

2.77%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free Minnesota Fund (DMNIX)

3.34%

SEC 30-day yield* with waiver (Institutional Class)

2.93%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Minnesota High-Yield Municipal Bond Fund (DMHIX)

3.74%

SEC 30-day yield* with waiver (Institutional Class)

3.28%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free New Jersey Fund (FINLX)

2.84%

SEC 30-day yield* with waiver (Institutional Class)

3.81%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free Oregon Fund (FTOTX)

3.13%

SEC 30-day yield* with waiver (Institutional Class)

3.55%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free New York Fund (DTNIX)

3.78%

SEC 30-day yield* with waiver (Institutional Class)

3.62%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

Delaware Tax-Free Pennsylvania Fund (DTPIX)

3.99%

SEC 30-day yield* with waiver (Institutional Class)

3.87%

Distribution yield

Overall Morningstar Rating^TM (Institutional Class shares - as of 09/30/2022)

View the Fund's standardized performance

The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Performance data for all share classes current to the most recent month end may be obtained by delawarefunds.com/performance or calling 800 877 693-3546. Investors should read the prospectus and the summary prospectus carefully before investing.

DAZIX rated 4, 4, and 4 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 167, 155, and 100 funds, respectively, and 4 stars out of 167 funds in the overall rating. DCTIX rated 4, 4, and 4 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 102, 96, and 69 funds, respectively, and 4 stars out of 102 funds in the overall rating. DCOIX rated 5, 5, and 5 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 167, 155, and 100 funds, respectively, and 5 stars out of 167 funds in the overall rating. DTIDX rated 4, 4, and 4 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 167, 155, and 100 funds, respectively, and 4 stars out of 167 funds in the overall rating. DMIIX rated 3, 3, and 3 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 43, 41, and 30 funds, respectively, and 3 stars out of 43 funds in the overall rating. DMNIX rated 4, 4, and 5 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 43, 41, and 30 funds, respectively, and 4 stars out of 43 funds in the overall rating. DMHIX rated 4, 5, and 5 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 43, 41, and 30 funds, respectively, and 5 stars out of 43 funds in the overall rating. FINLX rated 4, 4, and 3 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 49, 45, and 38 funds, respectively, and 4 stars out of 49 funds in the overall rating. FTOTX rated 5, 5, and 4 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 167, 155, and 100 funds, respectively, and 5 stars out of 167 funds in the overall rating. DTNIX rated 5, 4, and 4 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 71, 66, and 55 funds, respectively, and 4 stars out of 71 funds in the overall rating. DTPIX rated 5, 4, and 4 stars for the 3-, 5-, and 10-year periods ended 9/30/2022 among 52, 48, and 42 funds, respectively, and 4 stars out of 52 funds in the overall rating.

Morningstar fund data for all time periods shown are as of the above indicated date. Although a Fund may outperform peers when compared to its Morningstar peer group, the returns for that period may still be negative. Rankings shown are provided by Morningstar. Rankings and performance for other time periods are available from Morningstar.

* 30-Day SEC yield is shown with waivers. The 30-day SEC yields without waivers are 3.28% for DAZIX, 3.31% for DCTIX, 3.09% for DCOIX, 3.14% for DTIDX, 2.57% for DMIIX, 2.79% for DMNIX, 3.19% for DMHIX, 2.35% for FINLX, 2.59% for FTOTX, 3.23% for DTNIX, 3.41% for DTPIX.

The performance quoted represents past performance and does not guarantee future results.

12-month distribution rate reflects the fund’s past dividends paid to shareholders. It is calculated monthly by taking the sum of the trailing 12-month dividend payments divided by the last month's ending share price plus any capital gains distributed over the previous 12 months.

For financial professional use only. Not for use with the general public.

IMPORTANT INFORMATION

Average annual total returns (%) as of September 30, 2022

Fund	1 year	3 year	5 year	10 year/since inception*	Inception date	Gross exp. ratio	Net exp. ratio**	Expense waiver date
Delaware National High-Yield Municipal Bond Fund (Institutional Class)	-15.36	-1.34	1.61	3.19	12/31/08	0.63	0.60	12/29/22
Delaware Tax-Free USA Fund (Institutional Class)	-17.40	-2.27	0.47	1.82	12/31/08	0.66	0.55	12/29/22
Delaware Tax-Free USA Intermediate Fund (Institutional Class)	-13.37	-1.97	0.38	1.33	12/31/08	0.63	0.50	12/29/22

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 for all share classes current to the most recent month end may be obtained by calling 877 693-3546 or visiting delawarefunds.com/performance.

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

*Since inception performance shown for funds with less than a 10-year track record.

**Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements through the date shown. Please see the fee table in each Fund’s prospectus for more information.

© 2022 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar Rating is for the Class(es) indicated; other classes may have different performance characteristics

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 visiting delawarefunds.com/literature, or calling 877 693-3546. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

Diversification may not protect against market risk. • 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. •Substantially all dividend income derived from tax-free funds is exempt from federal income tax. Some income may be subject to state and 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. • IBOR risk is the risk that changes related to the use of the London interbank offered rate (LIBOR) or similar rates (such as EONIA) could have adverse impacts on financial instruments that reference these rates. The abandonment of these rates could affect the value and liquidity of instruments that reference them and could affect investment strategy performance. • The disruptions caused by natural disasters, pandemics, or similar events could prevent the Fund from executing advantageous investment decisions in a timely manner and could negatively impact the Fund’s ability to achieve its investment objective and the value of the Fund’s investments. Indices are unmanaged and one cannot invest directly in an index.

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

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Why munis?