Delaware Tax-Free USA Fund


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.


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

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

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 (08/31/2017)

as of quarter-end (06/30/2017)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)5.18%0.41%3.46%3.15%4.73%6.56%01/11/1984
Max offer price0.42%-4.14%1.89%2.20%4.25%6.42%
Bloomberg Barclays Municipal Bond Index5.20%0.88%3.40%3.23%4.73%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.92%-0.68%3.48%3.37%4.50%6.55%01/11/1984
Max offer price-2.65%-5.17%1.89%2.42%4.01%6.41%
Bloomberg Barclays Municipal Bond Index1.96%-0.49%3.33%3.26%4.60%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.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

Expense ratio

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Dec. 29, 2016 through Dec. 29, 2017. Please see the fee table in the Fund's prospectus for more information. The Fund's Class A shares also 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.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
Portfolio characteristics - as of 08/31/2017Bloomberg Barclays Municipal Bond Index
Number of holdings16050,355
Portfolio turnover (last fiscal year)33%n/a
Modified duration (view definition)5.38 years5.07 years
Effective maturity (weighted average) (view definition)7.54 years13.03 years
Yield to maturity (view definition)3.86%2.90%
Average market price (view definition)$115.27n/a
Average coupon (view definition)5.75%4.74%
Yield to worst (view definition)2.19%2.08%
Alternative minimum tax4.46%3.83%
SEC 30-day yield with waiver (view definition)1.85%
SEC 30-day yield without waiver (view definition)1.73%
Annualized standard deviation, 3 years (view definition)3.26n/a
Portfolio composition as of 08/31/2017Total may not equal 100% due to rounding.
Municipal bonds100.5%
Cash and cash equivalents-0.5%

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

Top 10 fixed income holdings as of 08/31/2017
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%
Buckeye Tobacco Settlement Financing Authority 5.875 6/1/20472.8%
New York City Transitional Finance Authority Future Tax Secured Revenue 5.000 11/1/20422.3%
County of Mecklenburg NC 5.000 9/1/20252.0%
Brooklyn Arena Local Development Corp. 6.500 7/15/20301.8%
Golden State Tobacco Securitization Corp. 5.750 6/1/20471.5%
City of New York NY 5.000 10/1/20361.5%
Public Authority for Colorado Energy 6.500 11/15/20381.4%
County of Montgomery MD 5.000 11/1/20281.4%
Railsplitter Tobacco Settlement Authority 6.250 6/1/20241.4%
Total % Portfolio in Top 10 holdings19.3%

Fixed income sectors as of 08/31/2017

List excludes cash and cash equivalents.

IDR/PCR (corporate)16.1%2.8%
Special tax9.7%9.7%
Local general obligations7.0%12.8%
State general obligations6.8%14.9%
Water & sewer2.9%8.7%
Credit quality as of 08/31/2017
Not rated13.4%0.0%

Total may not equal 100% due to rounding. The Fund’s investment manager, Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust, receives “Credit Quality” ratings for the underlying securities held by the Fund from three “nationally recognized statistical rating organizations” (NRSROs): Standard & Poor’s (S&P), Moody’s Investors Service, and Fitch, Inc. The credit quality breakdown is calculated by DMC based on the NRSRO ratings. If two or more NRSROs have assigned a rating to a security the higher rating (lower value) is used. If only one NRSRO rates a security, that rating is used. Securities that are unrated by any of the three NRSROs are included in the “not rated” category when applicable. Unrated securities do not necessarily indicate low quality. More information about securities ratings is contained in the Fund’s Statement of Additional Information.

Top 10 states as of 08/31/2017
State% of portfolio
New York15.4%
New Jersey7.1%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment

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 (if any) is only provided from June 1, 2014 onward.

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

Client-focused consistency

Get a firsthand look at the Delaware Investments municipal bond group and see what drives its passion for performance.

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Joe Baxter

Joe Baxter  

Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager — Macquarie Investment Management, Americas

Start date on the Fund: January 2003

Years of industry experience: 32

(View bio)

Steve Czepiel

Steve Czepiel  

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: July 2007

Years of industry experience: 35

(View bio)

Greg Gizzi

Greg Gizzi 

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: December 2012

Years of industry experience: 33

(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 Funds by Macquarie. More information about these and other discounts is available from your financial intermediary, in the Fund's prospectus under the section entitled "About your account," and in the Fund's statement of additional information (SAI) under the section entitled "Purchasing Shares."

The table below 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), has contractually agreed to waive all or a portion of its investment advisory fees and/or pay/reimburse expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, 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) in order to prevent total annual fund operating expenses from exceeding 0.56% of the Fund's average daily net assets from Dec. 29, 2016 through Dec. 29, 2017. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund. The Fund's Class A shares also 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 Quarterly commentary June 30, 2017


The Fund’s benchmark, the Bloomberg Barclays Municipal Bond Index, returned 1.96% for the second quarter of 2017 as yields declined across all maturity segments despite the Federal Open Market Committee’s (FOMC) decision in June to raise the federal funds rate by 0.25 percentage points to a range of 1.00% to 1.25%. Although performance was driven primarily by strong technical factors, markets also were influenced by soft economic data that caused the municipal yield curve to flatten. Yields bottomed in early June before rebounding to end the quarter at 1.83% on the 10-year bond and 2.66% on the 30-year issue. Municipal credit spreads widened by a mere 0.01 percentage points.

Second-quarter municipal supply decreased by 18% compared to the second quarter of 2016. Refunding supply, in particular, slowed sharply with monthly year-over-year decreases of 50%, 38%, and 48% in April, May, and June, respectively. Demand, as measured by mutual fund flows, was positive. According to Lipper, municipal mutual funds took in approximately $5.8 billion during the second quarter, with the heaviest inflows accruing to intermediate-term funds.

On the economic front, survey results continued to appear stronger than the hard data. First quarter gross domestic product (GDP) was reported at only 1.2%, three-month average payroll growth fell from 201,000 to 120,000, and consumer inflation eased for three consecutive months. However, the FOMC viewed the apparent slowing of economic activity as transitory, with minutes of its May meeting suggesting a June rate hike. The US Federal Reserve’s reinvestment of its Treasurys, agency-backed securities (ABS), and mortgage-backed securities (MBS) are expected to be tapered over time.

Illinois general obligation bonds were downgraded by Standard & Poor’s (from BBB to BBB-) and Moody’s Investors Service (from Baa2 to Baa3) due to the state’s two-year budget standoff. The downgrade caused yields to widen, though Illinois bonds still managed a 1.31% gain for the quarter. Elsewhere, an Oversight Board created by the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) used Title III (bankruptcy-like provisions) to address years of weak economic performance that caused Puerto Rico to default on the majority of its debt. A federal judge was appointed to resolve conflicts between creditors, pensioners, and the Commonwealth. Puerto Rico bonds returned -7.33% for the second quarter and -7.99% year to date. Importantly, however, both Illinois and Puerto Rico were isolated rather than systemic issues within the municipal market.

Within the Fund

Contributing to performance was the Fund’s exposure to long-term bonds (22-plus years), which was the strongest-performing maturity segment within the benchmark, the Bloomberg Barclays Municipal Bond Index, returning 2.75%. Despite the Fund’s modestly lower return of 2.71% in the long bond segment, a 15.62-percentage-point overweight resulted in a positive relative contribution. Additionally, a 16.26% out-of-benchmark position in below-investment-grade bonds contributed to performance by returning 2.88% versus the benchmark return of 1.96%, while the Bloomberg Barclays High-Yield Municipal Bond Index returned 1.99%.

Meanwhile, the Fund’s exposure in the 20-year segment (17-22 years) was a modest detractor, returning 2.14% versus the benchmark’s 20-year segment return of 2.47%. The underperformance could be attributed to a duration that was 0.59 years shorter than the benchmark in the 20-year segment. However, the Fund’s 3.25-percentage-point overweight helped offset a portion of the underperformance.


As we enter the third quarter of 2017, the market consensus is for the FOMC to raise the federal funds rate one more time in 2017 and to begin tapering the Fed’s balance sheet positions in Treasurys and mortgages. Those moves are largely expected to occur at the Fed’s September and December meetings, although the sequence could depend on incoming data over the summer months. While the FOMC has signaled its desire to normalize the federal funds rate sooner rather than later, we believe the recent easing in inflation may cause policy makers to pause rate hikes in September, thus allowing more time to gather economic data points. The trajectory of rate increases is important, since it not only signals the direction of rates but also the slope of the yield curve. A pause may cause the curve to steepen, while continued tightening should result in additional flattening of the curve.

We believe the slowing in inflation and the recent weakness in nonfarm payrolls are signs that the economy continues to muddle along. Annual economic growth of about 2% has been the operative number over the past few years and we do not foresee a significant change. Therefore, we think the FOMC may continue to raise the federal funds rate slowly with long-term yields remaining range-bound. If long rates stay in a range and short rates rise only slowly, we expect the yield curve should continue to flatten and spread product — such as our portfolio overweights to A-rated, BBB-rated and below-investment-grade securities — should continue to provide excess return.

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.

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


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.

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 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.

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

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 09/21/2017)

Class APriceNet change
NAV$11.66no chg
Max offer price$12.21n/a

Total net assets (as of 08/31/2017)

$505.6 million all share classes

Overall Morningstar RatingTM

Class A shares (as of 08/31/2017)
Class ANo. of funds
3 Yrs4140
5 Yrs3131
10 Yrs4104
Morningstar categoryMuni National Long

(View Morningstar disclosure)

Morningstar ranking (as of 08/31/2017)

YTD ranking70 / 157
1 year58 / 156
3 years60 / 140
5 years72 / 131
10 years29 / 104
Morningstar categoryMuni National Long

(View Morningstar disclosure)

Lipper ranking (as of 08/31/2017)

YTD ranking97 / 261
1 year112 / 258
3 years78 / 226
5 years98 / 204
10 years32 / 149
Lipper classificationGen & Ins Muni Debt Fds

(View Lipper disclosure)

Benchmark, peer group

Bloomberg Barclays Municipal Bond Index (view definition)

Morningstar Muni National Long Category (view definition)

Lipper General & Insured Municipal Debt Funds Average (view definition)

Additional information