Prospectus
Fixed income
December 28, 2012
Nasdaq ticker symbols
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Class A
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Class B
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Class C
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Delaware Tax-Free Arizona Fund
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VAZIX
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DVABX
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DVACX
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Delaware Tax-Free California Fund
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DVTAX
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DVTFX
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DVFTX
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Delaware Tax-Free Colorado Fund
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VCTFX
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DVBTX
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DVCTX
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Delaware Tax-Free Idaho Fund
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VIDAX
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DVTIX
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DVICX
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Delaware Tax-Free New York Fund
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FTNYX
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DVTNX
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DVFNX
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Delaware Tax-Free Minnesota Fund
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DEFFX
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DMOBX
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DMOCX
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Delaware Tax-Free Minnesota Intermediate Fund
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DXCCX
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DVSBX
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DVSCX
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Delaware Minnesota High-Yield Municipal Bond Fund
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DVMHX
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DVMYX
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DVMMX
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The U.S. Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of
this Prospectus. Any representation to the contrary is a criminal offense.
Get shareholder reports and prospectuses online instead of in the mail.
Visit delawareinvestments.com/edelivery.
Fund summaries
Delaware Tax-Free Arizona Fund
What is the Fund's investment objective?
Delaware Tax-Free Arizona Fund seeks as high a level of current income exempt from federal income tax and from the Arizona
state personal income tax as is consistent with preservation of capital.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.50%
|
0.50%
|
0.50%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.15%
|
0.15%
|
0.15%
|
Total annual fund operating expenses
|
0.90%
|
1.65%
|
1.65%
|
Fee waivers and expense reimbursements
|
(0.06%)
2
|
(0.06%)
2
|
(0.06%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.84%
|
1.59%
|
1.59%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.59% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$532
|
$162
|
$562
|
$162
|
$262
|
3 years
|
$718
|
$514
|
$739
|
$514
|
$514
|
5 years
|
$920
|
$891
|
$1,041
|
$891
|
$891
|
10 years
|
$1,503
|
$1,749
|
$1,749
|
$1,950
|
$1,950
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 34% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes, including the federal alternative minimum tax, and from Arizona state personal income
taxes. This is a fundamental investment policy that may not be changed without prior shareholder approval.
Municipal debt obligations are issued by state and local governments to raise funds for various public purposes such as hospitals,
schools, and general capital expenses. The Fund will invest its assets in securities with maturities of various lengths, depending
on market conditions. We will adjust the average maturity of the bonds in the portfolio to attempt to provide a high level
of tax-exempt income consistent with preservation of capital. The Fund's income level will vary depending on current interest
rates and the specific securities in the portfolio. The Fund may concentrate its investments in certain types of bonds or
in a certain segment of the municipal bond market when the supply of bonds in other sectors does not suit our investment needs.
The Fund will generally have a dollar-weighted average effective maturity of between 5 and 30 years.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free Arizona Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 7.52%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 8.33% for the quarter ended September 30, 2009 and its lowest quarterly
return was -4.98% for the quarter ended December 31, 2010. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
4.06%
|
3.39%
|
4.27%
|
Class A return after taxes on distributions
|
4.05%
|
3.38%
|
4.23%
|
Class A return after taxes on distributions and sale of Fund shares
|
4.01%
|
3.45%
|
4.23%
|
Class B return before taxes
|
4.26%
|
3.31%
|
4.12%
|
Class C return before taxes
|
7.16%
|
3.57%
|
3.98%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of Arizona. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Tax-Free California Fund
What is the Fund's investment objective?
Delaware Tax-Free California Fund seeks as high a level of current income exempt from federal income tax and from the California
state personal income tax as is consistent with preservation of capital.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.55%
|
0.55%
|
0.55%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.17%
|
0.17%
|
0.17%
|
Total annual fund operating expenses
|
0.97%
|
1.72%
|
1.72%
|
Fee waivers and expense reimbursements
|
(0.15%)
2
|
(0.15%)
2
|
(0.15%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.82%
|
1.57%
|
1.57%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.57% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$530
|
$160
|
$560
|
$160
|
$260
|
3 years
|
$731
|
$527
|
$752
|
$527
|
$527
|
5 years
|
$948
|
$919
|
$1,069
|
$919
|
$919
|
10 years
|
$1,573
|
$1,819
|
$1,819
|
$2,018
|
$2,018
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 32% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes, including the federal alternative minimum tax, and from California state personal income
taxes. This is a fundamental investment policy that may not be changed without prior shareholder approval.
Municipal debt obligations are issued by state and local governments to raise funds for various public purposes such as hospitals,
schools, and general capital expenses. The Fund will invest its assets in securities with maturities of various lengths, depending
on market conditions. We will adjust the average maturity of the bonds in the portfolio to attempt to provide a high level
of tax-exempt income consistent with preservation of capital. The Fund's income level will vary depending on current interest
rates and the specific securities in the portfolio. The Fund may concentrate its investments in certain types of bonds or
in a certain segment of the municipal bond market when the supply of bonds in other sectors does not suit our investment needs.
The Fund will generally have a dollar-weighted average effective maturity of between 5 and 30 years.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures, and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated. Derivative contracts are also subject to the risk that
the counterparty may fail to perform its obligations under the contract due to financial difficulties (such as a bankruptcy
or reorganization).
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free California Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 10.23%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 12.14% for the quarter ended September 30, 2009 and its lowest quarterly
return was -5.79% for the quarter ended December 31, 2010. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
6.24%
|
3.42%
|
4.75%
|
Class A return after taxes on distributions
|
6.24%
|
3.42%
|
4.75%
|
Class A return after taxes on distributions and sale of Fund shares
|
5.55%
|
3.50%
|
4.69%
|
Class B return before taxes
|
6.42%
|
3.33%
|
4.59%
|
Class C return before taxes
|
9.44%
|
3.59%
|
4.44%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of California. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Tax-Free Colorado Fund
What is the Fund's investment objective?
Delaware Tax-Free Colorado Fund seeks as high a level of current income exempt from federal income tax and from the personal
income tax in Colorado as is consistent with preservation of capital.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.55%
|
0.55%
|
0.55%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.13%
|
0.13%
|
0.13%
|
Total annual fund operating expenses
|
0.93%
|
1.68%
|
1.68%
|
Fee waivers and expense reimbursements
|
(0.09%)
2
|
(0.09%)
2
|
(0.09%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.84%
|
1.59%
|
1.59%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.59% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$532
|
$162
|
$562
|
$162
|
$262
|
3 years
|
$725
|
$521
|
$746
|
$521
|
$521
|
5 years
|
$933
|
$904
|
$1,054
|
$904
|
$904
|
10 years
|
$1,534
|
$1,780
|
$1,780
|
$1,980
|
$1,980
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 24% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes, including the federal alternative minimum tax, and from Colorado state personal income
taxes. This is a fundamental investment policy that may not be changed without prior shareholder approval.
Municipal debt obligations are issued by state and local governments to raise funds for various public purposes such as hospitals,
schools, and general capital expenses. The Fund will invest its assets in securities with maturities of various lengths, depending
on market conditions. We will adjust the average maturity of the bonds in the portfolio to attempt to provide a high level
of tax-exempt income consistent with preservation of capital. The Fund's income level will vary depending on current interest
rates and the specific securities in the portfolio. The Fund may concentrate its investments in certain types of bonds or
in a certain segment of the municipal bond market when the supply of bonds in other sectors does not suit our investment needs.
The Fund will generally have a dollar-weighted average effective maturity of between 5 and 30 years.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free Colorado Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 7.58%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 8.43% for the quarter ended September 30, 2009 and its lowest quarterly
return was -4.97% for the quarter ended December 31, 2010. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
5.06%
|
3.49%
|
4.29%
|
Class A return after taxes on distributions
|
5.06%
|
3.49%
|
4.29%
|
Class A return after taxes on distributions and sale of Fund shares
|
4.72%
|
3.56%
|
4.29%
|
Class B return before taxes
|
5.21%
|
3.41%
|
4.15%
|
Class C return before taxes
|
8.19%
|
3.68%
|
4.00%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of Colorado. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Tax-Free Idaho Fund
What is the Fund's investment objective?
Delaware Tax-Free Idaho Fund seeks as high a level of current income exempt from federal income tax and from Idaho personal
income taxes as is consistent with preservation of capital.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.55%
|
0.55%
|
0.55%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.14%
|
0.14%
|
0.14%
|
Total annual fund operating expenses
|
0.94%
|
1.69%
|
1.69%
|
Fee waivers and expense reimbursements
|
(0.06%)
2
|
(0.06%)
2
|
(0.06%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.88%
|
1.63%
|
1.63%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.63% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$536
|
$166
|
$566
|
$166
|
$266
|
3 years
|
$730
|
$527
|
$752
|
$527
|
$527
|
5 years
|
$941
|
$912
|
$1,062
|
$912
|
$912
|
10 years
|
$1,548
|
$1,793
|
$1,793
|
$1,993
|
$1,993
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 17% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes, including the federal alternative minimum tax, and from Idaho state personal income taxes.
This is a fundamental investment policy that may not be changed without prior shareholder approval.
Municipal debt obligations are issued by state and local governments to raise funds for various public purposes such as hospitals,
schools, and general capital expenses. The Fund will invest its assets in securities with maturities of various lengths, depending
on market conditions. We will adjust the average maturity of the bonds in the portfolio to attempt to provide a high level
of tax-exempt income consistent with preservation of capital. The Fund's income level will vary depending on current interest
rates and the specific securities in the portfolio. The Fund may concentrate its investments in certain types of bonds or
in a certain segment of the municipal bond market when the supply of bonds in other sectors does not suit our investment needs.
The Fund will generally have a dollar-weighted average effective maturity of between 5 and 30 years.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free Idaho Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 5.51%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 7.07% for the quarter ended September 30, 2009 and its lowest quarterly
return was -4.60% for the quarter ended December 31, 2010. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
3.48%
|
3.69%
|
4.45%
|
Class A return after taxes on distributions
|
3.48%
|
3.69%
|
4.45%
|
Class A return after taxes on distributions and sale of Fund shares
|
3.56%
|
3.69%
|
4.39%
|
Class B return before taxes
|
3.58%
|
3.60%
|
4.30%
|
Class C return before taxes
|
6.58%
|
3.85%
|
4.16%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of Idaho. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Tax-Free New York Fund
What is the Fund's investment objective?
Delaware Tax-Free New York Fund seeks as high a level of current income exempt from federal income tax and from New York state
personal income taxes as is consistent with preservation of capital.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.55%
|
0.55%
|
0.55%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.21%
|
0.21%
|
0.21%
|
Total annual fund operating expenses
|
1.01%
|
1.76%
|
1.76%
|
Fee waivers and expense reimbursements
|
(0.21%)
2
|
(0.21%)
2
|
(0.21%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.80%
|
1.55%
|
1.55%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.55% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$528
|
$158
|
$558
|
$158
|
$258
|
3 years
|
$737
|
$534
|
$759
|
$534
|
$534
|
5 years
|
$963
|
$935
|
$1,085
|
$935
|
$935
|
10 years
|
$1,612
|
$1,857
|
$1,857
|
$2,056
|
$2,056
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 28% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes, including the federal alternative minimum tax, and from New York state personal income
taxes. This is a fundamental investment policy that may not be changed without prior shareholder approval.
Municipal debt obligations are issued by state and local governments to raise funds for various public purposes such as hospitals,
schools, and general capital expenses. The Fund will invest its assets in securities with maturities of various lengths, depending
on market conditions. We will adjust the average maturity of the bonds in the portfolio to attempt to provide a high level
of tax-exempt income consistent with preservation of capital. The Fund's income level will vary depending on current interest
rates and the specific securities in the portfolio. The Fund may concentrate its investments in certain types of bonds or
in a certain segment of the municipal bond market when the supply of bonds in other sectors does not suit our investment needs.
The Fund will generally have a dollar-weighted average effective maturity of between 5 and 30 years.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free New York Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 8.93%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 8.61% for the quarter ended September 30, 2009 and its lowest quarterly
return was -5.10% for the quarter ended December 31, 2010. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
5.04%
|
3.96%
|
4.96%
|
Class A return after taxes on distributions
|
5.04%
|
3.96%
|
4.96%
|
Class A return after taxes on distributions and sale of Fund shares
|
4.60%
|
3.94%
|
4.87%
|
Class B return before taxes
|
5.16%
|
3.89%
|
4.82%
|
Class C return before taxes
|
8.16%
|
4.15%
|
4.67%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of New York. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Tax-Free Minnesota Fund
What is the Fund's investment objective?
Delaware Tax-Free Minnesota Fund seeks 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.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.54%
|
0.54%
|
0.54%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.13%
|
0.13%
|
0.13%
|
Total annual fund operating expenses
|
0.92%
|
1.67%
|
1.67%
|
Fee waivers and expense reimbursements
|
(0.02%)
2
|
(0.02%)
2
|
(0.02%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.90%
|
1.65%
|
1.65%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.65% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$538
|
$168
|
$568
|
$168
|
$268
|
3 years
|
$728
|
$525
|
$750
|
$525
|
$525
|
5 years
|
$935
|
$905
|
$1,055
|
$905
|
$905
|
10 years
|
$1,529
|
$1,775
|
$1,775
|
$1,975
|
$1,975
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 16% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, Delaware Tax-Free Minnesota Fund will invest at least 80% of its net assets in municipal securities
the income from which is exempt from federal income taxes, including the federal alternative minimum tax, and from Minnesota
state personal income taxes. This is a fundamental investment policy that may not be changed without prior shareholder approval.
The Fund is required to derive at least 95% of its income from Minnesota obligations in order for any of its income to be
exempt from Minnesota state personal income taxes. Municipal debt obligations are issued by state and local governments to
raise funds for various public purposes such as hospitals, schools, and general capital expenses. The Fund will invest its
assets in securities with maturities of various lengths, depending on market conditions. We will adjust the average maturity
of the bonds in the portfolio to attempt to provide a high level of tax-exempt income consistent with preservation of capital.
The Fund's income level will vary depending on current interest rates and the specific securities in the portfolio. The Fund
may concentrate its investments in certain types of bonds or in a certain segment of the municipal bond market when the supply
of bonds in other sectors does not suit our investment needs. Under normal circumstances, the Fund will generally have a dollar-weighted
average effective maturity of between 5 and 30 years.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free Minnesota Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 6.41%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 6.32% for the quarter ended September 30, 2009 and its lowest quarterly
return was -4.31% for the quarter ended December 31, 2010. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
5.69%
|
3.63%
|
4.67%
|
Class A return after taxes on distributions
|
5.55%
|
3.56%
|
4.58%
|
Class A return after taxes on distributions and sale of Fund shares
|
5.28%
|
3.64%
|
4.59%
|
Class B return before taxes
|
5.80%
|
3.54%
|
4.52%
|
Class C return before taxes
|
8.78%
|
3.80%
|
4.38%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of Minnesota. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Tax-Free Minnesota Intermediate Fund
What are the Fund's investment objectives?
Delaware Tax-Free Minnesota Intermediate Fund seeks 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.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
2.75%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
2.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.50%
|
0.50%
|
0.50%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.19%
|
0.19%
|
0.19%
|
Total annual fund operating expenses
|
0.94%
|
1.69%
|
1.69%
|
Fee waivers and expense reimbursements
|
(0.10%)
2
|
(0.00%)
2
|
(0.00%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.84%
|
1.69%
|
1.69%
|
1
|
If you redeem Class B shares during the first year after you buy them, you will pay a contingent deferred sales charge (CDSC)
of 2.00%, which declines to 1.00% during the second and third years, and 0% thereafter. Class C shares redeemed within one
year of purchase are subject to a 1.00% CDSC.
|
2
|
The 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, 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 0.69% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The Fund's distributor, Delaware Distributors, L.P. (Distributor), has contracted to limit the Fund's Class A shares 12b-1
fee from December 28, 2012 through December 27, 2013, to no more than 0.15% of average daily net assets.The waivers and reimbursements may only be terminated by agreement of
the Manager or the Distributor, as applicable, and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
applicable waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers for
years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$358
|
$172
|
$372
|
$172
|
$272
|
3 years
|
$557
|
$533
|
$633
|
$533
|
$533
|
5 years
|
$771
|
$918
|
$918
|
$918
|
$918
|
10 years
|
$1,389
|
$1,530
|
$1,530
|
$1,998
|
$1,998
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 21% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes, including the federal alternative minimum tax, and from Minnesota state personal income
taxes. This is a fundamental investment policy that may not be changed without prior shareholder approval.
The Fund is required to derive at least 95% of its income from Minnesota obligations in order for any of its income to be
exempt from Minnesota state personal income taxes. Municipal debt obligations are issued by state and local governments to
raise funds for various public purposes such as hospitals, schools, and general capital expenses. The Fund will invest its
assets in securities with maturities of various lengths, depending on market conditions. We will adjust the average maturity
of the bonds in the portfolio to attempt to provide a high level of tax-exempt income consistent with preservation of capital.
The Fund's income level will vary depending on current interest rates and the specific securities in the portfolio. The Fund
may concentrate its investments in certain types of bonds or in a certain segment of the municipal bond market when the supply
of bonds in other sectors does not suit our investment needs. Under normal circumstances, the Fund will maintain a dollar-weighted
average effective maturity of more than 3 years but less than 10 years.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free Minnesota Intermediate Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 4.93%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 4.74% for the quarter ended September 30, 2009 and its lowest quarterly
return was -3.60% for the quarter ended December 31, 2010. The maximum Class A sales charge of 2.75%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
5.74%
|
3.86%
|
4.52%
|
Class A return after taxes on distributions
|
5.74%
|
3.86%
|
4.52%
|
Class A return after taxes on distributions and sale of Fund shares
|
4.91%
|
3.81%
|
4.44%
|
Class B return before taxes
|
5.76%
|
3.58%
|
4.36%
|
Class C return before taxes
|
6.77%
|
3.58%
|
3.93%
|
Barclays 3–15 Year Blend Municipal Bond Index (reflects no deduction for fees,
expenses, or taxes)
|
9.62%
|
5.74%
|
5.35%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of Minnesota. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Minnesota High-Yield Municipal Bond Fund
What is the Fund's investment objective?
Delaware Minnesota High-Yield Municipal Bond Fund seeks a high level of current income that is exempt from federal income
tax and from Minnesota state personal income taxes, primarily through investment in medium- and lower-grade municipal obligations.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a
percentage of original purchase price or redemption
price, whichever is lower
|
none
|
4.00%
1
|
1.00%
1
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Management fees
|
0.55%
|
0.55%
|
0.55%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
Other expenses
|
0.17%
|
0.17%
|
0.17%
|
Total annual fund operating expenses
|
0.97%
|
1.72%
|
1.72%
|
Fee waivers and expense reimbursements
|
(0.08%)
2
|
(0.08%)
2
|
(0.08%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.89%
|
1.64%
|
1.64%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.64% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
1 year
|
$537
|
$167
|
$567
|
$167
|
$267
|
3 years
|
$737
|
$534
|
$759
|
$534
|
$534
|
5 years
|
$955
|
$926
|
$1,076
|
$926
|
$926
|
10 years
|
$1,579
|
$1,825
|
$1,825
|
$2,024
|
$2,024
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 13% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes, including the federal alternative minimum tax, and from Minnesota state personal income
taxes. This is a fundamental investment policy that may not be changed without prior shareholder approval.
The Fund is required to derive at least 95% of its income from Minnesota obligations in order for any of its income to be
exempt from Minnesota state personal income taxes. Municipal debt obligations are issued by state and local governments to
raise funds for various public purposes such as hospitals, schools, and general capital expenses. The Fund will invest its
assets in securities with maturities of various lengths, depending on market conditions. We will adjust the average maturity
of the bonds in the portfolio to attempt to provide a high level of tax-exempt income consistent with preservation of capital.
The Fund's income level will vary depending on current interest rates and the specific securities in the portfolio. The Fund
may concentrate its investments in certain types of bonds or in a certain segment of the municipal bond market when the supply
of bonds in other sectors does not suit our investment needs. Under normal circumstances, the Fund will generally have a dollar-weighted
average effective maturity of between 5 and 30 years.
The Fund will invest in lower-rated municipal securities ("junk bonds"), which typically offer higher income potential and
involve greater risk than higher-quality securities.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Geographic concentration risk
— The risk that heightened sensitivity to regional, state, and local political and economic conditions could adversely affect
the holdings in a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular
state.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Minnesota High-Yield Municipal Bond Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 7.11%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 9.03% for the quarter ended September 30, 2009 and its lowest quarterly
return was -6.04% for the quarter ended December 31, 2008. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual total returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011
|
1 year
|
5 years
|
10 years
|
Class A return before taxes
|
5.69%
|
3.42%
|
5.16%
|
Class A return after taxes on distributions
|
5.69%
|
3.42%
|
5.16%
|
Class A return after taxes on distributions and sale of Fund shares
|
5.14%
|
3.49%
|
5.08%
|
Class B return before taxes
|
5.81%
|
3.34%
|
5.01%
|
Class C return before taxes
|
8.80%
|
3.59%
|
4.87%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. We may reduce or waive the minimums in certain cases. No new or subsequent investments currently are
allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal and state income tax for residents of Minnesota. A portion
of these distributions, however, may be subject to the federal alternative minimum tax. The Fund may also make distributions
that are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
How we manage the Funds
We take a disciplined approach to investing, combining investment strategies and risk management techniques that we believe
can help shareholders meet their goals.
Our investment strategies
The Funds' investment manager, Delaware Management Company (Manager or we), will analyze economic and market conditions, seeking
to identify the securities or market sectors that we think are the best investments for a particular fund.
The Funds will invest primarily in tax-exempt obligations of issuers in their respective states.
The Funds may also invest in securities of U.S. territories and possessions to the extent that these securities are tax-exempt
under each state's tax code.
We will generally invest in securities for income rather than seeking capital appreciation through active trading. However,
we may sell securities for a variety of reasons such as: to reinvest the proceeds in higher yielding securities; to eliminate
investments not consistent with the preservation of capital; to honor redemption requests; or to address a weakening credit
situation. As a result, we may realize losses or capital gains that could be taxable to shareholders.
Delaware Tax-Free Minnesota Intermediate Fund will generally have a dollar-weighted average effective maturity of more than
3 years but less than 10 years. This is a more conservative strategy than funds with longer dollar-weighted average effective
maturities, which should result in the Fund experiencing less price volatility when interest rates rise or fall. The remaining
Funds described in this prospectus will generally have a dollar-weighted average effective maturity of between 5 and 30 years.
Each Fund's investment objective is nonfundamental. This means that each Fund's Board of Trustees (each a "Board" and together,
the "Boards") may change the objective without obtaining shareholder approval. If the objective were changed, a Fund would
notify shareholders at least 60 days before the change in the objective became effective.
The securities in which the Funds typically invest
Fixed income securities offer the potential for greater income payments than stocks, and also may provide capital appreciation.
Municipal bond securities typically pay income free of federal income taxes and may also be free of state income taxes in
the state where they are issued. Please see the Funds' statement of additional information (SAI) for additional information
about certain of the securities described below as well as other securities in which the Funds may invest.
Tax-exempt obligations
Tax-exempt obligations are commonly known as municipal bonds. These are debt obligations issued by or for a state or territory,
its agencies or instrumentalities, municipalities, or other political subdivisions. The interest on these debt obligations
can generally be excluded from federal income tax as well as personal income tax in the state where the bond is issued. Determination
of a bond's tax-exempt status is based on the opinion of the bond issuer's legal counsel. Tax-exempt obligations may include
securities subject to the alternative minimum tax.
How the Funds use them:
Under normal conditions, each Fund (except Delaware Minnesota High-Yield Municipal Bond Fund) may invest at least 80% of
its respective assets in tax-exempt debt obligations rated in the top four quality grades by Standard & Poor's (S&P) or another
nationally recognized statistical rating organization (NRSRO), or in unrated tax-exempt obligations if, in the Manager's opinion,
they are equivalent in quality to the top four quality grades. These bonds may include general obligation bonds and revenue
bonds.
Delaware Tax-Free New York Fund will invest at least 80% of net assets in tax-exempt obligations under normal market conditions.
Delaware Minnesota High-Yield Municipal Bond Fund may invest in both investment grade and below-investment-grade debt obligations.
Investment grade debt obligations are bonds rated BBB- and above by S&P or similarly rated by another NRSRO, or in the case
of unrated tax-exempt obligations, if they are equivalent in quality to BBB- and above in the Manager's opinion. Below-investment-grade
debt obligations are bonds rated lower than BBB- by S&P or similarly rated by another NRSRO or, in the case of unrated tax-exempt
obligations, if they are equivalent in quality to being rated below BBB- in the Manager's opinion. Both investment grade and
below-investment-grade bonds may include general obligation bonds and revenue bonds.
Delaware Minnesota High-Yield Municipal Bond Fund may invest all or a portion of its assets in higher grade securities if
the Manager determines that abnormal market conditions make investing in lower-rated securities inconsistent with shareholders'
best interest.
High yield, high-risk municipal bonds (junk bonds)
High yield, high-risk municipal bonds are municipal debt obligations rated lower than investment grade by an NRSRO or, if
unrated, of comparable quality. These securities are often referred to as "junk bonds" and are considered to be of poor standing
and predominantly speculative.
How the Funds use them:
Each Fund (except Delaware Minnesota High-Yield Municipal Bond Fund) may invest up to 20% of its net assets in high yield,
high-risk fixed income securities.
Delaware Minnesota High-Yield Municipal Bond Fund may invest without limit in high yield, high-risk fixed income securities.
General obligation bonds
General obligation bonds are municipal bonds on which the payment of principal and interest is secured by the issuer's pledge
of its full faith, credit, and taxing power.
How the Funds use them:
Each Fund (except Delaware Minnesota High-Yield Municipal Bond Fund) may invest without limit in general obligation bonds
in the top four quality grades or bonds that are unrated, but which the Manager determines to be of equal quality. Delaware
Minnesota High-Yield Municipal Bond Fund may invest without limit in general obligation bonds.
Revenue bonds
Revenue bonds are municipal bonds on which principal and interest payments are made from revenues derived from a particular
facility, from the proceeds of a special excise tax or from revenue generated by an operating project. Principal and interest
are not secured by the general taxing power. Tax-exempt industrial development bonds, in most cases, are a type of revenue
bond that is not backed by the credit of the issuing municipality and may therefore involve more risk.
How the Funds use them:
Each Fund (except Delaware Minnesota High-Yield Municipal Bond Fund) may invest without limit in revenue bonds in the top
four quality grades or bonds that are unrated, but which the Manager determines to be of equal quality. Delaware Minnesota
High-Yield Municipal Bond Fund may invest without limit in revenue bonds.
Insured municipal bonds
Various municipal issuers may obtain insurance for their obligations. In the event of a default, the insurer is required
to make payments of interest and principal when due to the bondholders. However, there is no assurance that the insurance
company will meet its obligations. Insured obligations are typically rated in the top quality grades by an NRSRO.
How the Funds use them:
The Funds may invest without limit in insured bonds. It is possible that a substantial portion of a Fund's portfolio may
consist of municipal bonds that are insured by a single insurance company.
Insurance is available on uninsured bonds and a Fund may purchase such insurance directly. We will generally do so only if
we believe that purchasing and insuring a bond provides an investment opportunity at least comparable to owning other available
insured securities.
The purpose of insurance is to protect against credit risk. It does not insure against market risk or guarantee the value
of the securities in the portfolio or the value of shares of a Fund.
Private activity or private placement bonds
Private activity are municipal bond whose proceeds are used to finance certain nongovernment activities, including some types
of industrial revenue bonds and privately owned sports facilities. Interest on certain private activity bonds, while exempt
from regular federal income tax, is a tax preference item for taxpayers when determing their alternative minimum tax under
the Internal Revenue Code of 1986, as amended (Internal Revenue Code).
Private placement bonds are bonds sold directly to qualified institutional investors or accredited investors, such as banks,
mutual funds, insurance companies, pension funds, and foundations. Private placement bonds do not require registration with
the U.S. Securities and Exchange Commission, provided the securities are bought for investment purposes rather than resale.
Privately placed bonds encompasses a wide variety of fixed income investments including corporate obligations, real estate
related, project finance and asset-backed loans.
How the Funds use them:
Under normal circumstances, each Fund may invest without limit in private activity bonds or private placement bonds, except
that a Fund's investments in these bonds will be limited if such investments, in the aggregate, would cause the Fund to have
less than 80% of its net assets invested in municipal securities the income from which is exempt from federal income taxes
and applicable state personal income taxes.
Inverse floaters
Inverse floaters are instruments with floating or variable interest rates that move in the opposite direction of short-term
interest rates. Consequently, the market values of inverse floaters will generally be more volatile than other tax-exempt
investments. Certain inverse floater programs may be considered a form of borrowing.
How the Funds use them:
Each Fund (except Delaware Minnesota High-Yield Municipal Bond Fund) may invest up to 25% of its net assets in inverse floaters
when the underlying bond is tax-exempt. However, a Fund's investments in taxable securities (including investments in inverse
floaters on taxable securities) combined with its investments in securities rated below-investment-grade are limited to 20%
of the Fund's net assets.
Delaware Minnesota High-Yield Municipal Bond Fund may invest up to 25% of its net assets in inverse floaters.
Where a Fund has invested in inverse floaters that are deemed to be borrowings, the Fund will designate cash and liquid securities
in an amount sufficient to terminate the inverse floater program, and will adjust the value of those designated assets on
a daily basis.
Advance refunded bonds
In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high-grade interest-bearing debt
securities that are deposited into an irrevocable escrow account held by a trustee bank to secure all future payments of principal
and interest on pre-existing bonds, which are then considered to be "advance refunded bonds." Escrow secured bonds often receive
the highest rating from S&P and Moody's Investors Service, Inc. (Moody's).
How the Funds use them:
The Funds may invest without limit in advance refunded bonds. These bonds are generally considered to be of very high quality
because of the escrow account, which typically holds U.S. Treasurys.
Short-term tax-free instruments
Short-term tax-free instruments include instruments such as tax-exempt commercial paper and general obligation, revenue,
and project notes, as well as variable floating rate demand obligations.
How the Funds use them:
The Funds may invest without limit in high-quality, short-term tax-free instruments.
Futures and options
Futures contracts are agreements for the purchase or sale of a security or a group of securities at a specified price, on
a specified date. Unlike purchasing an option, a futures contract must be executed unless it is sold before the settlement
date.
Options represent a right to buy or sell a swap agreement or a security or a group of securities at an agreed-upon price at
a future date. The purchaser of an option may or may not choose to go through with the transaction. The seller of an option,
however, must go through with the transaction if the purchaser exercises the option.
Certain options and futures may be considered derivative securities.
How the Funds use them:
The Funds may invest in futures, options, and closing transactions related thereto. These activities will not be entered
into for speculative purposes, but rather for hedging purposes and to facilitate the ability to quickly deploy into the market
a Fund's cash, short-term debt securities and other money market instruments at times when each Fund's assets are not fully
invested. We may only enter into these transactions for hedging purposes if it is consistent with a Fund's investment objective
and policies.
We may invest up to an aggregate of 20% of a Fund's net assets in futures, options, and swaps as long as the Fund's investment
in these securities when aggregated with other taxable instruments and securities rated below-investment-grade (other than
Delaware Minnesota High-Yield Municipal Bond Fund) does not exceed 20% of the Fund's total net assets. Delaware Minnesota
High-Yield Municipal Bond Fund is not subject to the 20% limitation on investments in securities rated below-investment-grade.
At times when we anticipate adverse conditions, we may want to protect gains on securities without actually selling them.
We might use futures or options on futures to neutralize the effect of any price declines, without selling a bond or bonds.
Use of these strategies can increase the operating costs of the Funds and can lead to loss of principal.
The Funds have claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange
Act (CEA) and, therefore, are not subject to registration or regulation as commodity pool operators under the CEA.
Restricted securities
Restricted securities are privately placed securities whose resale is restricted under U.S. securities laws.
How the Funds use them:
Each Fund may invest in privately placed securities, including those that are eligible for resale only among certain institutional
buyers without registration, commonly known as "Rule 144A Securities." Restricted securities that are determined to be illiquid
may not exceed a Fund's limit on investments in illiquid securities.
Illiquid securities
Illiquid securities are securities that do not have a ready market and cannot be readily sold within seven days at approximately
the price at which a fund has valued them.
How the Funds use them:
Each Fund may invest up to 15% of its net assets in illiquid securities.
Interest rate swap, index swap, and credit default swap agreements
In an interest rate swap, a fund receives payments from another party based on a variable or floating interest rate, in return
for making payments based on a fixed interest rate. An interest rate swap can also work in reverse with a fund receiving payments
based on a fixed interest rate and making payments based on a variable or floating interest rate.
In an index swap, a fund receives gains or incurs losses based on the total return of a specified index, in exchange for making
interest payments to another party. An index swap can also work in reverse with a fund receiving interest payments from another
party in exchange for movements in the total return of a specified index.
In a credit default swap, a fund may transfer the financial risk of a credit event occurring (a bond default, bankruptcy,
or restructuring, for example) on a particular security or basket of securities to another party by paying that party a periodic
premium; likewise, a fund may assume the financial risk of a credit event occurring on a particular security or basket of
securities in exchange for receiving premium payments from another party.
At times when the Manager anticipates adverse conditions, the Manager may want to protect gains on securities without actually
selling them. The Manager might use swaps to neutralize the effect of any price declines, without selling a bond or bonds.
Interest rate swaps, index swaps, and credit default swaps may be considered illiquid.
How the Funds use them:
The Funds may use interest rate swaps to adjust their sensitivity to interest rates by changing their duration. The Funds
may also use interest rate swaps to hedge against changes in interest rates. We may use index swaps to gain exposure to markets
that a Fund invests in and may also use index swaps as substitutes for futures, options, or forward contracts if such contracts
are not directly available to the Fund on favorable terms. We enter into credit default swaps in order to hedge against a
credit event, to enhance total return, or to gain exposure to certain securities or markets.
We may invest up to an aggregate of 20% of a Fund's net assets in futures, options, and swaps (subject to the Fund's 15% limitation
on the aggregate notional amount of credit default swaps when we are selling protection on a security or purchasing protection
on a security that the Fund does not own) as long as the Fund's investment in these securities, when aggregated with other
taxable investments and securities that are rated below-investment-grade (other than Delaware Minnesota High-Yield Municipal
Bond Fund), does not exceed 20% of the Fund's net assets. Delaware Minnesota High-Yield Municipal Bond Fund is not subject
to the 20% limit on investments in securities rated below-investment-grade.
Use of these strategies can increase the Funds' operating costs and can lead to loss of principal.
Municipal leases and certificates of participation
Certificates of participation (COPs) are widely used by state and local governments to finance the purchase of property and
facilities. COPs are like installment purchase agreements. A governmental corporation may create a COP when it issues long-term
bonds to pay for the acquisition of property or facilities. The property or facilities are then leased to a municipality,
which makes lease payments to repay interest and principal to the holders of the bonds. Once the lease payments are completed,
the municipality gains ownership of the property for a nominal sum.
How the Funds use them:
The Funds may invest without limit in investment grade municipal lease obligations, primarily through COPs, rated above BBB- by
S&P, above Baa by Moody's, similarly rated by another NRSRO, or those that are deemed to be of comparable quality.
As with the Funds' other investments, we expect their investments in municipal lease obligations to be exempt from regular
federal income taxes. Each Fund will rely on the opinion of the bond issuer's counsel for a determination of the bond's tax-exempt
status.
A feature that distinguishes COPs from municipal debt is that leases typically contain a "nonappropriation" or "abatement"
clause. This means that the municipality leasing the property or facility must use its best efforts to make lease payments,
but may terminate the lease without penalty if its legislature or other appropriating body does not allocate the necessary
money. In such a case, the creator of the COP, or its agent, is typically entitled to repossess the property. In many cases,
however, the market value of the property will be less than the amount the municipality was paying.
Zero coupon bonds
Zero coupon bonds are debt obligations that do not entitle the holder to any periodic payments of interest prior to maturity
or a specified date when the securities begin paying current interest. Therefore, they are issued and traded at a discount
from their respective face amount or par value.
How the Funds use them:
The Funds may invest in zero coupon bonds. The market prices of these bonds are generally more volatile than the market prices
of securities that pay interest periodically and are likely to react to changes in interest rates to a greater degree than
interest-paying bonds having similar maturities and credit quality. The bonds may have certain tax consequences which, under
certain conditions, could be adverse to a Fund.
Repurchase agreements
A repurchase agreement is an agreement between a buyer of securities, such as a fund, and a seller of securities, in which
the seller agrees to buy the securities back within a specified time at the same price the buyer paid for them, plus an amount
equal to an agreed-upon interest rate. Repurchase agreements are often viewed as equivalent to cash.
How the Funds use them:
Typically, each Fund uses repurchase agreements as a short-term investment for its cash position. In order to enter into
these repurchase agreements, a Fund must have collateral of at least 102% of the repurchase price. A Fund will only enter
into repurchase agreements in which the collateral comprises U.S. government securities. In the discretion of the Manager,
a Fund may invest overnight cash balances in short-term discount notes issued or guaranteed by the U.S. government, its agencies
or instrumentalities or government-sponsored enterprises.
Other investment strategies
Borrowing from banks
Each Fund may borrow money from banks as a temporary measure for extraordinary or emergency purposes or to facilitate redemptions.
The Funds will be required to pay interest to the lending banks on the amounts borrowed. As a result, borrowing money could
result in the Funds being unable to meet their investment objectives.
Purchasing securities on a when-issued or delayed-delivery basis
Each Fund may buy or sell securities on a when-issued or delayed-delivery basis; that is, paying for securities before delivery
or taking delivery at a later date. The Funds will designate cash or securities in amounts sufficient to cover their obligations,
and will value the designated assets daily.
Temporary defensive positions
In response to unfavorable market conditions, we may make temporary investments in cash or cash equivalents or other high-quality,
short-term instruments. These investments may not be consistent with a Fund's investment objective. To the extent that a
Fund holds such instruments, it may be unable to achieve its investment objective.
Downgraded quality ratings
The credit-quality restrictions described above for each Fund apply only at the time of purchase. A Fund may continue to
hold a security whose quality rating has been lowered or, in the case of an unrated bond, after we have changed our assessment
of its credit quality.
Concentration
Depending on the supply of available bonds and how those bonds suit our investment needs, each Fund may concentrate its investments
(investing more than 25% of total assets) in a particular segment of the bond market such as the housing, healthcare, and/or
utility industries. Each Fund may also invest more than 25% of total assets in industrial development bonds. Delaware Tax-Free
California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund, and Delaware Tax-Free New
York Fund may also concentrate investments in transportation, education, and/or industrial obligations.
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may receive little or no return on your investment,
and the risk that you may lose part or all of the money you invest. Before you invest in a Fund, you should carefully evaluate
the risks. Because of the nature of the Funds, you should consider your investment to be a long-term investment that typically
provides the best results when held for a number of years. The information below describes the principal risks you assume
when investing in the Funds. You should also note that the failure of an issuer of a tax-exempt security to comply with certain
legal or contractual requirements relating to the security could cause interest on the security, as well as Fund distributions
derived from this interest, to become taxable, in some cases retroactively to the date the security was issued. Please see
the SAI for a further discussion of these risks and other risks not discussed here.
While each Fund endeavors to purchase only bona fide tax-exempt securities, there are risks that: (i) a security issued as
tax-exempt may be reclassified by the Internal Revenue Service (IRS), or a state tax authority, as taxable and/or (ii) future
legislative, administrative or court actions could adversely impact the qualification of income from a tax-exempt security
as tax-free. Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively,
subjecting you to increased tax liability. In addition, such reclassifications or actions could cause the value of a security,
and therefore, the value of a Fund's shares, to decline.
Interest rate risk
Interest rate risk is the risk that securities will decrease in value if interest rates rise. The risk is greater for bonds
with longer maturities than for those with shorter maturities.
Swaps and inverse floaters may be particularly sensitive to interest rate changes. Depending on the actual movements of interest
rates and how well the portfolio manager anticipates them, a fund could experience a higher or lower return than anticipated.
How the Funds strive to manage it:
Interest rate risk is generally the most significant risk for these Funds. Because interest rate movements can be unpredictable,
we do not try to increase return by aggressively capitalizing on interest rate moves. We do attempt to manage the duration
of a Fund in order to take advantage of our market outlook, especially on a longer term basis.
Market risk
Market risk is the risk that all or a majority of the securities in a certain market — such as the stock or bond market —
will decline in value because of economic conditions, future expectations, investor confidence, or heavy institutional selling.
Index swaps are subject to the same market risks as the investment market or sector that the index represents. Depending on
the actual movements of the index and how well the portfolio manager forecasts those movements, a fund could experience a
higher or lower return than anticipated.
How the Funds strive to manage it:
The Funds maintain a long-term investment approach and focus on securities that we believe can continue to provide returns
over an extended time frame regardless of interim market fluctuations in the bond market. In evaluating the use of an index
swap, the Manager carefully considers how market changes could affect the swap and how that compares to a Fund investing directly
in the market the swap is intended to represent.
Industry and security risks
Industry risk is the risk that the value of securities in a particular industry (such as financial services or manufacturing)
will decline because of changing expectations for the performance of that industry.
Security risk is the risk that the value of an individual stock or bond will decline because of changing expectations for
the performance of the individual company issuing the stock or bond (due to situations that could range from decreased sales
to events such as a pending merger or actual or threatened bankruptcy).
How the Funds strive to manage them:
Each Fund spreads its assets across different types of municipal bonds and among bonds representing different industries
and regions within a state. We also follow a rigorous selection process before choosing securities for the portfolios. Each
Fund may concentrate its investments (investing 25% or more of total assets) in a particular segment of the bond market such
as the housing, healthcare and/or utility industries. Each Fund may also invest 25% or more of total assets in industrial
development bonds. We will generally concentrate our investments in a particular sector when the supply of bonds in other
sectors does not suit our investment needs. This will expose a Fund to greater industry and security risk.
Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Tax-Free New York
Fund, and Delaware Minnesota High-Yield Municipal Bond Fund may also concentrate their investments in transportation, education,
and/or industrial obligations.
Credit risk
Credit risk is the possibility that a bond's issuer (or an entity that insures the bond) will be unable to make timely payments
of interest and principal.
In the case of municipal bonds, issuers may be affected by poor economic conditions in their states.
How the Funds strive to manage it:
We conduct careful credit analysis of individual bonds; we focus on high-quality bonds and limit our holdings of bonds rated
below-investment-grade (except for Delaware Minnesota High-Yield Municipal Bond Fund). We also hold a number of different
bonds in each portfolio. All of this is designed to help reduce credit risk.
Delaware Minnesota High-Yield Municipal Bond Fund is subject to significant credit risk due to its investment in lower-quality,
high yielding bonds. This risk is described more fully below.
High yield, high-risk municipal bond (junk bond) risk
Investing in so-called "junk bonds" entails the risk of principal loss, which may be greater than the risk involved in investment
grade bonds. High yield bonds are sometimes issued by municipalities with less financial strength and therefore less ability
to make projected debt payments on the bonds.
Although experts disagree on the impact recessionary periods have had and will have on high yield municipal bonds, some analysts
believe a protracted economic downturn would adversely affect the value of outstanding bonds and the ability of high yield
issuers to repay principal and interest. In particular, for a high yield revenue bond, adverse economic conditions to the
particular project or industry that backs the bond would pose a significant risk.
How the Funds strive to manage it:
Each Fund (except Delaware Minnesota High-Yield Municipal Bond Fund) limits the amount of the portfolio that may be invested
in lower-quality, higher yielding bonds.
This is a significant risk for Delaware Minnesota High-Yield Municipal Bond Fund. In striving to manage this risk, we hold
a number of different bonds representing a variety of industries and municipal projects, seeking to minimize the effect that
any one bond may have on the portfolio.
Call risk
Call risk is the risk that a bond issuer will prepay the bond during periods of low interest rates, forcing an investor to
reinvest his or her money at interest rates that might be lower than rates on the called bond.
How the Funds strive to manage it:
We take into consideration the likelihood of prepayment when we select bonds and in certain environments may look for bonds
that have protection against early prepayment.
Liquidity risk
Liquidity risk is the possibility that securities cannot be readily sold, within seven days, at approximately the price at
which a fund has valued them.
There is generally no established retail secondary market for high yield securities. As a result, the secondary market for
high yield securities is more limited and less liquid than for other secondary securities markets. The high yield secondary
market is particularly susceptible to liquidity problems when the institutions, such as mutual funds and certain financial
institutions, which dominate it, temporarily stop buying bonds for regulatory, financial, or other reasons.
Adverse publicity and investor perceptions may also disrupt the secondary market for high yield securities.
How the Funds strive to manage it:
A Fund's exposure to illiquid securities is limited to no more than 15% of its net assets.
A less liquid secondary market may have an adverse effect on a Fund's ability to dispose of particular issues, when necessary,
to meet the Fund's liquidity needs or in response to a specific economic event, such as the deterioration in the creditworthiness
of the issuer. In striving to manage this risk, the Manager evaluates the size of a bond issuance as a way to anticipate its
likely liquidity level.
Swap agreements may be treated as illiquid securities, but swap dealers may be willing to repurchase interest rate swaps within
seven days.
Geographic concentration risk
Geographic concentration risk is the risk that a fund that concentrates on investments from a particular state or region could
be adversely affected by political and economic conditions in that state or region. There is also the risk that an inadequate
supply of municipal bonds exists in a particular state.
How the Funds strive to manage it:
Each Fund invests primarily in a specific state and may be subject to geographic concentration risk. We carefully monitor
the economies of each state, and in general we believe they are broad enough to satisfy our investment needs. In addition,
we have the flexibility to invest in issuers in Puerto Rico, the Virgin Islands, and Guam whose bonds are also free of individual
state income taxes.
Alternative minimum tax risk
If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
How the Funds strive to manage it:
Under normal circumstances, each Fund will not invest more than 20% of its assets in bonds whose income is subject to the
federal alternative minimum tax.
Derivatives risk
Derivatives risk is the possibility that a fund may experience a significant loss if it employs a derivatives strategy (including
a strategy involving swaps such as interest rate swaps, index swaps, and credit default swaps) related to a security or a
securities index and that security or index moves in the opposite direction from what the portfolio management team had anticipated.
Derivatives also involve additional expenses, which could reduce any benefit or increase any loss to a fund from using the
strategy.
How the Funds strive to manage it:
We will use derivatives for defensive purposes, such as to protect gains or hedge against potential losses in the portfolio
without actually selling a security, to neutralize the impact of interest rate changes, to increase diversification, or to
earn additional income.
Counterparty risk
If a fund enters into a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement, it will
be subject to the risk that the counterparty to such a contract or agreement may fail to perform its obligations under the
contract or agreement due to financial difficulties (such as a bankruptcy or reorganization). As a result, the fund may experience
significant delays in obtaining any recovery, may obtain only a limited recovery, or may obtain no recovery at all.
How the Funds strive to manage it:
We try to minimize this risk by considering the creditworthiness of all parties before we enter into transactions with them.
The Funds will hold collateral from counterparties consistent with applicable regulations.
Government and regulatory risks
Governments or regulatory authorities have, from time to time, taken or considered actions that could adversely affect various
sectors of the securities markets. Government involvement in the private sector may, in some cases, include government investment
in, or ownership of, companies in certain commercial business sectors; wage and price controls; or imposition of trade barriers
and other protectionist measures. For example, an economic or political crisis may lead to price controls, forced mergers
of companies, expropriation, the creation of government monopolies, foreign exchange controls, the introduction of new currencies
(and the redenomination of financial obligations into those currencies), or other measures that could be detrimental to the
investments of a fund.
How the Funds strive to manage it:
We evaluate the economic and political climate in the U.S. before selecting securities for the Funds. We typically diversify
a Fund's assets among a number of different securities in a variety of sectors in order to minimize the impact to the Fund
of any legislative or regulatory development affecting particular issuers or market sectors.
Disclosure of portfolio holdings information
A description of the Funds' policies and procedures with respect to the disclosure of their portfolio securities is available
in the SAI.
Who manages the Funds
Investment manager
The Manager is a series of Delaware Management Business Trust, which is a subsidiary of Delaware Management Holdings, Inc.
(DMHI). DMHI is a wholly owned subsidiary of Macquarie Group Ltd. The Manager makes investment decisions for the Funds, manages
the Funds' business affairs, and provides daily administrative services. For its services to each Fund, the Manager was paid
an aggregate fee, net of fee waivers, during the last fiscal year as follows:
As a percentage of average daily net assets
|
Delaware Tax-Free Arizona Fund
|
0.44%
|
Delaware Tax-Free California Fund
|
0.40%
|
Delaware Tax-Free Colorado Fund
|
0.46%
|
Delaware Tax-Free Idaho Fund
|
0.49%
|
Delaware Tax-Free Minnesota Fund
|
0.52%
|
Delaware Tax-Free Minnesota Intermediate Fund
|
0.50%
|
Delaware Minnesota High-Yield Municipal Bond Fund
|
0.47%
|
Delaware Tax-Free New York Fund
|
0.34%
|
A discussion of the basis for the Boards' approval of the Funds' investment management agreements is available in the Funds'
annual reports to shareholders for the period ended August 31, 2012.
Portfolio managers
Joseph R. Baxter, Stephen J. Czepiel, and Gregory A. Gizzi have an equal role in the management of the Funds. Mr. Baxter,
Mr. Czepiel, and Mr. Gizzi assumed primary responsibility for making day-to-day investment decisions for the Funds in May
2003, July 2007, and December 2012, respectively.
Joseph R. Baxter,
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
Joseph R. Baxter is the head of the municipal bond department and is responsible for setting the department's investment strategy.
He is also a co-portfolio manager of the firm's municipal bond funds and several client accounts. Before joining Delaware
Investments in 1999 as head municipal bond trader, he held investment positions with First Union, most recently as a municipal
portfolio manager with the Evergreen Funds. Baxter received a bachelor's degree in finance and marketing from La Salle University.
Stephen J. Czepiel,
Senior Vice President, Senior Portfolio Manager
Stephen J. Czepiel is a member of the firm's municipal fixed income portfolio management team with primary responsibility
for portfolio construction and strategic asset allocation. He is a co-portfolio manager of the firm's municipal bond funds
and client accounts. He joined Delaware Investments in July 2004 as a senior bond trader. Previously, he was vice president
at both Mesirow Financial and Loop Capital Markets. He began his career in the securities industry in 1982 as a municipal
bond trader at Kidder Peabody and now has more than 20 years of experience in the municipal securities industry. Czepiel earned
his bachelor's degree in finance and economics from Duquesne University.
Gregory A. Gizzi,
Senior Vice President, Senior Portfolio Manager
Gregory A. Gizzi is a member of the firm's municipal fixed income portfolio management team and municipal trading team, and
head of the municipal bond trading staff. Additionally, Gizzi serves as portfolio manager and head of the convertible bond
trading staff. Before joining Delaware Investments in January 2008 as head of municipal bond trading, he spent six years as
a vice president at Lehman Brothers for the firm's tax-exempt institutional sales effort. Prior to that, he spent two years
trading corporate bonds for UBS before joining Lehman Brothers in a sales capacity. Gizzi has more than 20 years of trading
experience in the municipal securities industry, beginning at Kidder Peabody in 1984, where he started as a municipal bond
trader and worked his way up to institutional block trading desk manager. He later worked in the same capacity at Dillon Read.
Gizzi earned his bachelor's degree in economics from Harvard University.
The SAI provides additional information about the portfolio managers' compensation, other accounts managed by the portfolio
managers, and the portfolio managers' ownership of Fund shares.
Manager of managers structure
The Funds and the Manager have received an exemptive order from the U.S. Securities and Exchange Commission (SEC) to operate
under a manager of managers structure that permits the Manager, with the approval of the Boards, to appoint and replace sub-advisors,
enter into sub-advisory agreements, and materially amend and terminate sub-advisory agreements on behalf of the Funds without
shareholder approval (Manager of Managers Structure). Under the Manager of Managers Structure, the Manager has ultimate responsibility,
subject to oversight by the Funds' Boards, for overseeing the Funds' sub-advisors and recommending to the Boards their hiring,
termination, or replacement. The SEC order does not apply to any sub-advisor that is affiliated with the Funds or the Manager.
While the Manager does not currently expect to use the Manager of Managers Structure with respect to the Funds, the Manager
may, in the future, recommend to the Funds' Boards the establishment of the Manager of Managers Structure by recommending
the hiring of one or more sub-advisors to manage all or a portion of the Funds' portfolios.
The Manager of Managers Structure enables the Funds to operate with greater efficiency and without incurring the expense and
delays associated with obtaining shareholder approvals for matters relating to sub-advisors or sub-advisory agreements. The
Manager of Managers Structure does not permit an increase in the overall management and advisory fees payable by the Funds
without shareholder approval. Shareholders will be notified of any changes made to sub-advisors or sub-advisory agreements
within 90 days of the change.
Who's who
Board of trustees:
A mutual fund is governed by a board of trustees, which has oversight responsibility for the management of the fund's business
affairs. Trustees establish procedures and oversee and review the performance of the fund's service providers.
Investment manager:
An investment manager is a company responsible for selecting portfolio investments consistent with the objective and policies
stated in the mutual fund's prospectus. A written contract between a mutual fund and its investment manager specifies the
services the investment manager performs and the fee the manager is entitled to receive.
Portfolio managers:
Portfolio managers make investment decisions for individual portfolios.
Distributor:
Most mutual funds continuously offer new shares to the public through distributors that are regulated as broker/dealers and
are subject to the Financial Industry Regulatory Authority (FINRA) rules governing mutual fund sales practices.
Service agent:
Mutual fund companies employ service agents (sometimes called transfer agents) to maintain records of shareholder accounts,
calculate and disburse dividends and capital gains, and prepare and mail shareholder statements and tax information, among
other functions. Many service agents also provide customer service to shareholders.
Custodian:
Mutual funds are legally required to protect their portfolio securities, and most funds place them with a qualified bank
custodian that segregates fund securities from other bank assets.
Financial advisors:
Financial advisors provide advice to their clients. They are associated with securities broker/dealers who have entered into
selling and/or service arrangements with the distributor. Selling broker/dealers and financial advisors are compensated for
their services generally through sales commissions, and through 12b-1 fees and/or service fees deducted from a fund's assets.
Shareholders:
Mutual fund shareholders have specific voting rights on matters such as material changes in the terms of a fund's management
contract and changes to fundamental investment policies.
About your account
Investing in the Funds
You can choose from a number of share classes for each Fund. Because each share class has a different combination of sales
charges, fees, and other features, you should consult your financial advisor to determine which class best suits your investment
goals and time frame.
Choosing a share class
Each share class of a Fund has adopted a separate 12b-1 plan that allows it to pay distribution fees for the sale and distribution
of its shares. Because these fees are paid out of a Fund's assets on an ongoing basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of sales charges.
Class A, Class B, and Class C shares each have a separate 12b-1 plan that allows them to pay distribution fees for the sale
and distribution of their shares. Because these fees are paid out of a Class's assets on an ongoing basis, over time these
fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Class A
-
Class A shares have an up-front sales charge of up to 4.50% (2.75% for Delaware Tax-Free Minnesota Intermediate Fund) that
you pay when you buy the shares.
-
If you invest $100,000 or more, your front-end sales charge will be reduced.
-
You may qualify for other reduced sales charges, and, under certain circumstances, the sales charge may be waived, as described
in "How to reduce your sales charge" below.
-
Class A shares are also subject to an annual 12b-1 fee no greater than 0.25% (currently limited to 0.15% for Delaware Tax-Free
Minnesota Intermediate Fund) of average daily net assets, which is lower than the 12b-1 fee for Class B and Class C shares.
See "Dealer compensation" below for further information.
-
Class A shares generally are not subject to a CDSC except in the limited circumstances described in the table below.
-
Class A shares generally are not available for purchase by anyone qualified to purchase Class B shares, except as described
below.
Class A sales charges
The table below details your sales charges on purchases of Class A shares. The offering price for Class A shares includes
the front-end sales charge. The sales charge as a percentage of the net amount invested is the maximum percentage of the amount
invested rounded to the nearest hundredth. The actual sales charge that you pay as a percentage of the offering price and
as a percentage of the net amount invested will vary depending on the then-current net asset value (NAV), the percentage rate
of the sales charge, and rounding.
Amount of purchase
|
Sales charge as a %
of offering price
|
Sales charge as a %
of net amount invested
|
Delaware Tax-Free Funds
|
|
|
|
|
Delaware Minnesota High-Yield Municipal Bond Fund
|
|
|
|
|
Less than $100,000
|
|
4.50%
|
|
5.13%
|
$100,000 but less than $250,000
|
|
3.50%
|
|
4.00%
|
$250,000 but less than $500,000
|
|
2.50%
|
|
3.00%
|
$500,000 but less than $1 million
|
|
2.00%
|
|
2.44%
|
$1 million or more
|
|
none*
|
|
none*
|
Amount of purchase
|
Sales charge as a %
of offering price
|
Sales charge as a %
of net amount invested
|
Delaware Tax-Free Minnesota Intermediate Fund
|
Less than $100,000
|
|
2.75%
|
|
2.83%
|
$100,000 but less than $250,000
|
|
2.00%
|
|
2.04%
|
$250,000 but less than $500,000
|
|
1.00%
|
|
1.01%
|
$500,000 but less than $1 million
|
|
1.00%
|
|
1.01%
|
$1 million or more
|
|
none*
|
|
none*
|
*
There is no front-end sales charge when you purchase $1 million or more of Class A shares. However, if the Distributor paid
your financial advisor a commission on your purchase of $1 million or more of Class A shares, you will have to pay a Limited
CDSC of 1.00% if you redeem shares of the Delaware Tax-Free Funds and Delaware Minnesota High-Yield Municipal Bond Fund within
the first year after your purchase and 0.50% if you redeem shares within the second year; and 0.75% if you redeem shares of
Delaware Tax-Free Minnesota Intermediate Fund within the first year after your purchase, unless a specific waiver of the Limited
CDSC applies. The Limited CDSC will be paid to the Distributor and will be assessed on an amount equal to the lesser of: (1)
the NAV at the time the Class A shares being redeemed were purchased; or (2) the NAV of such Class A shares at the time of
redemption. For purposes of this formula, the "NAV at the time of purchase" will be the NAV at purchase of the Class A shares
even if those shares are later exchanged for shares of another Delaware Investments
®
Fund and, in the event of an exchange of Class A shares, the "NAV of such shares at the time of redemption" will be the NAV
of the shares acquired in the exchange. In determining whether a Limited CDSC is payable, it will be assumed that shares not
subject to the Limited CDSC are the first redeemed followed by other shares held for the longest period of time. See "Dealer
compensation" below for a description of the amount of dealer compensation that is paid.
Class B
No new or subsequent investments, including investments through automatic investment plans and by qualified retirement plans
(such as 401(k) or 457 plans), are allowed in the Funds' Class B shares, except through a reinvestment of dividends or capital
gains or permitted exchanges. Existing shareholders of Class B shares may continue to hold their Class B shares, reinvest
dividends into Class B shares, and exchange their Class B shares of one Delaware Investments
®
Fund for Class B shares of another Fund, as permitted by existing exchange privileges. Existing Class B shareholders wishing
to make subsequent purchases in a Fund's shares will be permitted to invest in other classes of the Fund, subject to that
class's pricing structure and eligibility requirements, if any.
For Class B shares outstanding as of May 31, 2007, and Class B shares acquired upon reinvestment of dividends or capital gains,
all Class B share attributes, including the CDSC schedules, conversion to Class A schedule, and distribution and service (12b-1)
fees, will continue in their current form. In addition, because the Funds' or their Distributor's ability to assess certain
sales charges and fees is dependent on the sale of new shares, the termination of new purchases of Class B shares could ultimately
lead to the elimination and/or reduction of such sales charges and fees. The Funds may not be able to provide shareholders
with advance notice of the reduction in these sales charges and fees. You will be notified via Prospectus supplement if there
are any changes to any attributes, sales charges, or fees.
-
Class B shares have no up-front sales charge, so the full amount of your purchase is invested. However, you will pay a CDSC
if you redeem your shares within six years (three years for Delaware Tax-Free Minnesota Intermediate Fund) after you buy them.
-
If you redeem Class B shares during the first year after you buy them, the shares will be subject to a CDSC of 4.00%. The
CDSC is 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and fifth years, 1.00% during the
sixth year, and 0% thereafter. For Delaware Tax-Free Minnesota Intermediate Fund, the CDSC is 2.00% during the first year,
1.00% during the second and third years, and 0% thereafter.
-
In determining whether the CDSC applies to a redemption of Class B shares, it will be assumed that shares held for more than
six years (three years for Delaware Tax-Free Minnesota Intermediate Fund) are redeemed first, followed by shares acquired
through the reinvestment of dividends or distributions, and finally by shares held longest during the six-year period (three-year
period for Delaware Tax-Free Minnesota Intermediate Fund). For further information on how the CDSC is determined, please
see "Calculation of contingent deferred sales charges — Class B and Class C" below.
-
Under certain circumstances, the CDSC may be waived; please see "Waivers of contingent deferred sales charges" below for further
information.
-
For approximately eight years (five years for Delaware Tax-Free Minnesota Intermediate Fund) after you buy your Class B shares,
they are subject to an annual 12b-1 fee no greater than 1.00% of average daily net assets (of which 0.25% is a service fee)
paid to the Distributor, dealers, or others for providing services and maintaining shareholder accounts.
-
Because of their higher 12b-1 fee, Class B shares have higher expenses and any dividends paid on these shares are generally
lower than dividends on Class A shares.
-
Approximately eight years (five years for Delaware Tax-Free Minnesota Intermediate Fund) after you buy them, Class B shares
automatically convert to Class A shares with a 12b-1 fee of no more than 0.25%. Conversion may occur as late as three months
after, as applicable, the eighth or fifth anniversary of purchase, during which time Class B's higher 12b-1 fee applies.
Class C
-
Class C shares have no up-front sales charge, so the full amount of your purchase is invested in a Fund. However, you will
pay a CDSC of 1.00% if you redeem your shares within 12 months after you buy them.
-
In determining whether the CDSC applies to a redemption of Class C shares, it will be assumed that shares held for more than
12 months are redeemed first followed by shares acquired through the reinvestment of dividends or distributions, and finally
by shares held for 12 months or less. For further information on how the CDSC is determined, please see "Calculation of contingent
deferred sales charges — Class B and Class C" below.
-
Under certain circumstances, the CDSC may be waived; please see "Waivers of contingent deferred sales charges" below for further
information.
-
Class C shares are subject to an annual 12b-1 fee no greater than 1.00% of average daily net assets (of which 0.25% is a service
fee) paid to the Distributor, dealers, or others for providing services and maintaining shareholder accounts.
-
Class C shares do not automatically convert to another class.
-
You may purchase only up to $1 million of Class C shares at any one time. Orders that exceed $1 million will be rejected.
Calculation of contingent deferred sales charges — Class B and Class C
CDSCs are charged as a percentage of the dollar amount subject to the CDSC. The charge will be assessed on an amount equal
to the lesser of the NAV at the time the shares being redeemed were purchased or the NAV of those shares at the time of redemption.
No CDSC will be imposed on increases in NAV above the initial purchase price, nor will a CDSC be assessed on redemptions of
shares acquired through reinvestment of dividends or capital gains distributions. For purposes of this formula, the "NAV at
the time of purchase" will be the NAV at purchase of Class B shares or Class C shares of a Fund, even if those shares are
later exchanged for shares of another Delaware Investments
®
Fund. In the event of an exchange of the shares, the "NAV of such shares at the time of redemption" will be the NAV of the
shares that were acquired in the exchange.
Dealer compensation
The financial advisor that sells you shares of the Funds may be eligible to receive the following amounts as compensation
for your investment in the Funds. These amounts are paid by the Distributor to the securities dealer with whom your financial
advisor is associated.
|
Delaware Tax-Free Funds and
Delaware Minnesota High-Yield Municipal Bond Fund
|
Delaware Tax-Free Minnesota Intermediate Fund
|
|
Class A
1
|
Class B
2
|
Class C
3
|
Class A
1
|
Class B
2
|
Class C
3
|
Commission (%)
|
—
|
4.00%
|
1.00%
|
—
|
2.00%
|
1.00%
|
Investment less than $100,000
|
4.00%
|
—
|
—
|
2.35%
|
—
|
—
|
$100,000 but less than $250,000
|
3.00%
|
—
|
—
|
1.75%
|
—
|
—
|
$250,000 but less than $500,000
|
2.00%
|
—
|
—
|
0.75%
|
—
|
—
|
$500,000 but less than $1 million
|
1.60%
|
—
|
—
|
0.75%
|
—
|
—
|
$1 million but less than $5 million
|
1.00%
|
—
|
—
|
0.75%
|
—
|
—
|
$5 million but less than $25 million
|
0.50%
|
—
|
—
|
0.50%
|
—
|
—
|
$25 million or more
|
0.25%
|
—
|
—
|
0.25%
|
—
|
—
|
12b-1 fee to dealer
|
0.25%
|
0.25%
|
1.00%
|
0.25%
|
0.15%
|
1.00%
|
1
On sales of Class A shares, the Distributor re-allows to your securities dealer a portion of the front-end sales charge depending
upon the amount you invested. Your securities dealer may be eligible to receive up to 0.25% of the 12b-1 fee applicable to
Class A shares. The maximum 12b-1 fee applicable to Class A shares of Delaware Tax-Free Minnesota Intermediate Fund is 0.25%,
however, the Distributor has contracted to limit this amount to 0.15% from December 28, 2012 through December 27, 2013.
2
On sales of Class B shares, the Distributor may pay your securities dealer an up-front commission of 4.00% (2.00% for Delaware
Tax-Free Minnesota Intermediate Fund). Your securities dealer may also be eligible to receive a 12b-1 service fee of up to
0.25% (0.15% for Delaware Tax-Free Minnesota Intermediate Fund) from the date of purchase. After approximately eight years
(five years for Delaware Tax-Free Minnesota Intermediate Fund), Class B shares automatically convert to Class A shares and
dealers may then be eligible to receive the 12b-1 fee applicable to Class A shares.
3
On sales of Class C shares, the Distributor may pay your securities dealer an up-front commission of 1.00%. The up-front
commission includes an advance of the first year's 12b-1 service fee of up to 0.25%. During the first 12 months, the Distributor
retains the full 1.00% 12b-1 fee to partially offset the up-front commission and the prepaid 0.25% 12b-1 service fee advanced
at the time of purchase. Starting in the 13th month, your securities dealer may be eligible to receive the full 1.00% 12b-1
fee applicable to Class C. Alternatively, certain intermediaries may not be eligible to receive the up-front commission of
1.00%, but may receive the 12b-1 fee for Class C shares from the date of purchase.
Payments to intermediaries
The Distributor and its affiliates may pay additional compensation at their own expense and not as an expense of a Fund to
certain affiliated or unaffiliated brokers, dealers, or other financial intermediaries (Financial Intermediaries) in connection
with the sale or retention of Fund shares and/or shareholder servicing, including providing the Fund with "shelf space" or
a higher profile with the Financial Intermediaries' consultants, salespersons, and customers (distribution assistance). For
example, the Distributor or its affiliates may pay additional compensation to financial intermediaries for various purposes,
including, but not limited to, promoting the sale of Fund shares, maintaining share balances and/or for sub-accounting, administrative,
or shareholder processing services, marketing, educational support, and ticket charges. Such payments are in addition to any
distribution fees, service fees, and/or transfer agency fees that may be payable by a Fund. The additional payments may be
based on factors, including level of sales (based on gross or net sales or some specified minimum sales or some other similar
criteria related to sales of a Fund and/or some or all other Delaware Investments
®
Funds), amount of assets invested by the Financial Intermediary's customers (which could include current or aged assets of a
Fund and/or some or all other Delaware Investments
®
Funds), a Fund's advisory fees, some other agreed upon amount, or other measures as determined from time to time by the Distributor.
The level of payments made to a qualifying Financial Intermediary in any given year may vary. To the extent permitted by SEC
and FINRA rules and other applicable laws and regulations, the Distributor may pay, or allow its affiliates to pay, other
promotional incentives or payments to Financial Intermediaries.
If a mutual fund sponsor or distributor makes greater payments for distribution assistance to your Financial Intermediary
with respect to distribution of shares of that particular mutual fund than sponsors or distributors of other mutual funds
make to your Financial Intermediary with respect to the distribution of the shares of their mutual funds, your Financial Intermediary
and its salespersons may have a financial incentive to favor sales of shares of the mutual fund making the higher payments
over shares of other mutual funds or over other investment options. In addition, depending on the arrangements in place at
any particular time, a Financial Intermediary may also have a financial incentive for recommending a particular share class
over other share classes. You should consult with your Financial Intermediary and review carefully any disclosure provided
by such Financial Intermediary as to compensation it receives in connection with investment products it recommends or sells
to you. A significant purpose of these payments is to increase sales of a Fund's shares. The Manager or its affiliates may
benefit from the Distributor's or its affiliates' payment of compensation to financial intermediaries through increased fees
resulting from additional assets acquired through the sale of Fund shares through financial intermediaries. In certain instances,
the payments could be significant and may cause a conflict of interest for your Financial Intermediary. Any such payments
will not change the net asset value (NAV) or the price of a Fund's shares.
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on shares. Please refer to the SAI for detailed information
and eligibility requirements. You can also get additional information from your financial advisor. You or your financial advisor
must notify us at the time you purchase shares if you are eligible for any of these programs. You may also need to provide
information to your financial advisor or the Funds in order to qualify for a reduction in sales charges. Such information
may include your Delaware Investments
®
Funds holdings in any other accounts, including retirement accounts, held indirectly or through an intermediary, and the
names of qualifying family members and their holdings. We reserve the right to determine whether any purchase is entitled,
by virtue of the foregoing, to the reduced sales charge.
Letter of intent
Through a letter of intent you agree to invest a certain amount in Delaware Investments
®
Funds (except money market funds with no sales charge) over a 13-month period to qualify for reduced front-end sales charges.
Class A
|
Class B
|
Class C
|
Available
|
Not available
|
Although the letter of intent does not apply to the purchase of Class C shares, you can combine the value of your Class A
shares with your purchase of Class C shares to fulfill your letter of intent.
|
Rights of accumulation
You can combine your holdings or purchases of all Delaware Investments
®
Funds (except money market funds with no sales charge), as well as the holdings and purchases of your spouse and children
under 21 to qualify for reduced front-end sales charges.
Class A
|
Class B
|
Class C
|
Available
|
Although the rights of accumulation do not apply to the purchase of Class B shares acquired upon reinvestment of dividends
or capital gains, you can combine the value of your Class B shares purchased on or before May 31, 2007 with your purchase
of Class A shares to qualify for rights of accumulation.
|
Although the rights of accumulation do not apply to the purchase of Class C shares, you can combine your purchase of Class
A shares with your purchase of Class C shares to fulfill your rights of accumulation.
|
Reinvestment of redeemed shares
Up to 12 months after you redeem shares, you can reinvest the proceeds without paying a sales charge.
Class A
|
Class B and Class C
|
|
You will not have to pay an additional front-end sales charge.
|
Not available
|
|
Buying Class A shares at net asset value
Class A shares of a Fund may be purchased at NAV under the following circumstances, provided that you notify the Fund in advance
that the trade qualifies for this privilege. The Funds reserve the right to modify or terminate these arrangements at any
time.
-
Shares purchased under the Delaware Investments
®
dividend reinvestment plan and, under certain circumstances, the exchange privilege and the 12-month reinvestment privilege.
-
Purchases by: (i) current and former officers, Trustees/Directors, and employees of any Delaware Investments
®
Fund, the Manager, or any of the Manager's current affiliates and those that may in the future be created; (ii) legal counsel
to the Delaware Investments
®
Funds; and (iii) registered representatives and employees of broker/dealers who have entered into dealer's agreements with
the Distributor. At the direction of such persons, their family members (regardless of age) and any employee benefit plan
established by any of the foregoing entities, counsel, or broker/dealers may also purchase shares at NAV.
-
Shareholders who own Class A shares of Delaware Cash Reserve
®
Fund as a result of a liquidation of a Delaware Investments
®
Fund may exchange into Class A shares of another Delaware Investments
®
Fund at NAV.
-
Purchases by bank employees who provide services in connection with agreements between the bank and unaffiliated brokers or
dealers concerning sales of shares of the Delaware Investments
®
Funds.
-
Purchases by certain officers, trustees, and key employees of institutional clients of the Manager or any of its affiliates.
-
Purchases for the benefit of the clients of brokers, dealers, and registered investment advisors if such brokers, dealers,
or investment advisors have entered into an agreement with the Distributor providing specifically for the purchase of Class
A shares in connection with special investment products, such as wrap accounts or similar fee-based programs. Investors may
be charged a fee when effecting transactions in Class A shares through a broker or agent that offers these special investment
products.
-
Purchases by financial institutions investing for the accounts of their trust customers.
-
Loan repayments made to a Fund account in connection with loans originated from accounts previously maintained by another
investment firm.
Waivers of contingent deferred sales charges
Certain sales charges may be based on historical cost. Therefore, you should maintain any records that substantiate these
costs because the Funds, their transfer agent, and financial intermediaries may not maintain this information. Information
about existing sales charges and sales charge reductions and waivers is available free of charge on the Delaware Investments
®
Funds' website at delawareinvestments.com. Additional information on sales charges can be found in the SAI, which is available
upon request.
The Funds' applicable CDSCs may be waived under the following circumstances:
Redemptions in accordance with a systematic withdrawal plan
Redemptions in accordance with a systematic withdrawal plan, provided the annual amount selected to be withdrawn under the
plan does not exceed 12% of the value of the account on the date that the systematic withdrawal plan was established or modified.
Classes A
1
, B, and C
|
Available
|
Redemptions that result from the right to liquidate a shareholder's account
Redemptions that result from a Fund's right to liquidate a shareholder's account if the aggregate NAV of the shares held in
the account is less than the then-effective minimum account size.
Classes A
1
, B and C
|
Available
|
Distributions from an account of a redemption resulting from death or disability
Distributions from an account of a redemption resulting from the death or disability (as defined in Section 72(t)(2)(A) of
the Internal Revenue Code) of a registered owner or a registered joint owner occurring after the purchase of the shares being
redeemed. In the case of accounts established under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act or
trust accounts, the waiver applies upon the death of all beneficial owners.
Classes A
1
, B, and C
|
Available
|
Redemptions by the classes of shareholders who are permitted to purchase shares at NAV
Redemptions by the classes of shareholders who are permitted to purchase shares at NAV, regardless of the size of the purchase.
Class A
1
|
Classes B and C
|
Available
|
Not available
|
1
The waiver for Class A shares relates to a waiver of the Limited CDSC. Please note that you or your financial advisor will
have to notify us at the time of purchase that the trade qualifies for such waiver.
How to buy shares
Through your financial advisor
Your financial advisor can handle all the details of purchasing shares, including opening an account. Your financial advisor
may charge a separate fee for this service.
By mail
Complete an investment slip and mail it with your check, made payable to the fund and class of shares you wish to purchase,
to Delaware Investments at P.O. Box 9876, Providence, RI 02940-8076 or 4400 Computer Drive, Westborough, MA 01581-1722 for
investments by overnight courier service. If you are making an initial purchase by mail, you must include a completed investment
application with your check.
Please note that purchase orders submitted by mail will not be considered accepted until such orders are received by Delaware
Investments at P.O. Box 9876, Providence, RI 02940-8076 for investments by regular mail or 4400 Computer Drive, Westborough,
MA 01581-1722 for investments by overnight courier service. Please do not send purchase orders to 2005 Market Street, Philadelphia,
PA.
By wire
Ask your bank to wire the amount you want to invest to The Bank of New York Mellon, ABA #011001234, bank account #000073-6910.
Include your account number and the name of the fund and class of shares in which you want to invest. If you are making an
initial purchase by wire, you must first call us at 800 523-1918 so we can assign you an account number.
By exchange
You may exchange all or part of your investment in one or more Delaware Investments
®
Funds for shares of other Delaware Investments
®
Funds. Please keep in mind, however, that under most circumstances you are allowed to exchange only between like classes
of shares. To open an account by exchange, call the Shareholder Service Center at 800 523-1918.
Through automated shareholder services
For Class A, Class B, and Class C shares only, you may purchase or exchange shares through our automated telephone service,
or through our website, delawareinvestments.com. For more information about how to sign up for these services, call our Shareholder
Service Center at 800 523-1918.
Calculating share price
The price you pay for shares will depend on when we receive your purchase order. If your order is received by an authorized
agent or us before the close of regular trading on the NYSE, which is normally 4:00 p.m. Eastern time, you will pay that day's
closing share price, which is based on a fund's NAV. If your order is received after the close of regular trading on the NYSE,
you will pay the next Business Day's price. We reserve the right to reject any purchase order.
We determine the NAV per share for each class of a Delaware Investments
®
Fund at the close of regular trading on the NYSE on each Business Day. The NAV per share for each class of a fund is calculated
by subtracting the liabilities of each class from its total assets and dividing the resulting number by the number of shares
outstanding for that class. We generally price securities and other assets for which market quotations are readily available
at their market value. For a fund that invests primarily in foreign securities, the NAV may change on days when a shareholder
will not be able to purchase or redeem fund shares because foreign markets are open at times and on days when U.S. markets
are not. We price fixed income securities on the basis of valuations provided to us by an independent pricing service that
uses methods approved by the Boards. For all other securities, we use methods approved by the Boards that are designed to
price securities at their fair market values.
Fair valuation
When the Funds use fair value pricing, they may take into account any factors they deem appropriate. The Funds may determine
fair value based upon developments related to a specific security, current valuations of foreign stock indices (as reflected
in U.S. futures markets), and/or U.S. sector or broad stock market indices. The prices of securities used by the Funds to
calculate their NAVs may differ from quoted or published prices for the same securities. Fair value pricing may involve subjective
judgments and it is possible that the fair value determined for a security is materially different than the value that could
be realized upon the sale of that security.
The Funds anticipate using fair value pricing for securities primarily traded on U.S. exchanges only under very limited circumstances,
such as the early closing of the exchange on which a security is traded or suspension of trading in the security. The Funds
may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things,
most foreign markets close well before the Funds value their securities at 4:00 p.m. Eastern time. The earlier close of these
foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in
the interim. To account for this, the Funds may frequently value many foreign equity securities using fair value prices based
on third-party vendor modeling tools to the extent available.
The Boards have delegated responsibility for valuing the Funds' assets to a Pricing Committee of the Manager, which operates
under the policies and procedures approved by the Boards and which is subject to the Boards' oversight.
Document delivery
To reduce fund expenses, we try to identify related shareholders in a household and send only one copy of a fund's financial
reports and prospectus. This process, called "householding," will continue indefinitely unless you instruct us otherwise.
If you prefer not to have these documents householded, please call our Shareholder Service Center at 800 523-1918. At any
time you may view current prospectuses and financial reports on our website.
Inactive accounts
Please note that your account may be transferred to the appropriate state if no activity occurs in the account within the
time period specified by state law.
How to redeem shares
When you send us a properly completed request to redeem or exchange shares and the request is received by an authorized agent
or us before the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time), you will receive the NAV next determined
after we receive your request. If we receive your request after the close of regular trading on the NYSE, you will receive
the NAV next determined on the next Business Day. We will deduct any applicable CDSCs. You may also have to pay taxes on the
proceeds from your sale of shares. We will send you a check, normally the next Business Day, but no later than seven days
after we receive your request to sell your shares. If you purchased your shares by check and sell them before your check has
cleared, which can take up to 15 days, we will wait until your check has cleared before we send you your redemption proceeds.
If you are required to pay a CDSC when you redeem your shares, the amount subject to the fee will be based on the shares'
NAV when you purchased them or their NAV when you redeem them, whichever is less. This arrangement ensures that you will not
pay a CDSC on any increase in the value of your shares. You also will not pay the charge on any shares acquired by reinvesting
dividends or capital gains. If you exchange shares of one fund for shares of another, you do not pay a CDSC at the time of
the exchange. If you later redeem those shares, the purchase price for purposes of the CDSC formula will be the price you
paid for the original shares, not the exchange price. The redemption price for purposes of this formula will be the NAV of
the shares you are actually redeeming.
If you hold your shares in certificates, you must submit the certificates with your request to sell the shares. We recommend
that you send your certificates by certified mail.
Through your financial advisor
Your financial advisor can handle all the details of redeeming your shares (selling them back to a Fund). Your financial advisor
may charge a separate fee for this service.
By mail
You may redeem your shares by mail by writing to: Delaware Investments at P.O. Box 9876, Providence, RI 02940-8076 or 4400
Computer Drive, Westborough, MA 01581-1722 for redemptions by overnight courier service. All owners of the account must sign
the request. For redemptions of more than $100,000, you must include a signature guarantee for each owner. Signature guarantees
are also required when redemption proceeds are going to an address other than the address of record on the account.
Please note that redemption orders submitted by mail will not be considered accepted until such orders are received by Delaware
Investments at P.O. Box 9876, Providence, RI 02940-8076 for redemptions by regular mail or 4400 Computer Drive, Westborough,
MA 01581-1722 for redemptions by overnight courier service. Please do not send redemption requests to 2005 Market Street,
Philadelphia, PA.
By telephone
You may redeem up to $100,000 of your shares by telephone. You may have the proceeds sent to you by check or, if you redeem
at least $1,000 of shares, you may have the proceeds sent directly to your bank by wire. If you request a wire deposit, a
bank wire fee may be deducted from your proceeds. Bank information must be on file before you request a wire redemption.
By wire
You may redeem $1,000 or more of your shares and have the proceeds deposited directly to your bank account, normally the
next Business Day after we receive your request. If you request a wire deposit, a bank wire fee may be deducted from your
proceeds. Bank information must be on file before you request a wire redemption.
Through automated shareholder services
For Class A, Class B, and Class C shares only, you may redeem shares through our automated telephone service or through our
website, delawareinvestments.com. For more information about how to sign up for these services, call our Shareholder Service
Center at 800 523-1918.
Redemptions-in-kind
The Funds have reserved the right to pay for redemptions with portfolio securities under certain conditions. See the SAI for
more information on redemptions-in-kind.
Account minimums
For Class A, Class B, and Class C shares, if you redeem shares and your account balance falls below the required account minimum
of $1,000 for three or more consecutive months, you will have until the end of the current calendar quarter to raise the balance
to the minimum. If your account is not at the minimum by the required time, you may be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your account does not reach the minimum balance,
we may redeem your account after 60 days' written notice to you. Any CDSC that would otherwise be applicable would not apply
to such a redemption.
Investor services
To help make investing with us as easy as possible, and to help you build your investments, we offer the following investor
services.
Automatic investment plan
The automatic investment plan allows you to make regular monthly or quarterly investments directly from your bank account.
Direct deposit
With direct deposit, you can make additional investments through payroll deductions, recurring government or private payments
such as social security, or direct transfers from your bank account.
Electronic delivery
With Delaware eDelivery, you can receive your fund documents electronically instead of via U.S. mail. When you sign up for
eDelivery, you can access your account statements, shareholder reports, and other fund materials online, in a secure internet
environment at any time, from anywhere.
Online account access
Online account access is a password-protected area of the Delaware Investments
®
Funds' website that gives you access to your account information and allows you to perform transactions in a secure internet
environment.
Systematic exchange option
With the systematic exchange option, you can arrange automatic monthly exchanges between your shares in one or more Delaware
Investments
®
Funds. These exchanges are subject to the same rules as regular exchanges (see below) and require a minimum monthly exchange
of $100 per fund.
Dividend reinvestment plan
Through the dividend reinvestment plan, you can have your distributions reinvested in your account or the same share class
in another Delaware Investments
®
Fund. The shares that you purchase through the dividend reinvestment plan are not subject to a front-end sales charge or
to a CDSC. Under most circumstances, you may reinvest dividends only into like classes of shares.
Exchanges
You may generally exchange all or part of your shares for shares of the same class of another Delaware Investments
®
Fund without paying a front-end sales charge or a CDSC at the time of the exchange. However, if you exchange shares from
a money market fund that does not have a sales charge, you will pay any applicable sales charge on your new shares. When exchanging
Class B and Class C shares of one fund for the same class of shares in other funds, your new shares will be subject to the
same CDSC as the shares you originally purchased. The holding period for the CDSC will also remain the same, with the amount
of time you held your original shares being credited toward the holding period of your new shares. In certain other circumstances,
you may also be permitted to exchange your shares for shares of a different class of a Fund, but such exchange may be subject
to a sales charge for the new shares. (Please refer to the SAI for more details). You do not pay sales charges on shares that
you acquired through the reinvestment of dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund, so you should be sure to get a copy of the applicable fund's prospectus and read
it carefully before buying shares through an exchange. We may refuse the purchase side of any exchange request if, in the
Manager's judgment, a fund would be unable to invest effectively in accordance with its investment objective and policies
or would otherwise potentially be adversely affected.
On demand service
Through the on demand service, you or your financial advisor may transfer money between your Fund account and your predesignated
bank account by telephone request. There is a minimum transfer of $25 and a maximum transfer of $100,000. Delaware Investments
does not charge a fee for this service; however, your bank may assess one.
Direct deposit service
Through the direct deposit service, you can have $25 or more in dividends and distributions deposited directly into your bank
account. Delaware Investments does not charge a fee for this service; however, your bank may assess one. This service is not
available for retirement plans.
Systematic withdrawal plan
For Class A, Class B, and Class C shares, you can arrange a regular monthly or quarterly payment from your account made to
you or someone you designate. If the value of your account is $5,000 or more, you can make withdrawals of at least $25 monthly,
or $75 quarterly. You may also have your withdrawals deposited directly to your bank account through the direct deposit service.
The applicable Limited CDSC for Class A shares and the CDSC for Class B and C shares redeemed via a systematic withdrawal
plan will be waived if the annual amount withdrawn in each year is less than 12% of the account balance on the date that the
plan is established. If the annual amount withdrawn in any year exceeds 12% of the account balance on the date that the systematic
withdrawal plan is established, all redemptions under the plan will be subject to the applicable CDSC, including an assessment
for previously redeemed amounts under the plan.
Frequent trading of Fund shares
The Funds discourage purchases by market timers and purchase orders (including the purchase side of exchange orders) by shareholders
identified as market timers may be rejected. The Funds' Boards have adopted policies and procedures designed to detect, deter
and prevent trading activity detrimental to the Funds and their shareholders, such as market timing. The Funds will consider
anyone who follows a pattern of market timing in any Delaware Investments
®
Fund or the Optimum Fund Trust to be a market timer and may consider anyone who has followed a similar pattern of market
timing at an unaffiliated fund family to be a market timer.
Market timing of a fund occurs when investors make consecutive rapid short-term "roundtrips," that is, purchases into a fund
followed quickly by redemptions out of that fund. A short-term roundtrip is any redemption of fund shares within 20 Business
Days of a purchase of that fund's shares. If you make a second such short-term roundtrip in a fund within 90 rolling calendar
days of a previous short-term roundtrip in that fund, you may be considered a market timer. In determining whether market
timing has occurred, the Funds will consider short-term roundtrips to include rapid purchases and sales of Fund shares through
the exchange privilege. The Funds also reserve the right to consider other trading patterns to be market timing.
Your ability to use the Funds' exchange privilege may be limited if you are identified as a market timer. If you are identified
as a market timer, we will execute the redemption side of your exchange order but may refuse the purchase side of your exchange
order. The Funds reserve the right to restrict or reject, without prior notice, any purchase order or exchange order for any
reason, including any purchase order or exchange order accepted by any shareholder's financial intermediary or in any omnibus-type
account. Transactions placed in violation of the Funds' market timing policy are not necessarily deemed accepted by the Funds
and may be rejected by a Fund on the next Business Day following receipt by a Fund.
Redemptions will continue to be permitted in accordance with the Funds' current Prospectus. A redemption of shares under these
circumstances could be costly to a shareholder if, for example, the shares have declined in value, the shareholder recently
paid a front-end sales charge, the shares are subject to a CDSC, or the sale results in adverse tax consequences. To avoid
this risk, a shareholder should carefully monitor the purchases, sales, and exchanges of Fund shares and avoid frequent trading
in Fund shares.
Each Fund reserves the right to modify this policy at any time without notice, including modifications to a Fund's monitoring
procedures and the procedures to close accounts to new purchases. Although the implementation of this policy involves judgments
that are inherently subjective and may be selectively applied, we seek to make judgments and applications that are consistent
with the interests of each Fund's shareholders. While we will take actions designed to detect and prevent market timing, there
can be no assurance that such trading activity will be completely eliminated. Moreover, a Fund's market timing policy does
not require it to take action in response to frequent trading activity. If a Fund elects not to take any action in response
to frequent trading, such frequent trading activity could continue.
Risks of market timing
By realizing profits through short-term trading, shareholders that engage in rapid purchases and sales or exchanges of the
Funds' shares dilute the value of shares held by long-term shareholders. Volatility resulting from excessive purchases and
sales or exchanges of Fund shares, especially involving large dollar amounts, may disrupt efficient portfolio management.
In particular, a Fund may have difficulty implementing its long-term investment strategies if it is forced to maintain a higher
level of its assets in cash to accommodate significant short-term trading activity. Excessive purchases and sales or exchanges
of a Fund's shares may also force a Fund to sell portfolio securities at inopportune times to raise cash to accommodate short-term
trading activity. This could adversely affect a Fund's performance if, for example, a Fund incurs increased brokerage costs
and realization of taxable capital gains without attaining any investment advantage.
A fund that invests significantly in foreign securities may be particularly susceptible to short-term trading strategies.
This is because foreign securities are typically traded on markets that close well before the time a fund calculates its NAV
(normally 4:00 p.m. Eastern time). Developments that occur between the closing of the foreign market and the fund's NAV calculation
may affect the value of these foreign securities. The time-zone differences among international stock markets can allow a
shareholder engaging in a short-term trading strategy to exploit differences in fund share prices that are based on closing
prices of foreign securities established some time before a fund calculates its own share price.
Any fund that invests in securities that are thinly traded, traded infrequently, or relatively illiquid has the risk that
the securities prices used to calculate the fund's NAV may not accurately reflect current market values. A shareholder may
seek to engage in short-term trading to take advantage of these pricing differences. Funds that may be adversely affected
by such arbitrage include, in particular, funds that significantly invest in small-cap securities, technology and other specific
industry sector securities, and in certain fixed income securities, such as high yield bonds, asset-backed securities, or
municipal bonds.
Transaction monitoring procedures
Each Fund, through its transfer agent, maintains surveillance procedures designed to detect excessive or short-term trading
in Fund shares. This monitoring process involves several factors, which include scrutinizing transactions in Fund shares for
violations of the Funds' market timing policy or other patterns of short-term or excessive trading. For purposes of these
transaction monitoring procedures, the Funds may consider trading activity by multiple accounts under common ownership, control
or influence to be trading by a single entity. Trading activity identified by these factors, or as a result of any other available
information, will be evaluated to determine whether such activity might constitute market timing. These procedures may be
modified from time to time to improve the detection of excessive or short-term trading or to address other concerns. Such
changes may be necessary or appropriate, for example, to deal with issues specific to certain retirement plans, plan exchange
limits, U.S. Department of Labor regulations, certain automated or pre-established exchange, asset allocation or dollar cost
averaging programs, or omnibus account arrangements.
Omnibus account arrangements are common forms of holding shares of a Fund, particularly among certain broker/dealers and other
financial intermediaries, including sponsors of retirement plans and variable insurance products. The Funds will attempt to
have financial intermediaries apply the Funds' monitoring procedures to these omnibus accounts and to the individual participants
in such accounts. However, to the extent that a financial intermediary is not able or willing to monitor or enforce the Funds'
frequent trading policy with respect to an omnibus account, the Funds or their agents may require the financial intermediary
to impose its frequent trading policy, rather than the Funds' policy, to shareholders investing in the Fund through the financial
intermediary. In addition, a Fund or its transfer agent may enter into shareholder information agreements with such financial
intermediaries under which a Fund may receive information (such as taxpayer identification numbers and Fund transaction activity)
in order to identify frequent trading activity.
A financial intermediary may impose different requirements or have additional restrictions on the frequency of trading than
the Funds. Such restrictions may include without limitation, requiring the trades to be placed by U.S. mail, prohibiting purchases
for a designated period of time (typically 30 to 90 days) by investors who have recently purchased or redeemed Fund shares,
and similar restrictions. The Funds' ability to impose such restrictions with respect to accounts traded through particular
financial intermediaries may vary depending on systems capabilities, applicable contractual and legal restrictions, and cooperation
of those financial intermediaries.
You should consult your financial intermediary regarding the application of such restrictions and to determine whether your
financial intermediary imposes any additional or different limitations. In an effort to discourage market timers in such accounts,
the Funds may consider enforcement against market timers at the participant level and at the omnibus level, up to and including
termination of the omnibus account's authorization to purchase Fund shares.
Limitations on ability to detect and curtail market timing
Shareholders seeking to engage in market timing may employ a variety of strategies to avoid detection and, despite the efforts
of the Funds and their agents to detect market timing in Fund shares, there is no guarantee that the Funds will be able to
identify these shareholders or curtail their trading practices. In particular, the Funds may not be able to detect market
timing attributable to a particular investor who effects purchase, redemption and/or exchange activity in Fund shares through
omnibus accounts. The difficulty of detecting market timing may be further compounded if these entities utilize multiple tiers
or omnibus accounts.
Dividends, distributions, and taxes
Dividends and distributions
Each Fund intends to qualify each year as a regulated investment company under the Internal Revenue Code. As a regulated investment
company, a Fund generally pays no federal income tax on the income and gains it distributes to you. Each Fund expects to declare
dividends daily and distribute all of its net investment income, if any, to shareholders as dividends monthly. Each Fund will
distribute net realized capital gains, if any, at least annually usually in December. A Fund may distribute such income dividends
and capital gains more frequently, if necessary, in order to reduce or eliminate federal excise or income taxes on the Fund.
The amount of any distribution will vary, and there is no guarantee a Fund will pay either an income dividend or a capital
gains distribution. We automatically reinvest all dividends and any capital gains, unless you direct us to do otherwise.
Annual statements
Each year, the Funds will send you an annual statement (Form 1099) of your account activity to assist you in completing your
federal, state and local tax returns. Your statement will show the exempt-interest dividends you received and the separately-identified
portion that constitutes an item of tax preference for purposes of the alternative minimum tax (tax-exempt AMT interest).
Distributions declared in December to shareholders of record in such month, but paid in January, are taxable as if they were
paid in December. Prior to issuing your statement, the Funds make every effort to reduce the number of corrected forms mailed
to you. However, if a Fund finds it necessary to reclassify its distributions or adjust the cost basis of any covered shares
sold or exchanged after you receive your tax statement, the Fund will send you a corrected Form 1099.
Avoid "buying a dividend"
At the time you purchase your Fund shares, a Fund's NAV may reflect undistributed income, undistributed capital gains, or
net unrealized appreciation in value of portfolio securities held by it. For taxable investors, a subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just
before it declares an income dividend or capital gains distribution is sometimes known as "buying a dividend."
Tax considerations
Fund distributions.
Each Fund expects, based on its investment objective and strategies, that its distributions, if any, will be exempt from
regular federal income tax. Each Fund may also make distributions that are taxable as ordinary income, capital gains, or some
combination of both as described below.
Exempt-interest dividends.
Dividends from the Funds will consist primarily of exempt-interest dividends from interest earned on municipal securities.
In general, exempt-interest dividends are exempt from regular federal income tax. Exempt-interest dividends from interest
earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state's personal
income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
Because of these tax exemptions, a tax-free fund may not be a suitable investment for retirement plans and other tax-exempt
investors. Corporate shareholders should note that these dividends may be fully taxable in states that impose corporate franchise
taxes and, possibly, corporate income taxes, and they should consult with their tax advisors about the taxability of this
income before investing in a Fund.
Exempt-interest dividends are taken into account when determining the taxable portion of your social security or railroad
retirement benefits. Each Fund may invest a portion of its assets in private activity bonds. The income from these bonds is
a tax preference item when determining your federal alternative minimum tax, unless such bonds were issued in 2009 or 2010.
While each Fund endeavors to purchase only bona fide tax-exempt securities, there are risks that: (i) a security issued as
tax-exempt may be reclassified by the IRS, or a state tax authority, as taxable and/or (ii) future legislative, administrative,
or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free. Such reclassifications
or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased tax
liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of
a Fund's shares, to decline.
Taxable income dividends.
Each Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. Each Fund also may distribute
to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are a taxable
investor, Fund distributions from this income are taxable to you as ordinary income, and generally will not be treated as
qualified dividend income subject to reduced rates of taxation for individuals. Distributions of ordinary income are taxable
whether you reinvest your distributions in additional Fund shares or receive them in cash.
Capital gain distributions.
Each Fund also may realize net long-term capital gains from the sale of its portfolio securities. Fund distributions of long-term
capital gains are taxable to you as long-term capital gains no matter how long you have owned your shares.
Sales or redemptions of Fund shares.
A sale or redemption of Fund shares is a taxable event and, accordingly, a capital gain or loss may be recognized. For tax
purposes, an exchange of your Fund shares for shares of a different Delaware Investments
®
Fund is the same as a sale. Beginning with the 2012 calendar year, the Funds will be required to report to you and the IRS
annually on Form 1099-B not only the gross proceeds of Fund shares you sell or redeem but also the cost basis for shares purchased
or acquired on or after January 1, 2012 ("covered shares"). Cost basis will be calculated using a Fund's default method, unless
you instruct the Fund to use a different calculation method. Shareholders should carefully review the cost basis information
provided by the Funds and make any additional basis, holding period or other adjustments that are required when reporting
these amounts on their federal income tax returns. If your account is held by your investment representative (financial advisor
or other broker), please contact that representative with respect to reporting of cost basis and available elections for your
account. Tax-advantaged retirement accounts will not be affected. Additional information and updates regarding cost basis
reporting and available shareholder elections will be on Delaware Investments' website at delawareinvestments.com as the information
becomes available.
Medicare tax.
For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax will be imposed on certain net investment
income (including ordinary dividends and capital gain distributions received from a Fund and net gains from redemptions or
other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person's "modified
adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds
a threshold amount. Net investment income does not include exempt-interest dividends.
Backup withholding.
By law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications,
you may be subject to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your
shares. A Fund also must withhold if the IRS instructs it to do so. When withholding is required, the amount will be 28% of
any distributions or proceeds paid (for distributions and proceeds paid after December 31, 2012, the rate is scheduled to
rise to 31% unless the 28% rate is extended, possibly retroactively to January 1, 2013, or made permanent).
State and local taxes.
Fund distributions and gains from the sale or exchange of your Fund shares generally are subject to state and local taxes.
Non-U.S. investors.
Non-U.S. investors may be subject to U.S. withholding tax at a 30% or lower treaty rate and U.S. estate tax and are subject
to special U.S. tax certification requirements to avoid backup withholding and claim any treaty benefits. Exemptions from
U.S. withholding tax are provided for capital gain dividends paid by a Fund from long-term capital gains, if any, exempt-interest
dividends, and, with respect to taxable years of a Fund that begin before January 1, 2012 (unless such sunset date is extended,
possibly retroactively to January 1, 2012, or made permanent), interest-related dividends paid by a Fund from its qualified
net interest income from U.S. sources and short-term capital gain dividends. However, notwithstanding such exemptions from
U.S. withholding at the source, any such dividends and distributions of income and capital gains will be subject to backup
withholding at a rate of 28% (or the then applicable rate) if you fail to properly certify that you are not a U.S. person.
Other Reporting and Withholding Requirements.
The Foreign Account Tax Compliance Act ("FATCA") requires the reporting to the IRS of certain direct and indirect ownership
of foreign financial accounts by U.S. persons. Failure to provide this required information can result in a generally nonrefundable
30% tax on: (a) income dividends paid by a Fund after December 31, 2013 and (b) certain capital gain distributions (including
proceeds arising from the sale Fund shares) paid by a Fund after December 31, 2016 to certain "foreign financial institutions"
and "non-financial foreign entities."
State tax considerations
The following sections address certain state income tax aspects of distributions from the Funds. Unless otherwise noted, the
discussion is limited to income taxes applicable to individual shareholders.
Arizona state taxation.
You may exclude any exempt-interest dividends paid to you by Delaware Tax-Free Arizona Fund from your Arizona taxable income
for purposes of the Arizona individual income tax if the dividends are excluded from your gross income for federal income
tax purposes and if the dividends are derived from interest on:
obligations of the State of Arizona and its political subdivisions; or
qualifying obligations of U.S. territories and possessions that are exempt from state taxation under federal law.
You may exclude dividends derived from interest on these securities to the same extent as if you held these securities directly
rather than investing in them through a mutual fund.
California state taxation.
You may exclude any exempt-interest dividends paid to you by Delaware Tax-Free California Fund from your California taxable
income for purposes of the California personal income tax if:
the dividends are derived from interest on obligations of the State of California and its political subdivisions or qualifying
obligations of U.S. territories and possessions that are exempt from state taxation under federal law;
the dividends paid do not exceed the amount of interest (minus certain nondeductible expenses) the Fund receives, during
its taxable year, on obligations that, when held by an individual, pay interest exempt from taxation by California; and
the Fund properly identifies the dividends as California exempt-interest dividends in a written notice mailed to the investor.
Delaware Tax-Free California Fund may designate dividends as exempt from California income tax, only if:
it qualifies as a regulated investment company under the Internal Revenue Code; and
at the close of each quarter of its taxable year, at least 50% of the value of its total assets consists of obligations
the interest on which is exempt from taxation by the State of California when held by an individual.
Distributions from Delaware Tax-Free California Fund, including exempt-interest dividends, may be taxable to shareholders
that are subject to certain provisions of the California Corporation Tax Law.
Colorado state taxation.
You may exclude any exempt-interest dividends paid to you by Delaware Tax-Free Colorado Fund from your Colorado taxable income
for purposes of the Colorado individual income tax if the dividends are excluded from your gross income for federal income
tax purposes and if the dividends are attributable to interest on:
obligations of the State of Colorado or its political subdivisions that are issued on or after May 1, 1980;
obligations of the State of Colorado or its political subdivisions that were issued before May 1, 1980, to the extent that
such interest is specifically exempt from income taxation under the Colorado state laws authorizing the issuance of such obligations;
and
qualifying obligations of United States territories and possessions that are exempt from state taxation under federal law.
Idaho state taxation.
According to a ruling, which Delaware Tax-Free Idaho Fund received from the Idaho Department of Revenue, dated December 13,
1994, any exempt-interest dividends paid to you by Delaware Tax-Free Idaho Fund are not subject to the Idaho personal income
tax as long as the dividends are attributable to:
interest earned on bonds issued by the State of Idaho, its cities and political subdivisions; or
interest earned on qualifying obligations of the U.S. government or its territories and possessions that are exempt from
state taxation under federal law.
Minnesota state taxation. Individuals, estates and trusts may exclude any exempt-interest dividends paid by Delaware Tax-Free
Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund from
their Minnesota taxable net income if such dividends are derived from tax-exempt interest on obligations of Minnesota and
its political subdivisions and if the dividends are excluded from gross income for federal income tax purposes as long as
the following condition is met:
exempt-interest dividends from tax-exempt obligations of Minnesota and its political subdivisions represent 95% or more
of the total exempt-interest dividends (including the portion of exempt-interest dividends exempt from state taxation under
the laws of the United States) paid to shareholders by the Fund.
Exempt-interest dividends derived from other obligations (except exempt-interest dividends exempt from state taxation under
the laws of the United States) must be added back to federal taxable income in computing Minnesota taxable net income. However,
dividends attributable to interest derived from qualifying obligations of the United States may be excluded from Minnesota
taxable net income to the extent such interest was included in federal taxable income (although such obligations could affect
the above-referenced 95% requirement with respect to obligations of Minnesota and its political subdivisions).
Exempt-interest dividends that are excluded from Minnesota taxable net income but that are subject to the federal alternative
minimum tax, are also subject to the Minnesota alternative minimum tax on individuals, estates and trusts. Certain corporations
that receive distributions from the Minnesota Funds, including exempt-interest dividends, may be subject to the Minnesota
franchise tax imposed on corporations.
New York state and city taxation.
You may exclude any exempt-interest dividends paid to you by Delaware Tax-Free New York Fund from your taxable income for
purposes of the New York state personal income tax and the New York City personal income tax, if the dividends are excluded
from your gross income for federal income tax purposes and if the dividends are attributable to interest on:
obligations of the State of New York or its political subdivisions;
qualifying obligations of U.S. territories and possessions.
Dividends from (or the value of) Delaware Tax-Free New York Fund, including exempt-interest dividends, may be taken into account
in determining the New York State and New York City income and franchise taxes on business corporations, banking corporations
and insurance companies when paid to (or held by) shareholders subject to such taxes.
Expenses to carry tax-exempt obligations. Note that in addition to the discussion of the various state income taxes above,
interest on indebtedness incurred or continued to purchase or carry obligations, the income from which is exempt from state
taxation, may not be deductible for state income tax purposes.
This discussion of "Dividends, distributions, and taxes" is not intended or written to be used as tax advice. Because everyone's
tax situation is unique, you should consult your tax professional about federal, state, local, or foreign tax consequences
before making an investment in a Fund.
Financial highlights
The financial highlights tables are intended to help you understand each Fund's financial performance for the past five years.
Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate
that an investor would have earned or lost on an investment in each Fund (assuming reinvestment of all dividends and distributions).
The information for the 2012, 2011, and 2010 fiscal years has been audited by PricewaterhouseCoopers LLP, independent registered
public accounting firm, whose reports, along with the Funds' financial statements, are included in the annual reports, which
are available upon request by calling 800 523-1918. For the fiscal years prior to 2010, the Funds' prior independent registered
public accounting firm audited the Funds' financial statements.
Delaware Tax-Free Arizona Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.340
|
$11.760
|
$11.090
|
$10.930
|
$11.070
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.460
|
0.445
|
0.447
|
0.431
|
0.444
|
Net realized and unrealized gain (loss)
|
0.670
|
(0.394)
|
0.668
|
0.158
|
(0.140)
|
Total from investment operations
|
1.130
|
0.051
|
1.115
|
0.589
|
0.304
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.457)
|
(0.444)
|
(0.445)
|
(0.429)
|
(0.444)
|
Net realized gain
|
(0.003)
|
(0.027)
|
—
|
—
|
—
|
Total dividends and distributions
|
(0.460)
|
(0.471)
|
(0.445)
|
(0.429)
|
(0.444)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.010
|
$11.340
|
$11.760
|
$11.090
|
$10.930
|
|
|
|
|
|
|
Total return
1
|
10.15%
|
0.57%
|
10.27%
|
5.64%
|
2.78%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$99,953
|
$95,487
|
$108,214
|
$113,689
|
$122,027
|
Ratio of expenses to average net assets
|
0.84%
|
0.87%
|
0.86%
|
0.75%
|
0.75%
|
Ratio of expenses to average net assets prior to fees waived
|
0.90%
|
0.93%
|
0.92%
|
0.91%
|
0.91%
|
Ratio of net investment income to average net assets
|
3.94%
|
3.98%
|
3.94%
|
4.07%
|
4.02%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.88%
|
3.92%
|
3.88%
|
3.91%
|
3.86%
|
Portfolio turnover
|
34%
|
32%
|
15%
|
27%
|
29%
|
1
|
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.
|
Delaware Tax-Free Arizona Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.340
|
$11.760
|
$11.100
|
$10.940
|
$11.070
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.373
|
0.361
|
0.362
|
0.352
|
0.361
|
Net realized and unrealized gain (loss)
|
0.680
|
(0.394)
|
0.658
|
0.158
|
(0.130)
|
Total from investment operations
|
1.053
|
(0.033)
|
1.020
|
0.510
|
0.231
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.370)
|
(0.360)
|
(0.360)
|
(0.350)
|
(0.361)
|
Net realized gain
|
(0.003)
|
(0.027)
|
—
|
—
|
—
|
Total dividends and distributions
|
(0.373)
|
(0.387)
|
(0.360)
|
(0.350)
|
(0.361)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.020
|
$11.340
|
$11.760
|
$11.100
|
$10.940
|
Total return
1
|
9.42%
|
(0.18%)
|
9.35%
|
4.85%
|
2.10%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$224
|
$757
|
$2,917
|
$6,509
|
$9,620
|
Ratio of expenses to average net assets
|
1.59%
|
1.62%
|
1.61%
|
1.50%
|
1.50%
|
Ratio of expenses to average net assets prior to fees waived
|
1.65%
|
1.68%
|
1.67%
|
1.66%
|
1.66%
|
Ratio of net investment income to average net assets
|
3.19%
|
3.23%
|
3.19%
|
3.32%
|
3.27%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.13%
|
3.17%
|
3.13%
|
3.16%
|
3.11%
|
Portfolio turnover
|
34%
|
32%
|
15%
|
27%
|
29%
|
1
|
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.
|
Delaware Tax-Free Arizona Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.370
|
$11.790
|
$11.120
|
$10.960
|
$11.090
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.373
|
0.362
|
0.363
|
0.352
|
0.361
|
Net realized and unrealized gain (loss)
|
0.670
|
(0.394)
|
0.668
|
0.158
|
(0.130)
|
Total from investment operations
|
1.043
|
(0.032)
|
1.031
|
0.510
|
0.231
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.370)
|
(0.361)
|
(0.361)
|
(0.350)
|
(0.361)
|
Net realized gain
|
(0.003)
|
(0.027)
|
—
|
—
|
—
|
Total dividends and distributions
|
(0.373)
|
(0.388)
|
(0.361)
|
(0.350)
|
(0.361)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.040
|
$11.370
|
$11.790
|
$11.120
|
$10.960
|
|
|
|
|
|
|
Total return
1
|
9.31%
|
(0.17%)
|
9.43%
|
4.84%
|
2.09%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$7,108
|
$6,801
|
$7,995
|
$7,257
|
$8,806
|
Ratio of expenses to average net assets
|
1.59%
|
1.62%
|
1.61%
|
1.50%
|
1.50%
|
Ratio of expenses to average net assets prior to fees waived
|
1.65%
|
1.68%
|
1.67%
|
1.66%
|
1.66%
|
Ratio of net investment income to average net assets
|
3.19%
|
3.23%
|
3.19%
|
3.32%
|
3.27%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.13%
|
3.17%
|
3.13%
|
3.16%
|
3.11%
|
Portfolio turnover
|
34%
|
32%
|
15%
|
27%
|
29%
|
1
|
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.
|
Delaware Tax-Free California Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.170
|
$11.570
|
$10.620
|
$10.800
|
$11.010
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.484
|
0.476
|
0.497
|
0.448
|
0.449
|
Net realized and unrealized gain (loss)
|
1.039
|
(0.401)
|
0.950
|
(0.182)
|
(0.210)
|
Total from investment operations
|
1.523
|
0.075
|
1.447
|
0.266
|
0.239
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.483)
|
(0.475)
|
(0.497)
|
(0.446)
|
(0.449)
|
Total dividends and distributions
|
(0.483)
|
(0.475)
|
(0.497)
|
(0.446)
|
(0.449)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.210
|
$11.170
|
$11.570
|
$10.620
|
$10.800
|
Total return
1
|
13.90%
|
0.83%
|
13.92%
|
2.74%
|
2.21%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$97,821
|
$67,047
|
$72,902
|
$61,132
|
$67,174
|
Ratio of expenses to average net assets
|
0.82%
|
0.82%
|
0.82%
|
0.88%
|
0.88%
|
Ratio of expenses to average net assets prior to fees waived
|
0.97%
|
0.98%
|
0.98%
|
0.97%
|
0.97%
|
Ratio of net investment income to average net assets
|
4.10%
|
4.36%
|
4.48%
|
4.42%
|
4.11%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.95%
|
4.20%
|
4.32%
|
4.33%
|
4.02%
|
Portfolio turnover
|
32%
|
44%
|
35%
|
59%
|
34%
|
1
|
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.
|
Delaware Tax-Free California Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.210
|
$11.610
|
$10.670
|
$10.840
|
$11.060
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.398
|
0.395
|
0.416
|
0.373
|
0.367
|
Net realized and unrealized gain (loss)
|
1.049
|
(0.401)
|
0.940
|
(0.172)
|
(0.220)
|
Total from investment operations
|
1.447
|
(0.006)
|
1.356
|
0.201
|
0.147
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.397)
|
(0.394)
|
(0.416)
|
(0.371)
|
(0.367)
|
Total dividends and distributions
|
(0.397)
|
(0.394)
|
(0.416)
|
(0.371)
|
(0.367)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.260
|
$11.210
|
$11.610
|
$10.670
|
$10.840
|
Total return
1
|
13.10%
|
0.09%
|
12.93%
|
2.07%
|
1.34%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$905
|
$1,307
|
$3,254
|
$4,938
|
$6,589
|
Ratio of expenses to average net assets
|
1.57%
|
1.57%
|
1.57%
|
1.63%
|
1.63%
|
Ratio of expenses to average net assets prior to fees waived
|
1.72%
|
1.73%
|
1.73%
|
1.72%
|
1.72%
|
Ratio of net investment income to average net assets
|
3.35%
|
3.61%
|
3.73%
|
3.67%
|
3.36%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.20%
|
3.45%
|
3.57%
|
3.58%
|
3.27%
|
Portfolio turnover
|
32%
|
44%
|
35%
|
59%
|
34%
|
1
|
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.
|
Delaware Tax-Free California Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.180
|
$11.590
|
$10.640
|
$10.810
|
$11.030
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.397
|
0.394
|
0.415
|
0.373
|
0.367
|
Net realized and unrealized gain (loss)
|
1.049
|
(0.411)
|
0.950
|
(0.172)
|
(0.220)
|
Total from investment operations
|
1.446
|
(0.017)
|
1.365
|
0.201
|
0.147
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.396)
|
(0.393)
|
(0.415)
|
(0.371)
|
(0.367)
|
Total dividends and distributions
|
(0.396)
|
(0.393)
|
(0.415)
|
(0.371)
|
(0.367)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.230
|
$11.180
|
$11.590
|
$10.640
|
$10.810
|
Total return
1
|
13.13%
|
(0.01%)
|
13.06%
|
2.07%
|
1.35%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$18,830
|
$14,863
|
$15,526
|
$13,530
|
$14,991
|
Ratio of expenses to average net assets
|
1.57%
|
1.57%
|
1.57%
|
1.63%
|
1.63%
|
Ratio of expenses to average net assets prior to fees waived
|
1.72%
|
1.73%
|
1.73%
|
1.72%
|
1.72%
|
Ratio of net investment income to average net assets
|
3.35%
|
3.61%
|
3.73%
|
3.67%
|
3.36%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.20%
|
3.45%
|
3.57%
|
3.58%
|
3.27%
|
Portfolio turnover
|
32%
|
44%
|
35%
|
59%
|
34%
|
1
|
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.
|
Delaware Tax-Free Colorado Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.880
|
$11.260
|
$10.600
|
$10.640
|
$10.730
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.444
|
0.460
|
0.455
|
0.452
|
0.448
|
Net realized and unrealized gain (loss)
|
0.758
|
(0.397)
|
0.661
|
(0.041)
|
(0.089)
|
Total from investment operations
|
1.202
|
0.063
|
1.116
|
0.411
|
0.359
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.442)
|
(0.443)
|
(0.456)
|
(0.451)
|
(0.449)
|
Total dividends and distributions
|
(0.442)
|
(0.443)
|
(0.456)
|
(0.451)
|
(0.449)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.640
|
$10.880
|
$11.260
|
$10.600
|
$10.640
|
Total return
1
|
11.23%
|
0.71%
|
10.74%
|
4.11%
|
3.38%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$230,787
|
$216,151
|
$237,545
|
$226,393
|
$234,630
|
Ratio of expenses to average net assets
|
0.84%
|
0.88%
|
0.93%
|
0.90%
|
0.93%
|
Ratio of expenses to average net assets prior to fees waived
|
0.93%
|
0.95%
|
0.95%
|
0.95%
|
0.95%
|
Ratio of net investment income to average net assets
|
3.91%
|
4.30%
|
4.16%
|
4.43%
|
4.16%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.82%
|
4.23%
|
4.14%
|
4.38%
|
4.14%
|
Portfolio turnover
|
24%
|
26%
|
17%
|
27%
|
15%
|
1
|
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.
|
Delaware Tax-Free Colorado Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.890
|
$11.270
|
$10.610
|
$10.640
|
$10.730
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.360
|
0.380
|
0.373
|
0.375
|
0.367
|
Net realized and unrealized gain (loss)
|
0.758
|
(0.397)
|
0.661
|
(0.031)
|
(0.089)
|
Total from investment operations
|
1.118
|
(0.017)
|
1.034
|
0.344
|
0.278
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.358)
|
(0.363)
|
(0.374)
|
(0.374)
|
(0.368)
|
Total dividends and distributions
|
(0.358)
|
(0.363)
|
(0.374)
|
(0.374)
|
(0.368)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.650
|
$10.890
|
$11.270
|
$10.610
|
$10.640
|
Total return
1
|
10.41%
|
(0.04%)
|
9.91%
|
3.43%
|
2.60%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$173
|
$609
|
$1,429
|
$2,693
|
$3,961
|
Ratio of expenses to average net assets
|
1.59%
|
1.63%
|
1.68%
|
1.65%
|
1.68%
|
Ratio of expenses to average net assets prior to fees waived
|
1.68%
|
1.70%
|
1.70%
|
1.70%
|
1.70%
|
Ratio of net investment income to average net assets
|
3.16%
|
3.55%
|
3.41%
|
3.68%
|
3.41%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.07%
|
3.48%
|
3.39%
|
3.63%
|
3.39%
|
Portfolio turnover
|
24%
|
26%
|
17%
|
27%
|
15%
|
1
|
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.
|
Delaware Tax-Free Colorado Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.910
|
$11.290
|
$10.630
|
$10.660
|
$10.750
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.360
|
0.381
|
0.374
|
0.375
|
0.367
|
Net realized and unrealized gain (loss)
|
0.758
|
(0.397)
|
0.661
|
(0.031)
|
(0.089)
|
Total from investment operations
|
1.118
|
(0.016)
|
1.035
|
0.344
|
0.278
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.358)
|
(0.364)
|
(0.375)
|
(0.374)
|
(0.368)
|
Total dividends and distributions
|
(0.358)
|
(0.364)
|
(0.375)
|
(0.374)
|
(0.368)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.670
|
$10.910
|
$11.290
|
$10.630
|
$10.660
|
Total return
1
|
10.39%
|
(0.03%)
|
9.90%
|
3.43%
|
2.60%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$14,282
|
$13,253
|
$15,155
|
$11,542
|
$9,836
|
Ratio of expenses to average net assets
|
1.59%
|
1.63%
|
1.68%
|
1.65%
|
1.68%
|
Ratio of expenses to average net assets prior to fees waived
|
1.68%
|
1.70%
|
1.70%
|
1.70%
|
1.70%
|
Ratio of net investment income to average net assets
|
3.16%
|
3.55%
|
3.41%
|
3.68%
|
3.41%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.07%
|
3.48%
|
3.39%
|
3.63%
|
3.39%
|
Portfolio turnover
|
24%
|
26%
|
17%
|
27%
|
15%
|
1
|
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.
|
Delaware Tax-Free Idaho Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.730
|
$12.120
|
$11.490
|
$11.260
|
$11.260
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.438
|
0.438
|
0.431
|
0.436
|
0.437
|
Net realized and unrealized gain (loss)
|
0.509
|
(0.385)
|
0.633
|
0.228
|
—
|
Total from investment operations
|
0.947
|
0.053
|
1.064
|
0.664
|
0.437
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.437)
|
(0.436)
|
(0.434)
|
(0.434)
|
(0.437)
|
Net realized gain
|
—
|
(0.007)
|
—
|
—
|
—
|
Total dividends and distributions
|
(0.437)
|
(0.443)
|
(0.434)
|
(0.434)
|
(0.437)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.240
|
$11.730
|
$12.120
|
$11.490
|
$11.260
|
Total return
1
|
8.21%
|
0.56%
|
9.44%
|
6.12%
|
3.93%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$119,025
|
$98,821
|
$104,287
|
$86,445
|
$72,237
|
Ratio of expenses to average net assets
|
0.88%
|
0.90%
|
0.94%
|
0.88%
|
0.85%
|
Ratio of expenses to average net assets prior to fees waived
|
0.94%
|
0.96%
|
0.96%
|
0.96%
|
0.96%
|
Ratio of net investment income to average net assets
|
3.65%
|
3.78%
|
3.66%
|
3.94%
|
3.87%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.59%
|
3.72%
|
3.64%
|
3.86%
|
3.76%
|
Portfolio turnover
|
17%
|
32%
|
7%
|
10%
|
11%
|
1
|
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.
|
Delaware Tax-Free Idaho Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.710
|
$12.100
|
$11.470
|
$11.240
|
$11.240
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.348
|
0.350
|
0.343
|
0.353
|
0.353
|
Net realized and unrealized gain (loss)
|
0.509
|
(0.385)
|
0.633
|
0.228
|
—
|
Total from investment operations
|
0.857
|
(0.035)
|
0.976
|
0.581
|
0.353
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.347)
|
(0.348)
|
(0.346)
|
(0.351)
|
(0.353)
|
Net realized gain
|
—
|
(0.007)
|
—
|
—
|
—
|
Total dividends and distributions
|
(0.347)
|
(0.355)
|
(0.346)
|
(0.351)
|
(0.353)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.220
|
$11.710
|
$12.100
|
$11.470
|
$11.240
|
Total return
1
|
7.41%
|
(0.19%)
|
8.64%
|
5.34%
|
3.17%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$582
|
$912
|
$2,450
|
$3,359
|
$5,123
|
Ratio of expenses to average net assets
|
1.63%
|
1.65%
|
1.69%
|
1.63%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.69%
|
1.71%
|
1.71%
|
1.71%
|
1.71%
|
Ratio of net investment income to average net assets
|
2.90%
|
3.03%
|
2.91%
|
3.19%
|
3.12%
|
Ratio of net investment income to average net assets prior to fees waived
|
2.84%
|
2.97%
|
2.89%
|
3.11%
|
3.01%
|
Portfolio turnover
|
17%
|
32%
|
7%
|
10%
|
11%
|
1
|
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.
|
Delaware Tax-Free Idaho Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.720
|
$12.110
|
$11.480
|
$11.250
|
$11.250
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.348
|
0.351
|
0.342
|
0.353
|
0.352
|
Net realized and unrealized gain (loss)
|
0.509
|
(0.385)
|
0.633
|
0.228
|
—
|
Total from investment operations
|
0.857
|
(0.034)
|
0.975
|
0.581
|
0.352
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.347)
|
(0.349)
|
(0.345)
|
(0.351)
|
(0.352)
|
Net realized gain
|
—
|
(0.007)
|
—
|
—
|
—
|
Total dividends and distributions
|
(0.347)
|
(0.356)
|
(0.345)
|
(0.351)
|
(0.352)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.230
|
$11.720
|
$12.110
|
$11.480
|
$11.250
|
Total return
1
|
7.41%
|
(0.20%)
|
8.63%
|
5.34%
|
3.16%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$40,738
|
$35,797
|
$35,591
|
$19,176
|
$11,490
|
Ratio of expenses to average net assets
|
1.63%
|
1.65%
|
1.69%
|
1.63%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.69%
|
1.71%
|
1.71%
|
1.71%
|
1.71%
|
Ratio of net investment income to average net assets
|
2.90%
|
3.03%
|
2.91%
|
3.19%
|
3.12%
|
Ratio of net investment income to average net assets prior to fees waived
|
2.84%
|
2.97%
|
2.89%
|
3.11%
|
3.01%
|
Portfolio turnover
|
17%
|
32%
|
7%
|
10%
|
11%
|
1
|
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.
|
Delaware Tax-Free New York Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.800
|
$11.150
|
$10.450
|
$10.300
|
$10.300
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.426
|
0.406
|
0.429
|
0.409
|
0.411
|
Net realized and unrealized gain (loss)
|
0.867
|
(0.351)
|
0.700
|
0.148
|
—
|
Total from investment operations
|
1.293
|
0.055
|
1.129
|
0.557
|
0.411
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.423)
|
(0.405)
|
(0.429)
|
(0.407)
|
(0.411)
|
Total dividends and distributions
|
(0.423)
|
(0.405)
|
(0.429)
|
(0.407)
|
(0.411)
|
Net asset value, end of period
|
$11.670
|
$10.800
|
$11.150
|
$10.450
|
$10.300
|
Total return
1
|
12.18%
|
0.63%
|
11.02%
|
5.65%
|
4.04%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$53,456
|
$37,051
|
$37,716
|
$22,780
|
$15,340
|
Ratio of expenses to average net assets
|
0.80%
|
0.80%
|
0.80%
|
0.85%
|
0.85%
|
Ratio of expenses to average net assets prior to fees waived
|
1.01%
|
1.05%
|
1.07%
|
1.10%
|
1.09%
|
Ratio of net investment income to average net assets
|
3.77%
|
3.82%
|
3.94%
|
4.10%
|
3.97%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.56%
|
3.57%
|
3.67%
|
3.85%
|
3.73%
|
Portfolio turnover
|
28%
|
54%
|
15%
|
36%
|
28%
|
1
|
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.
|
Delaware Tax-Free New York Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.780
|
$11.120
|
$10.420
|
$10.270
|
$10.280
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.341
|
0.326
|
0.347
|
0.334
|
0.333
|
Net realized and unrealized gain (loss)
|
0.867
|
(0.341)
|
0.700
|
0.148
|
(0.010)
|
Total from investment operations
|
1.208
|
(0.015)
|
1.047
|
0.482
|
0.323
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.338)
|
(0.325)
|
(0.347)
|
(0.332)
|
(0.333)
|
Total dividends and distributions
|
(0.338)
|
(0.325)
|
(0.347)
|
(0.332)
|
(0.333)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.650
|
$10.780
|
$11.120
|
$10.420
|
$10.270
|
Total return
1
|
11.36%
|
(0.04%)
|
10.21%
|
4.88%
|
3.17%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$318
|
$477
|
$736
|
$1,018
|
$1,549
|
Ratio of expenses to average net assets
|
1.55%
|
1.55%
|
1.55%
|
1.60%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.76%
|
1.80%
|
1.82%
|
1.85%
|
1.84%
|
Ratio of net investment income to average net assets
|
3.02%
|
3.07%
|
3.19%
|
3.35%
|
3.22%
|
Ratio of net investment income to average net assets prior to fees waived
|
2.81%
|
2.82%
|
2.92%
|
3.10%
|
2.98%
|
Portfolio turnover
|
28%
|
54%
|
15%
|
36%
|
28%
|
1
|
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.
|
Delaware Tax-Free New York Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.780
|
$11.120
|
$10.420
|
$10.270
|
$10.280
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.340
|
0.326
|
0.346
|
0.333
|
0.333
|
Net realized and unrealized gain (loss)
|
0.857
|
(0.341)
|
0.700
|
0.148
|
(0.010)
|
Total from investment operations
|
1.197
|
(0.015)
|
1.046
|
0.481
|
0.323
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.337)
|
(0.325)
|
(0.346)
|
(0.331)
|
(0.333)
|
Total dividends and distributions
|
(0.337)
|
(0.325)
|
(0.346)
|
(0.331)
|
(0.333)
|
Net asset value, end of period
|
$11.640
|
$10.780
|
$11.120
|
$10.420
|
$10.270
|
Total return
1
|
11.26%
|
(0.04%)
|
10.20%
|
4.88%
|
3.17%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$20,524
|
$14,235
|
$13,462
|
$5,651
|
$2,049
|
Ratio of expenses to average net assets
|
1.55%
|
1.55%
|
1.55%
|
1.60%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.76%
|
1.80%
|
1.82%
|
1.85%
|
1.84%
|
Ratio of net investment income to average net assets
|
3.02%
|
3.07%
|
3.19%
|
3.35%
|
3.22%
|
Ratio of net investment income to average net assets prior to fees waived
|
2.81%
|
2.82%
|
2.92%
|
3.10%
|
2.98%
|
Portfolio turnover
|
28%
|
54%
|
15%
|
36%
|
28%
|
1
|
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.
|
Delaware Tax-Free Minnesota Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$12.480
|
$12.730
|
$12.180
|
$12.120
|
$12.170
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.487
|
0.492
|
0.484
|
0.474
|
0.495
|
Net realized and unrealized gain (loss)
|
0.660
|
(0.198)
|
0.550
|
0.107
|
(0.041)
|
Total from investment operations
|
1.147
|
0.294
|
1.034
|
0.581
|
0.454
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.488)
|
(0.492)
|
(0.484)
|
(0.473)
|
(0.502)
|
Net realized gain
|
(0.109)
|
(0.052)
|
—
|
(0.048)
|
(0.002)
|
Total dividends and distributions
|
(0.597)
|
(0.544)
|
(0.484)
|
(0.521)
|
(0.504)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$13.030
|
$12.480
|
$12.730
|
$12.180
|
$12.120
|
Total return
1
|
9.41%
|
2.50%
|
8.66%
|
5.04%
|
3.77%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$577,061
|
$538,170
|
$586,651
|
$559,393
|
$574,914
|
Ratio of expenses to average net assets excluding interest and fees on short–term floating rate notes issued
|
0.90%
|
0.91%
|
0.93%
|
0.92%
|
0.93%
|
Interest and fees on short-term floating rate notes issued
|
—
|
—
|
—
|
0.01%
|
0.18%
|
Total expenses
2
|
0.90%
|
0.91%
|
0.93%
|
0.93%
|
1.11%
|
|
|
|
|
|
|
Ratio of expenses to average net assets excluding interest and fees on short-term floating rate notes issued prior to fees
waived
|
0.92%
|
0.93%
|
0.93%
|
0.94%
|
0.93%
|
Interest and fees on short-term floating rate notes issued
|
—
|
—
|
—
|
0.01%
|
0.18%
|
Total expenses prior to fees waived
2
|
0.92%
|
0.93%
|
0.93%
|
0.95%
|
1.11%
|
Ratio of net investment income to average net assets
|
3.81%
|
4.02%
|
3.89%
|
4.03%
|
4.05%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.79%
|
4.00%
|
3.89%
|
4.01%
|
4.05%
|
Portfolio turnover
|
16%
|
12%
|
20%
|
20%
|
17%
|
1
|
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 some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been
in effect.
|
2
|
Total expenses and total expenses prior to fees waived and expense paid indirectly include interest and related expenses,
which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees' fees in connection
with the Fund's participation in inverse floater programs.
|
Delaware Tax-Free Minnesota Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$12.490
|
$12.740
|
$12.190
|
$12.130
|
$12.180
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.391
|
0.400
|
0.391
|
0.386
|
0.403
|
Net realized and unrealized gain (loss)
|
0.660
|
(0.197)
|
0.550
|
0.107
|
(0.041)
|
Total from investment operations
|
1.051
|
0.203
|
0.941
|
0.493
|
0.362
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.392)
|
(0.401)
|
(0.391)
|
(0.385)
|
(0.410)
|
Net realized gain
|
(0.109)
|
(0.052)
|
—
|
(0.048)
|
(0.002)
|
Total dividends and distributions
|
(0.501)
|
(0.453)
|
(0.391)
|
(0.433)
|
(0.412)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$13.040
|
$12.490
|
$12.740
|
$12.190
|
$12.130
|
Total return
1
|
8.59%
|
1.74%
|
7.85%
|
4.26%
|
2.99%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$2,115
|
$3,697
|
$7,234
|
$9,506
|
$11,593
|
Ratio of expenses to average net assets excluding interest and fees on short term floating rate notes issued
|
1.65%
|
1.66%
|
1.68%
|
1.67%
|
1.68%
|
Interest and fees on short-term floating rate notes issued
|
—
|
—
|
—
|
0.01%
|
0.18%
|
Total expenses
2
|
1.65%
|
1.66%
|
1.68%
|
1.68%
|
1.86%
|
|
|
|
|
|
|
Ratio of expenses to average net assets excluding interest and fees on short-term floating rate notes issued prior to fees
waived
|
1.67%
|
1.68%
|
1.68%
|
1.69%
|
1.68%
|
Interest and fees on short-term floating rate notes issued
|
—
|
—
|
—
|
0.01%
|
0.18%
|
Total expenses prior to fees waived
2
|
1.67%
|
1.68%
|
1.68%
|
1.70%
|
1.86%
|
Ratio of net investment income to average net assets
|
3.06%
|
3.27%
|
3.14%
|
3.28%
|
3.30%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.04%
|
3.25%
|
3.14%
|
3.26%
|
3.30%
|
Portfolio turnover
|
16%
|
12%
|
20%
|
20%
|
17%
|
1
|
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 some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been
in effect.
|
2
|
Total expenses and total expenses prior to fees waived and expense paid indirectly include interest and related expenses,
which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees' fees in connection
with the Fund's participation in inverse floater programs.
|
Delaware Tax-Free Minnesota Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$12.520
|
$12.780
|
$12.220
|
$12.160
|
$12.200
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.392
|
0.401
|
0.392
|
0.386
|
0.403
|
Net realized and unrealized gain (loss)
|
0.660
|
(0.207)
|
0.560
|
0.107
|
(0.031)
|
Total from investment operations
|
1.052
|
0.194
|
0.952
|
0.493
|
0.372
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.393)
|
(0.402)
|
(0.392)
|
(0.385)
|
(0.410)
|
Net realized gain
|
(0.109)
|
(0.052)
|
—
|
(0.048)
|
(0.002)
|
Total dividends and distributions
|
(0.502)
|
(0.454)
|
(0.392)
|
(0.433)
|
(0.412)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$13.070
|
$12.520
|
$12.780
|
$12.220
|
$12.160
|
Total return
1
|
8.58%
|
1.66%
|
7.91%
|
4.25%
|
3.06%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$41,368
|
$34,425
|
$38,981
|
$34,174
|
$27,585
|
|
|
|
|
|
|
Ratio of expenses to average net assets excluding interest and fees on short term floating rate notes issued
|
1.65%
|
1.66%
|
1.68%
|
1.67%
|
1.68%
|
Interest and fees on short-term floating rate notes issued
|
—
|
—
|
—
|
0.01%
|
0.18%
|
Total expenses
2
|
1.65%
|
1.66%
|
1.68%
|
1.68%
|
1.86%
|
|
|
|
|
|
|
Ratio of expenses to average net assets excluding interest and fees on short-term floating rate notes issued prior to fees
waived
|
1.67%
|
1.68%
|
1.68%
|
1.69%
|
1.68%
|
Interest and fees on short-term floating rate notes issued
|
—
|
—
|
—
|
0.01%
|
0.18%
|
Total expenses prior to fees waived
2
|
1.67%
|
1.68%
|
1.68%
|
1.70%
|
1.86%
|
Ratio of net investment income to average net assets
|
3.06%
|
3.27%
|
3.14%
|
3.28%
|
3.30%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.04%
|
3.25%
|
3.14%
|
3.26%
|
3.30%
|
Portfolio turnover
|
16%
|
12%
|
20%
|
20%
|
17%
|
1
|
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 some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been
in effect.
|
2
|
Total expenses and total expenses prior to fees waived and expense paid indirectly include interest and related expenses,
which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees' fees in connection
with the Fund's participation in inverse floater programs.
|
Delaware Tax-Free Minnesota Intermediate Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.130
|
$11.290
|
$10.820
|
$10.720
|
$10.610
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.355
|
0.375
|
0.376
|
0.384
|
0.414
|
Net realized and unrealized gain (loss)
|
0.400
|
(0.160)
|
0.469
|
0.100
|
0.110
|
Total from investment operations
|
0.755
|
0.215
|
0.845
|
0.484
|
0.524
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.355)
|
(0.375)
|
(0.375)
|
(0.384)
|
(0.414)
|
Total dividends and distributions
|
(0.355)
|
(0.375)
|
(0.375)
|
(0.384)
|
(0.414)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.530
|
$11.130
|
$11.290
|
$10.820
|
$10.720
|
Total return
1
|
6.88%
|
2.02%
|
7.96%
|
4.67%
|
5.00%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$97,032
|
$87,924
|
$96,568
|
$78,021
|
$58,465
|
Ratio of expenses to average net assets
|
0.84%
|
0.84%
|
0.82%
|
0.75%
|
0.75%
|
Ratio of expenses to average net assets prior to fees waived
|
0.94%
|
0.95%
|
0.96%
|
0.97%
|
0.95%
|
Ratio of net investment income to average net assets
|
3.12%
|
3.43%
|
3.42%
|
3.62%
|
3.83%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.02%
|
3.32%
|
3.28%
|
3.40%
|
3.63%
|
Portfolio turnover
|
21%
|
24%
|
22%
|
12%
|
27%
|
1
|
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.
|
Delaware Tax-Free Minnesota Intermediate Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.170
|
$11.330
|
$10.850
|
$10.750
|
$10.640
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.259
|
0.283
|
0.284
|
0.295
|
0.322
|
Net realized and unrealized gain (loss)
|
0.400
|
(0.160)
|
0.479
|
0.100
|
0.110
|
Total from investment operations
|
0.659
|
0.123
|
0.763
|
0.395
|
0.432
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.259)
|
(0.283)
|
(0.283)
|
(0.295)
|
(0.322)
|
Total dividends and distributions
|
(0.259)
|
(0.283)
|
(0.283)
|
(0.295)
|
(0.322)
|
Net asset value, end of period
|
$11.570
|
$11.170
|
$11.330
|
$10.850
|
$10.750
|
Total return
1
|
5.96%
|
1.16%
|
7.14%
|
3.79%
|
4.10%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$127
|
$135
|
$170
|
$317
|
$908
|
Ratio of expenses to average net assets
|
1.69%
|
1.69%
|
1.67%
|
1.60%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.69%
|
1.70%
|
1.71%
|
1.72%
|
1.70%
|
Ratio of net investment income to average net assets
|
2.27%
|
2.58%
|
2.57%
|
2.77%
|
2.98%
|
Ratio of net investment income to average net assets prior to fees waived
|
2.27%
|
2.57%
|
2.53%
|
2.65%
|
2.88%
|
Portfolio turnover
|
21%
|
24%
|
22%
|
12%
|
27%
|
1
|
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 some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been
in effect.
|
Delaware Tax-Free Minnesota Intermediate Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.160
|
$11.320
|
$10.840
|
$10.740
|
$10.630
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.259
|
0.283
|
0.283
|
0.295
|
0.322
|
Net realized and unrealized gain (loss)
|
0.400
|
(0.160)
|
0.479
|
0.100
|
0.110
|
Total from investment operations
|
0.659
|
0.123
|
0.762
|
0.395
|
0.432
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.259)
|
(0.283)
|
(0.282)
|
(0.295)
|
(0.322)
|
Total dividends and distributions
|
(0.259)
|
(0.283)
|
(0.282)
|
(0.295)
|
(0.322)
|
Net asset value, end of period
|
$11.560
|
$11.160
|
$11.320
|
$10.840
|
$10.740
|
Total return
1
|
5.96%
|
1.16%
|
7.14%
|
3.78%
|
4.10%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$16,210
|
$13,949
|
$14,649
|
$11,276
|
$7,126
|
Ratio of expenses to average net assets
|
1.69%
|
1.69%
|
1.67%
|
1.60%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.69%
|
1.70%
|
1.71%
|
1.72%
|
1.70%
|
Ratio of net investment income to average net assets
|
2.27%
|
2.58%
|
2.57%
|
2.77%
|
2.98%
|
Ratio of net investment income to average net assets prior to fees waived
|
2.27%
|
2.57%
|
2.53%
|
2.65%
|
2.88%
|
Portfolio turnover
|
21%
|
24%
|
22%
|
12%
|
27%
|
1
|
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 some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been
in effect.
|
Delaware Minnesota High-Yield Municipal Bond Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.490
|
$10.710
|
$9.910
|
$10.000
|
$10.180
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.420
|
0.430
|
0.415
|
0.422
|
0.418
|
Net realized and unrealized gain (loss)
|
0.596
|
(0.222)
|
0.798
|
(0.091)
|
(0.180)
|
Total from investment operations
|
1.016
|
0.208
|
1.213
|
0.331
|
0.238
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.426)
|
(0.428)
|
(0.413)
|
(0.421)
|
(0.418)
|
Total dividends and distributions
|
(0.426)
|
(0.428)
|
(0.413)
|
(0.421)
|
(0.418)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.080
|
$10.490
|
$10.710
|
$9.910
|
$10.000
|
Total return
1
|
9.86%
|
2.12%
|
12.46%
|
3.63%
|
2.35%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$124,717
|
$108,830
|
$119,038
|
$107,951
|
$116,999
|
Ratio of expenses to average net assets
|
0.89%
|
0.91%
|
0.93%
|
0.89%
|
0.89%
|
Ratio of expenses to average net assets prior to fees waived
|
0.97%
|
0.98%
|
0.98%
|
0.97%
|
0.97%
|
Ratio of net investment income to average net assets
|
3.89%
|
4.20%
|
4.02%
|
4.49%
|
4.11%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.81%
|
4.13%
|
3.97%
|
4.41%
|
4.03%
|
Portfolio turnover
|
13%
|
5%
|
11%
|
12%
|
10%
|
1
|
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.
|
Delaware Minnesota High-Yield Municipal Bond Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.510
|
$10.720
|
$9.920
|
$10.010
|
$10.190
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.340
|
0.354
|
0.338
|
0.352
|
0.341
|
Net realized and unrealized gain (loss)
|
0.586
|
(0.212)
|
0.798
|
(0.091)
|
(0.179)
|
Total from investment operations
|
0.926
|
0.142
|
1.136
|
0.261
|
0.162
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.346)
|
(0.352)
|
(0.336)
|
(0.351)
|
(0.342)
|
Total dividends and distributions
|
(0.346)
|
(0.352)
|
(0.336)
|
(0.351)
|
(0.342)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.090
|
$10.510
|
$10.720
|
$9.920
|
$10.010
|
|
|
|
|
|
|
Total return
1
|
8.93%
|
1.46%
|
11.62%
|
2.86%
|
1.58%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,928
|
$2,892
|
$4,130
|
$4,995
|
$5,907
|
Ratio of expenses to average net assets
|
1.64%
|
1.66%
|
1.68%
|
1.64%
|
1.64%
|
Ratio of expenses to average net assets prior to fees waived
|
1.72%
|
1.73%
|
1.73%
|
1.72%
|
1.72%
|
Ratio of net investment income to average net assets
|
3.14%
|
3.45%
|
3.27%
|
3.74%
|
3.36%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.06%
|
3.38%
|
3.22%
|
3.66%
|
3.28%
|
Portfolio turnover
|
13%
|
5%
|
11%
|
12%
|
10%
|
1
|
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.
|
Delaware Minnesota High-Yield Municipal Bond Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$10.510
|
$10.730
|
$9.930
|
$10.020
|
$10.200
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.340
|
0.354
|
0.338
|
0.352
|
0.342
|
Net realized and unrealized gain (loss)
|
0.596
|
(0.222)
|
0.798
|
(0.091)
|
(0.181)
|
Total from investment operations
|
0.936
|
0.132
|
1.136
|
0.261
|
0.161
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.346)
|
(0.352)
|
(0.336)
|
(0.351)
|
(0.341)
|
Total dividends and distributions
|
(0.346)
|
(0.352)
|
(0.336)
|
(0.351)
|
(0.341)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$11.100
|
$10.510
|
$10.730
|
$9.930
|
$10.020
|
|
|
|
|
|
|
Total return
1
|
9.03%
|
1.36%
|
11.61%
|
2.85%
|
1.58%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$33,432
|
$26,718
|
$28,727
|
$24,740
|
$28,849
|
Ratio of expenses to average net assets
|
1.64%
|
1.66%
|
1.68%
|
1.64%
|
1.64%
|
Ratio of expenses to average net assets prior to fees waived
|
1.72%
|
1.73%
|
1.73%
|
1.72%
|
1.72%
|
Ratio of net investment income to average net assets
|
3.14%
|
3.45%
|
3.27%
|
3.74%
|
3.36%
|
Ratio of net investment income to average net assets prior to fees waived
|
3.06%
|
3.38%
|
3.22%
|
3.66%
|
3.28%
|
Portfolio turnover
|
13%
|
5%
|
11%
|
12%
|
10%
|
1
|
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.
|
How to read the financial highlights
Net investment income (loss)
Net investment income (loss) includes dividend and interest income earned from a fund's investments; it is calculated after
expenses have been deducted.
Net realized and unrealized gain (loss) on investments
A realized gain occurs when we sell an investment at a profit, while a realized loss occurs when we sell an investment at
a loss. When an investment increases or decreases in value but we do not sell it, we record an unrealized gain or loss. The
amount of realized gain per share, if any, that we pay to shareholders would be listed under "Less dividends and distributions
from: Net realized gain on investments."
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an investment in a fund. In calculating this figure
for the financial highlights table, we include applicable fee waivers, exclude front-end sales charges and contingent deferred
sales charges, and assume the shareholder has reinvested all dividends and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio, less any liabilities, that are attributable
to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for operating expenses and management fees. These
expenses include accounting and administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income (loss) to average net assets
We determine this ratio by dividing net investment income (loss) by average net assets.
Portfolio turnover
This figure tells you the amount of trading activity in a fund's portfolio. A turnover rate of 100% would occur if, for example,
a fund bought and sold all of the securities in its portfolio once in the course of a year or frequently traded a single security.
A high rate of portfolio turnover in any year may increase brokerage commissions paid and could generate taxes for shareholders
on realized investment gains.
Additional information
Contact information
-
Website:
delawareinvestments.com
-
Shareholder Service Center: 800 523-1918 (representatives available weekdays from 8:30 a.m. to 6:00 p.m. Eastern time)
-
For fund information, literature, price, yield, and performance figures.
-
For information on existing regular investment accounts and retirement plan accounts including wire investments, wire redemptions,
telephone redemptions, and telephone exchanges.
-
Automated telephone service: 800 523-1918 (seven days a week, 24 hours a day)
-
Written correspondence: P.O. Box 9876, Providence, RI 02940-8076 or 4400 Computer Drive, Westborough, MA 01581-1722.
Additional information about the Funds' investments
is available in their annual and semiannual shareholder reports. In the Funds' annual shareholder report, you will find a
discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the
period covered by the report. You can find more information about the Funds in their current SAI, which is filed electronically
with the SEC, and which is legally a part of this Prospectus (it is incorporated by reference). To receive a free copy of
the SAI, or the annual or semiannual reports, or if you have any questions about investing in the Funds, write to us at P.O.
Box 9876, Providence, RI 02940-8076 by regular mail or 4400 Computer Drive, Westborough, MA 01581-1722 by overnight courier
service, or call toll-free 800 523-1918. The SAI and shareholder reports are available, free of charge, through the Funds'
website (delawareinvestments.com). You may also obtain additional information about the Funds from your financial advisor.
You can find reports and other information about the Funds on the EDGAR database on the SEC website (sec.gov). You can get
copies of this information, after paying a duplication fee, by e-mailing the SEC at publicinfo@sec.gov or by writing to the
Public Reference Section of the SEC,
100 F Street, NE, Washington, DC 20549-1520. Information about the Funds, including their SAI, can be reviewed and copied
at the SEC's Public Reference Room in Washington, D.C. For information on the Public Reference Room, call the SEC at 202 551-8090.
PR-322
[8/12] PDF 18356 [12/12]
Investment Company Act number: 811-04977, 811-04364, 811-06411, 811-07742, 811-04989, and 811-03910
|
Prospectus
Fixed income
December 28, 2012
Nasdaq ticker symbols
|
Delaware Tax-Free USA Fund
|
|
Class A
|
DMTFX
|
Class B
|
DTFCX
|
Class C
|
DUSCX
|
Institutional Class
|
DTFIX
|
Delaware Tax-Free USA Intermediate Fund
|
|
Class A
|
DMUSX
|
Class B
|
DUIBX
|
Class C
|
DUICX
|
Institutional Class
|
DUSIX
|
Delaware National High-Yield Municipal Bond Fund
|
|
Class A
|
CXHYX
|
Class B
|
DVNYX
|
Class C
|
DVHCX
|
Institutional Class
|
DVHIX
|
The U.S. Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of
this Prospectus. Any representation to the contrary is a criminal offense.
Get shareholder reports and prospectuses online instead of in the mail.
Visit delawareinvestments.com/edelivery.
Fund summaries
Delaware Tax-Free USA Fund
What is the Fund's investment 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.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Inst.
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
none
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Inst.
|
Management fees
|
0.54%
|
0.54%
|
0.54%
|
0.54%
|
Distribution and service (12b-1) fees
|
0.24%
|
1.00%
|
1.00%
|
none
|
Other expenses
|
0.15%
|
0.15%
|
0.15%
|
0.15%
|
Total annual fund operating expenses
|
0.93%
|
1.69%
|
1.69%
|
0.69%
|
Fee waivers and expense reimbursements
|
(0.13%)
2
|
(0.13%)
2
|
(0.13%)
2
|
(0.13%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.80%
|
1.56%
|
1.56%
|
0.56%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 December 28, 2012 through December 27, 2013. These waivers and reimbursements may only be terminated by agreement of the Manager 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.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
Inst.
|
1 year
|
$528
|
$159
|
$559
|
$159
|
$259
|
$57
|
3 years
|
$721
|
$520
|
$745
|
$520
|
$520
|
$208
|
5 years
|
$929
|
$906
|
$1,056
|
$906
|
$906
|
$371
|
10 years
|
$1,530
|
$1,785
|
$1,785
|
$1,987
|
$1,987
|
$846
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 52% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in securities the income from which is exempt
from federal income taxes, including the federal alternative minimum tax. This is a fundamental investment policy that may
not be changed without prior shareholder approval. The Fund will invest primarily in municipal debt obligations that are issued
by state and local governments to raise funds for various public purposes such as hospitals, schools, and general capital
expenses. The Fund will invest its assets in securities with maturities of various lengths, depending on market conditions,
but will have a dollar-weighted average effective maturity of between 5 and 30 years. We will adjust the average maturity
of the bonds in the portfolio to attempt to provide a high level of tax-exempt income consistent with preservation of capital.
The Fund's income level will vary depending on current interest rates and the specific securities in the portfolio. The Fund
may concentrate its investments in certain types of bonds or in a certain segment of the municipal bond market when the supply
of bonds in other sectors does not suit our investment needs.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free USA Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)*
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 9.38%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 9.63% for the quarter ended September 30, 2009, and its lowest quarterly
return was -4.71% for the quarter ended December 31, 2010. The maximum Class A sales charge of 4.50%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011*
|
1 year
|
5 years
|
10 years or lifetime
|
Class A return before taxes
|
5.60%
|
3.45%
|
4.67%
|
Class A return after taxes on distributions
|
5.60%
|
3.45%
|
4.67%
|
Class A return after taxes on distributions and sale of Fund shares
|
5.14%
|
3.55%
|
4.63%
|
Class B return before taxes
|
5.89%
|
3.37%
|
4.50%
|
Class C return before taxes
|
8.88%
|
3.64%
|
4.36%
|
Institutional Class return before taxes (lifetime: 12/31/08-12/31/11)
|
10.93%
|
n/a
|
10.32%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
* Because the Fund has combined its retail and institutional prospectuses, the bar chart and the after tax returns in the
average annual total returns table show the performance of the Fund's Class A shares.
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. For Institutional Class shares, there is no minimum initial purchase requirement, but certain eligibility
requirements must be met. The eligibility requirements are described in the prospectus under "Choosing a share class" and on
the Fund's website. We may reduce or waive the minimums or eligibility requirements in certain cases. No new or subsequent
investments currently are allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains
or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal income tax. A portion of these distributions, however,
may be subject to the federal alternative minimum tax and state and local taxes. The Fund may also make distributions that
are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware Tax-Free USA Intermediate Fund
What is the Fund's investment objective?
Delaware Tax-Free USA Intermediate 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.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
Class
|
A
|
B
|
C
|
Inst.
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
2.75%
|
none
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
2.00%
1
|
1.00%
1
|
none
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Inst.
|
Management fees
|
0.49%
|
0.49%
|
0.49%
|
0.49%
|
Distribution and service (12b-1) fees
|
0.30%
|
1.00%
|
1.00%
|
none
|
Other expenses
|
0.18%
|
0.18%
|
0.18%
|
0.18%
|
Total annual fund operating expenses
|
0.97%
|
1.67%
|
1.67%
|
0.67%
|
Fee waivers and expense reimbursements
|
(0.22%)
2
|
(0.07%)
2
|
(0.07%)
2
|
(0.07%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.75%
|
1.60%
|
1.60%
|
0.60%
|
1
|
If you redeem Class B shares during the first year after you buy them, you will pay a contingent deferred sales charge (CDSC)
of 2.00%, which declines to 1.00% during the second and third years, and 0% thereafter. Class C shares redeemed within one
year of purchase are subject to a 1.00% CDSC.
|
2
|
The 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, 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 0.60% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. The Fund's distributor, Delaware Distributors, L.P. (Distributor), has contracted to limit the Class A shares' 12b-1 fees
from December 28, 2012 through December 27, 2013 to no more than 0.15% of average daily net assets. These waivers and reimbursements may only be terminated by agreement of
the Manager or the Distributor, as applicable, and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
applicable waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers for
years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
Inst.
|
1 year
|
$349
|
$163
|
$363
|
$163
|
$263
|
$61
|
3 years
|
$554
|
$520
|
$620
|
$520
|
$520
|
$207
|
5 years
|
$776
|
$901
|
$901
|
$901
|
$901
|
$366
|
10 years
|
$1,413
|
$1,533
|
$1,533
|
$1,970
|
$1,970
|
$828
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 39% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in securities the income from which is exempt
from federal income taxes, including the federal alternative minimum tax. This is a fundamental investment policy that may
not be changed without prior shareholder approval. The Fund will invest primarily in municipal debt obligations that are issued
by state and local governments to raise funds for various public purposes such as hospitals, schools, and general capital
expenses. The Fund will invest its assets in securities with maturities of various lengths, depending on market conditions,
but will have a dollar-weighted average effective maturity of between 3 and 10 years. We will adjust the average maturity
of the bonds in the portfolio to attempt to provide a high level of tax-exempt income consistent with preservation of capital.
The Fund's income level will vary depending on current interest rates and the specific securities in the portfolio. The Fund
may concentrate its investments in certain types of bonds or in a certain segment of the municipal bond market when the supply
of bonds in other sectors does not suit our investment needs.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware Tax-Free USA Intermediate Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)*
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 5.27%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 6.88% for the quarter ended September 30, 2009, and its lowest quarterly
return was -4.05% for the quarter ended December 31, 2010. The maximum Class A sales charge of 2.75%, which is normally deducted
when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart. If this fee were included,
the returns would be less than those shown. The average annual returns in the table below do include the sales charge.
Average annual total returns for periods ended December 31, 2011*
|
1 year
|
5 years
|
10 years or lifetime
|
Class A return before taxes
|
5.80%
|
3.92%
|
4.73%
|
Class A return after taxes on distributions
|
5.80%
|
3.92%
|
4.73%
|
Class A return after taxes on distributions and sale of Fund shares
|
4.87%
|
3.84%
|
4.59%
|
Class B return before taxes
|
5.75%
|
3.60%
|
4.56%
|
Class C return before taxes
|
6.75%
|
3.61%
|
4.13%
|
Institutional Class before taxes (lifetime: 12/31/08-12/31/11)
|
8.86%
|
n/a
|
7.83%
|
Barclays 3–15 Year Blend Municipal Bond Index
(reflects no deduction for fees, expenses, or taxes)
|
9.62%
|
5.74%
|
5.35%
|
* Because the Fund has combined its retail and institutional prospectuses, the bar chart and the after tax returns in the
average annual total returns table show the performance of the Fund's Class A shares.
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. For Institutional Class shares, there is no minimum initial purchase requirement, but certain eligibility
requirements must be met. The eligibility requirements are described in the prospectus under "Choosing a share class" and on
the Fund's website. We may reduce or waive the minimums or eligibility requirements in certain cases. No new or subsequent
investments currently are allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains
or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal income tax. A portion of these distributions, however,
may be subject to the federal alternative minimum tax and state and local taxes. The Fund may also make distributions that
are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
Delaware National High-Yield Municipal Bond Fund
What is the Fund's investment objective?
Delaware National High-Yield Municipal Bond Fund seeks a high level of current income exempt from federal income tax primarily
through investment in medium- and lower-grade municipal obligations.
What are the Fund's fees and expenses?
The following table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. 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."
Shareholder fees (fees paid directly from your investment)
|
|
|
Class
|
A
|
B
|
C
|
Inst.
|
Maximum sales charge (load) imposed on purchases as a percentage of offering price
|
4.50%
|
none
|
none
|
none
|
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever
is lower
|
none
|
4.00%
1
|
1.00%
1
|
none
|
Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment)
|
Class
|
A
|
B
|
C
|
Inst.
|
Management fees
|
0.55%
|
0.55%
|
0.55%
|
0.55%
|
Distribution and service (12b-1) fees
|
0.25%
|
1.00%
|
1.00%
|
none
|
Other expenses
|
0.19%
|
0.19%
|
0.19%
|
0.19%
|
Total annual fund operating expenses
|
0.99%
|
1.74%
|
1.74%
|
0.74%
|
Fee waivers and expense reimbursements
|
(0.14%)
2
|
(0.14%)
2
|
(0.14%)
2
|
(0.14%)
2
|
Total annual fund operating expenses after fee waivers and expense reimbursements
|
0.85%
|
1.60%
|
1.60%
|
0.60%
|
1
|
If you redeem Class B shares during the first year after you bought them, you will pay a contingent deferred sales charge
(CDSC) of 4.00%, which declines to 3.00% during the second year, 2.25% during the third year, 1.50% during the fourth and
fifth years, 1.00% during the sixth year, and 0% thereafter. Class C shares redeemed within one year of purchase are subject
to a 1.00% CDSC.
|
2
|
The 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, 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 0.60% of the Fund's average daily net assets from December 28, 2012 through December 27, 2013. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.
|
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your investment has a 5% return each year and reflects the
Manager's expense waivers and reimbursements for the 1-year contractual period and the total operating expenses without waivers
for years 2 through 10. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
(if not redeemed)
|
|
(if not redeemed)
|
|
|
Class
|
A
|
B
|
B
|
C
|
C
|
Inst.
|
1 year
|
$533
|
$163
|
$563
|
$163
|
$263
|
$61
|
3 years
|
$738
|
$534
|
$759
|
$534
|
$534
|
$222
|
5 years
|
$959
|
$931
|
$1,081
|
$931
|
$931
|
$398
|
10 years
|
$1,596
|
$1,842
|
$1,842
|
$2,040
|
$2,040
|
$905
|
Portfolio turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A
higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held
in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the
Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 34% of the average value of
its portfolio.
What are the Fund's principal investment strategies?
Under normal circumstances, the Fund will invest at least 80% of its net assets in municipal securities the income from which
is exempt from federal income taxes. This is a fundamental investment policy that may not be changed without prior shareholder
approval. Municipal debt obligations are issued by state and local governments to raise funds for various public purposes
such as hospitals, schools, and general capital expenses. The Fund will invest its assets in securities with maturities of
various lengths, depending on market conditions, but will typically have a dollar-weighted average effective maturity between
5 and 30 years. We will adjust the average maturity of the bonds in the portfolio to attempt to provide a high level of tax-exempt
income consistent with preservation of capital. The Fund's income will vary depending on current interest rates and the specific
securities in the portfolio. The Fund may concentrate its investments in certain types of bonds or in a certain segment of
the municipal bond market when the supply of bonds in other sectors does not suit our investment needs. Under normal circumstances,
the Fund will invest primarily in lower-rated municipal securities, which typically offer higher income potential and involve
greater risk than higher-quality securities.
What are the principal risks of investing in the Fund?
Investing in any mutual fund involves the risk that you may lose part or all of the money you invest. Over time, the value
of your investment in the Fund will increase and decrease according to changes in the value of the securities in the Fund's
portfolio. Principal risks include:
Investments not guaranteed by the Manager or its affiliates
— Investments in the Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542
and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment
risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees
or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Market risk
— The risk that all or a majority of the securities in a certain market — such as the stock or bond market — will decline
in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or
heavy institutional selling.
Interest rate risk
— The risk that securities will decrease in value if interest rates rise. This risk is generally associated with bonds.
Credit risk
— The risk that an issuer of a debt security, including a governmental issuer, may be unable to make interest payments and
repay principal in a timely manner.
High yield (junk bond) risk
— The risk that high yield securities, commonly known as "junk bonds," are subject to reduced creditworthiness of issuers;
increased risk of default and a more limited and less liquid secondary market; and greater price volatility and risk of loss
of income and principal than are higher rated securities. High yield bonds are sometimes issued by municipalities with less
financial strength and therefore less ability to make projected debt payments on the bonds.
Call risk
— The risk that a bond issuer will prepay the bond during periods of low interest rates, forcing a fund to reinvest that
money at interest rates that might be lower than rates on the called bond.
Liquidity risk
— The possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has
valued them.
Alternative minimum tax risk
— If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
Derivatives risk
— Derivative contracts, such as options, futures and swaps, may involve additional expenses (such as the payment of premiums)
and are subject to significant loss if a security, or a securities index to which a derivative contract is associated, moves
in the opposite direction from what the portfolio manager anticipated.
Counterparty risk
— The risk that a counterparty to a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement
may fail to perform its obligations under the contract or agreement due to financial difficulties (such as a bankruptcy or
reorganization).
Government and regulatory risk
— The risk that governments or regulatory authorities have, from time to time, taken or considered actions that could adversely
affect various sectors of the securities markets.
How has Delaware National High-Yield Municipal Bond Fund performed?
The bar chart and table below provide some indication of the risks of investing in the Fund by showing changes in the Fund's
performance from year to year and by showing how the Fund's average annual total returns for the 1-, 5-, and 10-year periods
compare with those of a broad measure of market performance. The Fund's past performance (before and after taxes) is not necessarily
an indication of how it will perform in the future. The returns reflect expense caps in effect during these periods. The returns
would be lower without the expense caps. You may obtain the Fund's most recently available month-end performance by calling
800 523-1918 or by visiting our website at delawareinvestments.com/performance.
Year-by-year total return (Class A)*
As of September 30, 2012, the Fund's Class A shares had a calendar year-to-date return of 13.32%. During the periods illustrated
in this bar chart, Class A's highest quarterly return was 14.79% for the quarter ended September 30, 2009, and its lowest
quarterly return was -14.15% for the quarter ended December 31, 2008. The maximum Class A sales charge of 4.50%, which is
normally deducted when you purchase shares, is not reflected in the highest/lowest quarterly returns or in the bar chart.
If this fee were included, the returns would be less than those shown. The average annual returns in the table below do include
the sales charge.
Average annual total returns for periods ended December 31, 2011*
|
1 year
|
5 years
|
10 years or lifetime
|
Class A return before taxes
|
5.46%
|
3.27%
|
4.69%
|
Class A return after taxes on distributions
|
5.46%
|
3.27%
|
4.69%
|
Class A return after taxes on distributions and sale of Fund shares
|
5.29%
|
3.49%
|
4.73%
|
Class B return before taxes
|
5.58%
|
3.17%
|
4.52%
|
Class C return before taxes
|
8.56%
|
3.44%
|
4.39%
|
Institutional Class return before taxes (lifetime: 12/31/08-12/31/11)
|
10.62%
|
n/a
|
15.65%
|
Barclays Municipal Bond Index (reflects no deduction for fees, expenses, or taxes)
|
10.70%
|
5.22%
|
5.38%
|
* Because the Fund has combined its retail and institutional prospectuses, the bar chart and the after tax returns in the
average annual total returns table show the performance of the Fund's Class A shares.
After-tax performance is presented only for Class A shares of the Fund. The after-tax returns for other Fund classes may vary.
Actual after-tax returns depend on the investor's individual tax situation and may differ from the returns shown. After-tax
returns are not relevant for shares held in tax-deferred investment vehicles such as employer-sponsored 401(k) plans and individual
retirement accounts (IRAs). The after-tax returns shown are calculated using the highest individual federal marginal income
tax rates in effect during the periods presented and do not reflect the impact of state and local taxes.
Who manages the Fund?
Investment manager
Delaware Management Company, a series of Delaware Management Business Trust
Portfolio managers
|
Title with Delaware Management Company
|
Start date on the Fund
|
Joseph R. Baxter
|
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
|
May 2003
|
Stephen J. Czepiel
|
Senior Vice President, Senior Portfolio Manager
|
July 2007
|
Gregory A. Gizzi
|
Senior Vice President, Senior Portfolio Manager
|
December 2012
|
Purchase and redemption of Fund shares
You may purchase or redeem shares of the Fund on any day that the New York Stock Exchange (NYSE) is open for business (Business
Day). Shares may be purchased or redeemed: through your financial advisor; through the Fund's website at delawareinvestments.com;
by calling 800 523-1918; by regular mail (c/o Delaware Investments, P.O. Box 9876, Providence, RI 02940-8076); by overnight
courier service (c/o Delaware Service Center,
4400 Computer Drive, Westborough, MA 01581-1722); or by wire.
For Class A and Class C shares, the minimum initial investment is generally $1,000 and subsequent investments can be made
for as little as $100. For Institutional Class shares, there is no minimum initial purchase requirement, but certain eligibility
requirements must be met. The eligibility requirements are described in the prospectus under "Choosing a share class" and on
the Fund's website. We may reduce or waive the minimums or eligibility requirements in certain cases. No new or subsequent
investments currently are allowed in the Fund's Class B shares, except through a reinvestment of dividends or capital gains
or permitted exchanges.
Tax information
The Fund's distributions primarily are exempt from regular federal income tax. A portion of these distributions, however,
may be subject to the federal alternative minimum tax and state and local taxes. The Fund may also make distributions that
are taxable to you as ordinary income or capital gains.
Payments to broker/dealers and other
financial intermediaries
If you purchase shares of the Fund through a broker/dealer or other financial intermediary (such as a bank), the Fund and
its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create
a conflict of interest by influencing the broker/dealer or other intermediary and your salesperson to recommend the Fund over
another investment. Ask your salesperson or visit your financial intermediary's website for more information.
How we manage the Funds
We take a disciplined approach to investing, combining investment strategies and risk management techniques that we believe
can help shareholders meet their goals.
Our investment strategies
The Funds' investment manager, Delaware Management Company (Manager or we), will analyze economic and market conditions, seeking
to identify the securities or market sectors that we think are the best investments for a particular Fund. The following is
a general description of the investment strategies used to manage the Funds and a list of securities in which the Funds may
invest.
We will generally invest in debt obligations issued by state and local governments and their political subdivisions, agencies,
authorities, and instrumentalities that are exempt from federal income tax. We may also invest in debt obligations issued
by or for the District of Columbia, and its political subdivisions, agencies, authorities, and instrumentalities or territories
and possessions of the United States that are exempt from federal income tax.
We will generally invest in securities for income rather than seeking capital appreciation through active trading. However,
we may sell securities for a variety of reasons such as to reinvest the proceeds in higher yielding securities, to eliminate
investments not consistent with the preservation of capital; to honor redemption requests; or to address a weakening credit
situation. As a result, we may realize losses or capital gains which could be taxable to shareholders.
Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund will generally have a dollar-weighted average
effective maturity of between 5 and 30 years. Delaware Tax-Free USA Intermediate Fund will generally have a dollar-weighted
average effective maturity of between 3 and 10 years. This is a more conservative strategy than funds with longer average
maturities, which should result in a Fund experiencing less price volatility when interest rates rise or fall.
Each Fund's investment objective is nonfundamental. This means that each Fund's Board of Trustees (each a "Board" and together,
the "Boards") may change the objective without obtaining shareholder approval. If the objective were changed, a Fund would
notify shareholders at least 60 days before the change in the objective became effective.
The securities in which the Funds typically invest
Fixed income securities offer the potential for greater income payments than stocks, and also may provide capital appreciation.
Municipal bond securities typically pay income free of federal income taxes and may also be free of state income taxes in
the state where they are issued. Please see the Funds' statement of additional information (SAI) for additional information
about certain of the securities described below as well as other securities in which the Funds may invest.
Tax-exempt obligations
Tax-exempt obligations are commonly known as municipal bonds. These are debt obligations issued by or for a state or territory,
its agencies or instrumentalities, municipalities, or other political subdivisions. The interest on these debt obligations
can generally be excluded from federal income tax as well as personal income tax in the state where the bond is issued. Determination
of a bond's tax-exempt status is based on the opinion of the bond issuer's legal counsel. Tax-exempt obligations may include
securities subject to the alternative minimum tax.
How the Funds use them:
Under normal conditions, each Fund (except for Delaware National High-Yield Municipal Bond Fund) may invest at least 80%
of its assets in tax-exempt debt obligations rated in the top four quality grades by Standard & Poor's (S&P) or another nationally
recognized statistical rating organization (NRSRO), or in unrated tax-exempt obligations if, in the Manager's opinion, they
are equivalent in quality to the top four quality grades. These bonds may include general obligation bonds and revenue bonds.
Delaware National High-Yield Municipal Bond Fund may invest in both investment grade and below-investment-grade debt obligations.
Investment grade debt obligations are rated in the top four quality grades by S&P or another NRSRO, or in the case of unrated
tax-exempt obligations if, in the Manager's opinion, they are equivalent in quality to the top four quality grades. Below
investment grade debt obligations are rated below the top four quality grades by S&P or another NRSRO, or in the case of unrated
tax-exempt obligations if, in the Manager's opinion, they are equivalent in quality to being rated below the top four quality
grades. Both investment grade and below-investment-grade bonds may include general obligation bonds and revenue bonds.
Delaware National High-Yield Municipal Bond Fund may invest all or a portion of its assets in higher grade securities if the
Manager determines that abnormal market conditions make investing in lower-rated securities inconsistent with shareholders'
best interest.
High yield, high-risk municipal bonds (junk bonds)
High yield, high-risk municipal bonds are municipal debt obligations rated lower than investment grade by an NRSRO or, if
unrated, of comparable quality. These securities are often referred to as "junk bonds" and are considered to be of poor standing
and predominantly speculative.
How the Funds use them:
Each Fund (except for Delaware National High-Yield Municipal Bond Fund) may invest up to 20% of its net assets in high yield,
high-risk fixed income securities. Delaware National High-Yield Municipal Bond Fund may invest without limit in high yield,
high-risk fixed income securities.
General obligation bonds
General obligation bonds are municipal bonds on which the payment of principal and interest is secured by the issuer's pledge
of its full faith, credit, and taxing power.
How the Funds use them
: Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund may invest without limit in general obligation bonds
in the top four quality grades or bonds that are unrated, but which the Manager determines to be of equal quality.
Delaware National High-Yield Municipal Bond Fund may invest without limit in general obligation bonds.
Revenue bonds
Revenue bonds are municipal bonds on which principal and interest payments are made from revenues derived from a particular
facility, from the proceeds of a special excise tax or from revenue generated by an operating project. Principal and interest
are not secured by the general taxing power. Tax-exempt industrial development bonds, in most cases, are a type of revenue
bond that is not backed by the credit of the issuing municipality and may therefore involve more risk.
How the Funds use them
: Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund may invest without limit in revenue bonds in the
top four quality grades or bonds that are unrated, but which the Manager determines to be of equal quality.
Delaware National High-Yield Municipal Bond Fund may invest without limit in revenue bonds.
Insured municipal bonds
Various municipal issuers may obtain insurance for their obligations. In the event of a default, the insurer is required
to make payments of interest and principal when due to the bondholders. However, there is no assurance that the insurance
company will meet its obligations. Insured obligations are typically rated in the top quality grades by an NRSRO.
How the Funds use them:
The Funds may invest without limit in insured bonds. It is possible that a substantial portion of a Fund's portfolio may
consist of municipal bonds that are insured by a single insurance company.
Insurance is available on uninsured bonds and a Fund may purchase such insurance directly. The Manager will generally do so
only if it believes that purchasing and insuring a bond provides an investment opportunity at least comparable to owning other
available insured securities.
The purpose of insurance is to protect against credit risk. It does not insure against market risk or guarantee the value
of the securities in the portfolio or the value of shares of a Fund.
Private activity or private placement bonds
Private activity are municipal bond whose proceeds are used to finance certain nongovernment activities, including some types
of industrial revenue bonds and privately owned sports facilities. Interest on certain private activity bonds, while exempt
from regular federal income tax, is a tax preference item for taxpayers when determing their alternative minimum tax under
the Internal Revenue Code of 1986, as amended (Internal Revenue Code).
Private placement bonds are bonds sold directly to qualified institutional investors or accredited investors, such as banks,
mutual funds, insurance companies, pension funds, and foundations. Private placement bonds do not require registration with
the U.S. Securities and Exchange Commission, provided the securities are bought for investment purposes rather than resale.
Privately placed bonds encompasses a wide variety of fixed income investments including corporate obligations, real estate
related, project finance and asset-backed loans.
How the Funds use them:
Under normal circumstances, each Fund may invest without limit in private activity bonds or private placement bonds, except
that a Fund's investments in these bonds will be limited if such investments, in the aggregate, would cause the Fund to have
less than 80% of its net assets invested in municipal securities the income from which is exempt from federal income taxes.
Inverse floaters
Inverse floaters are instruments with floating or variable interest rates that move in the opposite direction of short-term
interest rates. Consequently, the market values of inverse floaters will generally be more volatile than other tax-exempt
investments. Certain inverse floater programs may be considered a form of borrowing.
How the Funds use them
: Each Fund (except for Delaware National High-Yield Municipal Bond Fund) may invest up to 25% of its net assets in inverse
floaters when the underlying bond is tax-exempt. However, a Fund's investments in taxable securities (including investments
in inverse floaters on taxable securities) combined with its investments in securities rated below investment grade are limited
to 20% of the Fund's net assets.
Delaware National High-Yield Municipal Bond Fund may invest up to 25% of its net assets in inverse floaters.
Where a Fund has invested in inverse floaters that are deemed to be borrowings, the Fund will designate cash and liquid securities
in an amount sufficient to terminate the inverse floater program, and will adjust the value of those designated assets on
a daily basis.
Advance refunded bonds
In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high-grade interest-bearing debt
securities that are deposited into an irrevocable escrow account held by a trustee bank to secure all future payments of principal
and interest on pre-existing bonds, which are then considered to be "advance refunded bonds." Escrow secured bonds often receive
the highest rating from S&P and Moody's Investors Service, Inc. (Moody's).
How the Funds use them:
The Funds may invest without limit in advance refunded bonds. These bonds are generally considered to be of very high quality
because of the escrow account, which typically holds U.S. Treasurys.
Short-term tax-free instruments
Short-term tax-free instruments include instruments such as tax-exempt commercial paper and general obligation, revenue,
and project notes, as well as variable floating rate demand obligations.
How the Funds use them:
The Funds may invest without limit in high-quality, short-term tax-free instruments.
Futures and options
Futures contracts are agreements for the purchase or sale of a security or a group of securities at a specified price, on
a specified date. Unlike purchasing an option, a futures contract must be executed unless it is sold before the settlement
date.
Options represent a right to buy or sell a swap agreement or a security or a group of securities at an agreed-upon price at
a future date. The purchaser of an option may or may not choose to go through with the transaction. The seller of an option,
however, must go through with the transaction if the purchaser exercises the option.
Certain options and futures may be considered derivative securities.
How the Funds use them:
The Funds may invest in futures, options, and closing transactions related thereto. These activities will not be entered
into for speculative purposes, but rather for hedging purposes and to facilitate the ability to quickly deploy into the market
a Fund's cash, short-term debt securities and other money market instruments at times when each Fund's assets are not fully
invested. Each Fund may only enter into these transactions for hedging purposes if it is consistent with the Fund's respective
investment objective and policies.
The Manager may invest up to an aggregate of 20% of a Fund's net assets in futures, options, and swaps as long as the Fund's
investment in these securities, when aggregated with other taxable instruments and securities rated below investment grade
(other than Delaware National High-Yield Municipal Bond Fund), does not exceed 20% of the Fund's total net assets. Delaware
National High-Yield Municipal Bond Fund is not subject to the 20% limitation on investments in securities rated below-investment-grade.
At times when the Manager anticipates adverse conditions, the Manager may want to protect gains on securities without actually
selling them. The Funds might use futures or options on futures to neutralize the effect of any price declines, without selling
a bond or bonds.
Use of these strategies can increase the operating costs of the Funds and can lead to loss of principal.
The Funds have claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange
Act (CEA) and, therefore, are not subject to registration or regulation as a commodity pool operator under the CEA.
Repurchase agreements
A repurchase agreement is an agreement between a buyer of securities, such as a fund, and a seller of securities, in which
the seller agrees to buy the securities back within a specified time at the same price the buyer paid for them, plus an amount
equal to an agreed-upon interest rate. Repurchase agreements are often viewed as equivalent to cash.
How the Funds use them:
Typically, each Fund uses repurchase agreements as a short-term investment for its cash position. In order to enter into
these repurchase agreements, a Fund must have collateral of at least 102% of the repurchase price. A Fund will only enter
into repurchase agreements in which the collateral comprises U.S. government securities. In the discretion of the Manager,
a Fund may invest overnight cash balances in short-term discount notes issued or guaranteed by the U.S. government, its agencies
or instrumentalities or government-sponsored enterprises.
Restricted securities
Restricted securities are privately placed securities whose resale is restricted under U.S. securities laws.
How the Funds use them:
Each Fund may invest in privately placed securities, including those that are eligible for resale only among certain institutional
buyers without registration, commonly known as "Rule 144A Securities." Restricted securities that are determined to be illiquid
may not exceed a Fund's limit on investments in illiquid securities.
Illiquid securities
Illiquid securities are securities that do not have a ready market and cannot be readily sold within seven days at approximately
the price at which a fund has valued them.
How the Funds use them:
Each Fund may invest up to 15% of its net assets in illiquid securities.
Interest rate swap, index swap, and credit default swap agreements
In an interest rate swap, a fund receives payments from another party based on a variable or floating interest rate, in return
for making payments based on a fixed interest rate. An interest rate swap can also work in reverse with a fund receiving payments
based on a fixed interest rate and making payments based on a variable or floating interest rate.
In an index swap, a fund receives gains or incurs losses based on the total return of a specified index, in exchange for making
interest payments to another party. An index swap can also work in reverse with a fund receiving interest payments from another
party in exchange for movements in the total return of a specified index.
In a credit default swap, a fund may transfer the financial risk of a credit event occurring (a bond default, bankruptcy,
or restructuring, for example) on a particular security or basket of securities to another party by paying that party a periodic
premium; likewise, a fund may assume the financial risk of a credit event occurring on a particular security or basket of
securities in exchange for receiving premium payments from another party.
At times when the Manager anticipates adverse conditions, the Manager may want to protect gains on securities without actually
selling them. The Manager might use swaps to neutralize the effect of any price declines, without selling a bond or bonds.
Interest rate swaps, index swaps, and credit default swaps may be considered illiquid.
How the Funds use them:
Each Fund may use interest rate swaps to adjust its sensitivity to interest rates by changing its duration. Each Fund may
also use interest rate swaps to hedge against changes in interest rates. Index swaps may be used to gain exposure to markets
that a Fund invests in and also as a substitute for futures, options, or forward contracts if such contracts are not directly
available to a Fund on favorable terms. A Fund enters into credit default swaps in order to hedge against a credit event,
to enhance total return, or to gain exposure to certain securities or markets.
Each Fund may invest up to an aggregate of 20% of its net assets in futures, options, and swaps (subject to each Fund's 15%
limitation on the aggregate notional amount of credit default swaps when a Fund is selling protection a security or purchasing
protection on a security that the Fund does not own) as long as each Fund's investment in these securities, when aggregated
with other taxable investments and securities that are rated below investment grade (other than Delaware National High-Yield
Municipal Bond Fund), does not exceed 20% of the Fund's net assets. Delaware National High-Yield Municipal Bond Fund is not
subject to the 20% limitation on investments in securities rated below-investment-grade.
Use of these strategies can increase the Funds' operating costs and can lead to loss of principal.
Municipal leases and certificates of participation
Certificates of participation (COPs) are widely used by state and local governments to finance the purchase of property and
facilities. COPs are like installment purchase agreements. A governmental corporation may create a COP when it issues long-term
bonds to pay for the acquisition of property or facilities. The property or facilities are then leased to a municipality,
which makes lease payments to repay interest and principal to the holders of the bonds. Once the lease payments are completed,
the municipality gains ownership of the property for a nominal sum.
How the Funds use them:
The Funds may invest without limit in investment-grade municipal lease obligations, primarily through COPs, rated above BBB- by
S&P, above Baa by Moody's, similarly rated by another NRSRO, or those that are deemed to be of comparable quality. Delaware
Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund may also invest up to 20% their respective net assets in below-investment-grade
municipal lease obligations rated BBB- or lower by S&P, Baa3 or lower by Moody's, or similarly rated by another NRSRO. Delaware
National High-Yield Municipal Bond Fund may invest in below-investment-grade municipal lease obligations without limit.
As with a Fund's other investments, we expect its investments in municipal lease obligations to be exempt from regular federal
income taxes. Each Fund will rely on the opinion of the bond issuer's counsel for a determination of the bond's tax-exempt
status.
A feature that distinguishes COPs from municipal debt is that leases typically contain a "nonappropriation" or "abatement"
clause. This means that the municipality leasing the property or facility must use its best efforts to make lease payments,
but may terminate the lease without penalty if its legislature or other appropriating body does not allocate the necessary
money. In such a case, the creator of the COP, or its agent, is typically entitled to repossess the property. In many cases,
however, the market value of the property will be less than the amount the municipality was paying.
Zero coupon bonds
Zero coupon bonds are debt obligations that do not entitle the holder to any periodic payments of interest prior to maturity
or a specified date when the securities begin paying current interest. Therefore, they are issued and traded at a discount
from their respective face amount or par value.
How the Funds use them:
The Funds may invest in zero coupon bonds. The market prices of these bonds are generally more volatile than the market prices
of securities that pay interest periodically and are likely to react to changes in interest rates to a greater degree than
interest-paying bonds having similar maturities and credit quality. The bonds may have certain tax consequences which, under
certain conditions, could be adverse to a Fund.
Other investment strategies
Downgraded quality ratings
The credit quality restrictions described above for each Fund apply only at the time of purchase. The Funds may continue to
hold a security whose quality rating has been lowered or in the case of an unrated bond, after we have changed our assessment
of its credit quality.
Borrowing from banks
Each Fund may borrow money from banks as a temporary measure for extraordinary or emergency purposes or to facilitate redemptions
but normally does not do so. Each Fund may borrow up to 10% of the value of its total assets (20% for Delaware National High-Yield
Municipal Bond Fund). A Fund will be required to pay interest to the lending banks on the amount borrowed. As a result, borrowing
money could result in a Fund being unable to meet its investment objective. The Funds will not borrow money in excess of one-third
of the value of their assets.
Purchasing securities on a when-issued or delayed-delivery basis
Each Fund may buy or sell securities on a when-issued or delayed-delivery basis; that is, paying for securities before delivery
or taking delivery at a later date. The Funds will designate cash or securities in amounts sufficient to cover their obligations,
and will value the designated assets daily.
Lending securities
Delaware Tax-Free USA Intermediate Fund may lend up to 25% of its assets to qualified broker/dealers and institutional investors
for their use in securities transactions. Borrowers of the Fund's securities must provide collateral to the Fund and adjust
the amount of collateral each day to reflect changes in the value of loaned securities. These transactions, if any, may generate
additional income for the Fund.
Concentration
Where the Manager feels there is a limited supply of appropriate investments, each Fund may concentrate its investments (invest
more than 25% of total assets) in municipal obligations relating to similar types of projects or with other similar economic,
business, or political characteristics (such as bonds of housing finance agencies or healthcare facilities). In addition,
each Fund may invest more than 25% of its assets in industrial development bonds or, in the case of Delaware Tax-Free USA
Fund and Delaware Tax-Free USA Intermediate Fund, pollution control bonds, which may be backed only by the assets and revenues
of a nongovernmental issuer. Each Fund will not, however, invest more than 25% of its total assets in bonds issued for companies
in the same industry.
Temporary defensive positions
In response to unfavorable market conditions, we may make temporary investments in cash or cash equivalents or other high-quality,
short-term instruments. These investments may not be consistent with a Fund's investment objective. To the extent that a
Fund holds such instruments, it may be unable to achieve its investment objective.
The risks of investing in the Funds
Investing in any mutual fund involves risk, including the risk that you may receive little or no return on your investment,
and the risk that you may lose part or all of the money you invest. Before you invest in a Fund, you should carefully evaluate
the risks. Because of the nature of the Funds, you should consider your investment to be a long-term investment that typically
provides the best results when held for a number of years. The information below describes the principal risks you assume
when investing in the Funds. You should also note that the failure of an issuer of a tax-exempt security to comply with certain
legal or contractual requirements relating to the security could cause interest on the security, as well as Fund distributions
derived from this interest to become taxable, in some cases retroactively to the date the security was issued. Please see
the SAI for a further discussion of these risks and other risks not discussed here.
While each Fund endeavors to purchase only bona fide tax-exempt securities, there are risks that: (i) a security issued as
tax-exempt may be reclassified by the Internal Revenue Service (IRS), or a state tax authority, as taxable and/or (ii) future
legislative, administrative, or court actions could adversely impact the qualification of income from a tax-exempt security
as tax-free. Such reclassifications or actions could cause interest from a security to become taxable, possibly retroactively,
subjecting you to increased tax liability. In addition, such reclassifications or actions could cause the value of a security,
and therefore, the value of a Fund's shares, to decline.
Interest rate risk
Interest rate risk is the risk that securities will decrease in value if interest rates rise. The risk is greater for bonds
with longer maturities than for those with shorter maturities.
Swaps and inverse floaters may be particularly sensitive to interest rate changes. Depending on the actual movements of interest
rates and how well the portfolio manager anticipates them, a fund could experience a higher or lower return than anticipated.
How the Funds strive to manage it:
Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund do not try to increase return by predicting and aggressively
capitalizing on interest rate moves. In an attempt to reduce interest rate risk, the Manager will adjust a Fund's average
maturity based on its view of interest rates. In anticipation of an interest rate decline, the Manager may extend average
maturity and when the Manager anticipates an increase, it may shorten average maturity.
In an attempt to reduce interest rate risk, the Manager will adjust Delaware National High-Yield Municipal Bond Fund's average
maturity based on its view of interest rates. In anticipation of an interest rate decline, the Manager may extend average
maturity and when the Manager anticipates an increase, it may shorten average maturity.
Market risk
Market risk is the risk that all or a majority of the securities in a certain market — such as the stock or bond market —
will decline in value because of economic conditions, future expectations, investor confidence, or heavy institutional selling.
Index swaps are subject to the same market risks as the investment market or sector that the index represents. Depending on
the actual movements of the index and how well the portfolio manager forecasts those movements, a fund could experience a
higher or lower return than anticipated.
How the Funds strive to manage it:
The Funds maintain a long-term investment approach and focus on securities that the Manager believes can continue to provide
returns over an extended time frame regardless of interim market fluctuations in the bond market.
In evaluating the use of an index swap, the Manager carefully considers how market changes could affect the swap and how that
compares to a Fund investing directly in the market the swap is intended to represent.
Industry and security risks
Industry risk is the risk that the value of securities in a particular industry (such as financial services or manufacturing)
will decline because of changing expectations for the performance of that industry.
Security risk is the risk that the value of an individual stock or bond will decline because of changing expectations for
the performance of the individual company issuing the stock or bond (due to situations that could range from decreased sales
to events such as a pending merger or actual or threatened bankruptcy).
How the Funds strive to manage them:
The Funds spread their assets across different types of municipal bonds and among bonds representing different industries
and regions throughout the country in order to minimize the impact that a poorly performing security would have on a Fund.
The Manager also follows a rigorous selection process before choosing securities for the portfolio.
Where the Manager feels there is a limited supply of appropriate investments, the Manager may concentrate each Fund's investments
in just a few industries. This will expose a Fund to greater industry and security risk.
Credit risk
Credit risk is the possibility that a bond's issuer (or an entity that insures the bond) will be unable to make timely payments
of interest and principal.
In the case of municipal bonds, issuers may be affected by poor economic conditions in their states.
How the Funds strive to manage it:
The Manager conducts careful credit analysis of individual bonds; the Funds focus on high-quality bonds and limit their holdings
of bonds rated below investment grade (except for Delaware National High-Yield Municipal Bond Fund); and the Funds hold a
number of different bonds in the portfolios. All of this is designed to help reduce credit risk.
Delaware National High-Yield Municipal Bond Fund is subject to significant credit risk due to its investment in lower-quality,
high yielding bonds. This risk is described more fully below.
High yield, high-risk municipal bond (junk bond) risk
Investing in so-called "junk bonds" entails the risk of principal loss, which may be greater than the risk involved in investment
grade bonds. High yield bonds are sometimes issued by municipalities with less financial strength and therefore less ability
to make projected debt payments on the bonds.
Although experts disagree on the impact recessionary periods have had and will have on high yield municipal bonds, some analysts
believe a protracted economic downturn would adversely affect the value of outstanding bonds and the ability of high yield
issuers to repay principal and interest. In particular, for a high yield revenue bond, adverse economic conditions to the
particular project or industry that backs the bond would pose a significant risk.
How the Funds strive to manage it:
Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund limit the amount of their respective portfolios which
may be invested in lower-quality, higher yielding bonds.
This is a significant risk for Delaware National High-Yield Municipal Bond Fund. In striving to manage this risk, the Fund
holds a number of different bonds representing a variety of industries and municipal projects, seeking to minimize the effect
that any one bond may have on the portfolio.
Call risk
Call risk is the risk that a bond issuer will prepay the bond during periods of low interest rates, forcing an investor to
reinvest his or her money at interest rates that might be lower than rates on the called bond.
How the Funds strive to manage it:
The Manager takes into consideration the likelihood of prepayment when it selects bonds and, in certain environments, the
Manager may look for bonds that have protection against early prepayment.
Liquidity risk
Liquidity risk is the possibility that securities cannot be readily sold within seven days at approximately the price at which
a fund has valued them.
There is generally no established retail secondary market for high yield securities. As a result, the secondary market for
high yield securities is more limited and less liquid than other secondary securities markets. The high yield secondary market
is particularly susceptible to liquidity problems when the institutions, such as mutual funds and certain financial institutions,
which dominate it temporarily stop buying bonds for regulatory, financial, or other reasons.
Adverse publicity and investor perceptions may also disrupt the secondary market for high yield securities.
How the Funds strive to manage it:
Each Fund's exposure to illiquid securities is limited to no more than 15% of its net assets.
A less liquid secondary market may have an adverse effect on a Fund's ability to dispose of particular issues, when necessary,
to meet the Fund's liquidity needs or in response to a specific economic event, such as the deterioration in the creditworthiness
of the issuer. In striving to manage this risk, the Manager evaluates the size of a bond issuance as a way to anticipate its
likely liquidity level.
Swap agreements may be treated as illiquid securities, but swap dealers may be willing to repurchase interest rate swaps within
seven days.
Derivatives risk
Derivatives risk is the possibility that a fund may experience a significant loss if it employs a derivatives strategy (including
a strategy involving swaps such as interest rate swaps, index swaps, and credit default swaps) related to a security or a
securities index and that security or index moves in the opposite direction from what the portfolio management team had anticipated.
Derivatives also involve additional expenses, which could reduce any benefit or increase any loss to a fund from using the
strategy.
How the Funds strive to manage it:
The Funds will use derivatives for defensive purposes, such as to protect gains or hedge against potential losses in the
portfolio without actually selling a security, to neutralize the impact of interest rate changes, to improve diversification
or to earn additional income. The Manager will generally not use derivatives for reasons inconsistent with a Fund's investment
objectives.
Alternative minimum tax risk
If a fund invests in bonds whose income is subject to the alternative minimum tax, that portion of the fund's distributions
would be taxable for shareholders who are subject to this tax.
How the Funds strive to manage it:
Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund each may invest up to 20% of their assets in bonds
whose income is subject to the federal alternative minimum tax.
Counterparty risk
If a fund enters into a derivative contract (such as a swap, futures, or options contract) or a repurchase agreement, it will
be subject to the risk that the counterparty to such a contract or agreement may fail to perform its obligations under the
contract or agreement due to financial difficulties (such as a bankruptcy or reorganization). As a result, the fund may experience
significant delays in obtaining any recovery, may obtain only a limited recovery, or may obtain no recovery at all.
How the Funds strive to manage it:
We try to minimize this risk by considering the creditworthiness of all parties before we enter into transactions with them.
The Funds will hold collateral from counterparties consistent with applicable regulations.
Government and regulatory risks
Governments or regulatory authorities have, from time to time, taken or considered actions that could adversely affect various
sectors of the securities markets. Government involvement in the private sector may, in some cases, include government investment
in, or ownership of, companies in certain commercial business sectors; wage and price controls; or imposition of trade barriers
and other protectionist measures. For example, an economic or political crisis may lead to price controls, forced mergers
of companies, expropriation, the creation of government monopolies, foreign exchange controls, the introduction of new currencies
(and the redenomination of financial obligations into those currencies), or other measures that could be detrimental to the
investments of a fund.
How the Funds strive to manage it:
We evaluate the economic and political climate in the country or countries in which a Fund may invest before selecting securities.
We typically diversify a Fund's assets among a number of different securities in a variety of sectors in order to minimize
the impact to the Fund of any legislative or regulatory development affecting particular issuers, or market sectors.
Disclosure of portfolio holdings information
A description of the Funds' policies and procedures with respect to the disclosure of their portfolio securities is available
in the SAI.
Who manages the Funds
Investment manager
The Manager is a series of Delaware Management Business Trust, which is a subsidiary of Delaware Management Holdings, Inc.
(DMHI). DMHI is a wholly owned subsidiary of Macquarie Group Ltd. The Manager makes investment decisions for the Funds, manages
the Funds' business affairs, and provides daily administrative services. For its services to the Funds, the Manager was paid
an aggregate fee, net of fee waivers, of 0.41%, 0.42%, and 0.41% of the average daily net assets of Delaware Tax-Free USA
Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund, respectively, during
the last fiscal year.
A discussion of the basis for the Boards' approval of the Funds' investment management agreements is available in the Funds'
annual report to shareholders for the fiscal year ended August 31, 2012.
Portfolio managers
Joseph R. Baxter, Stephen J. Czepiel and Gregory A. Gizzi have an equal role in the management of the Funds. Mr. Baxter, Mr.
Czepiel and Mr. Gizzi assumed primary responsibility for making day-to-day investment decisions for the Funds in May 2003,
July 2007, and December 2012, respectively.
Joseph R. Baxter,
Senior Vice President, Head of Municipal Bond Department, Senior Portfolio Manager
Joseph R. Baxter is the head of the municipal bond department and is responsible for setting the department's investment strategy.
He is also a co-portfolio manager of the firm's municipal bond funds and several client accounts. Before joining Delaware
Investments in 1999 as head municipal bond trader, he held investment positions with First Union, most recently as a municipal
portfolio manager with the Evergreen Funds. Baxter received a bachelor's degree in finance and marketing from La Salle University.
Stephen J. Czepiel,
Senior Vice President, Senior Portfolio Manager
Stephen J. Czepiel is a member of the firm's municipal fixed income portfolio management team with primary responsibility
for portfolio construction and strategic asset allocation. He is a co-portfolio manager of the firm's municipal bond funds
and client accounts. He joined Delaware Investments in July 2004 as a senior bond trader. Previously, he was vice president
at both Mesirow Financial and Loop Capital Markets. He began his career in the securities industry in 1982 as a municipal
bond trader at Kidder Peabody and now has more than 20 years of experience in the municipal securities industry. Czepiel earned
his bachelor's degree in finance and economics from Duquesne University.
Gregory A. Gizzi,
Senior Vice President, Senior Portfolio Manager
Gregory A. Gizzi is a member of the firm's municipal fixed income portfolio management team and municipal trading team, and
head of the municipal bond trading staff. Additionally, Gizzi serves as portfolio manager and head of the convertible bond
trading staff. Before joining Delaware Investments in January 2008 as head of municipal bond trading, he spent six years as
a vice president at Lehman Brothers for the firm's tax-exempt institutional sales effort. Prior to that, he spent two years
trading corporate bonds for UBS before joining Lehman Brothers in a sales capacity. Gizzi has more than 20 years of trading
experience in the municipal securities industry, beginning at Kidder Peabody in 1984, where he started as a municipal bond
trader and worked his way up to institutional block trading desk manager. He later worked in the same capacity at Dillon Read.
Gizzi earned his bachelor's degree in economics from Harvard University.
The SAI provides additional information about the portfolio managers' compensation, other accounts managed by the portfolio
managers, and the portfolio managers' ownership of Fund shares.
Manager of managers structure
The Funds and the Manager have received an exemptive order from the U.S. Securities and Exchange Commission (SEC) to operate
under a manager of managers structure that permits the Manager, with the approval of the Boards, to appoint and replace sub-advisors,
enter into sub-advisory agreements, and materially amend and terminate sub-advisory agreements on behalf of the Funds without
shareholder approval (Manager of Managers Structure). Under the Manager of Managers Structure, the Manager has ultimate responsibility,
subject to oversight by the Funds' Boards, for overseeing the Funds' sub-advisors and recommending to the Boards their hiring,
termination, or replacement. The SEC order does not apply to any sub-advisor that is affiliated with the Funds or the Manager.
While the Manager does not currently expect to use the Manager of Managers Structure with respect to the Funds, the Manager
may, in the future, recommend to the Funds' Boards the establishment of the Manager of Managers Structure by recommending
the hiring of one or more sub-advisors to manage all or a portion of the Funds' portfolios.
The Manager of Managers Structure enables the Funds to operate with greater efficiency and without incurring the expense and
delays associated with obtaining shareholder approvals for matters relating to sub-advisors or sub-advisory agreements. The
Manager of Managers Structure does not permit an increase in the overall management and advisory fees payable by the Funds
without shareholder approval. Shareholders will be notified of any changes made to sub-advisors or sub-advisory agreements
within 90 days of the change.
Who's who
Board of trustees:
A mutual fund is governed by a board of trustees, which has oversight responsibility for the management of the fund's business
affairs. Trustees establish procedures and oversee and review the performance of the fund's service providers.
Investment manager:
An investment manager is a company responsible for selecting portfolio investments consistent with the objective and policies
stated in the mutual fund's prospectus. A written contract between a mutual fund and its investment manager specifies the
services the investment manager performs and the fee the manager is entitled to receive.
Portfolio managers:
Portfolio managers make investment decisions for individual portfolios.
Distributor:
Most mutual funds continuously offer new shares to the public through distributors that are regulated as broker/dealers and
are subject to the Financial Industry Regulatory Authority (FINRA) rules governing mutual fund sales practices.
Service agent:
Mutual fund companies employ service agents (sometimes called transfer agents) to maintain records of shareholder accounts,
calculate and disburse dividends and capital gains, and prepare and mail shareholder statements and tax information, among
other functions. Many service agents also provide customer service to shareholders.
Custodian:
Mutual funds are legally required to protect their portfolio securities, and most funds place them with a qualified bank
custodian that segregates fund securities from other bank assets.
Financial advisors:
Financial advisors provide advice to their clients. They are associated with securities broker/dealers who have entered into
selling and/or service arrangements with the distributor. Selling broker/dealers and financial advisors are compensated for
their services generally through sales commissions, and through 12b-1 fees and/or service fees deducted from a fund's assets.
Shareholders:
Mutual fund shareholders have specific voting rights on matters such as material changes in the terms of a fund's management
contract and changes to fundamental investment policies.
About your account
Investing in the Funds
You can choose from a number of share classes for each Fund. Because each share class has a different combination of sales
charges, fees, and other features, you should consult your financial advisor to determine which class best suits your investment
goals and time frame.
Choosing a share class
Each share class of a Fund has adopted a separate 12b-1 plan that allows it to pay distribution fees for the sale and distribution
of its shares. Because these fees are paid out of a Fund's assets on an ongoing basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of sales charges.
Class A, Class B, and Class C shares each have a separate 12b-1 plan that allows them to pay distribution fees for the sale
and distribution of their shares. Because these fees are paid out of a Class's assets on an ongoing basis, over time these
fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Class A
-
Class A shares of Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund have an up-front sales charge
of up to 4.50% that you pay when you buy the shares. Class A shares of Delaware Tax-Free USA Intermediate Fund have an up-front
sales charge of up to 2.75%.
-
If you invest $100,000 or more, your front-end sales charge will be reduced.
-
You may qualify for other reduced sales charges, and, under certain circumstances, the sales charge may be waived, as described
in "How to reduce your sales charge" below.
-
Class A shares are also subject to an annual 12b-1 fee no greater than 0.25% with respect to Delaware Tax-Free USA Fund and
Delaware National High-Yield Municipal Bond Fund and 0.30% with respect to Delaware Tax-Free USA Intermediate Fund (currently
limited to 0.15%) of average daily net assets. See "Dealer compensation" below for further information.
-
Class A shares generally are not subject to a CDSC except in the limited circumstances described in the table below.
-
Class A shares generally are not available for purchase by anyone qualified to purchase Class B shares, except as described
below.
Class A sales charges
The table below details your sales charges on purchases of Class A shares. The offering price for Class A shares includes
the front-end sales charge. The sales charge as a percentage of the net amount invested is the maximum percentage of the amount
invested rounded to the nearest hundredth. The actual sales charge that you pay as a percentage of the offering price and
as a percentage of the net amount invested will vary depending on the then-current net asset value (NAV), the percentage rate
of the sales charge, and rounding.
Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund
|
|
|
Amount of purchase
|
Sales charge as a % of offering price
|
Sales charge as a % of net amount invested
|
Less than $100,000
|
4.50%
|
|
5.13%
|
$100,000 but less than $250,000
|
3.50%
|
|
4.00%
|
$250,000 but less than $500,000
|
2.50%
|
|
3.00%
|
$500,000 but less than $1 million
|
2.00%
|
|
2.44%
|
$1 million or more
|
none*
|
|
none*
|
Delaware Tax-Free USA Intermediate Fund
|
|
|
|
|
Amount of purchase
|
Sales charge as a % of offering price
|
Sales charge as a % of net amount invested
|
Less than $100,000
|
2.75%
|
|
2.83%
|
$100,000 but less than $250,000
|
2.00%
|
|
2.04%
|
$250,000 but less than $500,000
|
1.00%
|
|
1.01%
|
$500,000 but less than $1 million
|
1.00%
|
|
1.01%
|
$1 million or more
|
none*
|
|
none*
|
* There is no front-end sales charge when you purchase $1 million or more of Class A shares. However, if the Distributor paid
your financial advisor a commission on your purchase of $1 million or more of Class A shares, you will have to pay a limited
contingent deferred sales charge (Limited CDSC) of 1.00% if you redeem shares of Delaware Tax-Free USA Fund and Delaware National
High-Yield Municipal Bond Fund within the first year after your purchase and 0.50% if you redeem them within the second year;
and 0.75% if you redeem shares of Delaware Tax-Free USA Intermediate Fund within the first year after your purchase, unless
a specific waiver of the Limited CDSC applies. The Limited CDSC will be paid to the Distributor and will be assessed on an
amount equal to the lesser of: (1) the NAV at the time the Class A shares being redeemed were purchased; or (2) the NAV of
such Class A shares at the time of redemption. For purposes of this formula, the "NAV at the time of purchase" will be the
NAV at purchase of the Class A shares even if those shares are later exchanged for shares of another Delaware Investments
®
Fund and, in the event of an exchange of Class A shares, the "NAV of such shares at the time of redemption" will be the NAV
of the shares acquired in the exchange. In determining whether a Limited CDSC is payable, it will be assumed that shares not
subject to the Limited CDSC are the first redeemed followed by other shares held for the longest period of time. See "Dealer
compensation" below for a description of the amount of dealer compensation that is paid.
Class B
No new or subsequent investments, including investments through automatic investment plans and by qualified retirement plans
(such as 401(k) or 457 plans), are allowed in the Funds' Class B shares, except through a reinvestment of dividends or capital
gains or permitted exchanges. Existing shareholders of Class B shares may continue to hold their Class B shares, reinvest
dividends into Class B shares, and exchange their Class B shares of one Delaware Investments
®
Fund for Class B shares of another Fund, as permitted by existing exchange privileges. Existing Class B shareholders wishing
to make subsequent purchases in a Fund's shares will be permitted to invest in other classes of the Fund, subject to that
class's pricing structure and eligibility requirements, if any.
For Class B shares outstanding as of May 31, 2007, and Class B shares acquired upon reinvestment of dividends or capital gains,
all Class B share attributes, including the CDSC schedules, conversion to Class A schedule, and distribution and service (12b-1)
fees, will continue in their current form. In addition, because the Funds' or their Distributor's ability to assess certain
sales charges and fees is dependent on the sale of new shares, the termination of new purchases of Class B shares could ultimately
lead to the elimination and/or reduction of such sales charges and fees. The Funds may not be able to provide shareholders
with advance notice of the reduction in these sales charges and fees. You will be notified via Prospectus supplement if there
are any changes to any attributes, sales charges, or fees.
-
Class B shares have no up-front sales charge, so the full amount of your purchase is invested. However, you will pay a CDSC
if you redeem your shares within six years after you buy them (three years for Delaware Tax-Free USA Intermediate Fund).
-
If you redeem Class B shares of Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund during the
first year after you buy them, the shares will be subject to a CDSC of 4.00%. The CDSC is 3.00% during the second year, 2.25%
during the third year, 1.50% during the fourth and fifth years, 1.00% during the sixth year, and 0% thereafter. For Delaware
Tax-Free USA Intermediate Fund, the CDSC is 2.00% during the first year, 1.00% during the second and third years, and 0% thereafter.
-
In determining whether the CDSC applies to a redemption of Class B shares, it will be assumed that shares held for more than
six years are redeemed first, followed by shares acquired through the reinvestment of dividends or distributions, and finally
by shares held longest during the six-year period. For further information on how the CDSC is determined, please see "Calculation
of contingent deferred sales charges - Class B and Class C" below.
-
Under certain circumstances, the CDSC may be waived; please see "Waivers of contingent deferred sales charges" below for further
information.
-
For approximately eight years (five years for Delaware Tax-Free USA Intermediate Fund) after you buy your Class B shares,
they are subject to an annual 12b-1 fee no greater than 1.00% of average daily net assets (of which 0.25% is a service fee)
paid to the Distributor, dealers, or others for providing services and maintaining shareholder accounts.
-
Approximately eight years (five years for Delaware Tax-Free USA Intermediate Fund) after you buy them, Class B shares automatically
convert to Class A shares with a 12b-1 fee of no more than 0.25% for Delaware Tax-Free USA Fund and Delaware National High-Yield
Municipal Bond Fund and 0.30% for Delaware Tax-Free USA Intermediate Fund. Conversion may occur as late as three months after,
as applicable, the eighth anniversary of purchase (fifth anniversary for Delaware Tax-Free USA Intermediate Fund), during
which time Class B's higher 12b-1 fee applies.
Class C
-
Class C shares have no up-front sales charge, so the full amount of your purchase is invested. However, you will pay a CDSC
of 1.00% if you redeem your shares within 12 months after you buy them.
-
In determining whether the CDSC applies to a redemption of Class C shares, it will be assumed that shares held for more than
12 months are redeemed first followed by shares acquired through the reinvestment of dividends or distributions, and finally
by shares held for 12 months or less. For further information on how the CDSC is determined, please see "Calculation of contingent
deferred sales charges — Class B and Class C" below.
-
Under certain circumstances, the CDSC may be waived; please see "Waivers of contingent deferred sales charges" below for further
information.
-
Class C shares are subject to an annual 12b-1 fee no greater than 1.00% of average daily net assets (of which 0.25% is a service
fee) paid to the Distributor, dealers, or others for providing services and maintaining shareholder accounts.
-
Class C shares do not automatically convert to another class.
-
You may purchase only up to $1 million of Class C shares at any one time. Orders that exceed $1 million will be rejected.
Institutional Class
-
Institutional Class shares have no up-front sales charge, so the full amount of your purchase is invested.
-
Institutional Class shares do not assess a CDSC or a 12b-1 fee;
-
Institutional Class shares are available for purchase only by the following:
-
institutional advisory clients (including mutual funds) of the Manager or its affiliates, as well as those clients' affiliates,
and their corporate sponsors, subsidiaries, related employee benefit plans, and rollover IRAs of, or from, such institutional
advisory clients;
-
a bank, trust company, or similar financial institution investing for its own account or for the account of its trust customers
for whom the financial institution is exercising investment discretion in purchasing Institutional Class shares, except where
the investment is part of a program that requires payment to the financial institution of a Rule 12b-1 Plan fee;
-
RIAs investing on behalf of clients that consist solely of institutions and high net worth individuals having at least $1
million entrusted to an RIA for investment purposes (use of the Institutional Class shares is restricted to RIAs who are not
affiliated or associated with a broker or dealer and who derive compensation for their services exclusively from their advisory
clients);
-
certain plans qualified under Section 529 of the Internal Revenue Code, for which the Manager, Distributor, or Delaware Service
Company, Inc. (DSC), or one or more of their affiliates, provide record keeping, administrative, investment management, marketing,
distribution, or similar services;
-
programs sponsored by and/or controlled by financial intermediaries where: (1) such programs allow or require the purchase
of Institutional Class shares; (2) the financial intermediary has entered into an agreement covering the arrangement with
the Distributor and/or DSC; and (3) the financial intermediary (i) charges clients an ongoing fee for advisory, investment
consulting or similar services, or (ii) offers the Institutional Class shares through a no-commission network or platform;
or
-
private investment vehicles, including, but not limited to, foundations and endowments.
Calculation of contingent deferred sales charges — Class B and Class C
CDSCs are charged as a percentage of the dollar amount subject to the CDSC. The charge will be assessed on an amount equal
to the lesser of the NAV at the time the shares being redeemed were purchased or the NAV of those shares at the time of redemption.
No CDSC will be imposed on increases in NAV above the initial purchase price, nor will a CDSC be assessed on redemptions of
shares acquired through reinvestment of dividends or capital gains distributions. For purposes of this formula, the "NAV at
the time of purchase" will be the NAV at purchase of Class B shares or Class C shares of a Fund, even if those shares are
later exchanged for shares of another Delaware Investments
®
Fund. In the event of an exchange of the shares, the "NAV of such shares at the time of redemption" will be the NAV of the
shares that were acquired in the exchange.
Dealer compensation
The financial advisor that sells you shares of the Funds may be eligible to receive the following amounts as compensation
for your investment in the Funds. These amounts are paid by the Distributor to the securities dealer with whom your financial
advisor is associated. Institutional Class shares do not have a 12b-1 fee or sales charge so they are not included in the table
below.
|
Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund
|
Delaware Tax-Free USA Intermediate Fund
|
|
|
|
|
|
|
Class A
1
|
Class B
2
|
Class C
3
|
Class A
1
|
Class B
2
|
Class C
3
|
Commission (%)
|
—
|
4.00%
|
1.00%
|
—
|
2.00%
|
1.00%
|
Investment less than $100,000
|
4.00%
|
—
|
—
|
2.35%
|
—
|
—
|
$100,000 but less than $250,000
|
3.00%
|
—
|
—
|
1.75%
|
—
|
—
|
$250,000 but less than $500,000
|
2.00%
|
—
|
—
|
0.75%
|
—
|
—
|
$500,000 but less than $1 million
|
1.60%
|
—
|
—
|
0.75%
|
—
|
—
|
$1 million but less than $5 million
|
1.00%
|
—
|
—
|
0.75%
|
—
|
—
|
$5 million but less than $25 million
|
0.50%
|
—
|
—
|
0.50%
|
—
|
—
|
$25 million or more
|
0.25%
|
—
|
—
|
0.25%
|
—
|
—
|
12b-1 fee to dealer
|
0.30%
|
0.25%
|
1.00%
|
0.15%
|
0.15%
|
1.00%
|
1
On sales of Class A shares, the Distributor reallows to your securities dealer a portion of the front-end sales charge depending
upon the amount you invested. Your securities dealer may be eligible to receive up to 0.25% of the 12b-1 fee applicable to
Class A shares of Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund and 0.30% of the 12b-1 fee
applicable to Class A shares of Delaware Tax-Free USA Intermediate Fund. However, the Distributor has contracted to limit
this amount to 0.15% for Delaware Tax-Free USA Intermediate Fund from December 28, 2012 through December 27, 2013.
2
On sales of Class B shares, the Distributor may pay your securities dealer an up-front commission of 4.00% (2.00% for Delaware
Tax-Free USA Intermediate Fund). Your securities dealer may also be eligible to receive a 12b-1 service fee of up to 0.25%
from the date of purchase. After approximately eight years (five years for Delaware Tax-Free USA Intermediate Fund), Class
B shares automatically convert to Class A shares and dealers may then be eligible to receive the 12b-1 fee applicable to Class
A shares.
3
On sales of Class C shares, the Distributor may pay your securities dealer an up-front commission of 1.00%. The up-front
commission includes an advance of the first year's 12b-1 service fee of up to 0.25%. During the first 12 months, the Distributor
retains the full 1.00% 12b-1 fee to partially offset the up-front commission and the prepaid 0.25% 12b-1 service fee advanced
at the time of purchase. Starting in the 13th month, your securities dealer may be eligible to receive the full 1.00% 12b-1
fee applicable to Class C. Alternatively, certain intermediaries may not be eligible to receive the up-front commission of
1.00%, but may receive the 12b-1 fee for Class C shares from the date of purchase.
Payments to intermediaries
The Distributor and its affiliates may pay additional compensation at their own expense and not as an expense of a Fund to
certain affiliated or unaffiliated brokers, dealers, or other financial intermediaries (Financial Intermediaries) in connection
with the sale or retention of Fund shares and/or shareholder servicing, including providing the Fund with "shelf space" or
a higher profile with the Financial Intermediaries' consultants, salespersons, and customers (distribution assistance). For
example, the Distributor or its affiliates may pay additional compensation to financial intermediaries for various purposes,
including, but not limited to, promoting the sale of Fund shares, maintaining share balances and/or for sub-accounting, administrative,
or shareholder processing services, marketing, educational support, and ticket charges. Such payments are in addition to any
distribution fees, service fees, and/or transfer agency fees that may be payable by a Fund. The additional payments may be
based on factors, including level of sales (based on gross or net sales or some specified minimum sales or some other similar
criteria related to sales of a Fund and/or some or all other Delaware Investments
®
Funds), amount of assets invested by the Financial Intermediary's customers (which could include current or aged assets of a
Fund and/or some or all other Delaware Investments
®
Funds), a Fund's advisory fees, some other agreed upon amount, or other measures as determined from time to time by the Distributor.
The level of payments made to a qualifying Financial Intermediary in any given year may vary. To the extent permitted by SEC
and FINRA rules and other applicable laws and regulations, the Distributor may pay, or allow its affiliates to pay, other
promotional incentives or payments to Financial Intermediaries.
If a mutual fund sponsor or distributor makes greater payments for distribution assistance to your Financial Intermediary
with respect to distribution of shares of that particular mutual fund than sponsors or distributors of other mutual funds
make to your Financial Intermediary with respect to the distribution of the shares of their mutual funds, your Financial Intermediary
and its salespersons may have a financial incentive to favor sales of shares of the mutual fund making the higher payments
over shares of other mutual funds or over other investment options. In addition, depending on the arrangements in place at
any particular time, a Financial Intermediary may also have a financial incentive for recommending a particular share class
over other share classes. You should consult with your Financial Intermediary and review carefully any disclosure provided
by such Financial Intermediary as to compensation it receives in connection with investment products it recommends or sells
to you. A significant purpose of these payments is to increase sales of a Fund's shares. The Manager or its affiliates may
benefit from the Distributor's or its affiliates' payment of compensation to financial intermediaries through increased fees
resulting from additional assets acquired through the sale of Fund shares through financial intermediaries. In certain instances,
the payments could be significant and may cause a conflict of interest for your Financial Intermediary. Any such payments
will not change the net asset value (NAV) or the price of a Fund's shares.
How to reduce your sales charge
We offer a number of ways to reduce or eliminate the sales charge on shares. Please refer to the SAI for detailed information
and eligibility requirements. You can also get additional information from your financial advisor. You or your financial advisor
must notify us at the time you purchase shares if you are eligible for any of these programs. You may also need to provide
information to your financial advisor or the Funds in order to qualify for a reduction in sales charges. Such information
may include your Delaware Investments
®
Funds holdings in any other accounts, including retirement accounts, held indirectly or through an intermediary, and the
names of qualifying family members and their holdings. We reserve the right to determine whether any purchase is entitled,
by virtue of the foregoing, to the reduced sales charge. Institutional Class shares have no upfront sales charge or CDSC so
they are not included in the table below.
Letter of intent
Through a letter of intent you agree to invest a certain amount in Delaware Investments
®
Funds (except money market funds with no sales charge) over a 13-month period to qualify for reduced front-end sales charges.
Class A
|
Class B
|
Class C
|
Available
|
Not available
|
Although the letter of intent does not apply to the purchase of Class C shares, you can combine the value of your Class A
shares with your purchase of Class C shares to fulfill your letter of intent.
|
Rights of accumulation
You can combine your holdings or purchases of all Delaware Investments
®
Funds (except money market funds with no sales charge), as well as the holdings and purchases of your spouse and children
under 21 to qualify for reduced front-end sales charges.
Class A
|
Class B
|
Class C
|
Available
|
Although the rights of accumulation do not apply to the purchase of Class B shares acquired upon reinvestment of dividends
or capital gains, you can combine the value of your Class B shares purchased on or before May 31, 2007 with your purchase
of Class A shares to qualify for rights of accumulation.
|
Although the rights of accumulation do not apply to the purchase of Class C shares, you can combine your purchase of Class
A shares with your purchase of Class C shares to fulfill your rights of accumulation.
|
Reinvestment of redeemed shares
Up to 12 months after you redeem shares, you can reinvest the proceeds without paying a sales charge.
Class A
|
Class B and Class C
|
You will not have to pay an additional front-end sales charge.
|
Not available
|
Buying Class A shares at net asset value
Class A shares of a Fund may be purchased at NAV under the following circumstances, provided that you notify the Fund in advance
that the trade qualifies for this privilege. The Funds reserve the right to modify or terminate these arrangements at any
time.
-
Shares purchased under the Delaware Investments® dividend reinvestment plan and, under certain circumstances, the exchange
privilege and the 12-month reinvestment privilege.
-
Purchases by: (i) current and former officers, Trustees/Directors, and employees of any Delaware Investments® Fund, the Manager,
or any of the Manager's current affiliates and those that may in the future be created; (ii) legal counsel to the Delaware
Investments® Funds; and (iii) registered representatives and employees of broker/dealers who have entered into dealer's agreements
with the Distributor. At the direction of such persons, their family members (regardless of age) and any employee benefit
plan established by any of the foregoing entities, counsel, or broker/dealers may also purchase shares at NAV.
-
Shareholders who own Class A shares of Delaware Cash Reserve® Fund as a result of a liquidation of a Delaware Investments®
Fund may exchange into Class A shares of another Delaware Investments® Fund at NAV.
-
Purchases by bank employees who provide services in connection with agreements between the bank and unaffiliated brokers or
dealers concerning sales of shares of the Delaware Investments® Funds.
-
Purchases by certain officers, trustees, and key employees of institutional clients of the Manager or any of its affiliates.
-
Purchases for the benefit of the clients of brokers, dealers, and registered investment advisors if such brokers, dealers,
or investment advisors have entered into an agreement with the Distributor providing specifically for the purchase of Class
A shares in connection with special investment products, such as wrap accounts or similar fee-based programs. Investors may
be charged a fee when effecting transactions in Class A shares through a broker or agent that offers these special investment
products.
-
Purchases by financial institutions investing for the accounts of their trust customers if they are not eligible to purchase
shares of a Fund's Institutional Class, if applicable.
-
Loan repayments made to a Fund account in connection with loans originated from accounts previously maintained by another
investment firm.
Waivers of contingent deferred sales charges
Certain sales charges may be based on historical cost. Therefore, you should maintain any records that substantiate these
costs because the Funds, their transfer agent, and financial intermediaries may not maintain this information. Information
about existing sales charges and sales charge reductions and waivers is available free of charge on the Delaware Investments
®
Funds' website at delawareinvestments.com. Additional information on sales charges can be found in the SAI, which is available
upon request. Institutional Class shares have no upfront sales charge or CDSC so they are not included in the table below.
The Funds' applicable CDSCs may be waived under the following circumstances:
Redemptions in accordance with a systematic withdrawal plan
Redemptions in accordance with a systematic withdrawal plan, provided the annual amount selected to be withdrawn under the
plan does not exceed 12% of the value of the account on the date that the systematic withdrawal plan was established or modified.
Classes A
1
, B, and C
|
Available
|
Redemptions that result from the right to liquidate a shareholder's account
Redemptions that result from a Fund's right to liquidate a shareholder's account if the aggregate NAV of the shares held in
the account is less than the then-effective minimum account size.
Classes A
1
, B, and C
|
Available
|
Distributions from an account of a redemption resulting from death or disability
Distributions from an account of a redemption resulting from the death or disability (as defined in Section 72(t)(2)(A) of
the Internal Revenue Code) of a registered owner or a registered joint owner occurring after the purchase of the shares being
redeemed. In the case of accounts established under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act or
trust accounts, the waiver applies upon the death of all beneficial owners.
Classes A
1
, B, and C
|
Available
|
Redemptions by the classes of shareholders who are permitted to purchase shares at NAV
Redemptions by the classes of shareholders who are permitted to purchase shares at NAV, regardless of the size of the purchase.
Class A
1
|
Classes B and C
|
Available
|
Not available
|
1
The waiver for Class A shares relates to a waiver of the Limited CDSC. Please note that you or your financial advisor will
have to notify us at the time of purchase that the trade qualifies for such waiver.
How to buy shares
Through your financial advisor
Your financial advisor can handle all the details of purchasing shares, including opening an account. Your financial advisor
may charge a separate fee for this service.
By mail
Complete an investment slip and mail it with your check, made payable to the fund and class of shares you wish to purchase,
to Delaware Investments at P.O. Box 9876, Providence, RI 02940-8076 or 4400 Computer Drive, Westborough, MA 01581-1722 for
investments by overnight courier service. If you are making an initial purchase by mail, you must include a completed investment
application with your check.
Please note that purchase orders submitted by mail will not be considered accepted until such orders are received by Delaware
Investments at P.O. Box 9876, Providence, RI 02940-8076 for investments by regular mail or 4400 Computer Drive, Westborough,
MA 01581-1722 for investments by overnight courier service. Please do not send purchase orders to 2005 Market Street, Philadelphia,
PA.
By wire
Ask your bank to wire the amount you want to invest to The Bank of New York Mellon, ABA #011001234, bank account #000073-6910.
Include your account number and the name of the fund and class of shares in which you want to invest. If you are making an
initial purchase by wire, you must first call us at 800 523-1918 so we can assign you an account number.
By exchange
You may exchange all or part of your investment in one or more Delaware Investments
®
Funds for shares of other Delaware Investments
®
Funds. Please keep in mind, however, that under most circumstances you are allowed to exchange only between like classes
of shares. To open an account by exchange, call the Shareholder Service Center at 800 523-1918.
Through automated shareholder services
For Class A, Class B, and Class C shares only, you may purchase or exchange shares through our automated telephone service,
or through our website, delawareinvestments.com. For more information about how to sign up for these services, call our Shareholder
Service Center at 800 523-1918.
Calculating share price
The price you pay for shares will depend on when we receive your purchase order. If your order is received by an authorized
agent or us before the close of regular trading on the NYSE, which is normally 4:00 p.m. Eastern time, you will pay that day's
closing share price, which is based on a fund's NAV. If your order is received after the close of regular trading on the NYSE,
you will pay the next Business Day's price. We reserve the right to reject any purchase order.
We determine the NAV per share for each class of a Delaware Investments
®
Fund at the close of regular trading on the NYSE on each Business Day. The NAV per share for each class of a fund is calculated
by subtracting the liabilities of each class from its total assets and dividing the resulting number by the number of shares
outstanding for that class. We generally price securities and other assets for which market quotations are readily available
at their market value. For a fund that invests primarily in foreign securities, the NAV may change on days when a shareholder
will not be able to purchase or redeem fund shares because foreign markets are open at times and on days when U.S. markets
are not. We price fixed income securities on the basis of valuations provided to us by an independent pricing service that
uses methods approved by the Boards. For all other securities, we use methods approved by the Boards that are designed to
price securities at their fair market values.
Fair valuation
When the Funds use fair value pricing, they may take into account any factors they deem appropriate. The Funds may determine
fair value based upon developments related to a specific security, current valuations of foreign stock indices (as reflected
in U.S. futures markets), and/or U.S. sector or broad stock market indices. The prices of securities used by the Funds to
calculate their NAVs may differ from quoted or published prices for the same securities. Fair value pricing may involve subjective
judgments and it is possible that the fair value determined for a security is materially different than the value that could
be realized upon the sale of that security.
The Funds anticipate using fair value pricing for securities primarily traded on U.S. exchanges only under very limited circumstances,
such as the early closing of the exchange on which a security is traded or suspension of trading in the security. The Funds
may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things,
most foreign markets close well before the Funds value their securities at 4:00 p.m. Eastern time. The earlier close of these
foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in
the interim. To account for this, the Funds may frequently value many foreign equity securities using fair value prices based
on third-party vendor modeling tools to the extent available.
The Boards have delegated responsibility for valuing the Funds' assets to a Pricing Committee of the Manager, which operates
under the policies and procedures approved by the Boards and which is subject to the Boards' oversight.
Document delivery
To reduce fund expenses, we try to identify related shareholders in a household and send only one copy of a fund's financial
reports and prospectus. This process, called "householding," will continue indefinitely unless you instruct us otherwise.
If you prefer not to have these documents householded, please call our Shareholder Service Center at 800 523-1918. At any
time you may view current prospectuses and financial reports on our website.
Inactive accounts
Please note that your account may be transferred to the appropriate state if no activity occurs in the account within the
time period specified by state law.
How to redeem shares
When you send us a properly completed request to redeem or exchange shares and the request is received by an authorized agent
or us before the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time), you will receive the NAV next determined
after we receive your request. If we receive your request after the close of regular trading on the NYSE, you will receive
the NAV next determined on the next Business Day. We will deduct any applicable CDSCs. You may also have to pay taxes on the
proceeds from your sale of shares. We will send you a check, normally the next Business Day, but no later than seven days
after we receive your request to sell your shares. If you purchased your shares by check and sell them before your check has
cleared, which can take up to 15 days, we will wait until your check has cleared before we send you your redemption proceeds.
If you are required to pay a CDSC when you redeem your shares, the amount subject to the fee will be based on the shares'
NAV when you purchased them or their NAV when you redeem them, whichever is less. This arrangement ensures that you will not
pay a CDSC on any increase in the value of your shares. You also will not pay the charge on any shares acquired by reinvesting
dividends or capital gains. If you exchange shares of one fund for shares of another, you do not pay a CDSC at the time of
the exchange. If you later redeem those shares, the purchase price for purposes of the CDSC formula will be the price you
paid for the original shares, not the exchange price. The redemption price for purposes of this formula will be the NAV of
the shares you are actually redeeming.
If you hold your shares in certificates, you must submit the certificates with your request to sell the shares. We recommend
that you send your certificates by certified mail.
Through your financial advisor
Your financial advisor can handle all the details of redeeming your shares (selling them back to a Fund). Your financial advisor
may charge a separate fee for this service.
By mail
You may redeem your shares by mail by writing to: Delaware Investments at P.O. Box 9876, Providence, RI 02940-8076 or 4400
Computer Drive, Westborough, MA 01581-1722 for redemptions by overnight courier service. All owners of the account must sign
the request. For redemptions of more than $100,000, you must include a signature guarantee for each owner. Signature guarantees
are also required when redemption proceeds are going to an address other than the address of record on the account.
Please note that redemption orders submitted by mail will not be considered accepted until such orders are received by Delaware
Investments at P.O. Box 9876, Providence, RI 02940-8076 for redemptions by regular mail or 4400 Computer Drive, Westborough,
MA 01581-1722 for redemptions by overnight courier service. Please do not send redemption requests to 2005 Market Street,
Philadelphia, PA.
By telephone
You may redeem up to $100,000 of your shares by telephone. You may have the proceeds sent to you by check or, if you redeem
at least $1,000 of shares, you may have the proceeds sent directly to your bank by wire. If you request a wire deposit, a
bank wire fee may be deducted from your proceeds. Bank information must be on file before you request a wire redemption.
By wire
You may redeem $1,000 or more of your shares and have the proceeds deposited directly to your bank account, normally the
next Business Day after we receive your request. If you request a wire deposit, a bank wire fee may be deducted from your
proceeds. Bank information must be on file before you request a wire redemption.
Through automated shareholder services
For Class A, Class B, and Class C shares only, you may redeem shares through our automated telephone service or through our
website, delawareinvestments.com. For more information about how to sign up for these services, call our Shareholder Service
Center at 800 523-1918.
Redemptions-in-kind
The Funds have reserved the right to pay for redemptions with portfolio securities under certain conditions. See the SAI for
more information on redemptions-in-kind.
Account minimums
For Class A, Class B, and Class C shares, if you redeem shares and your account balance falls below the required account minimum
of $1,000 for three or more consecutive months, you will have until the end of the current calendar quarter to raise the balance
to the minimum. If your account is not at the minimum by the required time, you may be charged a $9 fee for that quarter and
each quarter after that until your account reaches the minimum balance. If your account does not reach the minimum balance,
it may be redeemed after 60 days' written notice to you.
For Institutional Class shares, if you redeem shares and your account balance falls below $250, we may redeem your shares
after 60 days' written notice to you.
Investor services
To help make investing with us as easy as possible, and to help you build your investments, we offer the following investor services.
Automatic investment plan
The automatic investment plan allows you to make regular monthly or quarterly investments directly from your bank account.
Online account access
Online account access is a password-protected area of the Delaware Investments
®
Funds' website that gives you access to your account information and allows you to perform transactions in a secure internet
environment.
Electronic delivery
With Delaware eDelivery, you can receive your fund documents electronically instead of via U.S. mail. When you sign up for
eDelivery, you can access your account statements, shareholder reports, and other fund materials online, in a secure internet
environment at any time, from anywhere.
Systematic exchange option
With the systematic exchange option, you can arrange automatic monthly exchanges between your shares in one or more Delaware
Investments
®
Funds. These exchanges are subject to the same rules as regular exchanges (see below) and require a minimum monthly exchange
of $100 per fund.
Exchanges
You may generally exchange all or part of your shares for shares of the same class of another Delaware Investments
®
Fund without paying a front-end sales charge or a CDSC at the time of the exchange. However, if you exchange shares from
a money market fund that does not have a sales charge, you will pay any applicable sales charge on your new shares. When exchanging
Class B and Class C shares of one fund for the same class of shares in other funds, your new shares will be subject to the
same CDSC as the shares you originally purchased. The holding period for the CDSC will also remain the same, with the amount
of time you held your original shares being credited toward the holding period of your new shares. In certain other circumstances,
you may also be permitted to exchange your shares for shares of a different class of a Fund, but such exchange may be subject
to a sales charge for the new shares. (Please refer to the SAI for more details). You do not pay sales charges on shares that
you acquired through the reinvestment of dividends. You may have to pay taxes on your exchange. When you exchange shares,
you are purchasing shares in another fund, so you should be sure to get a copy of the applicable fund's prospectus and read
it carefully before buying shares through an exchange. We may refuse the purchase side of any exchange request if, in the
Manager's judgment, a fund would be unable to invest effectively in accordance with its investment objective and policies
or would otherwise potentially be adversely affected.
Direct deposit service
Through the direct deposit service, you can have $25 or more in dividends and distributions deposited directly into your bank
account. Delaware Investments does not charge a fee for this service; however, your bank may assess one. This service is not
available for retirement plans.
Systematic withdrawal plan
For Class A, Class B, and Class C shares, you can arrange a regular monthly or quarterly payment from your account made to
you or someone you designate. If the value of your account is $5,000 or more, you can make withdrawals of at least $25 monthly,
or $75 quarterly. You may also have your withdrawals deposited directly to your bank account through the direct deposit service.
The applicable Limited CDSC for Class A shares and the CDSC for Class B and C shares redeemed via a systematic withdrawal
plan will be waived if the annual amount withdrawn in each year is less than 12% of the account balance on the date that the
plan is established. If the annual amount withdrawn in any year exceeds 12% of the account balance on the date that the systematic
withdrawal plan is established, all redemptions under the plan will be subject to the applicable CDSC, including an assessment
for previously redeemed amounts under the plan.
On demand service
Through the on demand service, you or your financial advisor may transfer money between your Fund account and your predesignated
bank account by telephone request. There is a minimum transfer of $25 and a maximum transfer of $100,000. Delaware Investments
does not charge a fee for this service; however, your bank may assess one.
Dividend reinvestment plan
Through the dividend reinvestment plan, you can have your distributions reinvested in your account or the same share class
in another Delaware Investments
®
Fund. The shares that you purchase through the dividend reinvestment plan are not subject to a front-end sales charge or
to a CDSC. Under most circumstances, you may reinvest dividends only into like classes of shares.
Frequent trading of Fund shares
The Funds discourage purchases by market timers and purchase orders (including the purchase side of exchange orders) by shareholders
identified as market timers may be rejected. The Funds' Boards have adopted policies and procedures designed to detect, deter
and prevent trading activity detrimental to the Funds and their shareholders, such as market timing. The Funds will consider
anyone who follows a pattern of market timing in any Delaware Investments
®
Fund or the Optimum Fund Trust to be a market timer and may consider anyone who has followed a similar pattern of market
timing at an unaffiliated fund family to be a market timer.
Market timing of a fund occurs when investors make consecutive rapid short-term "roundtrips," that is, purchases into a fund
followed quickly by redemptions out of that fund. A short-term roundtrip is any redemption of fund shares within 20 Business
Days of a purchase of that fund's shares. If you make a second such short-term roundtrip in a fund within 90 rolling calendar
days of a previous short-term roundtrip in that fund, you may be considered a market timer. In determining whether market
timing has occurred, the Funds will consider short-term roundtrips to include rapid purchases and sales of Fund shares through
the exchange privilege. The Funds also reserve the right to consider other trading patterns to be market timing.
Your ability to use the Funds' exchange privilege may be limited if you are identified as a market timer. If you are identified
as a market timer, we will execute the redemption side of your exchange order but may refuse the purchase side of your exchange
order. The Funds reserve the right to restrict or reject, without prior notice, any purchase order or exchange order for any
reason, including any purchase order or exchange order accepted by any shareholder's financial intermediary or in any omnibus-type
account. Transactions placed in violation of the Funds' market timing policy are not necessarily deemed accepted by the Funds
and may be rejected by a Fund on the next Business Day following receipt by a Fund.
Redemptions will continue to be permitted in accordance with the Funds' current Prospectus. A redemption of shares under these
circumstances could be costly to a shareholder if, for example, the shares have declined in value, the shareholder recently
paid a front-end sales charge, the shares are subject to a CDSC, or the sale results in adverse tax consequences. To avoid
this risk, a shareholder should carefully monitor the purchases, sales, and exchanges of Fund shares and avoid frequent trading
in Fund shares.
Each Fund reserves the right to modify this policy at any time without notice, including modifications to a Fund's monitoring
procedures and the procedures to close accounts to new purchases. Although the implementation of this policy involves judgments
that are inherently subjective and may be selectively applied, we seek to make judgments and applications that are consistent
with the interests of each Fund's shareholders. While we will take actions designed to detect and prevent market timing, there
can be no assurance that such trading activity will be completely eliminated. Moreover, a Fund's market timing policy does
not require it to take action in response to frequent trading activity. If a Fund elects not to take any action in response
to frequent trading, such frequent trading activity could continue.
Risks of market timing
By realizing profits through short-term trading, shareholders that engage in rapid purchases and sales or exchanges of the
Funds' shares dilute the value of shares held by long-term shareholders. Volatility resulting from excessive purchases and
sales or exchanges of Fund shares, especially involving large dollar amounts, may disrupt efficient portfolio management.
In particular, a Fund may have difficulty implementing its long-term investment strategies if it is forced to maintain a higher
level of its assets in cash to accommodate significant short-term trading activity. Excessive purchases and sales or exchanges
of a Fund's shares may also force a Fund to sell portfolio securities at inopportune times to raise cash to accommodate short-term
trading activity. This could adversely affect a Fund's performance if, for example, a Fund incurs increased brokerage costs
and realization of taxable capital gains without attaining any investment advantage.
A fund that invests significantly in foreign securities may be particularly susceptible to short-term trading strategies.
This is because foreign securities are typically traded on markets that close well before the time a fund calculates its NAV
(normally 4:00 p.m. Eastern time). Developments that occur between the closing of the foreign market and the fund's NAV calculation
may affect the value of these foreign securities. The time-zone differences among international stock markets can allow a
shareholder engaging in a short-term trading strategy to exploit differences in fund share prices that are based on closing
prices of foreign securities established some time before a fund calculates its own share price.
Any fund that invests in securities that are thinly traded, traded infrequently, or relatively illiquid has the risk that
the securities prices used to calculate the fund's NAV may not accurately reflect current market values. A shareholder may
seek to engage in short-term trading to take advantage of these pricing differences. Funds that may be adversely affected
by such arbitrage include, in particular, funds that significantly invest in small-cap securities, technology and other specific
industry sector securities, and in certain fixed income securities, such as high yield bonds, asset-backed securities, or
municipal bonds.
Transaction monitoring procedures
Each Fund, through its transfer agent, maintains surveillance procedures designed to detect excessive or short-term trading
in Fund shares. This monitoring process involves several factors, which include scrutinizing transactions in Fund shares for
violations of the Funds' market timing policy or other patterns of short-term or excessive trading. For purposes of these
transaction monitoring procedures, the Funds may consider trading activity by multiple accounts under common ownership, control
or influence to be trading by a single entity. Trading activity identified by these factors, or as a result of any other available
information, will be evaluated to determine whether such activity might constitute market timing. These procedures may be
modified from time to time to improve the detection of excessive or short-term trading or to address other concerns. Such
changes may be necessary or appropriate, for example, to deal with issues specific to certain retirement plans, plan exchange
limits, U.S. Department of Labor regulations, certain automated or pre-established exchange, asset allocation or dollar cost
averaging programs, or omnibus account arrangements.
Omnibus account arrangements are common forms of holding shares of a Fund, particularly among certain broker/dealers and other
financial intermediaries, including sponsors of retirement plans and variable insurance products. The Funds will attempt to
have financial intermediaries apply the Funds' monitoring procedures to these omnibus accounts and to the individual participants
in such accounts. However, to the extent that a financial intermediary is not able or willing to monitor or enforce the Funds'
frequent trading policy with respect to an omnibus account, the Funds or their agents may require the financial intermediary
to impose its frequent trading policy, rather than the Funds' policy, to shareholders investing in the Fund through the financial
intermediary. In addition, a Fund or its transfer agent may enter into shareholder information agreements with such financial
intermediaries under which a Fund may receive information (such as taxpayer identification numbers and Fund transaction activity)
in order to identify frequent trading activity.
A financial intermediary may impose different requirements or have additional restrictions on the frequency of trading than
the Funds. Such restrictions may include without limitation, requiring the trades to be placed by U.S. mail, prohibiting purchases
for a designated period of time (typically 30 to 90 days) by investors who have recently purchased or redeemed Fund shares,
and similar restrictions. The Funds' ability to impose such restrictions with respect to accounts traded through particular
financial intermediaries may vary depending on systems capabilities, applicable contractual and legal restrictions, and cooperation
of those financial intermediaries.
You should consult your financial intermediary regarding the application of such restrictions and to determine whether your
financial intermediary imposes any additional or different limitations. In an effort to discourage market timers in such accounts,
the Funds may consider enforcement against market timers at the participant level and at the omnibus level, up to and including
termination of the omnibus account's authorization to purchase Fund shares.
Limitations on ability to detect and curtail market timing
Shareholders seeking to engage in market timing may employ a variety of strategies to avoid detection and, despite the efforts
of the Funds and their agents to detect market timing in Fund shares, there is no guarantee that the Funds will be able to
identify these shareholders or curtail their trading practices. In particular, the Funds may not be able to detect market
timing attributable to a particular investor who effects purchase, redemption and/or exchange activity in Fund shares through
omnibus accounts. The difficulty of detecting market timing may be further compounded if these entities utilize multiple tiers
or omnibus accounts.
Dividends, distributions, and taxes
Dividends and distributions
Each Fund intends to qualify each year as a regulated investment company under the Internal Revenue Code. As a regulated investment
company, a Fund generally pays no federal income tax on the income and gains it distributes to you. Each Fund expects to declare
dividends daily and distribute all of its net investment income, if any, to shareholders as dividends monthly. Each Fund will
distribute net realized capital gains, if any, at least annually usually in December. A Fund may distribute such income dividends
and capital gains more frequently, if necessary, in order to reduce or eliminate federal excise or income taxes on the Fund.
The amount of any distribution will vary, and there is no guarantee a Fund will pay either an income dividend or a capital
gains distribution. We automatically reinvest all dividends and any capital gains, unless you direct us to do otherwise.
Annual statements
Each year, the Funds will send you an annual statement (Form 1099) of your account activity to assist you in completing your
federal, state and local tax returns. Your statement will show the exempt-interest dividends you received and the separately-identified
portion that constitutes an item of tax preference for purposes of the alternative minimum tax (tax-exempt AMT interest).
Distributions declared in December to shareholders of record in such month, but paid in January, are taxable as if they were
paid in December. Prior to issuing your statement, the Funds make every effort to reduce the number of corrected forms mailed
to you. However, if a Fund finds it necessary to reclassify its distributions or adjust the cost basis of any covered shares
sold or exchanged after you receive your tax statement, the Fund will send you a corrected Form 1099.
Avoid "buying a dividend"
At the time you purchase your Fund shares, a Fund's NAV may reflect undistributed income, undistributed capital gains, or
net unrealized appreciation in value of portfolio securities held by it. For taxable investors, a subsequent distribution
to you of such amounts, although constituting a return of your investment, would be taxable. Buying shares in a Fund just
before it declares an income dividend or capital gains distribution is sometimes known as "buying a dividend."
Tax considerations
Fund distributions
. Each Fund expects, based on its investment objective and strategies, that its distributions, if any, will be exempt from
regular federal income tax. Each Fund may also make distributions that are taxable as ordinary income, capital gains, or some
combination of both as described below.
Exempt-interest dividends
. Dividends from the Funds will consist primarily of exempt-interest dividends from interest earned on municipal securities.
In general, exempt-interest dividends are exempt from regular federal income tax. Exempt-interest dividends from interest
earned on municipal securities of a state, or its political subdivisions, generally are exempt from that state's personal
income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states.
Because of these tax exemptions, a tax-free fund may not be a suitable investment for retirement plans and other tax-exempt
investors. Corporate shareholders should note that these dividends may be fully taxable in states that impose corporate franchise
taxes and, possibly, corporate income taxes, and they should consult with their tax advisors about the taxability of this
income before investing in a Fund.
Exempt-interest dividends are taken into account when determining the taxable portion of your social security or railroad
retirement benefits. Each Fund may invest a portion of its assets in private activity bonds. The income from these bonds is
a tax preference item when determining your federal alternative minimum tax, unless such bonds were issued in 2009 or 2010.
While each Fund endeavors to purchase only bona fide tax-exempt securities, there are risks that: (i) a security issued as
tax-exempt may be reclassified by the IRS, or a state tax authority, as taxable and/or (ii) future legislative, administrative,
or court actions could adversely impact the qualification of income from a tax-exempt security as tax-free. Such reclassifications
or actions could cause interest from a security to become taxable, possibly retroactively, subjecting you to increased tax
liability. In addition, such reclassifications or actions could cause the value of a security, and therefore, the value of
a Fund's shares, to decline.
Taxable income dividends
. Each Fund may invest a portion of its assets in securities that pay income that is not tax-exempt. Each Fund also may distribute
to you any market discount and net short-term capital gains from the sale of its portfolio securities. If you are a taxable
investor, Fund distributions from this income are taxable to you as ordinary income, and generally will not be treated as
qualified dividend income subject to reduced rates of taxation for individuals. Distributions of ordinary income are taxable
whether you reinvest your distributions in additional Fund shares or receive them in cash.
Capital gain distributions
. Each Fund also may realize net long-term capital gains from the sale of its portfolio securities. Fund distributions of
long-term capital gains are taxable to you as long-term capital gains no matter how long you have owned your shares.
Sales or redemptions of Fund shares
. A sale or redemption of Fund shares is a taxable event and, accordingly, a capital gain or loss may be recognized. For tax
purposes, an exchange of your Fund shares for shares of a different Delaware Investments
®
Fund is the same as a sale. Beginning with the 2012 calendar year, the Funds will be required to report to you and the IRS
annually on Form 1099-B not only the gross proceeds of Fund shares you sell or redeem but also the cost basis for shares purchased
or acquired on or after January 1, 2012 ("covered shares"). Cost basis will be calculated using a Fund's default method, unless
you instruct the Fund to use a different calculation method. Shareholders should carefully review the cost basis information
provided by the Funds and make any additional basis, holding period or other adjustments that are required when reporting
these amounts on their federal income tax returns. If your account is held by your investment representative (financial advisor
or other broker), please contact that representative with respect to reporting of cost basis and available elections for your
account. Tax-advantaged retirement accounts will not be affected. Additional information and updates regarding cost basis
reporting and available shareholder elections will be on Delaware Investments' website at delawareinvestments.com as the information
becomes available.
Medicare tax
. For taxable years beginning after December 31, 2012, an additional 3.8% Medicare tax will be imposed on certain net investment
income (including ordinary dividends and capital gain distributions received from a Fund and net gains from redemptions or
other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person's "modified
adjusted gross income" (in the case of an individual) or "adjusted gross income" (in the case of an estate or trust) exceeds
a threshold amount. Net investment income does not include exempt-interest dividends.
Backup withholding
. By law, if you do not provide a Fund with your proper taxpayer identification number and certain required certifications,
you may be subject to backup withholding on any distributions of income, capital gains, or proceeds from the sale of your
shares. A Fund also must withhold if the IRS instructs it to do so. When withholding is required, the amount will be 28% of
any distributions or proceeds paid (for distributions and proceeds paid after December 31, 2012, the rate is scheduled to
rise to 31% unless the 28% rate is extended, possibly retroactively to January 1, 2013, or made permanent).
State and local taxes
. Fund distributions and gains from the sale or exchange of your Fund shares generally are subject to state and local taxes.
Non-U.S. investors
. Non-U.S. investors may be subject to U.S. withholding tax at a 30% or lower treaty rate and U.S. estate tax and are subject
to special U.S. tax certification requirements to avoid backup withholding and claim any treaty benefits. Exemptions from
U.S. withholding tax are provided for capital gain dividends paid by a Fund from long-term capital gains, if any, exempt-interest
dividends, and, with respect to taxable years of a Fund that begin before January 1, 2012 (unless such sunset date is extended,
possibly retroactively to January 1, 2012, or made permanent), interest-related dividends paid by a Fund from its qualified
net interest income from U.S. sources and short-term capital gain dividends. However, notwithstanding such exemptions from
U.S. withholding at the source, any such dividends and distributions of income and capital gains will be subject to backup
withholding at a rate of 28% (or the then applicable rate) if you fail to properly certify that you are not a U.S. person.
Other Reporting and Withholding Requirements
. The Foreign Account Tax Compliance Act ("FATCA") requires the reporting to the Internal Revenue Service of certain direct
and indirect ownership of foreign financial accounts by U.S. persons. Failure to provide this required information can result
in a generally nonrefundable 30% tax on: (a) income dividends paid by a Fund after December 31, 2013 and (b) certain capital
gain distributions (including proceeds arising from the sale Fund shares) paid by a Fund after December 31, 2016 to certain
"foreign financial institutions" and "non-financial foreign entities."
This discussion of "Dividends, distributions, and taxes" is not intended or written to be used as tax advice. Because everyone's
tax situation is unique, you should consult your tax professional about federal, state, local, or foreign tax consequences
before making an investment in a Fund.
Financial highlights
The financial highlights tables are intended to help you understand each Fund's financial performance for the past five years.
Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate
that an investor would have earned or lost on an investment in each Fund (assuming reinvestment of all dividends and distributions).
The information for the 2012, 2011, and 2010 fiscal years has been audited by PricewaterhouseCoopers LLP, independent registered
public accounting firm, whose reports, along with the Funds' financial statements, are included in the annual reports, which
are available upon request by calling 800 523-1918. For the fiscal years prior to 2010, the Funds' prior independent registered
public accounting firm audited the Funds' financial statements.
Delaware Tax-Free USA Fund
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
Year ended
8/31/08
|
Net asset value, beginning of period
|
$11.300
|
$11.630
|
$10.890
|
$10.970
|
$11.230
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.484
|
0.503
|
0.522
|
0.479
|
0.462
|
Net realized and unrealized gain (loss)
|
0.959
|
(0.330)
|
0.740
|
(0.081)
|
(0.260)
|
Total from investment operations
|
1.443
|
0.173
|
1.262
|
0.398
|
0.202
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.483)
|
(0.503)
|
(0.522)
|
(0.478)
|
(0.462)
|
Total dividends and distributions
|
(0.483)
|
(0.503)
|
(0.522)
|
(0.478)
|
(0.462)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.260
|
$11.300
|
$11.630
|
$10.890
|
$10.970
|
|
|
|
|
|
|
Total return
1
|
13.01%
|
1.65%
|
11.85%
|
3.91%
|
1.82%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$604,415
|
$589,175
|
$581,931
|
$536,420
|
$510,822
|
Ratio of expenses to average net assets
|
0.80%
|
0.80%
|
0.80%
|
0.84%
|
0.85%
|
Ratio of expenses to average net assets prior to fees waived
|
0.93%
|
0.94%
|
0.95%
|
0.97%
|
0.94%
|
Ratio of net investment income to average net assets
|
4.11%
|
4.52%
|
4.64%
|
4.60%
|
4.13%
|
Ratio of net investment income to average net assets
prior to fees waived
|
3.98%
|
4.38%
|
4.49%
|
4.47%
|
4.04%
|
Portfolio turnover
|
52%
|
49%
|
32%
|
66%
|
28%
|
1
|
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.
|
Delaware Tax-Free USA Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.290
|
$11.620
|
$10.880
|
$10.960
|
$11.230
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.395
|
0.418
|
0.437
|
0.399
|
0.378
|
Net realized and unrealized gain (loss)
|
0.969
|
(0.330)
|
0.740
|
(0.080)
|
(0.270)
|
Total from investment operations
|
1.364
|
0.088
|
1.177
|
0.319
|
0.108
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.394)
|
(0.418)
|
(0.437)
|
(0.399)
|
(0.378)
|
Total dividends and distributions
|
(0.394)
|
(0.418)
|
(0.437)
|
(0.399)
|
(0.378)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.260
|
$11.290
|
$11.620
|
$10.880
|
$10.960
|
|
|
|
|
|
|
Total return
1
|
12.27%
|
0.89%
|
11.01%
|
3.13%
|
0.96%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$1,827
|
$2,682
|
$5,373
|
$8,168
|
$11,812
|
Ratio of expenses to average net assets
|
1.56%
|
1.56%
|
1.56%
|
1.60%
|
1.61%
|
Ratio of expenses to average net assets prior to fees waived
|
1.69%
|
1.70%
|
1.71%
|
1.73%
|
1.70%
|
Ratio of net investment income to average net assets
|
3.35%
|
3.76%
|
3.88%
|
3.84%
|
3.37%
|
Ratio of net investment income to average net assets
prior to fees waived
|
3.22%
|
3.62%
|
3.73%
|
3.71%
|
3.28%
|
Portfolio turnover
|
52%
|
49%
|
32%
|
66%
|
28%
|
1
|
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.
|
Delaware Tax-Free USA Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.300
|
$11.630
|
$10.890
|
$10.970
|
$11.230
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.395
|
0.419
|
0.437
|
0.399
|
0.377
|
Net realized and unrealized gain (loss)
|
0.969
|
(0.330)
|
0.740
|
(0.080)
|
(0.260)
|
Total from investment operations
|
1.364
|
0.089
|
1.177
|
0.319
|
0.117
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.394)
|
(0.419)
|
(0.437)
|
(0.399)
|
(0.377)
|
Total dividends and distributions
|
(0.394)
|
(0.419)
|
(0.437)
|
(0.399)
|
(0.377)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.270
|
$11.300
|
$11.630
|
$10.890
|
$10.970
|
|
|
|
|
|
|
Total return
1
|
12.26%
|
0.88%
|
11.00%
|
3.13%
|
0.96%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$36,840
|
$30,552
|
$30,302
|
$20,542
|
$16,641
|
Ratio of expenses to average net assets
|
1.56%
|
1.56%
|
1.56%
|
1.60%
|
1.61%
|
Ratio of expenses to average net assets prior to fees waived
|
1.69%
|
1.70%
|
1.71%
|
1.73%
|
1.70%
|
Ratio of net investment income to average net assets
|
3.35%
|
3.76%
|
3.88%
|
3.84%
|
3.37%
|
Ratio of net investment income to average net assets
prior to fees waived
|
3.22%
|
3.62%
|
3.73%
|
3.71%
|
3.28%
|
Portfolio turnover
|
52%
|
49%
|
32%
|
66%
|
28%
|
1
|
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.
|
Delaware Tax-Free USA Fund
|
|
|
Year ended
|
|
Institutional Class shares
|
8/31/12
|
8/31/11
|
8/31/10
|
12/31/08
1
to 8/31/09
|
Net asset value, beginning of period
|
$11.380
|
$11.720
|
$ 10.890
|
$ 10.020
|
Income (loss) from investment operations:
|
|
|
|
|
Net investment income
|
0.517
|
0.534
|
0.549
|
0.322
|
Net realized and unrealized gain (loss)
|
0.979
|
(0.340)
|
0.830
|
0.870
|
Total from investment operations
|
1.496
|
0.194
|
1.379
|
1.192
|
Less dividends and distributions from:
|
|
|
|
|
Net investment income
|
(0.516)
|
(0.534)
|
(0.549)
|
(0.322)
|
Total dividends and distributions
|
(0.516)
|
(0.534)
|
(0.549)
|
(0.322)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.360
|
$11.380
|
$ 11.720
|
$ 10.890
|
|
|
|
|
|
Total return
2
|
13.41%
|
1.83%
|
12.84%
|
12.15%
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$18,187
|
$9,242
|
$ 7,634
|
$ 1
|
Ratio of expenses to average net assets
|
0.56%
|
0.56%
|
0.56%
|
0.60%
|
Ratio of expenses to average net assets prior to fees waived
|
0.69%
|
0.70%
|
0.71%
|
0.73%
|
Ratio of net investment income to average net assets
|
4.35%
|
4.76%
|
4.88%
|
4.84%
|
Ratio of net investment income to average net assets
prior to fees waived
|
4.22%
|
4.62%
|
4.73%
|
4.71%
|
Portfolio turnover
|
52%
|
49%
|
32%
|
66%
3
|
1
|
Date of commencement of operations; ratios have been annualized and total return has not been annualized.
|
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
|
Portfolio turnover is representative of the Fund for the entire period.
|
Delaware Tax-Free USA Intermediate Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.850
|
$12.110
|
$11.460
|
$11.250
|
$11.210
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.362
|
0.381
|
0.423
|
0.388
|
0.383
|
Net realized and unrealized gain (loss)
|
0.560
|
(0.260)
|
0.650
|
0.210
|
0.041
|
Total from investment operations
|
0.922
|
0.121
|
1.073
|
0.598
|
0.424
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.362)
|
(0.381)
|
(0.423)
|
(0.388)
|
(0.384)
|
Total dividends and distributions
|
(0.362)
|
(0.381)
|
(0.423)
|
(0.388)
|
(0.384)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.410
|
$11.850
|
$12.110
|
$11.460
|
$11.250
|
|
|
|
|
|
|
Total return
1
|
7.89%
|
1.10%
|
9.53%
|
5.49%
|
3.83%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$464,540
|
$444,780
|
$481,004
|
$459,782
|
$407,729
|
Ratio of expenses to average net assets
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
0.75%
|
Ratio of expenses to average net assets prior to fees waived
|
0.97%
|
0.98%
|
1.00%
|
1.03%
|
1.03%
|
Ratio of net investment income to average net assets
|
2.98%
|
3.27%
|
3.59%
|
3.51%
|
3.38%
|
Ratio of net investment income to average net assets
prior to fees waived
|
2.76%
|
3.04%
|
3.34%
|
3.23%
|
3.10%
|
Portfolio turnover
|
39%
|
43%
|
27%
|
47%
|
28%
|
1
|
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.
|
Delaware Tax-Free USA Intermediate Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.840
|
$12.100
|
$11.450
|
$11.240
|
$11.200
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.259
|
0.282
|
0.324
|
0.294
|
0.287
|
Net realized and unrealized gain (loss)
|
0.550
|
(0.260)
|
0.650
|
0.210
|
0.041
|
Total from investment operations
|
0.809
|
0.022
|
0.974
|
0.504
|
0.328
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.259)
|
(0.282)
|
(0.324)
|
(0.294)
|
(0.288)
|
Total dividends and distributions
|
(0.259)
|
(0.282)
|
(0.324)
|
(0.294)
|
(0.288)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.390
|
$11.840
|
$12.100
|
$11.450
|
$11.240
|
|
|
|
|
|
|
Total return
1
|
6.90%
|
0.25%
|
8.62%
|
4.61%
|
2.95%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$65
|
$249
|
$511
|
$861
|
$1,272
|
Ratio of expenses to average net assets
|
1.60%
|
1.60%
|
1.60%
|
1.60%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.67%
|
1.68%
|
1.70%
|
1.73%
|
1.73%
|
Ratio of net investment income to average net assets
|
2.13%
|
2.42%
|
2.74%
|
2.66%
|
2.53%
|
Ratio of net investment income to average net assets
prior to fees waived
|
2.06%
|
2.34%
|
2.64%
|
2.53%
|
2.40%
|
Portfolio turnover
|
39%
|
43%
|
27%
|
47%
|
28%
|
1
|
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.
|
Delaware Tax-Free USA Intermediate Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$11.850
|
$12.110
|
$11.450
|
$11.240
|
$11.200
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.258
|
0.282
|
0.323
|
0.294
|
0.287
|
Net realized and unrealized gain (loss)
|
0.550
|
(0.260)
|
0.660
|
0.210
|
0.041
|
Total from investment operations
|
0.808
|
0.022
|
0.983
|
0.504
|
0.328
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.258)
|
(0.282)
|
(0.323)
|
(0.294)
|
(0.288)
|
Total dividends and distributions
|
(0.258)
|
(0.282)
|
(0.323)
|
(0.294)
|
(0.288)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.400
|
$11.850
|
$12.110
|
$11.450
|
$11.240
|
|
|
|
|
|
|
Total return
1
|
6.89%
|
0.25%
|
8.70%
|
4.60%
|
2.95%
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$75,887
|
$60,398
|
$65,343
|
$40,232
|
$24,880
|
Ratio of expenses to average net assets
|
1.60%
|
1.60%
|
1.60%
|
1.60%
|
1.60%
|
Ratio of expenses to average net assets prior to fees waived
|
1.67%
|
1.68%
|
1.70%
|
1.73%
|
1.73%
|
Ratio of net investment income to average net assets
|
2.13%
|
2.42%
|
2.74%
|
2.66%
|
2.53%
|
Ratio of net investment income to average net assets
prior to fees waived
|
2.06%
|
2.34%
|
2.64%
|
2.53%
|
2.40%
|
Portfolio turnover
|
39%
|
43%
|
27%
|
47%
|
28%
|
1
|
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.
|
Delaware Tax-Free USA Intermediate Fund
|
|
|
Year ended
|
|
Institutional Class shares
|
8/31/12
|
8/31/11
|
8/31/10
|
12/31/08
1
to 8/31/09
|
Net asset value, beginning of period
|
$11.970
|
$12.230
|
$ 11.460
|
$ 10.800
|
Income (loss) from investment operations:
|
|
|
|
|
Net investment income
|
0.384
|
0.402
|
0.424
|
0.269
|
Net realized and unrealized gain (loss)
|
0.560
|
(0.260)
|
0.770
|
0.660
|
Total from investment operations
|
0.944
|
0.142
|
1.194
|
0.929
|
Less dividends and distributions from:
|
|
|
|
|
Net investment income
|
(0.384)
|
(0.402)
|
(0.424)
|
(0.269)
|
Total dividends and distributions
|
(0.384)
|
(0.402)
|
(0.424)
|
(0.269)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$12.530
|
$11.970
|
$ 12.230
|
$ 11.460
|
|
|
|
|
|
Total return
2
|
8.00%
|
1.28%
|
10.62%
|
8.68%
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$333,033
|
$281,256
|
$ 192,026
|
$ 1
|
Ratio of expenses to average net assets
|
0.60%
|
0.60%
|
0.60%
|
0.60%
|
Ratio of expenses to average net assets prior to fees waived
|
0.67%
|
0.68%
|
0.70%
|
0.73%
|
Ratio of net investment income to average net assets
|
3.13%
|
3.42%
|
3.74%
|
3.65%
|
Ratio of net investment income to average net assets
prior to fees waived
|
3.06%
|
3.34%
|
3.64%
|
3.52%
|
Portfolio turnover
|
39%
|
43%
|
27%
|
47%
3
|
1
|
Date of commencement of operations; ratios have been annualized and total return has not been annualized.
|
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
|
Portfolio turnover is representative of the Fund for the entire period.
|
Delaware National High-Yield Municipal Bond Fund
|
|
|
|
|
Year ended
|
Class A shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$9.620
|
$10.090
|
$8.920
|
$9.510
|
$10.030
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.496
|
0.479
|
0.513
|
0.505
|
0.484
|
Net realized and unrealized gain (loss)
|
1.127
|
(0.474)
|
1.169
|
(0.595)
|
(0.520)
|
Total from investment operations
|
1.623
|
0.005
|
1.682
|
(0.090)
|
(0.036)
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.493)
|
(0.475)
|
(0.512)
|
(0.500)
|
(0.484)
|
Total dividends and distributions
|
(0.493)
|
(0.475)
|
(0.512)
|
(0.500)
|
(0.484)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$10.750
|
$9.620
|
$10.090
|
$8.920
|
$9.510
|
|
|
|
|
|
|
Total return
1
|
17.28%
|
0.23%
|
19.29%
|
(0.38%)
|
(0.37%)
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$228,829
|
$140,629
|
$139,628
|
$68,812
|
$67,762
|
Ratio of expenses to average net assets
|
0.85%
|
0.85%
|
0.85%
|
0.90%
|
0.90%
|
Ratio of expenses to average net assets prior to fees waived
|
0.99%
|
1.01%
|
1.04%
|
1.08%
|
1.04%
|
Ratio of net investment income to average net assets
|
4.83%
|
5.03%
|
5.24%
|
6.06%
|
4.94%
|
Ratio of net investment income to average net assets
prior to fees waived
|
4.69%
|
4.87%
|
5.05%
|
5.88%
|
4.80%
|
Portfolio turnover
|
34%
|
57%
|
37%
|
67%
|
24%
|
1
|
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.
|
Delaware National High-Yield Municipal Bond Fund
|
|
|
|
|
Year ended
|
Class B shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$9.640
|
$10.110
|
$8.940
|
$9.530
|
$10.050
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.421
|
0.408
|
0.442
|
0.440
|
0.410
|
Net realized and unrealized gain (loss)
|
1.127
|
(0.474)
|
1.169
|
(0.592)
|
(0.520)
|
Total from investment operations
|
1.548
|
(0.066)
|
1.611
|
(0.152)
|
(0.110)
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.418)
|
(0.404)
|
(0.441)
|
(0.438)
|
(0.410)
|
Total dividends and distributions
|
(0.418)
|
(0.404)
|
(0.441)
|
(0.438)
|
(0.410)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$10.770
|
$9.640
|
$10.110
|
$8.940
|
$9.530
|
|
|
|
|
|
|
Total return
1
|
16.39%
|
(0.51%)
|
18.37%
|
(1.11%)
|
(1.12%)
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$775
|
$768
|
$1,118
|
$1,448
|
$3,135
|
Ratio of expenses to average net assets
|
1.60%
|
1.60%
|
1.60%
|
1.65%
|
1.65%
|
Ratio of expenses to average net assets prior to fees waived
|
1.74%
|
1.76%
|
1.79%
|
1.83%
|
1.79%
|
Ratio of net investment income to average net assets
|
4.08%
|
4.28%
|
4.49%
|
5.31%
|
4.19%
|
Ratio of net investment income to average net assets
prior to fees waived
|
3.94%
|
4.12%
|
4.30%
|
5.13%
|
4.05%
|
Portfolio turnover
|
34%
|
57%
|
37%
|
67%
|
24%
|
1
|
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.
|
Delaware National High-Yield Municipal Bond Fund
|
|
|
|
|
Year ended
|
Class C shares
|
8/31/12
|
8/31/11
|
8/31/10
|
8/31/09
|
8/31/08
|
Net asset value, beginning of period
|
$9.660
|
$10.130
|
$8.960
|
$9.550
|
$10.070
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.422
|
0.409
|
0.442
|
0.441
|
0.410
|
Net realized and unrealized gain (loss)
|
1.137
|
(0.474)
|
1.169
|
(0.592)
|
(0.520)
|
Total from investment operations
|
1.559
|
(0.065)
|
1.611
|
(0.151)
|
(0.110)
|
Less dividends and distributions from:
|
|
|
|
|
|
Net investment income
|
(0.419)
|
(0.405)
|
(0.441)
|
(0.439)
|
(0.410)
|
Total dividends and distributions
|
(0.419)
|
(0.405)
|
(0.441)
|
(0.439)
|
(0.410)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$10.800
|
$9.660
|
$10.130
|
$8.960
|
$9.550
|
|
|
|
|
|
|
Total return
1
|
16.47%
|
(0.51%)
|
18.33%
|
(1.11%)
|
(1.12%)
|
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$69,634
|
$44,497
|
$36,384
|
$7,770
|
$6,998
|
Ratio of expenses to average net assets
|
1.60%
|
1.60%
|
1.60%
|
1.65%
|
1.65%
|
Ratio of expenses to average net assets prior to fees waived
|
1.74%
|
1.76%
|
1.79%
|
1.83%
|
1.79%
|
Ratio of net investment income to average net assets
|
4.08%
|
4.28%
|
4.49%
|
5.31%
|
4.19%
|
Ratio of net investment income to average net assets
prior to fees waived
|
3.94%
|
4.12%
|
4.30%
|
5.13%
|
4.05%
|
Portfolio turnover
|
34%
|
57%
|
37%
|
67%
|
24%
|
1
|
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.
|
Delaware National High-Yield Municipal Bond Fund
|
|
|
Year ended
|
|
Institutional Class shares
|
8/31/12
|
8/31/11
|
8/31/10
|
12/31/08
1
to 8/31/09
|
Net asset value, beginning of period
|
$9.710
|
$10.190
|
$ 8.930
|
$ 7.590
|
Income (loss) from investment and operations:
|
|
|
|
|
Net investment income
|
0.527
|
0.506
|
0.534
|
0.342
|
Net realized and unrealized gain (loss)
|
1.137
|
(0.484)
|
1.259
|
1.338
|
Total from investment operations
|
1.664
|
0.022
|
1.793
|
1.680
|
Less dividends and distributions from:
|
|
|
|
|
Net investment income
|
(0.524)
|
(0.502)
|
(0.533)
|
(0.340)
|
Total dividends and distributions
|
(0.524)
|
(0.502)
|
(0.533)
|
(0.340)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
$10.850
|
$9.710
|
$ 10.190
|
$ 8.930
|
|
|
|
|
|
Total return
2
|
17.57%
|
0.41%
|
20.55%
|
22.55%
|
|
|
|
|
|
Ratios and supplemental data:
|
|
|
|
|
Net assets, end of period (000 omitted)
|
$125,661
|
$44,364
|
$ 16,840
|
$ 1
|
Ratio of expenses to average net assets
|
0.60%
|
0.60%
|
0.60%
|
0.65%
|
Ratio of expenses to average net assets prior to fees waived
|
0.74%
|
0.76%
|
0.79%
|
0.85%
|
Ratio of net investment income to average net assets
|
5.08%
|
5.28%
|
5.49%
|
6.41%
|
Ratio of net investment income to average net assets
prior to fees waived
|
4.94%
|
5.12%
|
5.30%
|
6.21%
|
Portfolio turnover
|
34%
|
57%
|
37%
|
67%
3
|
1
|
Date of commencement of operations; ratios have been annualized and total return has not been annualized.
|
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
|
Portfolio turnover is representative of the Fund for the entire period.
|
How to read the financial highlights
Net investment income (loss)
Net investment income (loss) includes dividend and interest income earned from a fund's investments; it is calculated after
expenses have been deducted.
Net realized and unrealized gain (loss) on investments
A realized gain occurs when we sell an investment at a profit, while a realized loss occurs when we sell an investment at
a loss. When an investment increases or decreases in value but we do not sell it, we record an unrealized gain or loss. The
amount of realized gain per share, if any, that we pay to shareholders would be listed under "Less dividends and distributions
from: Net realized gain on investments."
Net asset value (NAV)
This is the value of a mutual fund share, calculated by dividing the net assets by the number of shares outstanding.
Total return
This represents the rate that an investor would have earned or lost on an investment in a fund. In calculating this figure
for the financial highlights table, we include applicable fee waivers, exclude front-end sales charges and contingent deferred
sales charges, and assume the shareholder has reinvested all dividends and realized gains.
Net assets
Net assets represent the total value of all the assets in a fund's portfolio, less any liabilities, that are attributable
to that class of the fund.
Ratio of expenses to average net assets
The expense ratio is the percentage of net assets that a fund pays annually for operating expenses and management fees. These
expenses include accounting and administration expenses, services for shareholders, and similar expenses.
Ratio of net investment income (loss) to average net assets
We determine this ratio by dividing net investment income (loss) by average net assets.
Portfolio turnover
This figure tells you the amount of trading activity in a fund's portfolio. A turnover rate of 100% would occur if, for example,
a fund bought and sold all of the securities in its portfolio once in the course of a year or frequently traded a single security.
A high rate of portfolio turnover in any year may increase brokerage commissions paid and could generate taxes for shareholders
on realized investment gains.
Additional information
Contact information
-
Website:
delawareinvestments.com
-
Shareholder Service Center: 800 523-1918 (representatives available weekdays from 8:30 a.m. to 6:00 p.m. Eastern time)
-
For fund information, literature, price, yield, and performance figures.
-
For information on existing regular investment accounts and retirement plan accounts including wire investments, wire redemptions,
telephone redemptions, and telephone exchanges.
-
Automated telephone service: 800 523-1918 (seven days a week, 24 hours a day)
-
Written correspondence: P.O. Box 9876, Providence, RI 02940-8076 or 4400 Computer Drive, Westborough, MA 01581-1722.
Additional information about the Funds' investments
is available in their annual and semiannual shareholder reports. In the Funds' annual shareholder report, you will find a
discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the
period covered by the report. You can find more information about the Funds in their current SAI, which is filed electronically
with the SEC, and which is legally a part of this Prospectus (it is incorporated by reference). To receive a free copy of
the SAI, or the annual or semiannual reports, or if you have any questions about investing in the Funds, write to us at P.O.
Box 9876, Providence, RI 02940-8076 by regular mail or 4400 Computer Drive, Westborough, MA 01581-1722 by overnight courier
service, or call toll-free 800 523-1918. The SAI and shareholder reports are available, free of charge, through the Funds'
website (delawareinvestments.com). You may also obtain additional information about the Funds from your financial advisor.
You can find reports and other information about the Funds on the EDGAR database on the SEC website (sec.gov). You can get
copies of this information, after paying a duplication fee, by e-mailing the SEC at publicinfo@sec.gov or by writing to the
Public Reference Section of the SEC,
100 F Street, NE, Washington, DC 20549-1520. Information about the Funds, including their SAI, can be reviewed and copied
at the SEC's Public Reference Room in Washington, D.C. For information on the Public Reference Room, call the SEC at 202 551-8090.
PR-011
[8/12] PDF 18355 [12/12]
Investment Company Act numbers: 811-03850 and 811-07742
|