Item 1. Reports to Stockholders
Annual
report
Closed-end fund
Delaware Investments® National Municipal Income Fund
March 31, 2023
Table of contents
Macquarie Asset Management (MAM) is the asset
management division of Macquarie Group. MAM is a full-service asset manager offering a diverse range of products across public and private
markets including fixed income, equities, multi-asset solutions, private credit, infrastructure, renewables, natural assets, real estate,
and asset finance. The Public Investments business is a part of MAM and includes the following investment advisers: Macquarie Investment
Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage
AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, and Macquarie Investment Management
Europe S.A.
Unless otherwise noted, views expressed herein
are current as of March 31, 2023, and subject to change for events occurring after such date.
The Fund is not FDIC insured and is not guaranteed.
It is possible to lose the principal amount invested.
Advisory services provided by Delaware Management
Company, a series of MIMBT, a US registered investment advisor.
Other than Macquarie Bank Limited ABN 46 008 583
542 (“Macquarie Bank”), any Macquarie Group entity noted in this document is not an authorized deposit-taking institution for
the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these other Macquarie Group entities do not represent
deposits or other liabilities of Macquarie Bank. Macquarie Bank does not guarantee or otherwise provide assurance in respect of the obligations
of these other Macquarie Group entities. In addition, if this document relates to an investment, (a) the investor is subject to investment
risk including possible delays in repayment and loss of income and principal invested and (b) none of Macquarie Bank or any other Macquarie
Group entity guarantees any particular rate of return on or the performance of the investment, nor do they guarantee repayment of capital
in respect of the investment.
The Fund is governed by US laws and regulations.
All third-party marks cited are the property of their respective
owners.
© 2023 Macquarie Management Holdings, Inc.
Portfolio management review
Delaware Investments® National Municipal Income Fund
March 31, 2023 (Unaudited)
Performance preview (for the year ended March 31, 2023) |
|
|
Delaware Investments National Municipal Income Fund @ market price |
1-year return |
-11.51% |
Delaware Investments National Municipal Income Fund @ NAV |
1-year return |
-9.25% |
Lipper Closed-end General and Insured Municipal Debt Funds Average (Leveraged) @ market price |
1-year return |
-9.63% |
Lipper Closed-end General and Insured Municipal Debt Funds Average (Leveraged) @ NAV |
1-year return |
-5.50% |
Past performance does not guarantee future results.
Performance at market price will differ from performance
at net asset value (NAV). Although market price returns tend to reflect investment results over time, during shorter periods returns at
market price can also be influenced by factors such as changing views about the Fund, market conditions, supply and demand for the Fund’s
shares, or changes in the Fund’s distribution rate.
For complete, annualized performance for Delaware
Investments National Municipal Income Fund, please see the table on page 3.
Economic backdrop
For the fiscal year ended March 31, 2023, and
especially in its first half, inflation in the US remained a major concern for policy makers and investors. Higher energy costs, worsened
by Russia’s invasion of Ukraine in February 2022, and disruptions in the supply chain, primarily drove the rise in prices. In June
2022, the US Consumer Price Index (CPI) peaked at an annual increase of 9.1%, the fastest rise in more than 40 years. However, this trend
meaningfully slowed during the final three quarters of this fiscal year. By March 2023, the annual CPI increase had dropped to 5.0% –
still historically high but the lowest rate of inflation in more than a year, as interest rate hikes by the US Federal Reserve appeared
to have their desired impact.
The US central bank took decisive action by
raising short-term interest rates when inflation became a growing concern for the Fed. Throughout the fiscal year, the Fed increased rates
frequently and rapidly, raising the federal funds rate eight times from 0.25% at the start of the fiscal year to 4.75% by the end of March
2023. Although the Fed was expected to continue raising rates in 2023, most analysts believed that the rate-hiking cycle would soon come
to an end as concerns about a recession grew. Concern about the economic backdrop grew further in the final month of the fiscal year amid
worries about the banking industry, precipitated by the collapse of US lenders Silicon Valley Bank and Signature Bank, and Europe’s
Credit Suisse.
Amid rising inflation and interest rates, the
US economy began the fiscal year on a downturn. In the first half of 2022, the country’s gross domestic product (GDP) – a
measure of national economic output –decreased by an annualized 1.6% and 0.6%, in the first and second quarter, respectively. However,
in the third quarter, US GDP grew by an annualized 3.2%. The economy continued its expansion in the fourth quarter, growing an estimated
annual rate of 2.6% during that three-month period, driven primarily by inventory adjustments and consumer spending.
Despite the challenging economic conditions,
the US jobs market remained robust throughout the fiscal year. The unemployment rate began the period at an historically low 3.6%, which
was a significant improvement from the pandemic peak of 14.7% in April 2020. In February 2023, the jobless rate reached a 53-year-low
of 3.4% before ticking back up to 3.5% the following month.
Source: Bloomberg, unless otherwise noted.
Municipal bond market conditions
In an often-volatile environment for fixed-income
investors, the municipal bond market, as measured by the Bloomberg Municipal Bond Index, gained 0.26% for the fiscal year ended March
31, 2023.
Investors in municipal bonds encountered two
very different sets of market conditions during the Fund’s fiscal year. Market conditions were highly challenging for fixed-income
investors in its first half, as an unfavorable supply and demand backdrop hurt the municipal bond market. Despite generally healthy credit
quality among municipal issuers, rising interest rates and concerns that higher inflation would lead to even more rate hikes by the Fed
led to significant outflows from municipal bond funds, causing a decrease in bond values.
In the second half of the fiscal year, however,
investors’ concerns about inflation eased and expectations that the Fed would soon end its rate-hike cycle grew as the odds of recession
increased. Outflows from the municipal bond market slowed and demand for municipal securities increased, helping the market recover the
value it had lost earlier in the fiscal year.
In this market environment, the weakest performers
by far were longest-dated bonds hampered by their increased sensitivity to higher rates. Meanwhile, shorter-term, and especially intermediate-term
bonds fared the best. Additionally, bonds with lower credit ratings were more likely to lag their higher-rated counterparts during the
fiscal year.
Portfolio management review
Delaware Investments® National Municipal
Income Fund
These tables show municipal bond returns by maturity length and by
credit quality for the fiscal year ended March 31, 2023.
Returns by maturity |
|
1 year |
1.55% |
3 years |
1.52% |
5 years |
1.75% |
10 years |
2.38% |
22+ years |
-3.64% |
|
|
Returns by credit rating |
|
AAA |
0.55% |
AA |
0.58% |
A |
-0.04% |
BBB |
-1.32% |
Source: Bloomberg.
Maintaining our management approach
Regardless of the market backdrop, we regularly
maintain a consistent management approach throughout the fiscal year. Our bottom-up investment strategy relies on deep credit research
to select municipal securities on an issuer-by-issuer basis. We prioritize tax-exempt bonds that we believe offer a favorable balance
between risk and return potential for our shareholders.
We have high confidence in our team’s
credit research capabilities. Therefore, when looking for new investments to add to the Fund’s portfolio, we give priority to lower-rated,
higher-yielding bonds with strong credit fundamentals. We believe these types of securities provide greater opportunities for us to add
value for the Fund’s shareholders.
During the fiscal year, trading activity in
the Fund was elevated. With interest rates and bond yields rising and credit spreads widening, we actively pursued tax-loss swaps, which
allowed us to take advantage of the significantly better yields available in the marketplace. Employing this strategy, we exchanged bonds
with lower yields for those providing similar risk characteristics but better coupons. This approach allowed us to improve the Fund’s
income profile while also incurring a tax loss that we believe we may be able to apply to future gains. When implementing these swaps
– as well as buying newly issued bonds we believed offered an attractive combination of yield and credit risk – we were mindful
of preserving the Fund’s underlying credit quality along with its sector and duration positioning.
Often, our transactions were aimed at enhancing
the Fund’s diversification. Due to the acquisition of the assets of two state-specific tax-exempt bond funds within the Delaware
Funds by Macquarie® complex that closed in February 2022, the Fund had what we considered to be an elevated exposure to
the Minnesota and Colorado state marketplaces. Although we had trimmed the Fund’s exposure to Minnesota and Colorado debt prior
to this fiscal year, we sought to do so even further through our tax loss swaps and bond sales over the past 12 months. The concentration
in Colorado was reduced from 17.6% of the portfolio at the start of the fiscal year to 16% at fiscal year end. The concentration in Minnesota
was reduced from 40% of the portfolio at the start of the fiscal year to 32% at fiscal year end. We are pleased to have made additional
progress in this long-term objective while improving the Fund’s yield.
Individual performance effects
The Fund’s top individual performer was
a bond issued for the Atlas Preparatory charter school in Colorado Springs. These nonrated bonds gained 10% for the Fund during the fiscal
year. These bonds were pre-refunded during the period and therefore experienced a significant immediate boost in their price and underlying
credit quality.
A bond issued by the National Jewish Health
hospital in Denver also contributed to the Fund’s result, gaining 5%. These bonds with a 5% coupon, rated BB+ by Standard &
Poor’s, were helped by their desirable structure and 2027 maturity date, which represented a stronger-performing portion of the
yield curve during this time frame.
In contrast, nonrated bonds for the Legacy Cares
athletic complex project in Mesa, Arizona, meaningfully detracted from the Fund’s performance, returning -42%, as the issuer experienced
credit challenges during the fiscal year.
The Fund also saw underperformance from its
investment in senior housing bonds for the St. John’s Lutheran Home community in Colorado Springs and the Sunny Vista senior living
center project in Albert Lea, Minnesota. These nonrated bonds returned -28% and -15%, respectively, for the fiscal year. In an environment
in which high-yield bonds tended to underperform, the senior-living sector, which primarily features lower-rated issuers, disproportionately
struggled. These holdings were no exception and weighed on the Fund’s performance.
Performance summary
Delaware Investments® National Municipal Income Fund
March 31, 2023 (Unaudited)
The performance quoted represents past performance
and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Please obtain
the most recent performance data by calling 866 437-0252 or visiting our website at delawarefunds.com/closed-end.
Fund performance |
|
|
|
Average annual total returns through March 31, 2023 |
1 year |
5 year |
10 year |
At market price |
-11.51% |
+1.38% |
+2.02% |
At net asset value |
-9.25% |
+0.82% |
+2.69% |
Fixed income securities and bond funds can lose
value, and investors can lose principal, as interest rates rise. They also may be affected by economic conditions that hinder an issuer’s
ability to make interest and principal payments on its debt. This includes prepayment risk, the risk that the principal of a bond that
is held by a portfolio will be prepaid prior to maturity, at the time when interest rates are lower than what the bond was paying. A portfolio
may then have to reinvest that money at a lower interest rate.
High yielding, non-investment-grade bonds (junk
bonds) involve higher risk than investment grade bonds. The high yield secondary market is particularly susceptible to liquidity problems
when institutional investors, such as mutual funds and certain other financial institutions, temporarily stop buying bonds for regulatory,
financial, or other reasons. In addition, a less liquid secondary market makes it more difficult to obtain precise valuations of the high
yield securities.
Substantially all dividend income derived from
tax-free funds is exempt from federal income tax. Some income may be subject to state or local and/or the federal alternative minimum
tax (AMT) that applies to certain investors. Capital gains, if any, are taxable.
Funds that have a significant percentage of assets allocated to one
state may be more susceptible to the economic, regulatory, regional, and other factors of that state than more geographically diversified
funds.
The Fund may experience portfolio turnover in
excess of 100%, which could result in higher transaction costs and tax liability.
The Fund’s use of leverage may expose
common shareholders to additional volatility and cause the Fund to incur certain costs. In the event that the Fund is unable to meet certain
criteria (including, but not limited to, maintaining certain ratings with Fitch Ratings (Fitch), funding dividend payments or funding
redemptions), the Fund will pay additional fees with respect to the leverage.
Duration number will change as market conditions
change. Therefore, duration should not be solely relied upon to indicate a municipal bond fund’s potential volatility.
IBOR risk is the risk that changes related to
the use of the London interbank offered rate (LIBOR) or similar rates (such as EONIA) could have adverse impacts on financial instruments
that reference these rates. The abandonment of these rates and transition to alternative rates could affect the value and liquidity of
instruments that reference them and could affect investment strategy performance.
The disruptions caused by natural disasters,
pandemics, or similar events could prevent the Fund from executing advantageous investment decisions in a timely manner and could negatively
impact the Fund’s ability to achieve its investment objective and the value of the Fund’s investments.
This document may mention bond ratings published
by nationally recognized statistical rating organizations (NRSROs) Standard & Poor’s (S&P), Moody’s Investors Service,
and Fitch. For securities rated by an NRSRO other than S&P, the rating is converted to the equivalent S&P credit rating. Bonds
rated AAA are rated as having the highest quality and are generally considered to have the lowest degree of investment risk. Bonds rated
AA are considered to be of high quality, but with a slightly higher degree of risk than bonds rated AAA. Bonds rated A are considered
to have many favorable investment qualities, though they are somewhat more susceptible to adverse economic conditions. Bonds rated BBB
are believed to be of medium-grade quality and generally riskier over the long term. Bonds rated BB, B, and CCC are regarded as having
significant speculative characteristics, with BB indicating the least degree of speculation of the three.
Closed-end fund shares do not represent a deposit
or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution, and are not federally insured
by the Federal Deposit Insurance Corporation or any other government agency.
Performance summary
Delaware Investments® National Municipal
Income Fund
Closed-end funds, unlike open-end funds, are
not continuously offered. After being issued during a one-time-only public offering, shares of closed-end funds are sold in the open market
through a securities exchange. Net asset value (NAV) is calculated by subtracting total liabilities by total assets, then dividing by
the number of shares outstanding. At the time of sale, your shares may have a market price that is above or below NAV, and may be worth
more or less than your original investment.
The Bloomberg Municipal Bond Index, mentioned
on page 1, measures the total return performance of the long-term investment grade tax-exempt bond market.
The US Consumer Price Index (CPI), mentioned
on page 1, is a measure of inflation that is calculated by the US Department of Labor, representing changes in prices of all goods and
services purchased for consumption by urban households.
Index performance returns do not reflect any
management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.
The Fund may be required to make higher distributions
of ordinary income and capital gains at calendar year end. Those distributions may temporarily cause extraordinarily high yields. There
is no assurance that a Fund will repeat that yield in the future. Subsequent monthly distributions that do not include ordinary income
or capital gains in the form of dividends will likely be lower. Each of these performance numbers is as calculated by the relevant providing
entity disclosed above and may be based on differing methodologies.
The “Fund performance” table and
the “Performance of a $10,000 investment” graph do not reflect the deduction of taxes the shareholder would pay on Fund distributions
or redemptions of Fund shares.
Returns reflect the reinvestment of all distributions.
Dividends and distributions, if any, are assumed, for the purpose of this calculation to be reinvested at prices obtained under the Fund’s
dividend reinvestment policy. Shares of the Fund were initially offered with a sales charge of 7%. Performance since inception does not
include the sales charge or any other brokerage commission for purchases made since inception.
Past performance does not guarantee future results.
Market price versus net asset value (see notes on next page)
For the period March 31, 2022 through March 31, 2023
|
|
Starting value |
Ending value |
|
Delaware Investments National Municipal Income Fund @ NAV |
$13.63 |
$11.79 |
|
Delaware Investments National Municipal Income Fund @ market price |
$12.65 |
$10.67 |
Past performance does not guarantee future results.
Performance of a $10,000 investment
For the period March 31, 2013 through March 31, 2023
|
|
Starting value |
Ending value |
|
Lipper Closed-end General and Insured Municipal Debt Funds Average (Leveraged) @ NAV |
$10,000 |
$13,432 |
|
Delaware Investments® National Municipal Income Fund @ NAV |
$10,000 |
$13,041 |
|
Lipper Closed-end General and Insured Municipal Debt Funds Average (Leveraged) @ market price |
$10,000 |
$12,449 |
|
Delaware Investments National Municipal Income Fund @ market price |
$10,000 |
$12,218 |
The “Performance of a $10,000 investment”
graph assumes $10,000 invested in the Fund on March 31, 2013 and includes the reinvestment of all distributions at market value. The graph
assumes $10,000 in the Lipper Closed-end General and Insured Municipal Debt Funds Average (Leveraged) at market price and at NAV. Performance
of the Fund and the Lipper class at market value is based on market performance during the period. Performance of the Fund and Lipper
class at NAV is based on the fluctuations in NAV during the period. Delaware Investments National Municipal Income Fund was initially
offered with a sales charge of 7%. For market price, performance shown in both graphs above does not include fees, the initial sales charge,
or any brokerage commissions on purchases. For NAV, performance shown in both graphs above includes fees, but does not include the initial
sales charge or any brokerage commissions for purchases. Investments in the Fund are not available at NAV.
The Lipper Closed-end General and Insured Municipal
Debt Funds Average (Leveraged) compares closed-end funds that either invest primarily in municipal debt issues rated in the top four credit
ratings or invest primarily in municipal debt issues insured as to timely payment. These funds can be leveraged via use of debt, preferred
equity, and/or reverse purchase agreements (source: Lipper).
Index performance returns do not reflect any
management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.
Market price is the price an investor would
pay for shares of the Fund on the secondary market. NAV is the total value of one fund share, generally equal to a fund’s net assets
divided by the number of shares outstanding.
Past performance does not guarantee future results.
Fund basics
As of March 31, 2023 (Unaudited)
Delaware Investments®
National Municipal Income
Fund Fund objective
The Fund seeks to provide current income exempt from regular
federal income tax, consistent with the preservation of capital.
Total Fund net assets
$145 million
Number of holdings
204
Fund start date
February 26, 1993
NYSE American symbol
VFL
CUSIP number
24610T108
Security type / sector / state / territory allocations
As of March 31, 2023 (Unaudited)
Sector designations may be different from the sector designations
presented in other Fund materials.
Delaware Investments® National Municipal Income Fund
Security type / sector |
Percentage
of net assets |
Municipal Bonds* |
171.24% |
Education Revenue Bonds |
24.66% |
Electric Revenue Bonds |
20.73% |
Healthcare Revenue Bonds |
47.86% |
Housing Revenue Bonds |
1.36% |
Industrial Development Revenue/Pollution Control Revenue Bonds |
4.64% |
Lease Revenue Bonds |
14.66% |
Local General Obligation Bonds |
8.75% |
Pre-Refunded Bonds |
4.83% |
Special Tax Revenue Bonds |
33.02% |
State General Obligation Bond |
1.15% |
Transportation Revenue Bonds |
7.44% |
Water & Sewer Revenue Bond |
2.14% |
Short-Term Investments |
1.30% |
Total Value of Securities |
172.54% |
Liquidation Value of Preferred** |
(68.42%) |
Liabilities Net of Receivables and Other Assets |
(4.12%) |
Total Net Assets |
100.00% |
*As
of the date of this report, Delaware Investments® National Municipal Income Fund held bonds issued by or on behalf of territories
and the states of the US as follows:
State / territory |
Percentage
of net assets |
Alabama |
2.22% |
Arizona |
5.70% |
California |
3.54% |
Colorado |
27.81% |
District of Columbia |
0.49% |
Florida |
7.08% |
Georgia |
5.32% |
Guam |
2.89% |
Idaho |
2.38% |
Illinois |
7.75% |
Indiana |
0.02% |
Minnesota |
55.42% |
Missouri |
1.10% |
Montana |
0.77% |
New Jersey |
1.81% |
New York |
11.82% |
Ohio |
2.47% |
Oregon |
1.56% |
Pennsylvania |
4.10% |
Puerto Rico |
22.91% |
Texas |
0.12% |
Virginia |
2.23% |
Wisconsin |
1.73% |
Total Value of Securities |
171.24% |
** More information regarding the Fund’s
use of preferred shares as leverage is included in Note 6 in “Notes to financial statements.” The Fund utilizes preferred
shares as leverage in an attempt to obtain a higher return for the Fund. There is no assurance that the Fund will achieve a higher return
or its investment objectives through the use of such leverage.
Schedule of investments
Delaware Investments® National Municipal Income Fund
March 31, 2023
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds — 171.24% | |
| | | |
| | |
Education Revenue Bonds — 24.66% | |
| | | |
| | |
Arizona Industrial Development Authority Revenue | |
| | | |
| | |
(Leman Academy of Excellence of Projects) | |
| | | |
| | |
Series A 4.50% 7/1/54 | |
| 1,115,000 | | |
$ | 1,001,002 | |
Board of Trustees for Colorado Mesa University Enterprise | |
| | | |
| | |
Revenue | |
| | | |
| | |
Series B 5.00% 5/15/49 | |
| 750,000 | | |
| 810,983 | |
Brooklyn Park, Minnesota Charter School Lease Revenue | |
| | | |
| | |
(Prairie Seeds Academy Project) | |
| | | |
| | |
Series A 5.00% 3/1/34 | |
| 925,000 | | |
| 877,927 | |
Series A 5.00% 3/1/39 | |
| 170,000 | | |
| 155,653 | |
Chicago, Illinois Board of Education | |
| | | |
| | |
5.75% 4/1/48 (BAM) | |
| 4,000,000 | | |
| 4,456,720 | |
Colorado Educational & Cultural Facilities Authority Revenue | |
| | | |
| | |
(Aspen View Academy Project) | |
| | | |
| | |
4.00% 5/1/41 | |
| 175,000 | | |
| 153,906 | |
(Charter School - Aspen Ridge School Project) | |
| | | |
| | |
Series A 144A 5.00% 7/1/36 # | |
| 500,000 | | |
| 490,470 | |
Series A 144A 5.25% 7/1/46 # | |
| 500,000 | | |
| 480,500 | |
(Charter School - Community Leadership Academy, Inc. Second Campus Project) | |
| | | |
| | |
7.45% 8/1/48 | |
| 500,000 | | |
| 504,385 | |
(Charter School - Global Village Academy - Northglenn Project) | |
| | | |
| | |
144A 5.00% 12/1/50 # | |
| 475,000 | | |
| 413,525 | |
(Charter School - Liberty Common Project) | |
| | | |
| | |
Series A 5.00% 1/15/44 | |
| 1,000,000 | | |
| 1,006,440 | |
(Charter School - Peak to Peak Charter School Project) | |
| | | |
| | |
5.00% 8/15/34 | |
| 1,000,000 | | |
| 1,022,320 | |
(Charter School - Science Technology Engineering and Math (STEM) School Project) | |
| | | |
| | |
5.00% 11/1/54 | |
| 700,000 | | |
| 681,317 | |
5.125% 11/1/49 | |
| 765,000 | | |
| 765,023 | |
(Charter School - Skyview Academy Project) | |
| | | |
| | |
144A 5.50% 7/1/49 # | |
| 750,000 | | |
| 750,195 | |
Colorado Educational & Cultural Facilities Authority Revenue | |
| | | |
| | |
(Charter School - University Lab School Building) | |
| | | |
| | |
144A 5.00% 12/15/45 # | |
| 500,000 | | |
| 507,175 | |
(Vail Mountain School Project) | |
| | | |
| | |
4.00% 5/1/46 | |
| 25,000 | | |
| 21,852 | |
Deephaven, Minnesota Charter School | |
| | | |
| | |
(Eagle Ridge Academy Project) | |
| | | |
| | |
Series A 5.25% 7/1/37 | |
| 590,000 | | |
| 591,676 | |
Series A 5.25% 7/1/40 | |
| 500,000 | | |
| 500,210 | |
District of Columbia Revenue Bonds | |
| | | |
| | |
(Two Rivers Public Charter School Inc. Issue) | |
| | | |
| | |
5.00% 6/1/50 | |
| 760,000 | | |
| 711,010 | |
Duluth, Minnesota Housing & Redevelopment Authority Revenue | |
| | | |
| | |
(Duluth Public Schools Academy Project) | |
| | | |
| | |
Series A 5.00% 11/1/48 | |
| 1,200,000 | | |
| 1,072,776 | |
Florida Development Finance Educational Revenue | |
| | | |
| | |
(Mater Academy Projects) | |
| | | |
| | |
Series B 5.00% 6/15/56 | |
| 1,620,000 | | |
| 1,519,819 | |
Forest Lake, Minnesota Charter School Revenue | |
| | | |
| | |
(Lakes International Language Academy Project) | |
| | | |
| | |
Series A 5.375% 8/1/50 | |
| 915,000 | | |
| 885,043 | |
Series A 5.75% 8/1/44 | |
| 705,000 | | |
| 707,425 | |
Jacksonville, Alabama Public Educational Building Authority Revenue | |
| | | |
| | |
(JSU Foundation Project) | |
| | | |
| | |
Series A 5.25% 8/1/53 | |
| 3,000,000 | | |
| 3,205,868 | |
Minneapolis, Minnesota Student Housing Revenue | |
| | | |
| | |
(Riverton Community Housing Project) | |
| | | |
| | |
5.25% 8/1/39 | |
| 205,000 | | |
| 205,607 | |
5.50% 8/1/49 | |
| 990,000 | | |
| 993,168 | |
Minnesota Higher Education Facilities Authority Revenue | |
| | | |
| | |
(Carleton College) | |
| | | |
| | |
4.00% 3/1/36 | |
| 485,000 | | |
| 497,765 | |
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds (continued) | |
| | | |
| | |
Education Revenue Bonds (continued) | |
| | | |
| | |
Minnesota Higher Education Facilities Authority Revenue | |
| | | |
| | |
(Carleton College) | |
| | | |
| | |
5.00% 3/1/44 | |
| 555,000 | | |
$ | 590,059 | |
(Gustavus Adolphus College) | |
| | | |
| | |
5.00% 10/1/47 | |
| 500,000 | | |
| 515,055 | |
(Macalester College) | |
| | | |
| | |
4.00% 3/1/42 | |
| 900,000 | | |
| 903,708 | |
(St. Catherine University) | |
| | | |
| | |
Series A 5.00% 10/1/45 | |
| 785,000 | | |
| 807,867 | |
(St. John’s University) | |
| | | |
| | |
4.00% 3/1/36 | |
| 410,000 | | |
| 405,371 | |
Series 8-I 5.00% 10/1/31 | |
| 235,000 | | |
| 246,395 | |
(Trustees of the Hamline University of Minnesota) | |
| | | |
| | |
Series A 4.00% 10/1/38 | |
| 920,000 | | |
| 899,549 | |
Series B 5.00% 10/1/47 | |
| 1,055,000 | | |
| 1,064,864 | |
(University of St. Thomas) | |
| | | |
| | |
Series A 4.00% 10/1/37 | |
| 500,000 | | |
| 504,115 | |
Montana Board of Regents of Higher Education | |
| | | |
| | |
(University of Montana) | |
| | | |
| | |
5.25% 11/15/52 (AGM) | |
| 1,000,000 | | |
| 1,110,050 | |
Otsego, Montana Charter School Lease Revenue | |
| | | |
| | |
(Kaleidoscope Charter School) | |
| | | |
| | |
Series A 5.00% 9/1/34 | |
| 230,000 | | |
| 220,715 | |
St. Cloud, Minnesota Charter School Lease Revenue | |
| | | |
| | |
(Stride Academy Project) | |
| | | |
| | |
Series A 5.00% 4/1/46 | |
| 375,000 | | |
| 277,905 | |
St. Paul, Minnesota Housing & Redevelopment Authority Charter School Lease Revenue | |
| | | |
| | |
(Academia Cesar Chavez School Project) | |
| | | |
| | |
Series A 5.25% 7/1/50 | |
| 825,000 | | |
| 694,955 | |
(Great River School Project) | |
| | | |
| | |
Series A 144A 4.75% 7/1/29 # | |
| 100,000 | | |
| 98,930 | |
Series A 144A 5.50% 7/1/38 # | |
| 240,000 | | |
| 242,232 | |
(Twin Cities Academy Project) | |
| | | |
| | |
Series A 5.30% 7/1/45 | |
| 630,000 | | |
| 595,363 | |
Westchester County, New York Local Development Revenue | |
| | | |
| | |
(Pace University) | |
| | | |
| | |
Series A 5.00% 5/1/34 | |
| 1,500,000 | | |
| 1,516,140 | |
| |
| | | |
| 35,683,033 | |
Electric Revenue Bonds — 20.73% | |
| | | |
| | |
American Municipal Power Ohio | |
| | | |
| | |
(Prairie State Energy Campus Project) | |
| | | |
| | |
Series A 4.00% 2/15/36 | |
| 2,500,000 | | |
| 2,544,150 | |
Chaska, Minnesota Electric Revenue | |
| | | |
| | |
(Generating Facilities) | |
| | | |
| | |
Series A 5.00% 10/1/28 | |
| 445,000 | | |
| 471,420 | |
Fort Collins, Colorado Electric Utility Enterprise Revenue | |
| | | |
| | |
Series A 5.00% 12/1/42 | |
| 500,000 | | |
| 542,970 | |
Loveland, Colorado Electric & Communications Enterprise Revenue | |
| | | |
| | |
Series A 5.00% 12/1/44 | |
| 500,000 | | |
| 526,250 | |
Minnesota Municipal Power Agency Electric Revenue | |
| | | |
| | |
5.00% 10/1/26 | |
| 500,000 | | |
| 517,235 | |
5.00% 10/1/27 | |
| 320,000 | | |
| 330,982 | |
5.00% 10/1/47 | |
| 1,210,000 | | |
| 1,274,711 | |
Municipal Electric Authority of Georgia | |
| | | |
| | |
(Plant Vogtle Units 3&4 Project M) | |
| | | |
| | |
Series A 5.00% 1/1/56 (BAM) | |
| 5,000,000 | | |
| 5,135,850 | |
Series A 5.00% 1/1/63 (BAM) | |
| 2,500,000 | | |
| 2,559,700 | |
Northern Minnesota Municipal Power Agency Electric System Revenue | |
| | | |
| | |
Series A 5.00% 1/1/26 | |
| 100,000 | | |
| 100,170 | |
Series A 5.00% 1/1/30 | |
| 340,000 | | |
| 340,541 | |
Rochester, Minnesota Electric Utility Revenue | |
| | | |
| | |
Series A 5.00% 12/1/42 | |
| 605,000 | | |
| 638,305 | |
Series A 5.00% 12/1/47 | |
| 985,000 | | |
| 1,035,068 | |
Salt River, Arizona Project Agricultural Improvement & Power District Electric System Revenue | |
| | | |
| | |
Series A 5.00% 1/1/50 | |
| 6,000,000 | | |
| 6,712,260 | |
Southern Minnesota Municipal Power Agency Supply Revenue | |
| | | |
| | |
Series A 5.00% 1/1/41 | |
| 240,000 | | |
| 251,781 | |
Series A 5.00% 1/1/47 | |
| 1,650,000 | | |
| 1,773,882 | |
St. Paul, Minnesota Housing & Redevelopment Authority District Energy Revenue | |
| | | |
| | |
Series A 4.00% 10/1/33 | |
| 285,000 | | |
| 294,955 | |
Schedule of investments
Delaware Investments® National Municipal
Income Fund
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds (continued) | |
| | | |
| | |
Electric Revenue Bonds (continued) | |
| | | |
| | |
St. Paul, Minnesota Housing & Redevelopment Authority District Energy Revenue | |
| | | |
| | |
Series B 4.00% 10/1/37 | |
| 800,000 | | |
$ | 809,016 | |
Western Minnesota Municipal Power Agency Supply Revenue | |
| | | |
| | |
Series A 5.00% 1/1/49 | |
| 3,860,000 | | |
| 4,132,979 | |
| |
| | | |
| 29,992,225 | |
Healthcare Revenue Bonds — 47.86% | |
| | | |
| | |
Anoka, Minnesota Healthcare & Housing Facilities Revenue | |
| | | |
| | |
(The Homestead at Anoka, Inc. Project) | |
| | | |
| | |
5.375% 11/1/34 | |
| 610,000 | | |
| 584,856 | |
Apple Valley, Minnesota Senior Housing Revenue | |
| | | |
| | |
(PHS Apple Valley Senior Housing, Inc. Orchard Path Project) | |
| | | |
| | |
4.50% 9/1/53 | |
| 1,160,000 | | |
| 1,006,404 | |
5.00% 9/1/58 | |
| 1,605,000 | | |
| 1,494,496 | |
Apple Valley, Minnesota Senior Living Revenue | |
| | | |
| | |
(Minnesota Senior Living LLC Project) | |
| | | |
| | |
Fourth Tier | |
| | | |
| | |
Series D 7.00% 1/1/37 | |
| 685,000 | | |
| 463,868 | |
Fourth Tier | |
| | | |
| | |
Series D 7.25% 1/1/52 | |
| 1,035,000 | | |
| 636,774 | |
Second Tier | |
| | | |
| | |
Series B 5.00% 1/1/47 | |
| 715,000 | | |
| 415,801 | |
Arizona Industrial Development Authority Revenue | |
| | | |
| | |
(Great Lakes Senior Living Communities LLC Project) | |
| | | |
| | |
Fourth Tier Series D-2 | |
| | | |
| | |
144A 7.75% 1/1/54 # | |
| 50,000 | | |
| 27,565 | |
Second Tier | |
| | | |
| | |
Series B 5.00% 1/1/49 | |
| 70,000 | | |
| 37,716 | |
Bethel, Minnesota Housing & Healthcare Facilities Revenue | |
| | | |
| | |
(Benedictine Health System - St. Peter Communities Project) | |
| | | |
| | |
Series A 5.50% 12/1/48 | |
| 500,000 | | |
| 404,080 | |
Center City, Minnesota Health Care Facilities Revenue | |
| | | |
| | |
(Hazelden Betty Ford Foundation Project) | |
| | | |
| | |
5.00% 11/1/27 | |
| 500,000 | | |
| 507,085 | |
City of Bethel, Minnesota | |
| | | |
| | |
(The Lodge at The Lakes at Stillwater Project) | |
| | | |
| | |
5.25% 6/1/58 | |
| 1,775,000 | | |
| 1,475,806 | |
Colorado Health Facilities Authority Revenue | |
| | | |
| | |
(Aberdeen Ridge) | |
| | | |
| | |
Series A 5.00% 5/15/49 | |
| 500,000 | | |
| 389,685 | |
(AdventHealth Obligated Group) | |
| | | |
| | |
Series A 3.00% 11/15/51 | |
| 2,500,000 | | |
| 1,889,700 | |
Series A 4.00% 11/15/50 | |
| 500,000 | | |
| 466,875 | |
(Adventist Health System/ Sunbelt Obligated Group) | |
| | | |
| | |
Series A 5.00% 11/15/48 | |
| 1,000,000 | | |
| 1,046,640 | |
(Bethesda Project) | |
| | | |
| | |
Series A-1 5.00% 9/15/48 | |
| 750,000 | | |
| 692,182 | |
(Cappella of Grand Junction Project) | |
| | | |
| | |
144A 5.00% 12/1/54 # | |
| 525,000 | | |
| 359,399 | |
(CommonSpirit Health) | |
| | | |
| | |
Series A-2 4.00% 8/1/49 | |
| 2,250,000 | | |
| 2,010,307 | |
Series A-2 5.00% 8/1/44 | |
| 290,000 | | |
| 299,428 | |
(Covenant Living Communities and Services) | |
| | | |
| | |
Series A 4.00% 12/1/40 | |
| 750,000 | | |
| 662,138 | |
(Covenant Retirement Communities, Inc.) | |
| | | |
| | |
Series A 5.00% 12/1/35 | |
| 1,000,000 | | |
| 1,008,710 | |
(Mental Health Center of Denver Project) | |
| | | |
| | |
Series A 5.75% 2/1/44 | |
| 1,500,000 | | |
| 1,508,385 | |
(National Jewish Health Project) | |
| | | |
| | |
5.00% 1/1/27 | |
| 500,000 | | |
| 500,625 | |
(Sanford) | |
| | | |
| | |
Series A 5.00% 11/1/44 | |
| 1,465,000 | | |
| 1,519,381 | |
(Sunny Vista Living Center Project) | |
| | | |
| | |
Series A 144A 6.25% 12/1/50 # | |
| 505,000 | | |
| 344,163 | |
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds (continued) | |
| | | |
| | |
Healthcare Revenue Bonds (continued) | |
| | | |
| | |
Crookston, Minnesota Health Care Facilities Revenue | |
| | | |
| | |
(Riverview Health Project) | |
| | | |
| | |
5.00% 5/1/51 | |
| 1,390,000 | | |
$ | 1,140,829 | |
Cumberland County, Pennsylvania Municipal Authority Revenue | |
| | | |
| | |
(Penn State Health) | |
| | | |
| | |
Series A 4.00% 11/1/44 | |
| 980,000 | | |
| 955,843 | |
Cuyahoga County, Ohio Hospital Revenue | |
| | | |
| | |
(The Metrohealth System) | |
| | | |
| | |
5.50% 2/15/57 | |
| 1,000,000 | | |
| 1,021,800 | |
Deephaven, Minnesota Housing & Healthcare Facility Revenue | |
| | | |
| | |
(St. Therese Senior Living Project) | |
| | | |
| | |
Series A 5.00% 4/1/38 | |
| 280,000 | | |
| 246,008 | |
Series A 5.00% 4/1/40 | |
| 270,000 | | |
| 233,196 | |
Denver, Colorado Health & Hospital Authority Healthcare Revenue | |
| | | |
| | |
Series A 4.00% 12/1/40 | |
| 500,000 | | |
| 453,530 | |
Escambia County, Florida Health Facilities Authority Revenue | |
| | | |
| | |
(Baptist Health Care Corporation Obligated Group) | |
| | | |
| | |
Series A 4.00% 8/15/50 | |
| 1,150,000 | | |
| 989,092 | |
Hayward, Minnesota Health Care Facilities Revenue | |
| | | |
| | |
(American Baptist Homes of the Midwest Obligated Group) | |
| | | |
| | |
5.75% 2/1/44 | |
| 500,000 | | |
| 411,170 | |
(St. John’s Lutheran Home of Albert Lea Project) | |
| | | |
| | |
Series A 5.375% 10/1/44 ‡ | |
| 125,000 | | |
| 75,000 | |
Henrico County, Virginia Economic Development Authority | |
| | | |
| | |
(Westminister Canterbury Richmond) | |
| | | |
| | |
Series A 5.00% 10/1/52 | |
| 1,200,000 | | |
| 1,252,728 | |
Hillsborough County, Florida Industrial Development Authority Hospital Revenue | |
| | | |
| | |
(Tampa General Hospital Project) | |
| | | |
| | |
Series A 3.50% 8/1/55 | |
| 6,875,000 | | |
| 5,419,562 | |
Hospital Facility Authority Union County, Oregon Revenue | |
| | | |
| | |
(Grande Ronde Hospital Project) | |
| | | |
| | |
5.00% 7/1/39 | |
| 1,665,000 | | |
| 1,744,454 | |
Idaho Health Facilities Authority Revenue | |
| | | |
| | |
(St. Luke’s Health System Project) | |
| | | |
| | |
Series A 3.00% 3/1/51 | |
| 4,630,000 | | |
| 3,440,923 | |
Illinois Finance Authority | |
| | | |
| | |
(NorthShore - Edward-Elmhurst Health Credit Group) | |
| | | |
| | |
Series A 5.00% 8/15/51 | |
| 4,355,000 | | |
| 4,593,218 | |
Maple Grove, Minnesota Health Care Facilities Revenue | |
| | | |
| | |
(Maple Grove Hospital Corporation) | |
| | | |
| | |
4.00% 5/1/37 | |
| 1,000,000 | | |
| 965,740 | |
(North Memorial Health Care) | |
| | | |
| | |
5.00% 9/1/30 | |
| 865,000 | | |
| 896,910 | |
Maple Plain, Minnesota Senior Housing & Health Care Revenue | |
| | | |
| | |
(Haven Homes, Inc. Project) | |
| | | |
| | |
5.00% 7/1/54 | |
| 1,500,000 | | |
| 1,222,725 | |
Minneapolis Health Care System Revenue | |
| | | |
| | |
(Fairview Health Services) | |
| | | |
| | |
Series A 5.00% 11/15/33 | |
| 500,000 | | |
| 519,940 | |
Series A 5.00% 11/15/34 | |
| 500,000 | | |
| 518,685 | |
Series A 5.00% 11/15/49 | |
| 2,000,000 | | |
| 2,053,020 | |
Minneapolis Senior Housing & Healthcare Revenue | |
| | | |
| | |
(Ecumen-Abiitan Mill City Project) | |
| | | |
| | |
5.00% 11/1/35 | |
| 220,000 | | |
| 202,400 | |
5.25% 11/1/45 | |
| 850,000 | | |
| 759,152 | |
5.375% 11/1/50 | |
| 200,000 | | |
| 179,286 | |
Missouri Health & Educational Facilities Revenue | |
| | | |
| | |
(Mercy Health) | |
| | | |
| | |
4.00% 6/1/53 (BAM) | |
| 1,630,000 | | |
| 1,595,737 | |
Montgomery County, Pennsylvania Higher Education and Health Authority Revenue | |
| | | |
| | |
(Thomas Jefferson University) | |
| | | |
| | |
Series B 4.00% 5/1/56 | |
| 1,000,000 | | |
| 906,050 | |
Schedule of investments
Delaware Investments® National Municipal
Income Fund
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds (continued) | |
| | | |
| | |
Healthcare Revenue Bonds (continued) | |
| | | |
| | |
Montgomery County, Pennsylvania Higher Education and Health Authority Revenue | |
| | | |
| | |
(Thomas Jefferson University) | |
| | | |
| | |
Series B 5.00% 5/1/57 | |
| 3,515,000 | | |
$ | 3,575,880 | |
New Hope, Texas Cultural Education Facilities | |
| | | |
| | |
(Cardinal Bay Inc. - Village on the Park/Carriage Inn Project) | |
| | | |
| | |
Series A-1 5.00% 7/1/51 | |
| 135,000 | | |
| 90,113 | |
Series B 4.75% 7/1/51 | |
| 160,000 | | |
| 80,000 | |
Rochester, Minnesota Health Care & Housing Facility Revenue | |
| | | |
| | |
(The Homestead at Rochester Inc. Project) | |
| | | |
| | |
Series A 6.875% 12/1/48 | |
| 1,220,000 | | |
| 1,222,904 | |
Sartell, Minnesota Health Care & Housing Facilities Revenue | |
| | | |
| | |
(Country Manor Campus LLC Project) | |
| | | |
| | |
5.30% 9/1/37 | |
| 600,000 | | |
| 557,640 | |
Shakopee, Minnesota Health Care Facilities Revenue | |
| | | |
| | |
(St. Francis Regional Medical Center) | |
| | | |
| | |
4.00% 9/1/31 | |
| 205,000 | | |
| 206,099 | |
5.00% 9/1/34 | |
| 165,000 | | |
| 167,468 | |
St. Cloud, Minnesota Health Care Revenue | |
| | | |
| | |
(Centracare Health System) | |
| | | |
| | |
4.00% 5/1/49 | |
| 1,585,000 | | |
| 1,503,721 | |
5.00% 5/1/48 | |
| 2,250,000 | | |
| 2,337,998 | |
Series A 5.00% 5/1/46 | |
| 2,375,000 | | |
| 2,432,736 | |
St. Paul, Minnesota Housing & Redevelopment Authority Health Care Facilities Revenue | |
| | | |
| | |
(Amherst H. Wilder Foundation Project) | |
| | | |
| | |
Series A 5.00% 12/1/36 | |
| 750,000 | | |
| 751,837 | |
(Fairview Health Services) | |
| | | |
| | |
Series A 4.00% 11/15/43 | |
| 905,000 | | |
| 833,270 | |
Series A 5.00% 11/15/47 | |
| 680,000 | | |
| 696,089 | |
(HealthPartners Obligated Group) | |
| | | |
| | |
Series A 5.00% 7/1/30 | |
| 1,000,000 | | |
| 1,041,690 | |
St. Paul, Minnesota Housing & Redevelopment Authority | |
| | | |
| | |
Senior Housing & Health Care Revenue | |
| | | |
| | |
(Episcopal Homes Project) | |
| | | |
| | |
5.125% 5/1/48 | |
| 1,200,000 | | |
| 995,844 | |
Union County, Oregon Hospital Facility Authority Revenue | |
| | | |
| | |
(Grande Ronde Hospital Project) | |
| | | |
| | |
5.00% 7/1/47 | |
| 500,000 | | |
| 510,490 | |
Wisconsin Health & Educational Facilities Authority Senior Living Revenue | |
| | | |
| | |
(Covenant Communities, Inc. Project) | |
| | | |
| | |
Second Tier Series B-5 5.00% | |
| | | |
| | |
7/1/53 | |
| 1,000,000 | | |
| 703,410 | |
| |
| | | |
| 69,256,256 | |
Housing Revenue Bonds — 1.36% | |
| | | |
| | |
Minnesota Housing Finance Agency State Appropriated | |
| | | |
| | |
(Housing Infrastructure) | |
| | | |
| | |
Series C 5.00% 8/1/33 | |
| 1,390,000 | | |
| 1,429,170 | |
Northwest, Minnesota Multi-County Housing & Redevelopment Authority | |
| | | |
| | |
(Pooled Housing Program) | |
| | | |
| | |
5.50% 7/1/45 | |
| 560,000 | | |
| 537,746 | |
| |
| | | |
| 1,966,916 | |
Industrial Development Revenue/Pollution Control | |
| | | |
| | |
Revenue Bonds — 4.64% | |
| | | |
| | |
Golden State, California Tobacco Securitization Settlement Revenue | |
| | | |
| | |
(Capital Appreciation) | |
| | | |
| | |
Subordinate Series B-2 0.913% | |
| | | |
| | |
6/1/66 ^ | |
| 17,625,000 | | |
| 1,790,172 | |
Inland, California Empire Tobacco Securitization | |
| | | |
| | |
(Capital Appreciation Turbo Asset-Backed) | |
| | | |
| | |
Series E | |
| | | |
| | |
144A 0.63% 6/1/57 #, ^ | |
| 3,900,000 | | |
| 228,540 | |
Series F | |
| | | |
| | |
144A 0.778% 6/1/57 #, ^ | |
| 2,500,000 | | |
| 123,175 | |
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds (continued) | |
| | | |
| | |
Industrial Development Revenue/Pollution Control | |
| | | |
| | |
Revenue Bonds (continued) | |
| | | |
| | |
Public Authority for Colorado Energy Natural Gas Revenue | |
| | | |
| | |
6.25% 11/15/28 | |
| 865,000 | | |
$ | 940,515 | |
6.50% 11/15/38 | |
| 2,250,000 | | |
| 2,695,297 | |
Shoals, Indiana Exempt Facilities Revenue | |
| | | |
| | |
(National Gypsum Project) | |
| | | |
| | |
7.25% 11/1/43 (AMT) | |
| 25,000 | | |
| 25,289 | |
Tobacco Securitization Authority of Southern California | |
| | | |
| | |
(San Diego County) | |
| | | |
| | |
Capital Appreciation Second Subordinate | |
| | | |
| | |
Series C 1.105% 6/1/46 ^ | |
| 3,235,000 | | |
| 525,914 | |
Capital Appreciation Third Subordinate | |
| | | |
| | |
Series D 1.183% 6/1/46 ^ | |
| 3,015,000 | | |
| 384,774 | |
| |
| | | |
| 6,713,676 | |
Lease Revenue Bonds — 14.66% | |
| | | |
| | |
Denver, Colorado Health & Hospital Authority | |
| | | |
| | |
(550 Acoma, Inc.) | |
| | | |
| | |
4.00% 12/1/38 | |
| 500,000 | | |
| 463,155 | |
Metropolitan Pier & Exposition Authority Illinois Revenue | |
| | | |
| | |
(McCormick Place Expansion Project) | |
| | | |
| | |
Series A 4.65% 12/15/52 (AGM) ^ | |
| 4,625,000 | | |
| 1,099,085 | |
Series
B 4.545% 12/15/54 (BAM) ^ | |
| 5,000,000 | | |
| 1,070,500 | |
| |
| | | |
| | |
Minnesota State General Fund Appropriation Revenue | |
| | | |
| | |
Series A 5.00% 6/1/32 | |
| 780,000 | | |
| 782,652 | |
Series A 5.00% 6/1/38 | |
| 5,500,000 | | |
| 5,514,135 | |
Series A 5.00% 6/1/43 | |
| 1,750,000 | | |
| 1,753,535 | |
New York Liberty Development Revenue | |
| | | |
| | |
(Green Bonds) | |
| | | |
| | |
Series A 2.875% | |
| | | |
| | |
11/15/46 (BAM) | |
| 10,170,000 | | |
| 7,624,958 | |
State of Colorado Department of Transportation Certificates of Participation | |
| | | |
| | |
5.00% 6/15/34 | |
| 340,000 | | |
| 361,457 | |
5.00% 6/15/36 | |
| 545,000 | | |
| 575,978 | |
Virginia Commonwealth Transportation Board | |
| | | |
| | |
(U.S. Route 58 Corridor Development Program) | |
| | | |
| | |
4.00% 5/15/47 | |
| 2,000,000 | | |
| 1,967,600 | |
| |
| | | |
| 21,213,055 | |
Local General Obligation Bonds — 8.75% | |
| | | |
| | |
Arapahoe County, Colorado School District No. 6 | |
| | | |
| | |
(Littleton Public Schools) | |
| | | |
| | |
Series A 5.50% 12/1/38 | |
| 650,000 | | |
| 735,891 | |
Beacon Point, Colorado Metropolitan District | |
| | | |
| | |
5.00% 12/1/30 (AGM) | |
| 600,000 | | |
| 632,472 | |
Boulder Valley, Colorado School | |
| | | |
| | |
District No RE-2 | |
| | | |
| | |
Series A 4.00% 12/1/48 | |
| 500,000 | | |
| 495,075 | |
Brainerd, Minnesota Independent | |
| | | |
| | |
School District No. 181 | |
| | | |
| | |
(Brainerd Public Schools) | |
| | | |
| | |
Series A 4.00% 2/1/38 | |
| 1,500,000 | | |
| 1,544,100 | |
Series A 4.00% 2/1/43 | |
| 1,500,000 | | |
| 1,528,110 | |
Cass Lake-Bena, Minnesota Independent School District No. 115 | |
| | | |
| | |
(Minnesota School District Credit Enhancement Program) | |
| | | |
| | |
Series A 4.00% 2/1/39 | |
| 930,000 | | |
| 948,386 | |
City of Philadelphia, Pennsylvania | |
| | | |
| | |
Series A 4.00% 5/1/42 | |
| 500,000 | | |
| 494,435 | |
Grand River Hospital District | |
| | | |
| | |
Garfield and Mesa Counties, Colorado | |
| | | |
| | |
5.25% 12/1/37 (AGM) | |
| 675,000 | | |
| 716,202 | |
Jefferson County, Colorado School District No. R-1 | |
| | | |
| | |
5.25% 12/15/24 | |
| 750,000 | | |
| 784,073 | |
Mounds View, Minnesota Independent School District No. 621 | |
| | | |
| | |
(Minnesota School District Credit Enhancement Program) | |
| | | |
| | |
Series A 4.00% 2/1/43 | |
| 2,000,000 | | |
| 2,031,740 | |
New York City, New York Fiscal 2023 Subordinate | |
| | | |
| | |
Series B-1 5.25% 10/1/47 | |
| 1,500,000 | | |
| 1,676,235 | |
Schedule of investments
Delaware Investments® National Municipal
Income Fund
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds (continued) | |
| | | |
| | |
Local General Obligation Bonds (continued) | |
| | | |
| | |
Weld County, Colorado School District No. RE-3(J) | |
| | | |
| | |
(Weld and Adams Counties) | |
| | | |
| | |
5.00% 12/15/34 (BAM) | |
| 1,000,000 | | |
$ | 1,074,020 | |
| |
| | | |
| 12,660,739 | |
Pre-Refunded Bonds — 4.83% | |
| | | |
| | |
Central Platte Valley Metropolitan District Denver, Colorado | |
| | | |
| | |
5.00% 12/1/43-23 § | |
| 375,000 | | |
| 379,984 | |
Colorado Educational & Cultural Facilities Authority Revenue | |
| | | |
| | |
(Charter School - Atlas Preparatory School Project) | |
| | | |
| | |
144A 5.25% 4/1/45-25 #, § | |
| 700,000 | | |
| 734,426 | |
Colorado Health Facilities Authority Revenue | |
| | | |
| | |
(Covenant Retirement Communities, Inc.) | |
| | | |
| | |
Series A 5.75% 12/1/36-23 § | |
| 1,000,000 | | |
| 1,020,780 | |
Commerce City, Colorado Sales and Use Tax Revenue | |
| | | |
| | |
5.00% 8/1/44-24 (AGM) § | |
| 1,000,000 | | |
| 1,030,820 | |
St. Paul, Minnesota Housing & Redevelopment Authority Hospital Facility | |
| | | |
| | |
(Healtheast Care System Project) | |
| | | |
| | |
Series A 5.00% 11/15/29-25 § | |
| 395,000 | | |
| 419,794 | |
Series A 5.00% 11/15/30-25 § | |
| 290,000 | | |
| 308,203 | |
Tallyn’s Reach, Colorado Metropolitan District No. 3 | |
| | | |
| | |
(Limited Tax Convertible) | |
| | | |
| | |
144A 5.125% 11/1/38-23 #, § | |
| 295,000 | | |
| 299,257 | |
Western Minnesota Municipal Power Agency Supply Revenue | |
| | | |
| | |
Series A 5.00% 1/1/40-24 § | |
| 750,000 | | |
| 763,380 | |
Series A 5.00% 1/1/46-24 § | |
| 2,000,000 | | |
| 2,035,680 | |
| |
| | | |
| 6,992,324 | |
Special Tax Revenue Bonds — 33.02% | |
| | | |
| | |
Arizona Industrial Development Authority Revenue | |
| | | |
| | |
(Legacy Cares, Inc. Project) | |
| | | |
| | |
Series A 144A 7.75% | |
| | | |
| | |
7/1/50 #, ‡ | |
| 725,000 | | |
| 471,250 | |
City & County of San Francisco, California Special Tax District No 2020-1 | |
| | | |
| | |
(Mission Rock Facilities and Services) | |
| | | |
| | |
Series B 144A 5.25% 9/1/49 # | |
| 550,000 | | |
| 399,278 | |
Commonwealth of Puerto Rico | |
| | | |
| | |
(Restructured) | |
| | | |
| | |
5.75% 11/1/51 • | |
| 452,914 | | |
| 152,858 | |
Florida Development Finance Revenue | |
| | | |
| | |
(Brightline Florida Passenger Rail Expansion Project) | |
| | | |
| | |
Series A 144A 7.50% | |
| | | |
| | |
7/1/57 (AMT) #, • | |
| 600,000 | | |
| 592,548 | |
Fountain, Colorado Urban Renewal Authority Tax Increment Revenue | |
| | | |
| | |
(South Academy Highlands Project) | |
| | | |
| | |
Series A 5.50% 11/1/44 | |
| 655,000 | | |
| 623,986 | |
GDB Debt Recovery Authority of Puerto Rico | |
| | | |
| | |
(Taxable) | |
| | | |
| | |
7.50% 8/20/40 | |
| 16,807,101 | | |
| 13,949,894 | |
Lincoln Park Metropolitan District Douglas County, Colorado | |
| | | |
| | |
5.00% 12/1/46 (AGM) | |
| 500,000 | | |
| 536,190 | |
Miami-Dade County, Florida | |
| | | |
| | |
(Capital Appreciation) | |
| | | |
| | |
3.505% 10/1/37 (BAM) ^ | |
| 3,000,000 | | |
| 1,733,940 | |
New York State Dormitory Authority Personal Income Tax Revenue | |
| | | |
| | |
(General Purpose) | |
| | | |
| | |
Series E 3.00% 3/15/50 | |
| 2,500,000 | | |
| 1,920,750 | |
New York State Thruway Authority State Personal Income Tax Revenue | |
| | | |
| | |
(Climate Bond Certified - Green Bonds) | |
| | | |
| | |
Series C 5.00% 3/15/55 | |
| 4,000,000 | | |
| 4,357,320 | |
Prairie Center Metropolitan District No. 3, Colorado | |
| | | |
| | |
Series A 144A 5.00% | |
| | | |
| | |
12/15/41 # | |
| 500,000 | | |
| 492,025 | |
| |
Principal | | |
| |
| |
amount° | | |
Value (US $) | |
Municipal Bonds (continued) | |
| | | |
| | |
Special Tax Revenue Bonds (continued) | |
| | | |
| | |
Public Finance Authority, Wisconsin | |
| | | |
| | |
(American Dream @ Meadowlands Project) | |
| | | |
| | |
144A 7.00% 12/1/50 # | |
| 380,000 | | |
$ | 332,724 | |
Public Finance Authority, Wisconsin Hotel Revenue | |
| | | |
| | |
(Grand Hyatt San Antonio Hotel Acquisition Project) | |
| | | |
| | |
Series A 5.00% 2/1/62 | |
| 1,475,000 | | |
| 1,461,872 | |
Puerto Rico Sales Tax Financing Revenue | |
| | | |
| | |
(Restructured) | |
| | | |
| | |
Series A-1 4.75% 7/1/53 | |
| 7,000,000 | | |
| 6,420,400 | |
Series A-1 5.047% 7/1/46 ^ | |
| 10,000,000 | | |
| 2,625,900 | |
Series A-1 5.518% 7/1/51 ^ | |
| 51,455,000 | | |
| 10,014,172 | |
St. Paul, Minnesota Sales Tax Revenue | |
| | | |
| | |
Series G 5.00% 11/1/30 | |
| 935,000 | | |
| 965,874 | |
Thornton, Colorado Development Authority | |
| | | |
| | |
(East 144th Avenue & I-25 Project) | |
| | | |
| | |
Series B 5.00% 12/1/35 | |
| 265,000 | | |
| 272,412 | |
Series B 5.00% 12/1/36 | |
| 440,000 | | |
| 452,232 | |
| |
| | | |
| 47,775,625 | |
State General Obligation Bond — 1.15% | |
| | | |
| | |
California State | |
| | | |
| | |
(Various Purpose) | |
| | | |
| | |
3.00% 3/1/46 | |
| 2,000,000 | | |
| 1,672,560 | |
| |
| | | |
| 1,672,560 | |
Transportation Revenue Bonds — 7.44% | |
| | | |
| | |
Colorado High Performance Transportation Enterprise Revenue | |
| | | |
| | |
(U.S. 36 & I-25 Managed Lanes) | |
| | | |
| | |
5.00% 12/31/56 | |
| 1,000,000 | | |
| 969,800 | |
5.75% 1/1/44 (AMT) | |
| 1,110,000 | | |
| 1,110,733 | |
Denver, Colorado City & County Airport System Subordinate Revenue | |
| | | |
| | |
Series A 5.00% 12/1/48 (AMT) | |
| 1,000,000 | | |
| 1,032,140 | |
Port Authority of Guam Revenue | |
| | | |
| | |
Series A 5.00% 7/1/48 | |
| 1,050,000 | | |
| 1,078,539 | |
South Jersey, New Jersey Transportation Authority Revenue | |
| | | |
| | |
Series A 5.00% 11/1/45 (BAM) | |
| 2,455,000 | | |
| 2,624,419 | |
St. Paul, Minneapolis Metropolitan Airports Commission Revenue | |
| | | |
| | |
(Senior) | |
| | | |
| | |
Series C 5.00% 1/1/33 | |
| 1,000,000 | | |
| 1,078,920 | |
Series C 5.00% 1/1/36 | |
| 1,000,000 | | |
| 1,068,040 | |
Series C 5.00% 1/1/46 | |
| 1,245,000 | | |
| 1,293,119 | |
(Subordinate) | |
| | | |
| | |
Series B 5.00% 1/1/26 (AMT) | |
| 500,000 | | |
| 505,065 | |
| |
| | | |
| 10,760,775 | |
Water & Sewer Revenue Bond — 2.14% | |
| | | |
| | |
Guam Waterworks Authority Water & Wastewater System Revenue Refunding | |
| | | |
| | |
5.00% 7/1/37 | |
| 3,000,000 | | |
| 3,093,330 | |
| |
| | | |
| 3,093,330 | |
Total Municipal Bonds | |
| | | |
| | |
(cost $256,226,686) | |
| | | |
| 247,780,514 | |
| |
| | | |
| | |
Short-Term Investments — 1.30% | |
| | | |
| | |
Variable Rate Demand Notes — 1.30%¤ | |
| | | |
| | |
Los Angeles Department of Water & Power Revenue | |
| | | |
| | |
Subordinate Series A-2 3.35% | |
| | | |
| | |
7/1/45 | |
| | | |
| | |
(SPA - Barclays Bank) | |
| 1,000,000 | | |
| 1,000,000 | |
Phoenix, Arizona Industrial Development Authority | |
| | | |
| | |
(Mayo Clinic) Series B 3.60% | |
| | | |
| | |
11/15/52 | |
| | | |
| | |
(SPA - Northern Trust) | |
| 875,000 | | |
| 875,000 | |
Total Short-Term Investments | |
| | | |
| | |
(cost $1,875,000) | |
| | | |
| 1,875,000 | |
Total Value of Securities—172.54% | |
| | | |
| | |
(cost $258,101,686) | |
| | | |
$ | 249,655,514 | |
° | Principal amount shown is stated in USD unless noted that the security is denominated in another currency. |
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At March
31, 2023, the aggregate value of Rule 144A securities was $7,387,377, which represents 5.11% of the Fund’s net assets. See Note 8 in “Notes
to financial statements.” |
‡ | Non-income producing security. Security is currently in default. |
^ | Zero-coupon security. The rate shown is the effective yield at the time of purchase. |
Schedule of investments
Delaware Investments® National Municipal
Income Fund
§ | Pre-refunded bonds. Municipal bonds that are generally backed or secured by US Treasury bonds. For pre-refunded
bonds, the stated maturity is followed by the year in which the bond will be pre-refunded. See Note 8 in “Notes to financial statements.” |
• | Variable rate investment.
Rates reset periodically. Rate shown reflects the rate in effect at March 31, 2023. For securities based on a published reference rate
and spread, the reference rate and spread are indicated in their descriptions. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M,
etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the
reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer
or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which
are paying off over time. These securities do not indicate a reference rate and spread in their descriptions. |
¤ | Tax-exempt obligations that contain a floating or variable interest rate adjustment formula and an unconditional
right of demand to receive payment of the unpaid principal balance plus accrued interest upon a short notice period (generally up to 30
days) prior to specified dates either from the issuer or by drawing on a bank letter of credit, a guarantee, or insurance issued with
respect to such instrument. Each rate shown is as of March 31, 2023. |
Summary of abbreviations:
AGM – Insured by Assured Guaranty Municipal Corporation
AMT – Subject to Alternative Minimum Tax
BAM – Insured by Build America Mutual Assurance
ICE – Intercontinental Exchange, Inc.
LIBOR – London Interbank Offered Rate
LIBOR03M – ICE LIBOR USD 3 Month
LIBOR06M – ICE LIBOR USD 6 Month
LLC – Limited Liability Corporation
SPA – Stand-by Purchase Agreement
USD – US Dollar
See accompanying notes, which are an integral part of the financial
statements.
Statement of assets and liabilities
Delaware Investments® National Municipal Income Fund
March 31, 2023 | |
| |
Assets: | |
| | |
Investments, at value* | |
$ | 249,655,514 | |
Interest receivable | |
| 2,957,942 | |
Deferred offering cost for preferred shares | |
| 176,544 | |
Other assets | |
| 2,148 | |
Total Assets | |
| 252,792,148 | |
Liabilities: | |
| | |
Due to custodian | |
| 800,782 | |
Liquidation value of preferred stock | |
| 99,000,000 | |
Payable for securities purchased | |
| 7,912,098 | |
Other accrued expenses | |
| 261,587 | |
Investment management fees payable to affiliates | |
| 94,443 | |
Administration expenses payable to affiliates | |
| 23,036 | |
Total Liabilities | |
| 108,091,946 | |
Total Net Assets Applicable to Common Shareholders | |
$ | 144,700,202 | |
| |
| | |
Net Assets Applicable to Common Shareholders Consist of: | |
| | |
Paid-in capital ($0.001 par value)•, f | |
$ | 180,200,170 | |
Total distributable earnings (loss) | |
| (35,499,968 | ) |
Total Net Assets Applicable to Common Shareholders | |
$ | 144,700,202 | |
| |
| | |
*Investments, at cost | |
$ | 258,101,686 | |
•Common shares outstanding | |
| 12,278,003 | |
fCommon shares authorized | |
| unlimited | |
See accompanying notes, which are an integral part of the financial
statements.
Statement of operations
Delaware Investments® National Municipal Income Fund
Year ended March 31, 2023 | |
| |
Investment Income: | |
| | |
Interest | |
$ | 15,196,022 | |
| |
| | |
Expenses: | |
| | |
Management fees | |
| 1,442,951 | |
Dividend expense | |
| 3,396,207 | |
Dividend disbursing and transfer agent fees and expenses | |
| 540,712 | |
Legal fees | |
| 479,366 | |
Accounting and administration expenses | |
| 108,003 | |
Audit and tax fees | |
| 68,824 | |
Reports and statements to shareholders expenses | |
| 58,619 | |
Custodian fees | |
| 28,369 | |
Trustees’ fees and expenses | |
| 14,965 | |
Registration fees | |
| 152 | |
Other | |
| 398,177 | |
Total operating expenses | |
| 6,536,345 | |
Net Investment Income (Loss) | |
| 8,659,677 | |
| |
| | |
Net Realized and Unrealized Gain (Loss): | |
| | |
Net realized gain (loss) on investments | |
| (24,543,349 | ) |
Net change in unrealized appreciation (depreciation) on investments | |
| (10,657,292 | ) |
Net Realized and Unrealized Gain (Loss) | |
| (35,200,641 | ) |
Net Increase (Decrease) in Net Assets Resulting from Operations | |
$ | (26,540,964 | ) |
See accompanying notes, which are an integral part of the financial
statements.
Statements of changes in net assets
Delaware Investments® National Municipal Income Fund
| |
Year ended | |
| |
3/31/23 | | |
3/31/22 | |
Increase (Decrease) in Net Assets from Operations: | |
| | | |
| | |
Net investment income (loss) | |
$ | 8,659,677 | | |
$ | 3,356,556 | |
Net realized gain (loss) | |
| (24,543,349 | ) | |
| (2,015,982 | ) |
Net change in unrealized appreciation (depreciation) | |
| (10,657,292 | ) | |
| (15,173,054 | ) |
Net increase (decrease) in net assets resulting from operations | |
| (26,540,964 | ) | |
| (13,832,480 | ) |
| |
| | | |
| | |
Dividends and Distributions to Common Shareholders from: | |
| | | |
| | |
Distributable earnings | |
| (8,622,394 | ) | |
| (4,399,567 | ) |
Return of capital | |
| (1,132,057 | ) | |
| — | |
Total distributions to shareholders | |
| (9,754,451 | ) | |
| (4,399,567 | ) |
| |
| | | |
| | |
Capital Share Transactions: | |
| | | |
| | |
Net assets from merger1 | |
| — | | |
| 235,755,536 | |
Cost of shares redeemed | |
| (103,710,362 | ) | |
| — | |
Increase (decrease) in net assets derived from capital share transactions | |
| (103,710,362 | ) | |
| 235,755,536 | |
Net Increase (Decrease) in Net Assets Applicable to Common Shareholders | |
| (140,005,777 | ) | |
| 217,523,489 | |
| |
| | | |
| | |
Net Assets Applicable to Common Shareholders: | |
| | | |
| | |
Beginning of year | |
| 284,705,979 | | |
| 67,182,490 | |
End of year | |
$ | 144,700,202 | | |
$ | 284,705,979 | |
| 1 | See Note 7 in “Notes to financial statements.” |
See accompanying notes, which are an integral part of the financial
statements.
Statement of cash flows
Delaware Investments® National Municipal Income Fund
Year ended March 31, 2023 | |
| |
Cash Flows Provided by (Used for) Operating Activities: | |
| | |
Net increase (decrease) in net assets resulting from operations | |
$ | (26,540,964 | ) |
Adjustments to reconcile net increase (decrease) in net assets from operations to net cash provided by (used for) operating activities: | |
| | |
Amortization of premium and accretion of discount on investments | |
| 712,368 | |
Proceeds from disposition of investment securities | |
| 452,829,335 | |
Purchase of investment securities | |
| (320,626,391 | ) |
(Purchase) proceeds from disposition of short-term investment securities, net | |
| 4,932,418 | |
Net realized (gain) loss on investments | |
| 24,543,349 | |
Net change in unrealized (appreciation) depreciation of investments | |
| 10,657,292 | |
(Increase) decrease in other assets | |
| 400,848 | |
(Increase) decrease in receivable for securities sold | |
| 22,064,142 | |
(Increase) decrease in interest receivable | |
| 2,085,177 | |
(Increase) decrease in offering cost for preferred shareholders | |
| 22,121 | |
(Increase) decrease in prepaid rating agency fee | |
| 43,740 | |
Increase (decrease) in payable for securities purchased | |
| (25,826,655 | ) |
Increase (decrease) in Trustees’ fees and expenses payable to affiliates | |
| (1,418 | ) |
Increase (decrease) in accounting and administration expenses payable to affiliates | |
| (1,349 | ) |
Increase (decrease) in administration expenses payable to affiliates | |
| 23,036 | |
Increase (decrease) in investment management fees payable to affiliates | |
| (50,473 | ) |
Increase (decrease) in reports and statements to shareholders expenses payable to affiliates | |
| (145 | ) |
Increase (decrease) in audit and tax fees payable | |
| (44,046 | ) |
Increase (decrease) in legal fees payable to affiliates | |
| (13,380 | ) |
Increase (decrease) in other accrued expenses | |
| 233,166 | |
Total adjustments | |
| 171,983,135 | |
Net cash provided by operating activities | |
| 145,442,171 | |
| |
| | |
Cash provided by (used for) financing activities: | |
| | |
Repurchase of preferred stock at liquidation value | |
| (36,000,000 | ) |
Cash dividends and distributions paid to common shareholders and preferred shareholders | |
| (9,754,451 | ) |
Cost of shares redeemed net of amounts payables | |
| (103,710,362 | ) |
Increase (decrease) in bank overdraft | |
| 800,782 | |
Net cash provided by (used for) financing activities | |
| (148,664,031 | ) |
Net increase (decrease) in cash | |
| (3,221,860 | ) |
Cash at beginning of year | |
$ | 3,221,860 | |
Cash at end of year | |
$ | — | |
Cash paid during the period for dividend expense from borrowings | |
$ | 3,396,207 | |
See accompanying notes, which are an integral part of the financial
statements.
Financial
highlights
Delaware
Investments® National Municipal Income Fund
Selected
data for each share of the Fund outstanding throughout each period were as follows:
| |
| |
| |
| |
| |
|
| |
Year
ended |
| |
3/31/23 | |
3/31/22 | |
3/31/21 | |
3/31/20 | |
3/31/19 |
Net
asset value, beginning of period | |
$ | 13.59 | | |
$ | 14.84 | | |
$ | 13.71 | | |
$ | 14.44 | | |
$ | 14.34 | |
Income
(loss) from investment operations: | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
investment income1 | |
| 0.47 | | |
| 0.51 | | |
| 0.58 | | |
| 0.54 | | |
| 0.59 | |
Net
realized and unrealized gain (loss) | |
| (1.73 | ) | |
| (1.12 | ) | |
| 1.12 | | |
| (0.57 | ) | |
| 0.11 | |
Total
from investment operations | |
| (1.26 | ) | |
| (0.61 | ) | |
| 1.70 | | |
| (0.03 | ) | |
| 0.70 | |
Less
dividends and distributions to common shareholders from: | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
investment income | |
| (0.48 | ) | |
| (0.54 | ) | |
| (0.51 | ) | |
| (0.55 | ) | |
| (0.60 | ) |
Net
realized gain | |
| — | | |
| (0.10 | ) | |
| (0.06 | ) | |
| (0.15 | ) | |
| — | |
Return
of capital | |
| (0.06 | ) | |
| — | | |
| — | | |
| — | | |
| — | |
Total
dividends and distributions | |
| (0.54 | ) | |
| (0.64 | ) | |
| (0.57 | ) | |
| (0.70 | ) | |
| (0.60 | ) |
Net
asset value, end of period | |
$ | 11.79 | | |
$ | 13.59 | | |
$ | 14.84 | | |
$ | 13.71 | | |
$ | 14.44 | |
Market
value, end of period | |
$ | 10.67 | | |
$ | 12.65 | | |
$ | 13.12 | | |
$ | 12.24 | | |
$ | 12.69 | |
Total
return based on:2 | |
| | | |
| | | |
| | | |
| | | |
| | |
Net asset
value | |
| (9.25 | )% | |
| (4.15 | )% | |
| 13.20 | % | |
| (0.24 | )% | |
| 5.71 | % |
Market
value | |
| (11.51 | )% | |
| 0.92 | % | |
| 12.11 | % | |
| 1.35 | % | |
| 5.56 | % |
Ratios
and supplemental data: | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
assets applicable to common shares, end of period (000 omitted) | |
$ | 144,700 | | |
$ | 284,706 | | |
$ | 67,182 | | |
$ | 62,085 | | |
$ | 65,399 | |
Ratio
of expenses to average net assets applicable to common shareholders3 | |
| 2.89 | % | |
| 1.57 | % | |
| 1.66 | % | |
| 2.27 | % | |
| 2.31 | % |
Ratio
of net investment income to average net assets applicable to common shareholders4 | |
| 3.83 | % | |
| 3.45 | % | |
| 4.03 | % | |
| 3.69 | % | |
| 4.19 | % |
Portfolio
turnover | |
| 94 | % | |
| 75 | % | |
| 19 | % | |
| 33 | % | |
| 16 | % |
Leverage
analysis: | |
| | | |
| | | |
| | | |
| | | |
| | |
Value
of preferred shares outstanding (000 omitted)5 | |
| 99,000 | | |
| 135,000 | | |
| 30,000 | | |
| 30,000 | | |
| 30,000 | |
Net asset
coverage per share of preferred shares, end of period5 | |
| 246,162 | | |
| 310,893 | | |
| 323,942 | | |
| 306,949 | | |
| 317,996 | |
Liquidation
value per share of preferred shares5 | |
| 100,000 | | |
| 100,000 | | |
| 100,000 | | |
| 100,000 | | |
| 100,000 | |
1 | Net
investment income is reduced by dividends paid to preferred shareholders from net investment
income of $0.28, $0.08, $0.08, $0.17, and $0.18 per share for the years ended March 31, 2023,
2022, 2021, 2020, and 2019 respectively. |
2 | Total
investment return is calculated assuming a purchase of common stock on the opening of the
first day and a sale on the closing of the last day of each period reported. Dividends and
distributions, if any, are assumed for the purposes of this calculation to be reinvested
at prices obtained under the Fund’s dividend reinvestment plan. Generally, total investment
return based on net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in the premium
of the market value to the net asset value from the beginning to the end of such periods.
Conversely, total investment return based on net asset value will be lower than total investment
return based on market value in periods where there is a decrease in the discount or an increase
in the premium of the market value to the net asset value from the beginning to the end of
such periods. |
3 | The
ratio of expenses to average net assets applicable to common shareholders excluding dividend
expense for the years ended March 31, 2023, 2022, 2021, 2020, and 2019 were 1.39%, 1.04%,
1.02%, 1.11%, and 1.05%, respectively. |
4 | The
ratio of net investment income excluding dividend expense to average net assets for the years
ended March 31, 2023, 2022, 2021, 2020, and 2019 were 5.33%, 3.98%, 4.67%, 4.84%, and 5.45%,
respectively. |
5 | In
March 2012, the Fund issued a series of 300 variable rate preferred shares, with a liquidation
preference of $100,000 per share (Series 2017 Shares). The Series 2017 Shares were redeemed
on February 2, 2016 and replaced with Series 2021 Shares, which were the same amount and
value as the Fund’s Series 2017 Shares. On April 25, 2019, the Fund redeemed the Series
2021 Shares, and replaced them with Series 2049 Muni-MultiMode Preferred Shares (Series 2049),
which have the same amount and value as the Series 2021 Shares. When the Fund acquired Delaware
Investments Colorado Municipal Income Fund, Inc. and Delaware Investments Minnesota Municipal
Income Fund II, Inc. on February 11, 2022, it also acquired the Series 2049 preferred shares
used as leverage by those funds, which are reflected in the value of preferred shares outstanding
in the table above. 36,000,000 were redeemed to Fund the tender offer of VFL on December
16, 2022. |
See
accompanying notes, which are an integral part of the financial statements.
Notes
to financial statements
Delaware
Investments® National Municipal Income Fund
March
31, 2023
Delaware
Investments National Municipal Income Fund (Fund) is organized as a Massachusetts business trust, and is a diversified closed-end management
investment company under the Investment Company Act of 1940, as amended (1940 Act). The Fund’s shares trade on the NYSE American,
the successor to the American Stock Exchange, formerly known as NYSE Market.
1.
Significant Accounting Policies
The
Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic
946, Financial Services — Investment Companies. The following accounting policies are in accordance with US generally accepted
accounting principles (US GAAP) and are consistently followed by the Fund.
Security
Valuation — Debt securities are valued based upon valuations provided by an independent pricing service or broker and reviewed
by management. To the extent current market prices are not available, the pricing service may take into account developments related
to the specific security, as well as transactions in comparable securities. Valuations for fixed income securities utilize matrix systems,
which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations.
Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in
good faith by the Fund’s valuation designee, Delaware Management Company (DMC). Subject to the oversight of the Fund’s Board of Trustees
(Board), DMC, as valuation designee, has adopted policies and procedures to fair value securities with that are not readily available
consistent with the requirements of Rule 2a-5 under the 1940 Act. In determining whether market quotations are readily available or fair
valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security.
Restricted securities and private placements are valued at fair value.
Federal
Income Taxes — No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income
tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite
distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s
tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority.
Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current
year. Management has analyzed the Fund’s tax positions taken or expected to be taken on the Fund’s federal income tax returns
through the year ended March 31, 2023 and for all open tax years (years ended March 31, 2020 – March 31, 2022), and has concluded
that no provision for federal income tax is required in the Fund’s financial statements. If applicable, the Fund recognizes interest
accrued on unrecognized tax benefits in interest expense and penalties in “Other” on the “Statements of operations.”
During the year ended March 31, 2023, the Fund did not incur any interest or tax penalties.
Cash
and Cash Equivalents — Cash and cash equivalents include deposits held at financial institutions, which are available for the
Fund’s use with no restrictions, with original maturities of 90 days or less.
Use
of Estimates — The preparation of financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and the differences could be material.
Other
— Expenses directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within
the Delaware Funds by Macquarie® (Delaware Funds) are generally allocated among such funds on the basis of average net
assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are
purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on debt
securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective
interest method. Premiums on callable debt securities are amortized to interest income to the earliest call date using the effective
interest method. The Fund declares and pays dividends from net investment income monthly and distributions from net realized gain on
investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if
any, are recorded on the ex-dividend date.
2.
Investment Management, Administration Agreements and Other Transactions with Affiliates
In
accordance with the terms of its investment management agreement, the Fund pays DMC, a series of Macquarie Investment Management Business
Trust and the investment manager, an annual fee of 0.40% which is calculated based on the Fund’s adjusted average daily net assets.
Delaware
Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administrative oversight services
to the Fund. For these services, DIFSC’s fees are calculated daily and paid monthly, based on the aggregate daily net assets of
all funds within the Delaware Funds at the following annual rates: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion;
0.0025% of the next $45 billion; and 0.0015% of aggregate average daily net assets in excess of $90 billion (Total Fee). Each fund in
the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund then pays its portion of
the remainder of the Total Fee on a relative net asset value (NAV) basis. This amount is included on the “Statement of operations”
under “Accounting and administration expenses.” For the year ended March 31, 2023, the Fund paid $27,861 for these services.
As
provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including
the cost of internal personnel of DMC and/or its affiliates that provide legal and regulatory reporting services to the Fund. For the
year ended March 31, 2023, the Fund paid $76,934 for internal legal and regulatory reporting services provided by DMC and/or its affiliates’
employees. This amount is included on the “Statement of operations” under “Legal fees.”
Trustees’ fees
include expenses accrued by the Fund for each Independent Trustee’s retainer and other fees. Certain officers of DMC and DIFSC
are officers and/or Trustees of the Fund. These officers and Trustees are paid no compensation by the Fund.
Cross
trades for the year ended March 31, 2023, were executed by the Fund pursuant to procedures adopted by the Board designed to ensure compliance
with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies,
or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common
investment advisor (or affiliated investment advisors), common trustees and/or common officers. At their regularly scheduled meetings,
the Board reviews a report related to the Fund’s compliance with the procedures adopted by the Board. Pursuant to these procedures,
for the year ended March 31, 2023, the Fund engaged in Rule 17a-7 securities purchases of $34,383,915. For the year ended March 31, 2023,
the Fund engaged in Rule 17a-7 securities sales of $47,018,606, resulting in net losses of $2,073,138.
3.
Investments
For
the year ended March 31, 2023, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases | |
$ | 320,626,391 | |
Sales | |
| 452,829,335 | |
The
tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be the final tax
cost basis adjustments, but approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders.
At March 31, 2023, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes for the Fund were
as follows:
Cost
of investments | |
$ | 258,643,540 | |
Aggregate
unrealized appreciation of investments | |
$ | 2,353,762 | |
Aggregate
unrealized depreciation of investments | |
| (11,341,788 | ) |
Net
unrealized depreciation of investments | |
$ | (8,988,026 | ) |
US
GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction
between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements
has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable
and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect
the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent
of the reporting entity.
Notes
to financial statements
Delaware
Investments® National Municipal Income Fund
3.
Investments (continued)
Unobservable
inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset
or liability based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level
based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized
as follows:
| Level 1
– | Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies,
futures contracts, and exchange-traded options contracts) |
| Level 2
– | Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active,
quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are
observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit
risks, and default rates) or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign
currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, and fair valued
securities) |
| Level 3
– | Significant unobservable inputs, including the Fund’s own assumptions used to determine the fair value of investments. (Examples:
broker-quoted securities and fair valued securities) |
Level
3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the
anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature
or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities
that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3 investment may not represent the value
which is received upon disposition and this could impact the results of operations.
The
following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of March 31, 2023:
| |
Level 2 |
|
Securities | |
|
Assets: | |
|
Municipal Bonds | |
$ | 247,780,514 | |
Short-Term Investments | |
| 1,875,000 | |
Total Value of Securities | |
$ | 249,655,514 | |
During
the year ended March 31, 2023, there were no transfers into or out of Level 3 investments. The Fund’s policy is to recognize transfers
into or out of Level 3 investments based on fair value at the beginning of the reporting year.
A
reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning or
end of the period in relation to the Fund’s net assets. During the year ended March 31, 2023, there were no Level 3 investments.
4.
Dividend and Distribution Information
Income
and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.
Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income
tax purposes. The tax character of dividends and distributions paid during the years ended March 31, 2023 and 2022 were as follows:
| |
Year ended |
| |
| 3/31/23 | | |
| 3/31/22 | |
Tax-exempt income | |
$ | 8,568,847 | | |
$ | 3,946,579 | |
Ordinary income | |
| 53,547 | | |
| 576 | |
Long-term capital gains | |
| — | | |
| 452,412 | |
Return of capital | |
| 1,132,057 | | |
| — | |
Total | |
$ | 9,754,451 | | |
$ | 4,399,567 | |
5.
Components of Net Assets on a Tax Basis
As
of March 31, 2023, the components of net assets on a tax basis were as follows:
Shares of beneficial interest | |
$ | 180,200,170 | |
Capital loss carryforwards* | |
| (26,494,436 | ) |
Unrealized appreciation (depreciation) of investments | |
| (9,005,532 | ) |
Net assets | |
$ | 144,700,202 | |
*
A portion of the Series capital loss carryforward is subject to limitation under the Internal Revenue Code and related regulations.
The
differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of market discount
on debt instruments and tax deferral of wash sales.
For
financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications
are primarily due to reorganization-related adjustments and tax treatment of payments to preferred shareholders. Results of operations
and net assets were not affected by these reclassifications. For the year ended March 31, 2023, the Fund had no reclassifications.
At
March 31, 2023, capital loss carryforwards available to offset future realized capital gains are as follows:
Loss carryforward character | | |
| | |
| Short-term | | |
| Long-term | | |
| Total | |
$ | 17,315,727 | | |
$ | 9,178,709 | | |
$ | 26,494,436 | |
6.
Capital Stock
Pursuant
to its declaration of trust, the Fund has been authorized to issue an unlimited amount of $0.01 par value common shares. Shares issuable
under the Fund’s dividend reinvestment plan are purchased by the Fund’s transfer agent, Computershare, Inc., in the open
market. During the years ended March 31, 2023 and 2022, the Fund did not issue any shares under its dividend reinvestment plan.
On
April 25, 2019, the Fund priced private offerings to a qualified institutional buyer, as defined pursuant to Rule 144A under the Securities
Act of 1933, of approximately $30 million of Muni-MultiMode Preferred Shares, Series 2049 (MMP), with a $100,000 liquidation value per
share. The Fund used the net proceeds from each offering to redeem its outstanding Variable Rate MuniFund Term Preferred Shares, Series
2021 (VMTP). The Fund issued MMP shares in the same amount and value as its previously outstanding VMTP shares. On February 11, 2022,
the Fund acquired the assets of Delaware Investments Colorado Municipal Income Fund, Inc. (“VCF”) and Delaware Investments
Minnesota Municipal Income Fund II, Inc. (“VMM”), which included Series 2049 MMP preferred shares issued by each of VCF and
VMM used as leverage (the “Reorganization”). The Reorganization caused the Fund’s total preferred shares outstanding
to equal $135 million, with VCF’s Series 2049 MMP preferred shares becoming Series 2 and VMM’s Series 2049 MMP preferred
shares becoming Series 3 of the MMP shares issued by the Fund. The Fund’s original tranche of Series 2049 MMP preferred shares
is Series 1. The terms of the Series 2 and Series 3 MMP shares are substantially similar to those of the Series 1. For more information
on the Reorganization see Note 7.
Notes
to financial statements
Delaware
Investments® National Municipal Income Fund
6.
Capital Stock (continued)
The
MMP shares are a floating rate form of preferred stock with a mandatory term redemption. The mandatory term redemption date for these
offerings is April 1, 2049. MMP shares have the option at either the request of the purchaser or issuer to be converted to a variable
rate demand preferred (“VRDP”) structure. The converted VRDP shares could then be offered for sale to certain institutional
investors. The VRDP could continue to remain outstanding for the remainder of the MMP shares’ 30-year term. MMP dividends are set
weekly at a spread to the Securities Industry and Financial Markets Association Municipal Swap Index. MMP shares represent the preferred
stock of the Fund and are senior, with priority in all respects, to the Fund’s common shares as to payments of dividends. MMP shares
are redeemable at par. The Fund may be obligated to redeem certain of the MMP shares if the Fund fails to maintain certain asset coverage
and leverage ratio requirements and such failures are not cured by the applicable cure date. The redemption price per share is equal
to the sum of the liquidation value per share plus any accumulated but unpaid dividends. Dividends on MMP shares are set weekly, and
are based on a short-term index rate plus an additional spread that is subject to adjustment in certain circumstances, including a change
in the credit rating assigned to the MMP shares by Fitch Ratings (“Fitch”).
For
the year ended March 31, 2023, the Fund redeemed 8,678,692 common shares valued at $103,710,362.
The
weighted average dividend rate for all of the Fund’s MMP shares for the year ended March 31, 2023 is 2.69%.
The
Fund uses leverage because its managers believe that, over time, leveraging may provide opportunities for additional income and total
return for common shareholders. However, the use of leverage also can expose common shareholders to additional volatility. For example,
as the prices of securities held by the Fund decline, the negative impact of these valuation changes on common share NAV and common shareholder
total return is magnified by the use of leverage; accordingly, the use of structural leverage may hurt the Fund’s overall performance.
Leverage
may also cause the Fund to incur certain costs. In the event that the Fund is unable to meet certain criteria (including, but not limited
to, maintaining certain ratings with Fitch, funding dividend payments, or funding redemptions), the Fund will pay additional fees with
respect to the leverage.
For
financial reporting purposes, the MMP shares are considered debt of the issuer; therefore, the liquidation value which approximates fair
value of the MMP shares is recorded as a liability in the “Statement of assets and liabilities”. Dividends accrued and paid
on the MMP shares are included as a component of dividend expense in the “Statement of operations”. The MMP shares are treated
as equity for legal and tax purposes. Dividends paid to holders of the MMP shares are generally classified as tax-exempt income for tax-reporting
purposes.
Offering
costs for MMP shares are recorded as a deferred charge and amortized over the 30-year life of the MMP shares. These are presented as
“Offering cost for preferred shareholders” on the “Statement of assets and liabilities” and “Offering costs”
on the “Statement of operations.”
7.
Reorganization
On
November 9, 2021, the Board approved a proposal to reorganize (the “Reorganization”) Delaware Investments® Colorado
Municipal Income Fund, Inc. and Delaware Investments Minnesota Municipal Income Fund II, Inc. (the “Acquired Funds”), each
organized as Minnesota corporations, with and into Delaware Investments National Municipal Income Fund (the “Acquiring Fund”),
organized as a Massachusetts business trust. Pursuant to an Agreement and Plan of Reorganization (the “Plan”): (i) all of
the property, assets, and goodwill of the Acquired Funds were acquired by the Acquiring Fund, and (ii) the Trust, on behalf of the Acquiring
Fund, assumed the liabilities of the Acquired Funds, in exchange for shares of the Acquiring Fund. In accordance with the Plan, the Acquired
Funds liquidated and dissolved following the Reorganization. The purpose of the transaction was to allow shareholders of the Acquired
Funds to own shares of the Acquiring Fund, and the Acquiring Fund to achieve a larger asset level, which could potentially reduce its
discounts as well as fixed expenses, greater liquidity to facilitate larger trading volumes, stronger investment opportunities due to
scale and having a national investment focus, and the ability to implement other forms of leverage. The Reorganization was accomplished
by a tax-free exchange of shares on February 11, 2022. For financial reporting purposes, assets received and shares issued by the Acquiring
Fund were recorded at fair value; however, the cost basis of the investments received from the Acquired Funds was carried forward to
align ongoing reporting of the Acquiring Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for
tax purposes.
The
share transactions associated with the Reorganization are as follows:
| |
Acquired Fund Net Assets | |
Acquired Fund Shares Outstanding | |
Shares Converted to Acquiring Fund | |
Acquiring Fund Net Assets | |
Conversion Ratio |
| | |
Delaware Investments Colorado Municipal Income Fund, Inc. | |
Delaware Investments National Municipal Income Fund | |
| | |
Common Shares | | |
$ |
71,680,609 | |
| 4,837,100 | | |
| 4,995,164 | | |
$ | 64,997,119 | | |
| 1.0327 | |
| |
Acquired Fund Net Assets | |
Acquired Fund Shares Outstanding | |
Shares Converted to Acquiring Fund | |
Acquiring Fund Net Assets | |
Conversion Ratio |
| | |
Delaware Investments Minnesota Municipal Income Fund II, Inc. | |
Delaware Investments National Municipal Income Fund | |
| | |
Common Shares | | |
$ |
164,074,927 | |
| 11,504,975 | | |
| 11,433,793 | | |
$ | 64,997,119 | | |
| 0.9938 | |
The
net assets of the Acquired Funds before the Reorganization were $235,755,536. The net assets of the Acquiring Fund immediately following
the Reorganization were $300,752,655.
Assuming
the Reorganization had been completed on April 1, 2021, the Acquiring Fund’s pro forma results of operations for the year ended March
31, 2022, would have been as follows:
Net investment income | |
$ | 10,353,883 | |
Net realized loss on investments | |
| (2,024,210 | ) |
Net change in unrealized appreciation (depreciation) | |
| (22,051,855 | ) |
Net decrease in net assets resulting from operations | |
$ | (13,722,182 | ) |
Because
the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not
practical to separate the amounts of revenue and earnings of the Acquired Funds that have been included in the Acquiring Fund’s Statement
of Operations since the Reorganization was consummated on March 31, 2022.
8.
Geographic, Credit, and Market Risks
The
global outbreak of COVID-19 has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of
entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, cancellations, supply
chain disruptions, and lower consumer demand, as well as general concern and uncertainty. The impact of COVID-19, and other infectious
illness outbreaks that may arise in the future, could adversely affect the economies of many nations or the entire global economy, individual
issuers and capital markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illnesses in emerging
market countries may be greater due to generally less established healthcare systems. Public health crises caused by the COVID-19 outbreak
may exacerbate other pre-existing political, social and economic risks in certain countries or globally. The duration of the outbreak,
its full economic impact and ongoing effects at the macro-level and on individual businesses are unpredictable and may result in significant
and prolonged effects on a Fund’s performance.
When
interest rates rise, fixed income securities (i.e. debt obligations) generally will decline in value. These declines in value are greater
for fixed income securities with longer maturities or durations. These declines in value are greater for fixed income securities with
longer maturities or durations. Interest rate changes are influenced by a number of factors, such as government policy, monetary policy,
inflation expectations, and the supply and demand of bonds. A fund may be subject to a greater risk of rising interest rates when interest
rates are low or inflation rates are high or rising.
IBOR
is the risk that changes related to the use of the London interbank offered rate (LIBOR) and other interbank offered rate (collectively,
IBORs) could have adverse impacts on financial instruments that reference LIBOR (or the corresponding IBOR). The abandonment of LIBOR
could affect the value and liquidity of instruments that reference LIBOR. The use of alternative reference rate products may impact investment
Notes
to financial statements
Delaware
Investments® National Municipal Income Fund
8.
Geographic, Credit, and Market Risks (continued)
strategy performance. These risks may also apply with respect to changes in connection
with other IBORs, such as the euro overnight index average (EONIA), which are also the subject of recent reform.
The
Fund concentrates its investments in securities issued by each corresponding state’s municipalities. The Fund invests primarily
in a specific state and may be subject to geographic concentration risk. In addition, the Fund has the flexibility to invest in issuers
in US territories and possessions such as the Commonwealth of Puerto Rico, the US Virgin Islands, and Guam whose bonds are also free
of federal and individual state income taxes. The value of the Fund’s investments may be adversely affected by new legislation
within the states or US territories, regional or local economic conditions, and differing levels of supply and demand for municipal bonds.
Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer,
such bonds remain subject to the risk that value may fluctuate for other reasons and there is no certainty that the insurance company
will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value
of insured bonds held in the Fund.
From
time to time, the Fund may invest in industrial development bonds (IDBs) or pollution control revenue (PCR) bonds that are issued by
a conduit authority on behalf of a corporation that is either foreign owned or has international affiliates or operations. While the
bonds may be issued to finance a facility located in the United States, the bonds may be secured by a payment obligation or guaranty
of the corporation. To the extent the Fund invests in such securities, that Fund may be exposed to risks associated with international
investments. The risk of international investments not ordinarily associated with US investments includes fluctuation in currency values,
differences in accounting principles, and/or economic or political instability in other nations.
The
Fund invests a portion of its assets in high yield fixed income securities, which are securities rated lower than BBB- by Standard &
Poor’s Financial Service LLC (S&P), lower than Baa3 by Moody’s Investors Service, Inc. (Moody’s), or similarly rated by another nationally
recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree
of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive
industry conditions than investment grade securities.
In
particular, there recently has been speculation that due to a weak economic outlook, high government debt levels, and credit rating downgrades
by S&P and Moody’s, Puerto Rican debt obligations may be subject to a greater risk of default. In striving to manage geographic
concentration risk for a Fund, DMC carefully monitors the economies of each state, region, and US territory and possession in which the
Fund invests or may invest. In general, DMC believes these economies are broad enough to satisfy the Fund’s investment needs. However,
there is no way to eliminate this risk when investing with a concentration in certain geographic areas.
The
Fund may invest in advance refunded bonds, escrow secured bonds, or defeased bonds. Under current federal tax laws and regulations, state
and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding
debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction
where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current
refunding.” “Advance refunded bonds” are bonds in which the refunded bond issue remains outstanding for more than 90
days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to
purchase high grade interest bearing debt securities, which are then deposited in an irrevocable escrow account held by an escrow agent
to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity”
when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and
interest on the original interest payment and maturity dates.
Bonds
are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or
dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased”
when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond
contract are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and
interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s, S&P,
and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.
To
the extent that the Fund invests in securities with longer duration, it may be more sensitive to fluctuation of interest rates.
The
Fund invests in certain obligations that may have liquidity protection designed to ensure that the receipt of payments due on the underlying
security is timely. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained by the issuer
or sponsor from third parties, through various means of structuring the transaction, or through a combination of such approaches. The
Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.
The
Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale,
securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which
may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner
and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Board has delegated to DMC the day-to-day
functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid
securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s
15% limit on investments in illiquid securities. Rule 144A securities held by the Fund have been identified on the “Schedule of
investments.”
9.
Contractual Obligations
The
Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under
these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed
the Fund’s existing contracts and expects the risk of loss to be remote.
10.
Recent Accounting Pronouncements
In
March 2020, FASB issued an Accounting Standards Update (ASU), ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects
of Reference Rate Reform on Financial Reporting. The amendments in ASU 2020-04 provide optional temporary financial reporting relief
from the effect of certain types of contract modifications due to the planned discontinuation of LIBOR and other interbank-offered based
reference rates as of the end of 2021. In March 2021, the administrator for LIBOR announced the extension of the publication of a majority
of the USD LIBOR settings to June 30, 2023. On December 21, 2022, FASB issued ASU 2022-06 to defer the sunset date of Accounting Standards
Codification Topic 848 until December 31, 2024. ASU 2020-04 is effective for certain reference rate-related contract modifications that
occur during the period March 12, 2020 through December 31, 2024. Management is currently evaluating ASU 2020-04 and ASU 2022-06, but
does not believe there will be a material impact.
11.
Subsequent Events
At
the close of business on or about July 7, 2023 (Closing Date), the new board of trustees and new investment management agreement with
abrdn Inc. was completed. Fund shareholders approved the election of four new trustees and the new investment management agreement with
abrdn Inc. at a special meeting of shareholders held on March 8, 2023. The results of the special shareholder meeting were as follows:
As of the record date, December 22, 2022, the Fund had outstanding 12,278,003.15 common shares and 990 preferred shares. At the special
shareholder meeting, 8,071,335 of outstanding common shares and 990 of outstanding preferred shares were voted representing quorum.
Proposal
1 (New Investment Management Agreement with abrdn Inc.):
Votes For | |
Votes Against | |
Votes Abstained | |
Broker Non-Votes |
5,453,641 | |
| 384,244 | | |
| 212,653 | | |
| 2,023,386 | |
Proposal
2 (Election of Four New Trustees):
Common
Shares and Preferred Shares voting together
Stephen
Bird |
|
|
|
|
|
Votes
For |
|
Votes
Withhold |
7,579,827 |
|
494,096 |
Notes
to financial statements
Delaware
Investments® National Municipal Income Fund
11.
Subsequent Events (continued)
Todd
Reit |
|
|
|
|
|
Votes
For |
|
Votes
Withhold |
7,569,876 |
|
504,047 |
|
|
|
Preferred
Shares only |
|
|
|
|
|
Nancy Yao
Maasbach |
|
|
|
|
|
Votes
For |
|
Votes
Withhold |
990 |
|
0 |
|
|
|
C. William
Maher |
|
|
|
|
|
Votes
For |
|
Votes
Withhold |
990 |
|
0 |
On
the Closing Date, the four new trustees took office upon the resignation of the previous trustees and abrdn Inc. replaced DMC as the
Fund’s investment manager.
Management
has determined that no other material events or transactions occurred subsequent to March 31, 2023, that would require recognition or
disclosure in the Fund’s financial statements.
Report
of independent
registered public accounting firm
To
the Board of Trustees and Shareholders of Delaware Investments® National Municipal Income Fund
Opinion
on the Financial Statements
We
have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Delaware Investments®
National Municipal Income Fund (the “Fund”) as of March 31, 2023, the related statements of operations and cash flows
for the year ended March 31, 2023, the statements of changes in net assets for each of the two years in the period ended March 31, 2023,
including the related notes, and the financial highlights for each of the five years in the period ended March 31, 2023 (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Fund as of March 31, 2023, the results of its operations and its cash flows for the year then ended, the
changes in its net assets for each of the two years in the period ended March 31, 2023 and the financial highlights for each of the five
years in the period ended March 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of March 31, 2023 by correspondence with the custodian and brokers; when replies were not received from brokers,
we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers
LLP
Philadelphia, Pennsylvania
June 9, 2023
We
have served as the auditor of one or more investment companies in Delaware Funds by Macquarie® since 2010.
Other
Fund information (Unaudited)
Delaware
Investments® National Municipal Income Fund
Tax
Information (Unaudited)
The
information set forth below is for the Fund’s fiscal year as required by federal income tax laws. Shareholders, however, must repot
distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of a
fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in January of each year. Please
consult your tax advisor for proper treatment of this information.
All
disclosures are based on financial information available as of the date of this annual report and, accordingly are subject to change.
For any and all items requiring reporting, it is the intention of the Fund to report the maximum amount permitted under the Internal
Revenue Code and the regulations thereunder.
For
the year ended March 31, 2023, the Fund reported distributions paid during the year as follows:
(A) Ordinary Income Distributions (Tax Basis) | |
| 0.55 | % |
(B) Tax-Exempt Distributions (Tax Basis) | |
| 87.84 | % |
(C) Return of Capital (Tax Basis) | |
| 11.61 | % |
Total Distributions (Tax Basis) | |
| 100.00 | % |
(A),
(B), and (C) are based on a percentage of the Fund’s total distributions.
Fund
management
Gregory A. Gizzi
Senior
Managing Director, Head of US Fixed Income and Head of Municipal Bonds, Senior Portfolio Manager
Gregory
A. Gizzi is Head of US Fixed Income and Head of Municipal Bonds for Macquarie Asset Management Fixed Income (MFI) in the Americas, a
role he assumed in April 2022. Gizzi is responsible for overseeing the US fixed income component of MAM’s global MFI business.
Additionally, he leads the MFI municipal business. In this role, he is responsible for the overall operation of the strategy and is team
lead on several of the tax-exempt strategies. Gizzi is also responsible for MFI’s taxable municipal business and the marketing
efforts for the team’s municipal products. Previously, Gizzi was co-portfolio manager of the firm’s municipal bond funds
and several client accounts, a role he held since November 2011. Before joining Macquarie Asset Management (MAM) 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. 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.
Stephen
J. Czepiel
Managing
Director, Head of Municipal Bonds Portfolio Management, Senior Portfolio Manager
Stephen
J. Czepiel leads the portfolio management of the firm’s municipal bonds strategies for Macquarie Asset Management Fixed Income
(MFI) in the Americas, a role he assumed in February 2019. He is a co-portfolio manager of the firm’s municipal bond funds and
client accounts, a role he has held since August 2007. He joined Macquarie Asset Management 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.
Jake
van Roden
Managing
Director, Senior Portfolio Manager
Jake
van Roden is a Senior Portfolio Manager on the municipal bond team within Macquarie Asset Management Fixed Income (MFI) in the Americas,
a role he assumed in 2017. In addition to portfolio management, his responsibilities include oversight of distressed and high yield investments
across municipals, public purpose, and corporate credit sectors. He joined MFI’s municipal department in July 2004 as a generalist
and became head of municipal trading in December 2012. Prior to joining MFI, he interned at Macquarie Asset Management (MAM) in the client
services department. He received a bachelor’s degree in American studies with a minor in government from Franklin & Marshall
College.
Fund
strategies and risks
What
are the Fund’s principal investment strategies?
The
Fund seeks to achieve its investment objective by investing under normal circumstances, substantially all (at least 80%) of its net assets
in “Municipal Obligations.” “Municipal Obligations” are debt obligations issued by or on behalf of a state or
territory or its agencies, instrumentalities, municipalities and political subdivisions, the interest payable on which is, in the opinion
of bond counsel, excludable from gross income for purposes of federal income taxation (except, in certain instances, the alternative
minimum tax, depending upon the shareholder’s tax status). The Fund may invest up to 20% of the Fund’s assets in securities
that generate interest that is subject to federal alternative minimum tax (“AMT”). The Fund may invest without limitation
in uninsured, “investment grade” Municipal Obligations. “Investment grade” means that, at the time of investment,
a Municipal Obligation has a credit rating of at least Baa by Moody’s, or BBB by Standard & Poor’s Financial Services
LLC (“S&P”), or is unrated but judged by the Manager, to be of comparable quality. The Fund may invest up to 20% of its
net assets in Municipal Obligations that are rated below investment grade or that are unrated but judged by the Manager to be of comparable
quality.
The
Manager analyzes economic and market conditions, seeking to identify the securities or market sectors that the Manager thinks are the
best investments for the Fund. The Fund generally invests in debt obligations issued by state and local governments and their political
subdivisions, agencies, authorities, and instrumentalities that are exempt from federal income tax. The Fund 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.
The
Fund will generally invest in securities for income rather than seeking capital appreciation through active trading. However, the Fund
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 fund tender offers, or to address a weakening credit situation.
The
Fund invests its assets in securities with maturities of various lengths, depending on market conditions, but will have a dollar-weighted
average effective maturity of between 20 and 30 years. The Manager will adjust the average maturity of the bonds in the Fund’s
portfolio to attempt to provide a current tax-exempt income, consistent with preservation of capital. The Fund may focus 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 do not suit
its investment needs.
The
Fund may invest without limitation 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. The Fund may invest without limitation in revenue bonds in the top four quality grades or
bonds that are unrated, but which the Manager determines to be of equal quality.
The
Fund may invest without limitation in insured Municipal Obligations. In addition, insurance is available on uninsured bonds and the Fund
may purchase such insurance directly. The Manager will generally do so only if it believes that purchasing and insuring a Municipal Obligation
provides an investment opportunity at least comparable to owning other available insured Municipal Obligations.
Private
activity or private placement bonds are municipal bond issues whose proceeds are used to finance certain nongovernment activities, including
some types of industrial revenue bonds such as privately owned sports and convention facilities. The Tax Reform Act of 1986 subjects
interest income from these bonds to the federal alternative minimum tax and makes the tax-exempt status of certain bonds dependent on
the issuer’s compliance with specific requirements after the bonds are issued. As described above, the Fund may invest up to 20%
of its assets in bonds whose income is subject to the federal alternative minimum tax. This means that a portion of the Fund’s
distributions could be subject to the federal alternative minimum tax that applies to certain taxpayers. The Fund may invest without
limit in advance refunded bonds.
The
Fund may invest without limitation in high-quality, short-term tax-free instruments.
The
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 the Fund’s 15% limit on investments in illiquid securities.
The
Fund may invest without limitation in municipal lease obligations, primarily through certificates of participation rated in the top four
quality grades by S&P or another nationally recognized statistical rating agency. As with the Fund’s other investments, the
Manager expects that
Other
Fund information (Unaudited)
Delaware
Investments® National Municipal Income Fund
Fund
management (continued)
investments in municipal lease obligations will be exempt from regular federal income taxes. The Fund will
rely on the opinion of the bond issuer’s counsel for a determination of the bond’s tax-exempt status.
The
Fund may invest in zero coupon bonds.
Credit
quality restrictions for the Fund apply only at the time of purchase. The Fund may continue to hold a security whose quality rating has
been lowered or, in the case of an unrated bond, after the Manager has changed its assessment of its credit quality.
The
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 Fund will designate cash or securities in amounts sufficient to cover its obligations, and will value the
designated assets daily.
Where
the Manager feels there is a limited supply of appropriate investments, the Fund may invest more than 25% of its 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, the Fund may invest more than 25% of its assets in industrial development
bonds or, in the case of the Fund, pollution control bonds, which may be backed only by the assets and revenues of a nongovernmental
issuer. The Fund will not, however, invest more than 25% of its total assets in bonds issued for companies in the same business sector.
The
Fund may borrow money from banks as a temporary measure for extraordinary or emergency purposes but normally does not do so. The Fund
will not borrow money in excess of one-third of the value of its assets.
In
response to unfavorable market conditions, the Fund may invest in taxable instruments for temporary defensive purposes. These could include
obligations of the US government, its agencies and instrumentalities, commercial paper, cash, certificates of deposit of domestic banks,
repurchase agreements, reverse repurchase agreements, other cash equivalents, and other debt instruments. These investments may not be
consistent with the Fund’s investment objective. To the extent that the Fund holds such investments, it may be unable to achieve
its investment objective.
What
are the principal risks of investing in the Fund?
Investing
in any closed-end 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. An investment
in the Fund may not be appropriate for all investors. The Fund’s principal risks include:
Net asset value discount risk —
The risk that a closed-end investment company will trade at a discount from its net asset value (NAV).
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 the prices of bonds and other fixed income securities will increase as interest rates fall and decrease
as interest rates rise. Interest rate changes are influenced by a number of factors, such as government policy, monetary policy, inflation
expectations, and the supply and demand of bonds. Bonds and other fixed income securities with longer maturities or duration generally
are more sensitive to interest rate changes. A fund may be subject to a greater risk of rising interest rates due to the current period
of historically low interest rates.
Security
risk — 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).
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. High yield securities may
also be subject to greater price volatility and risk of loss of income and principal than are higher-rated securities. High yield bonds
are sometimes issued by municipalities that have less financial strength and therefore have less ability to make projected debt payments
on the bonds.
Industry
and sector risk — The risk that the value of securities in a particular industry or sector will decline because of changing
expectations for the performance of that industry or sector.
Geographic
concentration risk — The risk that heightened sensitivity to regional, state, US territories or possessions (such as the Commonwealth
of Puerto Rico, Guam, or the US Virgin Islands), and local political and economic conditions could adversely affect the holdings in and
performance of a fund. There is also the risk that there could be an inadequate supply of municipal bonds in a particular state or US
territory or possession. For a further discussion of geographic, credit and market risks, see Note 8 in “Notes to financial statements.”
Credit risk — The risk that an issuer of a debt security, including a governmental issuer or an entity that insures a bond,
may be unable to make interest payments and/or repay principal in a timely manner.
Leveraging
risk — The risk that certain fund transactions, such as the issuance of preferred shares, may give rise to leverage, causing
a fund to be more volatile than if it had not been leveraged, which may result in increased losses to the fund.
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.
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.
Government
and regulatory risk — The risk that governments or regulatory authorities may take actions that could adversely affect various
sectors of the securities markets and affect fund performance. For example, a tax-exempt security may be reclassified by the Internal
Revenue Service or a state tax authority as taxable, and/or future legislative, administrative, or court actions could cause interest
from a tax-exempt security to become taxable, possibly retroactively.
Liquidity
risk — The possibility that investments cannot be readily sold within seven calendar days at approximately the price at which
a fund has valued them.
IBOR
risk — The risk that changes related to the use of the London Interbank Offered Rate (LIBOR) or similar interbank offered rates
(“IBORs,” such as the Euro Overnight Index Average (EONIA)) could have adverse impacts on financial instruments that reference
LIBOR or a similar rate. While some instruments may contemplate a scenario where LIBOR or a similar rate is no longer available by providing
for an alternative rate setting methodology, not all instruments have such fallback provisions and the effectiveness of replacement rates
is uncertain. The abandonment of LIBOR and similar rates could affect the value and liquidity of instruments that reference such rates,
especially those that do not have fallback provisions. The use of alternative reference rate products may impact investment strategy
performance.
Active
management and selection risk — The risk that the securities selected by a fund’s management will underperform the markets,
the relevant indices, or the securities selected by other funds with similar investment objectives and investment strategies. The securities
and sectors selected may vary from the securities and sectors included in the relevant index.
Form
N-PORT and proxy voting information
The
Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters
of each fiscal year on Form N-PORT. The Fund’s Forms N-PORT, as well as a description of the policies and procedures that the Fund
uses to determine how to vote proxies (if any) relating to portfolio securities, are available without charge (i) upon request, by calling
800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Fund
uses to determine how to vote proxies (if any) relating to portfolio securities and the Schedule of investments included in the Fund’s
most recent Form N-PORT are available without charge on the Fund’s website at delawarefunds.com/literature.
Information
(if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended
June 30 is available without charge (i) through the Fund’s website at delawarefunds.com/proxy; and (ii) on the SEC’s website
at sec.gov.
Board
of trustees and officers addendum
Delaware
Funds by Macquarie®
A
fund is governed by a Board of Trustees (“Trustees”), which has oversight responsibility for the management of a fund’s
business affairs. Trustees establish procedures and oversee and review the performance of the investment manager and others who perform
services for the fund. The independent fund trustees, in particular, are advocates for shareholder interests. Each trustee has served
in that capacity since he or she was elected to or appointed to the Board of Trustees, and will continue to serve until his or her retirement
or the election of a new trustee in his or her place. The following is a list of the Trustees and Officers as of March 31, 2023 with
certain background and related information.
Name,
Address,
and Birth Year |
|
Position(s)
Held with
the Fund |
|
Length
of Time
Served1 |
|
Number
of
Funds in Fund
Complex Overseen
by Trustee |
|
Principal
Occupation(s)
During the
Past Five Years |
|
Other
Directorships
Held by Trustee
During the
Past Five Years |
Interested
Trustee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shawn
K. Lytle2
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1970 |
|
President,
Chief Executive Officer,
and Trustee |
|
President
and Chief Executive Officer since August 2015 Trustee since September 2015 |
|
117 |
|
Macquarie
Asset Management3 (2015–Present)
-Global Head of Macquarie Asset Management Public Investments (2019–Present)
-Head of Americas of Macquarie Group (2017–Present) |
|
None |
|
Independent
Trustees |
|
|
|
|
|
|
|
|
|
Jerome
D. Abernathy
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1959 |
|
Trustee |
|
Since
January 2019 |
|
117 |
|
Stonebrook
Capital Management, LLC
(financial technology: macro factors and databases)
-Managing Member (1993-Present) |
|
None |
|
Ann
D. Borowiec
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1958 |
|
Trustee |
|
Since
March 2015 |
|
117 |
|
J.P.
Morgan Chase & Co. (1987-2013)
-Chief Executive Officer, Private Wealth Management (2011– 2013) |
|
Banco
Santander International (2016–2019) Santander Bank, N.A. (2016-2019) |
|
Joseph
W. Chow
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1953 |
|
Trustee |
|
Since
January 2013 |
|
117 |
|
Private
Investor (2011–Present)
State Street Bank and Trust Company (1996-2011)
-Executive Vice President of Enterprise Risk Management and Emerging Economies Strategy; and Chief Risk and Corporate Administration
Officer |
|
None |
|
H.
Jeffrey Dobbs
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1955 |
|
Trustee |
|
Since
April 20194 |
|
117 |
|
KPMG
LLP (2002-2015)
-Global Sector Chairman, Industrial Manufacturing (2010-2015) |
|
TechAccel
LLC (2015–Present) PatientsVoices, Inc. (2018–Present) Valparaiso University Board (2012-Present) Ivy Funds Complex (2019-
2021) |
Name,
Address,
and Birth Year |
|
Position(s)
Held with
the Fund |
|
Length
of Time
Served1 |
|
Number
of
Funds in Fund
Complex Overseen
by Trustee |
|
Principal
Occupation(s)
During the
Past Five Years |
|
Other
Directorships
Held by Trustee
During the
Past Five Years |
|
John
A. Fry
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1960 |
|
Trustee |
|
Since
January 2001 |
|
117 |
|
Drexel
University -President (2010–Present) |
|
Federal
Reserve Bank of Philadelphia (2020–Present)
Kresge Foundation (2018-Present)
FS Credit Real Estate Income Trust, Inc. (2018–Present)
vTv Therapeutics Inc. (2017–Present)
Community Health Systems (2004–Present)
Drexel Morgan & Co. (2015–2019) |
|
Joseph
Harroz, Jr.
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1967 |
|
Trustee |
|
Since
November 19984 |
|
117 |
|
University
of Oklahoma -President (2020–Present)
-Interim President (2019–2020)
-Vice President and Dean, College of Law (2010–2019)
Brookhaven Investments LLC (commercial enterprises)
-Managing Member (2019–Present)
St. Clair, LLC (commercial enterprises)
-Managing Member (2019–Present) |
|
OU
Medicine, Inc. (2020–Present)
Big 12 Athletic Conference (2019-Present)
Valliance Bank (2007–Present)
Ivy Funds Complex (1998-2021) |
|
Sandra
A.J. Lawrence
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1957 |
|
Trustee |
|
Since
April 20194 |
|
117 |
|
Children’s
Mercy Hospitals and Clinics (2005–2019)
-Chief Administrative Officer (2016–2019) |
|
Brixmor
Property Group Inc. (2021-Present)
Sera Prognostics Inc.
(biotechnology)
(2021-Present)
Recology (resource recovery) (2021-Present) Evergy, Inc., Kansas City Power & Light Company, KCP&L Greater Missouri Operations
Company, Westar Energy, Inc. and Kansas Gas and Electric Company (related utility companies) (2018-Present)
National Association of Corporate Directors (2017-Present)
American Shared Hospital Services (medical device) (2017-2021)
Ivy Funds Complex (2019- 2021) |
Board
of trustees and officers addendum
Delaware
Funds by Macquarie®
Name,
Address,
and Birth Year |
|
Position(s)
Held with
the Fund |
|
Length
of Time
Served1 |
|
Number
of
Funds in Fund
Complex Overseen
by Trustee |
|
Principal
Occupation(s)
During the
Past Five Years |
|
Other
Directorships
Held by Trustee
During the
Past Five Years |
|
Frances
A. Sevilla-Sacasa
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1956 |
|
Trustee |
|
Since
September 2011 |
|
117 |
|
Banco
Itaú International -Chief Executive Officer (2012–2016)
Bank of America, U.S. Trust Private Wealth -President (2007-2008)
U.S. Trust Corp. -President & CEO (2005-2007) |
|
Florida
Chapter of National Association of Corporate Directors (2021-Present)
Callon Petroleum Company (2019-Present) Camden Property Trust (2011-Present)
New Senior Investment Group Inc. (2021)
Carrizo Oil & Gas, Inc. (2018-2019) |
|
Thomas
K. Whitford
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1956 |
|
Chair
and Trustee |
|
Trustee
since January 2013
Chair since January 2023 |
|
117 |
|
PNC
Financial Services Group (1983–2013)
-Vice Chairman (2009- 2013) |
|
HSBC
USA Inc. (2014–2022)
HSBC North America Holdings Inc. (2013–2022) |
|
Christianna
Wood
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1959 |
|
Trustee |
|
Since
January 2019 |
|
117 |
|
Gore
Creek Capital, Ltd. -Chief Executive Officer and President (2009–Present)
Capital Z Asset Management -Chief Executive Officer (2008-2009)
California Public Employees’ Retirement System (CalPERS)
-Senior Investment Officer of Global Equity (2002-2008) |
|
The
Merger Fund (2013–2021),
The Merger Fund VL (2013–2021),
WCM Alternatives: Event- Driven Fund (2013–2021),
and WCM Alternatives: Credit Event Fund (2017–2021)
Grange Insurance (2013–Present)
H&R Block Corporation (2008–2022)
International Securities Exchange (2010-2018)
Vassar College Trustee (2006-2018) |
|
Janet
L. Yeomans
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1948 |
|
Trustee |
|
Since
April 1999 |
|
117 |
|
3M
Company (1995-2012)
-Vice President and Treasurer (2006–2012) |
|
Temple
University Hospital (2017-Present)
Pennsylvania State System of Higher Education (2018-Present) |
|
Officers |
|
|
|
|
|
|
|
|
|
|
|
David
F. Connor
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1963 |
|
Senior
Vice President, General Counsel, and Secretary |
|
Senior
Vice President, since May 2013; General Counsel since May 2015; Secretary since October 2005 |
|
117 |
|
David
F. Connor has served in various capacities at different times at Macquarie Asset Management. |
|
None5 |
|
Daniel
V. Geatens
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1972 |
|
Senior
Vice President and Treasurer |
|
Senior
Vice President and Treasurer since October 2007 |
|
117 |
|
Daniel
V. Geatens has served in various capacities at different times at Macquarie Asset Management. |
|
None5 |
Name,
Address,
and Birth Year |
|
Position(s)
Held with
the Fund |
|
Length
of Time
Served1 |
|
Number
of
Funds in Fund
Complex Overseen
by Trustee |
|
Principal
Occupation(s)
During the
Past Five Years |
|
Other
Directorships
Held by Trustee
During the
Past Five Years |
|
Richard
Salus
100 Independence
610 Market Street
Philadelphia, PA
19106-2354
1963 |
|
Senior
Vice President and Chief Financial Officer |
|
Senior
Vice President and Chief Financial Officer since November 2006 |
|
117 |
|
Richard
Salus has served in various capacities at different times at Macquarie Asset Management. |
|
None |
1 | “Length of
Time Served” refers to the time since the Trustee or officer began serving one or more of the Trusts in the Delaware Funds complex. |
2 | Shawn K. Lytle is
considered to be an “Interested Trustee” because he is an executive officer of the Funds’ investment advisor. |
3 | Macquarie Asset Management
is the marketing name for certain companies comprising the asset management division of Macquarie Group, including the Funds’ investment
advisor, principal underwriter, and transfer agent. |
4 | Includes time served
on the Board of Ivy Funds prior to the date when Ivy Funds joined the Delaware Funds complex. |
5 | David F. Connor and
Daniel V. Geatens serve in similar capacities for the six portfolios of the Optimum Fund Trust, which have the same investment manager,
principal underwriter, and transfer agent as the Fund. Mr. Geatens also serves as the Chief Financial Officer of the Optimum Fund Trust. |