-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CoTwuzXS3Yh2FBcdeU4pVPgDAP/VyHSwLPwFVSxSqznWRsIXQsSpvBrf+eQYXpRM mXqR7xKfIaON2vgXidh7gw== 0000950116-04-001387.txt : 20040505 0000950116-04-001387.hdr.sgml : 20040505 20040505170259 ACCESSION NUMBER: 0000950116-04-001387 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040229 FILED AS OF DATE: 20040505 EFFECTIVENESS DATE: 20040505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR INVESTMENT TRUST CENTRAL INDEX KEY: 0000879342 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06411 FILM NUMBER: 04782286 BUSINESS ADDRESS: STREET 1: ONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: (215) 255-2127 MAIL ADDRESS: STREET 1: ONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19103 N-CSR 1 n-csr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-6411 Exact name of registrant as specified in charter: Voyageur Investment Trust Address of principal executive offices: 2005 Market Street Philadelphia, PA 19103 Name and address of agent for service: Richelle S. Maestro, Esq. 2005 Market Street Philadelphia, PA 19103 Registrant's telephone number, including area code: (800) 523-1918 Date of fiscal year end: August 31 Date of reporting period: February 29, 2004
ITEM 1. REPORTS TO STOCKHOLDERS The Registrant's shareholder reports are combined with the shareholder reports of other investment company registrants. This Form N-CSR pertains to the Delaware Tax-Free California Insured Fund, Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured Fund of the Registrant, information on which is included in the following shareholder report. DELAWARE INVESTMENTS(SM) -------------------------------------- A member of Lincoln Financial Group(R) FIXED INCOME Semiannual Report FEBRUARY 29, 2004 - -------------------------------------------------------------------------------- DELAWARE TAX-FREE CALIFORNIA INSURED FUND [LOGO] POWERED BY RESEARCH.(SM) Table OF CONTENTS - ----------------------------------------------------------------- FINANCIAL STATEMENTS: Statements of Net Assets 1 Statements of Operations 3 Statements of Changes in Net Assets 4 Financial Highlights 5 Notes to Financial Statements 8 - ----------------------------------------------------------------- Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested. Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. (C) 2004 Delaware Distributors, L.P. Statements Delaware Tax-Free California Insured Fund OF NET ASSETS (CONTINUED) February 29, 2004 (Unaudited) Principal Market Amount Value Municipal Bonds - 97.47% Airport Revenue Bonds - 2.51% Sacramento County Airport System Revenue Series A 5.00% 7/1/32 (FSA) $1,000,000 $1,047,160 ---------- 1,047,160 ---------- Continuing Care/Retirement Revenue Bonds - 2.50% California Health Facilities Financing (The Episcopal Home) 5.30% 2/1/32 (RADIAN) 1,000,000 1,041,980 ---------- 1,041,980 ---------- Dedicated Tax & Fees Revenue Bonds - 4.93% San Bernardino County Special Tax Community Facilities 5.90% 9/1/33 1,000,000 1,009,500 San Francisco Bay Area Rapid Transit District Sales Tax Revenue 5.125% 7/1/36 (AMBAC) 1,000,000 1,049,820 ---------- 2,059,320 ---------- Higher Education Revenue Bonds - 14.31% California Educational Facilities Authority Revenue (California Institute of Technology) 5.00% 10/1/32 1,000,000 1,046,750 California Educational Facilities Authority Revenue (University of The Pacific) 5.75% 11/1/30 (MBIA) 1,000,000 1,136,720 California State Los Angeles University Auxiliary Services 5.125% 6/1/33 (MBIA) 1,600,000 1,680,960 San Diego County Certificates of Participation (University of San Diego) 5.375% 10/1/41 1,000,000 1,059,080 University of California Revenues Series A 5.00% 5/15/33 (AMBAC) 1,000,000 1,050,800 ---------- 5,974,310 ---------- Hospital Revenue Bonds - 3.59% Oakland Industrial Revenue (Harrison Foundation) Series B 6.00% 1/1/29 (AMBAC) 1,300,000 1,500,798 ---------- 1,500,798 ---------- Miscellaneous Revenue Bonds - 7.69% California Statewide Communities Development Authority Revenue (Bentley School) 6.75% 7/1/32 1,000,000 1,022,460 San Diego County Certificates of Participation 5.75% 7/1/31 (MBIA) 1,000,000 1,143,320 San Jose Financing Authority Lease Revenue (Civic Center Project) Series B 5.00% 6/1/32 (AMBAC) 1,000,000 1,044,710 ---------- 3,210,490 ---------- Multifamily Housing Revenue Bonds - 12.12% California Statewide Communities Development Authority Multifamily Housing Revenue (Citrus Gardens Apartments Project) Series D1 5.375% 7/1/32 800,000 827,864 California Statewide Communities Development Authority Multifamily Housing Revenue (East Tabor Apartments) 6.85% 8/20/36 (GNMA)(AMT) 1,500,000 1,635,045 Principal Market Amount Value Municipal Bonds (continued) Multifamily Housing Revenue Bonds (continued) Los Angeles Multifamily Housing Revenue (Park Plaza) 5.50% 1/20/43 (GNMA)(AMT) $1,430,000 $1,517,144 Ventura County Area Housing Authority Multifamily Housing Revenue (Glen Oaks Apartments) Series A 6.35% 7/20/34 (GNMA) 1,023,000 1,081,291 ---------- 5,061,344 ---------- Municipal Lease Revenue Bonds - 10.21% California State Public Works Board Lease Revenue 5.00% 3/1/27 (AMBAC) 1,000,000 1,044,600 5.00% 12/1/27 (AMBAC) 1,000,000 1,051,710 Franklin-McKinley School District Certificates of Participation (Financing Project) Series B 5.00% 9/1/27 (AMBAC) 1,060,000 1,118,692 San Juan Basin Authority (Ground Water Recovery Project) 5.00% 12/1/34 (AMBAC) 1,000,000 1,045,750 ---------- 4,260,752 ---------- Ports & Harbors Revenue Bonds - 2.64% Port of Oakland 5.75% 11/1/29 (FGIC)(AMT) 1,000,000 1,102,710 ---------- 1,102,710 ---------- Public Power Revenue Bonds - 2.56% California State Department Water Reserve Power Supply Revenue Series A 5.375% 5/1/21 1,000,000 1,067,840 ---------- 1,067,840 ---------- School District General Obligation Bonds - 11.38% Gilroy Unified School District (Malbor Generating State Project) 5.00% 8/1/27 (FGIC) 1,000,000 1,056,540 Lawndale Elementary School District 5.00% 8/1/32 (FSA) 1,000,000 1,047,510 Placer Unified High School District 5.00% 8/1/25 (FSA) 500,000 530,260 San Diego Unified School District 5.00% 7/1/28 (FSA) 1,000,000 1,055,310 Sequoia Unified High School District 5.125% 7/1/31 (FSA) 1,000,000 1,063,270 ---------- 4,752,890 ---------- State General Obligation Bonds - 2.51% California State 5.50% 11/1/33 1,000,000 1,046,120 ---------- 1,046,120 ---------- Tax Increment/Special Assessment Bonds - 10.47% La Quinta Redevelopment Agency Tax Allocation 5.10% 9/1/31 (AMBAC) 1,000,000 1,057,190 Poway Redevelopment Agency Certificates of Participation 5.75% 6/15/33 (MBIA) 1,400,000 1,604,932 Riverside County Redevelopment Agency 5.25% 10/1/35 (AMBAC) 1,590,000 1,708,312 ---------- 4,370,434 ---------- 1 Statements Delaware Tax-Free California Insured Fund OF NET ASSETS (CONTINUED) Principal Market Amount Value Municipal Bonds (continued) Waste Disposal Revenue Bonds - 5.04% Salinas Valley Solid Waste Authority Revenue 5.25% 8/1/27 (AMBAC)(AMT) $ 2,000,000 $ 2,104,040 ----------- 2,104,040 ----------- Water & Sewer Revenue Bonds - 5.01% California State Department of Water Resources Water Systems Revenue (Central Valley Project) Series X 5.00% 12/1/29 (FGIC) 1,000,000 1,049,470 Los Angeles Department of Water & Power Waterworks Revenue Series A 5.00% 7/1/43 (FGIC) 1,000,000 1,043,030 ----------- 2,092,500 ----------- Total Municipal Bonds (cost $37,910,891) 40,692,688 ----------- Number of Shares Short-Term Investments - 1.37% Federated California Municipal Trust 573,453 573,453 ----------- Total Short-Term Investments (cost $573,453) 573,453 ----------- Total Market Value of Securities - 98.84% (cost $38,484,344) 41,266,141 Receivables and Other Assets Net of Liabilities - 1.16% 483,891 ----------- Net Assets Applicable to 3,717,717 Shares Outstanding - 100.00% $41,750,032 =========== Net Asset Value - Delaware Tax-Free California Insured Fund Class A ($30,785,249 / 2,740,897 Shares) $11.23 ------ Net Asset Value - Delaware Tax-Free California Insured Fund Class B ($7,590,044 / 675,585 Shares) $11.23 ------ Net Asset Value - Delaware Tax-Free California Insured Fund Class C ($3,374,739 / 301,235 Shares) $11.20 ------ Components of Net Assets at February 29, 2004: Shares of beneficial interest (unlimited authorization - no par) $38,925,156 Accumulated net realized gain on investments 43,079 Net unrealized appreciation of investments 2,781,797 ----------- Total net assets $41,750,032 =========== Summary of Abbreviations: AMBAC - Insured by the AMBAC Assurance Corporation AMT - Subject to Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance GNMA - Insured by Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association RADIAN - Insured by Radian Asset Assurance Net Asset Value and Offering Price per Share - Delaware Tax-Free California Insured Fund Net asset value Class A (A) $11.23 Sales charge (4.50% of offering price, or 4.72% of amount invested per share) (B) 0.53 ------ Offering price $11.76 ====== (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See the current prospectus for purchases of $100,000 or more. See accompanying notes 2 Statements Six Months Ended February 29, 2004 (Unaudited) OF OPERATIONS
Delaware Tax-Free California Insured Fund Investment Income: Interest $1,049,338 ---------- Expenses: Management fees 103,407 Distribution expenses -- Class A 37,743 Distribution expenses -- Class B 40,303 Distribution expenses -- Class C 15,575 Dividend disbursing and transfer agent fees and expenses 10,018 Accounting and administration expenses 8,050 Legal and professional fees 4,174 Reports and statements to shareholders 3,800 Registration fees 640 Custodian fees 1,859 Trustees' fees 1,149 Other 1,325 ---------- 228,043 Less expenses absorbed or waived -- Less expenses paid indirectly (504) ---------- Total expenses 227,539 ---------- Net Investment Income 821,799 ---------- Net Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) on investments 158,806 Net change in unrealized appreciation/depreciation of investments 2,068,125 ---------- Net Realized and Unrealized Gain on Investments 2,226,931 ---------- Net Increase in Net Assets Resulting from Operations $3,048,730 ==========
See accompanying notes 3 Statements OF CHANGES IN NET ASSETS (CONTINUED)
Delaware Tax-Free California Insured Fund Six Months Year Ended Ended 2/29/04 8/31/03 (Unaudited) Increase (Decrease) in Net Assets from Operations: Net investment income $ 821,799 $ 1,632,266 Net realized gain on investments 158,806 166,983 Net change in unrealized appreciation/depreciation of investments 2,068,125 (1,149,222) ----------- ----------- Net increase in net assets resulting from operations 3,048,730 650,027 ----------- ----------- Dividends and Distributions to Shareholders from: Net investment income: Class A (630,166) (1,249,365) Class B (138,158) (319,704) Class C (53,475) (63,197) Net realized gain on investments: Class A (70,273) -- Class B (18,623) -- Class C (6,970) -- ----------- ----------- (917,665) (1,632,266) ----------- ----------- Capital Share Transactions: Proceeds from shares sold: Class A 2,216,158 4,039,278 Class B 283,389 1,648,826 Class C 244,228 2,003,403 Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 357,229 655,264 Class B 89,785 161,774 Class C 26,942 26,743 ----------- ----------- 3,217,731 8,535,288 ----------- ----------- Cost of shares repurchased: Class A (2,163,449) (3,785,642) Class B (1,827,871) (2,732,015) Class C -- (360,679) ----------- ----------- (3,991,320) (6,878,336) ----------- ----------- Increase (decrease) in net assets derived from capital share transactions (773,589) 1,656,952 ----------- ----------- Net Increase (Decrease) in Net Assets 1,357,476 674,713 Net Assets: Beginning of period 40,392,556 39,717,843 ----------- ----------- End of period (including undistributed net investment income of $1,300, $1,300, $0 and $0, respectively) $41,750,032 $40,392,556 =========== ===========
See accompanying notes 4 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
Delaware Tax-Free California Insured Fund Class A - ----------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended 2/29/04(1) 8/31/03 8/31/02(3) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.670 $10.930 $11.130 $10.640 $10.430 $11.130 Income (loss) from investment operations: Net investment income 0.228 0.463 0.470 0.496 0.500 0.497 Net realized and unrealized gain (loss) on investments 0.585 (0.260) (0.027) 0.490 0.210 (0.700) ------- ------- ------- ------- ------- ------- Total from investment operations 0.813 0.203 0.443 0.986 0.710 (0.203) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.228) (0.463) (0.470) (0.496) (0.500) (0.497) Net realized gain on investments (0.025) -- (0.173) -- -- -- ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.253) (0.463) (0.643) (0.496) (0.500) (0.497) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.230 $10.670 $10.930 $11.130 $10.640 $10.430 ======= ======= ======= ======= ======= ======= Total return(2) 7.69% 1.84% 4.23% 9.51% 7.10% (1.97%) Ratios and supplemental data: Net assets, end of period (000 omitted) $30,785 $28,822 $28,630 $28,045 $23,877 $25,042 Ratio of expenses to average net assets 0.90% 0.93% 0.92% 0.87% 1.00% 0.99% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.90% 0.93% 0.92% 0.87% 1.09% 1.10% Ratio of net investment income to average net assets 4.17% 4.21% 4.36% 4.59% 4.87% 4.51% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.17% 4.21% 4.36% 4.59% 4.78% 4.40% Portfolio turnover 30% 44% 111% 162% 91% 114%
(1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. (3) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. This change in accounting had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. See accompanying notes 5 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
Delaware Tax-Free California Insured Fund Class B - ----------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended 2/29/04(1) 8/31/03 8/31/02(3) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.670 $10.930 $11.130 $10.640 $10.430 $11.130 Income (loss) from investment operations: Net investment income 0.187 0.381 0.389 0.415 0.423 0.414 Net realized and unrealized gain (loss) on investments 0.585 (0.260) (0.027) 0.490 0.210 (0.700) ------- ------- ------- ------- ------- ------- Total from investment operations 0.772 0.121 0.362 0.905 0.633 (0.286) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.187) (0.381) (0.389) (0.415) (0.423) (0.414) Net realized gain on investments (0.025) -- (0.173) -- -- -- ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.212) (0.381) (0.562) (0.415) (0.423) (0.414) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.230 $10.670 $10.930 $11.130 $10.640 $10.430 ======= ======= ======= ======= ======= ======= Total return(2) 7.29% 1.07% 3.44% 8.70% 6.30% (2.70%) Ratios and supplemental data: Net assets, end of period (000 omitted) $7,590 $8,628 $9,714 $7,628 $6,440 $6,588 Ratio of expenses to average net assets 1.65% 1.68% 1.67% 1.62% 1.75% 1.74% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.65% 1.68% 1.67% 1.62% 1.84% 1.85% Ratio of net investment income to average net assets 3.42% 3.46% 3.61% 3.84% 4.12% 3.76% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.42% 3.46% 3.61% 3.84% 4.03% 3.65% Portfolio turnover 30% 44% 111% 162% 91% 114%
(1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. (3) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. This change in accounting had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. See accompanying notes 6 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
Delaware Tax-Free California Insured Fund Class C - ----------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended 2/29/04(1) 8/31/03 8/31/02(3) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.640 $10.890 $11.090 $10.600 $10.390 $11.090 Income (loss) from investment operations: Net investment income 0.187 0.380 0.392 0.417 0.423 0.414 Net realized and unrealized gain (loss) on investments 0.585 (0.250) (0.027) 0.490 0.210 (0.700) ------- ------- ------- ------- ------- ------- Total from investment operations 0.772 0.130 0.365 0.907 0.633 (0.286) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.187) (0.380) (0.392) (0.417) (0.423) (0.414) Net realized gain on investments (0.025) -- (0.173) -- -- -- ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.212) (0.380) (0.565) (0.417) (0.423) (0.414) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.200 $10.640 $10.890 $11.090 $10.600 $10.390 ======= ======= ======= ======= ======= ======= Total return(2) 7.31% 1.17% 3.45% 8.75% 6.32% (2.70%) Ratios and supplemental data: Net assets, end of period (000 omitted) $3,375 $2,942 $1,374 $200 $439 $592 Ratio of expenses to average net assets 1.65% 1.68% 1.67% 1.62% 1.75% 1.74% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.65% 1.68% 1.67% 1.62% 1.84% 1.85% Ratio of net investment income to average net assets 3.42% 3.46% 3.61% 3.84% 4.12% 3.76% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.42% 3.46% 3.61% 3.84% 4.03% 3.65% Portfolio turnover 30% 44% 111% 162% 91% 114%
(1) Ratios and portfolio turnover have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. (3) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. This change in accounting had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. See accompanying notes 7 Notes February 29, 2004 (Unaudited) TO FINANCIAL STATEMENTS Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust and offers six series: Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund and Delaware Tax-Free New York Fund. Voyageur Insured Funds (the "Trust") is organized as a Delaware statutory trust and offers two series: Delaware Tax-Free Arizona Insured Fund and Delaware Tax-Free Minnesota Insured Fund. Voyageur Investment Trust (the "Trust") is organized as a Massachusetts statutory trust and offers five series: Delaware Tax-Free California Insured Fund, Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured Fund. Voyageur Mutual Funds II (the "Trust") is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Colorado Fund. These financial statements and related footnotes pertain to Delaware Tax-Free Arizona Fund, Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund, Delaware Tax-Free California Insured Fund and Delaware Tax-Free Colorado Fund (each a "Fund" and, collectively, the "Funds"). The above Trusts are open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended. The Funds offer Class A, Class B, and Class C shares. Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge that declines from 4% to zero depending upon the period of time the shares are held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a contingent deferred sales charge of 1%, if redeemed during the first 12 months. The investment objective of Delaware Tax-Free Arizona Fund, Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund, Delaware Tax-Free California Insured Fund and Delaware Tax-Free Colorado Fund is to seek as high a level of current income exempt from federal income tax and personal income tax in their respective states, as is consistent with preservation of capital. 1. Significant Accounting Policies The following accounting policies are in accordance with accounting principles generally accepted in the United States and are consistently followed by the Funds. Security Valuation -- Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund's Board of Trustees. Federal Income Taxes -- Each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Class Accounting -- Investment income and common expenses are allocated to the classes of each Fund on the basis of "settled shares" of each class in relation to the net assets of each Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of each Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Use of Estimates -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of 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. Other -- Expenses common to all funds within the Delaware Investments Family of Funds are allocated amongst the funds on the basis of average net assets. Management fees and other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date). 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. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually. Certain expenses of the Funds are paid through commission arrangements with brokers. In addition, the Funds may receive earnings credits from their custodian when positive balances are maintained, which are used to offset custody fees. The expenses paid under the above arrangements are included in their respective expense captions on the Statements of Operations with the corresponding expense offset shown as "expenses paid indirectly". The amount of these expenses for the six months ended February 29, 2004 were as follows: Delaware Tax-Free California Insured Fund --------------------- Commission reimbursements $495 Earnings credits 9 2. Investment Management, Administration Agreements and Other Transactions with Affiliates In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee based on each Fund's average daily net assets as follows: Delaware Tax-Free California Insured Fund --------------------- On the first $500 million 0.500% On the next $500 million 0.475% On the next $1.5 billion 0.450% In excess of $2.5 billion 0.425% DMC has contractually agreed to waive that portion, if any, of its management fee and reimburses each Fund to the extent necessary to ensure that annual operating expenses, exclusive of taxes, interest, brokerage commissions, distribution fees, certain insurance costs and extraordinary expenses do not exceed specified percentages of average daily net assets of the Funds through October 31, 2004 and until revoked for the Delaware Tax-Free California Fund, as shown below. 8 Notes TO FINANCIAL STATEMENTS (CONTINUED) 2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued) Delaware Tax-Free California Insured Fund -------------------- Operating expense limitation as a percentage of average daily net assets (per annum) 0.75% Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing and transfer agent services. The Funds pay DSC a monthly fee based on average net assets subject to certain minimums for accounting and administration services. Each Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend and disbursing and transfer agent services. Pursuant to a distribution agreement and distribution plan, each Fund pays Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.25% of the average daily net assets of the Class A shares and 1.00% of the average daily net assets of the Class B and C shares. At February 29, 2004, each Fund had liabilities payable to affiliates as follows: Delaware Tax-Free California Insured Fund ------------------- Investment management fees payable to DMC $6,583 Dividend disbursing, transfer agent fees, accounting and other expenses payable to DSC 2,933 Other expenses payable to DMC and affiliates* 889 * DMC, as a part of its administrative services, pays operating expenses on behalf of the Funds and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, professional fees, custodian fees and trustees' fees. Certain internal legal expenses are allocated to the Funds. For the six months ended February 29, 2004, the Delaware Tax-Free Arizona Fund, Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund, Delaware Tax-Free California Insured Fund, and the Delaware Tax-Free Colorado Fund had costs of $1,715, $8,341, $2,078, $1,849, and $15,274, respectively. For the six months ended February 29, 2004, DDLP earned commissions on sales of Class A shares for each Fund as follows: Delaware Tax-Free California Insured Fund -------------------- $2,126 Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trusts. These officers and/or trustees are paid no compensation by the Funds. 3. Investments For the six months ended February 29, 2004, the Funds made purchases and sales of investment securities as follows: Delaware Tax-Free California Insured Fund --------------------- Purchases other than U.S. government securities and short-term investments $6,036,170 Sales other than U.S. government securities and short-term investments 7,579,383 At February 29, 2004, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At February 29, 2004, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows: Delaware Tax-Free California Insured Fund --------------------- Cost of investments $38,484,344 ----------- Aggregate unrealized appreciation $ 2,781,797 Aggregate unrealized depreciation -- ----------- Net unrealized appreciation $ 2,781,797 =========== 9 Notes TO FINANCIAL STATEMENTS (CONTINUED) 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 accounting principles generally accepted in the United States. The tax character of dividends and distributions paid during the six months ended February 29, 2004 and the year ended August 31, 2003 was as follows: Delaware Tax-Free California Insured Fund ------------------------------- Six Months Year Ended Ended 2/29/04* 8/31/03 Tax-exempt income $821,799 $1,632,266 Long-term capital gain 95,866 -- -------- ---------- Total $917,665 $1,632,266 ======== ========== * Tax information for the period ended February 29, 2004, is an estimate and the tax character of dividends and distributions may be redesignated at the fiscal year end. The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 29, 2004, the estimated components of net assets on a tax basis was as follows: Delaware Tax-Free California Insured Fund --------------------- Shares of beneficial interest $38,925,156 Undistributed tax-exempt income -- Undistributed long-term capital gains 62,940 Net realized capital gain (losses) on investments -- Capital loss carryforwards (18,151) Unrealized appreciation of investments 2,780,087 ----------- Net assets $41,750,032 =========== For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Such capital loss carryforwards expire as follows: Delaware Tax-Free California Insured Fund --------------------- 2008 $ -- 2009 -- 2011 18,151 ------- Total $18,151 ======= 10 Notes TO FINANCIAL STATEMENTS (CONTINUED) 5. Capital Shares Transactions in capital shares were as follows: Delaware Tax-Free California Insured Fund ----------------------------- Six Months Year Ended Ended 2/29/04 8/31/03 Shares sold: Class A 203,374 367,203 Class B 25,956 150,611 Class C 22,291 180,673 Shares issued upon reinvestments of dividends and distributions: Class A 32,514 59,858 Class B 8,170 14,770 Class C 2,458 2,450 -------- -------- 294,763 775,565 -------- -------- Shares repurchased: Class A (196,608) (345,875) Class B (167,094) (245,676) Class C -- (32,732) -------- -------- (363,702) (624,283) -------- -------- Net increase (decrease) (68,939) 151,282 ======== ======== 11 Notes TO FINANCIAL STATEMENTS (CONTINUED) 5. Capital Shares (continued) For the six months ended February 29, 2004 and the year ended August 31, 2003, the following shares and value were converted from Class B to Class A. The respective amounts are included in Class B redemptions and Class A subscriptions in the table below and the Statements of Changes in Net Assets.
Six Months Ended Year Ended 2/29/04 8/31/03 ------------------------------- --------------------------------- Class B Class A Class B Class A shares shares Amount shares shares Amount Delaware Tax-Free California Insured Fund 57,983 57,983 633,153 141,516 141,543 1,570,564
6. Line of Credit The Funds, along with certain other funds in the Delaware Investments Family of Funds (the "Participants"), participate in a $177,300,000 revolving line of credit facility to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Participants are charged an annual commitment fee, which is allocated across the Participants on the basis of each Fund's allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The Funds had no amounts outstanding as of February 29, 2004, or at any time during the period. 7. Credit and Market Risk The Funds concentrate their investments in securities issued by each corresponding state's municipalities. The value of these investments may be adversely affected by new legislation within the states, 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 market value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statements of Net Assets. 12 DELAWARE INVESTMENTS(SM) - -------------------------------------- A member of Lincoln Financial Group(R) This semiannual report is for the information of Delaware Tax-Free Arizona Fund, Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund, Delaware Tax-Free California Insured Fund, and Delaware Tax-Free Colorado Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Arizona Fund, Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund, Delaware Tax-Free California Insured Fund, and Delaware Tax-Free Colorado Fund and the Delaware Investments Performance Update for the most recently completed calendar quarter. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of each Fund. You should read the prospectus carefully before you invest. The figures in this report represent past results which are not a guarantee of future results. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
Board of Trustees Affiliated Officers Contact Information Walter P. Babich Jude T. Driscoll Investment Manager Board Chairman Chairman Delaware Management Company Citadel Construction Corporation Delaware Investments Family of Funds Philadelphia, PA King of Prussia, PA Philadelphia, PA International Affiliate John H. Durham Joseph H. Hastings Delaware International Advisers Ltd. Private Investor Executive Vice President and London, England Gwynedd Valley, PA Chief Financial Officer Delaware Investments Family of Funds National Distributor Anthony D. Knerr Philadelphia, PA Delaware Distributors, L.P. Managing Director Philadelphia, PA Anthony Knerr & Associates Richelle S. Maestro New York, NY Senior Vice President, Shareholder Servicing, Dividend Chief Legal Officer and Secretary Disbursing and Transfer Agent Ann R. Leven Delaware Investments Family of Funds Delaware Service Company, Inc. Former Treasurer/Chief Fiscal Officer Philadelphia, PA 2005 Market Street National Gallery of Art Philadelphia, PA 19103-7094 Washington, DC Michael P. Bishof Senior Vice President and Treasurer For Shareholders Thomas F. Madison Delaware Investments Family of Funds 800 523-1918 President and Chief Executive Officer Philadelphia, PA MLM Partners, Inc. For Securities Dealers and Financial Minneapolis, MN Institutions Representatives Only 800 362-7500 Janet L. Yeomans Vice President/Mergers & Acquisitions Web site 3M Corporation www.delawareinvestments.com St. Paul, MN -------------------------------------------------------------------------------- A description of the policies and procedures that the Funds use to determine how to vote proxies (if any) relating to portfolio securities is available without charge (i) upon request, by calling 800 523-1918; (ii) on the Funds' website at http://www.delawareinvestments.com; and (iii) on the Commission's website at http://www.sec.gov.; and beginning no later than August 31, 2004, information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge (i) through the Funds' website at http://www.delawareinvestments.com; and (ii) on the Commission's website at http://www.sec.gov. -------------------------------------------------------------------------------- (8620) Printed in the USA SA-WEST [2/04] IVES 4/04 J9612
Delaware Investments(SM) -------------------------------------- A member of Lincoln Financial Group(R) FIXED INCOME Semiannual Report FEBRUARY 29, 2004 - -------------------------------------------------------------------------------- DELAWARE TAX-FREE FLORIDA FUND DELAWARE TAX-FREE FLORIDA INSURED FUND [LOGO] POWERED BY RESEARCH.(SM) Table OF CONTENTS - -------------------------------------------------------------------- FINANCIAL STATEMENTS: Statements of Net Assets 1 Statements of Operations 5 Statements of Changes in Net Assets 6 Financial Highlights 7 Notes to Financial Statements 13 - -------------------------------------------------------------------- Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested. Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. (C) 2004 Delaware Distributors, L.P. Statements Delaware Tax-Free Florida Fund OF NET ASSETS February 29, 2004 (Unaudited) Principal Market Amount Value Municipal Bonds - 96.89% Airport Revenue Bonds - 5.10% Capital Trust Agency Florida Revenue (Orlando/Cargo Project) 6.75% 1/1/32 (AMT) $ 395,000 $ 380,120 Miami-Dade County Florida Aviation Revenue Series A 5.00% 10/1/33 (FSA)(AMT) 500,000 516,015 ---------- 896,135 ---------- Continuing Care/Retirement Revenue Bond - 1.56% Volusia County Health Facilities Authority (John Knox Village) Series A 6.00% 6/1/17 (RADIAN) 250,000 274,473 ---------- 274,473 ---------- Corporate Backed Revenue Bonds - 0.90% Jacksonville Sewer & Solid Waste Disposal Facilities Authority (Anheuser Busch Project) 5.875% 2/1/36 (AMT) 150,000 157,724 ---------- 157,724 ---------- Dedicated Tax & Fees Revenue Bonds - 7.12% Dade County Special Obligation Series B 5.00% 10/1/35 (AMBAC) 700,000 724,360 Jacksonville, Florida Sales Tax Revenue 5.00% 10/1/30 (MBIA) 500,000 527,460 ---------- 1,251,820 ---------- Hospital Revenue Bonds - 19.05% Escambia County Health Facilities Authority (Florida Health Care Facilities - VHA Program) 5.95% 7/1/20 (AMBAC) 425,000 449,042 Highlands County Health Facilities Authority (Adventist Health System/Sunbelt) Series A 6.00% 11/15/31 500,000 539,924 Hillsborough County Florida Industrial Development (Tampa General Hospital Project) Series B 5.25% 10/1/34 500,000 509,525 North Miami Health Facilities Authority (Catholic Health Services) LOC Suntrust Bank-Miami 6.00% 8/15/16 500,000 533,120 Orange County, Florida Health Facilities Authority Revenue (Orlando Regional Healthcare) 5.75% 12/1/32 250,000 263,058 Palm Beach County Health Facilities Authority Revenue Refunding Hospital (Boca Raton Community Hospital) 5.625% 12/1/31 500,000 519,570 South Broward Hospital District Revenue (Memorial Healthcare System) 5.625% 5/1/32 500,000 533,545 ---------- 3,347,784 ---------- Miscellaneous Revenue Bonds - 8.36% Florida Municipal Loan Council Revenue 5.00% 12/1/23 (MBIA) 250,000 266,380 Florida State Board of Education (Lottery Revenue) Series A 6.00% 7/1/14 (FGIC) 1,000,000 1,203,520 ---------- 1,469,900 ---------- Principal Market Amount Value Municipal Bonds (continued) Multi Family Housing Revenue Bonds - 10.54% Dade County Housing Finance Authority (Lincoln Fields Apartments Section 8) 6.25% 7/1/24 (MBIA) $ 495,000 $ 497,718 Duval Housing Finance Authority (St. Augustine Apartments) 6.00% 3/1/21 300,000 312,480 Florida Housing Finance Agency (The Vineyards Project) Series H 6.40% 11/1/15 500,000 518,075 Volusia County Multifamily Housing Finance Authority (San Marco Apartments) Series A 5.60% 1/1/44 (FSA)(AMT) 500,000 524,119 ---------- 1,852,392 ---------- Ports & Harbors Revenue Bonds - 1.84% Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30 (MBIA)(AMT) 295,000 323,447 ---------- 323,447 ---------- *Pre-Refunded Bonds - 19.73% Jacksonville Florida Port Authority Seaport Revenue 5.70% 11/1/30-10 (MBIA)(AMT) 205,000 241,121 Northern Palm Beach County Improvement District Special Assessment (Abacoa Water Control) 7.20% 8/1/16-06 300,000 346,464 Pinellas County Educational Facilities Authority (Clearwater Christian College) Private Placement 8.00% 2/1/11-06 205,000 230,121 Tampa Utilities Tax Revenue Series A 6.00% 10/1/17-09 (AMBAC) 1,000,000 1,202,260 6.125% 10/1/18-09 (AMBAC) 1,000,000 1,208,779 Volusia County, Florida Industrial Development Authority Mortgage Revenue (Bishops Glen Retirement Health Facilities Project) 7.50% 11/1/16-06 205,000 236,892 ---------- 3,465,637 ---------- Public Power Revenue Bonds - 5.98% Jacksonville, Florida Electric Authority Revenue Electric System Series 3-C 5.50% 10/1/30 1,000,000 1,051,480 ---------- 1,051,480 ---------- Single Family Housing Revenue Bonds - 3.57% Florida Housing Finance Agency Homeowner Mortgage Series 1B 6.00% 7/1/17 105,000 110,383 Orange County Florida Housing Finance Authority Homeowner Revenue Series B 5.25% 3/1/33 (AMT) 500,000 516,270 ---------- 626,653 ---------- Tax Increment/Special Assessment Bonds - 5.53% Julinton Creek Plantation Community Development District Special Assessment 5.00% 5/1/29 (MBIA) 495,000 518,914 Lake Bernadette Community Development District Special Assessment Series A 8.00% 5/1/17 240,000 245,921 1 Statements Delaware Tax-Free Florida Fund OF NET ASSETS (CONTINUED) Principal Market Amount Value Municipal Bonds (continued) Tax Increment/Special Assessment Bonds (continued) Tampa Palms Community Development District (Richmond Place Project) 7.50% 5/1/18 $195,000 $ 206,489 ----------- 971,324 ----------- Territorial Revenue Bonds - 2.68% Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series B 6.00% 7/1/26 150,000 159,917 Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series G 5.00% 7/1/42 300,000 310,512 ----------- 470,429 ----------- Turnpike/Toll Road Revenue Bonds - 1.94% Dunes, Florida Community Development District Revenue -Intracoastal Waterway Bridge (ITT Industries Corporation) 5.50% 10/1/07 175,000 179,043 Florida State Mid-Bay Bridge Authority Series D 6.125% 10/1/22 160,000 161,800 ----------- 340,843 ----------- Water & Sewer Revenue Bond - 2.99% Village Center Community Development District Florida Utility Revenue 5.00% 10/1/36 (MBIA) 500,000 526,030 ----------- 526,030 ----------- Total Municipal Bonds (cost $15,704,446) 17,026,071 ----------- Total Market Value of Securities - 96.89% (cost $15,704,446) 17,026,071 Receivables and Other Assets Net of Liabilities - 3.11% 546,788 ----------- Net Assets Applicable to 1,557,634 Shares Outstanding - 100.00% $17,572,859 =========== Net Asset Value - Delaware Tax-Free Florida Fund Class A ($10,509,136 / 932,194 Shares) $11.27 ------ Net Asset Value - Delaware Tax-Free Florida Fund Class B ($5,053,380 / 447,418 Shares) $11.29 ------ Net Asset Value - Delaware Tax-Free Florida Fund Class C ($2,010,343 / 178,022 Shares) $11.29 ------ Components of Net Assets at February 29, 2004: Shares of beneficial interest (unlimited authorization - no par) $16,933,212 Distributions in excess of net investment income (181) Accumulated net realized loss on investments (681,797) Net unrealized appreciation of investments 1,321,625 ----------- Total net assets $17,572,859 =========== Summary of Abbreviations: AMBAC - Insured by the AMBAC Assurance Corporation AMT - Subject to Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by Financial Security Assurance LOC - Letter of Credit MBIA - Insured by the Municipal Bond Insurance Association RADIAN - Insured by Radian Asset Assurance *For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. Net Asset Value and Offering Price per Share - Delaware Tax-Free Florida Fund Net asset value Class A (A) $11.27 Sales charge (4.50% of offering price, or 4.70% of amount invested per share)(B) 0.53 ------ Offering price $11.80 ====== (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See the current prospectus for purchases of $100,000 or more. See accompanying notes 2 Statements Delaware Tax-Free Florida Insured Fund OF NET ASSETS (CONTINUED) February 29, 2004 (Unaudited) Principal Market Amount Value Municipal Bonds - 98.07% Airport Revenue Bonds - 3.24% Lee County Florida Airport Revenue Series B 5.75% 10/1/33 (FSA) $3,000,000 $ 3,325,590 ----------- 3,325,590 ----------- Dedicated Tax & Fees Revenue Bonds - 13.75% Florida Department of Transportation 5.00% 7/1/31 (FGIC) 2,000,000 2,104,320 Jacksonville Florida Excise Taxes Revenue Series B 5.00% 10/1/26 (AMBAC) 1,500,000 1,576,365 +Palm Beach County Florida Criminal Justice Facilities Revenue Inverse Floater 9.97% 6/1/12 (FGIC) 7,500,000 10,449,150 ----------- 14,129,835 ----------- Higher Education Revenue Bonds - 3.24% Broward County, Florida Educational Facilities Authority Revenue (Nova Southeastern University) 5.25% 4/1/27 (RADIAN) 1,000,000 1,042,170 Dade County Florida Educational Facilities Authority (University of Miami) Series A 5.75% 4/1/29 (AMBAC) 2,000,000 2,284,120 ----------- 3,326,290 ----------- Hospital Revenue Bonds - 21.97% Escambia County Health Facilities Authority (Florida Health Care Facilities - VHA Program) 5.95% 7/1/20 (AMBAC) 4,500,000 4,754,565 Highlands County Health Facilities Authority (Adventist Health System/Sunbelt) Series A 6.00% 11/15/31 1,000,000 1,079,850 Hillsborough County Florida Industrial Development (Tampa General Hospital Project) Series B 5.25% 10/1/34 1,500,000 1,528,575 Indian River County Hospital District (Indian River Memorial Hospital) 6.10% 10/1/18 (FSA) 3,000,000 3,387,060 Lee Memorial Health Systems Series A 5.00% 4/1/18 (FSA) 1,250,000 1,346,863 Orange County, Florida Health Facilities Authority Revenue (Adventist Health System) 5.625% 11/15/32 3,000,000 3,190,890 Palm Beach County Health Facilities Authority Revenue Refunding Hospital (Boca Raton Community Hospital) 5.625% 12/1/31 2,000,000 2,078,280 South Broward Hospital District Revenue (Memorial Healthcare System) 5.625% 5/1/32 2,500,000 2,667,725 Tallahassee Health Facilities (Tallahassee Memorial Regional Medical Center) Series B 6.00% 12/1/15 (MBIA) 2,500,000 2,534,725 ----------- 22,568,533 ----------- Multi Family Housing Revenue Bonds - 27.02% Florida Housing Finance Agency (Spinnaker Cove Apartments) Series G 6.50% 7/1/36 (AMBAC)(AMT) 500,000 525,205 Principal Market Amount Value Municipal Bonds (continued) Multi Family Housing Revenue Bonds (continued) Florida Housing Finance Agency (Crossings Indian Run Apartments HUD) Series V 6.10% 12/1/26 (AMBAC)(AMT) $ 750,000 $ 786,908 Florida Housing Finance Agency (Landings at Sea Forest Apartments) Series T 5.85% 12/1/18 (AMBAC)(FHA)(AMT) 430,000 452,738 6.05% 12/1/36 (AMBAC)(FHA)(AMT) 700,000 732,606 Florida Housing Finance Agency (Leigh Meadows Apartments Section 8) Series N 6.20% 9/1/26 (AMBAC)(AMT) 2,765,000 2,899,794 Florida Housing Finance Agency (Leigh Meadows Apartments) Series N 6.30% 9/1/36 (AMBAC)(AMT) 2,000,000 2,098,340 Florida Housing Finance Agency (Mariner Club Apartments) Series K-1 6.25% 9/1/26 (AMBAC)(AMT) 2,000,000 2,099,440 6.375% 9/1/36 (AMBAC)(AMT) 3,500,000 3,676,435 Florida Housing Finance Agency (Riverfront Apartments Section 8) Series A 6.25% 4/1/37 (AMBAC)(AMT) 1,000,000 1,057,560 Florida Housing Finance Agency (Sterling Palms Apartments) Series D 6.30% 12/1/16 (AMBAC)(AMT) 1,000,000 1,054,070 6.40% 12/1/26 (AMBAC)(AMT) 1,500,000 1,573,635 6.50% 6/1/36 (AMBAC)(AMT) 6,540,000 6,863,075 Florida Housing Finance Agency (Woodbridge Apartments) Series L 6.25% 6/1/36 (AMBAC)(AMT) 2,000,000 2,101,940 Florida Housing Finance Agency (Woodbridge Apartments) Series L 6.15% 12/1/26 (AMBAC)(AMT) 1,750,000 1,837,990 ----------- 27,759,736 ----------- Municipal Lease Revenue Bonds - 4.20% Osceola County Florida School Board Series A 5.25% 6/1/27 (AMBAC) 4,000,000 4,313,200 ----------- 4,313,200 ----------- *Pre-Refunded Bonds - 7.46% Miramar Wastewater Improvement Assessment 6.75% 10/1/25-04 (FGIC) 2,425,000 2,532,549 Port St. Lucie Florida Utility Revenue 6.00% 9/1/24-04 (FGIC) 5,000,000 5,129,150 ----------- 7,661,699 ----------- Public Power Revenue Bonds - 2.04% Florida State Municipal Power Agency Revenue (Stanton II Project) 5.00% 10/1/26 (AMBAC) 2,000,000 2,101,820 ----------- 2,101,820 ----------- Tax Increment/Special Assessment Bonds - 1.24% Osceola County Celebration Community Development District Assessment 6.10% 5/1/16 (MBIA) 555,000 565,423 Osceola County Enterprise Community Development District Special Assessment 6.10% 5/1/16 (MBIA) 695,000 708,052 ----------- 1,273,475 ----------- 3 Statements Delaware Tax-Free Florida Insured Fund OF NET ASSETS (CONTINUED) Principal Market Amount Value Municipal Bonds (continued) Territorial General Obligation Bonds - 4.46% Puerto Rico Commonwealth Public Improvement Series A 5.125% 7/1/30 (FSA) $1,500,000 $ 1,593,450 5.50% 7/1/19 (MBIA) 2,500,000 2,988,975 ------------ 4,582,425 ------------ Territorial Revenue Bonds - 6.17% Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series D 5.25% 7/1/38 5,000,000 5,317,900 Puerto Rico Public Buildings Authority Revenue 5.25% 7/1/25 930,000 1,024,311 ------------ 6,342,211 ------------ Water & Sewer Revenue Bond - 3.28% JEA, Florida Water and Sewer Systems Revenue Series A 5.375% 10/1/30 (MBIA) 2,000,000 2,137,180 Tampa Water and Sewer Revenue 6.00% 10/1/16 (FSA) 1,000,000 1,236,110 ------------ 3,373,290 ------------ Total Municipal Bonds (cost $92,612,717) 100,758,104 ------------ Total Market Value of Securities - 98.07% (cost $92,612,717) 100,758,104 Receivables and Other Assets Net of Liabilities - 1.93% 1,978,761 ------------ Net Assets Applicable to 8,925,841 Shares Outstanding - 100.00% $102,736,865 ============ Net Asset Value - Delaware Tax-Free Florida Insured Fund Class A ($95,792,262 / 8,322,778 Shares) $11.51 ------ Net Asset Value - Delaware Tax-Free Florida Insured Fund Class B ($5,936,668 / 515,536 Shares) $11.52 ------ Net Asset Value - Delaware Tax-Free Florida Insured Fund Class C ($1,007,935 / 87,527 Shares) $11.52 ------ Components of Net Assets at February 29, 2004: Shares of beneficial interest (unlimited authorization - no par) $ 95,749,056 Accumulated net realized loss on investments (1,157,578) Net unrealized appreciation of investments 8,145,387 ------------ Total net assets $102,736,865 ============ Summary of Abbreviations: AMBAC - Insured by the AMBAC Assurance Corporation AMT - Subject to Alternative Minimum Tax FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association RADIAN - Insured by Radian Asset Assurance *For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. +An inverse floater bond is a type of bond with variable or floating interest rates that move in the opposite direction of short-term rates. Interest rate disclosed is in effect as of February 29, 2004. Net Asset Value and Offering Price per Share - Delaware Tax-Free Florida Insured Fund Net asset value Class A (A) $11.51 Sales charge (4.50% of offering price, or 4.69% of amount invested per share)(B) 0.54 ------ Offering price $12.05 ====== (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See the current prospectus for purchases of $100,000 or more. See accompanying notes 4 Statements Six Months Ended February 29, 2004 (Unaudited) OF OPERATIONS
Delaware Delaware Tax-Free Tax-Free Florida Florida Fund Insured Fund Investment Income: Interest $452,414 $2,846,398 -------- ---------- Expenses: Management fees 47,302 255,072 Dividend disbursing and transfer agent fees and expenses 3,235 44,477 Distribution expenses -- Class A 12,585 119,209 Distribution expenses -- Class B 26,109 29,149 Distribution expenses -- Class C 9,490 4,528 Legal and professional fees 2,682 10,077 Accounting and administration expenses 2,575 13,117 Registration fees 230 1,450 Reports and statements to shareholders 250 2,300 Custodian fees 1,157 5,205 Trustees' fees 1,205 3,110 Other 632 6,052 -------- ---------- 107,452 493,746 -------- ---------- Less expenses absorbed or waived (15,365) (6,609) Less expenses paid indirectly (893) (2,410) -------- ---------- Total expenses 91,194 484,727 -------- ---------- Net Investment Income 361,220 2,361,671 -------- ---------- Net Realized and Unrealized Gain on Investments: Net realized gain on investments 46,749 85,561 Net change in unrealized appreciation/depreciation of investments 508,623 3,515,575 -------- ---------- Net Realized and Unrealized Gain on Investments 555,372 3,601,136 -------- ---------- Net Increase in Net Assets Resulting from Operations $916,592 $5,962,807 ======== ==========
See accompanying notes 5 Statements OF CHANGES IN NET ASSETS
Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund Six Months Year Six Months Year Ended Ended Ended Ended 2/29/04 8/31/03 2/29/04 8/31/03 (Unaudited) (Unaudited) Increase (Decrease) in Net Assets from Operations: Net investment income $ 361,220 $ 723,474 $ 2,361,671 $ 4,996,861 Net realized gain on investments 46,749 76,778 85,561 614,284 Net change in unrealized appreciation/depreciation of investments 508,623 (243,690) 3,515,575 (2,605,250) ----------- ----------- ------------ ------------ Net increase in net assets resulting from operations 916,592 556,562 5,962,807 3,005,895 ----------- ----------- ------------ ------------ Dividends and Distributions to Shareholders from: Net investment income: Class A (227,359) (466,803) (2,229,568) (4,753,688) Class B (98,196) (210,191) (114,348) (218,299) Class C (35,665) (46,480) (17,755) (24,874) ----------- ----------- ------------ ------------ (361,220) (723,474) (2,361,671) (4,996,861) ----------- ----------- ------------ ------------ Capital Share Transactions: Proceeds from shares sold: Class A 518,833 1,111,543 1,621,357 5,639,680 Class B 162,702 928,820 31,386 1,740,052 Class C 354,957 1,165,280 205,010 431,204 Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 95,545 182,417 712,865 1,575,119 Class B 26,891 67,252 51,823 95,718 Class C 17,254 20,496 11,566 17,939 ----------- ----------- ------------ ------------ 1,176,182 3,475,808 2,634,007 9,499,712 ----------- ----------- ------------ ------------ Cost of shares repurchased: Class A (124,674) (1,976,552) (5,854,762) (15,180,505) Class B (617,198) (739,284) (153,241) (1,146,474) Class C (252,141) (64,239) (86,854) (141,785) ----------- ----------- ------------ ------------ (994,013) (2,780,075) (6,094,857) (16,468,764) ----------- ----------- ------------ ------------ Increase (decrease) in net assets derived from capital share transactions 182,169 695,733 (3,460,850) (6,969,052) ----------- ----------- ------------ ------------ Net Increase (Decrease) in Net Assets 737,541 528,821 140,286 (8,960,018) Net Assets: Beginning of period 16,835,318 16,306,497 102,596,579 111,556,597 ----------- ----------- ------------ ------------ End of period (including distributions in excess of net investment income of $181, $181, $-- and $--, respectively) $17,572,859 $16,835,318 $102,736,865 $102,596,579 =========== =========== ============ ============
See accompanying notes 6 Financial HIGHLIGHTS Selected data for each share of the Fund outstanding throughout each period were as follows:
------------------------------------------------------------------------ Delaware Tax-Free Florida Fund Class A ------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.920 $11.030 $10.870 $10.420 $10.530 $11.230 Income (loss) from investment operations: Net investment income 0.250 0.510 0.514 0.513 0.518 0.532 Net realized and unrealized gain (loss) on investments 0.350 (0.110) 0.160 0.450 (0.110) (0.688) ------- ------- ------- ------- ------- ------- Total from investment operations 0.600 0.400 0.674 0.963 0.408 (0.156) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.250) (0.510) (0.514) (0.513) (0.518) (0.532) Net realized gain on investments -- -- -- -- -- (0.012) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.250) (0.510) (0.514) (0.513) (0.518) (0.544) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.270 $10.920 $11.030 $10.870 $10.420 $10.530 ======= ======= ======= ======= ======= ======= Total return(3) 5.55% 3.67% 6.42% 9.48% 4.11% (1.50%) Ratios and supplemental data: Net assets, end of period (000 omitted) $10,509 $9,694 $10,464 $10,747 $8,711 $11,406 Ratio of expenses to average net assets(4) 0.75% 0.75% 0.75% 0.75% 0.75% 0.62% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.93% 0.98% 1.06% 0.97% 1.10% 1.16% Ratio of net investment income to average net assets 4.51% 4.59% 4.78% 4.84% 5.11% 4.81% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.33% 4.36% 4.47% 4.62% 4.76% 4.27% Portfolio turnover 14% 31% 57% 40% 64% 30%
(1) As required, effective September 1, 2001, the Fund adopted provisions of the AICPA Audit & Accounting Guide for Investment Companies that requires amortization of all premiums and discounts on debt securities. This change had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. (4) Ratios for the period ended February 29, 2004 and for the year ended August 31, 2002, including fees paid indirectly in accordance with Securities and Exchange Commission rules, were 0.76%. See accompanying notes 7 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
------------------------------------------------------------------------ Delaware Tax-Free Florida Fund Class B ------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.940 $11.040 $10.890 $10.430 $10.540 $11.240 Income (loss) from investment operations: Net investment income 0.208 0.426 0.433 0.434 0.443 0.449 Net realized and unrealized gain (loss) on investments 0.350 (0.100) 0.150 0.460 (0.110) (0.688) ------- ------- ------- ------- ------- ------- Total from investment operations 0.558 0.326 0.583 0.894 0.333 (0.239) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.208) (0.426) (0.433) (0.434) (0.443) (0.449) Net realized gain on investments -- -- -- -- -- (0.012) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.208) (0.426) (0.433) (0.434) (0.443) (0.461) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.290 $10.940 $11.040 $10.890 $10.430 $10.540 ======= ======= ======= ======= ======= ======= Total return(3) 5.14% 2.98% 5.52% 8.76% 3.34% (2.24%) Ratios and supplemental data: Net assets, end of period (000 omitted) $5,053 $5,313 $5,110 $4,655 $4,045 $4,468 Ratio of expenses to average net assets(4) 1.50% 1.50% 1.50% 1.50% 1.50% 1.37% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.68% 1.73% 1.81% 1.72% 1.85% 1.91% Ratio of net investment income to average net assets 3.76% 3.84% 4.03% 4.09% 4.36% 4.06% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.58% 3.61% 3.72% 3.87% 4.01% 3.52% Portfolio turnover 14% 31% 57% 40% 64% 30%
(1) As required, effective September 1, 2001, the Fund adopted provisions of the AICPA Audit & Accounting Guide for Investment Companies that requires amortization of all premiums and discounts on debt securities. This change had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. (4) Ratios for the period ended February 29, 2004 and for the year ended August 31, 2002, including fees paid indirectly in accordance with Securities and Exchange Commission rules, were 1.51%. See accompanying notes 8 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
------------------------------------------------------------------------ Delaware Tax-Free Florida Fund Class C ------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.930 $11.040 $10.880 $10.420 $10.530 $11.240 Income (loss) from investment operations: Net investment income 0.208 0.426 0.433 0.434 0.446 0.449 Net realized and unrealized gain (loss) on investments 0.360 (0.110) 0.160 0.460 (0.110) (0.698) ------- ------- ------- ------- ------- ------- Total from investment operations 0.568 0.316 0.593 0.894 0.336 (0.249) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.208) (0.426) (0.433) (0.434) (0.446) (0.449) Net realized gain on investments -- -- -- -- -- (0.012) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.208) (0.426) (0.433) (0.434) (0.446) (0.461) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.290 $10.930 $11.040 $10.880 $10.420 $10.530 ======= ======= ======= ======= ======= ======= Total return(3) 5.24% 2.89% 5.63% 8.79% 3.38% (2.33%) Ratios and supplemental data: Net assets, end of period (000 omitted) $2,010 $1,828 $732 $516 $433 $722 Ratio of expenses to average net assets(4) 1.50% 1.50% 1.50% 1.50% 1.50% 1.37% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.68% 1.73% 1.81% 1.72% 1.85% 1.91% Ratio of net investment income to average net assets 3.76% 3.84% 4.03% 4.09% 4.36% 4.06% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.58% 3.61% 3.72% 3.87% 4.01% 3.52% Portfolio turnover 14% 31% 57% 40% 64% 30%
(1) As required, effective September 1, 2001, the Fund adopted provisions of the AICPA Audit & Accounting Guide for Investment Companies that requires amortization of all premiums and discounts on debt securities. This change had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. (4) Ratios for the period ended February 29, 2004 and for the year ended August 31, 2002, including fees paid indirectly in accordance with Securities and Exchange Commission rules, were 1.51%. See accompanying notes 9 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
------------------------------------------------------------------------ Delaware Tax-Free Florida Insured Fund Class A ------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $11.110 $11.330 $11.230 $10.770 $10.750 $11.370 Income (loss) from investment operations: Net investment income 0.264 0.523 0.532 0.527 0.525 0.537 Net realized and unrealized gain (loss) on investments 0.400 (0.220) 0.100 0.460 0.020 (0.620) ------- ------- ------- ------- ------- ------- Total from investment operations 0.664 0.303 0.632 0.987 0.545 (0.083) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.264) (0.523) (0.532) (0.527) (0.525) (0.537) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.264) (0.523) (0.532) (0.527) (0.525) (0.537) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.510 $11.110 $11.330 $11.230 $10.770 $10.750 ======= ======= ======= ======= ======= ======= Total return(3) 6.03% 2.68% 5.83% 9.39% 5.29% (0.83%) Ratios and supplemental data: Net assets, end of period (000 omitted) $95,792 $95,951 $105,773 $107,365 $110,708 $125,838 Ratio of expenses to average net assets 0.90% 0.90% 0.90% 0.90% 0.91% 0.85% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.91% 0.94% 0.99% 0.97% 1.01% 0.85% Ratio of net investment income to average net assets 4.67% 4.60% 4.80% 4.81% 4.98% 4.77% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.66% 4.56% 4.71% 4.74% 4.88% 4.77% Portfolio turnover 0% 26% 46% 12% 56% 25%
(1) As required, effective September 1, 2001, the Fund adopted provisions of the AICPA Audit & Accounting Guide for Investment Companies that requires amortization of all premiums and discounts on debt securities. This change had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 10 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
------------------------------------------------------------------------ Delaware Tax-Free Florida Insured Fund Class B ------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $11.120 $11.330 $11.230 $10.770 $10.750 $11.370 Income (loss) from investment operations: Net investment income 0.221 0.437 0.445 0.443 0.448 0.452 Net realized and unrealized gain (loss) on investments 0.400 (0.210) 0.100 0.460 0.016 (0.620) ------- ------- ------- ------- ------- ------- Total from investment operations 0.621 0.227 0.545 0.903 0.464 (0.168) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.221) (0.437) (0.445) (0.443) (0.444) (0.452) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.221) (0.437) (0.445) (0.443) (0.444) (0.452) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.520 $11.120 $11.330 $11.230 $10.770 $10.750 ======= ======= ======= ======= ======= ======= Total return(3) 5.63% 2.00% 5.01% 8.56% 4.50% (1.58%) Ratios and supplemental data: Net assets, end of period (000 omitted) $5,937 $5,800 $5,223 $5,014 $5,272 $4,799 Ratio of expenses to average net assets 1.65% 1.65% 1.65% 1.65% 1.66% 1.60% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.66% 1.69% 1.74% 1.72% 1.76% 1.60% Ratio of net investment income to average net assets 3.92% 3.85% 4.05% 4.06% 4.23% 4.02% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.91% 3.81% 3.96% 3.99% 4.13% 4.02% Portfolio turnover 0% 26% 46% 12% 56% 25%
(1) As required, effective September 1, 2001, the Fund adopted provisions of the AICPA Audit & Accounting Guide for Investment Companies that requires amortization of all premiums and discounts on debt securities. This change had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 11 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
------------------------------------------------------------------------ Delaware Tax-Free Florida Insured Fund Class C ------------------------------------------------------------------------ Six Months 1/8/99(2,3) Ended Year Ended to 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/30/00 8/31/99 (Unaudited) Net asset value, beginning of period $11.120 $11.330 $11.240 $10.780 $10.760 $11.370 Income (loss) from investment operations: Net investment income 0.221 0.437 0.447 0.443 0.454 0.286 Net realized and unrealized gain (loss) on investments 0.400 (0.210) 0.090 0.460 0.010 (0.610) ------- ------- ------- ------- ------- ------- Total from investment operations 0.621 0.227 0.537 0.903 0.464 (0.324) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.221) (0.437) (0.447) (0.443) (0.444) (0.286) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.221) (0.437) (0.447) (0.443) (0.444) (0.286) ------- ------- ------- ------- ------- ------- Net asset value, end of period $11.520 $11.120 $11.330 $11.240 $10.780 $10.760 ======= ======= ======= ======= ======= ======= Total return(4) 5.63% 2.00% 4.93% 8.45% 4.49% (2.91%) Ratios and supplemental data: Net assets, end of period (000 omitted) $1,008 $846 $560 $53 $51 $107 Ratio of expenses to average net assets 1.65% 1.65% 1.65% 1.65% 1.66% 1.60% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.66% 1.69% 1.74% 1.72% 1.76% 1.60% Ratio of net investment income to average net assets 3.92% 3.85% 4.05% 4.06% 4.23% 4.02% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.91% 3.81% 3.96% 3.99% 4.13% 4.02% Portfolio turnover 0% 26% 46% 12% 56% 25%
(1) As required, effective September 1, 2001, the Fund adopted provisions of the AICPA Audit & Accounting Guide for Investment Companies that requires amortization of all premiums and discounts on debt securities. This change had no impact for the year ended August 31, 2002. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Shares of Delaware Investments Tax-Free Florida Insured Fund Class C were initially offered on September 29, 1997. On or about September 29, 1997, Class C sold shares, which were subsequently repurchased on December 18, 1997. There were no shares sold or outstanding from December 19, 1997 through January 7, 1999. Shareholder data for Class C for the period September 29, 1997 through December 18, 1997 are not disclosed because Management does not believe them to be meaningful. (4) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 12 Notes February 29, 2004 (Unaudited) TO FINANCIAL STATEMENTS Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust and offers six series: Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, and Delaware Tax-Free New York Fund. Voyageur Investment Trust (the "Trust") is organized as a Massachusetts business trust and offers five series: Delaware Tax-Free California Insured Fund, Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund. These financial statements and the related notes pertain to Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, and Delaware Tax-Free New York Fund (each "Fund" or, collectively, as the "Funds"). The Trust is an open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended. The Funds offer Class A, Class B, and Class C shares. Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge that declines from 4% to zero depending upon the period of time the shares are held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a contingent deferred sales charge of 1%, if redeemed during the first twelve months. The investment objective of Delaware Tax-Free Florida Fund and Delaware Tax-Free Florida Insured Fund is to seek as high a level of current income exempt from federal income tax and the Florida state intangibles tax, as is consistent with preservation of capital. The investment objective of Delaware Tax-Free New York Fund is to seek as high a level of current income exempt from federal income tax and from New York state personal income tax, as is consistent with preservation of capital. 1. Significant Accounting Policies The following accounting policies are in accordance with accounting principles generally accepted in the United States and are consistently followed by the Funds. Security Valuation -- Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Funds' Board of Trustees. Federal Income Taxes -- Each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Class Accounting -- Investment income and common expenses are allocated to the classes of the Funds on the basis of "settled shares" of each class in relation to the net assets of the Funds. Realized and unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Use of Estimates -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of 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. Other -- Expenses common to all funds within the Delaware Investments Family of Funds are allocated amongst the funds on the basis of average net assets. Management fees and other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date). 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. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually. Certain expenses of the Funds are paid through commission arrangements with brokers. In addition, the Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expenses paid under the above arrangements are included in their respective expense captions on the Statements of Operations with the corresponding expense offset shown as "expenses paid indirectly". The amount of these expenses for the period ended February 29, 2004 were as follows: Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- Commission reimbursements $206 $1,225 Earnings credits 687 1,185 2. Investment Management, Administration Agreements and Other Transactions with Affiliates In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee based on each Fund's average daily net assets as follows: Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- On the first $500 million 0.55% 0.50% On the next $500 million 0.50% 0.475% On the next $1.5 billion 0.45% 0.45% In excess of $2.5 billion 0.425% 0.425% 13 Notes TO FINANCIAL STATEMENTS (CONTINUED) 2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued) DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse each Fund to the extent necessary to ensure that annual operating expenses, exclusive of taxes, interest, brokerage commissions, distribution fees, certain insurance costs and extraordinary expenses, do not exceed specified percentages of average daily net assets through October 31, 2004 for the Delaware Tax-Free Florida and Delaware Tax-Free Florida Insured Funds and until revoked for the Delaware Tax-Free New York Fund, as shown below. Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ------------------ -------------------- The operating expense limitation as a percentage of average daily net assets (per annum) 0.50% 0.65% Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing, and transfer agent services. The Funds pay DSC a monthly fee based on average net assets subject to certain minimums for accounting and administration services. Each Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services. Pursuant to a distribution agreement and distribution plan, each Fund pays Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an annual fee not to exceed 0.25% of the average daily net assets of the Class A shares and 1.00% of the average daily net assets of the Class B and C shares. At February 29, 2004, the Funds had recievables from and liabilities payable to affiliates as follows:
Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- Receivable from DMC under expense limitation agreement $ -- $ -- Investment Management fee payable to DMC (3,823) (10,004) Dividend disbursing, transfer agent fees, accounting and other expenses payable to DSC (1,391) (10,175) Other expenses payable to DMC and affiliates* (568) (1,718)
*DMC, as part of its administrative services, pays operating expenses on behalf of the Funds and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, professional fees, registration fees and trustees' fees. Certain internal legal expenses are allocated to the Funds. For the six months ended February 29, 2004, the Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, and the Delaware Tax-Free New York Fund had costs of $823, $5,077 and $840, respectively. For the period ended February 29, 2004, DDLP earned commissions on sales of Class A shares for each Fund as follows: Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- $1,187 $6,304 Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust. These officers and trustees are paid no compensation by the Funds. 3. Investments For the period ended February 29, 2004, the Funds made purchases and sales of investment securities other than short-term investments as follows: Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- Purchases $1,267,283 $ -- Sales 1,198,360 4,053,960 At February 29, 2004, the cost of investment for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At February 29, 2004, the cost of investments and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows:
Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- Cost of investments $15,704,446 $92,612,717 ----------- ----------- Aggregate unrealized appreciation $ 1,324,447 $ 8,145,387 Aggregate unrealized depreciation (2,822) -- ----------- ----------- Net unrealized appreciation $ 1,321,625 $ 8,145,387 =========== ===========
14 Notes TO FINANCIAL STATEMENTS (CONTINUED) 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 accounting principles generally accepted in the United States. The tax character of dividends and distributions paid during the six months ended February 29, 2004 and the year ended August 31, 2003 was as follows:
Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------------- --------------------------- Six Months Year Six Months Year Ended Ended Ended Ended 2/29/04 8/31/03 2/29/04 8/31/03 ----------- -------- ----------- ------------ Tax-exempt income $361,220 $723,474 $2,361,671 $4,996,861
*Tax information for the period ended February 29, 2004 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end. The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end, the estimated components of net assets on a tax basis were as follows As of February 29, 2004, the components of net assets on a tax basis were as follows:
Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- Shares of beneficial interest $16,933,212 $ 95,749,056 Undistributed long-term capital gain 46,749 85,561 Distributions in excess of net investment income (181) -- Capital loss carryforwards (728,546) (1,243,139) Unrealized appreciation of investments 1,321,625 8,145,387 ----------- ------------ Net assets $17,572,859 $102,736,865 =========== ============
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Such capital loss carryforwards expire as follows: Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund ----------------- -------------------- 2004 $ -- $ 735,445 2008 85,428 507,694 2009 643,118 -- -------- ---------- Total $728,546 $1,243,139 ======== ========== 5. Capital Shares Transactions in capital shares were as follows:
Delaware Tax-Free Delaware Tax-Free Florida Fund Florida Insured Fund --------------------- --------------------- Six Months Year Six Months Year Ended Ended Ended Ended 2/29/04 8/31/03 2/29/04 8/31/03 Shares sold: Class A 46,678 100,615 143,070 498,628 Class B 14,624 83,873 2,778 152,690 Class C 31,804 104,884 18,034 37,398 Shares issued upon reinvestment of dividends and distributions: Class A 8,586 16,498 62,821 138,879 Class B 2,414 6,071 4,564 8,436 Class C 1,548 1,847 1,018 1,582 ------- ------- ------- ---------- 105,654 313,788 232,285 837,613 ------- ------- ------- ---------- Shares repurchased: Class A (11,154) (178,105) (518,703) (1,336,825) Class B (55,439) (66,791) (13,544) (100,200) Class C (22,507) (5,869) (7,645) (12,304) ------- ------- ------- ---------- (89,100) (250,765) (539,892) (1,449,329) ------- ------- ------- ---------- Net increase (decrease) 16,554 63,023 (307,607) (611,716) ======= ======= ======= ==========
15 Notes TO FINANCIAL STATEMENTS (CONTINUED) 5. Capital Shares (continued) For the six months ended February 29, 2004 and the year ended August 31, 2003, the following shares were converted from Class B to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the Statements of Changes in Net Assets.
Six Months Ended Year Ended 2/29/04 8/31/03 ----------------------------------------- --------------------------------------------- Class B Shares Class A shares Amount Class B Shares Class A shares Amount Delaware Tax-Free Florida Fund -- -- $ -- 5,872 5,883 $ 65,055 Delaware Tax-Free Florida Insured Fund 12,879 12,879 145,703 40,697 40,704 465,070
6. Line of Credit The Funds, along with certain other funds in the Delaware Investments Family of Funds (the "Participants"), participate in a $177,300,000 revolving line of credit facility to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Participants are charged an annual commitment fee, which is allocated across the Participants on the basis of each funds' allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The Funds had no amounts outstanding as of February 29, 2004, or at any time during the period. 7. Credit and Market Risk The Funds concentrate their investments in securities issued by each corresponding state's municipalities. The value of these investments may be adversely affected by new legislation within the states, 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 market value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statements of Net Assets. 16 Delaware Investments(SM) - -------------------------------------- A member of Lincoln Financial Group(R) This semiannual report is for the information of Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, and Delaware Tax-Free New York Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, and Delaware Tax-Free New York Fund and the Delaware Investments Performance Update for the most recently completed calendar quarter. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of each Fund. You should read the prospectus carefully before you invest. The figures in this report represent past results which are not a guarantee of future results. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
Board of Trustees Affiliated Officers Contact Information Walter P. Babich Jude T. Driscoll Investment Manager Board Chairman Chairman Delaware Management Company Citadel Construction Corporation Delaware Investments Family of Funds Philadelphia, PA King of Prussia, PA Philadelphia, PA International Affiliate John H. Durham Joseph H. Hastings Delaware International Advisers Ltd. Private Investor Executive Vice President and London, England Gwynedd Valley, PA Chief Financial Officer Delaware Investments Family of Funds National Distributor Anthony D. Knerr Philadelphia, PA Delaware Distributors, L.P. Managing Director Philadelphia, PA Anthony Knerr & Associates Richelle S. Maestro New York, NY Senior Vice President, Shareholder Servicing, Dividend Chief Legal Officer and Secretary Disbursing and Transfer Agent Ann R. Leven Delaware Investments Family of Funds Delaware Service Company, Inc. Former Treasurer/Chief Fiscal Officer Philadelphia, PA 2005 Market Street National Gallery of Art Philadelphia, PA 19103-7094 Washington, DC Michael P. Bishof Senior Vice President and Treasurer For Shareholders Thomas F. Madison Delaware Investments Family of Funds 800 523-1918 President and Chief Executive Officer Philadelphia, PA MLM Partners, Inc. For Securities Dealers and Financial Minneapolis, MN Institutions Representatives Only 800 362-7500 Janet L. Yeomans Vice President/Mergers & Acquisitions Web site 3M Corporation www.delawareinvestments.com St. Paul, MN
- -------------------------------------------------------------------------------- A description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities is available without charge (i) upon request, by calling 800 523-1918; (ii) on the Fund's website at http://www.delawareinvestments.com; and (iii) on the Commission's website at http://www.sec.gov.; and beginning no later than August 31, 2004, information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge (i) through the Fund's website at http://www.delawareinvestments.com; and (ii) on the Commission's website at http://www.sec.gov. - -------------------------------------------------------------------------------- (8621) Printed in the USA SA-FLNY [2/04] IVES 4/04 J9625 DELAWARE INVESTMENTS(SM) -------------------------------------- A member of Lincoln Financial Group(R) FIXED INCOME Semiannual Report FEBRUARY 29, 2004 - -------------------------------------------------------------------------------- DELAWARE TAX-FREE MISSOURI INSURED FUND DELAWARE TAX-FREE OREGON INSURED FUND [LOGO] POWERED BY RESEARCH.(SM) Table OF CONTENTS - ----------------------------------------------------------------- FINANCIAL STATEMENTS: Statements of Net Assets 1 Statements of Operations 6 Statements of Changes in Net Assets 7 Financial Highlights 8 Notes to Financial Statements 14 - ----------------------------------------------------------------- Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested. Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. (C) 2004 Delaware Distributors, L.P. Statements Delaware Tax-Free Missouri Insured Fund OF NET ASSETS February 29, 2004 (Unaudited) Principal Market Amount Value Municipal Bonds - 99.62% Airport Revenue Bonds - 3.31% St. Louis Airport (Capital Improvement Project) Series A 5.375% 7/1/21 (MBIA) $1,635,000 $ 1,803,438 ----------- 1,803,438 ----------- Corporate-Backed Revenue Bonds - 1.93% Missouri State Development Finance Board Solid Waste Disposal (Procter & Gamble Paper Products) 5.20% 3/15/29 (AMT) 500,000 543,155 Sugar Creek, Missouri Industrial Development Revenue (Lafarge North America) Series A 5.65% 6/1/37 (AMT) 500,000 509,625 ----------- 1,052,780 ----------- Dedicated Tax & Fees Revenue Bonds - 4.35% Bi-State Development Agency Missouri Illinois Metropolitan District (Metrolink Cross County Project) Series B 5.00% 10/1/32 (FSA) 1,000,000 1,052,750 Jackson County Special Obligation 5.00% 12/1/27 (MBIA) 1,250,000 1,315,188 ----------- 2,367,938 ----------- Escrowed to Maturity Bonds - 2.30% Cape Girardeau County Industrial Development Authority Health Care Facilities Revenue (Southeast Missouri Hospital) 5.25% 6/1/16 (MBIA) 440,000 506,290 **Greene County Single Family Mortgage Revenue Municipal Multiplier (Private Mortgage Insurance) 6.10% 3/1/16 1,225,000 743,563 ----------- 1,249,853 ----------- Higher Education Revenue Bonds - 3.88% Missouri State Health & Educational Facilities Authority Educational Facilities Revenue (Central Missouri State University Project) 5.75% 10/1/25 (AMBAC) 1,000,000 1,073,370 (University of Health Sciences) 5.00% 6/1/31 (MBIA) 1,000,000 1,037,830 ----------- 2,111,200 ----------- Hospital Revenue Bonds - 13.92% Cape Girardeau County Industrial Development Authority Health Care Facilities Revenue Unrefunded Balance (Southeast Missouri Hospital) 5.25% 6/1/16 (MBIA) 560,000 635,723 (St. Francis Medical Center) Series A 5.50% 6/1/32 (MBIA) 2,000,000 2,080,000 Hannibal Industrial Development Authority Health Facilities Revenue Refunding (Hannibal Regional Hospital) Series A 5.625% 3/1/12 (FSA) 1,000,000 1,094,020 5.75% 3/1/22 (FSA) 1,000,000 1,085,320 Missouri State Health & Educational Facilities 5.70% 5/15/34 500,000 523,005 Principal Market Amount Value Municipal Bonds (continued) Hospital Revenue Bonds (continued) Missouri State Health & Educational Facilities Authority Health Facilities Revenue Refunding (SSM Health Care) Series AA 6.40% 6/1/10 (MBIA) $ 500,000 $ 607,300 (St. Luke's Health System) 5.125% 11/15/19 (MBIA) 1,000,000 1,022,450 North Kansas City Missouri Hospital Revenue 5.00% 11/15/28 (FSA) 500,000 527,000 ----------- 7,574,818 ----------- Investor Owned Utilities Revenue Bonds - 4.34% Missouri State Environmental Improvement & Energy Resource Authority Pollution Control Revenue Refunding (St. Joseph Light & Power Company Project) 5.85% 2/1/13 (AMBAC) 2,200,000 2,362,910 ----------- 2,362,910 ----------- Miscellaneous Revenue Bonds - 2.02% Missouri State Environmental Improvement & Energy Resource Authority Water Pollution Control Revenue Unrefunded Balance (State Revolving Fund Project) Series A 6.05% 7/1/16 (FSA) 1,060,000 1,099,008 ----------- 1,099,008 ----------- Multi Family Housing Revenue Bonds - 7.91% Missouri State Housing Development Commission Multifamily Housing-Hyder Series 3 5.60% 7/1/34 (AMT) 1,435,000 1,509,706 St. Louis County Industrial Development Authority Housing Development Revenue Refunding Sub (Southfield & Oak Forest Apartment-A) 5.20% 1/20/36 (GNMA) 1,000,000 1,035,960 St. Louis Missouri Industrial Development Authority (Roosevelt Towne Apts) 4.65% 12/20/24 (GNMA) (AMT) 750,000 751,785 4.80% 12/20/29 (GNMA) (AMT) 1,000,000 1,006,250 ----------- 4,303,701 ----------- Municipal Lease Revenue Bonds - 9.87% Kansas City Land Clearance Redevelopment Authority Lease Revenue (Muehlebach Hotel) Series A 5.90% 12/1/18 (FSA) 1,000,000 1,099,420 Kansas City Municipal Assistance Corporation Revenue Refunding Leasehold (Bartle Convention Center) Series A 5.60% 4/15/16 (MBIA) 940,000 993,458 St. Charles County Public Water Supply District #2 Certificate of Participation (Missouri Project) Series A 5.25% 12/1/28 (MBIA) 1,000,000 1,067,230 St. Charles County Public Water Supply District #2 Certificates of Participation Series B 5.10% 12/1/25 (MBIA) 500,000 526,995 **St. Louis Missouri Industrial Development Authority Leasehold Revenue (Convention Center Hotel) 5.80% 7/15/20 (AMBAC) 3,035,000 1,431,487 St. Charles Missouri Certificates Participation 5.00% 5/1/24 250,000 256,178 ----------- 5,374,768 ----------- 1 Statements Delaware Tax-Free Missouri Insured Fund OF NET ASSETS (CONTINUED) Principal Market Amount Value Municipal Bonds (continued) Political Subdivision General Obligation Bonds - 1.96% Taney County Reorganization School District R-V Hollister School District 5.00% 3/1/22 (FSA) $1,000,000 $ 1,067,620 ----------- 1,067,620 ----------- *Pre-Refunded Bonds - 22.67% Jackson County Industrial Development Authority Health Care Corporation Revenue (Carondelet Health St. Mary's Hospital) 5.75% 7/1/24-A) 7/1/04-04 (MBIA) 1,750,000 1,813,822 Kansas City Airport Revenue General Improvement Series B 6.875% 9/1/14-04 (FSA) 1,675,000 1,742,402 Missouri State Environmental Improvement & Energy Resource Authority Water Pollution Control Revenue (State Revolving Fund) Series A 6.05% 7/1/16-04 (FSA) 1,205,000 1,250,284 St. Charles Missouri 5.75% 3/1/15-04 (FSA) 1,000,000 1,020,530 St. Charles School District 6.50% 2/1/14-06 (FGIC) 1,250,000 1,375,813 St. Louis Municipal Finance Corporation Leasehold Revenue Improvement (City Justice Center) Series A 5.95% 2/15/16-06 (AMBAC) 1,000,000 1,110,220 St. Louis Municipal Finance Corporation Leasehold Revenue Refunding & Improvement 6.25% 2/15/12-05 (FGIC) 1,850,000 1,942,925 Troy Reorganization School District #3 Lincoln County 6.10% 3/1/14-05 (MBIA) 1,235,000 1,296,305 West Platte School District R-11 5.85% 3/1/15-05 (MBIA) 750,000 786,750 ----------- 12,339,051 ----------- Public Power Revenue Bonds - 2.24% Sikeston Electric Revenue Refunding 6.00% 6/1/13 (MBIA) 1,000,000 1,219,060 ----------- 1,219,060 ----------- School District General Obligation Bonds - 4.54% Greene County Reorganization School District R8 (Direct Deposit Project) 5.10% 3/1/22 (FSA) 1,500,000 1,606,515 **St. Charles County Francis Howell School District (Capital Appreciation Direct Deposit Project) Series A 5.15% 3/1/17 (FGIC) 1,500,000 865,665 ----------- 2,472,180 ----------- Single Family Housing Revenue Bonds - 3.69% Missouri State Housing Development Commission Mortgage Revenue Series C 7.45% 9/1/27 (GNMA/FNMA) (AMT) 415,000 425,583 Single Family Homeowner Loan A 7.20% 9/1/26 (GNMA/FNMA) (AMT) 355,000 359,686 Single Family Homeowner Loan B 7.55% 9/1/27 (GNMA/FNMA) (AMT) 205,000 208,784 Single Family Homeowner Loan C 7.25% 9/1/26 (GNMA/FNMA) (AMT) 400,000 405,440 Principal Market Amount Value Municipal Bonds (continued) Single Family Housing Revenue Bonds (continued) Single Family Mortgage Series A 5.20% 9/1/33 (GNMA/FNMA) (AMT) $ 490,000 $ 504,940 7.20% 12/1/17 (GNMA) (AMT) 30,000 30,838 7.25% 12/1/20 (GNMA) (AMT) 70,000 71,955 ----------- 2,007,226 ----------- Territorial Revenue Bonds - 6.48% Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series A 4.75% 7/1/38 (MBIA) 1,000,000 1,045,020 Puerto Rico Electric Power Authority Power Revenue Series N 5.125% 7/1/29 400,000 420,592 +Puerto Rico Electric Power Authority Power Revenue, Inverse Floater ROLs 7.89% 7/1/19 (FSA) 1,925,000 2,063,427 ----------- 3,529,039 ----------- Water & Sewer Revenue Bonds - 4.21% Liberty Sewer System Revenue 6.00% 2/1/08 (MBIA) 495,000 544,436 6.15% 2/1/15 (MBIA) 1,500,000 1,749,375 ----------- 2,293,811 ----------- Total Municipal Bonds (cost $50,120,546) 54,228,401 ----------- Number of Shares Short Term Investments - 2.13% Dreyfus Tax-Exempt Cash Management Fund 1,160,242 1,160,242 ----------- Total Short-Term Investments (cost $1,160,242) 1,160,242 ----------- Total Market Value of Securities - 101.75% (cost $51,280,788) 55,388,643 Liabilities Net of Receivables and Other Assets - (1.75%) (954,098) ----------- Net Assets Applicable to 4,986,879 Shares Outstanding - 100.00% $54,434,545 =========== Net Asset Value - Delaware Tax-Free Missouri Insured Fund Class A ($46,808,440 / 4,288,195 Shares) $10.92 ------ Net Asset Value - Delaware Tax-Free Missouri Insured Fund Class B ($6,222,361 / 570,259 Shares) $10.91 ------ Net Asset Value - Delaware Tax-Free Missouri Insured Fund Class C ($1,403,744 / 128,425 Shares) $10.93 ------ 2 Statements Delaware Tax-Free Missouri Insured Fund OF NET ASSETS (CONTINUED) Components of Net Assets at February 29, 2004: Shares of beneficial interest (unlimited authorization - no par) $50,753,132 Accumulated net realized loss on investments (426,442) Net unrealized appreciation of investments 4,107,855 ----------- Total net assets $54,434,545 =========== *For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. **Zero coupon bond. The interest rate shown is the yield at time of purchase. +An inverse floater bond is a type of bond with variable or floating interest rates that move in the opposite direction of short-term interest rates. Interest rate disclosed is in effect as of February 29, 2004. Summary of Abbreviations: AMBAC -- Insured by the AMBAC Indemnity Corporation AMT -- Subject to Alternative Minimum Tax FGIC -- Insured by the Financial Guaranty Insurance Company FNMA -- Insured by the Federal National Mortgage Association FSA -- Insured by Financial Security Assurance GNMA -- Insured by Government National Mortgage Association MBIA -- Insured by the Municipal Bond Insurance Association ROLs -- Residual Options Long Net Asset Value and Offering Price per Share - Delaware Tax-Free Missouri Fund Net asset value Class A (A) $10.92 Sales charge (4.50% of offering price, or 4.67% of amount invested per share) (B) 0.51 ------ Offering price $11.43 ====== (A) Net asset value per share, as illustrated, is the estimated amount, which would be paid upon redemption or repurchase of shares. (B) See the current prospectus for purchases of $100,000 or more. See accompanying notes 3 Statements Delaware Tax-Free Oregon Insured Fund OF NET ASSETS (CONTINUED) February 29, 2004 (Unaudited) Principal Market Amount Value Municipal Bonds - 98.05% Airport Revenue Bonds - 3.48% Portland Oregon Airport Revenue (Portland International Airport) Series 11 5.625% 7/1/26 (FGIC) (AMT) $1,500,000 $ 1,623,810 ----------- 1,623,810 ----------- Higher Education Revenue Bonds - 14.78% **Oregon Health Sciences University Revenue (Capital Appreciation Insured) Series A 5.50% 7/1/21 (MBIA) 2,000,000 905,700 Oregon Health Sciences University Revenue Series A 5.00% 7/1/32 (MBIA) 3,000,000 3,139,500 Oregon State Facilities Authority Revenue (College Housing Northwest Project) Series A 5.45% 10/1/32 1,700,000 1,751,765 Oregon State Health, Housing, Educational & Cultural Facilities Refunding (Lewis & Clark College Project) Series A 6.125% 10/1/24 (MBIA) 1,055,000 1,104,659 ----------- 6,901,624 ----------- Hospital Revenue Bonds - 6.22% Deschutes County Hospital Facilities Authority Hospital Revenue (Cascade Health Services) 5.60% 1/1/32 1,250,000 1,314,225 Umatilla County Hospital Facility Authority Revenue (Catholic Health Initiatives) Series A 5.50% 3/1/32 1,000,000 1,072,400 Western Lane Hospital District Hospital Facility Authority Revenue Refunding (Sisters of St. Joseph Peace) 5.875% 8/1/12 (MBIA) 500,000 519,460 ----------- 2,906,085 ----------- Investor Owned Utilities Revenue Bonds - 1.35% Port Morrow, Oregon Pollution Control Revenue (Portland General) 5.20% 5/1/33 600,000 632,334 ----------- 632,334 ----------- Miscellaneous Revenue Bonds - 3.15% Oregon State Department Administrative Services Lottery Revenue Refunding Series A 5.00% 4/1/18 (FSA) 500,000 558,565 Oregon State Department Administrative Services 5.00% 9/1/13 (FSA) 800,000 914,312 ----------- 1,472,877 ----------- Multi Family Housing Revenue Bonds - 2.41% Oregon Health, Housing, Educational, & Cultural Facilities Authority (Pier Park Project) Series A 6.05% 4/1/18 (GNMA) (AMT) 1,095,000 1,124,762 ----------- 1,124,762 ----------- Municipal Lease Revenue Bonds - 2.44% Oregon State Department Administration Services Certificate of Participation Refunding Series C 5.25% 11/1/15 (MBIA) 1,000,000 1,138,180 ----------- 1,138,180 ----------- Principal Market Amount Value Municipal Bonds (continued) Political Subdivision General Obligation Bonds - 4.67% Deschutes County Administrative School District #1 Series A 5.125% 6/15/21 (FSA) $1,000,000 $ 1,083,390 Deschutes County Refunding 5.00% 12/1/16 (FSA) 500,000 553,560 Malheur County (Jail Buildings) 6.30% 12/1/12 (MBIA) 500,000 542,790 ----------- 2,179,740 ----------- *Pre-Refunded Bonds - 24.87% Central Oregon Community College District Oregon 5.90% 6/1/09-04 (FGIC) 750,000 759,735 Chemeketa County Community College District 5.80% 6/1/12-06 (FGIC) 1,500,000 1,650,674 Eugene Electric Utility Revenue Series C 5.80% 8/1/22-04 (MBIA) 1,250,000 1,288,462 Hermiston Oregon 6.20% 8/1/24-04 (AMBAC) 500,000 511,280 Klamath Falls Water Revenue 6.10% 6/1/14-04 (FSA) 500,000 511,735 Lane County School District #019 Springfield 6.30% 10/15/14-04 (MBIA) 500,000 521,865 Multnomah County School District #3 Park Rose 5.50% 12/1/11-05 (FGIC) 500,000 537,995 Multnomah County School District #39 Corbet 6.00% 12/1/13-04 (MBIA) 500,000 519,180 Oregon State Department Administrative Services Certificate of Participation Series A 5.80% 5/1/24-07 (AMBAC) 1,000,000 1,139,510 Portland Series A 5.75% 6/1/15-05 (MBIA) 500,000 529,340 Portland Sewer System Revenue Series A 6.25% 6/1/15-04 (FSA) 1,000,000 1,023,860 Salem Water & Sewer Revenue 5.625% 6/1/16-06 (MBIA) 1,000,000 1,096,560 Tillamook County 6.25% 1/1/14-05 (FGIC) 250,000 263,583 Umatilla County School District #016R Pendelton 6.00% 7/1/14-04 (AMBAC) 250,000 256,858 Washington County Education Services District Certificate of Participation 7.10% 6/1/25-05 (MBIA) 700,000 753,067 Washington County School District #088 J Sherwood 6.10% 6/1/12-05 (FSA) 235,000 249,819 ----------- 11,613,523 ----------- Public Utility District Revenue Bonds - 1.77% Emerald Peoples Utilities District Series A 5.25% 11/1/22 (FSA) 750,000 824,895 ----------- 824,895 ----------- School District General Obligation Bonds - 16.65% Benton & Linn Counties School District #509J Corvallis 5.00% 6/1/21 (FSA) 1,000,000 1,075,500 Jackson County School District #6 Central Point 5.25% 6/15/20 (FGIC) 1,175,000 1,300,302 Jefferson County School District #509J 5.00% 6/15/22 (FGIC) 500,000 531,540 Lane County School District #019 Springfield Refunding 6.00% 10/15/14 (FGIC) 500,000 618,950 Lincoln County School District 5.25% 6/15/12 (FGIC) 700,000 795,494 4 Statements Delaware Tax-Free Oregon Insured Fund OF NET ASSETS (CONTINUED) Principal Market Amount Value Municipal Bonds (continued) School District General Obligation Bonds (continued) ++Linn County Community School District #9 Lebanon 5.60% 6/15/30 (FGIC) $2,000,000 $2,229,420 Salem-Keizer Oregon School District #24J Refunding 5.00% 6/15/19-00 (FSA) 500,000 548,260 **Umatilla County School District #6 R Umatilla Refunding 5.50% 12/15/22 (AMBAC) 200,000 83,508 Washington & Clackamas Counties School District #13 J Tigard 4.875% 6/15/22 (MBIA) 500,000 522,880 Washington County School District #088 J Sherwood 6.10% 6/1/12 (FSA) 65,000 69,099 ----------- 7,774,953 ----------- Single Family Housing Revenue Bonds - 4.15% Oregon State Housing & Community Services Department Mortgage Revenue Single Family Mortgage Program Series R 5.375% 7/1/32 (AMT) 1,865,000 1,939,376 ----------- 1,939,376 ----------- Tax Increment/Special Assessment Bonds - 2.34% North Unit Irrigation District 5.75% 6/1/16 (MBIA) 1,000,000 1,091,510 ----------- 1,091,510 ----------- Territorial Revenue Bonds - 7.94% Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series D 5.25% 7/1/38 500,000 531,790 Series G 5.00% 7/1/42 500,000 517,520 Puerto Rico Electric Power Authority Power Revenue Series NN 5.125% 7/1/29 1,000,000 1,051,480 +Puerto Rico Electric Power Authority Power Revenue, Inverse Floater ROLs 7.89% 7/1/19 (FSA) 1,500,000 1,607,865 ----------- 3,708,655 ----------- Water & Sewer Revenue Bonds - 1.83% Beaverton County Water Revenue 6.125% 6/1/14 (FSA) 500,000 511,385 Portland Sewer Systems Revenue (Second Lien) Series A 5.00% 6/1/23 (FSA) 325,000 344,887 ----------- 856,272 ----------- Total Municipal Bonds (cost $42,594,087) 45,788,596 ----------- Number of Shares Short Term Investments - 3.00% Dreyfus Tax-Exempt Cash Management Fund 1,400,262 1,400,262 ----------- Total Short Term Investments (cost $1,400,262) 1,400,262 ----------- Total Market Value of Securities - 101.05% (cost $43,994,349) $ 47,188,858 Liabilities Net of Receivables and Other Assets - (1.05%) (491,974) ----------- Net Assets Applicable to 4,359,606 Shares Outstanding - 100.00% $46,696,884 =========== Net Asset Value - Delaware Tax-Free Oregon Insured Fund Class A ($32,222,682 / 3,009,440 Shares) $10.71 ------ Net Asset Value - Delaware Tax-Free Oregon Insured Fund Class B ($8,369,610 / 781,298 Shares) $10.71 ------ Net Asset Value - Delaware Tax-Free Oregon Insured Fund Class C ($6,104,592 / 568,868 Shares) $10.73 ------ Components of Net Assets at February 29, 2004: Shares of beneficial interest (unlimited authorization - no par) $43,927,470 Accumulated net realized loss on investments (425,095) Net unrealized appreciation of investments 3,194,509 ----------- Total net assets $46,696,884 =========== *For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. **Zero coupon bond. The interest rate shown is the yield at the time of purchase. +An inverse floater bond is a type of bond with variable or floating interest rates that move in the opposite direction of short-term interest rates. Interest rate disclosed is in effect as of February 29, 2004. ++Step coupon bond. Summary of Abbreviations: AMBAC -- Insured by the AMBAC Indemnity Corporation AMT -- Subject to Alternative Minimum Tax FGIC -- Insured by the Financial Guaranty Insurance Company FSA -- Insured by Financial Security Assurance GNMA -- Insured by Government National Mortgage Association MBIA -- Insured by the Municipal Bond Insurance Association ROLs -- Residual Options Long Net Asset Value and Offering Price per Share - Delaware Tax-Free Oregon Insured Fund Net asset value Class A (A) $10.71 Sales charge (4.50% of offering price, or 4.67% of amount invested per share) (B) 0.50 ------ Offering price $11.21 ====== (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See the current prospectus for purchases of $100,000 or more. See accompanying notes 5 Statements Six Months Ended February 29, 2004 (Unaudited) OF OPERATIONS
Delaware Delaware Tax-Free Tax-Free Missouri Insured Oregon Insured Fund Fund Investment Income: Interest $1,395,758 $1,155,668 ---------- ---------- Expenses: Management fees 132,011 112,455 Distribution expenses-- Class A 56,238 38,428 Distribution expenses-- Class B 32,627 41,555 Distribution expenses-- Class C 6,516 29,447 Dividend disbursing and transfer agent fees and expenses 19,840 13,400 Accounting and administration expenses 9,800 8,700 Legal and professional fees 1,907 2,460 Registration fees 1,130 1,500 Reports and statements to shareholders 2,000 4,100 Custodian fees 1,223 1,705 Trustees' fees 1,280 1,300 Other 623 1,386 ---------- ---------- 265,195 256,436 Less expenses absorbed or waived -- (11,509) Less expenses paid indirectly (657) (545) ---------- ---------- Total expenses 264,538 244,382 ---------- ---------- Net Investment Income 1,131,220 911,286 ---------- ---------- Net Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) on investments (1,327) 10,663 Net change in unrealized appreciation/depreciation of investments 1,349,856 1,382,897 ---------- ---------- Net Realized and Unrealized Gain on Investments 1,348,529 1,393,560 ---------- ---------- Net Increase in Net Assets Resulting from Operations $2,479,749 $2,304,846 ========== ==========
See accompanying notes 6 Statements OF CHANGES IN NET ASSETS
Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund Six Months Year Six Months Year Ended Ended Ended Ended 2/29/04 8/31/03 2/29/04 8/31/03 (Unaudited) (Unaudited) Increase (Decrease) in Net Assets from Operations: Net investment income $ 1,131,220 $ 2,256,905 $ 911,286 $ 1,669,580 Net realized gain (loss) on investments (1,327) 281,149 10,663 214,112 Net change in unrealized appreciation/depreciation of investments 1,349,856 (1,135,869) 1,382,897 (924,292) ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations 2,479,749 1,402,185 2,304,846 959,400 ------------ ------------ ------------ ------------ Dividends and Distributions to Shareholders from: Net investment income: Class A (987,764) (1,906,317) (659,885) (1,192,516) Class B (119,001) (295,924) (147,159) (318,633) Class C (23,689) (46,691) (104,042) (154,374) ------------ ------------ ------------ ------------ (1,130,454) (2,248,932) (911,086) (1,665,523) ------------ ------------ ------------ ------------ Capital Share Transactions: Proceeds from shares sold: Class A 2,894,261 5,521,827 3,147,497 6,845,055 Class B 190,554 440,239 304,164 2,122,381 Class C 191,345 649,304 697,984 3,223,917 Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 487,791 934,595 384,523 697,048 Class B 79,431 176,563 84,065 174,625 Class C 21,245 39,136 67,674 89,992 ------------ ------------ ------------ ------------ 3,864,627 7,761,664 4,685,907 13,153,018 ------------ ------------ ------------ ------------ Cost of shares repurchased: Class A (1,741,579) (4,318,513) (1,671,199) (2,735,631) Class B (1,627,943) (2,372,010) (1,029,343) (1,896,972) Class C (98,505) (650,350) (237,561) (1,082,332) ------------ ------------ ------------ ------------ (3,468,027) (7,340,873) (2,938,103) (5,714,935) ------------ ------------ ------------ ------------ Increase (decrease) in net assets derived from capital share transactions 396,600 420,791 1,747,804 7,438,083 ------------ ------------ ------------ ------------ Net Increase (Decrease) in Net Assets 1,745,895 (425,956) 3,141,564 6,731,960 Net Assets: Beginning of period 52,688,650 53,114,606 43,555,320 36,823,360 ------------ ------------ ------------ ------------ End of period(1) $ 54,434,545 $ 52,688,650 $ 46,696,884 $ 43,555,320 ============ ============ ============ ============ (1)Including distributions in excess of net investment income $ -- $ -- $ -- $ -- ============ ============ ============ ============
See accompanying notes 7 Financial HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were as follows: Delaware Tax-Free Missouri Insured Fund Class A - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.640 $10.810 $10.740 $10.340 $10.340 $10.870 Income (loss) from investment operations: Net investment income 0.237 0.469 0.489 0.497 0.494 0.498 Net realized and unrealized gain (loss) on investments 0.280 (0.172) 0.068 0.400 -- (0.530) ------- ------- ------- ------- ------- ------- Total from investment operations 0.517 0.297 0.557 0.897 0.494 (0.032) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.237) (0.467) (0.487) (0.497) (0.494) (0.498) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.237) (0.467) (0.487) (0.497) (0.494) (0.498) ------- ------- ------- ------- ------- ------- Net asset value, end of period $10.920 $10.640 $10.810 $10.740 $10.340 $10.340 ======= ======= ======= ======= ======= ======= Total return(3) 4.89% 2.75% 5.38% 8.89% 4.99% (0.38%) Ratios and supplemental data: Net assets, end of period (000 omitted) $46,809 $44,026 $42,610 $40,349 $38,314 $42,337 Ratio of expenses to average net assets 0.89% 0.98% 0.97% 0.95% 1.03% 0.97% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.89% 0.98% 0.97% 0.95% 1.03% 1.02% Ratio of net investment income to average net assets 4.39% 4.31% 4.61% 4.74% 4.88% 4.62% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.39% 4.31% 4.61% 4.74% 4.88% 4.57% Portfolio turnover 12% 31% 23% 14% 1% 7%
(1) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. The effect of this change for the year ended August 31, 2002 was an increase in net investment income per share of $0.002, a decrease in net realized and unrealized gain (loss) per share of $0.002, and an increase in the ratio of net investment income to average net assets of 0.02%. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 8 Financial HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were as follows: Delaware Tax-Free Missouri Insured Fund Class B - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.640 $10.810 $10.730 $10.340 $10.340 $10.870 Income (loss) from investment operations: Net investment income 0.197 0.387 0.410 0.418 0.418 0.416 Net realized and unrealized gain (loss) on investments 0.270 (0.172) 0.078 0.390 -- (0.530) ------- ------- ------- ------- ------- ------- Total from investment operations 0.467 0.215 0.488 0.808 0.418 (0.114) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.197) (0.385) (0.408) (0.418) (0.418) (0.416) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.197) (0.385) (0.408) (0.418) (0.418) (0.416) ------- ------- ------- ------- ------- ------- Net asset value, end of period $10.910 $10.640 $10.810 $10.730 $10.340 $10.340 ======= ======= ======= ======= ======= ======= Total return(3) 4.42% 1.99% 4.70% 7.98% 4.21% (1.13%) Ratios and supplemental data: Net assets, end of period (000 omitted) $6,222 $7,406 $9,264 $9,693 $10,053 $10,572 Ratio of expenses to average net assets 1.64% 1.73% 1.72% 1.70% 1.78% 1.72% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.64% 1.73% 1.72% 1.70% 1.78% 1.77% Ratio of net investment income to average net assets 3.64% 3.56% 3.86% 3.99% 4.13% 3.87% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.64% 3.56% 3.86% 3.99% 4.13% 3.82% Portfolio turnover 12% 31% 23% 14% 1% 7%
(1) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. The effect of this change for the year ended August 31, 2002 was an increase in net investment income per share of $0.002, a decrease in net realized and unrealized gain (loss) per share of $0.002, and an increase in the ratio of net investment income to average net assets of 0.02%. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 9 Financial HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were as follows: Delaware Tax-Free Missouri Insured Fund Class C - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.660 $10.820 $10.740 $10.350 $10.350 $10.880 Income (loss) from investment operations: Net investment income 0.196 0.387 0.410 0.418 0.418 0.419 Net realized and unrealized gain (loss) on investments 0.270 (0.162) 0.078 0.390 -- (0.530) ------- ------- ------- ------- ------- ------- Total from investment operations 0.466 0.225 0.488 0.808 0.418 (0.111) ------- ------- ------- ------- ------- ------- Less dividends and distributions from: Net investment income (0.196) (0.385) (0.408) (0.418) (0.418) (0.419) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.196) (0.385) (0.408) (0.418) (0.418) (0.419) ------- ------- ------- ------- ------- ------- Net asset value, end of period $10.930 $10.660 $10.820 $10.740 $10.350 $10.350 ======= ======= ======= ======= ======= ======= Total return(3) 4.40% 2.08% 4.68% 7.97% 4.20% (1.12%) Ratios and supplemental data: Net assets, end of period (000 omitted) $1,404 $1,257 $1,241 $626 $343 $231 Ratio of expenses to average net assets 1.64% 1.73% 1.72% 1.70% 1.78% 1.72% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.64% 1.73% 1.72% 1.70% 1.78% 1.77% Ratio of net investment income to average net assets 3.64% 3.56% 3.86% 3.99% 4.13% 3.87% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.64% 3.56% 3.86% 3.99% 4.13% 3.82% Portfolio turnover 12% 31% 23% 14% 1% 7%
(1) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. The effect of this change for the year ended August 31, 2002 was an increase in net investment income per share of $0.002, a decrease in net realized and unrealized gain (loss) per share of $0.002, and an increase in the ratio of net investment income to average net assets of 0.02%. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 10 Financial HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were as follows: Delaware Tax-Free Oregon Insured Fund Class A - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.380 $10.530 $10.450 $9.910 $9.810 $10.430 Income (loss) from investment operations: Net investment income 0.226 0.461 0.467 0.465 0.467 0.458 Net realized and unrealized gain (loss) on investments 0.330 (0.151) 0.079 0.540 0.100 (0.620) ------- ------- ------- ------- ------ ------ Total from investment operations 0.556 0.310 0.546 1.005 0.567 (0.162) ------- ------- ------- ------- ------ ------ Less dividends and distributions from: Net investment income (0.226) (0.460) (0.466) (0.465) (0.467) (0.458) ------- ------- ------- ------- ------ ------ Total dividends and distributions (0.226) (0.460) (0.466) (0.465) (0.467) (0.458) ------- ------- ------- ------- ------ ------ Net asset value, end of period $10.710 $10.380 $10.530 $10.450 $9.910 $9.810 ======= ======= ======= ======= ======= ======= Total return(3) 5.40% 2.97% 5.41% 10.39% 6.04% (1.67%) Ratios and supplemental data: Net assets, end of period (000 omitted) $32,223 $29,410 $25,082 $22,973 $22,712 $27,518 Ratio of expenses to average net assets 0.85% 0.84% 0.85% 0.85% 0.85% 0.80% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.90% 0.96% 1.00% 0.99% 1.01% 1.02% Ratio of net investment income to average net assets 4.29% 4.35% 4.52% 4.59% 4.85% 4.44% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.24% 4.23% 4.37% 4.45% 4.69% 4.22% Portfolio turnover 2% 16% 20% 28% 0% 10%
(1) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. The effect of this change for the year ended August 31, 2002 was an increase in net investment income per share of $0.001, a decrease in net realized and unrealized gain (loss) per share of $0.001, and an increase in the ratio of net investment income to average net assets of 0.01%. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 11 Financial highlights (continued)
Selected data for each share of the Fund outstanding throughout each period were as follows: Delaware Tax-Free Oregon Insured Fund Class B - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.390 $10.540 $10.450 $9.910 $9.810 $10.430 Income (loss) from investment operations: Net investment income 0.186 0.382 0.390 0.389 0.394 0.381 Net realized and unrealized gain (loss) on investments 0.320 (0.151) 0.089 0.540 0.100 (0.620) ------- ------- ------- ------- ------ ------ Total from investment operations 0.506 0.231 0.479 0.929 0.494 (0.239) ------- ------- ------- ------- ------ ------ Less dividends and distributions from: Net investment income (0.186) (0.381) (0.389) (0.389) (0.394) (0.381) ------- ------- ------- ------- ------ ------ Total dividends and distributions (0.186) (0.381) (0.389) (0.389) (0.394) (0.381) ------- ------- ------- ------- ------ ------ Net asset value, end of period $10.710 $10.390 $10.540 $10.450 $9.910 $9.810 ======= ======= ======= ======= ====== ====== Total return(3) 4.91% 2.20% 4.73% 9.57% 5.24% (2.41%) Ratios and supplemental data: Net assets, end of period (000 omitted) $8,370 $8,750 $8,489 $7,928 $7,484 $7,999 Ratio of expenses to average net assets 1.60% 1.59% 1.60% 1.60% 1.60% 1.55% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.65% 1.71% 1.75% 1.74% 1.76% 1.77% Ratio of net investment income to average net assets 3.54% 3.60% 3.77% 3.84% 4.10% 3.69% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.49% 3.48% 3.62% 3.70% 3.94% 3.47% Portfolio turnover 2% 16% 20% 28% 0% 10%
(1) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. The effect of this change for the year ended August 31, 2002 was an increase in net investment income per share of $0.001, a decrease in net realized and unrealized gain (loss) per share of $0.001, and an increase in the ratio of net investment income to average net assets of 0.01%. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 12 Financial HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were as follows: Delaware Tax-Free Oregon Insured Fund Class C - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/29/04(2) 8/31/03 8/31/02(1) 8/31/01 8/31/00 8/31/99 (Unaudited) Net asset value, beginning of period $10.400 $10.550 $10.470 $9.920 $9.820 $10.440 Income (loss) from investment operations: Net investment income 0.186 0.381 0.389 0.388 0.394 0.380 Net realized and unrealized gain (loss) on investments 0.330 (0.151) 0.079 0.550 0.100 (0.620) ------- ------- ------- ------- ------ ------ Total from investment operations 0.516 0.230 0.468 0.938 0.494 (0.240) ------- ------- ------- ------- ------ ------ Less dividends and distributions from: Net investment income (0.186) (0.380) (0.388) (0.388) (0.394) (0.380) ------- ------- ------- ------- ------ ------ Total dividends and distributions (0.186) (0.380) (0.388) (0.388) (0.394) (0.380) ------- ------- ------- ------- ------ ------ Net asset value, end of period $10.730 $10.400 $10.550 $10.470 $9.920 $9.820 ======= ======= ======= ======= ====== ====== Total return(3) 5.00% 2.19% 4.62% 9.66% 5.24% (2.41%) Ratios and supplemental data: Net assets, end of period (000 omitted) $6,104 $5,395 $3,253 $1,820 $1,609 $1,603 Ratio of expenses to average net assets 1.60% 1.59% 1.60% 1.60% 1.60% 1.55% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.65% 1.71% 1.75% 1.74% 1.76% 1.77% Ratio of net investment income to average net assets 3.54% 3.60% 3.77% 3.84% 4.10% 3.69% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.49% 3.48% 3.62% 3.70% 3.94% 3.47% Portfolio turnover 2% 16% 20% 28% 0% 10%
(1) As required, effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies that require amortization of all premiums and discounts on debt securities. The effect of this change for the year ended August 31, 2002 was an increase in net investment income per share of $0.001, a decrease in net realized and unrealized gain (loss) per share of $0.001, and an increase in the ratio of net investment income to average net assets of 0.01%. Per share data and ratios for periods prior to September 1, 2001 have not been restated to reflect this change in accounting. (2) Ratios and portfolio turnover have been annualized and total return has not been annualized. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers and payment of fees by the manager, as applicable. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 13 Notes February 29, 2004 (Unaudited) TO FINANCIAL STATEMENTS Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust and offers six series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund. Voyageur Investment Trust (the "Trust") is organized as a Massachusetts business trust and offers five series: Delaware Tax-Free California Insured Fund, Delaware Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured Fund. These financial statements and the related notes pertain to the Delaware Tax-Free Idaho Fund, Delaware Tax-Free Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund (the "Fund" or collectively as the "Funds"). The above Trusts are open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended. The Funds offer Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge that declines from 4.00% to zero depending upon the period of time the shares are held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a contingent deferred sales charge of 1%, if redeemed during the first 12 months. The investment objective of Delaware Tax-Free Idaho Fund, Delaware Tax-Free Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund is to seek as high a level of current income exempt from federal income tax and personal income tax in their respective states, as is consistent with preservation of capital. 1. Significant Accounting Policies The following accounting policies are in accordance with accounting principles generally accepted in the United States and are consistently followed by the Funds. Security Valuation -- Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund's Board of Trustees. Federal Income Taxes - Each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Class Accounting - Investment income and common expenses are allocated to the classes of the Funds on the basis of "settled shares" of each class in relation to the net assets of the Funds. Realized and unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Use of Estimates -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of 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. Other -- Expenses common to all funds within the Delaware Investments Family of Funds are allocated amongst the funds on the basis of average net assets. Management fees and other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date). 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 are amortized to interest income over the lives of the respective securities. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually. Certain expenses of the Funds are paid through commission arrangements with brokers. In addition, the Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expenses paid under the above arrangements are included in their respective expense captions on the Statements of Operations with the corresponding expense offset shown as "expenses paid indirectly." The amount of these expenses for the six months ended February 29, 2004 were as follows: Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- ------------------- Commission reimbursements $634 $540 Earnings credits 23 5 2. Investment Management, Administration Agreements and Other Transactions with Affiliates In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee based on each Fund's average daily net assets as follows: Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- ------------------- On the first $500 million 0.50% 0.50% On the next $500 million 0.475% 0.475% On the next $1.5 billion 0.45% 0.45% In excess of $2.5 billion 0.425% 0.425% 14 Notes TO FINANCIAL STATEMENTS (CONTINUED) 2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued) DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse each Fund to the extent necessary to ensure that annual operating expenses, exclusive of taxes, interest, brokerage commissions, distribution fees, certain insurance costs, and extraordinary expenses, do not exceed specified percentages of average daily net assets through October 31, 2004, as shown below.
Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- ------------------- The operating expense limitation as a percentage of average daily net assets (per annum) N/A 0.60%
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing and transfer agent services. The Funds pay DSC a monthly fee based on average net assets subject to certain minimums for accounting and administration services. Each Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services. Pursuant to a distribution agreement and distribution plan, each Fund pays Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.25% of the average daily net assets of the Class A shares and 1.00% of the average daily net assets of the Class B and C shares. At February 29, 2004, each Fund had liabilities payable to affiliates as follows:
Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- ------------------- Investment management fee payable to DMC $6,255 $13,274 Dividend disbursing, transfer agent fees, accounting and other expenses payable to DSC 5,127 3,860 Other expenses payable to DMC and affiliates* 1,046 931
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, professional fees, registration fees and trustees' fees. Certain internal legal expenses are allocated to the Funds. For the six months ended February 29, 2004, the Delaware Tax-Free Idaho Fund, Delaware Tax-Free Missouri Insured Fund and the Delaware Tax-Free Oregon Insured Fund had costs of $3,870, $2,403 and $2,004, respectively. For the six months ended February 29,2004, DDLP earned commissions on sales of Class A shares for each Fund as follows: Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- ------------------- $2,453 $11,241 Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust. These officers and trustees are paid no compensation by the Fund. 3. Investments For the six months ended February 29, 2004, the Funds made purchases and sales of investment securities other than short-term investments as follows: Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- ------------------- Purchases $3,707,245 $2,613,040 Sales 3,121,691 364,693 At February 29, 2004, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At February 29, 2004, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows: Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- ------------------- Cost of investments $51,238,004 $43,971,382 ----------- ----------- Aggregate unrealized appreciation $ 4,211,143 $ 3,222,406 Aggregate unrealized depreciation (60,504) (4,930) ----------- ----------- Net unrealized appreciation $ 4,150,639 $ 3,217,476 ----------- ----------- 15 Notes TO FINANCIAL STATEMENTS (CONTINUED) 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 accounting principles generally accepted in the United States. The tax character of dividends and distributions paid during the six months ended February 29, 2004 and year ended August 31, 2003 was as follows: Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- --------------------- Six Months Year Six Months Year Ended Ended Ended Ended 2/29/04 8/31/03 2/29/04 8/31/03 Tax-exempt income $1,130,454 $2,248,932 $911,086 $1,665,523 *Tax information for the six months ended February 29, 2004 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end. The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 29, 2004, the estimated components of net assets on a tax basis were as follows:
Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund --------------------- --------------------- Shares of beneficial interest $ 50,753,132 $ 43,927,470 Distributions in excess of tax-exempt income -- -- Capital loss carryforwards (467,522) (458,726) Net realized capital gains (losses) on investments (1,704) 10,663 Net unrealized appreciation of investments 4,150,639 3,217,477 ------------ ------------ Net assets $ 54,434,545 $ 46,696,884 ============ ============
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Such capital loss carryforward amounts will expire as follows: Delaware Tax-Free Delaware Tax-Free Year of expiration Missouri Insured Fund Oregon Insured Fund - -------------------- --------------------- --------------------- 2004 $279,740 $162,740 2008 187,782 -- 2009 -- 217,063 2010 -- 78,923 -------- -------- Total $467,522 $458,726 ======== ======== 5. Capital Shares Transactions in capital shares were as follows:
Delaware Tax-Free Delaware Tax-Free Missouri Insured Fund Oregon Insured Fund ------------------------------ ----------------------------- Six Months Year Six Months Year Ended Ended Ended Ended 2/29/04 8/31/03 2/29/04 8/31/03 Shares sold: Class A 267,611 506,831 298,470 644,131 Class B 17,625 40,296 28,795 199,885 Class C 17,607 59,018 66,409 303,936 Shares issued upon reinvestment of dividends and distributions: Class A 45,070 86,307 36,344 66,096 Class B 7,344 16,310 7,944 16,553 Class C 1,960 3,613 6,380 8,512 -------- -------- ------- -------- 357,217 712,375 444,342 1,239,113 -------- -------- ------- -------- Shares repurchased: Class A (161,411) (397,871) (158,473) (259,058) Class B (150,890) (217,615) (97,926) (179,667) Class C (9,110) (59,346) (22,512) (102,244) -------- -------- ------- -------- (321,411) (674,832) (278,911) (540,969) -------- -------- ------- -------- Net increase (decrease) 35,806 37,543 165,431 698,144 ======== ======== ======= ========
16 Notes TO FINANCIAL STATEMENTS (CONTINUED) 5. Capital Shares (continued) For the six months ended February 29, 2004 and the year ended August 31, 2003, the following shares and value were converted from Class B to Class A. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the Statements of Changes in Net Assets.
Six Months Ended Year Ended 2/29/04 8/31/03 Class B Shares Class A Shares Value Class B Shares Class A Shares Value -------------- -------------- ----- -------------- -------------- ----- Delaware Tax-Free Missouri Insured Fund 105,235 105,177 $1,135,820 126,971 126,971 $1,389,281 Delaware Tax-Free Oregon Insured Fund 32,867 32,896 346,251 80,709 80,756 860,427
6. Line of Credit Each Fund, along with certain other funds in the Delaware Investments Family of Funds (the "Participants"), participates in a $177,300,000 revolving line of credit facility to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Participants are charged an annual commitment fee, which is allocated across the Participants on the basis of each fund's allocation of the entire facility. The Participants may borrow up to a maximum of one-third of their net assets under the agreement. The Funds had no amounts outstanding as of February 29, 2004 or at any time during the period. 7. Credit And Market Risks The Funds concentrate their investments in securities issued by municipalities. The value of these investments may be adversely affected by new legislation within the states, 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 market value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statements of Net Assets. The Funds may invest in inverse floating rate securities ("inverse floaters"), a type of derivative tax-exempt obligation with floating or variable interest rates that move in the opposite direction of short-term interest rates, usually at an accelerated speed. Consequently, the market values of inverse floaters will generally be more volatile than other tax-exempt investments. Such securities are denoted on the Statements of Net Assets. 17 DELAWARE INVESTMENTS(SM) - -------------------------------------- A member of Lincoln Financial Group(R) This semiannual report is for the information of Delaware Tax-Free Idaho Fund, Delaware Tax-Free Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Idaho Fund, Delaware Tax-Free Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund and the Delaware Investments Performance Update for the most recently completed calendar quarter. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of each Fund. You should read the prospectus carefully before you invest. The figures in this report represent past results which are not a guarantee of future results. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
Board of Trustees Affiliated Officers Contact Information Walter P. Babich Jude T. Driscoll Investment Manager Board Chairman Chairman Delaware Management Company Citadel Construction Corporation Delaware Investments Family of Funds Philadelphia, PA King of Prussia, PA Philadelphia, PA International Affiliate John H. Durham Joseph H. Hastings Delaware International Advisers Ltd. Private Investor Executive Vice President and London, England Gwynedd Valley, PA Chief Financial Officer Delaware Investments Family of Funds National Distributor Anthony D. Knerr Philadelphia, PA Delaware Distributors, L.P. Managing Director Philadelphia, PA Anthony Knerr & Associates Richelle S. Maestro New York, NY Senior Vice President, Shareholder Servicing, Dividend Chief Legal Officer and Secretary Disbursing and Transfer Agent Ann R. Leven Delaware Investments Family of Funds Delaware Service Company, Inc. Former Treasurer/Chief Fiscal Officer Philadelphia, PA 2005 Market Street National Gallery of Art Philadelphia, PA 19103-7094 Washington, DC Michael P. Bishof Senior Vice President and Treasurer For Shareholders Thomas F. Madison Delaware Investments Family of Funds 800 523-1918 President and Chief Executive Officer Philadelphia, PA MLM Partners, Inc. For Securities Dealers and Financial Minneapolis, MN Institutions Representatives Only 800 362-7500 Janet L. Yeomans Vice President/Mergers & Acquisitions Web site 3M Corporation www.delawareinvestments.com St. Paul, MN -------------------------------------------------------------------------------- A description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities is available without charge (i) upon request, by calling 800 523-1918; (ii) on the Fund's website at http://www.delawareinvestments.com; and (iii) on the Commission's website at http://www.sec.gov.; and beginning no later than August 31, 2004, information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge (i) through the Fund's website at http://www.delawareinvestments.com; and (ii) on the Commission's website at http://www.sec.gov. -------------------------------------------------------------------------------- (8619) Printed in the USA SA-CORN [2/04] IVES 4/04 J9623
ITEM 2. CODE OF ETHICS Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 10. CONTROLS AND PROCEDURES The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There were no significant changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS (a) (1) Code of Ethics Not applicable. (2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT. (3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934. Not applicable. (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized. VOYAGEUR INVESTMENT TRUST Jude T. Driscoll - ----------------------------------- By: Jude T. Driscoll Title: Chairman Date: April 27, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Jude T. Driscoll - ----------------------------------- By: Jude T. Driscoll Title: Chairman Date: April 27, 2004 Joseph H. Hastings - ----------------------------------- By: Joseph H. Hastings Title: Chief Financial Officer Date: April 27, 2004 EX-99.CERT 2 ex99-cert.txt EXHIBIT 99.CERT EXHIBIT 99.CERT CERTIFICATION ------------- I, Jude T. Driscoll certify that: 1. I have reviewed this report on Form N-CSR of Voyageur Investment Trust: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 27, 2004 Jude T. Driscoll - ----------------------------------- By: Jude T. Driscoll Title: Chairman EXHIBIT 99.CERT CERTIFICATION ------------- I, Joseph H. Hastings, certify that: 1. I have reviewed this report on Form N-CSR of Voyageur Investment Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 27, 2004 Joseph H. Hastings - ----------------------------------- By: Joseph H. Hastings Title: Chief Financial Officer EX-99.906CERT 3 ex99-906cert.txt EXHIBIT 99.906CERT EXHIBIT 99.906CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the attached report of the registrant on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the registrant does hereby certify, to the best of such officer's knowledge, that: 1. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report. Date: April 27, 2004 Jude T. Driscoll - ------------------------------------ By: Jude T. Driscoll Title: Chairman Joseph H. Hastings - ------------------------------------ By: Joseph H. Hastings Title: Chief Financial Officer A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the SEC or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----