-----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, Rkin2dDJBf4xJHR199aoJYTNoKSb5ZpiV+Ge45ivLJpN4ngB0aiLypfzBOiyPn8n tVujf/hv7JFVczt/+WloMA== 0001206774-06-001109.txt : 20060510 0001206774-06-001109.hdr.sgml : 20060510 20060510103610 ACCESSION NUMBER: 0001206774-06-001109 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060228 FILED AS OF DATE: 20060510 DATE AS OF CHANGE: 20060510 EFFECTIVENESS DATE: 20060510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELAWARE INVESTMENTS MUNICIPAL TRUST CENTRAL INDEX KEY: 0000879342 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06411 FILM NUMBER: 06823884 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 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR INVESTMENT TRUST DATE OF NAME CHANGE: 19921215 0000879342 S000002409 DELAWARE TAX-FREE FLORIDA INSURED FUND C000006401 DELAWARE TAX-FREE FLORIDA INSURED FUND CLASS A VFLIX C000006402 DELAWARE TAX-FREE FLORIDA INSURED FUND CLASS B DVDBX C000034367 DELAWARE TAX-FREE FLORIDA INSURED FUND CLASS C 0000879342 S000002410 DELAWARE TAX-FREE MISSOURI INSURED FUND C000006403 DELAWARE TAX-FREE MISSOURI INSURED FUND CLASS A VMOIX C000006404 DELAWARE TAX-FREE MISSOURI INSURED FUND CLASS B DVTBX C000006405 DELAWARE TAX-FREE MISSOURI INSURED FUND CLASS C DVTCX 0000879342 S000002411 DELAWARE TAX-FREE OREGON INSURED FUND C000006406 DELAWARE TAX-FREE OREGON INSURED FUND CLASS A VORIX C000006407 DELAWARE TAX-FREE OREGON INSURED FUND CLASS B DVYBX C000006408 DELAWARE TAX-FREE OREGON INSURED FUND CLASS C DVYCX N-CSR 1 d19276_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: Delaware Investments Municipal Trust Address of principal executive offices: 2005 Market Street Philadelphia, PA 19103 Name and address of agent for service: David F. Connor, 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 28, 2006 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 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 reports. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [DELAWARE INVESTMENTS(R) LOGO] FIXED INCOME - -------------------------------------------------------------------------------- Semiannual Report FEBRUARY 28, 2006 - -------------------------------------------------------------------------------- DELAWARE TAX-FREE FLORIDA INSURED FUND DELAWARE TAX-FREE NEW YORK FUND [POWERED BY RESEARCH(R) LOGO] Table OF CONTENTS - ------------------------------------------------------------ DISCLOSURE OF FUND EXPENSES 1 - ------------------------------------------------------------ SECTOR ALLOCATIONS 2 - ------------------------------------------------------------ FINANCIAL STATEMENTS: Statements of Net Assets 3 Statements of Operations 8 Statements of Changes in Net Assets 9 Financial Highlights 10 Notes to Financial Statements 16 - ------------------------------------------------------------ ABOUT THE ORGANIZATION 21 - ------------------------------------------------------------ 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)2006 Delaware Distributors, L.P. - -------------------------------------------------------------------------------- Disclosure For the Period September 1, 2005 to February 28, 2006 - -------------------------------------------------------------------------------- OF FUND EXPENSES As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2005 to February 28, 2006. Actual Expenses The first section of the tables shown, "Actual Fund Return," provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second section of the tables shown, "Hypothetical 5% Return," provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Each Funds' actual expenses, shown in the tables, reflect fee waivers in effect. The expenses shown in each table, assume reinvestment of all dividends and distributions. "Expenses Paid During Period" are equal to the Funds' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Delaware Tax-Free Florida Insured Fund Expense Analysis of an Investment of $1,000
Expenses Beginning Ending Paid During Account Account Annualized Period Value Value Expense 9/1/05 to 9/1/05 2/28/06 Ratio 2/28/06 - ------------------------------------------------------------------------------------------------------- Actual Fund Return Class A $ 1,000.00 $ 1,009.50 0.87% $ 4.33 Class B 1,000.00 1,005.80 1.62% 8.06 Class C 1,000.00 1,006.60 1.62% 8.06 - ------------------------------------------------------------------------------------------------------- Hypothetical 5% Return (5% return before expenses) Class A $ 1,000.00 $ 1,020.48 0.87% $ 4.36 Class B 1,000.00 1,016.76 1.62% 8.10 Class C 1,000.00 1,016.76 1.62% 8.10 - -------------------------------------------------------------------------------------------------------
Delaware Tax-Free New York Fund Expense Analysis of an Investment of $1,000
Expenses Beginning Ending Paid During Account Account Annualized Period Value Value Expense 9/1/05 to 9/1/05 2/28/06 Ratio 2/28/06 - ------------------------------------------------------------------------------------------------------- Actual Fund Return Class A $ 1,000.00 $ 1,009.70 0.65% $ 3.24 Class B 1,000.00 1,007.00 1.40% 6.97 Class C 1,000.00 1,007.00 1.40% 6.97 - ------------------------------------------------------------------------------------------------------- Hypothetical 5% Return (5% return before expenses) Class A $ 1,000.00 $ 1,021.57 0.65% $ 3.26 Class B 1,000.00 1,017.85 1.40% 7.00 Class C 1,000.00 1,017.85 1.40% 7.00 - -------------------------------------------------------------------------------------------------------
1 - -------------------------------------------------------------------------------- Sector Allocations As of February 28, 2006 - -------------------------------------------------------------------------------- Sector designations may be different than the sector designations presented in other Fund materials. Delaware Tax-Free Florida Insured Fund - --------------------------------------------------------------- Percentage Sector of Net Assets - --------------------------------------------------------------- Municipal Bonds 98.37% Airport Revenue Bonds 1.48% Dedicated Tax & Fees Revenue Bonds 16.27% Electric & Gas Revenue Bonds 1.99% Higher Education Revenue Bonds 5.10% Hospital Revenue Bonds 15.51% Multifamily Housing Revenue Bonds 26.94% Municipal Lease Revenue Bonds 10.70% Ports & Harbors Revenue Bonds 0.30% Pre-Refunded Bonds 10.73% Public Utility District Revenue Bonds 1.17% Single Family Housing Revenue Bonds 0.29% Tax Increment/Special Assessment Bonds 2.08% Territorial General Obligation Bonds 2.76% Water & Sewer Revenue Bonds 3.05% - --------------------------------------------------------------- Total Market Value of Securities 98.37% - --------------------------------------------------------------- Receivables and Other Assets Net of Liabilities 1.63% - --------------------------------------------------------------- Total Net Assets 100.00% - --------------------------------------------------------------- Delaware Tax-Free New York Fund - --------------------------------------------------------------- Percentage Sector of Net Assets - --------------------------------------------------------------- Municipal Bonds 96.33% - --------------------------------------------------------------- Airport Revenue Bonds 5.79% City General Obligation Bonds 4.78% Continuing Care/Retirement Revenue Bonds 2.63% Corporate-Backed Revenue Bonds 2.95% Dedicated Tax & Fees Revenue Bonds 8.95% Electric & Gas Revenue Bonds 14.96% Higher Education Revenue Bonds 11.54% Hospital Revenue Bonds 8.75% Municipal Lease Revenue Bonds 14.85% Parking Revenue Bonds 3.00% Pre-Refunded Bonds 12.23% Water & Sewer Revenue Bonds 5.90% - --------------------------------------------------------------- Variable Rate Demand Notes 2.24% - --------------------------------------------------------------- Total Market Value of Securities 98.57% - --------------------------------------------------------------- Receivables and Other Assets Net of Liabilities 1.43% - --------------------------------------------------------------- Total Net Assets 100.00% - --------------------------------------------------------------- 2 - -------------------------------------------------------------------------------- Delaware Tax-Free Florida Insured Fund Statements February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- OF NET ASSETS Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds - 98.37% - -------------------------------------------------------------------------------- Airport Revenue Bonds - 1.48% Miami-Dade County Aviation Revenue (Miami International Airport) Series B 5.00% 10/1/37 (FGIC) $ 1,000,000 $ 1,046,140 Miami-Dade County Aviation Revenue Series A 5.00% 10/1/33 (FSA) (AMT) 500,000 513,670 ----------- 1,559,810 ----------- Dedicated Tax & Fees Revenue Bonds - 16.27% Florida State Board of Education (Lottery Revenue) Series A 6.00% 7/1/14 (FGIC) 1,000,000 1,103,970 Florida State Department of Transportation 5.00% 7/1/31 (FGIC) 1,875,000 1,963,388 Jacksonville Excise Taxes Revenue Series B 5.00% 10/1/26 (AMBAC) 1,000,000 1,045,320 5.125% 10/1/32 (FGIC) 1,000,000 1,049,980 **Palm Beach County Florida Criminal Justice Facilities Revenue Inverse Floater 8.01%6/1/12 (FGIC) 7,500,000 9,254,400 Puerto Rico Commonwealth Highway & Transportation Authority Revenue Series G 5.00% 7/1/42 800,000 818,696 Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series K 5.00% 7/1/35 1,000,000 1,033,110 ^Puerto Rico Commonwealth Infrarastructure Financing Authority Series A 4.60% 7/1/30 (FGIC) 2,500,000 836,225 ----------- 17,105,089 ----------- Electric & Gas Revenue Bonds - 1.99% Florida State Municipal Power Agency Revenue (Stanton II Project) 5.00% 10/1/26 (AMBAC) 2,000,000 2,094,160 ----------- 2,094,160 ----------- Higher Education Revenue Bonds - 5.10% Broward County Educational Facilities Authority Revenue (Nova Southeastern University) 5.25% 4/1/27 (RADIAN) 1,000,000 1,044,950 Miami-Dade County Educational Facilities Authority (University of Miami) Series A 5.75% 4/1/29 (AMBAC) 2,000,000 2,172,520 University of Central Florida Athletics Association Certificates of Participation Series A 5.25% 10/1/34 (FGIC) 2,000,000 2,143,660 ----------- 5,361,130 ----------- Hospital Revenue Bonds - 15.51% Escambia County Health Facilities Authority (Florida Health Care Facilities -- VHA Program) 5.95% 7/1/20 (AMBAC) 560,000 593,936 Highlands County Health Facilities Authority (Adventist Health System/Sunbelt) Series A 6.00% 11/15/31 1,500,000 1,619,445 Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Hospital Revenue Bonds (continued) Indian River County Hospital District (Indian River Memorial Hospital) 6.10% 10/1/18 (FSA) $ 3,000,000 $ 3,103,680 Miami-Dade County Public Facilities Revenue (Jackson Health Systems) Series A 5.00% 6/1/35 (MBIA) 1,500,000 1,568,895 North Miami Health Facilities Authority (Catholic Health Services) (LOC Suntrust Bank-Miami) 6.00% 8/15/16 500,000 513,820 Orange County Health Facilities Authority Revenue (Adventist Health System) 5.625% 11/15/32 1,000,000 1,074,010 Palm Beach County Health Facilities Authority Revenue (Boca Raton Community Hospital) 5.625% 12/1/31 2,000,000 2,106,500 South Broward Hospital District Revenue (Memorial Health Care System) 5.625% 5/1/32 3,000,000 3,220,410 Tallahassee Health Facilities (Tallahassee Memorial Regional Medical Center) Series B 6.00% 12/1/15 (MBIA) 2,500,000 2,505,050 ----------- 16,305,746 ----------- Multifamily Housing Revenue Bonds - 26.94% Duval Housing Finance Authority (St. Augustine Apartments) 6.00% 3/1/21 300,000 306,066 Florida Housing Finance Agency (Crossings Indian Run Apartments HUD) Series V 6.10% 12/1/26 (AMBAC) (AMT) 750,000 771,060 (Landings at Sea Forest Apartments) Series T 5.85% 12/1/18 (AMBAC) (FHA) (AMT) 390,000 400,834 6.05% 12/1/36 (AMBAC) (FHA) (AMT) 700,000 718,459 (Leigh Meadows Apartments HUD) Series N 6.20% 9/1/26 (AMBAC) (AMT) 2,765,000 2,836,669 6.30% 9/1/36 (AMBAC) (AMT) 2,000,000 2,051,440 (Mariner Club Apartments) Series K-1 6.25% 9/1/26 (AMBAC) (AMT) 2,000,000 2,052,260 6.375% 9/1/36 (AMBAC) (AMT) 3,500,000 3,591,175 (Riverfront Apartments Section 8 HUD) Series A 6.25% 4/1/37 (AMBAC) (AMT) 1,000,000 1,032,720 (Spinnaker Cove Apartments) Series G 6.50% 7/1/36 (AMBAC) (FHA) (AMT) 500,000 512,150 (Sterling Palms Apartments) Series D-1 6.30% 12/1/16 (AMBAC) (AMT) 925,000 946,275 6.40% 12/1/26 (AMBAC) (AMT) 1,500,000 1,536,555 6.50% 6/1/36 (AMBAC) (AMT) 6,540,000 6,691,727 (The Vineyards Project) Series H 6.40% 11/1/15 500,000 511,200 (Woodbridge Apartments) Series L 6.15% 12/1/26 (AMBAC) (AMT) 1,750,000 1,799,683 6.25% 6/1/36 (AMBAC) (AMT) 2,000,000 2,056,220 Volusia County Multifamily Housing Finance Authority (San Marco Apartments) Series A 5.60% 1/1/44 (FSA) (AMT) 500,000 514,865 ----------- 28,329,358 ----------- 3 - -------------------------------------------------------------------------------- Delaware Tax-Free Florida Insured Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Municipal Lease Revenue Bonds - 10.70% Florida Municipal Loan Council Revenue Series B 5.00% 11/1/29 (MBIA) $ 1,590,000 $ 1,681,759 Lake County Florida School Board 5.00% 6/1/30 (AMBAC) 1,750,000 1,837,850 Osceola County School Board Series A 5.25% 6/1/27 (AMBAC) 4,000,000 4,281,280 Palm Beach County School Board Certificates of Participation Series D 5.00% 8/1/28 (FSA) 300,000 311,925 Pasco County Florida School Board Series A 5.00% 8/1/30 (AMBAC) 1,000,000 1,050,970 Puerto Rico Public Buildings Authority Revenue (Government Facilities) Series F 5.25% 7/1/25 930,000 1,036,708 St. Augustine Capital Improvement Revenue 5.00% 10/1/34 (AMBAC) 1,000,000 1,051,050 ----------- 11,251,542 ----------- Ports & Harbors Revenue Bonds - 0.30% Jacksonville Port Authority Seaport Revenue 5.70% 11/1/30 (MBIA) (AMT) 295,000 315,199 ----------- 315,199 ----------- - -/-Pre-Refunded Bonds - 10.73% Jacksonville Port Authority Seaport Revenue 5.70% 11/1/30-10 (MBIA) (AMT) 205,000 221,363 Lee County Florida Airport Revenue Series B 5.75% 10/1/33-10 (FSA) 3,000,000 3,306,150 Northern Palm Beach County Improvement District Special Assessment (Abacoa Water Control) 7.20% 8/1/16-06 300,000 310,530 Puerto Rico Commonwealth Highway & Transportation Authority Highway RevenueSeries D 5.25% 7/1/38-12 3,000,000 3,270,300 Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series J 5.50% 7/1/22-14 1,600,000 1,790,992 Tampa Utilities Tax Revenue Series A 6.00% 10/1/17-09 (AMBAC) 1,000,000 1,094,080 6.125% 10/1/18-09 (AMBAC) 1,000,000 1,098,090 Volusia County Industrial Development Authority Mortgage Revenue (Bishops Glen Retirement Health Facilities Project) 7.50% 11/1/16-06 180,000 187,981 ----------- 11,279,486 ----------- Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Public Utility District Revenue Bonds - 1.17% Ocala Utility System Revenue Series B 5.25% 10/1/25 (FGIC) $ 1,125,000 $ 1,231,841 ----------- 1,231,841 ----------- Single Family Housing Revenue Bonds - 0.29% Orange County Florida Housing Finance Authority Homeowner Revenue Series B 5.25%3/1/33 (GNMA) (FNMA) (AMT) 295,000 300,776 ----------- 300,776 ----------- Tax Increment/Special Assessment Bonds - 2.08% Enterprise Community Development District Special Assessment 6.10% 5/1/16 (MBIA) 695,000 696,599 Hollywood Community Redevelopment Agency 5.625% 3/1/24 1,200,000 1,283,940 Julington Creek Plantation Community Development District Special Assessment 5.00% 5/1/29 (MBIA) 200,000 208,992 ----------- 2,189,531 ----------- Territorial General Obligation Bonds - 2.76% Puerto Rico Commonwealth Public Improvement Series A 5.50% 7/1/19 (MBIA) 2,500,000 2,897,300 ----------- 2,897,300 ----------- Water & Sewer Revenue Bonds - 3.05% Tampa Water and Sewer Revenue 6.00% 10/1/16 (FSA) 1,000,000 1,180,940 Village Center Community Development District Utility Revenue 5.00% 10/1/36 (MBIA) 500,000 523,620 Winter Haven Utilities Systems Revenue Refunding & Improvement 5.00% 10/1/30 (MBIA) 1,415,000 1,499,546 ----------- 3,204,106 ----------- Total Municipal Bonds (cost $98,000,827) 103,425,074 ----------- 4 - -------------------------------------------------------------------------------- Delaware Tax-Free Florida Insured Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Total Market Value of Securities - 98.37% (cost $98,000,827) $ 103,425,074 Receivables and Other Assets Net of Liabilities - 1.63% 1,715,627 ------------- Net Assets Applicable to 9,395,937 Shares Outstanding - 100.00% $ 105,140,701 ============= Net Asset Value - Delaware Tax-Free Florida Insured Fund Class A ($96,523,421 / 8,626,174 Shares) $ 11.19 ------------- Net Asset Value - Delaware Tax-Free Florida Insured Fund Class B ($4,942,438 / 441,517 Shares) $ 11.19 ------------- Net Asset Value - Delaware Tax-Free Florida Insured Fund Class C ($3,674,842 / 328,246 Shares) $ 11.20 ------------- Components of Net Assets at February 28, 2006: Shares of beneficial interest (unlimited authorization - no par) $ 100,442,884 Accumulated net realized loss on investments (726,430) Net unrealized appreciation of investments 5,424,247 ------------- Total net assets $ 105,140,701 ============= ** 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 28, 2006. See Note 8 in "Notes to Financial Statements." - -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in "Notes to Financial Statements." ^ Zero coupon security. The interest rate shown is the yield at the time of purchase. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 Administration FNMA - Insured by Federal National Mortgage Association FSA - Insured by the Financial Security Assurance GNMA - Insured by Government National Mortgage Association LOC - Letter of Credit 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 Florida Insured Fund Net asset value Class A (A) $ 11.19 Sales charge (4.50% of offering price) (B) 0.53 ------------- Offering price $ 11.72 ============= (A) Net asset value per share, as illustrated, is the 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 - -------------------------------------------------------------------------------- Delaware Tax-Free New York Fund Statements February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds - 96.33% - -------------------------------------------------------------------------------- Airport Revenue Bonds - 5.79% New York City Industrial Development (JFK Airis Project) 5.50% 7/1/28 (AMT) $ 500,000 $ 503,750 Onondaga County Industrial Development Authority Revenue Subordinated (Air Cargo Project) 7.25% 1/1/32 (AMT) 500,000 530,860 ----------- 1,034,610 ----------- City General Obligation Bonds - 4.78% New York City Series C 5.375% 11/15/27 310,000 321,309 Series J 5.25% 6/1/28 500,000 532,040 ----------- 853,349 ----------- Continuing Care/Retirement Revenue Bonds - 2.63% New York State Dormitory Authority Revenue (Chapel Oaks) 5.45% 7/1/26 (LOC Allied Irish Bank) 450,000 469,868 ----------- 469,868 ----------- Corporate-Backed Revenue Bonds - 2.95% oDutchess County Industrial Development Agency (IBM Project) 5.45% 12/1/29 (AMT) 500,000 527,660 ----------- 527,660 ----------- Dedicated Tax & Fees Revenue Bonds - 8.95% New York State Sales Tax Asset Receivables Series A 5.25% 10/15/27 (AMBAC) 500,000 543,500 Puerto Rico Commonwealth Highway & Transportation Authority Revenue Series Y 5.50% 7/1/36 475,000 521,944 Schenectady Metroplex Development Authority Revenue Series A 5.375% 12/15/21 500,000 532,720 ----------- 1,598,164 ----------- Electric & Gas Revenue Bonds - 14.96% New York City Industrial Development Agency (Brooklyn Navy Yard Cogen Partners) 5.75% 10/1/36 (AMT) 450,000 453,380 New York State Energy Research & Development Authority Pollution Control Revenue (Central Hudson Gas) Series A 5.45% 8/1/27 (AMBAC) 500,000 532,800 Puerto Rico Electric Power Authority Power Revenue Series II 5.25% 7/1/31 500,000 528,960 Series NN 5.125% 7/1/29 600,000 633,125 Suffolk County Industrial Development Agency Revenue (Keyspan-Port Jefferson Project) 5.25% 6/1/27 (AMT) 500,000 522,180 ----------- 2,670,445 ----------- Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Higher Education Revenue Bonds - 11.54% Amherst Industrial Development Agency Civic Facilities Revenue (UBF Faculty Student Housing) Series A 5.75% 8/1/30 (AMBAC) $ 200,000 $ 220,446 Dutchess County Industrial Development Agency (Marist College) 5.00% 7/1/20 500,000 521,010 New York State Dormitory Authority Revenue (Columbia University) Series A 5.00% 7/1/23 500,000 530,370 (Pratt Institute) 6.00% 7/1/20 (RADIAN) 500,000 542,755 (State University) Series B 7.50% 5/15/11 220,000 246,220 ----------- 2,060,801 ----------- Hospital Revenue Bonds - 8.75% New York State Dormitory Authority Revenue (Mental Health) Series D 5.90% 2/15/12 25,000 26,006 (Millard Fillmore Hospital) 5.375% 2/1/32 (AMBAC) (FHA) 450,000 468,639 (North Shore Long Island Jewish Group Project) 5.50% 5/1/33 500,000 536,515 (Winthrop South Nassau Hospital) Series B 5.50% 7/1/23 500,000 531,095 ----------- 1,562,255 ----------- Municipal Lease Revenue Bonds - 14.85% Albany Industrial Development Agency Civic Facility Revenue (Charitable Leadership Project) Series A 5.75% 7/1/26 500,000 521,210 Battery Park City Authority Revenue Series A 5.00% 11/1/26 500,000 528,840 5.25% 11/1/22 485,000 527,273 New York City Industrial Development Agency Civic Facility Revenue (American National Red Cross Project) 5.00% 2/1/36 (AMBAC) 500,000 527,810 Tobacco Settlement Financing Series B-1C 5.50% 6/1/21 500,000 547,634 ----------- 2,652,767 ----------- Parking Revenue Bonds - 3.00% Albany Parking Authority Revenue Series A 5.625% 7/15/25 500,000 535,350 ----------- 535,350 ----------- - -/-Pre-Refunded Bonds - 12.23% Metropolitan Transportation Authority Dedicated Tax Series A 6.125% 4/1/17-10 (FGIC) 1,000,000 1,101,230 New York City Series C 5.375% 11/15/27-07 140,000 145,975 New York State Dormitory Authority Lease 5.375% 5/15/21-13 500,000 554,575 New York State Dormitory Authority Revenue (Mental Health) Series D 5.90% 2/15/12-07 225,000 234,709 (State University) Series B 7.50% 5/15/11-09 130,000 147,675 ----------- 2,184,164 ----------- 6 - -------------------------------------------------------------------------------- Delaware Tax-Free New York Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Water & Sewer Revenue Bonds - 5.90% New York City Municipal Water Finance Authority Water & Sewer System Revenue Series A 5.125% 6/15/34 $ 500,000 $ 526,345 Series B 5.00% 6/15/36 500,000 527,775 ----------- 1,054,120 ----------- Total Municipal Bonds (cost $16,262,965) 17,203,553 ----------- - -------------------------------------------------------------------------------- oVariable Rate Demand Notes - 2.24% - -------------------------------------------------------------------------------- New York City Series E5 3.02% 8/1/15 400,000 400,000 ----------- Total Variable Rate Demand Notes (cost $400,000) 400,000 ----------- Total Market Value of Securities - 98.57% (cost $16,662,965) 17,603,553 Receivables and Other Assets Net of Liabilities - 1.43% 256,072 ----------- Net Assets Applicable to 1,688,503 Shares Outstanding - 100.00% $17,859,625 =========== Net Asset Value - Delaware Tax-Free New York Fund Class A ($13,784,698 / 1,302,619 Shares) $ 10.58 ----------- Net Asset Value - Delaware Tax-Free New York Fund Class B ($2,794,841 / 264,631 Shares) $ 10.56 ----------- Net Asset Value - Delaware Tax-Free New York Fund Class C ($1,280,086 / 121,253 Shares) $ 10.56 ----------- Components of Net Assets at February 28, 2006: Shares of beneficial interest (unlimited authorization - no par) $17,139,922 Distributions in excess of net investment income (655) Accumulated net realized loss on investments (220,230) Net unrealized appreciation of investments 940,588 Total net assets $17,859,625 =========== - -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in "Notes to Financial Statements." o Variable rate security. The interest rate shown is the rate as of February 28, 2006. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 Administration LOC - Letter of Credit RADIAN - Insured by Radian Asset Assurance Net Asset Value and Offering Price per Share - Delaware Tax-Free New York Fund Net asset value Class A (A) $ 10.58 Sales charge (4.50% of offering price) (B) 0.50 ------------ Offering price $ 11.08 ============ (A) Net asset value per share, as illustrated, is the 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 7 - -------------------------------------------------------------------------------- Statements Six Months Ended February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- OF OPERATIONS
Delaware Delaware Tax-Free Tax-Free Florida Insured Fund New York Fund Investment Income: Interest $ 2,764,679 $ 417,269 Expenses: Management fees 261,638 46,978 Distribution expenses -- Class A 120,305 16,491 Distribution expenses -- Class B 25,682 14,205 Distribution expenses -- Class C 16,420 5,151 Dividend disbursing and transfer agent fees and expenses 35,931 7,156 Accounting and administration expenses 20,931 3,417 Legal & professional fees 15,034 6,174 Reports and statements to shareholders 10,770 935 Registration fees 8,000 4,275 Trustees' fees 2,991 489 Custodian fees 2,768 878 Insurance fees 1,127 232 Pricing fees 943 500 Other 3,899 1,473 -------------------- ------------- 526,439 108,354 Less expenses absorbed or waived (39,487) (37,609) Less expense paid indirectly (1,839) (750) -------------------- ------------- Total operating expenses 485,113 69,995 -------------------- ------------- Net Investment Income 2,279,566 347,274 -------------------- ------------- Net Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) on investments (36,173) 2,977 Net change in unrealized appreciation/depreciation of investments (1,285,279) (177,638) -------------------- ------------- Net Realized and Unrealized Loss on Investments (1,321,452) (174,661) -------------------- ------------- Net Increase in Net Assets Resulting from Operations $ 958,114 $ 172,613 ==================== =============
See accompanying notes 8 - -------------------------------------------------------------------------------- Statements - -------------------------------------------------------------------------------- OF CHANGES IN NET ASSETS
Delaware Tax-Free Delaware Tax-Free Florida Insured Fund New York Fund Six Months Ended Year Ended Six Months Ended Year Ended 2/28/06 8/31/05 2/28/06 8/31/05 (Unaudited) (Unaudited) Increase (Decrease) in Net Assets from Operations: Net investment income $ 2,279,566 $ 4,400,282 $ 347,274 $ 685,440 Net realized gain (loss) on investments (36,173) 332,797 2,977 73,048 Net change in unrealized appreciation/depreciation of investments (1,285,279) 426,912 (177,638) 267,666 ----------------- ------------- --------------- ------------- Net increase in net assets resulting from operations 958,114 5,159,991 172,613 1,026,154 ----------------- ------------- --------------- ------------- Dividends and Distributions to Shareholders from: Net investment income: Class A (2,125,293) (4,136,398) (279,585) (519,496) Class B (94,082) (195,487) (49,696) (105,732) Class C (60,191) (68,397) (17,993) (60,212) ----------------- ------------- --------------- ------------- (2,279,566) (4,400,282) (347,274) (685,440) ----------------- ------------- --------------- ------------- Capital Share Transactions: Proceeds from shares sold: Class A 4,917,873 8,716,486 1,433,219 1,917,681 Class B 16,916 392,192 124,193 388,800 Class C 638,989 339,297 413,196 449,842 Net assets from reorganization(1): Class A -- 10,617,811 -- -- Class B -- 2,665,962 -- -- Class C -- 2,237,525 -- -- Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 1,083,534 1,690,235 198,387 374,723 Class B 29,552 49,113 21,991 48,934 Class C 31,558 34,037 15,875 20,784 ----------------- ------------- --------------- ------------- 6,718,422 26,742,658 2,206,861 3,200,764 ----------------- ------------- --------------- ------------- Cost of shares repurchased: Class A (6,590,462) (10,965,231) (863,444) (921,789) Class B (566,983) (2,629,629) (342,275) (335,650) Class C (267,639) (419,581) (28,783) (1,931,944) ----------------- ------------- --------------- ------------- (7,425,084) (14,014,441) (1,234,502) (3,189,383) ----------------- ------------- --------------- ------------- Increase (decrease) in net assets derived from capital share transactions (706,662) 12,728,217 972,359 11,381 ----------------- ------------- --------------- ------------- Net Increase (Decrease) in Net Assets (2,028,114) 13,487,926 797,698 352,095 Net Assets: Beginning of period 107,168,815 93,680,889 17,061,927 16,709,832 ----------------- ------------- --------------- ------------- End of period $ 105,140,701 $ 107,168,815 $ 17,859,625 $ 17,061,927 ================= ============= =============== ============= (Distributions in excess of net investment income) $ -- $ -- $ (655) $ (655)
(1) See Note 6 in "Notes to Financial Statements." See accompanying notes 9 Financial HIGHLIGHTS 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 11.330 $ 11.250 $ 11.110 $ 11.330 $ 11.230 $ 10.770 Income (loss) from investment operations: Net investment income 0.245 0.507 0.533 0.523 0.532 0.527 Net realized and unrealized gain (loss) on investments (0.140) 0.080 0.140 (0.220) 0.100 0.460 --------- -------- -------- -------- --------- -------- Total from investment operations 0.105 0.587 0.673 0.303 0.632 0.987 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.245) (0.507) (0.533) (0.523) (0.532) (0.527) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.245) (0.507) (0.533) (0.523) (0.532) (0.527) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 11.190 $ 11.330 $ 11.250 $ 11.110 $ 11.330 $ 11.230 ========= ======== ======== ======== ========= ======== Total Return(3) 0.95% 5.32% 6.15% 2.68% 5.83% 9.39% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 96,523 $ 98,326 $ 87,591 $ 95,951 $ 105,773 $107,365 Ratio of expenses to average net assets 0.87% 0.88% 0.90% 0.90% 0.90% 0.90% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.94% 0.98% 0.94% 0.94% 0.99% 0.97% Ratio of net investment income to average net assets 4.42% 4.48% 4.72% 4.60% 4.80% 4.81% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.35% 4.38% 4.68% 4.56% 4.71% 4.74% Portfolio turnover 5% 17% 3% 26% 46% 12%
(1) As required, effective September 1, 2001, the Fund has adopted the 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 waivers 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.230 $ 10.770 Income (loss) from investment operations: Net investment income 0.204 0.422 0.448 0.437 0.445 0.443 Net realized and unrealized gain (loss) on investments (0.140) 0.070 0.140 (0.210) 0.100 0.460 --------- -------- -------- -------- --------- -------- Total from investment operations 0.064 0.492 0.588 0.227 0.545 0.903 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.204) (0.422) (0.448) (0.437) (0.445) (0.443) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.204) (0.422) (0.448) (0.437) (0.445) (0.443) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 11.190 $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.230 ========= ======== ======== ======== ========= ======== Total Return(3) 0.58% 4.45% 5.36% 2.00% 5.01% 8.56% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 4,943 $ 5,532 $ 5,002 $ 5,800 $ 5,223 $ 5,014 Ratio of expenses to average net assets 1.62% 1.63% 1.65% 1.65% 1.65% 1.65% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.69% 1.73% 1.69% 1.69% 1.74% 1.72% Ratio of net investment income to average net assets 3.67% 3.74% 3.97% 3.85% 4.05% 4.06% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.60% 3.64% 3.93% 3.81% 3.96% 3.99% Portfolio turnover 5% 17% 3% 26% 46% 12%
(1) As required, effective September 1, 2001, the Fund has adopted the 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 waivers 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 Ended Year Ended 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.240 $ 10.780 Income (loss) from investment operations: Net investment income 0.203 0.422 0.448 0.437 0.447 0.443 Net realized and unrealized gain (loss) on investments (0.130) 0.070 0.140 (0.210) 0.090 0.460 --------- -------- -------- -------- --------- -------- Total from investment operations 0.073 0.492 0.588 0.227 0.537 0.903 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.203) (0.422) (0.448) (0.437) (0.447) (0.443) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.203) (0.422) (0.448) (0.437) (0.447) (0.443) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 11.200 $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.240 ========= ======== ======== ======== ========= ======== Total Return(3) 0.66% 4.45% 5.36% 2.00% 4.93% 8.45% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 3,675 $ 3,311 $ 1,088 $ 846 $ 560 $ 53 Ratio of expenses to average net assets 1.62% 1.63% 1.65% 1.65% 1.65% 1.65% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.69% 1.73% 1.69% 1.69% 1.74% 1.72% Ratio of net investment income to average net assets 3.67% 3.74% 3.97% 3.85% 4.05% 4.06% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.60% 3.64% 3.93% 3.81% 3.96% 3.99% Portfolio turnover 5% 17% 3% 26% 46% 12%
(1) As required, effective September 1, 2001, the Fund has adopted the 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 waivers and payment of fees by the manager. 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 New York Fund Class A - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.700 $ 10.470 $ 10.220 $ 10.340 $ 10.350 $ 9.820 Income (loss) from investment operations: Net investment income 0.222 0.453 0.479 0.484 0.503 0.523 Net realized and unrealized gain (loss) on investments (0.120) 0.230 0.250 (0.120) (0.010) 0.530 --------- -------- -------- -------- --------- -------- Total from investment operations 0.102 0.683 0.729 0.364 0.493 1.053 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.222) (0.453) (0.479) (0.484) (0.503) (0.523) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.222) (0.453) (0.479) (0.484) (0.503) (0.523) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.580 $ 10.700 $ 10.470 $ 10.220 $ 10.340 $ 10.350 ========= ======== ======== ======== ========= ======== Total Return(3) 0.97% 6.65% 7.26% 3.56% 4.98% 11.03% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 13,785 $ 13,153 $ 11,523 $ 11,436 $ 9,490 $ 10,169 Ratio of expenses to average net assets(4) 0.65% 0.66% 0.50% 0.50% 0.50% 0.50% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.09% 1.12% 1.02% 1.05% 1.15% 1.02% Ratio of net investment income to average net assets 4.24% 4.29% 4.60% 4.65% 4.98% 5.23% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.80% 3.83% 4.08% 4.10% 4.33% 4.71% Portfolio turnover 23% 13% 26% 64% 43% 27%
(1) As required, effective September 1, 2001, the Fund has adopted the 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 waivers and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. (4) Ratios for the years ended August 31, 2003 and 2002, including fees paid indirectly in accordance with Securities and Exchange Commission rules, were 0.51%. See accompanying notes 13 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------ Delaware Tax-Free New York Fund Class B - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.670 $ 10.450 $ 10.200 $ 10.330 $ 10.330 $ 9.810 Income (loss) from investment operations: Net investment income 0.183 0.374 0.401 0.406 0.426 0.448 Net realized and unrealized gain (loss) on investments (0.110) 0.220 0.250 (0.130) -- 0.520 --------- -------- -------- -------- --------- -------- Total from investment operations 0.073 0.594 0.651 0.276 0.426 0.968 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.183) (0.374) (0.401) (0.406) (0.426) (0.448) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.183) (0.374) (0.401) (0.406) (0.426) (0.448) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.560 $ 10.670 $ 10.450 $ 10.200 $ 10.330 $ 10.330 ========= ======== ======== ======== ========= ======== Total Return(3) 0.70% 5.77% 6.47% 2.69% 4.30% 10.12% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 2,795 $ 3,023 $ 2,858 $ 3,238 $ 3,352 $ 2,507 Ratio of expenses to average net assets(4) 1.40% 1.41% 1.25% 1.25% 1.25% 1.25% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.84% 1.87% 1.77% 1.80% 1.90% 1.77% Ratio of net investment income to average net assets 3.49% 3.54% 3.85% 3.90% 4.23% 4.48% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.05% 3.08% 3.33% 3.35% 3.58% 3.96% Portfolio turnover 23% 13% 26% 64% 43% 27%
(1) As required, effective September 1, 2001, the Fund has adopted the 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 waivers and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. (4) Ratios for the years ended August 31, 2003 and 2002, including fees paid indirectly in accordance with Securities and Exchange Commission rules, were 1.26%. See accompanying notes 14 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------ Delaware Tax-Free New York Fund Class C - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.670 $ 10.450 $ 10.200 $ 10.320 $ 10.330 $ 9.800 Income (loss) from investment operations: Net investment income 0.183 0.376 0.401 0.406 0.426 0.449 Net realized and unrealized gain (loss) on investments (0.110) 0.220 0.250 (0.120) (0.010) 0.530 --------- -------- -------- -------- --------- -------- Total from investment operations 0.073 0.596 0.651 0.286 0.416 0.979 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.183) (0.376) (0.401) (0.406) (0.426) (0.449) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.183) (0.376) (0.401) (0.406) (0.426) (0.449) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.560 $ 10.670 $ 10.450 $ 10.200 $ 10.320 $ 10.330 ========= ======== ======== ======== ========= ======== Total Return(3) 0.70% 5.80% 6.47% 2.79% 4.20% 10.23% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 1,280 $ 886 $ 2,329 $ 2,828 $ 1,115 $ 1,206 Ratio of expenses to average net assets(4) 1.40% 1.41% 1.25% 1.25% 1.25% 1.25% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.84% 1.87% 1.77% 1.80% 1.90% 1.77% Ratio of net investment income to average net assets 3.49% 3.54% 3.85% 3.90% 4.23% 4.48% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.05% 3.08% 3.33% 3.35% 3.58% 3.96% Portfolio turnover 23% 13% 26% 64% 43% 27%
(1) As required, effective September 1, 2001, the Fund has adopted the 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 waivers and payment of fees by the manager. Performance would have been lower had the expense limitation not been in effect. (4) Ratios for the years ended August 31, 2003 and 2002, including fees paid indirectly in accordance with Securities and Exchange Commission rules, were 1.26%. See accompanying notes 15 - -------------------------------------------------------------------------------- Notes February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund. Delaware Investments Municipal Trust (the "Trust") (formerly Voyageur Investment Trust) is organized as a Delaware statutory trust and offers three series: 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 Insured Fund and Delaware Tax-Free New York Fund (referred to as a "Fund" or, collectively, the "Funds"). The Trusts are open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended, and 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 Insured Fund and Delaware Tax-Free New York Fund is to seek a high a level of current income exempt from federal income tax and the state 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 U.S. generally accepted accounting principles 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. In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures, aftermarket trading or significant events after local market trading (e.g., government actions or pronouncements, trading volume or volatility on markets, exchanges among dealers, or news events). 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 U.S. generally accepted accounting principles 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(R) Family of Funds are allocated amongst the funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums 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. The Funds receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under the above arrangement is included in custodian fees on the Statements of Operations with the corresponding expense offset shown as "expense paid indirectly." 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 Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund --------------- -------- On the first $500 million 0.500% 0.550% On the next $500 million 0.475% 0.500% On the next $1.5 billion 0.450% 0.450% In excess of $2.5 billion 0.425% 0.425% 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 as shown below. Delaware Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund --------------- --------- The operating expense limitation as a percentage of average daily net assets (per annum) 0.62% 0.40% Expiration date 12/29/05 12/29/05 Effective December 30, 2005, operating expense limitation as a percentage of average daily net assets (per annum) 0.61% 0.40% Expiration date 12/31/06 12/31/06 Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing, and transfer agent services. Each Fund pays DSC a monthly fee computed at the annual rate of 0.04% of each Fund's average daily net assets for accounting and administration services. Each Fund also 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. 16 - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS (CONTINUED) 2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued) At February 28, 2006, the Funds had liabilities payable to affiliates as follows: Delaware Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund --------------- -------- Investment management fee payable to DMC $ 33,105 $ 1,389 Dividend disbursing, transfer agent, accounting and administration fees and other expenses payable to DSC 20,345 4,675 Distribution fee payable to DDLP 22,097 5,472 Other expenses payable to DMC and affiliates* 11,249 1,104 * DMC, as part of its administrative services, pays operating expenses on behalf of each Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees' fees. As provided in the investment management agreement, each Fund bears the cost of certain legal services expenses, including internal legal services provided to each Fund by DMC employees. For the six months ended February 28, 2006, each Fund was charged for internal legal services provided by DMC as follows: Delaware Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund --------------- -------- $3,904 $636 For the six months ended February 28, 2006, DDLP earned commissions on sales of Class A shares for each Fund as follows: Delaware Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund --------------- -------- $9,573 $3,939 For the six months ended February 28, 2006, DDLP received gross contingent deferred sales charge commissions on redemption of each Fund's Class A, Class B and Class C shares. These commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows: Delaware Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund --------------- -------- Class A $ 37 $ -- Class B -- 1,178 Class C 509 99 Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trusts. These officers and trustees are paid no compensation by the Funds. 3. Investments For the six months ended February 28, 2006, the Funds made purchases and sales of investment securities, other than short-term investments, as follows: Delaware Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund --------------- ---------- Purchases $2,611,265 $2,395,787 Sales 3,401,604 1,872,599 At February 28, 2006, 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 28, 2006, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows: Delaware Delaware Tax-Free Tax-Free Florida Insured New York Fund Fund ------------- ------------ Cost of investments $ 98,000,827 $ 16,662,965 ============= ============ Aggregate unrealized appreciation 5,443,753 951,114 Aggregate unrealized depreciation (19,506) (10,526) ------------- ------------ Net unrealized appreciation $ 5,424,247 $ 940,588 ============= ============ 17 - -------------------------------------------------------------------------------- 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 U.S. generally accepted accounting principles. Additionally, net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2006 and year ended August 31, 2005 was as follows: Delaware Tax-Free Delaware Tax-Free Florida Insured Fund New York Fund ----------------------- ---------------------- Six Months Year Six Months Year Ended Ended Ended Ended 2/28/06* 8/31/05 2/28/06* 8/31/05 ---------- ---------- --------- ---------- Tax-exempt income $2,279,566 $4,400,282 $347,274 $685,440 * Tax information for the six months ended February 28, 2006 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 28, 2006, the estimated components of net assets on a tax basis were as follows: Delaware Tax-Free Delaware Tax-Free Florida Insured Fund New York Fund -------------------- ----------------- Shares of beneficial interest $ 100,442,884 $ 17,139,922 Distributions in excess of net investment income -- (655) Capital loss carryforwards (690,257) (223,207) Six month period realized gains (losses) (36,173) 6,847 Post-October losses -- (3,870) Unrealized appreciation of investments 5,424,247 940,588 ------------- ------------ Net assets $ 105,140,701 $ 17,859,625 ============= ============ Post-October losses represent losses realized on investment transactions from November 1, 2005 through February 28, 2006 that, in accordance with federal income tax regulations, each Fund has elected to defer and treat as having arisen in the following fiscal year. For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2005 will expire as follows: Year of Delaware Tax-Free Delaware Tax-Free Expiration Florida Insured Fund New York Fund - ---------- -------------------- ------------------ 2008 $ 690,257 $ -- 2009 -- 223,207 --------- --------- Total $ 690,257 $ 223,207 ========= ========= For the six months ended February 28, 2006, the Delaware Tax-Free Florida Insured Fund had capital losses of $36,173, which may increase the capital loss carryforwards and Delaware Tax-Free New York Fund had capital gains of $6,847, which may reduce the capital loss carryforwards. 18 - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS (CONTINUED) 5. Capital Shares Transactions in capital shares were as follows:
Delaware Tax-Free Delaware Tax-Free Florida Insured Fund New York Fund ------------------------ --------------------- Six Months Year Six Months Year Ended Ended Ended Ended 2/28/06 8/31/05 2/28/06 8/31/05 Shares sold: Class A 440,430 771,683 136,003 181,145 Class B 1,506 34,695 11,823 36,925 Class C 57,223 30,020 39,481 42,532 Shares issued from reorganization: Class A -- 948,019 -- -- Class B -- 238,033 -- -- Class C -- 199,779 -- -- Shares issued upon reinvestment of dividends and distributions: Class A 96,888 149,719 18,793 35,395 Class B 2,642 4,348 2,088 4,632 Class C 2,821 3,014 1,508 1,966 ---------- ---------- ---------- -------- 601,510 2,379,310 209,696 302,595 ---------- ---------- ---------- -------- Shares repurchased: Class A (590,637) (973,048) (81,929) (87,166) Class B (50,738) (233,220) (32,514) (31,706) Class C (23,936) (37,307) (2,740) (184,316) ---------- ---------- ---------- -------- (665,311) (1,243,575) (117,183) (303,188) ---------- ---------- ---------- -------- Net increase (decrease) (63,801) (1,135,735) 92,513 (593) ---------- ---------- ---------- --------
For the six months ended February 28, 2006 and the year ended August 31, 2005, 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 2/28/06 8/31/05 ------------------------------------------ -------------------------------------------- Class B Shares Class A Shares Value Class B Shares Class A Shares Value -------------- -------------- -------- -------------- -------------- ---------- Delaware Tax-Free Florida Insured Fund 22,302 22,322 $249,796 62,454 62,490 $ 703,111 Delaware Tax-Free New York Fund 15,906 15,860 166,696 8,994 8,977 95,273
6. Fund Reorganization Effective April 11, 2005, Delaware Tax-Free Florida Insured Fund (the "Fund") acquired all of the assets and assumed all of the liabilities of Delaware Tax-Free Florida Fund, an open-end investment company, pursuant to a Plan and Agreement of Reorganization (the "Reorganization"). The shareholders of Delaware Tax-Free Florida Fund received shares of the respective class of the Fund equal to the aggregate net asset value of their shares prior to the Reorganization based on the net asset value per share of the respective classes of the Fund. The Reorganization was treated as a non-taxable event and, accordingly, the Fund's basis in the securities acquired reflected the historical cost basis as of the date of transfer. The net assets, net unrealized appreciation and accumulated net realized loss of Delaware Tax-Free Florida Fund as of the close of business on April 8, 2005 were as follows: Accumulated Net Unrealized Net Realized Net Assets Appreciation Losses ----------- -------------- ------------ Delaware Tax-Free Florida Fund $15,521,298 $648,070 $(515,360)* * Includes prior capital loss carry forwards. The net assets of the Fund prior to the Reorganization were $92,098,392. The combined net assets of the Fund after the reorganization were $107,619,690. 7. Line of Credit Each Fund, along with certain other funds in the Delaware Investments(R) Family of Funds (the "Participants"), participates in a $225,000,000 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 28, 2006, or at any time during the six month period. 19 - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS (CONTINUED) 8. 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. 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 identified on the Statements of Net Assets. The Funds may invest in advanced refunded bonds, escrow secured bonds or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a "current refunding." "Advance refunded bonds" are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are "escrowed to maturity" when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates. Bonds are considered "pre-refunded" when the refunding issue's proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at that time, including any required premium. Bonds become "defeased" when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract and are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody's Investors Service, Inc., Standard & Poor's Ratings Group, and/or Fitch due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement. The Delaware Tax-Free Florida Insured Fund will purchase escrow secured bonds without additional insurance only where the escrow is invested in securities of the U.S. government or agencies or instrumentalities of the U.S. government. Each Fund may invest up to 15% of its total assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Fund's Board of Trustees has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of each Fund's limitation on investments in illiquid assets. At February 28, 2006, there were no Rule 144A securities and no securities have been determined to be illiquid under the Funds' Liquidity Procedures. 9. Contractual Obligations The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds' maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed each Fund's existing contracts and expects the risk of loss to be remote. 20 - -------------------------------------------------------------------------------- About - -------------------------------------------------------------------------------- THE ORGANIZATION This semiannual report is for the information of 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 Insured Fund and Delaware Tax-Free New York Fund and the Delaware Investments(R) Performance Update for the most recently completed calendar quarter. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the Fund. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Board of Trustees Jude T. Driscoll Chairman Delaware Investments(R) Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA Anthony D. Knerr Founder/Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA Ann R. Leven Former Treasurer/Chief Fiscal Officer National Gallery of Art Washington, DC Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ Affiliated Officers Michael P. Bishof Senior Vice President and Chief Financial Officer Delaware Investments(R) Family of Funds Philadelphia, PA David F. Connor Vice President, Deputy General Counsel and Secretary Delaware Investments(R) Family of Funds Philadelphia, PA David P. O'Connor Senior Vice President, General Counsel and Chief Legal Officer Delaware Investments(R) Family of Funds Philadelphia, PA John J. O'Connor Senior Vice President and Treasurer Delaware Investments(R) Family of Funds Philadelphia, PA Contact Information Investment Manager Delaware Management Company, a Series of Delaware Management Business Trust Philadelphia, PA National Distributor Delaware Distributors, L.P. Philadelphia, PA Shareholder Servicing, Dividend Disbursing and Transfer Agent Delaware Service Company, Inc. 2005 Market Street Philadelphia, PA 19103-7094 For Shareholders 800 523-1918 For Securities Dealers and Financial Institutions Representatives Only 800 362-7500 Web Site www.delawareinvestments.com Delaware Investments is the marketing name for Delaware Management Holdings, Inc. and its subsidiaries. - -------------------------------------------------------------------------------- Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. Each Fund's Forms N-Q, as well as a description of the policies and procedures that each 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 Web site at http://www.delawareinvestments.com; and (iii) on the Commission's Web site at http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how each Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund Web site at http://www.delawareinvestments.com; and (ii) on the Commission's Web site at http://www.sec.gov. - -------------------------------------------------------------------------------- 21 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [DELAWARE INVESTMENTS(R) LOGO] - -------------------------------------------------------------------------------- Contact Information Web Site www.delawareinvestments.com E-mail service@delinvest.com Shareholder Service Center 800 523-1918 Call the Shareholder Service Center Monday to Friday, 8:00 a.m. to 7:00 p.m. Eastern Time: o For fund information, literature, price, yield, and performance figures. o For information on existing regular investment accounts and retirement plan accounts including wire investments, wire redemptions, telephone redemptions, and telephone exchanges. Delaphone Service 800 362-FUND (800 362-3863) o For convenient access to account information or current performance information on all Delaware Investments(R) Funds seven days a week, 24 hours a day, use this Touch-Tone(R) service. - -------------------------------------------------------------------------------- (330) Printed in the USA SA-FLNY [2/06] CGI 4/06 SEMI-0603 FLNY PO10934 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [DELAWARE INVESTMENTS(R) LOGO] FIXED INCOME - -------------------------------------------------------------------------------- Semiannual Report FEBRUARY 28, 2006 - -------------------------------------------------------------------------------- DELAWARE TAX-FREE IDAHO FUND DELAWARE TAX-FREE MISSOURI INSURED FUND (Closed to new investors) DELAWARE TAX-FREE OREGON INSURED FUND (Closed to new investors) [POWERED BY RESEARCH(R) LOGO] Table OF CONTENTS - ------------------------------------------------------------ DISCLOSURE OF FUND EXPENSES 1 - ------------------------------------------------------------ SECTOR ALLOCATIONS 2 - ------------------------------------------------------------ FINANCIAL STATEMENTS: Statements of Net Assets 4 Statements of Operations 13 Statements of Changes in Net Assets 14 Financial Highlights 15 Notes to Financial Statements 24 - ------------------------------------------------------------ OTHER FUND INFORMATION 28 - ------------------------------------------------------------ ABOUT THE ORGANIZATION 29 - ------------------------------------------------------------ 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)2006 Delaware Distributors, L.P. - -------------------------------------------------------------------------------- Disclosure For the Period September 1, 2005 to February 28, 2006 - -------------------------------------------------------------------------------- OF FUND EXPENSES As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2005 to February 28, 2006. Actual Expenses The first section of the tables shown, "Actual Fund Return," provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second section of the tables shown, "Hypothetical 5% Return," provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Each Fund's actual expenses, shown in the tables, reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions. "Expenses Paid During Period" are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by the 181/365 (to reflect the one-half year period). Delaware Tax-Free Idaho Fund Expense Analysis of an Investment of $1,000
Expenses Beginning Ending Paid During Account Account Annualized Period Value Value Expense 9/1/05 to 9/1/05 2/28/06 Ratio 2/28/06 - ------------------------------------------------------------------------------------------------------- Actual Fund Return Class A $ 1,000.00 $ 1,007.40 0.85% $ 4.23 Class B 1,000.00 1,004.60 1.60% 7.95 Class C 1,000.00 1,003.70 1.60% 7.95 - ------------------------------------------------------------------------------------------------------- Hypothetical 5% Return (5% return before expenses) Class A $ 1,000.00 $ 1,020.58 0.85% $ 4.26 Class B 1,000.00 1,016.86 1.60% 8.00 Class C 1,000.00 1,016.86 1.60% 8.00 - -------------------------------------------------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund Expense Analysis of an Investment of $1,000
Expenses Beginning Ending Paid During Account Account Annualized Period Value Value Expense 9/1/05 to 9/1/05 2/28/06 Ratio 2/28/06 - ------------------------------------------------------------------------------------------------------- Actual Fund Return Class A $ 1,000.00 $ 1,008.80 0.90% $ 4.48 Class B 1,000.00 1,006.10 1.65% 8.21 Class C 1,000.00 1,006.00 1.65% 8.21 - ------------------------------------------------------------------------------------------------------- Hypothetical 5% Return (5% return before expenses) Class A $ 1,000.00 $ 1,020.33 0.90% $ 4.51 Class B 1,000.00 1,016.61 1.65% 8.25 Class C 1,000.00 1,016.61 1.65% 8.25 - -------------------------------------------------------------------------------------------------------
Delaware Tax-Free Oregon Insured Fund Expense Analysis of an Investment of $1,000
Expenses Beginning Ending Paid During Account Account Annualized Period Value Value Expense 9/1/05 to 9/1/05 2/28/06 Ratio 2/28/06 - ------------------------------------------------------------------------------------------------------- Actual Fund Return Class A $ 1,000.00 $ 1,007.00 0.85% $ 4.23 Class B 1,000.00 1,003.30 1.60% 7.95 Class C 1,000.00 1,003.30 1.60% 7.95 - ------------------------------------------------------------------------------------------------------- Hypothetical 5% Return (5% return before expenses) Class A $ 1,000.00 $ 1,020.58 0.85% $ 4.26 Class B 1,000.00 1,016.86 1.60% 8.00 Class C 1,000.00 1,016.86 1.60% 8.00 - -------------------------------------------------------------------------------------------------------
1 - -------------------------------------------------------------------------------- Sector Allocations As of February 28, 2006 - -------------------------------------------------------------------------------- Sector designations may be different than the sector designations presented in other Fund materials. Delaware Tax-Free Idaho Fund Percentage Sector of Net Assets - --------------------------------------------------------------- Municipal Bonds 98.75% - --------------------------------------------------------------- Corporate-Backed Revenue Bonds 7.20% Dedicated Tax & Fees Revenue Bonds 8.98% Electric & Gas Revenue Bonds 1.79% Escrowed to Maturity Bonds 2.15% Higher Education Revenue Bonds 14.13% Hospital Revenue Bonds 5.37% Multifamily Housing Revenue Bonds 1.10% Municipal Lease Revenue Bonds 8.91% Political Subdivision General Obligation Bonds 5.62% Pre-Refunded Bonds 7.95% School District General Obligation Bonds 15.16% Single Family Housing Revenue Bonds 5.79% State General Obligation Bonds 1.24% Tax Increment/Special Assessment Bonds 5.38% Territorial General Obligation Bonds 5.07% Water & Sewer Revenue Bonds 2.91% - --------------------------------------------------------------- Short-Term Investments 1.53% - --------------------------------------------------------------- Money Market Instruments 0.17% Variable Rate Demand Notes 1.36% - --------------------------------------------------------------- Total Market Value of Securities 100.28% - --------------------------------------------------------------- Liabilities Net of Receivables and Other Assets (0.28%) - --------------------------------------------------------------- Total Net Assets 100.00% - --------------------------------------------------------------- Delaware Tax-Free Missouri Insured Fund (Closed to new investors) Percentage Sector of Net Assets - --------------------------------------------------------------- Municipal Bonds 91.25% - --------------------------------------------------------------- Airport Revenue Bonds 3.45% City General Obligation Bonds 2.18% Corporate-Backed Revenue Bonds 2.03% Dedicated Tax & Fees Revenue Bonds 8.18% Electric & Gas Revenue Bonds 13.45% Escrowed to Maturity Bonds 3.05% Higher Education Revenue Bonds 3.06% Hospital Revenue Bonds 11.78% Multifamily Housing Revenue Bonds 5.95% Municipal Lease Revenue Bonds 14.10% Political Subdivision General Obligation Bonds 3.89% Pre-Refunded Bonds 6.27% School District General Obligation Bonds 4.00% Single Family Housing Revenue Bonds 1.46% Territorial General Obligation Bonds 2.52% Water & Sewer Revenue Bonds 5.88% - --------------------------------------------------------------- Short-Term Investments 7.83% - --------------------------------------------------------------- Money Market Instruments 0.99% Variable Rate Demand Notes 6.84% - --------------------------------------------------------------- Total Market Value of Securities 99.08% - --------------------------------------------------------------- Receivables and Other Assets Net of Liabilities 0.92% - --------------------------------------------------------------- Total Net Assets 100.00% - --------------------------------------------------------------- 2 - -------------------------------------------------------------------------------- Sector Allocations (CONTINUED) As of February 28, 2006 - -------------------------------------------------------------------------------- Sector designations may be different than the sector designations presented in other Fund materials. Delaware Tax-Free Oregon Insured Fund (Closed to new investors) Percentage Sector of Net Assets - --------------------------------------------------------------- Municipal Bonds 96.03% - --------------------------------------------------------------- Airport Revenue Bonds 3.33% Dedicated Tax & Fees Revenue Bonds 1.16% Electric & Gas Revenue Bonds 7.46% Escrowed to Maturity Bonds 2.35% Higher Education Revenue Bonds 15.27% Hospital Revenue Bonds 1.17% Investor Owned Utilities Revenue Bonds 1.34% Multifamily Housing Revenue Bonds 2.37% Municipal Lease Revenue Bonds 8.82% Political Subdivision General Obligation Bonds 5.12% Pre-Refunded Bonds 25.88% School District General Obligation Bonds 11.21% Single Family Housing Revenue Bonds 2.65% Tax Increment/Special Assessment Bonds 2.70% Territorial General Obligation Bonds 4.45% Water & Sewer Revenue Bonds 0.75% - --------------------------------------------------------------- Short-Term Investments 3.04% - --------------------------------------------------------------- Money Market Instruments 0.77% Variable Rate Demand Notes 2.27% - --------------------------------------------------------------- Total Market Value of Securities 99.07% - --------------------------------------------------------------- Receivables and Other Assets Net of Liabilities 0.93% - --------------------------------------------------------------- Total Net Assets 100.00% - --------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- Delaware Tax-Free Idaho Fund Statements February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- OF NET ASSETS Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds - 98.75% - -------------------------------------------------------------------------------- Corporate-Backed Revenue Bonds - 7.20% Meridian Economic Development Corporation Revenue Refunding Industrial Development (Hi-Micro Project) 5.85% 8/15/11 (AMT) $ 1,250,000 $ 1,258,975 Nez Perce County Pollution Control Revenue Refunding (Potlatch Corporation Project) 6.00% 10/1/24 2,535,000 2,592,317 Power County Pollution Control Revenue Refunding (FMC Corporation Project) 5.625% 10/1/14 2,475,000 2,514,179 ------------- 6,365,471 ------------- Dedicated Tax & Fees Revenue Bonds - 8.98% Idaho Bond Bank Authority Revenue Series A 5.00% 9/1/14 (AMBAC) 350,000 382,365 5.00% 9/1/15 (AMBAC) 400,000 435,464 5.00% 9/1/16 (AMBAC) 315,000 341,901 Puerto Rico Commonwealth Highway & Transportation Authority Revenue Series G 5.00% 7/1/33 2,000,000 2,055,520 Series W 5.50% 7/1/15 175,000 193,130 Series Y 5.00% 7/1/36 2,000,000 2,071,800 Virgin Islands Public Finance Authority 5.25% 10/1/20 500,000 538,825 5.25% 10/1/21 500,000 539,200 5.25% 10/1/24 800,000 857,944 5.50% 10/1/14 500,000 522,720 ------------- 7,938,869 ------------- Electric & Gas Revenue Bonds - 1.79% Puerto Rico Electric Power Authority Power Revenue Series II 5.25% 7/1/31 1,000,000 1,057,920 Series NN 5.125% 7/1/29 500,000 527,605 ------------- 1,585,525 ------------- Escrowed to Maturity Bonds - 2.15% Puerto Rico Commonwealth Infrastructure Financing Authority Special Series A 5.375% 10/1/24 1,750,000 1,897,123 ------------- 1,897,123 ------------- Higher Education Revenue Bonds - 14.13% Boise State University Idaho Revenue 5.00% 4/1/17 (AMBAC) 500,000 534,250 5.00% 4/1/18 (FGIC) 1,645,000 1,772,438 5.125% 4/1/31 (FGIC) 1,000,000 1,050,320 5.375% 4/1/22 (FGIC) 1,000,000 1,082,470 Idaho State University Revenue Refunding and Improvement 5.00% 4/1/20 (FSA) 1,130,000 1,203,800 5.00% 4/1/23 (FSA) 2,115,000 2,239,700 North Idaho College Dormitory Housing Certificate of Participation 6.45% 10/1/16 1,000,000 1,031,950 Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Higher Education Revenue Bonds (continued) University of Idaho University Revenue Refunding General Series A 5.00% 4/1/21 (AMBAC) $ 1,150,000 $ 1,240,988 University of Idaho University Revenue Student Fee (Housing Improvements Project) 5.25% 4/1/31 (FGIC) 2,195,000 2,332,122 ------------- 12,488,038 ------------- Hospital Revenue Bonds - 5.37% Idaho Health Facilities Authority Hospital Revenue (Idaho Elks Rehabilitation Hospital Project) 5.30% 7/15/18 625,000 641,300 5.45% 7/15/23 2,000,000 2,050,800 (Portneuf Medical Center Project) Series A 5.00% 9/1/35 (RADIAN) 2,000,000 2,049,560 ------------- 4,741,660 ------------- Multifamily Housing Revenue Bonds - 1.10% Idaho State Housing Agency Housing Revenue (Park Place Project) Series A 6.50% 12/1/36 (FHA) (AMT) 955,000 969,659 ------------- 969,659 ------------- Municipal Lease Revenue Bonds - 8.91% Blaine School District #61 Certificate of Participation 5.00% 7/30/10 (AMBAC) 1,000,000 1,057,660 Boise City Certificate of Participation 5.375% 9/1/20 (FGIC) (AMT) 2,100,000 2,208,738 Boise City Revenue Refunding Series A 5.375% 12/1/31 (MBIA) 500,000 537,730 Idaho State Building Authority Building Revenue Series A 5.00% 9/1/21 (MBIA) 1,150,000 1,188,008 5.00% 9/1/43 (XLCA) 1,000,000 1,039,640 Series B 5.00% 9/1/21 (MBIA) 750,000 793,320 Puerto Rico Public Buildings Authority Revenue (Government Facilities) Series J 5.00% 7/1/28 1,000,000 1,051,180 ------------- 7,876,276 ------------- Political Subdivision General Obligation Bonds - 5.62% Lemhi County 5.20% 8/1/27 (FSA) 2,145,000 2,287,664 Nampa Idaho 5.00% 8/1/21 (FGIC) 2,475,000 2,676,762 ------------- 4,964,426 ------------- - -/-Pre-Refunded Bonds - 7.95% Ammon Urban Renewal Agency Revenue Sub Lien Tax Increment Series B 6.25% 8/1/18-06 445,000 450,438 Idaho Health Facilities Authority Hospital Revenue (Bannock Regional Medical Center Project) 6.375% 5/1/17-06 1,445,000 1,480,822 (Bonner General Hospital Project) 6.50% 10/1/28-07 1,500,000 1,595,595 4 - -------------------------------------------------------------------------------- Delaware Tax-Free Idaho Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- - -/-Pre-Refunded Bonds (continued) Puerto Rico Commonwealth Highway & Transportation Authority Highway Revenue Series D 5.25% 7/1/38-12 $ 1,000,000 $ 1,090,100 Puerto Rico Commonwealth Public Improvement Series A 5.125% 7/1/31-11 1,010,000 1,088,012 University of Idaho University Revenue Student Fee (Telecommunications) 5.85% 4/1/11-06 (FSA) 1,300,000 1,315,938 ------------- 7,020,905 ------------- School District General Obligation Bonds - 15.16% Ada & Canyon Counties Joint School District #2 Meridian 4.75% 2/15/20 1,000,000 1,056,400 5.00% 7/30/20 2,155,000 2,295,399 5.125% 7/30/19 1,005,000 1,077,561 5.50% 7/30/16 1,305,000 1,492,959 Bannock County School District #025 (Pocatello Idaho School Board Guaranteed Program) 5.00% 8/15/15 1,040,000 1,134,307 5.00% 8/15/16 1,100,000 1,196,085 Canyon County School District #132 Caldwell 5.00% 7/30/15 (FGIC) 2,000,000 2,193,840 Kootenai County School District #273 Post Falls 5.00% 8/15/16 740,000 809,160 5.00% 8/15/18 840,000 914,264 Power & Cassia Counties Joint School District #381 American Falls 5.00% 8/1/17 1,155,000 1,226,113 ------------- 13,396,088 ------------- Single Family Housing Revenue Bonds - 5.79% Idaho Housing & Finance Association Single Family Mortgage Series A Class III 4.875%7/1/26 (AMT) 1,000,000 1,007,080 Series C Class III 5.35% 1/1/25 (AMT) 355,000 365,586 Series D Class III 5.45% 7/1/23 (AMT) 1,450,000 1,509,189 Series E Class I 5.35% 1/1/33 (AMT) 90,000 92,678 Series E Class III 4.875% 1/1/26 (AMT) 1,500,000 1,509,015 Idaho State Housing Agency Single Family Mortgage Series A 6.05% 7/1/13 (AMBAC) (FHA) (VA) (AMT) 60,000 60,377 Series A 6.10% 7/1/16 (FHA) (VA) (AMT) 80,000 80,517 Series A-1 6.85% 7/1/12 (AMT) 5,000 5,043 Series B 6.45% 7/1/15 (FHA) (VA) (AMT) 30,000 30,116 Series C-2 6.35% 7/1/15 (AMT) 45,000 45,500 Series E 6.35% 7/1/15 (FHA) (AMT) 75,000 76,443 Series E-1 6.60% 7/1/11 15,000 15,116 Series G-2 6.15% 7/1/15 (FHA) (VA) (AMT) 315,000 317,044 ------------- 5,113,704 ------------- Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- State General Obligation Bonds - 1.24% Puerto Rico Public Buildings Authority Revenue Government Facility Series I 5.50% 7/1/23 $ 1,000,000 $ 1,096,530 ------------- 1,096,530 ------------- Tax Increment/Special Assessment Bonds - 5.38% Boise Urban Renewal Agency Parking Revenue Refunding Tax Increment Series A 6.125% 9/1/15 2,090,000 2,149,482 Series B 6.125% 9/1/15 1,700,000 1,748,382 Bonner County Local Improvement District #93-1 6.35% 4/30/06 185,000 185,740 6.40% 4/30/07 195,000 195,774 6.50% 4/30/08 110,000 110,444 6.50% 4/30/10 100,000 100,383 Coeur D'Alene Local Improvement District #6 Series 1995 6.00% 7/1/09 85,000 85,550 Series 1996 6.05% 7/1/10 90,000 90,591 Series 1997 6.10% 7/1/12 40,000 40,251 Series 1998 6.10% 7/1/14 45,000 45,278 ------------- 4,751,875 ------------- Territorial General Obligation Bonds - 5.07% Puerto Rico Commonwealth Public Improvement Series A 5.00% 7/1/30 2,000,000 2,102,360 5.125% 7/1/31 2,315,000 2,381,765 ------------- 4,484,125 ------------- Water & Sewer Revenue Bonds - 2.91% Chubbuck Water Revenue Certificate of Participation 6.35% 4/1/08 125,000 125,256 6.40% 4/1/10 135,000 135,269 Moscow Sewer Revenue 5.00% 11/1/22 (FSA) 2,175,000 2,312,068 ------------- 2,572,593 ------------- Total Municipal Bonds (cost $84,462,736) 87,262,867 ============= Number of Shares - -------------------------------------------------------------------------------- Short-Term Investments - 1.53% - -------------------------------------------------------------------------------- Money Market Instruments - 0.17% Dreyfus Tax-Exempt Cash Management Fund 154,300 154,300 ------------- 154,300 ------------- Principal Amount o Variable Rate Demand Notes - 1.36% Boise City Housing Authority Multifamily Revenue (Civic Plaza Housing Project) Series C 3.28% 3/1/33 $ 1,200,000 1,200,000 ------------- 1,200,000 ------------- Total Short-Term Investments (cost $1,354,300) 1,354,300 ============= 5 - -------------------------------------------------------------------------------- Delaware Tax-Free Idaho Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Total Market Value of Securities - 100.28% (cost $85,817,036) $ 88,617,167 Liabilities Net of Receivables and Other Assets - (0.28%) (251,361) ------------- Net Assets Applicable to 7,691,141 Shares Outstanding - 100.00% $ 88,365,806 ============= Net Asset Value - Delaware Tax-Free Idaho Fund Class A ($63,819,771 / 5,553,313 Shares) $ 11.49 ------------- Net Asset Value - Delaware Tax-Free Idaho Fund Class B ($9,713,869 / 846,520 Shares) $ 11.48 ------------- Net Asset Value - Delaware Tax-Free Idaho Fund Class C ($14,832,166 / 1,291,308 Shares) $ 11.49 ------------- Components of Net Assets at February 28, 2006: Shares of beneficial interest (unlimited authorization - no par) $ 85,940,108 Distributions in excess of net investment income (11,301) Accumulated net realized loss on investments (363,132) Net unrealized appreciation of investments 2,800,131 ------------- Total net assets $ 88,365,806 ============= o Variable rate security. The interest rate shown is the rate as of February 28, 2006. - -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 7 in "Notes to Financial Statements." - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 Administration FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association RADIAN - Insured by Radian Asset Assurance VA - Insured by the Veterans Administration XLCA - Insured by XL Capital Assurance Net Asset Value and Offering Price per Share - Delaware Tax-Free Idaho Fund Net asset value Class A (A) $ 11.49 Sales charge (4.50% of offering price) (B) 0.54 ------------- Offering price $ 12.03 ============= (A) Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. (B) See current prospectus for purchases of $100,000 or more. See accompanying notes 6 - -------------------------------------------------------------------------------- Delaware Tax-Free Missouri Insured Fund Statements February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds - 91.25% - -------------------------------------------------------------------------------- Airport Revenue Bonds - 3.45% St. Louis Airport (Capital Improvement Project) Series A 5.375% 7/1/21 (MBIA) $ 1,635,000 $ 1,763,527 ------------- 1,763,527 ------------- City General Obligation Bonds - 2.18% Des Peres Refunding 5.375% 2/1/20 (AMBAC) 1,000,000 1,112,240 ------------- 1,112,240 ------------- Corporate-Backed Revenue Bonds - 2.03% Missouri State Development Finance Board Infrastructure Facilities (Triumph Foods Project) Series A 5.25% 3/1/25 500,000 520,750 Sugar Creek Industrial Development Revenue (Lafarge North America Project) Series A 5.65% 6/1/37 (AMT) 500,000 519,840 ------------- 1,040,590 ------------- Dedicated Tax & Fees Revenue Bonds - 8.18% Bi-State Development Agency Illinois Metropolitan District (Metrolink Cross County Project) Series B 5.00% 10/1/32 (FSA) 2,000,000 2,101,020 Jackson County Special Obligation 5.00% 12/1/27 (MBIA) 1,000,000 1,045,090 Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series A 4.75% 7/1/38 (MBIA) 1,000,000 1,039,290 ------------- 4,185,400 ------------- Electric & Gas Revenue Bonds - 13.45% 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 2,226,466 Puerto Rico Electric Power Authority Power Revenue Series NN 5.125% 7/1/29 400,000 422,084 Series PP 5.00% 7/1/25 (FGIC) 1,000,000 1,064,080 &Puerto Rico Electric Power Authority Power Revenue, Inverse Floater ROLs 5.635% 7/1/19 (FSA) 1,925,000 2,023,233 Sikeston Electric Revenue Refunding 6.00% 6/1/13 (MBIA) 1,000,000 1,143,120 ------------- 6,878,983 ------------- Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Escrowed to Maturity Bonds - 3.05% Cape Girardeau County Industrial Development Authority Health Care Facilities Revenue (Southeast Missouri Hospital) 5.25% 6/1/16 (MBIA) $ 440,000 $ 481,228 ^Greene County Single Family Mortgage Revenue Municipal Multiplier (Private Mortgage Insurance) 6.10% 3/1/16 1,225,000 812,481 Liberty Sewer System Revenue 6.00% 2/1/08 (MBIA) 260,000 267,665 ------------- 1,561,374 ------------- Higher Education Revenue Bonds - 3.06% Missouri State Health & Educational Facilities Authority Educational Facilities Revenue (University of Health Sciences) 5.00% 6/1/31 (MBIA) 1,000,000 1,035,660 University of the Virgin Islands Series A 5.375% 6/1/34 500,000 528,415 ------------- 1,564,075 ------------- Hospital Revenue Bonds - 11.78% Cape Girardeau County Industrial Development Authority Health Care Facilities Revenue Unrefunded Balance (Southeast Missouri Hospital) 5.25% 6/1/16 (MBIA) 560,000 606,620 (St. Francis Medical Center) Series A 5.50% 6/1/32 1,000,000 1,063,240 Hannibal Industrial Development Authority Health Facilities Revenue Refunding (Hannibal Regional Hospital) Series A 5.625% 3/1/12 (FSA) 1,000,000 1,021,660 5.75% 3/1/22 (FSA) 1,000,000 1,021,740 Joplin Industrial Development Authority Health Facilities Revenue (Freeman Health System Project) 5.375% 2/15/35 255,000 263,405 5.75% 2/15/35 405,000 436,027 Missouri State Health & Educational Facilities Authority Health Facilities Revenue Refunding (Lake Regional Health System Project) 5.70% 2/15/34 500,000 530,775 (SSM Health Care) Series AA 6.40% 6/1/10 (MBIA) 500,000 554,470 North Kansas City Hospital Revenue Series A 5.00% 11/15/28 (FSA) 500,000 525,590 ------------- 6,023,527 ------------- 7 - -------------------------------------------------------------------------------- Delaware Tax-Free Missouri Insured Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- Multifamily Housing Revenue Bonds - 5.95% Missouri State Housing Development Commission Multifamily Housing Hyder Series 3 5.60% 7/1/34 (FHA) (AMT) $ 1,435,000 $ 1,496,849 San Remo Series 5 5.45% 1/1/36 (FHA) (AMT) 500,000 517,120 St. Louis County Industrial Development Authority Housing Development Revenue Refunding (Southfield & Oak Forest Apartment-A) 5.20% 1/20/36 (GNMA) 1,000,000 1,030,220 ------------- 3,044,189 ------------- Municipal Lease Revenue Bonds - 14.10% Chesterfield Certificates of Participation 5.00% 12/1/24 (FGIC) 1,000,000 1,063,860 Missouri State Development Finance Board Infrastructure Facilities Revenue (Branson Landing Project) Series A 5.25% 12/1/19 435,000 455,493 5.50% 12/1/24 500,000 531,685 (Crackerneck Creek Project) Series C 5.00% 3/1/26 500,000 513,845 (Hartman Heritage Center Phase II) 5.00% 4/1/21 (AMBAC) 335,000 354,705 St. Charles County Public Water Supply District #2 Certificate of Participation (Missouri Project) Series A 5.25% 12/1/28 (MBIA) 1,000,000 1,066,420 Series B 5.10% 12/1/25 (MBIA) 500,000 521,110 St. Louis College District Leasehold Revenue 5.00% 3/1/23 (AMBAC) 1,000,000 1,064,500 ^St. Louis Industrial Development Authority Leasehold Revenue (Convention Center Hotel) 5.80% 7/15/20 (AMBAC) 3,035,000 1,641,449 ------------- 7,213,067 ------------- Political Subdivision General Obligation Bonds - 3.89% Jackson County Special Obligation 5.50% 12/1/17 (MBIA) 845,000 929,593 Taney County Reorganization School District R-V Hollister School District 5.00% 3/1/22 (FSA) 1,000,000 1,057,770 ------------- 1,987,363 ------------- - -/-Pre-Refunded Bonds - 6.27% Greene County Reorganization School District R8 (Direct Deposit Project) 5.10% 3/1/22-12 (FSA) 1,500,000 1,595,340 Liberty Sewer System Revenue 6.15% 2/1/15-09 (MBIA) 1,500,000 1,611,540 ------------- 3,206,880 ------------- Principal Market Amount Value - -------------------------------------------------------------------------------- Municipal Bonds (continued) - -------------------------------------------------------------------------------- School District General Obligation Bonds - 4.00% Camdenton Reorganized School District R-III Camden County Refunding & Improvement 5.25% 3/1/24 (FSA) $ 1,000,000 $ 1,094,960 ^St. Charles County Francis Howell School District (Capital Appreciation Direct Deposit Project) Series A 5.15% 3/1/17 (FGIC) 1,500,000 952,110 ------------- 2,047,070 ------------- Single Family Housing Revenue Bonds - 1.46% Missouri State Housing Development Commission Mortgage Revenue Series C 7.45% 9/1/27 (GNMA) (FNMA) (AMT) 135,000 137,277 Missouri State Housing Development Commission Mortgage Revenue Single Family Homeowner Loan A 7.20% 9/1/26 (GNMA) (FNMA) (AMT) 110,000 110,915 Loan B 7.55% 9/1/27 (GNMA) (FNMA) (AMT) 45,000 45,775 Loan C 7.25% 9/1/26 (GNMA) (FNAM) (AMT) 125,000 126,941 Missouri State Housing Development Commission Mortgage Revenue Single Family Mortgage Series A 5.20% 9/1/33 (GNMA) (FNMA) (AMT) 320,000 326,311 ------------- 747,219 ------------- Territorial General Obligation Bonds - 2.52% Puerto Rico Commonwealth Improvement 5.25% 7/1/27 (FSA) 705,000 752,559 Series A 5.25% 7/1/23 500,000 535,505 ------------- 1,288,064 ------------- Water & Sewer Revenue Bonds - 5.88% Metropolitan St. Louis Sewer District Wastewater Revenue 5.00% 5/1/34 (MBIA) 1,250,000 1,313,662 Missouri State Development Finance Board Infrastructure Facilities Revenue (Sewer System Improvement Project) Series C 5.00% 3/1/25 605,000 623,192 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 1,069,233 ------------- 3,006,087 ------------- Total Municipal Bonds (cost $44,143,885) 46,669,655 ============= 8 - -------------------------------------------------------------------------------- Delaware Tax-Free Missouri Insured Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Number Market of Shares Value - -------------------------------------------------------------------------------- Short-Term Investments - 7.83% - -------------------------------------------------------------------------------- Money Market Instruments - 0.99% Dreyfus Tax-Exempt Cash Management Fund 506,707 $ 506,707 ------------- 506,707 ------------- Principal Amount oVariable Rate Demand Notes - 6.84% Kansas City Municipal Assistance Revenue Leasehold Series A 3.17% 4/15/34 (AMBAC) $ 2,500,000 2,500,000 Missouri State Health & Educational Facilities Authority Revenue (St. Louis University) Series A 3.00% 10/1/35 (MBIA) 1,000,000 1,000,000 ------------- 3,500,000 ------------- Total Short-Term Investments (cost $4,006,707) 4,006,707 ============= Total Market Value of Securities - 99.08% (cost $48,150,592) 50,676,362 Receivables and Other Assets Net of Liabilities - 0.92% 471,578 ------------- Net Assets Applicable to 4,784,153 Shares Outstanding - 100.00% $ 51,147,940 ============= Net Asset Value - Delaware Tax-Free Missouri Insured Fund Class A ($47,511,795 / 4,444,138 Shares) $ 10.69 ------------- Net Asset Value - Delaware Tax-Free Missouri Insured Fund Class B ($2,339,521 / 218,914 Shares) $ 10.69 ------------- Net Asset Value - Delaware Tax-Free Missouri Insured Fund Class C ($1,296,624 / 121,101 Shares) $ 10.71 ------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Components of Net Assets at February 28, 2006: Shares of beneficial interest (unlimited authorization - no par) $ 48,571,559 Accumulated net realized gain on investments 50,611 Net unrealized appreciation of investments 2,525,770 ------------- Total net assets $ 51,147,940 ============= o Variable rate security. The interest rate shown is the rate as of February 28, 2006. ^ Zero coupon security. The interest rate shown is the yield at the time of purchase. - -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 7 in "Notes to Financial Statements." ** 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 28, 2006. See Note 7 in "Notes to Financial Statements." 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 Administration 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 Insured Fund Net asset value Class A (A) $ 10.69 Sales charge (4.50% of offering price) (B) 0.50 ------------- Offering price $ 11.19 ============= (A) Net asset value per share, as illustrated, is the 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 9 - -------------------------------------------------------------------------------- Delaware Tax-Free Oregon Insured Fund Statements February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - ------------------------------------------------------------------------------- Municipal Bonds - 96.03% - ------------------------------------------------------------------------------- Airport Revenue Bonds - 3.33% Portland Airport Revenue (Portland International Airport) Series 11 5.625% 7/1/26 (FGIC) (AMT) $ 1,500,000 $ 1,538,595 ------------- 1,538,595 ------------- Dedicated Tax & Fees Revenue Bonds - 1.16% Oregon State Department of Administrative Services Lottery Revenue Refunding Series A 5.00% 4/1/18 (FSA) 500,000 537,295 ------------- 537,295 ------------- Electric & Gas Revenue Bonds - 7.46% Emerald Peoples Utilities District Series A 5.25% 11/1/22 (FSA) 750,000 813,300 Puerto Rico Electric Power Authority Power Revenue Series NN 5.125% 7/1/29 1,000,000 1,055,210 **Puerto Rico Electric Power Authority Power Revenue Inverse Floater ROLs 5.635% 7/1/19 (FSA) 1,500,000 1,576,545 ------------- 3,445,055 ------------- Escrowed to Maturity Bonds - 2.35% Umatilla County Hospital Facility Authority Revenue (Catholic Health Initiatives) Series A 5.50% 3/1/32 1,000,000 1,083,570 ------------- 1,083,570 ------------- Higher Education Revenue Bonds - 15.27% Oregon Health & Science University Revenue (Capital Appreciation Insured) Series A 5.00% 7/1/32 (MBIA) 2,000,000 2,092,360 ^5.50% 7/1/21 (MBIA) 2,000,000 1,035,040 Oregon State Facilities Authority Revenue (College Housing Northwest Project) Series A 5.45% 10/1/32 1,000,000 1,031,460 (College Independent Student Housing Project) Series A 5.25% 7/1/30 (XLCA) 630,000 678,371 (Linfield College Project) Series A 5.00% 10/1/30 600,000 620,538 (Willamette University Project) Series A 5.00% 10/1/34 (FGIC) 1,000,000 1,053,840 5.125% 10/1/25 (FGIC) 500,000 538,970 ------------- 7,050,579 ------------- Hospital Revenue Bonds - 1.17% Multnomah County Hospital Facilities Authority Revenue (Providence Health System) 5.25% 10/1/22 500,000 539,015 ------------- 539,015 ------------- Investor Owned Utilities Revenue Bonds - 1.34% oPort Morrow Pollution Control Revenue (Portland General Electric Co.) Series A 5.20% 5/1/33 600,000 618,756 ------------- 618,756 ------------- Principal Market Amount Value - ------------------------------------------------------------------------------- Municipal Bonds (continued) - ------------------------------------------------------------------------------- Multifamily Housing Revenue Bonds - 2.37% Oregon Health, Housing, Educational & Cultural Facilities Authority (Pier Park Project) Series A 6.05% 4/1/18 (GNMA) (AMT) $ 1,095,000 $ 1,096,106 ------------- 1,096,106 ------------- Municipal Lease Revenue Bonds - 8.82% Oregon State Department of Administrative Services 5.00% 9/1/13 (FSA) 800,000 866,816 Oregon State Department of Administrative Services Certificates of Participation Refunding Series A 5.00% 5/1/30 (FSA) 500,000 526,855 Series B 5.00% 11/1/30 (FGIC) 500,000 528,040 Series C 5.25% 11/1/15 (MBIA) 1,000,000 1,081,090 oPuerto Rico Public Buildings Authority Revenue (Government Facilities) Series J 5.00% 7/1/36 (AMBAC) 1,000,000 1,070,210 ------------- 4,073,011 ------------- Political Subdivision General Obligation Bonds - 5.12% Deschutes County Refunding 5.00% 12/1/16 (FSA) 500,000 535,345 Southwestern Oregon Community College District 5.00% 6/1/28 (MBIA) 1,100,000 1,169,883 Treasure Valley Community College District 5.00% 6/1/35 (AMBAC) 620,000 656,952 ------------- 2,362,180 ------------- - -/-Pre-Refunded Bonds - 25.88% Chemeketa County Community College District 5.80% 6/1/12-06 (FGIC) 1,500,000 1,509,540 Deschutes County Administrative School District #1 Series A 5.125% 6/15/21-11 (FSA) 1,000,000 1,074,740 Deschutes County Hospital Facilities Authority Hospital Revenue (Cascade Health Services) 5.60% 1/1/32-12 1,250,000 1,374,025 Jackson County School District #6 Central Point 5.25% 6/15/20-10 (FGIC) 1,175,000 1,255,687 Linn County Community School District #9 Lebanon 5.60% 6/15/30-13 (FGIC) 2,000,000 2,244,621 North Unit Irrigation District 5.75% 6/1/16-06 (MBIA) 1,000,000 1,006,330 Oregon State Department of Administrative Services Certificates of Participation Refunding Series A 5.80% 5/1/24-07 (AMBAC) 1,000,000 1,037,470 Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue Series J 5.50% 7/1/22-14 400,000 447,748 Puerto Rico Commonwealth Public Improvement 5.125% 7/1/30-11 (FSA) 920,000 991,061 Salem Water & Sewer Revenue 5.625% 6/1/16-06 (MBIA) 1,000,000 1,005,910 ------------- 11,947,132 ------------- 10 - ------------------------------------------------------------------------------- Delaware Tax-Free Oregon Insured Fund Statements - ------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) Principal Market Amount Value - ------------------------------------------------------------------------------- Municipal Bonds (continued) - ------------------------------------------------------------------------------- School District General Obligation Bonds - 11.21% Benton & Linn Counties School District #509J (Corvallis) 5.00% 6/1/21(FSA) $ 1,000,000 $ 1,062,720 Clackamas County School District #12 (North Clackamas) 5.00% 6/15/16 (FSA) 1,000,000 1,097,040 #86 (Canby) 5.00% 6/15/25 (FSA) 500,000 533,470 Jefferson County School District #509J 5.00% 6/15/22 (FGIC) 500,000 530,160 Lane County School District #19 (Springfield) Refunding 6.00% 10/15/14 (FGIC) 500,000 579,590 Lincoln County School District 5.25% 6/15/12 (FGIC) 700,000 736,841 Salem-Keizer School District #24J Refunding 5.00% 6/15/19 (FSA) 500,000 535,525 ^Umatilla County School District #6 R Umatilla Refunding 5.50% 12/15/22 (AMBAC) 200,000 97,554 ------------- 5,172,900 ------------- Single Family Housing Revenue Bonds - 2.65% Oregon State Housing & Community Services Department Mortgage Revenue Single Family Mortgage Program Series R 5.375% 7/1/32 (AMT) 1,195,000 1,224,134 ------------- 1,224,134 ------------- Tax Increment/Special Assessment Bonds - 2.70% Portland River District Urban Renewal & Redevelopment Interstate Corridor Series A 5.00% 6/15/23 (AMBAC) 250,000 264,455 Portland Urban Renewal & Redevelopment Interstate Corridor Series A 5.25% 6/15/20 (FGIC) 890,000 981,065 ------------- 1,245,520 ------------- Territorial General Obligation Bonds - 4.45% Puerto Rico Commonwealth Public Improvement (Unrefunded Balance) 5.125% 7/1/30 (FSA) 965,000 1,024,328 Series A 5.125% 7/1/31 1,000,000 1,028,840 ------------- 2,053,168 ------------- Water & Sewer Revenue Bonds - 0.75% Portland Sewer Systems Revenue (Second Lien) Series A 5.00% 6/1/23 (FSA) 325,000 343,707 ------------- 343,707 ------------- Total Municipal Bonds (cost $41,909,470) 44,330,723 ------------- Number Market of Shares Value - ------------------------------------------------------------------------------- Short-Term Investments - 3.04% - ------------------------------------------------------------------------------- Money Market Instruments - 0.77% Dreyfus Tax-Exempt Cash Management Fund 355,933 $ 355,933 ------------- 355,933 ------------- Principal Amount oVariable Rate Demand Notes- 2.27% Portland Multi-Family Housing Revenue (South Park Block Project) 3.07% 12/1/11 $ 1,050,000 1,050,000 ------------- 1,050,000 ------------- Total Short-Term Investments (cost $1,405,933) 1,405,933 ============= Total Market Value of Securities - 99.07% (cost $43,315,403) 45,736,656 Receivables and Other Assets Net of Liabilities - 0.93% 427,518 ------------- Net Assets Applicable to 4,385,483 Shares Outstanding - 100.00% $ 46,164,174 ============= Net Asset Value - Delaware Tax-Free Oregon Insured Fund Class A ($33,888,621 / 3,220,566 Shares) $ 10.52 ------------- Net Asset Value - Delaware Tax-Free Oregon Insured Fund Class B ($6,213,347 / 590,164 Shares) $ 10.53 ------------- Net Asset Value - Delaware Tax-Free Oregon Insured Fund Class C ($6,062,206 / 574,753 Shares) $ 10.55 ------------- 11 - -------------------------------------------------------------------------------- Delaware Tax-Free Oregon Insured Fund Statements - -------------------------------------------------------------------------------- OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Components of Net Assets at February 28, 2006: Shares of beneficial interest (unlimited authorization - no par) $ 44,196,291 Accumulated net realized loss on investments (453,370) Net unrealized appreciation of investments 2,421,253 ------------- Total net assets $ 46,164,174 ============= o Variable rate security. The interest rate shown is the rate as of February 28, 2006. ^ Zero coupon security. The interest rate shown is the yield at the time of purchase. - -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S.Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 7 in "Notes to Financial Statements." ** 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 28, 2006. See Note 7 in "Notes to Financial Statements." 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 ROLs - Residual Options Long XLCA - Insured by XL Capital Assurance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Net Asset Value and Offering Price per Share - Delaware Tax-Free Oregon Insured Fund Net asset value Class A (A) $ 10.52 Sales charge (4.50% of offering price) (B) 0.50 ------------ Offering price $ 11.02 ============ (A) Net asset value per share, as illustrated, is the 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 12 - -------------------------------------------------------------------------------- Statements Six Months Ended February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- OF OPERATIONS
Delaware Delaware Delaware Tax-Free Idaho Tax-Free Missouri Tax-Free Oregon Fund Insured Fund Insured Fund Investment Income: Interest $ 2,084,367 $ 1,237,943 $ 1,094,373 -------------- ----------------- --------------- Expenses: Management fees 239,202 125,014 115,158 Distribution expenses -- Class A 77,506 57,473 41,828 Distribution expenses -- Class B 49,723 13,201 31,714 Distribution expenses -- Class C 74,808 6,857 31,280 Dividend disbursing and transfer agent fees and expenses 26,006 16,571 13,828 Accounting and administration expenses 17,396 10,001 9,212 Legal & professional fees 11,258 10,572 10,730 Reports and statements to shareholders 8,200 4,099 4,632 Custodian fees 3,257 1,539 1,804 Trustees' fees 2,500 1,428 1,318 Registration fees 2,450 2,000 779 Pricing fees 1,166 781 710 Insurance fees 1,601 566 556 Taxes (other than taxes on income) 452 134 99 Other 3,141 3,073 3,897 -------------- ----------------- --------------- 518,666 253,309 267,545 Less expenses absorbed or waived (55,530) (13,050) (24,428) Less expenses paid indirectly (202) (239) (63) -------------- ----------------- --------------- Total expenses 462,934 240,020 243,054 -------------- ----------------- --------------- Net Investment Income 1,621,433 997,923 851,319 -------------- ----------------- --------------- Net Realized and Unrealized Gain (Loss) on Investments: Net realized gain (loss) on investments (55,861) 52,364 (280,227) Net change in unrealized appreciation/depreciation of investments (1,024,607) (598,034) (296,643) -------------- ----------------- --------------- Net Realized and Unrealized Loss on Investments (1,080,468) (545,670) (576,870) -------------- ----------------- --------------- Net Increase in Net Assets Resulting from Operations $ 540,965 $ 452,253 $ 274,449 ============== ================= ===============
See accompanying notes 13 - -------------------------------------------------------------------------------- Statements - -------------------------------------------------------------------------------- OF CHANGES IN NET ASSETS
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund Six Months Six Months Six Months Ended Year Ended Year Ended Year 2/28/06 Ended 2/28/06 Ended 2/28/06 Ended (Unaudited) 8/31/05 (Unaudited) 8/31/05 (Unaudited) 8/31/05 Increase (Decrease) in Net Assets from Operations: Net investment income $ 1,621,433 $ 3,114,747 $ 997,923 $ 2,083,200 $ 851,319 $ 1,687,339 Net realized gain (loss) on investments (55,861) 416,497 52,364 130,115 (280,227) 106,456 Net change in unrealized appreciation/depreciation of investments (1,024,607) 566,203 (598,034) 380,933 (296,643) 366,029 ------------ ------------- ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations 540,965 4,097,447 452,253 2,594,248 274,449 2,159,824 ------------ ------------- ------------ ------------ ------------ ------------ Dividends and Distributions to Shareholders from: Net investment income: Class A (1,222,334) (2,268,543) (927,407) (1,901,135) (651,340) (1,250,887) Class B (158,977) (369,910) (43,451) (128,675) (99,587) (225,919) Class C (238,931) (476,579) (22,489) (45,752) (97,987) (206,598) ------------ ------------- ------------ ------------ ------------ ------------ (1,620,242) (3,115,032) (993,347) (2,075,562) (848,914) (1,683,404) ------------ ------------- ------------ ------------ ------------ ------------ Capital Share Transactions: Proceeds from shares sold: Class A 7,496,430 9,100,675 2,587,337 3,524,066 2,011,274 5,524,963 Class B 53,364 378,499 25,388 408 109,245 582,909 Class C 1,216,163 3,196,560 84,984 105,402 478,548 1,199,241 Net asset value of shares issued upon reinvestment of dividends and distributions: Class A 807,539 1,470,126 565,025 1,017,242 384,639 718,106 Class B 98,437 211,390 34,188 96,955 65,198 137,290 Class C 150,946 286,213 20,719 39,754 59,888 126,671 ------------ ------------- ------------ ------------ ------------ ------------ 9,822,879 14,643,463 3,317,641 4,783,827 3,108,792 8,289,180 ------------ ------------- ------------ ------------ ------------ ------------ Cost of shares repurchased: Class A (4,294,328) (6,264,069) (1,334,752) (4,575,966) (2,124,246) (3,366,599) Class B (1,211,632) (2,857,710) (781,340) (1,933,993) (768,006) (1,783,006) Class C (2,014,881) (3,018,204) (184,874) (25,210) (1,052,281) (1,080,203) ------------ ------------- ------------ ------------ ------------ ------------ (7,520,841) (12,139,983) (2,300,966) (6,535,169) (3,944,533) (6,229,808) ------------ ------------- ------------ ------------ ------------ ------------ Increase (decrease) in net assets derived from capital share transactions 2,302,038 2,503,480 1,016,675 (1,751,342) (835,741) 2,059,372 ------------ ------------- ------------ ------------ ------------ ------------ Net Increase (Decrease) in Net Assets 1,222,761 3,485,895 475,581 (1,232,656) (1,410,206) 2,535,792 Net Assets: Beginning of period 87,143,045 83,657,150 50,672,359 51,905,015 47,574,380 45,038,588 ------------ ------------- ------------ ------------ ------------ ------------ End of period(1) $ 88,365,806 $ 87,143,045 $ 51,147,940 $ 50,672,359 $ 46,164,174 $ 47,574,380 ============ ============= ============ ============ ============ ============ (1)Including distributions in excess of net investment income $ (11,301) $ (11,301) $ -- $ -- $ -- $ -- ============ ============= ============ ============ ============ ============
See accompanying notes 14 Financial HIGHLIGHTS Selected data for each share of the Fund outstanding throughout each period were as follows:
- ----------------------------------------------------------------------------------------------------------------------------------- Delaware Tax-Free Idaho Fund Class A - ----------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 11.630 $ 11.490 $ 11.140 $ 11.320 $ 11.260 $ 10.730 Income (loss) from investment operations: Net investment income 0.224 0.452 0.478 0.497 0.522 0.541 Net realized and unrealized gain (loss) on investments (0.140) 0.140 0.353 (0.181) 0.059 0.530 --------- -------- -------- -------- --------- -------- Total from investment operations 0.084 0.592 0.831 0.316 0.581 1.071 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.224) (0.452) (0.481) (0.496) (0.521) (0.541) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.224) (0.452) (0.481) (0.496) (0.521) (0.541) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 11.490 $ 11.630 $ 11.490 $ 11.140 $ 11.320 $ 11.260 ========= ======== ======== ======== ========= ======== Total return(3) 0.74% 5.25% 7.58% 2.81% 5.36% 10.24% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 63,820 $ 60,554 $ 55,572 $ 51,682 $ 45,108 $ 38,228 Ratio of expenses to average net assets 0.85% 0.87% 0.97% 0.93% 1.00% 1.00% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.98% 0.98% 0.97% 1.00% 1.03% 1.03% Ratio of net investment income to average net assets 3.94% 3.92% 4.21% 4.36% 4.69% 4.94% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.81% 3.81% 4.21% 4.29% 4.66% 4.91% Portfolio turnover 9% 27% 13% 18% 11% 14%
(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 15 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
- ----------------------------------------------------------------------------------------------------------------------------------- Delaware Tax-Free Idaho Fund Class B - ----------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 11.610 $ 11.480 $ 11.130 $ 11.310 $ 11.250 $ 10.720 Income (loss) from investment operations: Net investment income 0.181 0.366 0.393 0.412 0.439 0.460 Net realized and unrealized gain (loss) on investments (0.130) 0.130 0.353 (0.181) 0.059 0.530 --------- -------- -------- -------- --------- -------- Total from investment operations 0.051 0.496 0.746 0.231 0.498 0.990 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.181) (0.366) (0.396) (0.411) (0.438) (0.460) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.181) (0.366) (0.396) (0.411) (0.438) (0.460) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 11.480 $ 11.610 $ 11.480 $ 11.130 $ 11.310 $ 11.250 ========= ======== ======== ======== ========= ======== Total return(3) 0.46% 4.39% 6.79% 2.05% 4.58% 9.43% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 9,714 $ 10,911 $ 13,044 $ 16,801 $ 14,809 $ 12,366 Ratio of expenses to average net assets 1.60% 1.62% 1.72% 1.68% 1.75% 1.75% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.73% 1.73% 1.72% 1.75% 1.78% 1.78% Ratio of net investment income to average net assets 3.19% 3.17% 3.46% 3.61% 3.94% 4.19% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.06% 3.06% 3.46% 3.54% 3.91% 4.16% Portfolio turnover 9% 27% 13% 18% 11% 14%
(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 16 Financial HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
- ----------------------------------------------------------------------------------------------------------------------------------- Delaware Tax-Free Idaho Fund Class C - ----------------------------------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 11.630 $ 11.490 $ 11.130 $ 11.310 $ 11.250 $ 10.720 Income (loss) from investment operations: Net investment income 0.181 0.366 0.393 0.413 0.439 0.460 Net realized and unrealized gain (loss) on investments (0.140) 0.140 0.362 (0.181) 0.059 0.530 --------- -------- -------- -------- --------- -------- Total from investment operations 0.041 0.506 0.755 0.232 0.498 0.990 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.181) (0.366) (0.395) (0.412) (0.438) (0.460) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.181) (0.366) (0.395) (0.412) (0.438) (0.460) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 11.490 $ 11.630 $ 11.490 $ 11.130 $ 11.310 $ 11.250 ========= ======== ======== ======== ========= ======== Total return(3) 0.37% 4.47% 6.87% 2.05% 4.57% 9.43% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 14,832 $ 15,678 $ 15,041 $ 16,296 $ 9,829 $ 4,931 Ratio of expenses to average net assets 1.60% 1.62% 1.72% 1.68% 1.75% 1.75% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.73% 1.73% 1.72% 1.75% 1.78% 1.78% Ratio of net investment income to average net assets 3.19% 3.17% 3.46% 3.61% 3.94% 4.19% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.06% 3.06% 3.46% 3.54% 3.91% 4.16% Portfolio turnover 9% 27% 13% 18% 11% 14%
(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 17 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.810 $ 10.700 $ 10.640 $ 10.810 $ 10.740 $ 10.340 Income (loss) from investment operations: Net investment income 0.214 0.442 0.464 0.469 0.489 0.497 Net realized and unrealized gain (loss) on investments (0.121) 0.110 0.065 (0.172) 0.068 0.400 --------- -------- -------- -------- --------- -------- Total from investment operations 0.093 0.552 0.529 0.297 0.557 0.897 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.213) (0.442) (0.469) (0.467) (0.487) (0.497) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.213) (0.442) (0.469) (0.467) (0.487) (0.497) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.690 $ 10.810 $ 10.700 $ 10.640 $ 10.810 $ 10.740 ========= ======== ======== ======== ========= ======== Total return(3) 0.88% 5.27% 5.06% 2.75% 5.38% 8.89% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 47,512 $ 46,182 $ 45,745 $ 44,026 $ 42,610 $ 40,349 Ratio of expenses to average net assets 0.90% 0.93% 0.94% 0.98% 0.97% 0.95% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.95% 0.95% 0.94% 0.98% 0.97% 0.95% Ratio of net investment income to average net assets 4.05% 4.14% 4.33% 4.31% 4.61% 4.74% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.00% 4.12% 4.33% 4.31% 4.61% 4.74% Portfolio turnover 11% 21% 20% 31% 23% 14%
(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 18 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.800 $ 10.690 $ 10.640 $ 10.810 $ 10.730 $ 10.340 Income (loss) from investment operations: Net investment income 0.175 0.363 0.385 0.387 0.410 0.418 Net realized and unrealized gain (loss) on investments (0.111) 0.110 0.054 (0.172) 0.078 0.390 --------- -------- -------- -------- --------- -------- Total from investment operations 0.064 0.473 0.439 0.215 0.488 0.808 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.174) (0.363) (0.389) (0.385) (0.408) (0.418) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.174) (0.363) (0.389) (0.385) (0.408) (0.418) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.690 $ 10.800 $ 10.690 $ 10.640 $ 10.810 $ 10.730 ========= ======== ======== ======== ========= ======== Total return(3) 0.61% 4.50% 4.19% 1.99% 4.70% 7.98% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 2,339 $ 3,099 $ 4,903 $ 7,406 $ 9,264 $ 9,693 Ratio of expenses to average net assets 1.65% 1.68% 1.69% 1.73% 1.72% 1.70% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.70% 1.70% 1.69% 1.73% 1.72% 1.70% Ratio of net investment income to average net assets 3.30% 3.39% 3.58% 3.56% 3.86% 3.99% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.25% 3.37% 3.58% 3.56% 3.86% 3.99% Portfolio turnover 11% 21% 20% 31% 23% 14%
(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 19 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.820 $ 10.710 $ 10.660 $ 10.820 $ 10.740 $ 10.350 Income (loss) from investment operations: Net investment income 0.174 0.361 0.384 0.387 0.410 0.418 Net realized and unrealized gain (loss) on investments (0.111) 0.110 0.054 (0.162) 0.078 0.390 --------- -------- -------- -------- --------- -------- Total from investment operations 0.063 0.471 0.438 0.225 0.488 0.808 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.173) (0.361) (0.388) (0.385) (0.408) (0.418) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.173) (0.361) (0.388) (0.385) (0.408) (0.418) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.710 $ 10.820 $ 10.710 $ 10.660 $ 10.820 $ 10.740 ========= ======== ======== ======== ========= ======== Total return(3) 0.60% 4.48% 4.17% 2.08% 4.68% 7.97% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 1,297 $ 1,391 $ 1,257 $ 1,257 $ 1,241 $ 626 Ratio of expenses to average net assets 1.65% 1.68% 1.69% 1.73% 1.72% 1.70% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.70% 1.70% 1.69% 1.73% 1.72% 1.70% Ratio of net investment income to average net assets 3.30% 3.39% 3.58% 3.56% 3.86% 3.99% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.25% 3.37% 3.58% 3.56% 3.86% 3.99% Portfolio turnover 11% 21% 20% 31% 23% 14%
(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 20 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.650 $ 10.540 $ 10.380 $ 10.530 $ 10.450 $ 9.910 Income (loss) from investment operations: Net investment income 0.204 0.417 0.453 0.461 0.467 0.465 Net realized and unrealized gain (loss) on investments (0.131) 0.110 0.163 (0.151) 0.079 0.540 --------- -------- -------- -------- --------- -------- Total from investment operations 0.073 0.527 0.616 0.310 0.546 1.005 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.203) (0.417) (0.456) (0.460) (0.466) (0.465) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.203) (0.417) (0.456) (0.460) (0.466) (0.465) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.520 $ 10.650 $ 10.540 $ 10.380 $ 10.530 $ 10.450 ========= ======== ======== ======== ========= ======== Total return(3) 0.70% 5.09% 6.04% 2.97% 5.41% 10.39% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 33,889 $ 34,029 $ 30,817 $ 29,410 $ 25,082 $ 22,973 Ratio of expenses to average net assets 0.85% 0.87% 0.85% 0.84% 0.85% 0.85% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 0.96% 0.96% 0.90% 0.96% 1.00% 0.99% Ratio of net investment income to average net assets 3.89% 3.94% 4.30% 4.35% 4.52% 4.59% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.78% 3.85% 4.25% 4.23% 4.37% 4.45% Portfolio turnover 7% 14% 16% 16% 20% 28%
(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. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 21 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.660 $ 10.550 $ 10.390 $ 10.540 $ 10.450 $ 9.910 Income (loss) from investment operations: Net investment income 0.165 0.338 0.374 0.382 0.390 0.389 Net realized and unrealized gain (loss) on investments (0.131) 0.110 0.163 (0.151) 0.089 0.540 --------- -------- -------- -------- --------- -------- Total from investment operations 0.034 0.448 0.537 0.231 0.479 0.929 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.164) (0.338) (0.377) (0.381) (0.389) (0.389) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.164) (0.338) (0.377) (0.381) (0.389) (0.389) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.530 $ 10.660 $ 10.550 $ 10.390 $ 10.540 $ 10.450 ========= ======== ======== ======== ========= ======== Total return(3) 0.33% 4.31% 5.24% 2.20% 4.73% 9.57% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 6,213 $ 6,889 $ 7,878 $ 8,750 $ 8,489 $ 7,928 Ratio of expenses to average net assets 1.60% 1.62% 1.60% 1.59% 1.60% 1.60% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.71% 1.71% 1.65% 1.71% 1.75% 1.74% Ratio of net investment income to average net assets 3.14% 3.19% 3.55% 3.60% 3.77% 3.84% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.03% 3.10% 3.50% 3.48% 3.62% 3.70% Portfolio turnover 7% 14% 16% 16% 20% 28%
(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. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 22 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 2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01 (Unaudited) Net asset value, beginning of period $ 10.680 $ 10.570 $ 10.400 $ 10.550 $ 10.470 $ 9.920 Income (loss) from investment operations: Net investment income 0.165 0.337 0.374 0.381 0.389 0.388 Net realized and unrealized gain (loss) on investments (0.131) 0.110 0.173 (0.151) 0.079 0.550 --------- -------- -------- -------- --------- -------- Total from investment operations 0.034 0.447 0.547 0.230 0.468 0.938 --------- -------- -------- -------- --------- -------- Less dividends and distributions from: Net investment income (0.164) (0.337) (0.377) (0.380) (0.388) (0.388) --------- -------- -------- -------- --------- -------- Total dividends and distributions (0.164) (0.337) (0.377) (0.380) (0.388) (0.388) --------- -------- -------- -------- --------- -------- Net asset value, end of period $ 10.550 $ 10.680 $ 10.570 $ 10.400 $ 10.550 $ 10.470 ========= ======== ======== ======== ========= ======== Total return(3) 0.33% 4.30% 5.33% 2.19% 4.62% 9.66% Ratios and supplemental data: Net assets, end of period (000 omitted) $ 6,062 $ 6,656 $ 6,344 $ 5,395 $ 3,253 $ 1,820 Ratio of expenses to average net assets 1.60% 1.62% 1.60% 1.59% 1.60% 1.60% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly 1.71% 1.71% 1.65% 1.71% 1.75% 1.74% Ratio of net investment income to average net assets 3.14% 3.19% 3.55% 3.60% 3.77% 3.84% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 3.03% 3.10% 3.50% 3.48% 3.62% 3.70% Portfolio turnover 7% 14% 16% 16% 20% 28%
(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. Performance would have been lower had the expense limitation not been in effect. See accompanying notes 23 - -------------------------------------------------------------------------------- Notes February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond 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 Delaware statutory trust and offers three series: 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 (each referred to as a "Fund" or collectively as the "Funds"). The Trusts are open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended, and 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 U.S. generally accepted accounting principles 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. Open-end investment companies are valued at their published net asset 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. In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures, aftermarket trading or significant events after local market trading (e.g., government actions or pronouncements, trading volume or volatility on markets, exchanges among dealers, or news events). 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 U.S. generally accepted accounting principles 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(R) Family of Funds are allocated amongst the funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums 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. The Funds 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 custodian fees on the Statements of Operations with the corresponding expenses offset shown as "expenses paid indirectly." 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 Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- On the first $500 million 0.550% 0.500% 0.500% On the next $500 million 0.500% 0.475% 0.475% On the next $1.5 billion 0.450% 0.450% 0.450% In excess of $2.5 billion 0.425% 0.425% 0.425%
24 - -------------------------------------------------------------------------------- Notes February 28, 2006 (Unaudited) - -------------------------------------------------------------------------------- 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, as shown below.
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- The operating expense limitation as a percentage of average daily net assets (per annum) 0.60% 0.65% 0.60% Expiration date 12/31/06 12/31/06 12/31/06
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting, administration, dividend disbursing, and transfer agent services. Each Fund pays DSC a monthly fee computed at the annual rate of 0.04% of the Funds' average daily net assets 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 28, 2006, each Fund had liabilities payable to affiliates as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- Investment management fees payable to DMC $26,710 $17,284 $13,554 Dividend disbursing, transfer agent, accounting and administration fees and other expenses payable to DSC 15,476 10,485 9,245 Distribution fee payable to DDLP 29,968 10,159 15,588 Other expenses payable to DMC and affiliates* 3,827 5,068 4,435
* DMC, as a part of its administrative services, pays operating expenses on behalf of each Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees' fees. As provided in the investment management agreement, the Funds bear the cost of certain legal services expenses, including internal legal services provided to the Funds by DMC employees. For the six months ended February 28, 2006, Delaware Tax-Free Idaho Fund, Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured Fund were charged $995, $2,509, and $2,913, respectively, for internal legal services provided by DMC. For the six months ended February 28, 2006, DDLP earned commissions on sales of Class A shares for each Fund as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- $9,830 $2,983 $5,768
For the six months ended February 28, 2006, DDLP received gross contingent deferred sales charge commissions on redemption of each Fund's Class A, Class B and Class C shares. These commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- Class A $ -- $ -- $ 480 Class B 3,841 60 1,306 Class C 1,294 -- 308
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. 25 - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS (CONTINUED) 3. Investments For the six months ended February 28, 2006, the Funds made purchases and sales of investment securities other than short-term investments as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- Purchases $9,878,803 $2,721,510 $1,973,808 Sales 4,012,320 4,575,000 1,471,960
At February 28, 2006, 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 28, 2006, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- Cost of investments $85,806,229 $48,117,917 $43,564,587 =========== =========== =========== Aggregate unrealized appreciation 2,878,535 2,575,662 2,218,944 Aggregate unrealized depreciation (67,597) (17,217) (46,875) ----------- ----------- ----------- Net unrealized appreciation $ 2,810,938 $ 2,558,445 $ 2,172,069 =========== =========== ===========
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 U.S. generally accepted accounting principles. Additionally, net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2006 and the year ended August 31, 2005 was as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ---------------------- ---------------------- ---------------------- Six Months Year Six Months Year Six Months Year Ended Ended Ended Ended Ended Ended 2/28/06* 8/31/05 2/28/06* 8/31/05 2/28/06* 8/31/05 Tax-exempt income $1,620,242 $3,115,032 $993,347 $2,075,562 $848,914 $1,683,404
* Tax information for the six months ended February 28, 2006 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 28, 2006, the estimated components of net assets on a tax basis were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- Shares of beneficial interest $ 85,940,108 $ 48,571,559 $ 44,196,291 Distributions in excess of net investment income (11,301) -- -- Six-month period gain (loss) (23,435) 50,409 (14,655) Post-October loss (32,078) -- -- Capital loss carryforwards (318,426) (32,473) (189,531) Net unrealized appreciation of investments 2,810,938 2,558,445 2,172,069 ------------ ------------ ------------ Net assets $ 88,365,806 $ 51,147,940 $ 46,164,174 ============ ============ ============
Post-October losses represent losses realized on investment transactions from November 1, 2005 through February 28, 2006 that, in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year. For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2006, the Funds recorded an estimate of the differences since the final tax characteristics cannot be determined until fiscal year end.
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- Undistributed (distribution in excess of) net investment income $ (1,191) $(4,576) $(2,405) Accumulated net realized gain (loss) 1,191 4,576 2,405
26 - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS (CONTINUED) 4. Dividend and Distribution Information (continued) For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforward amounts remaining at August 31, 2005 will expire as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- Year of expiration 2008 $ -- $ 32,473 $ -- 2009 151,477 -- 110,608 2010 166,949 -- 78,923 --------- -------- --------- Total $ 318,426 $ 32,473 $ 189,531 ========= ======== =========
For the six months ended February 28, 2006, each Fund had net capital gains (losses) which may be reduced (increased) by the capital loss carryforwards as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------- --------------------- ------------------- $(23,435) $50,409 $(14,655)
5. Capital Shares Transactions in capital shares were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free Idaho Fund Missouri Insured Fund Oregon Insured Fund ----------------------- --------------------- --------------------- Six Months Year Six Months Year Six Months Year Ended Ended Ended Ended Ended Ended 2/28/06 8/31/05 2/28/06 8/31/05 2/28/06 8/31/05 Shares sold: Class A 651,810 787,185 243,229 329,028 191,438 521,536 Class B 4,707 32,777 2,353 62 10,426 54,948 Class C 106,118 276,422 7,946 9,871 45,587 112,925 Shares issued upon reinvestment of dividends and distributions: Class A 70,428 127,188 52,993 94,843 36,605 67,787 Class B 8,597 18,318 3,208 9,044 6,201 12,953 Class C 13,172 24,780 1,941 3,701 5,686 11,930 ---------- ---------- ---------- -------- ---------- -------- 854,832 1,266,670 311,670 446,549 295,943 782,079 ---------- ---------- ---------- -------- ---------- -------- Shares repurchased: Class A (375,231) (542,673) (125,609) (426,911) (201,974) (317,964) Class B (106,143) (247,933) (73,476) (180,772) (72,892) (168,301) Class C (176,546) (261,721) (17,359) (2,347) (99,910) (101,836) ---------- ---------- ---------- -------- ---------- -------- (657,920) (1,052,327) (216,444) (610,030) (374,776) (588,101) ----------------------- --------------------- --------------------- Net increase (decrease) 196,912 214,343 95,226 (163,481) (78,833) 193,978 ---------- ---------- ---------- -------- ---------- --------
For the six months ended February 28, 2006 and the year ended August 31, 2005, the following shares 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 2/28/06 8/31/05 ---------------------------- ----------------------------- Class B Class A Class B Class A shares shares Value shares shares Value ------- ------- --------- ------- ------- ----------- Delaware Tax-Free Idaho Fund 20,827 20,809 $ 239,921 43,515 43,479 $ 501,442 Delaware Tax-Free Missouri Insured Fund 67,273 67,273 715,530 139,117 139,010 1,489,016 Delaware Tax-Free Oregon Insured Fund 40,916 40,916 431,899 70,235 70,293 742,841
27 - -------------------------------------------------------------------------------- Notes - -------------------------------------------------------------------------------- TO FINANCIAL STATEMENTS (CONTINUED) 6. Line of Credit Each Fund, along with certain other funds in the Delaware Investments(R) Family of Funds (the "Participants"), participates in a $225,000,000 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 Fund had no amounts outstanding as of February 28, 2006, or at any time during the fiscal six-month 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. 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. The Funds may invest in advanced refunded bonds, escrow secured bonds or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days of the issuance of the refunding issue is known as a "current refunding." "Advance refunded bonds" are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are "escrowed to maturity" when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates. Bonds are considered "pre-refunded" when the refunding issue's proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become "defeased" when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract and are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody's Investor Service, Inc., Standard & Poor's Ratings Group, and/or Fitch due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement. The Tax-Free Insured Funds will purchase escrow secured bonds without additional insurance only where the escrow is invested in securities of the U.S. government or agencies or instrumentalities of the U.S. government. Each Fund may invest up to 15% of its total assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Funds' Board of Trustees has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Funds' limitation on investments in illiquid assets. At February 28, 2006, there were no Rule 144A securities and no securities have been determined to be illiquid under the Funds' Liquidity Procedures. 8. Contractual Obligations The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds' maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds' existing contracts and expects the risk of loss to be remote. - -------------------------------------------------------------------------------- Other - -------------------------------------------------------------------------------- FUND INFORMATION * Effective as of the close of business on March 1, 2006, the Delaware Tax-Free Missouri Insured Fund and the Delaware Tax-Free Oregon Insured Fund will be closed to new investors. Shareholders of the Reorganizing Funds will receive a proxy statement/prospectus providing them with information about the Delaware Tax-Free USA Fund and requesting their votes on the proposed reorganization of their Fund at a special meeting of shareholders to be held in late June 2006. If approved, the reorganization would be expected to take place in late August 2006. Additionally, the Delaware Tax-Free Missouri Insured Fund and the Delaware Tax-Free Oregon Insured Fund would continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until the last business day before the reorganization. 28 - -------------------------------------------------------------------------------- About - -------------------------------------------------------------------------------- THE ORGANIZATION 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(R) Performance Update for the most recently completed calendar quarter. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the Funds. You should read the prospectus carefully before you invest. The figures in this report represent past results that 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 Jude T. Driscoll Chairman Delaware Investments(R) Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA Anthony D. Knerr Founder/Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA Ann R. Leven Former Treasurer/Chief Fiscal Officer National Gallery of Art Washington, DC Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ Affiliated Officers Michael P. Bishof Senior Vice President and Chief Financial Officer Delaware Investments(R) Family of Funds Philadelphia, PA David F. Connor Vice President, Deputy General Counsel and Secretary Delaware Investments(R) Family of Funds Philadelphia, PA David P. O'Connor Senior Vice President, General Counsel and Chief Legal Officer Delaware Investments(R) Family of Funds Philadelphia, PA John J. O'Connor Senior Vice President and Treasurer Delaware Investments(R) Family of Funds Philadelphia, PA Contact Information Investment Manager Delaware Management Company, a Series of Delaware Management Business Trust Philadelphia, PA National Distributor Delaware Distributors, L.P. Philadelphia, PA Shareholder Servicing, Dividend Disbursing and Transfer Agent Delaware Service Company, Inc. 2005 Market Street Philadelphia, PA 19103-7094 For Shareholders 800 523-1918 For Securities Dealers and Financial Institutions Representatives Only 800 362-7500 Web Site www.delawareinvestments.com Delaware Investments is the marketing name for Delaware Management Holdings, Inc. and its subsidiaries. - -------------------------------------------------------------------------------- Each Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. Each Fund's Forms N-Q, as well as a description of the policies and procedures that each 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 each Fund's Web site at http://www.delawareinvestments.com; and (iii) on the Commission's Web site at http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through each Fund's Web site at http://www.delawareinvestments.com; and (ii) on the Commission's Web site at http://www.sec.gov. - -------------------------------------------------------------------------------- 29 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [DELAWARE INVESTMENTS(R) LOGO] - -------------------------------------------------------------------------------- Contact Information Web Site www.delawareinvestments.com E-mail service@delinvest.com Shareholder Service Center 800 523-1918 Call the Shareholder Service Center Monday to Friday, 8:00 a.m. to 7:00 p.m. Eastern Time: - - For fund information, literature, price, yield, and performance figures. - - For information on existing regular investment accounts and retirement plan accounts including wire investments, wire redemptions, telephone redemptions, and telephone exchanges. Delaphone Service 800 362-FUND (800 362-3863) - - For convenient access to account information or current performance information on all Delaware Investments(R) Funds seven days a week, 24 hours a day, use this Touch-Tone(R) service. (329) Printed in the USA SA-CORN [2/06] CGI 4/06 SEMI-0603 CORN PO10911 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. Schedule of Investments Included as part of report to shareholders filed under Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers Not applicable. Item 10. Submission of Matters to a Vote of Security Holders Not applicable. Item 11. 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 second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant's second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. 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. DELAWARE INVESTMENTS MUNICIPAL TRUST Jude T. Driscoll - ------------------------------------ By: Jude T. Driscoll Title: Chief Executive Officer Date: May 8, 2006 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: Chief Executive Officer Date: May 8, 2006 Michael P. Bishof - ------------------------------------ By: Michael P. Bishof Title: Chief Financial Officer Date: May 8, 2006 EX-99.CERT 2 d19276ex99cert.txt EXHIBIT 99.CERT CERTIFICATION I, Jude T. Driscoll certify that: 1. I have reviewed this report on Form N-CSR of Delaware Investments Municipal 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this 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: May 8, 2006 Jude T. Driscoll - ------------------------------------ By: Jude T. Driscoll Title: Chief Executive Officer EXHIBIT 99.CERT CERTIFICATION I, Michael P. Bishof, certify that: 1. I have reviewed this report on Form N-CSR of Delaware Investments Municipal 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this 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: May 8, 2006 Michael P. Bishof - ------------------------------------ By: Michael P. Bishof Title: Chief Financial Officer EX-99.906CERT 3 d19276ex99906cert.txt 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: May 8, 2006 Jude T. Driscoll - ------------------------------------ By: Jude T. Driscoll Title: Chief Executive Officer Michael P. Bishof - ------------------------------------ By: Michael P. Bishof 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-----