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: | 811-04364 |
| Exact name of registrant as specified in charter: | Voyageur Intermediate Tax Free Funds |
| 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 29, 2008 |
Item 1. Reports to Stockholders
 |  |
| Semiannual report | |
| Delaware Tax-Free Minnesota Fund | |
| Delaware Tax-Free Minnesota Intermediate Fund | |
| Delaware Minnesota High-Yield Municipal | |
| Bond Fund | |
| February 29, 2008 | |
| Fixed income mutual funds |
Table of contents
| Disclosure of Fund expenses | 1 |
| Sector allocations and credit quality breakdowns | 4 |
| Statements of net assets | 7 |
| Statements of operations | 36 |
| Statements of changes in net assets | 38 |
| Financial highlights | 44 |
| Notes to financial statements | 62 |
| About the organization | 74 |
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.
© 2008 Delaware Distributors, L.P.
Disclosure of Fund expenses
For the period September 1, 2007 to February 29, 2008
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, 2007 to February 29, 2008.
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 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. The Fund’s 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 182/366 (to reflect the one-half year period).
1
Disclosure of Fund expenses
Delaware Tax-Free Minnesota Fund
Expense analysis of an investment of $1,000
| Beginning | Ending | Expenses | |||||||||
| Account Value | Account Value | Annualized | Paid During Period | ||||||||
| 9/1/07 | 2/29/08 | Expense Ratio | 9/1/07 to 2/29/08* | ||||||||
| Actual Fund Return | |||||||||||
| Class A | $1,000.00 | $992.90 | 1.19% | $5.90 | |||||||
| Class B | 1,000.00 | 989.20 | 1.94% | 9.59 | |||||||
| Class C | 1,000.00 | 990.00 | 1.94% | 9.60 | |||||||
| Hypothetical 5% return (5% return before expenses) | |||||||||||
| Class A | $1,000.00 | $1,018.95 | 1.19% | $5.97 | |||||||
| Class B | 1,000.00 | 1,015.22 | 1.94% | 9.72 | |||||||
| Class C | 1,000.00 | 1,015.22 | 1.94% | 9.72 | |||||||
The expenses in the table above includes interest and related expenses which include, but are not limited to interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floaters programs. See Notes 1 and 7 in “Notes to financial statements.” Delaware Tax-Free Minnesota Intermediate Fund | |||||||||||
| Beginning | Ending | Expenses | |||||||||
| Account Value | Account Value | Annualized | Paid During Period | ||||||||
| 9/1/07 | 2/29/08 | Expense Ratio | 9/1/07 to 2/29/08* | ||||||||
| Actual Fund Return | |||||||||||
| Class A | $1,000.00 | $1,013.20 | 0.75% | $3.75 | |||||||
| Class B | 1,000.00 | 1,008.90 | 1.60% | 7.99 | |||||||
| Class C | 1,000.00 | 1,008.90 | 1.60% | 7.99 | |||||||
| Hypothetical 5% return (5% return before expenses) | |||||||||||
| Class A | $1,000.00 | $1,021.13 | 0.75% | $3.77 | |||||||
| Class B | 1,000.00 | 1,016.91 | 1.60% | 8.02 | |||||||
| Class C | 1,000.00 | 1,016.91 | 1.60% | 8.02 | |||||||
2
Delaware Minnesota High-Yield Municipal Bond Fund
Expense analysis of an investment of $1,000
| Beginning | Ending | Expenses | |||||||||
| Account Value | Account Value | Annualized | Paid During Period | ||||||||
| 9/1/07 | 2/29/08 | Expense Ratio | 9/1/07 to 2/29/08* | ||||||||
| Actual Fund Return | |||||||||||
| Class A | $1,000.00 | $970.50 | 0.89% | $4.36 | |||||||
| Class B | 1,000.00 | 966.90 | 1.64% | 8.02 | |||||||
| Class C | 1,000.00 | 967.00 | 1.64% | 8.02 | |||||||
| Hypothetical 5% return (5% return before expenses) | |||||||||||
| Class A | $1,000.00 | $1,020.44 | 0.89% | $4.47 | |||||||
| Class B | 1,000.00 | 1,016.71 | 1.64% | 8.22 | |||||||
| Class C | 1,000.00 | 1,016.71 | 1.64% | 8.22 | |||||||
3
| Sector allocations and credit quality breakdowns | ||
| Delaware Minnesota Municipal Bond Funds | As of February 29, 2008 | |
Sector designations may be different than the sector designations presented in other Fund materials.
Delaware Tax-Free Minnesota Fund
| Sector | Percentage of net assets | |
| Municipal Bonds | 102.40 | % |
| Corporate-Backed Revenue Bonds | 4.11 | % |
| Education Revenue Bonds | 6.22 | % |
| Electric Revenue Bonds | 7.84 | % |
| Escrowed to Maturity Bonds | 6.20 | % |
| Health Care Revenue Bonds | 15.93 | % |
| Housing Revenue Bonds | 6.59 | % |
| Lease Revenue Bonds | 3.40 | % |
| Local General Obligation Bonds | 10.60 | % |
| Pre-Refunded Bonds | 31.17 | % |
| Special Tax Revenue Bonds | 1.80 | % |
| State General Obligation Bonds | 5.70 | % |
| Transportation Revenue Bonds | 1.12 | % |
| Water & Sewer Revenue Bond | 1.72 | % |
| Short-Term Investments | 1.35 | % |
| Money Market Instrument | 0.97 | % |
| Variable Rate Demand Note | 0.38 | % |
| Total Value of Securities | 103.75 | % |
| Liabilities Net of Receivables and Other Assets | (3.75 | %) |
| Total Net Assets | 100.00 | % |
| Credit quality breakdown (as a % of fixed income investments) | ||
| AAA | 51.94 | % |
| AA | 15.67 | % |
| A | 14.69 | % |
| BBB | 11.26 | % |
| BB | 1.07 | % |
| Not Rated | 5.37 | % |
| Total | 100.00 | % |
4
Sector designations may be different than the sector designations presented in other Fund materials.
Delaware Tax-Free Minnesota Intermediate Fund
| Sector | Percentage of net assets | |
| Municipal Bonds | 93.77 | % |
| Corporate-Backed Revenue Bonds | 3.03 | % |
| Education Revenue Bonds | 5.62 | % |
| Electric Revenue Bond | 1.65 | % |
| Escrowed to Maturity Bond | 1.95 | % |
| Health Care Revenue Bonds | 12.74 | % |
| Housing Revenue Bonds | 7.44 | % |
| Lease Revenue Bonds | 3.19 | % |
| Local General Obligation Bonds | 14.00 | % |
| Pre-Refunded Bonds | 21.33 | % |
| Special Tax Revenue Bond | 3.93 | % |
| State General Obligation Bonds | 13.41 | % |
| Transportation Revenue Bonds | 2.27 | % |
| Water & Sewer Revenue Bonds | 3.21 | % |
| Short-Term Investments | 8.28 | % |
| Money Market Instrument | 3.97 | % |
| Variable Rate Demand Note | 4.31 | % |
| Total Value of Securities | 102.05 | % |
| Liabilities Net of Receivables and Other Assets | (2.05 | %) |
| Total Net Assets | 100.00 | % |
| Credit quality breakdown (as a % of fixed income investments) | ||
| AAA | 45.44 | % |
| AA | 20.63 | % |
| A | 12.32 | % |
| BBB | 13.60 | % |
| Not Rated | 8.01 | % |
| Total | 100.00 | % |
5
Sector allocations and credit quality breakdowns
Delaware Minnesota Municipal Bond Funds
Sector designations may be different than the sector designations presented in other Fund materials.
Delaware Minnesota High-Yield Municipal Bond Fund
| Sector | Percentage of net assets | |
| Municipal Bonds | 98.37 | % |
| Corporate-Backed Revenue Bonds | 3.46 | % |
| Education Revenue Bonds | 7.57 | % |
| Electric Revenue Bonds | 6.46 | % |
| Health Care Revenue Bonds | 29.42 | % |
| Housing Revenue Bonds | 14.09 | % |
| Lease Revenue Bonds | 1.88 | % |
| Local General Obligation Bonds | 9.93 | % |
| Pre-Refunded Bonds | 12.61 | % |
| Special Tax Revenue Bonds | 3.69 | % |
| State General Obligation Bonds | 4.25 | % |
| Transportation Revenue Bond | 1.37 | % |
| Water & Sewer Revenue Bonds | 3.64 | % |
| Short-Term Investments | 1.86 | % |
| Money Market Instrument | 0.39 | % |
| Variable Rate Demand Notes | 1.47 | % |
| Total Value of Securities | 100.23 | % |
| Liabilities Net of Receivables and Other Assets | (0.23 | %) |
| Total Net Assets | 100.00 | % |
| Credit quality breakdown (as a % of fixed income investments) | ||
| AAA | 27.06 | % |
| AA | 14.31 | % |
| A | 20.69 | % |
| BBB | 16.30 | % |
| BB | 1.19 | % |
| Not Rated | 20.45 | % |
| Total | 100.00 | % |
6
| Statements of net assets | ||
| Delaware Tax-Free Minnesota Fund | February 29, 2008 (Unaudited) | |
| Principal amount | Value | |||||
| Municipal Bonds – 102.40% | ||||||
| Corporate-Backed Revenue Bonds – 4.11% | ||||||
| Cloquet Pollution Control Revenue Refunding | ||||||
| (Potlatch Corporation Project) 5.90% 10/1/26 | $ | 6,500,000 | $ | 6,197,360 | ||
| Laurentian Energy Authority I Cogeneration Revenue | ||||||
| Series A 5.00% 12/1/21 | 8,000,000 | 7,402,000 | ||||
| Sartell Environmental Improvement Revenue Refunding | ||||||
| (International Paper) Series A 5.20% 6/1/27 | 7,265,000 | 6,323,747 | ||||
| Seaway Port Authority of Duluth Industrial Development | ||||||
| Dock & Wharf Revenues Refunding | ||||||
| (Cargill Project) Series E 6.125% 11/1/14 | 4,500,000 | 4,522,995 | ||||
| 24,446,102 | ||||||
| Education Revenue Bonds – 6.22% | ||||||
| Minnesota State Colleges & Universities | ||||||
| Revenue Fund Series A | ||||||
| 5.00% 10/1/22 (FSA) | 5,135,000 | 5,164,013 | ||||
| 5.00% 10/1/29 (MBIA) | 5,665,000 | 5,497,316 | ||||
| Minnesota Higher Education Facilities Authority Revenue | ||||||
| (Augsburg College) | ||||||
| Series 6-C 5.00% 5/1/20 | 1,250,000 | 1,197,650 | ||||
| Series 6-J1 5.00% 5/1/36 | 2,225,000 | 1,924,113 | ||||
| Minnesota State Higher Education Facilities Authority Revenue | ||||||
| (College of St. Benedict) Series 4-G 6.20% 3/1/16 | 1,000,000 | 1,000,960 | ||||
| (St. Catherine College) Series 5-N1 | ||||||
| 5.00% 10/1/18 | 2,200,000 | 2,174,986 | ||||
| 5.25% 10/1/22 | 1,500,000 | 1,455,315 | ||||
| 5.375% 10/1/32 | 1,000,000 | 922,530 | ||||
| St. Cloud Housing & Redevelopment Authority Revenue | ||||||
| (State University Foundation Project) 5.00% 5/1/23 | 2,000,000 | 1,993,540 | ||||
| University of Minnesota | ||||||
| &15.50% 7/1/21 | 10,500,000 | 11,346,300 | ||||
| &25.75% 7/1/18 | 3,840,000 | 4,339,949 | ||||
| 37,016,672 | ||||||
| Electric Revenue Bonds – 7.84% | ||||||
| Chaska Electric Revenue Refunding (Generating Facilities) | ||||||
| Series A 5.00% 10/1/30 | 3,000,000 | 2,734,920 | ||||
| Minnesota State Municipal Power Agency Electric Revenue | ||||||
| 5.00% 10/1/35 | 3,000,000 | 2,780,160 | ||||
| Series A 5.00% 10/1/34 | 6,250,000 | 5,807,563 | ||||
| Series A 5.125% 10/1/29 | 3,000,000 | 2,902,860 | ||||
7
Statements of net assets
Delaware Tax-Free Minnesota Fund
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Electric Revenue Bonds (continued) | ||||||
| Northern Municipal Power Agency Electric System Revenue | ||||||
| &3Series 32 5.25% 1/1/13 (FSA) | $ | 9,170,000 | $ | 9,527,538 | ||
| ^Capital Appreciation Series A 5.85% 1/1/09 (AMBAC) | 3,815,000 | 3,727,026 | ||||
| Refunding Series B 4.75% 1/1/20 (AMBAC) | 2,500,000 | 2,471,975 | ||||
| Puerto Rico Electric Power Authority Power Revenue | ||||||
| Refunding Series GG 4.75% 7/1/21 (FSA) | 1,000,000 | 986,340 | ||||
| Southern Minnesota Municipal Power Agency Supply | ||||||
| System Revenue | ||||||
| &45.25% 1/1/14 (AMBAC) | 4,000,000 | 4,262,140 | ||||
| &55.25% 1/1/15 (AMBAC) | 5,900,000 | 6,289,872 | ||||
| Series A 5.25% 1/1/15 (AMBAC) | 3,000,000 | 3,198,240 | ||||
| ^Capital Appreciation 4.44% 1/1/25 (MBIA) | 5,000,000 | 1,979,200 | ||||
| 46,667,834 | ||||||
| Escrowed to Maturity Bonds – 6.20% | ||||||
| Dakota - Washington Counties Housing & | ||||||
| Redevelopment Authority Single Family Residential | ||||||
| Mortgage Revenue | ||||||
| 8.15% 9/1/16 (MBIA) (GNMA) (AMT) | 405,000 | 524,082 | ||||
| (Anoka) 8.45% 9/1/19 (GNMA) (AMT) | 9,000,000 | 12,148,110 | ||||
| (Bloomington Mortgage) Refunding Series B | ||||||
| 8.375% 9/1/21 (GNMA) (FHA) (VA) (AMT) | 14,115,000 | 19,094,489 | ||||
| Southern Minnesota Municipal Power Agency Supply | ||||||
| System Revenue Refunding Series B | ||||||
| 5.50% 1/1/15 (AMBAC) | 990,000 | 1,049,846 | ||||
| University of Minnesota Series A 5.50% 7/1/21 | 2,000,000 | 2,161,220 | ||||
| Western Minnesota Municipal Power Agency Supply | ||||||
| Revenue Series A | ||||||
| 6.60% 1/1/10 | 900,000 | 940,752 | ||||
| 9.75% 1/1/16 (MBIA) | 715,000 | 968,947 | ||||
| 36,887,446 | ||||||
| Health Care Revenue Bonds – 15.93% | ||||||
| Aitkin Health Care Facilities Revenue Refunding | ||||||
| (Riverwood Health Care Center) 5.60% 2/1/32 | 1,500,000 | 1,325,460 | ||||
| Apple Valley Economic Development Authority Health | ||||||
| Care Revenue (Augustana Home St. Paul Project) | ||||||
| Series A 6.00% 1/1/40 | 2,700,000 | 2,473,659 | ||||
8
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Health Care Revenue Bonds (continued) | ||||||
| Bemidji Health Care Facilities First Mortgage Revenue | ||||||
| (North Country Health Services) | ||||||
| 5.00% 9/1/24 (RADIAN) | $ | 740,000 | $ | 699,433 | ||
| Bloomington Housing & Redevelopment Authority | ||||||
| Revenue (Senior Summerhouse Bloomington | ||||||
| Project - PHM) 6.125% 5/1/35 | 3,420,000 | 3,086,653 | ||||
| Breckenridge Catholic Health Initiatives | ||||||
| Series A 5.00% 5/1/30 | 2,500,000 | 2,310,675 | ||||
| Buffalo Health Care Revenue Refunding | ||||||
| (Central Minnesota Senior Housing Project) | ||||||
| Series A 5.50% 9/1/33 | 1,270,000 | 1,092,467 | ||||
| Maple Grove Health Care Facilities Revenue | ||||||
| (North Memorial Health Care) 5.00% 9/1/29 | 1,000,000 | 914,440 | ||||
| Maple Grove Health Care System Revenue | ||||||
| (Maple Grove Hospital) 5.25% 5/1/37 | 4,000,000 | 3,678,760 | ||||
| Minneapolis Health Care Facilities Revenue | ||||||
| (Jones-Harrison Residence Project) 5.60% 10/1/30 | 1,550,000 | 1,379,020 | ||||
| Minneapolis Health Care System Revenue | ||||||
| (Fairview Health Services) Series D | ||||||
| 5.00% 11/15/30 (AMBAC) | 2,500,000 | 2,348,050 | ||||
| 5.00% 11/15/34 (AMBAC) | 10,750,000 | 10,101,344 | ||||
| Minneapolis - St. Paul Housing & Redevelopment | ||||||
| Authority Health Care System Revenue | ||||||
| (Health Partners Obligation Group Project) | ||||||
| 5.625% 12/1/22 | 650,000 | 638,762 | ||||
| 5.875% 12/1/29 | 1,000,000 | 981,240 | ||||
| Minnesota Agricultural & Economic | ||||||
| Development Board Revenue | ||||||
| (Benedictine Health Systems) 5.75% 2/1/29 | 1,895,000 | 1,713,554 | ||||
| (Fairview Health Care System) Un-refunded Balance | ||||||
| Series A 5.75% 11/15/26 (MBIA) | 180,000 | 182,135 | ||||
| 6.375% 11/15/29 | 15,000 | 15,416 | ||||
| Northfield Hospital Revenue 5.375% 11/1/26 | 3,785,000 | 3,469,445 | ||||
| Northfield Housing & Redevelopment Authority Revenue | ||||||
| Refunding (Northfield Retirement Project) | ||||||
| Series A 5.375% 12/1/36 | 1,000,000 | 842,410 | ||||
| Prior Lake Senior Housing Revenue | ||||||
| (Shepherds Path Senior Housing) | ||||||
| Series B 5.70% 8/1/36 | 2,000,000 | 1,826,140 | ||||
9
Statements of net assets
Delaware Tax-Free Minnesota Fund
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| Health Care Revenue Bonds (continued) | |||||
| Rochester Health Care Facilities Revenue | |||||
| (Mayo Foundation) Series B 5.50% 11/15/27 | $ | 700,000 | $ | 703,402 | |
| &6Series A 5.50% 11/15/27 | 4,200,000 | 4,220,412 | |||
| &7Series B 5.50% 11/15/27 | 16,750,000 | 16,831,404 | |||
| Shakopee Health Care Facilities Revenue (St. Francis | |||||
| Regional Medical Center) | |||||
| 5.10% 9/1/25 | 2,000,000 | 1,841,140 | |||
| 5.25% 9/1/34 | 7,000,000 | 6,239,730 | |||
| Sherburne County Health Care Facilities Revenue | |||||
| (Guardian Angels Health Services) 5.55% 10/1/36 | 1,500,000 | 1,302,330 | |||
| St. Paul Housing & Redevelopment Authority Health Care | |||||
| Facilities Revenue | |||||
| (Allina Health System) Series A 5.00% 11/15/18 (MBIA) | 5,720,000 | 5,738,361 | |||
| (Health Partners Obligation Group Project) | |||||
| 5.25% 5/15/36 | 7,900,000 | 6,857,911 | |||
| St. Paul Housing & Redevelopment Authority Hospital | |||||
| Revenue (Health East Project) | |||||
| 6.00% 11/15/35 | 4,340,000 | 4,033,553 | |||
| Series A 5.70% 11/1/15 | 1,300,000 | 1,310,075 | |||
| St. Paul Housing & Redevelopment Authority Multifamily | |||||
| �� Housing Revenue Refunding (Marion Center Project) | |||||
| Series A 5.30% 11/1/30 | 500,000 | 412,030 | |||
| Series A 5.375% 5/1/43 | 500,000 | 398,245 | |||
| Stillwater Health Care Revenue (Health System | |||||
| Obligation Group) 5.00% 6/1/35 | 1,000,000 | 892,890 | |||
| Washington County Housing & Redevelopment Authority | |||||
| Revenue (Health East Project) | |||||
| 5.50% 11/15/27 | 1,000,000 | 901,440 | |||
| Willmar (Rice Memorial Hospital Project) | |||||
| 5.00% 2/1/22 (FSA) | 1,000,000 | 1,011,910 | |||
| 5.00% 2/1/25 (FSA) | 1,000,000 | 997,700 | |||
| Woodbury Economic Development Authority Housing | |||||
| Revenue (Senior Summerhouse | |||||
| Woodbury Project) Series B 5.75% 6/1/41 | 2,250,000 | 1,987,943 | |||
| 94,759,539 | |||||
10
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| Housing Revenue Bonds – 6.59% | |||||
| Brooklyn Center Multifamily Housing Revenue Refunding | |||||
| (Shingle Creek) 5.40% 5/20/43 (GNMA) (AMT) | $ | 1,000,000 | $ | 919,180 | |
| Dakota County Housing & Redevelopment Authority | |||||
| Single Family Mortgage Revenue | |||||
| 5.85% 10/1/30 (GNMA) (FNMA) (AMT) | 158,000 | 155,848 | |||
| Hopkins Multifamily Housing Revenue (Hopkins | |||||
| Renaissance Project) 6.375% 4/1/20 (HUD Section 8) | 1,000,000 | 1,016,460 | |||
| @Hutchinson Multifamily Housing Revenue (Evergreen | |||||
| Apartments Project) | |||||
| 5.75% 11/1/28 (HUD Section 8) | 825,000 | 715,943 | |||
| Minneapolis Multifamily Housing Revenue | |||||
| (Bottineau Commons Project) | |||||
| 5.45% 4/20/43 (GNMA) (AMT) | 1,500,000 | 1,430,340 | |||
| (Grant Street Apartments Project) | |||||
| Series A 7.25% 11/1/29 | 750,000 | 760,095 | |||
| (Seward Towers Project) 5.00% 5/20/36 (GNMA) | 8,000,000 | 7,375,599 | |||
| (Sumner Field) Series A 5.50% 11/20/26 (GNMA) (AMT) | 950,000 | 937,023 | |||
| (Trinity Apartments) Refunding Series A | |||||
| 6.75% 5/1/21 (HUD Section 8) | 1,680,000 | 1,705,066 | |||
| Minnesota Housing Finance Agency Rental Housing | |||||
| Revenue Series C-2 5.95% 2/1/15 (AMBAC) | 1,642,000 | 1,643,938 | |||
| Minnesota Housing Finance Agency | |||||
| (Residential Housing) | |||||
| Series A 5.30% 7/1/19 | 495,000 | 503,801 | |||
| Series B 5.35% 1/1/33 (AMT) | 2,955,000 | 2,766,146 | |||
| ·Series D 4.80% 7/1/38 (AMT) | 2,500,000 | 2,132,250 | |||
| Series I 4.85% 7/1/38 (AMT) | 2,000,000 | 1,735,180 | |||
| 5.15% 7/1/38 (AMT) | 5,550,000 | 5,008,153 | |||
| Series M 4.875% 7/1/37 (AMT) | 4,500,000 | 3,904,740 | |||
| (Single Family Mortgage) Series J 5.90% 7/1/28 (AMT) | 435,000 | 435,035 | |||
| @Park Rapids Multifamily Revenue (The Court Apartments | |||||
| Project) 6.30% 2/1/20 (HUD Section 8) | 2,735,000 | 2,597,594 | |||
| St. Cloud Housing & Redevelopment Authority | |||||
| Multifamily Housing Revenue (Sterling | |||||
| Heights Apartments Project) 7.55% 4/1/39 (AMT) | 1,000,000 | 945,830 | |||
11
Statements of net assets
Delaware Tax-Free Minnesota Fund
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| Housing Revenue Bonds (continued) | |||||
| St. Louis Park Residential Single Family Mortgage | |||||
| Revenue Series A 7.25% 4/20/23 (GNMA) | $ | 13,000 | $ | 13,212 | |
| Washington County Housing & Redevelopment Authority | |||||
| Governmental Revenue Refunding (Briar Pond) | |||||
| Series C 7.25% 8/20/34 | 940,000 | 817,424 | |||
| White Bear Lake Multifamily Revenue Refunding (Lake | |||||
| Square) Series A 5.875% 2/1/15 (FHA) | 905,000 | 915,055 | |||
| Willmar Housing & Redevelopment Authority Multifamily | |||||
| Housing Revenue (Highland Apartments) | |||||
| 5.85% 6/1/19 (HUD Section 8) | 860,000 | 804,367 | |||
| 39,238,279 | |||||
| Lease Revenue Bonds – 3.40% | |||||
| Minneapolis Special School District #001 Series A | |||||
| 5.00% 2/1/18 (FSA) | 1,545,000 | 1,595,135 | |||
| 5.00% 2/1/19 (FSA) | 1,535,000 | 1,562,538 | |||
| 5.00% 2/1/20 (FSA) | 1,690,000 | 1,710,618 | |||
| Puerto Rico Public Buildings Authority Revenue | |||||
| (Guaranteed Government Facilities) Un-refunded | |||||
| Balance Series D 5.25% 7/1/36 | 1,070,000 | 984,347 | |||
| St. Paul Port Authority Lease Revenue | |||||
| (Cedar Street Office Building Project) | |||||
| 5.00% 12/1/22 | 2,500,000 | 2,514,525 | |||
| 5.25% 12/1/27 | 3,840,000 | 3,830,322 | |||
| Series 3-12 5.125% 12/1/27 | 3,000,000 | 2,939,880 | |||
| (Robert Street Office Building Project) Series 3-11 | |||||
| 4.75% 12/1/23 | 2,000,000 | 1,922,580 | |||
| 5.00% 12/1/27 | 2,500,000 | 2,444,550 | |||
| Series 9 5.25% 12/1/27 | 725,000 | 726,755 | |||
| 20,231,250 | |||||
| Local General Obligation Bonds – 10.60% | |||||
| Dakota County Community Development Agency | |||||
| (Senior Housing Facilities) 5.00% 1/1/21 | 1,275,000 | 1,283,313 | |||
| Farmington Independent School District #192 | |||||
| Series B 5.00% 2/1/27 (FSA) | 10,705,000 | 10,575,576 | |||
| Hennepin County Regional Railroad Authority | |||||
| 5.00% 12/1/31 | 4,030,000 | 3,883,227 | |||
| Lakeville Independent School District #194 | |||||
| Series A 4.75% 2/1/22 (FSA) | 7,850,000 | 7,724,085 | |||
12
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| Local General Obligation Bonds (continued) | |||||
| ^Mahtomedi Independent School District #832 Capital | |||||
| Appreciation Series B 5.90% 2/1/14 (MBIA) | $ | 1,540,000 | $ | 1,206,621 | |
| Metropolitan Council Minneapolis/St. Paul Metropolitan | |||||
| Area Waste Water Treatment | |||||
| Series B 5.00% 12/1/21 | 1,200,000 | 1,219,848 | |||
| Series C 5.00% 3/1/16 | 1,690,000 | 1,823,645 | |||
| Minneapolis Library 5.00% 12/1/25 | 1,500,000 | 1,485,960 | |||
| Minneapolis Tax Increment Revenue Refunding | |||||
| (St. Anthony Falls Project) 5.75% 2/1/27 | 1,000,000 | 878,960 | |||
| Mounds View Independent School District #621 Series A | |||||
| 5.00% 2/1/20 (MBIA) | 2,970,000 | 2,993,522 | |||
| New Brighton Tax Increment Series A | |||||
| 5.00% 2/1/26 (MBIA) | 1,185,000 | 1,165,673 | |||
| 5.00% 2/1/27 (MBIA) | 1,000,000 | 980,780 | |||
| 5.00% 2/1/28 (MBIA) | 1,000,000 | 976,540 | |||
| Osseo Independent School District #279 Series A | |||||
| 5.00% 2/1/21 (FSA) | 3,570,000 | 3,604,629 | |||
| Prior Lake Independent School District #719 Series B | |||||
| 5.00% 2/1/19 (FSA) | 3,145,000 | 3,239,413 | |||
| Ramsey County State Aid Series C 5.00% 2/1/28 | 1,060,000 | 1,057,308 | |||
| Robbinsdale Independent School District #281 | |||||
| 5.00% 2/1/21 (FSA) | 1,310,000 | 1,322,707 | |||
| ^Rosemount Independent School District #196 Capital | |||||
| Appreciation Series B | |||||
| 5.80% 4/1/09 (FSA) | 1,860,000 | 1,809,185 | |||
| 5.85% 4/1/10 (FSA) | 2,240,000 | 2,110,125 | |||
| 5.931% 4/1/11 (FSA) | 2,600,000 | 2,352,142 | |||
| 5.961% 4/1/12 (FSA) | 1,850,000 | 1,600,158 | |||
| 6.008% 4/1/13 (FSA) | 1,915,000 | 1,577,596 | |||
| ^Sartell Independent School District #748 | |||||
| Capital Appreciation Series B | |||||
| 5.976% 2/1/13 (MBIA) | 540,000 | 452,061 | |||
| 6.100% 2/1/15 (MBIA) | 1,075,000 | 816,452 | |||
| 6.15% 2/1/16 (MBIA) | 1,750,000 | 1,261,453 | |||
| St. Peter’s Hospital Series A 5.00% 9/1/24 (MBIA) | 1,905,000 | 1,900,752 | |||
13
Statements of net assets
Delaware Tax-Free Minnesota Fund
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| Local General Obligation Bonds (continued) | |||||
| Todd Morrison Cass & Wadena Counties United Hospital | |||||
| District (Health Care Facilities-Lakewood) | |||||
| 5.00% 12/1/21 | $ | 2,000,000 | $ | 1,922,860 | |
| 5.00% 12/1/34 | 1,000,000 | 884,450 | |||
| 5.125% 12/1/24 | 1,000,000 | 948,710 | |||
| 63,057,751 | |||||
| §Pre-Refunded Bonds – 31.17% | |||||
| Big Lake Independent School District #727 Series A | |||||
| 5.00% 2/1/17-10 (FSA) | 1,040,000 | 1,077,419 | |||
| 5.00% 2/1/20-10 (FSA) | 1,000,000 | 1,035,980 | |||
| Bloomington Independent School District #271 | |||||
| Series B 5.00% 2/1/17-10 | 5,300,000 | 5,490,694 | |||
| Centennial Independent School District #012 | |||||
| Series A 5.00% 2/1/18-12 (FSA) | 1,270,000 | 1,339,215 | |||
| Chaska Electric Revenue Series A 6.00% 10/1/25-10 | 1,000,000 | 1,071,450 | |||
| Dakota County Capital Improvement | |||||
| Series A 4.75% 2/1/26-11 | 1,000,000 | 968,290 | |||
| Duluth Economic Development Authority Health | |||||
| Care Facilities Revenue (Benedictine Health System) | |||||
| (St. Mary’s Hospital) | |||||
| 5.25% 2/15/28-14 | 8,500,000 | 8,027,910 | |||
| 5.25% 2/15/33-14 | 10,000,000 | 9,180,499 | |||
| 5.50% 2/15/23-14 | 1,000,000 | 995,940 | |||
| ^Farmington Independent School District #192 Capital | |||||
| Appreciation Series B | |||||
| 5.34% 2/1/21-12 (FSA) | 1,650,000 | 929,462 | |||
| 5.424% 2/1/20-12 (FSA) | 1,500,000 | 801,120 | |||
| Hopkins Housing & Redevelopment Authority | |||||
| (Public Works & Fire Station) Series A | |||||
| 5.00% 2/1/23-13 (MBIA) | 1,210,000 | 1,297,604 | |||
| ^Lakeville Independent School District #194 Capital | |||||
| Appreciation Series B 5.45% 2/1/19-10 (FSA) | 8,000,000 | 4,609,200 | |||
| Marshall Medical Center Gross Revenue (Weiner | |||||
| Memorial Medical Center Project) 6.00% 11/1/28-09 | 1,000,000 | 1,046,100 | |||
| Minneapolis Community Development Agency Series G-3 | |||||
| 5.45% 12/1/31-11 | 2,000,000 | 2,158,320 | |||
| Minneapolis Health Care System Revenue | |||||
| (Allina Health Systems) Series A 5.75% 11/15/32-12 | 17,300,000 | 18,974,466 | |||
| (Fairview Health Services) Series A 5.625% 5/15/32-12 | 16,925,000 | 18,474,145 | |||
14
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| §Pre-Refunded Bonds (continued) | |||||
| Minneapolis - St. Paul Metropolitan Airports | |||||
| Commission Revenue | |||||
| Series A | |||||
| 5.125% 1/1/25-09 (FGIC) | $ | 100,000 | $ | 102,976 | |
| 5.25% 1/1/32-11 (FGIC) | 5,000,000 | 5,294,650 | |||
| Series C | |||||
| 5.125% 1/1/20-11 (FGIC) | 2,000,000 | 2,111,120 | |||
| 5.25% 1/1/32-11 (FGIC) | 8,845,000 | 9,366,236 | |||
| 5.50% 1/1/17-11 (FGIC) | 2,500,000 | 2,664,200 | |||
| Minneapolis Tax Increment Revenue | |||||
| Series E 5.00% 3/1/13-09 | 6,265,000 | 6,405,837 | |||
| Minnesota Agricultural & Economic Development Board | |||||
| Revenue (Fairview Health Care System) | |||||
| Series A 6.375% 11/15/29-10 | 485,000 | 532,030 | |||
| Minnesota Public Facilities Authority Water | |||||
| Pollution Control Revenue | |||||
| Series A 5.00% 3/1/20-10 | 3,000,000 | 3,122,610 | |||
| Series B 4.75% 3/1/19-09 | 2,000,000 | 2,039,840 | |||
| Morris Independent School District #769 Building | |||||
| 5.00% 2/1/24-13 (MBIA) | 4,875,000 | 5,180,224 | |||
| Mounds View Independent School District #621 Series A | |||||
| 5.375% 2/1/24-11 (FGIC) | 6,170,000 | 6,533,043 | |||
| Puerto Rico Commonwealth | |||||
| Series A 5.00% 7/1/34-14 | 2,830,000 | 3,055,127 | |||
| Series B 5.00% 7/1/35-16 | 925,000 | 997,816 | |||
| Puerto Rico Public Buildings Authority Guaranteed | |||||
| Government Facilities Revenue | |||||
| Series D 5.25% 7/1/36-12 | 2,930,000 | 3,129,123 | |||
| Rochester Electric Utilities Revenue 5.25% 12/1/30-10 | 4,915,000 | 5,211,571 | |||
| Rochester Multifamily Housing Revenue (Wedum | |||||
| Shorewood Campus Project) 6.60% 6/1/36-09 | 3,890,000 | 4,136,859 | |||
| Rockford Independent School District # 883 | |||||
| 5.60% 2/1/21-10 (FSA) | 3,210,000 | 3,361,191 | |||
| 5.625% 2/1/23-10 (FSA) | 7,020,000 | 7,353,871 | |||
| ^Sauk Rapids Independent School District #047 Series B | |||||
| 5.982% 2/1/15-11 (FSA) | 2,700,000 | 1,933,551 | |||
| 6.083% 2/1/17-11 (FSA) | 2,245,000 | 1,422,881 | |||
15
Statements of net assets
Delaware Tax-Free Minnesota Fund
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| §Pre-Refunded Bonds (continued) | |||||
| Shakopee Public Utilities Commission Revenue | |||||
| 5.125% 2/1/26-09 (MBIA) | $ | 2,850,000 | $ | 2,907,485 | |
| South Washington County Independent School District | |||||
| #833 Series A 5.60% 2/1/20-10 (MBIA) | 6,880,000 | 7,230,398 | |||
| Southern Minnesota Municipal Power Agency Supply | |||||
| Revenue Series A | |||||
| 5.75% 1/1/18-13 | 3,790,000 | 4,109,724 | |||
| 5.75% 1/1/18-13 (AMBAC) | 670,000 | 726,521 | |||
| 5.75% 1/1/18-13 (MBIA) | 1,000,000 | 1,084,360 | |||
| St. Louis Park Health Care Facilities Revenue | |||||
| (Park Nicollet Health Services) Series B | |||||
| 5.25% 7/1/30-14 | 9,420,000 | 10,251,692 | |||
| 5.50% 7/1/25-14 | 2,000,000 | 2,204,620 | |||
| St. Michael Independent School District #885 | |||||
| 5.00% 2/1/20-12 (FSA) | 1,970,000 | 2,077,365 | |||
| 5.00% 2/1/27-12 (FSA) | 3,435,000 | 3,436,065 | |||
| 185,460,800 | |||||
| Special Tax Revenue Bonds – 1.80% | |||||
| ^Minneapolis Community Development Agency Tax | |||||
| Increment Revenue Capital Appreciation Revenue | |||||
| 6.673% 9/1/09 (MBIA) | 5,750,000 | 5,512,295 | |||
| Puerto Rico Commonwealth Infrastructure Financing | |||||
| Authority Special Tax Revenue | |||||
| Series B 5.00% 7/1/46 | 4,000,000 | 3,493,120 | |||
| Virgin Islands Public Finance Authority Revenue (Senior | |||||
| Lien Matching Fund Loan) Series A 5.25% 10/1/22 | 1,785,000 | 1,710,316 | |||
| 10,715,731 | |||||
| State General Obligation Bonds – 5.70% | |||||
| Minnesota State | |||||
| 5.00% 10/1/15 | 7,000,000 | 7,582,680 | |||
| 5.00% 11/1/20 (FSA) | 13,675,000 | 13,818,724 | |||
| 5.00% 8/1/21 | 2,400,000 | 2,427,408 | |||
| Puerto Rico Commonwealth Public Improvement Series A | |||||
| 5.00% 7/1/34 | 1,670,000 | 1,505,154 | |||
| 5.50% 7/1/17 | 4,070,000 | 4,218,555 | |||
| 5.50% 7/1/18 | 1,240,000 | 1,277,374 | |||
| Refunding 5.50% 7/1/19 (MBIA) | 1,500,000 | 1,558,935 | |||
| Series B 5.00% 7/1/35 | 575,000 | 516,603 | |||
16
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| State General Obligation Bonds (continued) | ||||||
| Puerto Rico Government Development Bank Senior Notes | ||||||
| Series B 5.00% 12/1/14 | $ | 1,000,000 | $ | 1,025,210 | ||
| 33,930,643 | ||||||
| Transportation Revenue Bonds – 1.12% | ||||||
| Minneapolis/St. Paul Metropolitan Airports Commission | ||||||
| Revenue Series A | ||||||
| 5.00% 1/1/22 (MBIA) | 2,000,000 | 1,943,440 | ||||
| 5.00% 1/1/15 (AMT) | 3,095,000 | 3,210,876 | ||||
| 5.25% 1/1/16 (MBIA) | 1,460,000 | 1,514,765 | ||||
| 6,669,081 | ||||||
| Water & Sewer Revenue Bond – 1.72% | ||||||
| &8Minnesota Public Facilities Authority II Water Pollution | ||||||
| Control Revenue 5.25% 3/1/18 | 10,000,000 | 10,248,500 | ||||
| 10,248,500 | ||||||
| Total Municipal Bonds (cost $610,763,132) | 609,329,628 | |||||
| Number of shares | ||||||
| Short-Term Investments – 1.35% | ||||||
| Money Market Instrument – 0.97% | ||||||
| Federated Minnesota Municipal Cash Trust | 5,774,911 | 5,774,911 | ||||
| 5,774,911 | ||||||
| Principal amount | ||||||
| ·Variable Rate Demand Note – 0.38% | ||||||
| University of Minnesota Series C 3.23% 12/1/36 | $ | 2,260,000 | 2,260,000 | |||
| 2,260,000 | ||||||
| Total Short-Term Investments (cost $8,034,911) | 8,034,911 | |||||
| Total Value of Securities – 103.75% | ||||||
| (cost $618,798,043) | 617,364,539 | |||||
| Liabilities Net of Receivables and | ||||||
| Other Assets* – (3.75%) | (22,317,303 | ) | ||||
| Net Assets Applicable to 50,295,839 | ||||||
| Shares Outstanding – 100.00% | $ | 595,047,236 | ||||
17
Statements of net assets
Delaware Tax-Free Minnesota Fund
| Net Asset Value – Delaware Tax-Free Minnesota Fund | $11.83 | ||
| Class A ($556,259,563 / 47,024,386 Shares) | |||
| Net Asset Value – Delaware Tax-Free Minnesota Fund | |||
| Class B ($13,210,265 / 1,115,914 Shares) | $11.84 | ||
| Net Asset Value – Delaware Tax-Free Minnesota Fund | |||
| Class C ($25,577,408 / 2,155,539 Shares) | $11.87 | ||
| Components of Net Assets at February 29, 2008: | |||
| Shares of beneficial interest (unlimited authorization – no par) | $595,065,901 | ||
| Distributions in excess of net investment income | (22,417 | ) | |
| Accumulated net realized gain on investments | 1,437,256 | ||
| Net unrealized depreciation of investments | (1,433,504 | ) | |
| Total net assets | $595,047,236 | ||
| ^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
| · | Variable rate security. The rate shown is the rate as of February 29, 2008. |
| § | 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 10 in “Notes to financial statements.” |
| @ | Illiquid security. At February 29, 2008, the aggregate amount of illiquid securities was $3,313,537, which represented 0.56% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
| * | Includes $32,180,000 in liability for Inverse Floater programs. See Note 7 in “Notes to financial statements.” |
| &1 | Security held in a trust in connection with the Inverse Floater security $5,250,000, 9.341%, 7/1/21. |
| &2 | Security held in a trust in connection with the Inverse Floater security $1,920,000, 9.922%, 7/1/18. |
| &3 | Security held in a trust in connection with the Inverse Floater security $4,585,000, 8.710%, 1/1/13. |
| &4 | Security held in a trust in connection with the Inverse Floater security $2,000,000, 6.230%, 1/1/14. |
| &5 | Security held in a trust in connection with the Inverse Floater security $2,950,000, 6.230%, 1/1/15. |
| &6 | Security held in a trust in connection with the Inverse Floater security $2,100,000, 9.341%, 11/15/27. |
18
| &7 | Security held in a trust in connection with the Inverse Floater security $8,375,000, 9.341%, 11/15/27. |
| &8 | Security held in a trust in connection with the Inverse Floater security $5,000,000, 12.573%, 3/1/18. |
For additional information on the Inverse Floater programs, 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 Authority
FNMA — Insured by Federal National Mortgage Association
FSA — Insured by Financial Security Assurance
GNMA — Insured by Government National Mortgage Association
HUD — Housing and Urban Development
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance
VA — Insured by the Veterans Administration
| Net Asset Value and Offering Price Per Share – | |
| Delaware Tax-Free Minnesota Fund | |
| Net asset value Class A (A) | $11.83 |
| Sales charge (4.50% of offering price) (B) | 0.56 |
| Offering price | $12.39 |
| (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
19
| Delaware Tax-Free Minnesota Intermediate Fund | February 29, 2008 (Unaudited) |
| Principal amount | Value | ||||
| Municipal Bonds – 93.77% | |||||
| Corporate-Backed Revenue Bonds – 3.03% | |||||
| Laurentian Energy Authority I Cogeneration Revenue | |||||
| Series A 5.00% 12/1/21 | $ | 750,000 | $ | 693,938 | |
| Minneapolis Community Development Agency | |||||
| (Limited Tax Common Bond Fund) | |||||
| Series 4 6.20% 6/1/17 (AMT) | 1,055,000 | 1,059,293 | |||
| 1,753,231 | |||||
| Education Revenue Bonds – 5.62% | |||||
| Minnesota Higher Education Facilities Authority Revenue | |||||
| (Macalester College) Series 6-P 4.25% 3/1/27 | 750,000 | 653,625 | |||
| (University of St. Thomas) Series 5-Y 5.25% 10/1/19 | 1,590,000 | 1,603,579 | |||
| St. Cloud Housing & Redevelopment Authority Revenue | |||||
| (State University Foundation Project) 5.00% 5/1/23 | 1,000,000 | 996,770 | |||
| 3,253,974 | |||||
| Electric Revenue Bond – 1.65% | |||||
| Chaska Electric Revenue Refunding | |||||
| (Generating Facilities) Series A 5.25% 10/1/25 | 1,000,000 | 955,720 | |||
| 955,720 | |||||
| Escrowed to Maturity Bond – 1.95% | |||||
| University of Minnesota Series A 5.75% 7/1/16 | 1,000,000 | 1,131,700 | |||
| 1,131,700 | |||||
| Health Care Revenue Bonds – 12.74% | |||||
| Minneapolis-St. Paul Housing & Redevelopment | |||||
| Authority Health Care System (Health | |||||
| Partners Obligation Group Project) | |||||
| 6.00% 12/1/17 | 1,125,000 | 1,164,083 | |||
| Moorhead Economic Development Authority | |||||
| Multifamily Housing Revenue Refunding | |||||
| (Eventide Lutheran Home Project) 4.70% 6/1/18 | 475,000 | 421,776 | |||
| Northfield Hospital Revenue 5.25% 11/1/21 | 1,000,000 | 941,280 | |||
| Oakdale Elderly Housing Revenue | |||||
| (PHM/Oakdale Project) 5.75% 3/1/18 | 1,400,000 | 1,378,594 | |||
| Sherburne County Health Care Facilities Revenue | |||||
| (Guardian Angel Health Services) 5.30% 10/1/26 | 250,000 | 220,165 | |||
| St. Paul Housing & Redevelopment Authority | |||||
| Health Care Revenue (Health East Project) | |||||
| Series B 5.85% 11/1/17 | 1,160,000 | 1,166,763 | |||
20
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Health Care Revenue Bonds (continued) | ||||||
| St. Paul Housing & Redevelopment Authority Hospital | ||||||
| Revenue (Allina Health System) | ||||||
| Series A 5.00% 11/15/14 (MBIA) | $ | 2,000,000 | $ | 2,083,460 | ||
| 7,376,121 | ||||||
| Housing Revenue Bonds – 7.44% | ||||||
| Minneapolis Multifamily Housing Revenue Refunding | ||||||
| (Trinity Apartments) (HUD Section 8) | ||||||
| Series A 6.75% 5/1/21 | 1,750,000 | 1,776,110 | ||||
| Minnesota Housing Finance Agency Residential Housing | ||||||
| Series I 5.10% 7/1/20 (AMT) | 785,000 | 773,994 | ||||
| Series M 4.85% 7/1/31(AMT) | 1,000,000 | 881,590 | ||||
| Single Family Mortgage Series J 5.90% 7/1/28 (AMT) | 395,000 | 395,032 | ||||
| @Park Rapids Multifamily Housing Revenue | ||||||
| (The Court Apartments Project) (HUD Section 8) | ||||||
| 6.05% 8/1/12 | 480,000 | 482,323 | ||||
| 4,309,049 | ||||||
| Lease Revenue Bonds – 3.19% | ||||||
| Edina Housing & Redevelopment Authority | ||||||
| Public Project Revenue | ||||||
| (Appropriate Lease Obligation) 5.125% 2/1/19 | 1,000,000 | 1,021,770 | ||||
| Virginia Housing & Redevelopment Authority | ||||||
| Health Care Facilities Lease Revenue | ||||||
| 5.25% 10/1/25 | 880,000 | 824,270 | ||||
| 1,846,040 | ||||||
| Local General Obligation Bonds – 14.00% | ||||||
| Big Lake Independent School District #727 | ||||||
| Series C Refunding | ||||||
| 5.00% 2/1/16 (FSA) | 1,180,000 | 1,230,634 | ||||
| 5.00% 2/1/17 (FSA) | 1,000,000 | 1,042,910 | ||||
| Duluth County Independent School District #709 | ||||||
| Series A 4.25% 2/1/20 (FSA) | 710,000 | 678,504 | ||||
| Hennepin County Series B 4.75% 12/1/14 | 1,000,000 | 1,030,730 | ||||
| Minneapolis-St. Paul Metropolitan | ||||||
| Council Area Waste Water | ||||||
| Series C 5.00% 3/1/16 | 560,000 | 604,285 | ||||
| Minneapolis Tax Increment Revenue | ||||||
| (Ivy Tower Project) 5.50% 2/1/22 | 415,000 | 370,172 | ||||
21
Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Local General Obligation Bonds (continued) | ||||||
| Osseo Independent School District #279 | ||||||
| Series A 5.00% 2/1/21 (FSA) | $ | 1,500,000 | $ | 1,514,550 | ||
| South Washington County Independent School District #833 | ||||||
| Series B 5.00% 2/1/16 (FSA) | 1,560,000 | 1,638,997 | ||||
| 8,110,782 | ||||||
| §Pre-Refunded Bonds – 21.33% | ||||||
| Centennial Independent School District #012 | ||||||
| Series A 5.00% 2/1/18-12 (FSA) | 1,000,000 | 1,054,500 | ||||
| 5.00% 2/1/20-12 (FSA) | 750,000 | 790,875 | ||||
| Dakota County Capital Improvement | ||||||
| Series A 4.75% 2/1/17-11 | 1,000,000 | 1,032,810 | ||||
| Hopkins Independent School District #270 | ||||||
| 5.125% 2/1/17-12 (FGIC) | 2,000,000 | 2,118,079 | ||||
| Minneapolis Health Care System Revenue Series A | ||||||
| (Allina Health Systems) 5.75% 11/15/32-12 | 1,500,000 | 1,645,185 | ||||
| (Fairview Health Services) 5.625% 5/15/32-12 | 1,750,000 | 1,910,178 | ||||
| Minnesota Higher Education Facilities Authority Revenue | ||||||
| (College of Art & Design) | ||||||
| Series 5-D 6.625% 5/1/20-10 | 1,000,000 | 1,075,520 | ||||
| Puerto Rico Commonwealth Highway & | ||||||
| Transportation Authority Revenue | ||||||
| Series D 5.25% 7/1/38-12 | 500,000 | 537,105 | ||||
| Puerto Rico Commonwealth Public Improvement | ||||||
| Series A 5.00% 7/1/33-13 | 500,000 | 538,355 | ||||
| St. Louis Park Health Care Facilities Revenue | ||||||
| (Park Nicollet Health Services) | ||||||
| Series B 5.50% 7/1/25-14 | 1,500,000 | 1,653,465 | ||||
| 12,356,072 | ||||||
| Special Tax Revenue Bond – 3.93% | ||||||
| Minneapolis Art Center Facilities Revenue | ||||||
| (Walker Art Center Project) 5.125% 7/1/21 | 2,250,000 | 2,272,500 | ||||
| 2,272,500 | ||||||
| State General Obligation Bonds – 13.41% | ||||||
| Minnesota State | ||||||
| 5.00% 6/1/10 | 1,330,000 | 1,395,250 | ||||
| 5.00% 11/1/11 | 2,000,000 | 2,135,880 | ||||
| 5.00% 8/1/15 | 2,000,000 | 2,164,240 | ||||
| Puerto Rico Commonwealth Public Improvement Refunding | ||||||
| Series A 5.25% 7/1/15 | 1,000,000 | 1,032,800 | ||||
22
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| State General Obligation Bonds (continued) | ||||||
| ·Puerto Rico Public Finance Commonwealth Appropriation | ||||||
| (LOC Puerto Rico Government Bank) | ||||||
| Series A 5.75% 8/1/27 | $ | 1,000,000 | $ | 1,040,440 | ||
| 7,768,610 | ||||||
| Transportation Revenue Bonds – 2.27% | ||||||
| Minneapolis/St. Paul Metropolitan Airports | ||||||
| Commission Refunding | ||||||
| Series A 5.00% 1/1/13 (AMT) | 500,000 | 522,895 | ||||
| Series 14 5.50% 1/1/11(AMT) | 750,000 | 793,493 | ||||
| 1,316,388 | ||||||
| Water & Sewer Revenue Bonds – 3.21% | ||||||
| Minnesota Public Facilities Authority Water Pollution | ||||||
| Control Revenue Refunding Series D 5.00% 3/1/14 | 500,000 | 539,180 | ||||
| St. Paul Sewer Revenue Series D 5.00% 12/1/20 | 1,275,000 | 1,319,510 | ||||
| 1,858,690 | ||||||
| Total Municipal Bonds (cost $53,973,145) | 54,308,877 | |||||
| Number of shares | ||||||
| Short-Term Investments – 8.28% | ||||||
| Money Market Instrument – 3.97% | ||||||
| Federated Minnesota Municipal Cash Trust | 2,297,979 | 2,297,979 | ||||
| 2,297,979 | ||||||
| Principal amount | ||||||
| ·Variable Rate Demand Note – 4.31% | ||||||
| University of Minnesota Series A 3.23% 1/1/34 | $ | 2,500,000 | 2,500,000 | |||
| 2,500,000 | ||||||
| Total Short-Term Investments (cost $4,797,979) | 4,797,979 | |||||
23
Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
| Total Value of Securities – 102.05% | |||||
| (cost $58,771,124) | $ | 59,106,856 | |||
| Liabilities Net of Receivables and | |||||
| Other Assets – (2.05%) | (1,187,221 | ) | |||
| Net Assets Applicable to 5,493,930 | |||||
| Shares Outstanding – 100.00% | $ | 57,919,635 | |||
| Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund | |||||
| Class A ($51,156,296 / 4,853,547 Shares) | $10.54 | ||||
| Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund | |||||
| Class B ($1,342,484 / 127,042 Shares) | $10.57 | ||||
| Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund | |||||
| Class C ($5,420,855 / 513,341 Shares) | $10.56 | ||||
| Components of Net Assets at February 29, 2008: | |||||
| Shares of beneficial interest (unlimited authorization – no par) | $ | 59,087,946 | |||
| Accumulated net realized loss on investments | (1,504,043 | ) | |||
| Net unrealized appreciation of investments | 335,732 | ||||
| Total net assets | $ | 57,919,635 | |||
Summary of abbreviations:
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FSA — Insured by Financial Security Assurance
HUD — Housing and Urban Development
LOC — Letter of Credit
MBIA — Insured by the Municipal Bond Insurance Association
| @ | Illiquid security. At February 29, 2008, the aggregate amount of illiquid securities was $482,323, which represented 0.83% of the Fund’s net assets. See Note 10 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 10 in “Notes to financial statements.” |
| · | Variable rate security. The rate shown is the rate as of February 29, 2008. |
24
| Net Asset Value and Offering Price per Share – | ||
| Delaware Tax-Free Minnesota Intermediate Fund | ||
| Net asset value Class A (A) | $10.54 | |
| Sales charge (2.75% of offering price) (B) | 0.30 | |
| Offering price | $10.84 |
| (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
25
| Statements of net assets | |
| Delaware Minnesota High-Yield Municipal Bond Fund | February 29, 2008 (Unaudited) |
| Principal amount | Value | |||||
| Municipal Bonds – 98.37% | ||||||
| Corporate-Backed Revenue Bonds – 3.46% | ||||||
| Cloquet Pollution Control Revenue Refunding | ||||||
| (Potlatch Corporation Project) 5.90% 10/1/26 | $ | 1,700,000 | $ | 1,620,848 | ||
| Laurentian Energy Authority I Cogeneration Revenue | ||||||
| �� Series A 5.00% 12/1/21 | 1,750,000 | 1,619,188 | ||||
| Sartell Environmental Improvement Revenue Refunding | ||||||
| (International Paper) Series A 5.20% 6/1/27 | 1,750,000 | 1,523,270 | ||||
| 4,763,306 | ||||||
| Education Revenue Bonds – 7.57% | ||||||
| Minnesota Higher Education Facilities Authority Revenue | ||||||
| (Augsburg College) | ||||||
| Series 6-C 5.00% 5/1/23 | 700,000 | 646,940 | ||||
| Series 6-J1 5.00% 5/1/36 | 1,000,000 | 864,770 | ||||
| (Macalester College) Series 6-P 4.25% 3/1/32 | 1,500,000 | 1,261,275 | ||||
| (St. Olaf) | ||||||
| Series 6-O 4.50% 10/1/32 | 1,000,000 | 847,080 | ||||
| Series 6-O 5.00% 10/1/22 | 1,000,000 | 969,740 | ||||
| (University of St. Thomas) Series 6-I 5.00% 4/1/23 | 1,500,000 | 1,411,965 | ||||
| Minnesota State Higher Education Facilities | ||||||
| Authority Revenue (St. Catherine College) | ||||||
| Series 5-N1 5.375% 10/1/32 | 2,000,000 | 1,845,060 | ||||
| University of Minnesota Special Purpose Revenue | ||||||
| (Supported Stadium Debt) 5.00% 8/1/29 | 2,660,000 | 2,584,961 | ||||
| 10,431,791 | ||||||
| Electric Revenue Bonds – 6.46% | ||||||
| Chaska Electric Revenue Refunding (Generating Facilities) | ||||||
| Series A 5.25% 10/1/25 | 1,000,000 | 955,720 | ||||
| Minnesota State Municipal Power Agency Electric Revenue | ||||||
| 5.00% 10/1/35 | 1,000,000 | 926,720 | ||||
| Series A 5.00% 10/1/34 | 2,750,000 | 2,555,328 | ||||
| Southern Minnesota Municipal Power Agency Supply System | ||||||
| Revenue Series A 5.25% 1/1/16 (AMBAC) | 1,000,000 | 1,062,590 | ||||
| Western Minnesota Municipal Power Agency Revenue | ||||||
| 5.00% 1/1/36 (FSA) | 2,250,000 | 2,152,170 | ||||
| Series A 5.00% 1/1/30 (MBIA) | 1,335,000 | 1,255,487 | ||||
| 8,908,015 | ||||||
| Health Care Revenue Bonds – 29.42% | ||||||
| Aitkin Health Care Facilities Revenue Refunding | ||||||
| (Riverwood Health Care Center) 5.50% 2/1/24 | 700,000 | 649,152 | ||||
26
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Health Care Revenue Bonds (continued) | ||||||
| Apple Valley Economic Development Authority Health | ||||||
| Care Revenue (Augustanna Home St. Paul Project) | ||||||
| Series A 5.80% 1/1/30 | $ | 1,000,000 | $ | 912,020 | ||
| Bemidji Health Care Facilities First Mortgage Revenue | ||||||
| (North Country Health Services) | ||||||
| 5.00% 9/1/31 (RADIAN) | 2,500,000 | 2,262,924 | ||||
| Refunding 5.00% 9/1/20 | 1,150,000 | 1,125,425 | ||||
| Breckenridge Catholic Health Initiatives | ||||||
| Series A 5.00% 5/1/30 | 2,000,000 | 1,848,540 | ||||
| Detroit Lakes Housing & Health Facilities Revenue Refunding | ||||||
| (Mankato Lutheran Homes) Series D 5.50% 8/1/21 | 500,000 | 467,315 | ||||
| Glencoe Health Care Facilities Revenue | ||||||
| (Glencoe Regional Health Services Project) | ||||||
| 5.00% 4/1/20 | 1,100,000 | 1,024,232 | ||||
| 5.00% 4/1/31 | 1,965,000 | 1,652,034 | ||||
| Mahtomedi Senior Housing Revenue Refunding | ||||||
| (St. Andrews Village Project) 5.75% 12/1/40 | 1,000,000 | 884,030 | ||||
| Maple Grove Health Care Revenue Facilities | ||||||
| (North Memorial Health Care) 5.00% 9/1/35 | 3,590,000 | 3,195,314 | ||||
| Maple Grove Health Care System Revenue | ||||||
| (Maple Grove Hospital) 5.25% 5/1/37 | 1,000,000 | 919,690 | ||||
| Minneapolis Health Care Facilities Revenue | ||||||
| (Augustana Chapel View Homes) Series D 5.75% 6/1/29 | 1,000,000 | 919,510 | ||||
| (Jones-Harrison Residence Project) 5.60% 10/1/30 | 1,500,000 | 1,334,535 | ||||
| Minneapolis Health Care System Revenue | ||||||
| (Fairview Health Services) | ||||||
| Series D 5.00% 11/15/34 (AMBAC) | 1,000,000 | 939,660 | ||||
| Minneapolis-St. Paul Housing & Redevelopment | ||||||
| Authority (Health Partners Obligation Group Project) | ||||||
| 6.00% 12/1/17 | 1,125,000 | 1,164,083 | ||||
| Minnesota Agricultural & Economic Development Board | ||||||
| Revenue (Benedictine Health Systems) 5.75% 2/1/29 | 1,000,000 | 904,250 | ||||
| Moorhead Economic Development Authority Multifamily | ||||||
| Housing Revenue Refunding (Eventide Project) | ||||||
| Series A 5.15% 6/1/29 | 550,000 | 455,950 | ||||
| North Oaks Senior Housing Revenue (Presbyterian Homes) | ||||||
| 6.25% 10/1/47 | 1,000,000 | 947,610 | ||||
| Northfield Hospital Revenue 5.375% 11/1/31 | 1,000,000 | 885,780 | ||||
| Northfield Housing & Redevelopment Authority (Northfield | ||||||
| Retirement Center) Series B 5.125% 12/1/26 | 750,000 | 635,325 | ||||
27
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Health Care Revenue Bonds (continued) | ||||||
| Oakdale Elderly Housing Revenue (PHM/Oakdale Project) | ||||||
| 6.00% 3/1/28 | $ | 1,800,000 | $ | 1,722,330 | ||
| Owatonna Senior Housing Revenue | ||||||
| (Senior Living Project) Series A | ||||||
| 5.80% 10/1/29 | 400,000 | 368,028 | ||||
| 6.00% 4/1/41 | 1,250,000 | 1,151,875 | ||||
| Shakopee Health Care Facilities Revenue | ||||||
| (St. Francis Regional Medical Center) 5.25% 9/1/34 | 1,000,000 | 891,390 | ||||
| Shoreview Elderly Housing Revenue | ||||||
| (PHM/Shoreview Project) 6.15% 12/1/33 | 1,250,000 | 1,185,200 | ||||
| St. Paul Housing & Redevelopment Authority Health Care | ||||||
| Facilities Revenue (Health Partners | ||||||
| Obligation Group Project) 5.25% 5/15/36 | 1,000,000 | 868,090 | ||||
| St. Paul Housing & Redevelopment Authority Health | ||||||
| Care Revenue (Allina Health System) | ||||||
| Series A 5.00% 11/15/18 (MBIA) | 1,900,000 | 1,906,099 | ||||
| St. Paul Housing & Redevelopment Authority Hospital | ||||||
| Revenue (Health East Project) | ||||||
| 6.00% 11/15/25 | 1,000,000 | 969,700 | ||||
| Series A 5.70% 11/1/15 | 800,000 | 806,200 | ||||
| Series B 5.85% 11/1/17 | 250,000 | 251,458 | ||||
| St. Paul Housing and Redevelopment Authority | ||||||
| Multifamily Housing Revenue Refunding | ||||||
| (Marion Center Project) Series A 5.375% 5/1/43 | 1,000,000 | 796,490 | ||||
| Stillwater Health Care Revenue | ||||||
| (Health System Obligation Group) | ||||||
| 5.00% 6/1/25 | 2,000,000 | 1,866,060 | ||||
| 5.00% 6/1/35 | 1,000,000 | 892,890 | ||||
| Twin Valley Congregate Housing Revenue | ||||||
| (Living Options Project) 5.95% 11/1/28 | 1,825,000 | 1,512,177 | ||||
| Winona Health Care Facilities Revenue Refunding | ||||||
| (Winona Health Obligation Group) 5.15% 7/1/31 | 1,500,000 | 1,333,965 | ||||
| Woodbury Economic Development Authority Housing | ||||||
| Revenue Refunding 5.65% 6/1/33 | 1,000,000 | 881,200 | ||||
| 40,530,531 | ||||||
| Housing Revenue Bonds – 14.09% | ||||||
| Chanhassen Multifamily Housing Revenue Refunding | ||||||
| (Heritage Park Apartments) | ||||||
| 6.20% 7/1/30 (FHA) (AMT) (HUD Section 8) | 300,000 | 301,062 | ||||
28
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Housing Revenue Bonds (continued) | ||||||
| Chaska Multifamily Housing Revenue (West Suburban | ||||||
| Housing Partners Project) 5.875% 3/1/31 (AMT) | $ | 1,000,000 | $ | 863,630 | ||
| @Hutchinson Multifamily Housing Revenue | ||||||
| (Evergreen Apartments Project) (HUD Section 8) | ||||||
| 5.75% 11/1/28 | 1,815,000 | 1,575,075 | ||||
| Minneapolis Multifamily Housing Revenue | ||||||
| (Grant Street Apartments Project) Series A 7.25% 11/1/29 | 2,085,000 | 2,113,064 | ||||
| (Olson Townhomes Project) 6.00% 12/1/19 (AMT) | 1,420,000 | 1,420,625 | ||||
| (Trinity Apartments) Refunding | ||||||
| Series A 6.75% 5/1/21 (HUD Section 8) | 645,000 | 654,623 | ||||
| Minneapolis-St. Paul Housing Finance Board Single | ||||||
| Family Mortgage (City Living Project) | ||||||
| Series A-2 5.00% 12/1/38 (GNMA) (FNMA) (AMT) | 985,592 | 879,059 | ||||
| Minnesota Housing Finance Agency | ||||||
| (Rental Housing) | ||||||
| Series A 4.875% 8/1/24 (AMT) | 585,000 | 542,781 | ||||
| Series A-1 5.00% 8/1/40 (AMT) | 2,265,000 | 1,980,629 | ||||
| (Residential Housing) | ||||||
| Series G 5.00% 7/1/36 (AMT) | 1,000,000 | 888,010 | ||||
| Series I 4.85% 7/1/38 (AMT) | 1,145,000 | 993,391 | ||||
| Series M 4.875% 7/1/37 (AMT) | 2,500,000 | 2,169,300 | ||||
| (Single Family Mortgage) Series J 5.90% 7/1/28 (AMT) | 610,000 | 610,049 | ||||
| Minnesota State Housing Finance | ||||||
| Agency Single Family Mortgage | ||||||
| Series E 6.25% 1/1/23 (AMT) | 5,000 | 5,002 | ||||
| Series M 5.875% 1/1/17 | 10,000 | 10,306 | ||||
| St. Cloud Housing & Redevelopment Authority Multifamily | ||||||
| Housing Revenue (Sterling Heights Apartments Project) | ||||||
| 7.55% 4/1/39 (AMT) | 530,000 | 501,290 | ||||
| St. Paul Housing & Redevelopment Authority Multifamily | ||||||
| Housing Revenue (Shelby Grotto Housing Project) | ||||||
| 5.50% 9/20/44 (GNMA) (FHA) (AMT) | 750,000 | 710,550 | ||||
| Stillwater Multifamily Housing Revenue | ||||||
| (Orleans Homes LP Project) 5.50% 2/1/42 (AMT) | 750,000 | 602,790 | ||||
| Washington County Housing & Redevelopment | ||||||
| Authority Revenue Refunding | ||||||
| (Briar Pond Project) Series B 7.125% 8/20/34 | 825,000 | 738,210 | ||||
| (Woodland Park Apartments Project) 4.70% 10/1/32 | 2,075,000 | 1,851,045 | ||||
| 19,410,491 | ||||||
29
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| Lease Revenue Bonds – 1.88% | ||||||
| Hibbing Economic Development Authority Revenue | ||||||
| (Public Project - Hibbing Lease Obligation) 6.40% 2/1/12 | $ | 530,000 | $ | 530,530 | ||
| St. Paul Port Authority Lease Revenue | ||||||
| (Regions Hospital Parking Ramp Project) | ||||||
| Series 1 5.00% 8/1/36 | 1,375,000 | 1,084,724 | ||||
| (Robert Street Office Building Project) | ||||||
| Series 3-11 5.00% 12/1/27 | 1,000,000 | 977,820 | ||||
| 2,593,074 | ||||||
| Local General Obligation Bonds – 9.93% | ||||||
| Chaska Independent School District #112 | ||||||
| Series A 4.50% 2/1/28 (MBIA) | 1,000,000 | 907,980 | ||||
| Duluth Independent School District #709 | ||||||
| 4.25% 2/1/20 (FSA) | 1,000,000 | 955,640 | ||||
| Farmington Independent School District #192 | ||||||
| Series B 5.00% 2/1/27 (FSA) | 1,000,000 | 987,910 | ||||
| Foley Independent School District #51 (School Building) | ||||||
| Refunding Series A 5.00% 2/1/21 | 1,105,000 | 1,127,332 | ||||
| Hopkins Independent School District #270 Facilities | ||||||
| 5.00% 2/1/26 (MBIA) | 1,055,000 | 1,043,880 | ||||
| Lakeville Independent School District #194 | ||||||
| Series A 4.75% 2/1/22 (FSA) | 1,000,000 | 983,960 | ||||
| Metropolitan Council Minneapolis - St. Paul Metropolitan | ||||||
| Area Waste Water Treatment | ||||||
| Series B 5.00% 12/1/21 | 500,000 | 508,270 | ||||
| Series C 5.00% 3/1/16 | 750,000 | 809,310 | ||||
| Minneapolis Tax Increment Revenue | ||||||
| (Ivy Tower Project) 5.70% 2/1/29 | 785,000 | 678,264 | ||||
| (St. Anthony Falls Project) 5.65% 2/1/27 | 500,000 | 433,865 | ||||
| Moorhead Improvement Series B 5.00% 2/1/33 (MBIA) | 750,000 | 722,055 | ||||
| Perham Disposal System 6.00% 5/1/22 (AMT) | 1,500,000 | 1,508,010 | ||||
| St. Paul Independent School District #625 | ||||||
| Series B 5.00% 2/1/20 (FSA) | 750,000 | 765,360 | ||||
| Todd Morrison Cass & Wadena Counties United Hospital | ||||||
| District (Health Care Facilities - Lakewood) | ||||||
| 5.00% 12/1/21 | 610,000 | 586,472 | ||||
| 5.125% 12/1/24 | 205,000 | 194,486 | ||||
| 5.25% 12/1/26 | 1,540,000 | 1,470,885 | ||||
| 13,683,679 | ||||||
30
| Principal amount | Value | |||||
| Municipal Bonds (continued) | ||||||
| §Pre-Refunded Bonds – 12.61% | ||||||
| Andover Economic Development Authority Public Facilities | ||||||
| Lease Revenue (Andover Community Center) | ||||||
| 5.20% 2/1/34-14 | $ | 1,000,000 | $ | 998,540 | ||
| Duluth Economic Development Authority | ||||||
| Health Care Facilities Revenue | ||||||
| (Benedictine Health System - St. Mary’s Hospital) | ||||||
| 5.25% 2/15/28-14 | 1,000,000 | 944,460 | ||||
| 5.25% 2/15/33-14 | 2,250,000 | 2,065,613 | ||||
| Minneapolis Community Development Agency | ||||||
| (Supported Development Revenue) | ||||||
| Series G-3 5.45% 12/1/31-11 | 1,000,000 | 1,079,160 | ||||
| Minneapolis Health Care System Revenue | ||||||
| (Allina Health Systems) Series A 5.75% 11/15/32-12 | 2,000,000 | 2,193,580 | ||||
| (Fairview Health Services) Series A 5.625% 5/15/32-12 | 2,000,000 | 2,183,060 | ||||
| Minnesota Higher Education Facilities Authority Revenue | ||||||
| (College of Art & Design Project) | ||||||
| Series 5-D 6.75% 5/1/26-10 | 500,000 | 539,065 | ||||
| Minnesota State Refunding and Various Purpose | ||||||
| 5.00% 11/1/17-08 | 2,160,000 | 2,196,245 | ||||
| Puerto Rico Commonwealth Highway & Transportation | ||||||
| Authority Revenue Series D 5.25% 7/1/38-12 | 1,500,000 | 1,611,315 | ||||
| Puerto Rico Commonwealth Public Improvement | ||||||
| Series A 5.00% 7/1/34-14 | 315,000 | 340,058 | ||||
| Puerto Rico Electric Power Authority Revenue | ||||||
| Series II 5.25% 7/1/31-12 | 1,000,000 | 1,084,960 | ||||
| Rochester Multifamily Housing Revenue | ||||||
| (Wedum Shorewood Campus Project) 6.60% 6/1/36-09 | 990,000 | 1,052,825 | ||||
| St. Louis Park Health Care Facilities Revenue | ||||||
| (Park Nicollet Health Services) Series B 5.25% 7/1/30-14 | 1,000,000 | 1,088,290 | ||||
| 17,377,171 | ||||||
| Special Tax Revenue Bonds – 3.69% | ||||||
| Hennepin County Sales Tax Revenue | ||||||
| (First Lien – Ballpark Project) Series A 5.00% 12/15/24 | 1,000,000 | 1,001,460 | ||||
| Minneapolis Supported Development Revenue | ||||||
| (Limited Tax Common Bond Fund) | ||||||
| Series 2A 5.00% 6/1/28 (AMT) | 1,170,000 | 1,033,145 | ||||
| Puerto Rico Commonwealth Infrastructure Financing | ||||||
| Authority Special Tax Revenue Series B 5.00% 7/1/46 | 800,000 | 698,624 | ||||
31
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
| Principal amount | Value | ||||
| Municipal Bonds (continued) | |||||
| Special Tax Revenue Bonds (continued) | |||||
| St. Paul Port Authority (Brownsfields Redevelopment Tax) | |||||
| Series 2 5.00% 3/1/37 | $ | 1,500,000 | $ | 1,404,240 | |
| Virgin Islands Public Finance Authority Revenue | |||||
| (Senior Lien – Matching Fund Loan Note) | |||||
| Series A 5.25% 10/1/24 | 1,000,000 | 944,390 | |||
| 5,081,859 | |||||
| State General Obligation Bonds – 4.25% | |||||
| Minnesota State | |||||
| 5.00% 6/1/10 | 2,500,000 | 2,622,650 | |||
| 5.00% 6/1/14 | 1,000,000 | 1,081,520 | |||
| Puerto Rico Commonwealth Public Improvement Series A | |||||
| 5.00% 7/1/34 | 185,000 | 166,739 | |||
| 5.25% 7/1/22 | 1,000,000 | 961,920 | |||
| Puerto Rico Government Development Bank Senior Notes | |||||
| Series B 5.00% 12/1/14 | 1,000,000 | 1,025,210 | |||
| 5,858,039 | |||||
| Transportation Revenue Bond – 1.37% | |||||
| Minneapolis - St. Paul Metropolitan Airports Commission | |||||
| Revenue Series A 5.00% 1/1/28 (MBIA) | 2,000,000 | 1,884,600 | |||
| 1,884,600 | |||||
| Water & Sewer Revenue Bonds – 3.64% | |||||
| Minnesota Public Facilities Authority Water Pollution | |||||
| Control Revenue Refunding Series D 5.00% 3/1/14 | 1,500,000 | 1,617,540 | |||
| Minnesota Public Facilities Authority Clean Water Revenue | |||||
| Series B 5.00% 3/1/18 | 2,000,000 | 2,120,220 | |||
| St. Paul Sewer Revenue Series D 5.00% 12/1/19 | 1,220,000 | 1,276,937 | |||
| 5,014,697 | |||||
| Total Municipal Bonds (cost $145,070,267) | 135,537,253 | ||||
| Number of shares | |||||
| Short-Term Investments – 1.86% | |||||
| Money Market Instrument – 0.39% | |||||
| Federated Minnesota Municipal Cash Trust | 531,707 | 531,707 | |||
| 531,707 | |||||
32
| Principal amount | Value | ||||||
| Short-Term Investments (continued) | |||||||
| ·Variable Rate Demand Notes – 1.47% | |||||||
| St. Paul Port Authority Industrial Development Revenue | |||||||
| (Camada Limited Partnership-711) 3.26% 12/1/22 (AMT) | $ | 100,000 | $ | 100,000 | |||
| University of Minnesota | |||||||
| Series A 3.23% 1/1/34 | 480,000 | 480,000 | |||||
| Series C 3.23% 12/1/36 | 1,445,000 | 1,445,000 | |||||
| 2,025,000 | |||||||
| Total Short-Term Investments (cost $2,556,707) | 2,556,707 | ||||||
| Total Value of Securities – 100.23% | |||||||
| (cost $147,626,974) | 138,093,960 | ||||||
| Liabilities Net of Receivables and | |||||||
| Other Assets – (0.23%) | (313,019 | ) | |||||
| Net Assets Applicable to 14,228,328 | |||||||
| Shares Outstanding – 100.00% | $ | 137,780,941 | |||||
| Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund | |||||||
| Class A ($104,955,730 / 10,843,296 Shares) | $9.68 | ||||||
| Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund | |||||||
| Class B ($5,912,293 / 609,949 Shares) | $9.69 | ||||||
| Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund | |||||||
| Class C ($26,912,918 / 2,775,083 Shares) | $9.70 | ||||||
| Components of Net Assets at February 29, 2008 | |||||||
| Shares of beneficial interest (unlimited authorization – no par) | $ | 149,909,597 | |||||
| Accumulated net realized loss on investments | (2,595,642 | ) | |||||
| Net unrealized depreciation of investments | (9,533,014 | ) | |||||
| Total net assets | $ | 137,780,941 | |||||
33
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FHA — Insured by the Federal Housing Administration
FNMA — Insured by 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
HUD — Housing and Urban Development
RADIAN — Insured by Radian Asset Assurance
| § | 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 10 in “Notes to financial statements.” |
| · | Variable rate security. The rate shown is the rate as of February 29, 2008. |
| @ | Illiquid security. At February 29, 2008 the aggregate amount of illiquid securities was $1,575,075, which represented 1.14% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
| Net Asset Value and Offering Price per Share – | ||
| Delaware Minnesota High-Yield Municipal Bond Fund | ||
| Net asset value Class A (A) | $ | 9.68 |
| Sales charge (4.50% of offering price) (B) | 0.46 | |
| Offering price | $ | 10.14 |
| (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
34
Statements of operations
Six Months Ended February 29, 2008 (Unaudited)
| Delaware | Delaware | ||||||||||
| Delaware | Tax-Free | Minnesota | |||||||||
| Tax-Free | Minnesota | High-Yield | |||||||||
| Minnesota | Intermediate | Municipal | |||||||||
| Fund | Fund | Bond Fund | |||||||||
| Investment Income: | |||||||||||
| Interest | $ | 16,327,794 | $ | 1,311,403 | $ | 3,612,314 | |||||
| Expenses: | |||||||||||
| Management fees | 1,673,235 | 138,858 | 398,535 | ||||||||
| Interest and related expenses | 769,615 | — | — | ||||||||
| Distribution expenses – Class A | 723,852 | 61,178 | 139,034 | ||||||||
| Distribution expenses – Class B | 72,747 | 7,394 | 33,663 | ||||||||
| Distribution expenses – Class C | 131,904 | 25,620 | 134,738 | ||||||||
| Dividend disbursing and transfer agent | |||||||||||
| fees and expenses | 152,381 | 17,570 | 45,152 | ||||||||
| Accounting and administration expenses | 123,865 | 11,106 | 28,977 | ||||||||
| Legal fees | 63,642 | 14,497 | 21,123 | ||||||||
| Reports and statements to shareholders | 27,098 | 1,829 | 7,354 | ||||||||
| Registration fees | 22,492 | 6,677 | 8,232 | ||||||||
| Audit and tax | 21,132 | 5,315 | 8,462 | ||||||||
| Trustees’ fees | 15,039 | 1,346 | 3,511 | ||||||||
| Insurance fees | 8,363 | 750 | 2,089 | ||||||||
| Custodian fees | 7,665 | 4,166 | 7,789 | ||||||||
| Consulting fees | 5,755 | 519 | 1,302 | ||||||||
| Pricing fees | 4,745 | 1,635 | 3,011 | ||||||||
| Trustees’ expenses | 2,691 | 240 | 631 | ||||||||
| Dues and services | 1,169 | 51 | 219 | ||||||||
| Taxes (other than taxes on income) | 354 | 32 | 12 | ||||||||
| 3,827,744 | 298,782 | 843,833 | |||||||||
| Less expenses absorbed or waived | (459 | ) | (37,270 | ) | (70,660 | ) | |||||
| Less waived distribution expenses – Class A | — | (24,471 | ) | — | |||||||
| Total operating expenses | 3,827,285 | 237,041 | 773,173 | ||||||||
| Net Investment Income | 12,500,509 | 1,074,362 | 2,839,141 | ||||||||
36
| Delaware | Delaware | ||||||||||
| Delaware | Tax-Free | Minnesota | |||||||||
| Tax-Free | Minnesota | High-Yield | |||||||||
| Minnesota | Intermediate | Municipal | |||||||||
| Fund | Fund | Bond Fund | |||||||||
| Net Realized and Unrealized Gain | |||||||||||
| (Loss) on Investments: | |||||||||||
| Net realized gain on investments | $ | 1,186,162 | $ | 41,977 | $ | 6,054 | |||||
| Net change in unrealized appreciation/ | |||||||||||
| depreciation of investments | (17,553,030 | ) | (479,845 | ) | (7,266,735 | ) | |||||
| Net Realized and Unrealized Loss | |||||||||||
| on Investments | (16,366,868 | ) | (437,868 | ) | (7,260,681 | ) | |||||
| Net Increase (Decrease) in Net Assets | |||||||||||
| Resulting from Operations | $ | (3,866,359 | ) | $ | 636,494 | $ | (4,421,540 | ) | |||
See accompanying notes
37
Statements of changes in net assets
Delaware Tax-Free Minnesota Fund
| Six Months | Year | ||||||
| Ended | Ended | ||||||
| 2/29/08 | 8/31/07 | ||||||
| (Unaudited) | |||||||
| Increase (Decrease) in Net Assets from Operations: | |||||||
| Net investment income | $ | 12,500,509 | $ | 20,063,656 | |||
| Net realized gain on investments | 1,186,162 | 33,546 | |||||
| Net change in unrealized | |||||||
| appreciation/depreciation of investments | (17,553,030 | ) | (15,848,509 | ) | |||
| Net increase (decrease) in net assets resulting | |||||||
| from operations | (3,866,359 | ) | 4,248,693 | ||||
| Dividends and Distributions to Shareholders from: | |||||||
| Net investment income: | |||||||
| Class A | (12,191,596 | ) | (18,683,231 | ) | |||
| Class B | (251,580 | ) | (434,393 | ) | |||
| Class C | (454,565 | ) | (671,635 | ) | |||
| Net realized gain on investments: | |||||||
| Class A | (94,009 | ) | (332,881 | ) | |||
| Class B | (2,390 | ) | (9,630 | ) | |||
| Class C | (4,208 | ) | (13,628 | ) | |||
| (12,998,348 | ) | (20,145,398 | ) | ||||
| Capital Share Transactions: | |||||||
| Proceeds from shares sold: | |||||||
| Class A | 19,770,393 | 45,483,808 | |||||
| Class B | 119,268 | 425,118 | |||||
| Class C | 1,787,638 | 4,739,708 | |||||
| Net asset value of shares issued upon reinvestment | |||||||
| of dividends and distributions: | |||||||
| Class A | 8,118,155 | 12,201,845 | |||||
| Class B | 173,277 | 282,247 | |||||
| Class C | 363,016 | 527,388 | |||||
38
| Six Months | Year | ||||||
| Ended | Ended | ||||||
| 2/29/08 | 8/31/07 | ||||||
| (Unaudited) | |||||||
| Capital Share Transactions (continued): | |||||||
| Net assets from merger1: | |||||||
| Class A | $ | — | $ | 205,624,133 | |||
| Class B | — | 8,764,578 | |||||
| Class C | — | 11,631,916 | |||||
| 30,331,747 | 289,680,741 | ||||||
| Cost of shares repurchased: | |||||||
| Class A | (34,037,459 | ) | (52,066,708 | ) | |||
| Class B | (2,404,595 | ) | (4,727,364 | ) | |||
| Class C | (2,675,908 | ) | (4,490,541 | ) | |||
| (39,117,962 | ) | (61,284,613 | ) | ||||
| Increase (decrease) in net assets derived from | |||||||
| capital share transactions | (8,786,215 | ) | 228,396,128 | ||||
| Net Increase (Decrease) in Net Assets | (25,650,922 | ) | 212,499,423 | ||||
| Net Assets: | |||||||
| Beginning of period | 620,698,158 | 408,198,735 | |||||
| End of period | $ | 595,047,236 | $ | 620,698,158 | |||
| Distributions in excess of | |||||||
| net investment income | $ | (22,417 | ) | $ | (22,488 | ) | |
1See Note 8 in “Notes to financial statements.”
See accompanying notes
39
Statements of changes in net assets
Delaware Tax-Free Minnesota Intermediate Fund
| Six Months | Year | ||||||
| Ended | Ended | ||||||
| 2/29/08 | 8/31/07 | ||||||
| (Unaudited) | |||||||
| Increase (Decrease) in Net Assets from Operations: | |||||||
| Net investment income | $ | 1,074,362 | $ | 2,196,287 | |||
| Net realized gain (loss) on investments | 41,977 | (89,813 | ) | ||||
| Net change in unrealized | |||||||
| appreciation/depreciation of investments | (479,845 | ) | (1,183,650 | ) | |||
| Net increase in net assets resulting | |||||||
| from operations | 636,494 | 922,824 | |||||
| Dividends and Distributions to Shareholders from: | |||||||
| Net investment income: | |||||||
| Class A | (971,613 | ) | (1,971,803 | ) | |||
| Class B | (23,048 | ) | (60,183 | ) | |||
| Class C | (79,701 | ) | (164,296 | ) | |||
| (1,074,362 | ) | (2,196,282 | ) | ||||
| Capital Share Transactions: | |||||||
| Proceeds from shares sold: | |||||||
| Class A | 5,324,290 | 6,159,265 | |||||
| Class B | 131,720 | 13,368 | |||||
| Class C | 876,498 | 709,963 | |||||
| Net asset value of shares issued upon reinvestment | |||||||
| of dividends and distributions: | |||||||
| Class A | 687,488 | 1,387,160 | |||||
| Class B | 17,551 | 46,325 | |||||
| Class C | 60,978 | 120,231 | |||||
| 7,098,525 | 8,436,312 | ||||||
40
| Six Months | Year | ||||||
| Ended | Ended | ||||||
| 2/29/08 | 8/31/07 | ||||||
| (Unaudited) | |||||||
| Capital Share Transactions (continued): | |||||||
| Cost of shares repurchased: | |||||||
| Class A | $ | (2,944,571 | ) | $ | (6,246,465 | ) | |
| Class B | (514,286 | ) | (300,624 | ) | |||
| Class C | (408,055 | ) | (941,586 | ) | |||
| (3,866,912 | ) | (7,488,675 | ) | ||||
| Increase in net assets derived from | |||||||
| capital share transactions | 3,231,613 | 947,637 | |||||
| Net Increase (Decrease) in Net Assets | 2,793,745 | (325,821 | ) | ||||
| Net Assets: | |||||||
| Beginning of period | 55,125,890 | 55,451,711 | |||||
| End of period | $ | 57,919,635 | $ | 55,125,890 | |||
See accompanying notes
41
Statements of changes in net assets
Delaware Minnesota High-Yield Municipal Bond Fund
| Six Months | Year | ||||||
| Ended | Ended | ||||||
| 2/29/08 | 8/31/07 | ||||||
| (Unaudited) | |||||||
| Increase (Decrease) in Net Assets from Operations: | |||||||
| Net investment income | $ | 2,839,141 | $ | 5,320,666 | |||
| Net realized gain (loss) on investments | 6,054 | (71,140 | ) | ||||
| Net change in unrealized | |||||||
| appreciation/depreciation of investments | (7,266,735 | ) | (5,199,371 | ) | |||
| Net increase (decrease) in net assets resulting | |||||||
| from operations | (4,421,540 | ) | 50,155 | ||||
| Dividends and Distributions to Shareholders from: | |||||||
| Net investment income: | |||||||
| Class A | (2,276,185 | ) | (4,206,568 | ) | |||
| Class B | (112,421 | ) | (292,864 | ) | |||
| Class C | (449,440 | ) | (801,099 | ) | |||
| (2,838,046 | ) | (5,300,531 | ) | ||||
| Capital Share Transactions: | |||||||
| Proceeds from shares sold: | |||||||
| Class A | 14,438,037 | 39,562,284 | |||||
| Class B | 7,098 | 718,339 | |||||
| Class C | 4,560,199 | 10,413,630 | |||||
| Net asset value of shares issued upon reinvestment | |||||||
| of dividends and distributions: | |||||||
| Class A | 1,540,999 | 2,699,180 | |||||
| Class B | 73,726 | 194,713 | |||||
| Class C | 338,012 | 574,257 | |||||
| 20,958,071 | 54,162,403 | ||||||
42
| Six Months | Year | ||||||
| Ended | Ended | ||||||
| 2/29/08 | 8/31/07 | ||||||
| (Unaudited) | |||||||
| Capital Share Transactions (continued): | |||||||
| Cost of shares repurchased: | |||||||
| Class A | $ | (15,270,290 | ) | $ | (15,928,387 | ) | |
| Class B | (1,210,646 | ) | (2,897,155 | ) | |||
| Class C | (2,593,812 | ) | (4,527,479 | ) | |||
| (19,074,748 | ) | (23,353,021 | ) | ||||
| Increase in net assets derived from | |||||||
| capital share transactions | 1,883,323 | 30,809,382 | |||||
| Net Increase (Decrease) in Net Assets | (5,376,263 | ) | 25,559,006 | ||||
| Net Assets: | |||||||
| Beginning of period | 143,157,204 | 117,598,198 | |||||
| End of period | $ | 137,780,941 | $ | 143,157,204 | |||
| Undistributed net investment income | $ | — | $ | 45 | |||
See accompanying notes
43
Financial highlights
Delaware Tax-Free Minnesota Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets excluding interest and fees on short-term floating |
| rate notes issued |
| Interest and fees on short-term floating rate notes issued |
| Total expenses3 |
| Ratio of expenses to average net assets excluding interest and fees on short-term floating |
| rate notes issued prior to expense limitation and expenses paid indirectly |
| Interest and fees on short-term floating rate notes issued |
| Total expenses prior to expense limitation and expense paid indirectly3 |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
44
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $12.170 | $12.490 | $12.690 | $12.620 | $12.450 | $12.610 | ||||||||||||
| 0.251 | 0.511 | 0.511 | 0.527 | 0.590 | 0.622 | ||||||||||||
| (0.330 | ) | (0.313 | ) | (0.172 | ) | 0.222 | 0.348 | (0.148 | ) | ||||||||
| (0.079 | ) | 0.198 | 0.339 | 0.749 | 0.938 | 0.474 | |||||||||||
| (0.259 | ) | (0.507 | ) | (0.513 | ) | (0.526 | ) | (0.600 | ) | (0.625 | ) | ||||||
| (0.002 | ) | (0.011 | ) | (0.026 | ) | (0.153 | ) | (0.168 | ) | (0.009 | ) | ||||||
| (0.261 | ) | (0.518 | ) | (0.539 | ) | (0.679 | ) | (0.768 | ) | (0.634 | ) | ||||||
| $11.830 | $12.170 | $12.490 | $12.690 | $12.620 | $12.450 | ||||||||||||
| (0.71% | ) | 1.58% | 2.78% | 6.12% | 7.72% | 3.80% | |||||||||||
| $556,260 | $578,194 | $381,720 | $364,491 | $348,000 | $340,029 | ||||||||||||
| 0.94% | 0.94% | 0.93% | 0.93% | 0.94% | 0.97% | ||||||||||||
| 0.25% | 0.29% | 0.26% | 0.19% | 0.14% | 0.20% | ||||||||||||
| 1.19% | 1.23% | 1.19% | 1.12% | 1.08% | 1.17% | ||||||||||||
| 0.94% | 0.96% | 0.94% | 0.94% | 0.94% | 0.97% | ||||||||||||
| 0.25% | 0.29% | 0.26% | 0.19% | 0.14% | 0.20% | ||||||||||||
| 1.19% | 1.25% | 1.20% | 1.13% | 1.08% | 1.17% | ||||||||||||
| 4.09% | 4.12% | 4.11% | 4.19% | 4.68% | 4.90% | ||||||||||||
| 4.09% | 4.10% | 4.10% | 4.18% | 4.68% | 4.90% | ||||||||||||
| 18% | 7% | 13% | 10% | 25% | 27% | ||||||||||||
45
Financial highlights
Delaware Tax-Free Minnesota Fund Class B
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets excluding interest and fees on short-term floating |
| rate notes issued |
| Interest and fees on short-term floating rate notes issued |
| Total expenses3 |
| Ratio of expenses to average net assets excluding interest and fees on short-term floating |
| rate notes issued prior to expense limitation and expenses paid indirectly |
| Interest and fees on short-term floating rate notes issued |
| Total expenses prior to expense limitation and expense paid indirectly3 |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
46
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $12.180 | $12.500 | $12.700 | $12.630 | $12.460 | $12.620 | ||||||||||||
| 0.205 | 0.419 | 0.418 | 0.433 | 0.496 | 0.529 | ||||||||||||
| (0.330 | ) | (0.314 | ) | (0.172 | ) | 0.222 | 0.348 | (0.150 | ) | ||||||||
| (0.125 | ) | 0.105 | 0.246 | 0.655 | 0.844 | 0.379 | |||||||||||
| (0.213 | ) | (0.414 | ) | (0.420 | ) | (0.432 | ) | (0.506 | ) | (0.530 | ) | ||||||
| (0.002 | ) | (0.011 | ) | (0.026 | ) | (0.153 | ) | (0.168 | ) | (0.009 | ) | ||||||
| (0.215 | ) | (0.425 | ) | (0.446 | ) | (0.585 | ) | (0.674 | ) | (0.539 | ) | ||||||
| $11.840 | $12.180 | $12.500 | $12.700 | $12.630 | $12.460 | ||||||||||||
| (1.08% | ) | 0.82% | 2.01% | 5.33% | 6.91% | 3.02% | |||||||||||
| $13,210 | $15,674 | $11,354 | $12,810 | $14,588 | $16,394 | ||||||||||||
| 1.69% | 1.69% | 1.68% | 1.68% | 1.69% | 1.72% | ||||||||||||
| 0.25% | 0.29% | 0.26% | 0.19% | 0.14% | 0.20% | ||||||||||||
| 1.94% | 1.98% | 1.94% | 1.87% | 1.83% | 1.92% | ||||||||||||
| 1.69% | 1.71% | 1.69% | 1.69% | 1.69% | 1.72% | ||||||||||||
| 0.25% | 0.29% | 0.26% | 0.19% | 0.14% | 0.20% | ||||||||||||
| 1.94% | 2.00% | 1.95% | 1.88% | 1.83% | 1.92% | ||||||||||||
| 3.34% | 3.37% | 3.36% | 3.44% | 3.93% | 4.15% | ||||||||||||
| 3.34% | 3.35% | 3.35% | 3.43% | 3.93% | 4.15% | ||||||||||||
| 18% | 7% | 13% | 10% | 25% | 27% | ||||||||||||
47
Financial highlights
Delaware Tax-Free Minnesota Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets excluding interest and fees on short-term floating |
| rate notes issued |
| Interest and fees on short-term floating rate notes issued |
| Total expenses3 |
| Ratio of expenses to average net assets excluding interest and fees on short-term floating |
| rate notes issued prior to expense limitation and expenses paid indirectly |
| Interest and fees on short-term floating rate notes issued |
| Total expenses prior to expense limitation and expense paid indirectly3 |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
48
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $12.200 | $12.530 | $12.720 | $12.650 | $12.480 | $12.640 | ||||||||||||
| 0.205 | 0.418 | 0.418 | 0.433 | 0.495 | 0.529 | ||||||||||||
| (0.320 | ) | (0.323 | ) | (0.162 | ) | 0.222 | 0.348 | (0.151 | ) | ||||||||
| (0.115 | ) | 0.095 | 0.256 | 0.655 | 0.843 | 0.378 | |||||||||||
| (0.213 | ) | (0.414 | ) | (0.420 | ) | (0.432 | ) | (0.505 | ) | (0.529 | ) | ||||||
| (0.002 | ) | (0.011 | ) | (0.026 | ) | (0.153 | ) | (0.168 | ) | (0.009 | ) | ||||||
| (0.215 | ) | (0.425 | ) | (0.446 | ) | (0.585 | ) | (0.673 | ) | (0.538 | ) | ||||||
| $11.870 | $12.200 | $12.530 | $12.720 | $12.650 | $12.480 | ||||||||||||
| (1.00% | ) | 0.73% | 2.08% | 5.32% | 6.90% | 3.01% | |||||||||||
| $25,577 | $26,830 | $15,125 | $13,971 | $10,811 | $10,161 | ||||||||||||
| 1.69% | 1.69% | 1.68% | 1.68% | 1.69% | 1.72% | ||||||||||||
| 0.25% | 0.29% | 0.26% | 0.19% | 0.14% | 0.20% | ||||||||||||
| 1.94% | 1.98% | 1.94% | 1.87% | 1.83% | 1.92% | ||||||||||||
| 1.69% | 1.71% | 1.69% | 1.69% | 1.69% | 1.72% | ||||||||||||
| 0.25% | 0.29% | 0.26% | 0.19% | 0.14% | 0.20% | ||||||||||||
| 1.94% | 2.00% | 1.95% | 1.88% | 1.83% | 1.92% | ||||||||||||
| 3.34% | 3.37% | 3.36% | 3.44% | 3.93% | 4.15% | ||||||||||||
| 3.34% | 3.35% | 3.35% | 3.43% | 3.93% | 4.15% | ||||||||||||
| 18% | 7% | 13% | 10% | 25% | 27% | ||||||||||||
49
Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of expenses to average net assets |
| prior to expense limitation and expenses paid indirectly3 |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager and distributor, as applicable. Performance would have been lower had the waiver not been in effect. |
| 3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly for the years ended August 31, 2004 and 2003, includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.” |
See accompanying notes
50
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $10.610 | $10.860 | $11.010 | $10.890 | $10.630 | $10.720 | ||||||||||||
| 0.213 | 0.445 | 0.429 | 0.407 | 0.444 | 0.469 | ||||||||||||
| (0.070 | ) | (0.250 | ) | (0.150 | ) | 0.120 | 0.260 | (0.088 | ) | ||||||||
| 0.143 | 0.195 | 0.279 | 0.527 | 0.704 | 0.381 | ||||||||||||
| (0.213 | ) | (0.445 | ) | (0.429 | ) | (0.407 | ) | (0.444 | ) | (0.471 | ) | ||||||
| (0.213 | ) | (0.445 | ) | (0.429 | ) | (0.407 | ) | (0.444 | ) | (0.471 | ) | ||||||
| $10.540 | $10.610 | $10.860 | $11.010 | $10.890 | $10.630 | ||||||||||||
| 1.32% | 1.80% | 2.62% | 4.93% | 6.73% | 3.59% | ||||||||||||
| $51,156 | $48,477 | $48,297 | $52,958 | $57,012 | $57,635 | ||||||||||||
| 0.75% | 0.76% | 0.75% | 0.79% | 0.89% | 0.96% | ||||||||||||
| 0.99% | 1.00% | 0.97% | 0.95% | 1.00% | 1.06% | ||||||||||||
| 3.98% | 4.11% | 3.96% | 3.72% | 4.10% | 4.32% | ||||||||||||
| 3.74% | 3.87% | 3.74% | 3.56% | 3.99% | 4.22% | ||||||||||||
| 38% | 15% | 11% | 25% | 30% | 23% | ||||||||||||
51
Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class B
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of expenses to average net assets |
| prior to expense limitation and expenses paid indirectly3 |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
| 3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly for the years ended August 31, 2004 and 2003, includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.” |
See accompanying notes
52
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $10.640 | $10.890 | $11.040 | $10.920 | $10.650 | $10.740 | ||||||||||||
| 0.168 | 0.353 | 0.337 | 0.314 | 0.352 | 0.377 | ||||||||||||
| (0.070 | ) | (0.250 | ) | (0.150 | ) | 0.120 | 0.270 | (0.088 | ) | ||||||||
| 0.098 | 0.103 | 0.187 | 0.434 | 0.622 | 0.289 | ||||||||||||
| (0.168 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | (0.352 | ) | (0.379 | ) | ||||||
| (0.168 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | (0.352 | ) | (0.379 | ) | ||||||
| $10.570 | $10.640 | $10.890 | $11.040 | $10.920 | $10.650 | ||||||||||||
| 0.89% | 0.94% | 1.75% | 4.03% | 5.91% | 2.70% | ||||||||||||
| $1,343 | $1,713 | $1,993 | $2,811 | $3,224 | $4,002 | ||||||||||||
| 1.60% | 1.61% | 1.60% | 1.64% | 1.74% | 1.81% | ||||||||||||
| 1.74% | 1.75% | 1.72% | 1.70% | 1.75% | 1.83% | ||||||||||||
| 3.13% | 3.26% | 3.11% | 2.87% | 3.25% | 3.47% | ||||||||||||
| 2.99% | 3.12% | 2.99% | 2.81% | 3.24% | 3.45% | ||||||||||||
| 38% | 15% | 11% | 25% | 30% | 23% | ||||||||||||
53
Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets3 |
| Ratio of expenses to average net assets |
| prior to expense limitation and expenses paid indirectly3 |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
| 3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly for the years ended August 31, 2004 and 2003, includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.” |
See accompanying notes
54
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $10.630 | $10.880 | $11.030 | $10.910 | $10.640 | $10.730 | ||||||||||||
| 0.168 | 0.353 | 0.337 | 0.314 | 0.352 | 0.377 | ||||||||||||
| (0.070 | ) | (0.250 | ) | (0.150 | ) | 0.120 | 0.270 | (0.088 | ) | ||||||||
| 0.098 | 0.103 | 0.187 | 0.434 | 0.622 | 0.289 | ||||||||||||
| (0.168 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | (0.352 | ) | (0.379 | ) | ||||||
| (0.168 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | (0.352 | ) | (0.379 | ) | ||||||
| $10.560 | $10.630 | $10.880 | $11.030 | $10.910 | $10.640 | ||||||||||||
| 0.89% | 0.94% | 1.75% | 4.04% | 5.91% | 2.71% | ||||||||||||
| $5,421 | $4,936 | $5,162 | $5,996 | $7,188 | $6,544 | ||||||||||||
| 1.60% | 1.61% | 1.60% | 1.64% | 1.74% | 1.81% | ||||||||||||
| 1.74% | 1.75% | 1.72% | 1.70% | 1.75% | 1.83% | ||||||||||||
| 3.13% | 3.26% | 3.11% | 2.87% | 3.25% | 3.47% | ||||||||||||
| 2.99% | 3.12% | 2.99% | 2.81% | 3.24% | 3.45% | ||||||||||||
| 38% | 15% | 11% | 25% | 30% | 23% | ||||||||||||
55
Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to expense limitation and expenses paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
56
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $10.180 | $10.530 | $10.610 | $10.240 | $9.910 | $9.950 | ||||||||||||
| 0.210 | 0.430 | 0.445 | 0.469 | 0.512 | 0.550 | ||||||||||||
| (0.500 | ) | (0.350 | ) | (0.082 | ) | 0.372 | 0.328 | (0.030 | ) | ||||||||
| (0.290 | ) | 0.080 | 0.363 | 0.841 | 0.840 | 0.520 | |||||||||||
| (0.210 | ) | (0.430 | ) | (0.443 | ) | (0.471 | ) | (0.510 | ) | (0.560 | ) | ||||||
| (0.210 | ) | (0.430 | ) | (0.443 | ) | (0.471 | ) | (0.510 | ) | (0.560 | ) | ||||||
| $9.680 | $10.180 | $10.530 | $10.610 | $10.240 | $9.910 | ||||||||||||
| (2.95% | ) | 0.71% | 3.54% | 8.40% | 8.65% | 5.33% | |||||||||||
| $104,956 | $109,807 | $87,504 | $63,802 | $42,636 | $36,644 | ||||||||||||
| 0.89% | 0.90% | 0.89% | 0.89% | 0.75% | 0.75% | ||||||||||||
| 0.99% | 1.00% | 1.00% | 0.98% | 1.00% | 1.04% | ||||||||||||
| 4.10% | 4.09% | 4.26% | 4.50% | 5.03% | 5.48% | ||||||||||||
| 4.00% | 3.99% | 4.15% | 4.41% | 4.78% | 5.19% | ||||||||||||
| 10% | 10% | 4% | 3% | 24% | 32% | ||||||||||||
57
Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class B
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to expense limitation and expenses paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
58
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $10.190 | $10.550 | $10.630 | $10.250 | $9.930 | $9.970 | ||||||||||||
| 0.171 | 0.351 | 0.367 | 0.391 | 0.435 | 0.475 | ||||||||||||
| (0.499 | ) | (0.360 | ) | (0.082 | ) | 0.381 | 0.318 | (0.030 | ) | ||||||||
| (0.328 | ) | (0.009 | ) | 0.285 | 0.772 | 0.753 | 0.445 | ||||||||||
| (0.172 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | (0.433 | ) | (0.485 | ) | ||||||
| (0.172 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | (0.433 | ) | (0.485 | ) | ||||||
| $9.690 | $10.190 | $10.550 | $10.630 | $10.250 | $9.930 | ||||||||||||
| (3.31% | ) | (0.13% | ) | 2.77% | 7.68% | 7.71% | 4.55% | ||||||||||
| $5,912 | $7,334 | $9,578 | $10,505 | $12,463 | $12,513 | ||||||||||||
| 1.64% | 1.65% | 1.64% | 1.64% | 1.50% | 1.50% | ||||||||||||
| 1.74% | 1.75% | 1.75% | 1.73% | 1.75% | 1.79% | ||||||||||||
| 3.35% | 3.34% | 3.51% | 3.75% | 4.28% | 4.73% | ||||||||||||
| 3.25% | 3.24% | 3.40% | 3.66% | 4.03% | 4.44% | ||||||||||||
| 10% | 10% | 4% | 3% | 24% | 32% | ||||||||||||
59
Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| Income (loss) from investment operations: |
| Net investment income |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| Less dividends and distributions from: |
| Net investment income |
| Total dividends and distributions |
| Net asset value, end of period |
| Total return2 |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to expense limitation and expenses paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to expense limitation and expense paid indirectly |
| Portfolio turnover |
| 1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
| 2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
60
| Six Months Ended | Year Ended | ||||||||||||||||
| 2/29/081 | 8/31/07 | 8/31/06 | 8/31/05 | 8/31/04 | 8/31/03 | ||||||||||||
| (Unaudited) | |||||||||||||||||
| $10.200 | $10.550 | $10.630 | $10.250 | $9.930 | $9.970 | ||||||||||||
| 0.171 | 0.351 | 0.367 | 0.391 | 0.435 | 0.475 | ||||||||||||
| (0.500 | ) | (0.350 | ) | (0.082 | ) | 0.381 | 0.318 | (0.030 | ) | ||||||||
| (0.329 | ) | 0.001 | 0.285 | 0.772 | 0.753 | 0.445 | |||||||||||
| (0.171 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | (0.433 | ) | (0.485 | ) | ||||||
| (0.171 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | (0.433 | ) | (0.485 | ) | ||||||
| $9.700 | $10.200 | $10.550 | $10.630 | $10.250 | $9.930 | ||||||||||||
| (3.30% | ) | (0.04% | ) | 2.76% | 7.68% | 7.71% | 4.54% | ||||||||||
| $26,913 | $26,016 | $20,516 | $15,809 | $11,435 | $10,754 | ||||||||||||
| 1.64% | 1.65% | 1.64% | 1.64% | 1.50% | 1.50% | ||||||||||||
| 1.74% | 1.75% | 1.75% | 1.73% | 1.75% | 1.79% | ||||||||||||
| 3.35% | 3.34% | 3.51% | 3.75% | 4.28% | 4.73% | ||||||||||||
| 3.25% | 3.24% | 3.40% | 3.66% | 4.03% | 4.44% | ||||||||||||
| 10% | 10% | 4% | 3% | 24% | 32% | ||||||||||||
61
| Notes to financial statements | |
| Delaware Minnesota Municipal Bond Funds | February 29, 2008 (unaudited) |
Voyageur Mutual Funds 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 Tax-Free Funds is organized as a Delaware statutory trust and offers the Delaware Tax-Free Minnesota Fund. Voyageur Intermediate Tax-Free Funds is organized as a Delaware statutory trust and offers the Delaware Tax-Free Minnesota Intermediate Fund. Voyageur Mutual Funds, Voyageur Tax-Free Funds and Voyageur Intermediate Tax-Free Funds are individually referred to as Trust and collectively as Trusts. These financial statements and the related notes pertain to Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond Fund (each referred to as a Fund or collectively as the Funds). The above Trusts are open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended, 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% for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund and up to 2.75% for Delaware Tax-Free Minnesota Intermediate Fund. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Effective June 1, 2007, Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and that declined from 2% to zero for Delaware Tax-Free Minnesota Intermediate Fund depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and approximately five years after purchase for Delaware Tax-Free Minnesota Intermediate Fund. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months.
The investment objective of Delaware Tax-Free Minnesota Fund is to seek as high a level of current income exempt from federal income tax and from the Minnesota state personal income tax, as is consistent with preservation of capital.
The investment objective of Delaware Tax-Free Minnesota Intermediate Fund is to seek to provide investors with preservation of capital and, secondarily, current income exempt from federal income tax and from the Minnesota state personal income tax, by maintaining a dollar-weighted average effective portfolio maturity of 10 years or less.
The investment objective of Delaware Minnesota High-Yield Municipal Bond Fund is to seek as high a level of current income exempt from federal income tax and from the Minnesota state personal income tax, primarily through investment in medium- and lower-grade municipal obligations.
62
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 or broker 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. Generally, 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).
In September 2006, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 157 “Fair Value Measurements” (Statement 157). Statement 157 establishes a framework for measuring fair value in U.S. generally accepted accounting principles, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements. Statement 157 is intended to increase consistency and comparability among fair value estimates used in financial reporting. Statement 157 is effective for fiscal years beginning after November 15, 2007. Management does not expect the adoption of Statement 157 to have a material impact on the amounts reported in the financial statements.
Federal Income Taxes — Each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements.
Effective February 29, 2008, the Funds adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The adoption of FIN 48 did not result in the recording of any tax benefit or expense in the current period.
Class Accounting — Investment income and common expenses are allocated to the various 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.
63
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
1. Significant Accounting Policies (continued)
Interest and Related Expenses — Interest and related expenses include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees from a Fund’s participation in inverse floater programs where the Fund has transferred its own bonds to a trust that issues floating rate securities with an aggregate principal amount equal to the principal of the transferred bonds. In conveyance of the bond, the Fund receives the inverse floating rate securities and cash from the trust. As a result of certain rights retained by the Fund, the transfer of the bond is not considered a sale, but rather a form of financing for accounting purposes whereby the cash received is recorded as a liability and interest expense is recorded based on the interest rate of the floating rate securities. Remarketing fees, liquidity fees, and trustees’ fees expenses are recorded on the accrual basis.
For the period ended February 29, 2008, Delaware Tax-Free Minnesota Fund had an average daily liability from the participation in inverse floater program of $37,293,973 and recorded interest expense at an average rate of 3.67%.
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 directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such 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.
64
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, which is calculated based on each Fund’s average daily net assets as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||||||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||||||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||||||||
| On the first $500 million | 0.550% | 0.500% | 0.550% | |||||||||
| On the next $500 million | 0.500% | 0.475% | 0.500% | |||||||||
| On the next $1.5 billion | 0.450% | 0.450% | 0.450% | |||||||||
| In excess of $2.5 billion | 0.425% | 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 fees, inverse floater expenses, 12b-1 plan expenses, certain insurance costs and non-routine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations, do not exceed specified percentages of average daily net assets as shown below. For purposes of these waivers and reimbursements, non-routine expenses may also involve such additional costs and expenses, as may be agreed upon from time to time by the Funds’ Board of Trustees and DMC.
| Delaware Tax-Free | Delaware Minnesota | |||||||||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||||||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||||||||
| Operating expense limitation | ||||||||||||
| as a percentage of average | ||||||||||||
| daily net assets (per annum) | 0.68% | 0.60% | 0.64% | |||||||||
| Expiration date | 12/31/08 | 12/31/08 | 12/31/08 | |||||||||
Effective October 1, 2007, Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, the Funds pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.005% of the first $30 billion; 0.0045% of the next $10 billion; 0.004% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. Prior to October 1, 2007, DSC provided fund accounting and administrative services to the Funds and received a fee at an annual rate of 0.04% of average daily net assets. For the six months ended February 29, 2008, each Fund was charged for these services as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||||||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||||||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||||||||
| $33,451 | $2,977 | $7,798 | ||||||||||
65
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
DSC also provides dividend disbursing and transfer agency 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 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. DDLP has contracted to waive distribution and services fees through December 31, 2008 in order to prevent 12b-1 fees of Class A shares from exceeding 0.15% of average daily net assets for Delaware Tax-Free Minnesota Intermediate Fund.
At February 29, 2008, the Funds had liabilities payable to affiliates as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||
| Investment management fee payable to DMC | $264,079 | $17,874 | $55,027 | |||
| Dividend disbursing, transfer agent fees and other expenses payable to DSC | 27,493 | 3,082 | 8,138 | |||
| Distribution fee payable to DDLP | 146,394 | 11,323 | 49,304 | |||
| Other expenses payable to DMC and affiliates* | 54,307 | 6,595 | 12,503 |
*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 and tax services, including internal legal and tax services provided to the Funds by DMC and/or its affiliates’ employees. For the six months ended February 29, 2008, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||
| $22,007 | $1,989 | $5,132 |
For the six months ended February 29, 2008, DDLP earned commissions on sales of Class A shares for each Fund as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||
| $28,849 | $3,264 | $23,340 |
66
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
For the six months ended February 29, 2008, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B and Class C shares, respectively. 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 Minnesota | ||||
| Delaware Tax-Free | High-Yield Municipal | |||
| Minnesota Fund | Bond Fund | |||
| Class A | $2,383 | $10,556 | ||
| Class B | 9,300 | 4,822 | ||
| Class C | 839 | 2,978 |
Trustees’ fees include expenses accrued by the Funds for each Trustee’s retainer and per meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Funds.
3. Investments
For the six months ended February 29, 2008, the Funds made purchases and sales of investment securities other than short-term investments as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||
| Purchases | $53,228,114 | $11,904,197 | $11,219,834 | |||
| Sales | 62,110,588 | 10,181,148 | 6,936,998 |
At February 29, 2008, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At February 29, 2008 the cost of investments and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||||||||||||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||||||||||||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||||||||||||||
| Cost of investments | $ | 586,288,710 | $ | 58,771,124 | $ | 147,534,958 | ||||||||||||
| Aggregate unrealized appreciation | $ | 20,187,369 | $ | 1,394,370 | $ | 1,478,103 | ||||||||||||
| Aggregate unrealized depreciation | (21,291,540 | ) | (1,058,638 | ) | (10,919,101 | ) | ||||||||||||
| Net unrealized appreciation (depreciation) | $ | (1,104,171 | ) | $ | 335,732 | $ | (9,440,998 | ) | ||||||||||
67
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
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 29, 2008, and the year ended August 31, 2007 was as follows:
| Delaware Tax-Free | Delaware Minnesota | ||||||||||||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | |||||||||||||
| Minnesota Fund | Intermediate Fund | Bond Fund | |||||||||||||
| Six months ended 2/29/08* | |||||||||||||||
| Ordinary Income | $ | 351,659 | $ | — | $ | 7,104 | |||||||||
| Tax-exempt income | 12,546,082 | 1,074,362 | 2,830,942 | ||||||||||||
| Long-term capital gain | 100,607 | — | — | ||||||||||||
| Total | $ | 12,998,348 | $ | 1,074,362 | $ | 2,838,046 | |||||||||
| Year ended 8/31/07 | |||||||||||||||
| Ordinary Income | $ | 30,656 | $ | — | $ | — | |||||||||
| Tax-exempt income | 19,758,603 | 2,196,282 | 5,300,531 | ||||||||||||
| Long-term capital gain | 356,139 | — | — | ||||||||||||
| Total | $ | 20,145,398 | $ | 2,196,282 | $ | 5,300,531 | |||||||||
*Tax information for the period ended February 29, 2008 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
5. Components of Net Assets on a Tax Basis
The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 29, 2008, the estimated components of net assets on a tax basis was as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||||||||||||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||||||||||||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||||||||||||||
| Shares of beneficial interest | $ | 595,065,901 | $ | 59,087,946 | $ | 149,909,597 | ||||||||||||
| Distributions payable | (417,105 | ) | (40,923 | ) | (107,565 | ) | ||||||||||||
| Undistributed tax-exempt income | 394,688 | 40,923 | 107,565 | |||||||||||||||
| Realized gains (losses) 9/1/07 – 2/29/08 | 1,174,819 | (37,423 | ) | (159,133 | ) | |||||||||||||
| Capital loss carryforward as of 08/31/07 | (66,896 | ) | (1,466,620 | ) | (2,528,525 | ) | ||||||||||||
| Unrealized appreciation (depreciation) of investments | (1,104,171 | ) | 335,732 | (9,440,998 | ) | |||||||||||||
| Net assets | $ | 595,047,236 | $ | 57,919,635 | $ | 137,780,941 | ||||||||||||
68
5. Components of Net Assets on a Tax Basis (continued)
The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of market discount on debt instruments.
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 29, 2008, the Funds recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end.
| Delaware Minnesota | ||||||||||||
| Delaware Tax-Free | High-Yield Municipal | |||||||||||
| Minnesota Fund | Bond Fund | |||||||||||
| Undistributed net investment income. | $ | 397,303 | $ | (1,140 | ) | |||||||
| Accumulated realized gain (loss) | (397,303 | ) | 1,140 | |||||||||
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at February 29, 2008 will expire as follows:
| Delaware Tax-Free | Delaware Minnesota | |||||||||||||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||||||||||||
| Year of Expiration | Minnesota Fund | Intermediate Fund | Bond Fund | |||||||||||||
| 2008 | $ | — | $ | — | $ | 179,791 | ||||||||||
| 2009 | — | 1,024,839 | 1,267,552 | |||||||||||||
| 2010 | — | 4,037 | 57,521 | |||||||||||||
| 2011 | — | 246,659 | 243,334 | |||||||||||||
| 2012 | — | — | 684,248 | |||||||||||||
| 2014 | 66,896 | 81,340 | — | |||||||||||||
| 2015 | — | 109,745 | 96,079 | |||||||||||||
| Total | $ | 66,896 | $ | 1,466,620 | $ | 2,528,525 | ||||||||||
For the six months ended February 29, 2008, the Funds had capital gains (losses) which may increase or decrease capital loss carryforwards.
| Delaware Tax-Free | Delaware Minnesota | |||||
| Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||
| Minnesota Fund | Intermediate Fund | Bond Fund | ||||
| $1,174,819 | $(37,423) | $(159,133) |
69
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
6. Capital Shares
Transactions in capital shares were as follows:
| Delaware | ||||||||||||||||
| Delaware Tax-Free | Tax-Free Minnesota | |||||||||||||||
| Minnesota Fund | Intermediate Fund | |||||||||||||||
| Six Months | Year | Six Months | Year | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 2/29/08 | 8/31/07 | 2/29/08 | 8/31/07 | |||||||||||||
| Shares sold: | ||||||||||||||||
| Class A | 1,603,175 | 3,661,506 | 496,257 | 569,224 | ||||||||||||
| Class B | 9,706 | 33,935 | 12,219 | 1,226 | ||||||||||||
| Class C | 144,419 | 378,988 | 81,203 | 65,839 | ||||||||||||
| Shares issued upon reinvestment of dividends and distributions: | ||||||||||||||||
| Class A | 658,301 | 983,425 | 63,740 | 128,379 | ||||||||||||
| Class B | 14,049 | 22,742 | 1,623 | 4,274 | ||||||||||||
| Class C | 29,371 | 42,393 | 5,642 | 11,105 | ||||||||||||
| Shares issued from merger:1 | ||||||||||||||||
| Class A | — | 16,515,995 | — | — | ||||||||||||
| Class B | — | 703,417 | — | — | ||||||||||||
| Class C | — | 931,298 | — | — | ||||||||||||
| 2,459,021 | 23,273,699 | 660,684 | 780,047 | |||||||||||||
| Shares repurchased: | ||||||||||||||||
| Class A | (2,761,890 | ) | (4,188,406 | ) | (273,910 | ) | (576,943 | ) | ||||||||
| Class B | (195,159 | ) | (380,797 | ) | (47,733 | ) | (27,619 | ) | ||||||||
| Class C | (216,782 | ) | (361,460 | ) | (37,714 | ) | (87,115 | ) | ||||||||
| (3,173,831 | ) | (4,930,663 | ) | (359,357 | ) | (691,677 | ) | |||||||||
| Net increase (decrease) | (714,810 | ) | 18,343,036 | 301,327 | 88,370 | |||||||||||
| Delaware Minnesota High-Yield | ||||||||
| Municipal Bond Fund | ||||||||
| Six Months | Year | |||||||
| Ended | Ended | |||||||
| 2/29/08 | 8/31/07 | |||||||
| Shares sold: | ||||||||
| Class A | 1,401,013 | 3,750,543 | ||||||
| Class B | 681 | 67,763 | ||||||
| Class C | 442,745 | 985,801 | ||||||
| Shares issued upon reinvestment of dividends and distributions: | ||||||||
| Class A | 149,901 | 257,132 | ||||||
| Class B | 7,160 | 18,487 | ||||||
| Class C | 32,819 | 54,628 | ||||||
| 2,034,319 | 5,134,354 | |||||||
| Shares repurchased: | ||||||||
| Class A | (1,496,221 | ) | (1,528,071 | ) | ||||
| Class B | (117,437 | ) | (274,769 | ) | ||||
| Class C | (251,758 | ) | (433,788 | ) | ||||
| (1,865,416 | ) | (2,236,628 | ) | |||||
| Net increase | 168,903 | 2,897,726 | ||||||
1See note 8 in “Notes to financial statements.”
70
6. Capital Shares (continued)
For the six months ended February 29, 2008 and the year ended August 31, 2007, the following shares and values were converted from Class B to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the tables on the previous page and the statements of changes in net assets.
| Six month Ended | Year Ended | |||||||||||
| 2/29/08 | 8/31/07 | |||||||||||
| Class B | Class A | Class B | Class A | |||||||||
| Shares | Shares | Value | Shares | Shares | Value | |||||||
| Delaware Tax-Free Minnesota Fund | 92,889 | 92,965 | $1,143,050 | 205,359 | 205,523 | $2,549,549 | ||||||
| Delaware Tax-Free Minnesota Intermediate Fund | 44,760 | 44,884 | 482,209 | 15,124 | 15,160 | 164,797 | ||||||
| Delaware Minnesota High-Yield Municipal Bond Fund | 50,751 | 50,843 | 524,328 | 157,023 | 157,243 | 1,656,744 | ||||||
7. Inverse Floaters
The Funds may participate in inverse floater programs where a Fund transfers its own bonds to a trust that issues floating rate securities and inverse floating rate securities (inverse floaters) with an aggregate principal amount equal to the principal of the transferred bonds. The inverse floaters received by the Funds are derivative tax-exempt obligations 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 the inverse floaters will generally be more volatile than other tax-exempt investments. The Funds typically use inverse floaters to adjust the duration of their portfolio. Duration measures a portfolio’s sensitivity to changes in interest rates. By holding inverse floaters with a different duration than the underlying bonds that a Fund transferred to the trust, the Fund seeks to adjust its portfolio’s sensitivity to changes in interest rates. The Funds may also invest in inverse floaters to add additional income to the Funds or to adjust the Funds’ exposure to a specific segment of the yield curve. Securities held in trust relating to inverse floater programs are identified on the statements of net assets.
8. Fund Merger
Effective April 13, 2007, the Delaware Tax-Free Minnesota Fund (Acquiring Fund) acquired all of the assets and assumed all of the liabilities of Delaware Tax-Free Minnesota Insured Fund (Acquired Fund), an open end investments company, in exchange for shares of the Acquiring Fund pursuant to a Plan and Agreement of Reorganization (Reorganization). The shareholders of the Acquired Fund received shares of the respective class of the Acquiring Fund equal to the aggregate net asset of their share in the Acquired Fund prior to Reorganization.
71
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
8. Fund Merger (continued)
The Reorganization was treated as a non-taxable event and, accordingly, Delaware Tax-Free Minnesota 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 realized gain (loss) of Delaware Tax-Free Minnesota Insured Fund as of the close of business on April 13, 2007, were as follows:
| Accumulated | Net | |||||
| Net Realized | Unrealized | |||||
| Net Assets | Gain | Appreciation | ||||
| Delaware Tax-Free Minnesota Insured Fund | $226,020,627 | $286,856 | $14,039,792 |
The net assets of the Delaware Tax-Free Minnesota Fund prior to the Reorganization were $407,952,332. The combined net assets of Delaware Tax-Free Minnesota after the merger were $633,972,959.
9. Line of Credit
Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (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 29, 2008 or at any time during the period then ended.
10. Credit and Market Risk
The Funds concentrate their investments in securities issued by municipalities, mainly in Minnesota. The value of these investments may be adversely affected by new legislation within the state, 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 Fund 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
72
10. Credit and Market Risk (continued)
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 Investors Service, Inc., Standard & Poor’s Ratings Group, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.
Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A 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. As of February 29, 2008, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.
11. 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.
73
About the organization
This semiannual report is for the information of Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund and the Delaware Investments® Fund profiles for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. 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 investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
Board of trustees | ||||
Patrick P. Coyne Thomas L. Bennett John A. Fry Anthony D. Knerr Lucinda S. Landreth | Ann R. Leven Thomas F. Madison Janet L. Yeomans J. Richard Zecher | |||
74
Affiliated officers | Contact information | |
David F. Connor Daniel V. Geatens David P. O’Connor Richard Salus | Investment manager National distributor Shareholder servicing, dividend disbursing, and transfer agent For shareholders For securities dealers and financial institutions representatives only Web site | |
| | ||
Delaware Investments is the marketing name of 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 are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the Commission’s Web site at www.sec.gov. In addition, a description of the policies and procedures that each Fund uses to determine how to vote proxies (if any) relating to portfolio securities and each Fund’s Schedule of Investments are available without charge on each Fund’s Web site at www.delawareinvestments.com. Each Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C.; 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 each Fund’s Web site at www.delawareinvestments.com; and (ii) on the Commission’s Web site at www.sec.gov. | ||
75
SA-MNALL [2/08] DG3 4/08 MF-08-03-023 PO 12795 (2927) |  |
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. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
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.
Name of Registrant: VOYAGEUR INTERMEDIATE TAX FREE FUNDS
| PATRICK P. COYNE | |
| By: | Patrick P. Coyne |
| Title: | Chief Executive Officer |
| Date: | May 5, 2008 |
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.
| PATRICK P. COYNE | |
| By: | Patrick P. Coyne |
| Title: | Chief Executive Officer |
| Date: | May 5, 2008 |
| RICHARD SALUS | |
| By: | Richard Salus |
| Title: | Chief Financial Officer |
| Date: | May 5, 2008 |