UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANIES
Investment Company Act file number: | 811-07742 | |
Exact name of registrant as specified in charter: | Voyageur Mutual 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 28, 2010 |
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 28, 2010 Fixed income mutual funds |
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. The figures in the semiannual report for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund prospectus contains this and other important information about the Fund. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit www.delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund at www.delawareinvestments.com.
Manage your investments online
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On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Funds’ prospectus and any supplements thereto for more complete information.
Investments in Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including subsidiaries or related companies, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Funds, the repayment of capital from the Funds, or any particular rate of return.
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 |
Other Fund information | 75 |
About the organization | 86 |
Unless otherwise noted, views expressed herein are current as of Feb. 28, 2010, and are subject to change.
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. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2010 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the period September 1, 2009 to February 28, 2010
For the period September 1, 2009 to February 28, 2010
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. These 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 from September 1, 2009 to February 28, 2010.
Actual expenses
The first section of the tables shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the tables shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of 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 Funds’ expenses shown in the tables reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Tax-Free Minnesota Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||
9/1/09 | 2/28/10 | Expense Ratio | 9/1/09 to 2/28/10* | ||||||||
Actual Fund return | |||||||||||
Class A | $1,000.00 | $1,041.10 | 0.93% | $4.71 | |||||||
Class B | 1,000.00 | 1,037.20 | 1.68% | 8.49 | |||||||
Class C | 1,000.00 | 1,037.10 | 1.68% | 8.49 | |||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||
Class A | $1,000.00 | $1,020.18 | 0.93% | $4.66 | |||||||
Class B | 1,000.00 | 1,016.46 | 1.68% | 8.40 | |||||||
Class C | 1,000.00 | 1,016.46 | 1.68% | 8.40 |
Delaware Tax-Free Minnesota Intermediate Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||
9/1/09 | 2/28/10 | Expense Ratio | 9/1/09 to 2/28/10* | ||||||||
Actual Fund return | |||||||||||
Class A | $1,000.00 | $1,033.80 | 0.79% | $3.98 | |||||||
Class B | 1,000.00 | 1,029.40 | 1.64% | 8.25 | |||||||
Class C | 1,000.00 | 1,029.40 | 1.64% | 8.25 | |||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||
Class A | $1,000.00 | $1,020.88 | 0.79% | $3.96 | |||||||
Class B | 1,000.00 | 1,016.66 | 1.64% | 8.20 | |||||||
Class C | 1,000.00 | 1,016.66 | 1.64% | 8.20 |
2
Delaware Minnesota High-Yield Municipal Bond Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||
9/1/09 | 2/28/10 | Expense Ratio | 9/1/09 to 2/28/10* | ||||||||
Actual Fund return | |||||||||||
Class A | $1,000.00 | $1,063.30 | 0.91% | $4.66 | |||||||
Class B | 1,000.00 | 1,060.40 | 1.66% | 8.48 | |||||||
Class C | 1,000.00 | 1,059.30 | 1.66% | 8.48 | |||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||
Class A | $1,000.00 | $1,020.28 | 0.91% | $4.56 | |||||||
Class B | 1,000.00 | 1,016.56 | 1.66% | 8.30 | |||||||
Class C | 1,000.00 | 1,016.56 | 1.66% | 8.30 |
*“Expenses Paid During Period” are equal to the Funds’ annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
3
Sector allocations and credit quality breakdowns | |
Delaware Tax-Free Minnesota Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | |
Municipal Bonds | 100.51 | % |
Corporate-Backed Revenue Bonds | 4.02 | % |
Education Revenue Bonds | 6.06 | % |
Electric Revenue Bonds | 5.18 | % |
Escrowed to Maturity Bonds | 8.91 | % |
Health Care Revenue Bonds | 21.95 | % |
Housing Revenue Bonds | 7.15 | % |
Lease Revenue Bonds | 3.42 | % |
Local General Obligation Bonds | 17.56 | % |
Pre-Refunded Bonds | 17.54 | % |
Special Tax Revenue Bonds | 3.73 | % |
State General Obligation Bonds | 3.49 | % |
Transportation Revenue Bonds | 1.13 | % |
Water & Sewer Revenue Bonds | 0.37 | % |
Total Value of Securities | 100.51 | % |
Liabilities Net of Receivables and Other Assets | (0.51 | %) |
Net Assets | 100.00 | % |
Credit quality breakdown (as a % of fixed income investments)* | ||
AAA | 27.65 | % |
AA | 27.31 | % |
A | 23.72 | % |
BBB | 11.16 | % |
BB | 2.52 | % |
Not Rated | 7.64 | % |
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
4
Delaware Tax-Free Minnesota Intermediate Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | |
Municipal Bonds | 101.47 | % |
Corporate-Backed Revenue Bonds | 1.65 | % |
Education Revenue Bonds | 9.90 | % |
Electric Revenue Bonds | 7.56 | % |
Escrowed to Maturity Bonds | 1.72 | % |
Health Care Revenue Bonds | 17.24 | % |
Housing Revenue Bonds | 4.15 | % |
Lease Revenue Bonds | 1.94 | % |
Local General Obligation Bonds | 26.28 | % |
Pre-Refunded Bonds | 8.49 | % |
Special Tax Revenue Bonds | 11.05 | % |
State General Obligation Bonds | 5.80 | % |
Transportation Revenue Bonds | 2.41 | % |
Water & Sewer Revenue Bonds | 3.28 | % |
Short-Term Investment | 0.31 | % |
Total Value of Securities | 101.78 | % |
Liabilities Net of Receivables and Other Assets | (1.78 | %) |
Total Net Assets | 100.00 | % |
Credit quality breakdown (as a % of fixed income investments)* | ||
AAA | 31.97 | % |
AA | 32.62 | % |
A | 21.87 | % |
BBB | 7.20 | % |
BB | 1.17 | % |
Not Rated | 5.17 | % |
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
5
Sector allocations and credit quality breakdowns | |
Delaware Minnesota High-Yield Municipal Bond Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | |
Municipal Bonds | 98.30 | % |
Corporate-Backed Revenue Bonds | 3.35 | % |
Education Revenue Bonds | 9.43 | % |
Electric Revenue Bonds | 6.04 | % |
Health Care Revenue Bonds | 28.55 | % |
Housing Revenue Bonds | 12.58 | % |
Lease Revenue Bonds | 0.90 | % |
Local General Obligation Bonds | 11.44 | % |
Pre-Refunded Bonds | 8.69 | % |
Special Tax Revenue Bonds | 7.76 | % |
State General Obligation Bonds | 4.01 | % |
Transportation Revenue Bond | 1.39 | % |
Water & Sewer Revenue Bonds | 4.16 | % |
Short-Term Investments | 0.55 | % |
Total Value of Securities | 98.85 | % |
Receivables and Other Assets Net of Liabilities | 1.15 | % |
Total Net Assets | 100.00 | % |
Credit quality breakdown (as a % of fixed income investments)* | ||
AAA | 15.94 | % |
AA | 21.19 | % |
A | 24.34 | % |
BBB | 17.61 | % |
BB | 3.07 | % |
Not Rated | 17.85 | % |
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
6
Statements of net assets | |
Delaware Tax-Free Minnesota Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 100.51% | ||||||||
Corporate-Backed Revenue Bonds – 4.02% | ||||||||
Cloquet Pollution Control Revenue Refunding | ||||||||
(Potlatch Project) 5.90% 10/1/26 | $ | 6,500,000 | $ | 5,983,965 | ||||
Laurentian Energy Authority I Cogeneration Revenue | ||||||||
Series A 5.00% 12/1/21 | 8,000,000 | 7,743,680 | ||||||
Sartell Environmental Improvement Revenue Refunding | ||||||||
(International Paper) Series A 5.20% 6/1/27 | 7,265,000 | 6,733,057 | ||||||
Seaway Port Authority of Duluth Industrial Development | ||||||||
Dock & Wharf Revenues Refunding (Cargill Project) | ||||||||
Series E 6.125% 11/1/14 | 4,500,000 | 4,520,340 | ||||||
24,981,042 | ||||||||
Education Revenue Bonds – 6.06% | ||||||||
Minnesota Colleges & Universities Revenue Fund Series A | ||||||||
5.00% 10/1/22 (AGM) | 5,135,000 | 5,413,985 | ||||||
5.00% 10/1/28 | 8,900,000 | 9,666,556 | ||||||
5.00% 10/1/29 (NATL-RE) | 5,665,000 | 5,971,079 | ||||||
Minnesota Higher Education Facilities Authority Revenue | ||||||||
(Augsburg College) | ||||||||
Series 6-C 5.00% 5/1/20 | 1,250,000 | 1,270,638 | ||||||
Series 6-J1 5.00% 5/1/36 | 2,225,000 | 2,112,816 | ||||||
(Bethel University) Refunding Series 6-R 5.50% 5/1/37 | 2,500,000 | 2,365,175 | ||||||
(Carleton College) Series 6-T 5.00% 1/1/28 | 1,000,000 | 1,061,200 | ||||||
(University of St. Thomas) | ||||||||
Series 6-X 5.25% 4/1/39 | 5,000,000 | 5,100,600 | ||||||
Series 7-A 5.00% 10/1/39 | 2,000,000 | 2,016,600 | ||||||
St. Cloud Housing & Redevelopment Authority Revenue | ||||||||
(State University Foundation Project) 5.00% 5/1/23 | 2,000,000 | 2,059,520 | ||||||
University Minnesota Series C 4.00% 2/1/16 | 515,000 | 569,441 | ||||||
37,607,610 | ||||||||
Electric Revenue Bonds – 5.18% | ||||||||
Chaska Electric Revenue Refunding (Generating Facilities) | ||||||||
Series A 5.00% 10/1/30 | 3,000,000 | 3,067,410 | ||||||
Minnesota Municipal Power Agency Electric Revenue | ||||||||
5.00% 10/1/35 | 3,000,000 | 3,033,420 | ||||||
Series A | ||||||||
5.00% 10/1/34 | 6,250,000 | 6,329,000 | ||||||
5.125% 10/1/29 | 3,000,000 | 3,074,460 |
7
Statements of net assets
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Electric Revenue Bonds (continued) | ||||||||
Northern Municipal Power Agency Electric System | ||||||||
Revenue Refunding Series B 4.75% 1/1/20 (AMBAC) | $ | 2,500,000 | $ | 2,507,000 | ||||
Puerto Rico Electric Power Authority Power Revenue | ||||||||
Refunding Series GG 4.75% 7/1/21 (AGM) | 1,000,000 | 1,006,880 | ||||||
Series TT 5.00% 7/1/37 | 2,500,000 | 2,388,700 | ||||||
Series WW 5.50% 7/1/38 | 4,800,000 | 4,860,480 | ||||||
Southern Minnesota Municipal Power Agency Supply | ||||||||
System Revenue Series A | ||||||||
5.25% 1/1/15 (AMBAC) | 2,900,000 | 3,304,463 | ||||||
^Capital Appreciation 4.44% 1/1/25 (NATL-RE) | 5,000,000 | 2,578,650 | ||||||
32,150,463 | ||||||||
Escrowed to Maturity Bonds – 8.91% | ||||||||
Dakota-Washington Counties Housing & Redevelopment | ||||||||
Authority Single Family Residential Mortgage Revenue | ||||||||
8.15% 9/1/16 (GNMA) (NATL-RE) (AMT) | 405,000 | 540,238 | ||||||
(Anoka County) 8.45% 9/1/19 (GNMA) (AMT) | 9,000,000 | 12,744,540 | ||||||
(Bloomington Mortgage) Refunding Series B | ||||||||
8.375% 9/1/21 (GNMA) (FHA) (VA) (AMT) | 14,115,000 | 20,591,526 | ||||||
Southern Minnesota Municipal Power Agency Power | ||||||||
Supply System Revenue Refunding Series B | ||||||||
5.50% 1/1/15 (AMBAC) | 990,000 | 1,046,232 | ||||||
University of Minnesota Series A | ||||||||
5.50% 7/1/21 | 12,500,000 | 14,811,125 | ||||||
5.75% 7/1/18 | 3,840,000 | 4,600,358 | ||||||
Western Minnesota Municipal Power Agency Supply | ||||||||
Revenue Series A 9.75% 1/1/16 (NATL-RE) | 715,000 | 979,865 | ||||||
55,313,884 | ||||||||
Health Care Revenue Bonds – 21.95% | ||||||||
Aitkin Health Care Facilities Revenue Refunding | ||||||||
(Riverwood Health Care Center) 5.60% 2/1/32 | 2,100,000 | 1,876,119 | ||||||
Apple Valley Economic Development Authority Health | ||||||||
Care Revenue (Augustana Home St. Paul Project) | ||||||||
Series A 6.00% 1/1/40 | 2,700,000 | 2,437,884 | ||||||
Bemidji Health Care Facilities First Mortgage Revenue | ||||||||
(North Country Health Services) | ||||||||
5.00% 9/1/24 (RADIAN) | 740,000 | 731,719 | ||||||
5.00% 9/1/31 (RADIAN) | 500,000 | 465,705 |
8
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Health Care Revenue Bonds (continued) | |||||||||
Breckenridge Catholic Health Initiatives | |||||||||
Series A 5.00% 5/1/30 | $ | 2,500,000 | $ | 2,554,650 | |||||
Maple Grove Health Care System Revenue | |||||||||
(Maple Grove Hospital) 5.25% 5/1/37 | 2,950,000 | 2,806,483 | |||||||
Minneapolis Health Care Facility Revenue | |||||||||
(Jones-Harrison Residence Project) 5.60% 10/1/30 | 1,050,000 | 930,447 | |||||||
Minneapolis Health Care System Revenue | |||||||||
(Fairview Health Services) | |||||||||
Series A 6.625% 11/15/28 | 3,000,000 | 3,370,170 | |||||||
Series B 6.50% 11/15/38 (ASSURED GTY) | 1,140,000 | 1,274,064 | |||||||
Series D | |||||||||
5.00% 11/15/30 (AMBAC) | 2,500,000 | 2,496,600 | |||||||
5.00% 11/15/34 (AMBAC) | 10,750,000 | 10,408,365 | |||||||
Minneapolis - St. Paul Housing & Redevelopment | |||||||||
Authority Health Care System Revenue | |||||||||
(Health Partners Obligation Group Project) | |||||||||
5.875% 12/1/29 | 1,000,000 | 1,004,740 | |||||||
Minnesota Agricultural & Economic | |||||||||
Development Board Revenue | |||||||||
(Benedictine Health Systems) 5.75% 2/1/29 | 1,895,000 | 1,742,547 | |||||||
(Essentia Remarketing) Series C-1 | |||||||||
5.00% 2/15/30 (ASSURED GTY) | 5,725,000 | 5,774,121 | |||||||
5.25% 2/15/23 (ASSURED GTY) | 5,000,000 | 5,372,950 | |||||||
5.50% 2/15/25 (ASSURED GTY) | 5,120,000 | 5,463,962 | |||||||
(Fairview Health Care System) | |||||||||
Un-Refunded Balance Series A | |||||||||
5.75% 11/15/26 (NATL-RE) | 180,000 | 180,072 | |||||||
6.375% 11/15/29 | 15,000 | 15,231 | |||||||
Northfield Hospital Revenue 5.375% 11/1/26 | 3,785,000 | 3,658,505 | |||||||
Rochester Health Care & Housing Revenue Refunding | |||||||||
(Samaritan Bethany) Series A 7.375% 12/1/41 | 5,220,000 | 5,400,716 | |||||||
Shakopee Health Care Facilities Revenue | |||||||||
(St. Francis Regional Medical Center) | |||||||||
5.10% 9/1/25 | 2,000,000 | 1,938,920 | |||||||
5.25% 9/1/34 | 7,000,000 | 6,542,900 | |||||||
Sherburne County Health Care Facilities Revenue | |||||||||
(Guardian Angels Health Services) 5.55% 10/1/36 | 1,500,000 | 1,288,695 |
9
Statements of net assets
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Health Care Revenue Bonds (continued) | |||||||||
St. Cloud Health Care Revenue (Centracare Health | |||||||||
System Project) | |||||||||
Series A | |||||||||
5.00% 5/1/25 | $ | 1,035,000 | $ | 1,037,412 | |||||
5.125% 5/1/30 | 5,350,000 | 5,339,568 | |||||||
Series D Remarketing 5.50% 5/1/39 (ASSURED GTY) | 6,000,000 | 6,172,380 | |||||||
St. Louis Park Health Care Facilities Revenue Refunding | |||||||||
(Park Nicollet Health Services) | |||||||||
5.75% 7/1/39 | 15,200,000 | 15,231,311 | |||||||
Series C | |||||||||
5.50% 7/1/23 | 1,925,000 | 1,991,547 | |||||||
5.625% 7/1/26 | 3,000,000 | 3,109,410 | |||||||
5.75% 7/1/30 | 5,000,000 | 5,102,500 | |||||||
St. Paul Housing & Redevelopment Authority | |||||||||
Health Care Revenue | |||||||||
(Allina Health System) | |||||||||
Series A 5.00% 11/15/18 (NATL-RE) | 5,720,000 | 6,072,924 | |||||||
Series A-1 5.25% 11/15/29 | 5,605,000 | 5,621,479 | |||||||
(Health Partners Obligation Group Project) | |||||||||
5.25% 5/15/36 | 7,900,000 | 7,287,513 | |||||||
St. Paul Housing & Redevelopment Authority | |||||||||
Hospital Revenue (Health East Project) | |||||||||
6.00% 11/15/30 | 4,000,000 | 3,709,360 | |||||||
6.00% 11/15/35 | 4,340,000 | 3,979,216 | |||||||
Series A 5.70% 11/1/15 | 1,150,000 | 1,149,885 | |||||||
St. Paul Housing & Redevelopment Authority | |||||||||
Multifamily Housing Revenue Refunding | |||||||||
(Marion Center Project) Series A | |||||||||
5.30% 11/1/30 | 500,000 | 421,620 | |||||||
5.375% 5/1/43 | 500,000 | 416,060 | |||||||
Stillwater Health Care Revenue (Health System | |||||||||
Obligation Group) 5.00% 6/1/35 | 1,000,000 | 945,120 | |||||||
Washington County Housing & Redevelopment | |||||||||
Authority Hospital Facilities Revenue (Health East Project) | |||||||||
5.50% 11/15/27 | 1,000,000 | 915,220 | |||||||
136,238,090 |
10
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Housing Revenue Bonds – 7.15% | |||||||||
Dakota County Housing & Redevelopment Authority | |||||||||
Single Family Mortgage Revenue | |||||||||
5.85% 10/1/30 (GNMA) (FNMA) (AMT) | $ | 113,000 | $ | 113,069 | |||||
@ | Hutchinson Multifamily Housing Revenue | ||||||||
(Evergreen Apartments Project) | |||||||||
5.75% 11/1/28 (HUD Section 8) | 740,000 | 747,918 | |||||||
Minneapolis Multifamily Housing Revenue | |||||||||
(Bottineau Commons Project) | |||||||||
5.45% 4/20/43 (GNMA) (AMT) | 1,500,000 | 1,508,340 | |||||||
(Grant Street Apartments Project) Series A 7.25% 11/1/29 | 750,000 | 757,710 | |||||||
(Seward Towers Project) 5.00% 5/20/36 (GNMA) | 8,000,000 | 8,068,960 | |||||||
(Sumner Field) Series A 5.50% 11/20/26 (GNMA) (AMT) | 890,000 | 907,079 | |||||||
(Trinity Apartments) Refunding Series A | |||||||||
6.75% 5/1/21 (HUD Section 8) | 1,535,000 | 1,544,578 | |||||||
Minnesota Housing Finance Agency Rental Housing | |||||||||
Revenue Series C-2 5.95% 2/1/15 (AMBAC) | 1,495,000 | 1,498,304 | |||||||
Minnesota Housing Finance Agency Residential Housing | |||||||||
Series A 5.30% 7/1/19 | 440,000 | 447,784 | |||||||
Series B-1 5.35% 1/1/33 (AMT) | 2,590,000 | 2,599,479 | |||||||
•Series D 4.80% 7/1/38 (AMT) | 2,500,000 | 2,359,475 | |||||||
Series I 4.85% 7/1/38 (AMT) | 2,000,000 | 1,902,360 | |||||||
Series I 5.15% 7/1/38 (AMT) | 5,530,000 | 5,537,908 | |||||||
Series L 5.10% 7/1/38 (AMT) | 9,910,000 | 9,821,306 | |||||||
Series M 4.875% 7/1/37 (AMT) | 4,500,000 | 4,351,275 | |||||||
@ | Washington County Housing & Redevelopment | ||||||||
Authority Governmental Revenue Refunding | |||||||||
(Briar Pond Project) Series C 7.25% 8/20/34 | 920,000 | 762,588 | |||||||
White Bear Lake Multifamily Revenue Refunding | |||||||||
(Lake Square) Series A 5.875% 2/1/15 (FHA) | 680,000 | 681,448 | |||||||
Willmar Housing & Redevelopment Authority | |||||||||
Multifamily Housing Revenue (Highland Apartments) | |||||||||
5.85% 6/1/19 (HUD Section 8) | 755,000 | 755,000 | |||||||
44,364,581 |
11
Statements of net assets
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Lease Revenue Bonds – 3.42% | |||||||||
Minneapolis Special School District #001 Series A | |||||||||
5.00% 2/1/18 (AGM) | $ | 1,545,000 | $ | 1,653,073 | |||||
5.00% 2/1/19 (AGM) | 1,535,000 | 1,642,373 | |||||||
5.00% 2/1/20 (AGM) | 1,690,000 | 1,808,216 | |||||||
Puerto Rico Public Buildings Authority Revenue | |||||||||
(Guaranteed Government Facilities) | |||||||||
Un-Refunded Balance Series D 5.25% 7/1/36 | 1,070,000 | 1,025,756 | |||||||
St. Paul Port Authority Lease Revenue | |||||||||
(Cedar Street Office Building Project) | |||||||||
5.00% 12/1/22 | 2,500,000 | 2,599,325 | |||||||
5.25% 12/1/27 | 3,840,000 | 3,969,253 | |||||||
Series 3-12 5.125% 12/1/27 | 3,000,000 | 3,120,930 | |||||||
(Robert Street Office Building Project) | |||||||||
Series 3-11 4.75% 12/1/23 | 2,000,000 | 2,075,320 | |||||||
Series 3-11 5.00% 12/1/27 | 2,500,000 | 2,589,050 | |||||||
Series 9 5.25% 12/1/27 | 725,000 | 749,404 | |||||||
21,232,700 | |||||||||
Local General Obligation Bonds – 17.56% | |||||||||
Anoka County Capital Improvement Series A | |||||||||
5.00% 2/1/19 | 1,270,000 | 1,488,186 | |||||||
5.00% 2/1/22 | 500,000 | 570,380 | |||||||
Brainerd Independent School District #181 | |||||||||
Refunding (School Building) Series A | |||||||||
4.00% 2/1/22 | 3,255,000 | 3,425,562 | |||||||
4.00% 2/1/23 | 5,990,000 | 6,247,330 | |||||||
Centennial Independent School District #012 | |||||||||
Series A 5.00% 2/1/18 (AGM) | 1,270,000 | 1,360,703 | |||||||
Dakota County Capital Improvement | |||||||||
Series A 4.75% 2/1/26 | 1,000,000 | 1,012,190 | |||||||
Dakota County Community Development Agency | |||||||||
(Senior Housing Facilities) 5.00% 1/1/21 | 1,275,000 | 1,312,319 | |||||||
Farmington Independent School District #192 Series B | |||||||||
5.00% 2/1/27 (AGM) | 10,705,000 | 11,363,892 | |||||||
^Capital Appreciation 5.34% 2/1/21 (AGM) | 1,500,000 | 894,540 | |||||||
^Capital Appreciation 5.424% 2/1/20 (AGM) | 1,650,000 | 1,037,834 | |||||||
Lakeville Independent School District #194 | |||||||||
Series A 4.75% 2/1/22 (AGM) | 6,850,000 | 7,137,425 |
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 (NATL-RE) | $ | 1,540,000 | $ | 1,444,135 | |||||
Metropolitan Council Minneapolis-St. Paul | |||||||||
Metropolitan Area Waste Water Treatment | |||||||||
Series B 5.00% 12/1/21 | 1,200,000 | 1,332,420 | |||||||
Series C | |||||||||
5.00% 3/1/16 | 2,440,000 | 2,867,781 | |||||||
5.00% 3/1/28 | 5,000,000 | 5,362,900 | |||||||
Minneapolis Library 5.00% 12/1/25 | 1,500,000 | 1,563,375 | |||||||
Morris Independent School District #769 Building | |||||||||
5.00% 2/1/24 (NATL-RE) | 4,875,000 | 5,348,948 | |||||||
Mounds View Independent School District #621 Series A | |||||||||
5.00% 2/1/20 (NATL-RE) | 2,970,000 | 3,176,207 | |||||||
5.375% 2/1/24 (FGIC) | 6,170,000 | 6,423,649 | |||||||
New Brighton Tax Increment | |||||||||
Series A 5.00% 2/1/27 (NATL-RE) | 1,000,000 | 1,077,860 | |||||||
Osseo Independent School District #279 | |||||||||
Series A 5.00% 2/1/21 (AGM) | 3,570,000 | 3,819,722 | |||||||
Prior Lake Independent School District #719 | |||||||||
Series B 5.00% 2/1/19 (AGM) | 3,145,000 | 3,425,503 | |||||||
Ramsey County State Aid Series C 5.00% 2/1/28 | 1,060,000 | 1,100,746 | |||||||
Robbinsdale Independent School District #281 | |||||||||
5.00% 2/1/21 (AGM) | 1,310,000 | 1,407,110 | |||||||
^ | Rosemount Independent School District #196 | ||||||||
Capital Appreciation Series B | |||||||||
5.931% 4/1/11 (AGM) | 2,600,000 | 2,582,970 | |||||||
5.961% 4/1/12 (AGM) | 1,850,000 | 1,810,188 | |||||||
6.008% 4/1/13 (AGM) | 1,915,000 | 1,837,404 | |||||||
^ | Sartell Independent School District #748 | ||||||||
Capital Appreciation Refunding Series B | |||||||||
5.976% 2/1/13 (NATL-RE) | 540,000 | 511,202 | |||||||
6.10% 2/1/15 (NATL-RE) | 1,075,000 | 944,044 | |||||||
6.15% 2/1/16 (NATL-RE) | 1,750,000 | 1,460,813 | |||||||
^ | Sauk Rapids Independent School District #047 Series B | ||||||||
5.983% 2/1/15 (AGM) | 2,700,000 | 2,109,618 | |||||||
6.083% 2/1/17 (AGM) | 2,245,000 | 1,552,440 |
13
Statements of net assets
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Local General Obligation Bonds (continued) | |||||||||
South Washington County Independent School | |||||||||
District #833 Series A | |||||||||
4.75% 2/1/25 | $ | 2,500,000 | $ | 2,695,675 | |||||
4.75% 2/1/26 | 3,600,000 | 3,851,280 | |||||||
4.75% 2/1/27 | 2,300,000 | 2,442,669 | |||||||
St. Michael Independent School District #885 | |||||||||
5.00% 2/1/20 (AGM) | 1,970,000 | 2,110,697 | |||||||
5.00% 2/1/27 (AGM) | 3,435,000 | 3,680,328 | |||||||
St. Peter’s Hospital Series A 5.00% 9/1/24 (NATL-RE) | 1,905,000 | 1,942,757 | |||||||
Todd Morrison Cass & Wadena Counties Staples United | |||||||||
Hospital District (Health Care Facilities-Lakewood) | |||||||||
5.00% 12/1/21 | 2,000,000 | 2,099,120 | |||||||
5.125% 12/1/24 | 1,000,000 | 1,044,770 | |||||||
Willmar (Rice Memorial Hospital Project) | |||||||||
5.00% 2/1/22 (AGM) | 1,000,000 | 1,067,570 | |||||||
5.00% 2/1/25 (AGM) | 1,000,000 | 1,029,850 | |||||||
108,974,112 | |||||||||
§Pre-Refunded Bonds – 17.54% | |||||||||
Chaska Electric Revenue Series A 6.00% 10/1/25-10 | 1,000,000 | 1,034,810 | |||||||
Duluth Economic Development Authority | |||||||||
Health Care Facilities Revenue | |||||||||
(Benedictine Health System - St. Mary’s Hospital) | |||||||||
5.25% 2/15/33-14 | 10,000,000 | 11,539,200 | |||||||
5.50% 2/15/23-14 | 1,000,000 | 1,163,570 | |||||||
Hennepin County Regional Railroad Authority | |||||||||
5.00% 12/1/31-10 | 4,030,000 | 4,064,457 | |||||||
Hopkins Housing & Redevelopment Authority | |||||||||
(Public Works & Fire Station) Series A | |||||||||
5.00% 2/1/23-13 (NATL-RE) | 1,210,000 | 1,355,067 | |||||||
Minneapolis Health Care System Revenue | |||||||||
(Allina Health Systems) Series A 5.75% 11/15/32-12 | 17,300,000 | 19,581,351 | |||||||
(Fairview Health Services) Series A 5.625% 5/15/32-12 | 16,925,000 | 18,916,396 | |||||||
Minneapolis - St. Paul Metropolitan Airports | |||||||||
Commission Revenue | |||||||||
Series A 5.25% 1/1/32-11 (FGIC) | 5,000,000 | 5,211,650 | |||||||
Series C 5.25% 1/1/32-11 (FGIC) | 6,845,000 | 7,129,341 |
14
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
§Pre-Refunded Bonds (continued) | |||||||||
Minnesota Agricultural & Economic Development | |||||||||
Revenue (Fairview Health Care System) | |||||||||
Series A 6.375% 11/15/29-10 | $ | 485,000 | $ | 511,287 | |||||
Minnesota State 5.00% 11/1/20-10 (AGM) | 13,675,000 | 14,125,728 | |||||||
Rochester Electric Utilities Revenue 5.25% 12/1/30-10 | 4,915,000 | 5,102,065 | |||||||
Southern Minnesota Municipal Power Agency Power Supply | |||||||||
Revenue Series A | |||||||||
5.75% 1/1/18-13 | 3,790,000 | 4,099,529 | |||||||
5.75% 1/1/18-13 (NATL-RE) | 1,000,000 | 1,081,670 | |||||||
5.75% 1/1/18-13 (AMBAC) | 670,000 | 724,719 | |||||||
St. Louis Park Health Care Facilities Revenue | |||||||||
(Park Nicollet Health Services) Series B | |||||||||
5.25% 7/1/30-14 | 9,420,000 | 10,903,273 | |||||||
5.50% 7/1/25-14 | 2,000,000 | 2,335,880 | |||||||
108,879,993 | |||||||||
Special Tax Revenue Bonds – 3.73% | |||||||||
Hennepin County Sales Revenue | |||||||||
(Second Lien - Ballpark Project) Series B | |||||||||
5.00% 12/15/19 | 2,100,000 | 2,397,696 | |||||||
5.00% 12/15/20 | 1,000,000 | 1,132,750 | |||||||
5.00% 12/15/24 | 1,150,000 | 1,271,463 | |||||||
Minneapolis Tax Increment Revenue Refunding | |||||||||
(St. Anthony Falls Project) 5.75% 2/1/27 | 1,000,000 | 889,780 | |||||||
Puerto Rico Commonwealth Highway & Transportation | |||||||||
Authority Revenue Series K 5.00% 7/1/30 | 5,605,000 | 5,316,567 | |||||||
Puerto Rico Commonwealth Infrastructure Financing | |||||||||
Authority Special Tax Revenue Series B 5.00% 7/1/46 | 4,000,000 | 3,549,400 | |||||||
Puerto Rico Sales Tax Financing Sales Tax Revenue | |||||||||
First Subordinate Series A | |||||||||
•5.00% 8/1/39 | 925,000 | 971,315 | |||||||
5.75% 8/1/37 | 5,620,000 | 5,809,787 | |||||||
Virgin Islands Public Finance Authority Revenue | |||||||||
(Senior Lien-Matching Fund Loan) Series A | |||||||||
5.25% 10/1/22 | 1,785,000 | 1,812,917 | |||||||
23,151,675 |
15
Statements of net assets
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
State General Obligation Bonds – 3.49% | |||||||||
Minnesota State | |||||||||
5.00% 10/1/15 | $ | 5,000,000 | $ | 5,884,649 | |||||
5.00% 8/1/21 | 2,400,000 | 2,619,432 | |||||||
Series A 5.00% 12/1/21 | 5,000,000 | 5,853,200 | |||||||
Puerto Rico Commonwealth Public Improvement | |||||||||
Series C 6.00% 7/1/39 | 4,045,000 | 4,164,125 | |||||||
Un-Refunded Balance | |||||||||
Series A 5.00% 7/1/34 | 1,670,000 | 1,545,936 | |||||||
Series B 5.00% 7/1/35 | 575,000 | 530,001 | |||||||
Puerto Rico Government Development Bank | |||||||||
Senior Notes Series B 5.00% 12/1/14 | 1,000,000 | 1,062,760 | |||||||
21,660,103 | |||||||||
Transportation Revenue Bonds – 1.13% | |||||||||
Minneapolis - St. Paul Metropolitan Airports | |||||||||
Commission Revenue Series A | |||||||||
5.00% 1/1/15 (AMT) | 3,095,000 | 3,375,128 | |||||||
5.00% 1/1/22 (NATL-RE) | 2,000,000 | 2,055,380 | |||||||
5.25% 1/1/16 (NATL-RE) | 1,460,000 | 1,585,575 | |||||||
7,016,083 | |||||||||
Water & Sewer Revenue Bonds – 0.37% | |||||||||
Minnesota Public Facilities Authority Drinking Water | |||||||||
Revenue Series B 5.25% 3/1/13 | 1,000,000 | 1,130,620 | |||||||
Minnesota Public Facilities Authority Water Pollution | |||||||||
Control Revenue Refunding Series B 5.00% 3/1/19 | 1,000,000 | 1,184,160 | |||||||
2,314,780 | |||||||||
Total Municipal Bonds (cost $595,508,886) | 623,885,116 | ||||||||
Number of shares | |||||||||
Short-Term Investment – 0.00% | |||||||||
Money Market Instrument – 0.00% | |||||||||
Federated Minnesota Municipal Cash Trust | 1,532 | 1,532 | |||||||
Total Short-Term Investment (cost $1,532) | 1,532 |
16
Total Value of Securities – 100.51% | ||||
(cost $595,510,418) | $ | 623,886,648 | ||
Liabilities Net of Receivables and | ||||
Other Assets – (0.51%) | (3,151,625 | ) | ||
Net Assets Applicable to 49,898,379 | ||||
Shares Outstanding – 100.00% | $ | 620,735,023 | ||
Net Asset Value – Delaware Tax-Free Minnesota Fund | ||||
Class A ($575,674,206 / 46,285,234 Shares) | $12.44 | |||
Net Asset Value – Delaware Tax-Free Minnesota Fund | ||||
Class B ($8,474,379 / 680,871 Shares) | $12.45 | |||
Net Asset Value – Delaware Tax-Free Minnesota Fund | ||||
Class C ($36,586,438 / 2,932,274 Shares) | $12.48 | |||
Components of Net Assets at February 28, 2010: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 591,374,256 | ||
Distributions in excess of net investment income | (145,617 | ) | ||
Accumulated net realized gain on investments | 1,130,154 | |||
Net unrealized appreciation of investments | 28,376,230 | |||
Total net assets | $ | 620,735,023 |
^ | 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 28, 2010. |
§ | Pre-Refunded bonds. Municipal bonds 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 9 in ”Notes to financial statements.” |
@ | Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $1,510,506, which represented 0.24% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
17
Statements of net assets
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund
Summary of abbreviations: AGM — Insured by Assured Guaranty Municipal Corporation AMBAC — Insured by the AMBAC Assurance Corporation AMT — Subject to Alternative Minimum Tax ASSURED GTY — Insured by the Assured Guaranty Corporation FGIC — Insured by the Financial Guaranty Insurance Company FHA — Insured by the Federal Housing Administration FNMA — Federal National Mortgage Association Collateral GNMA — Government National Mortgage Association Collateral HUD — Housing and Urban Development NATL-RE — Insured by the National Public Finance Guarantee Corporation RADIAN — Insured by Radian Asset Assurance VA — Veterans Administration Collateral |
Net Asset Value and Offering Price Per Share – | ||
Delaware Tax-Free Minnesota Fund | ||
Net asset value Class A (A) | $ | 12.44 |
Sales charge (4.50% of offering price) (B) | 0.59 | |
Offering price | $ | 13.03 |
(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
18
Delaware Tax-Free Minnesota Intermediate Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | ||||||||
Municipal Bonds – 101.47% | |||||||||
Corporate-Backed Revenue Bonds – 1.65% | |||||||||
Laurentian Energy Authority I Cogeneration Revenue | |||||||||
Series A 5.00% 12/1/21 | $ | 750,000 | $ | 725,970 | |||||
Minneapolis Community Development Agency | |||||||||
(Limited Tax Common Bond Fund) | |||||||||
Series 4 6.20% 6/1/17 (AMT) | 870,000 | 874,124 | |||||||
1,600,094 | |||||||||
Education Revenue Bonds – 9.90% | |||||||||
Minnesota Colleges & Universities Revenue Fund | |||||||||
Series A 5.00% 10/1/28 | 1,000,000 | 1,086,130 | |||||||
Minnesota Higher Education Facilities Authority Revenue | |||||||||
(Carleton College) Series 6-T 4.75% 1/1/23 | 1,000,000 | 1,074,430 | |||||||
(Macalester College) Series 6-P 4.25% 3/1/27 | 750,000 | 753,615 | |||||||
(St. Johns University) Series 6-U | |||||||||
4.40% 10/1/21 | 325,000 | 335,585 | |||||||
4.50% 10/1/23 | 265,000 | 271,890 | |||||||
(University of St. Thomas) | |||||||||
Series 5-Y 5.25% 10/1/19 | 1,590,000 | 1,694,145 | |||||||
Series 6-X 5.00% 4/1/24 | 1,000,000 | 1,056,160 | |||||||
St. Cloud Housing & Redevelopment Authority Revenue | |||||||||
(State University Foundation Project) 5.00% 5/1/23 | 1,000,000 | 1,029,760 | |||||||
University of Minnesota | |||||||||
Series A 4.00% 4/1/15 | 310,000 | 345,228 | |||||||
Series C 4.00% 2/1/14 | 250,000 | 276,908 | |||||||
University of Minnesota Special Purpose Revenue | |||||||||
(State Supported Stadium Debt) 5.00% 8/1/18 | 1,500,000 | 1,683,090 | |||||||
9,606,941 | |||||||||
Electric Revenue Bonds – 7.56% | |||||||||
Chaska Electric Revenue Refunding (Generating Facilities) | |||||||||
Series A 5.25% 10/1/25 | 1,000,000 | 1,046,770 | |||||||
Minnesota Municipal Power Agency Electric Revenue | |||||||||
5.25% 10/1/21 | 1,000,000 | 1,070,890 | |||||||
Northern Municipal Power Agency Electric System | |||||||||
Revenue Series A | |||||||||
5.00% 1/1/13 (ASSURED GTY) | 1,200,000 | 1,318,020 | |||||||
5.00% 1/1/14 (ASSURED GTY) | 510,000 | 570,588 | |||||||
5.00% 1/1/15 (ASSURED GTY) | 1,000,000 | 1,129,510 |
19
Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
Delaware Tax-Free Minnesota Intermediate Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Electric Revenue Bonds (continued) | ||||||||
Southern Minnesota Municipal Power Agency Supply System | ||||||||
Revenue Series A | ||||||||
5.25% 1/1/15 (AMBAC) | $ | 1,000,000 | $ | 1,139,470 | ||||
5.25% 1/1/30 | 1,000,000 | 1,054,180 | ||||||
7,329,428 | ||||||||
Escrowed to Maturity Bonds – 1.72% | ||||||||
University of Minnesota Series A | ||||||||
5.75% 7/1/16 | 1,000,000 | 1,189,620 | ||||||
5.75% 7/1/18 | 400,000 | 479,204 | ||||||
1,668,824 | ||||||||
Health Care Revenue Bonds – 17.24% | ||||||||
Bemidji Health Care Facilities First Mortgage Revenue | ||||||||
(North Country Health Services) | ||||||||
5.00% 9/1/31 (RADIAN) | 650,000 | 605,417 | ||||||
Glencoe Health Care Facilities Revenue (Glencoe Regional | ||||||||
Health Services Project) 5.00% 4/1/31 | 1,000,000 | 911,230 | ||||||
Minneapolis Health Care System Revenue | ||||||||
(Fairview Health Services) Series A 6.625% 11/15/28 | 1,500,000 | 1,685,085 | ||||||
Minneapolis-St. Paul Housing & Redevelopment Authority | ||||||||
(Health Partners Obligation Group Project) | ||||||||
6.00% 12/1/17 | 850,000 | 890,333 | ||||||
Minnesota Agricultural & Economic Development Board | ||||||||
Health Care Revenue (Essentia Remarketing) | ||||||||
Series C-1 5.50% 2/15/25 (ASSURED GTY) | 2,500,000 | 2,667,949 | ||||||
Moorhead Economic Development Authority Multifamily | ||||||||
Housing Revenue Refunding | ||||||||
(Eventide Lutheran Home Project) 4.70% 6/1/18 | 475,000 | 435,879 | ||||||
Rochester Minnesota Health Care & Housing Revenue | ||||||||
(Samaritan Bethany) Refunding Series A 6.875% 12/1/29 | 950,000 | 978,785 | ||||||
St. Cloud Minnesota Health Care Revenue (Centracare Health | ||||||||
System Project) 5.375% 5/1/31 (ASSURED GTY) | 1,000,000 | 1,036,200 | ||||||
Series A 5.125% 5/1/30 | 750,000 | 748,538 | ||||||
St. Louis Park Health Care Facilities Revenue Refunding | ||||||||
(Park Nicollet Health Services) | ||||||||
5.50% 7/1/29 | 1,000,000 | 1,016,730 | ||||||
Series C 5.625% 7/1/26 | 2,500,000 | 2,586,424 | ||||||
St. Paul Housing & Redevelopment Authority Health Care | ||||||||
Revenue (Allina Health System) | ||||||||
Series A-2 5.25% 11/15/28 | 2,000,000 | 2,011,782 |
20
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Health Care Revenue Bonds (continued) | ||||||||
St. Paul Housing & Redevelopment Authority Hospital | ||||||||
Revenue (Health East Project) Series B 5.85% 11/1/17 | $ | 1,160,000 | $ | 1,152,820 | ||||
16,727,172 | ||||||||
Housing Revenue Bonds – 4.15% | ||||||||
Minneapolis Multifamily Housing Revenue Refunding | ||||||||
(Trinity Apartments) | ||||||||
Series A 6.75% 5/1/21 (HUD Section 8) | 1,595,000 | 1,604,952 | ||||||
Minnesota Housing Finance Agency Residential Housing | ||||||||
•Series D 4.75% 7/1/32 (AMT) | 750,000 | 719,048 | ||||||
Series I 5.10% 7/1/20 (AMT) | 705,000 | 714,278 | ||||||
Series M 4.85% 7/1/31 (AMT) | 1,000,000 | 982,970 | ||||||
4,021,248 | ||||||||
Lease Revenue Bonds – 1.94% | ||||||||
Edina Housing & Redevelopment Authority Public Project | ||||||||
Revenue (Appropriate Lease Obligation) | ||||||||
5.125% 2/1/19 | 1,000,000 | 1,038,100 | ||||||
Virginia Housing & Redevelopment Authority Health Care | ||||||||
Facility Lease Revenue 5.25% 10/1/25 | 880,000 | 843,339 | ||||||
1,881,439 | ||||||||
Local General Obligation Bonds – 26.28% | ||||||||
Anoka County Capital Improvements | ||||||||
Series A 4.00% 2/1/17 | 1,175,000 | 1,301,559 | ||||||
Series C 5.00% 2/1/27 | 500,000 | 543,770 | ||||||
Anoka-Hennepin Independent School District #11 | ||||||||
Refunding 5.00% 2/1/17 | 1,000,000 | 1,173,510 | ||||||
Big Lake Independent School District #727 | ||||||||
Series C Refunding | ||||||||
5.00% 2/1/16 (AGM) | 1,180,000 | 1,224,333 | ||||||
5.00% 2/1/17 (AGM) | 1,000,000 | 1,037,570 | ||||||
Brainerd Independent School District #181 Refunding | ||||||||
(School Building) Series A 4.00% 2/1/22 | 2,500,000 | 2,631,000 | ||||||
Centennial Independent School District #012 Series A | ||||||||
5.00% 2/1/18 (AGM) | 1,000,000 | 1,071,420 | ||||||
5.00% 2/1/20 (AGM) | 750,000 | 803,565 | ||||||
Dakota County Capital Improvement Series A | ||||||||
4.75% 2/1/17 | 1,000,000 | 1,036,510 |
21
Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
Delaware Tax-Free Minnesota Intermediate Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Local General Obligation Bonds (continued) | ||||||||
Duluth Independent School District #709 Revenue | ||||||||
Certificates of Participation Series A 4.25% 2/1/20 (AGM) | $ | 1,710,000 | $ | 1,863,746 | ||||
Hopkins Independent School District #270 | ||||||||
5.125% 2/1/17 (FGIC) | 2,000,000 | 2,147,600 | ||||||
Mankato Independent School District #77 (Formerly Blue | ||||||||
Earth County Independent School District #10) | ||||||||
4.125% 2/1/22 | 1,000,000 | 1,060,400 | ||||||
Metropolitan Council Minneapolis-St. Paul Metropolitan | ||||||||
Area Waste Water Treatment Series C | ||||||||
5.00% 3/1/16 | 560,000 | 658,179 | ||||||
5.00% 3/1/28 | 1,000,000 | 1,072,580 | ||||||
Minneapolis Various Purposes 4.00% 12/1/23 | 1,500,000 | 1,561,920 | ||||||
Osseo Independent School District #279 | ||||||||
Series A 5.00% 2/1/21 (AGM) | 1,500,000 | 1,604,925 | ||||||
South Washington County Independent School District #833 | ||||||||
Series A 4.00% 2/1/22 | 750,000 | 784,380 | ||||||
Series B 5.00% 2/1/16 (AGM) | 1,560,000 | 1,670,635 | ||||||
St. Paul Independent School District #625 | ||||||||
(School Building) Series A 4.00% 2/1/15 | 1,020,000 | 1,137,351 | ||||||
White Bear Lake Independent School District #624 | ||||||||
(Formerly Joint Independent Consolidated Ramsey | ||||||||
County School District #39 & Washington & Anoka | ||||||||
Counties School District #103) Series B 4.75% 2/1/22 | 1,000,000 | 1,109,270 | ||||||
25,494,223 | ||||||||
§Pre-Refunded Bonds – 8.49% | ||||||||
Hennepin County Series B 4.75% 12/1/14-10 | 1,000,000 | 1,034,720 | ||||||
Minneapolis Health Care System Revenue | ||||||||
(Allina Health Systems) Series A 5.75% 11/15/32-12 | 1,500,000 | 1,697,805 | ||||||
(Fairview Health Services) Series A 5.625% 5/15/32-12 | 1,750,000 | 1,955,905 | ||||||
Minneapolis -St. Paul Metropolitan Airports Commission | ||||||||
Revenue Series C 5.125% 1/1/20-11 (FGIC) | 750,000 | 780,368 | ||||||
Minnesota Higher Education Facilities Authority Revenue | ||||||||
(College of Art & Design) Series 5-D 6.625% 5/1/20-10 | 1,000,000 | 1,011,490 | ||||||
St. Louis Park Health Care Facilities Revenue | ||||||||
(Park Nicollet Health Services) | ||||||||
Series B 5.50% 7/1/25-14 | 1,500,000 | 1,751,910 | ||||||
8,232,198 |
22
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Special Tax Revenue Bonds – 11.05% | ||||||||
Hennepin County Sales Tax Revenue (Second Lien-Ballpark) | ||||||||
Series B 5.00% 12/15/17 | $ | 1,740,000 | $ | 2,042,794 | ||||
Minneapolis Art Center Facilities Revenue (Walker Art | ||||||||
Center Project) 5.125% 7/1/21 | 2,250,000 | 2,301,637 | ||||||
@ | Minneapolis Tax Increment Revenue (Ivy Tower Project) | |||||||
5.50% 2/1/22 | 415,000 | 314,288 | ||||||
Minnesota 911 Revenue (Public Safety Radio | ||||||||
Communication System Project) | ||||||||
4.00% 6/1/14 (ASSURED GTY) | 1,370,000 | 1,515,234 | ||||||
4.25% 6/1/18 (ASSURED GTY) | 1,170,000 | 1,284,836 | ||||||
4.50% 6/1/25 (ASSURED GTY) | 1,000,000 | 1,063,910 | ||||||
Puerto Rico Sales Tax Financing Sales Tax Revenue | ||||||||
First Subordinate Series A | ||||||||
•5.00% 8/1/39 | 500,000 | 525,035 | ||||||
5.25% 8/1/27 | 1,000,000 | 1,023,110 | ||||||
6.125% 8/1/29 | 250,000 | 258,473 | ||||||
Ω(Capital Appreciation) 6.75% 8/1/32 | 510,000 | 388,156 | ||||||
10,717,473 | ||||||||
State General Obligation Bonds – 5.80% | ||||||||
Minnesota State | ||||||||
Refunding 5.00% 8/1/15 | 2,000,000 | 2,347,540 | ||||||
Various Purposes Series A 5.00% 12/1/21 | 1,000,000 | 1,170,640 | ||||||
Puerto Rico Commonwealth Public Improvement | ||||||||
Refunding Series A 5.25% 7/1/15 | 1,000,000 | 1,068,820 | ||||||
• | Puerto Rico Public Finance (Commonwealth Appropriation) | |||||||
Series A 5.75% 8/1/27 | ||||||||
(LOC - Puerto-Rico Government Bank) | 1,000,000 | 1,034,750 | ||||||
5,621,750 | ||||||||
Transportation Revenue Bonds – 2.41% | ||||||||
Minneapolis-St. Paul Metropolitan Airports | ||||||||
Commission Refunding | ||||||||
Series 14 5.50% 1/1/11 (AMT) | 750,000 | 777,608 | ||||||
Series A 5.00% 1/1/13 (AMT) | 500,000 | 539,140 | ||||||
Series B 5.00% 1/1/22 (AMT) | 1,000,000 | 1,022,900 | ||||||
2,339,648 |
23
Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
Delaware Tax-Free Minnesota Intermediate Fund
Principal amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Water & Sewer Revenue Bonds – 3.28% | ||||||||||
Minnesota Public Facilities Authority Water | ||||||||||
Pollution Control Revenue Refunding | ||||||||||
Series C 5.00% 3/1/18 | $ | 1,000,000 | $ | 1,141,420 | ||||||
Series D 5.00% 3/1/14 | 500,000 | 576,000 | ||||||||
St. Paul Sewer Revenue Series D 5.00% 12/1/20 | 1,275,000 | 1,463,279 | ||||||||
3,180,699 | ||||||||||
Total Municipal Bonds (cost $94,141,771) | 98,421,137 | |||||||||
Number of shares | ||||||||||
Short-Term Investment – 0.31% | ||||||||||
Money Market Instrument – 0.31% | ||||||||||
Federated Minnesota Municipal Cash Trust | 305,097 | 305,097 | ||||||||
Total Short-Term Investment (cost $305,097) | 305,097 | |||||||||
Total Value of Securities – 101.78% | ||||||||||
(cost $94,446,868) | 98,726,234 | |||||||||
Liabilities Net of Receivables | ||||||||||
and Other Assets – (1.78%) | (1,729,873 | ) | ||||||||
Net Assets Applicable to 8,819,362 | ||||||||||
Shares Outstanding – 100.00% | $ | 96,996,361 | ||||||||
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund | ||||||||||
Class A ($83,801,578 / 7,621,778 Shares) | $11.00 | |||||||||
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund | ||||||||||
Class B ($157,178 / 14,255 Shares) | $11.03 | |||||||||
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund | ||||||||||
Class C ($13,037,605 / 1,183,329 Shares) | $11.02 | |||||||||
Components of Net Assets at February 28, 2010: | ||||||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 93,577,105 | ||||||||
Undistributed net investment income | 2,522 | |||||||||
Accumulated net realized loss on investments | (862,632 | ) | ||||||||
Net unrealized appreciation of investments | 4,279,366 | |||||||||
Total net assets | $ | 96,996,361 |
24
@ | Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $314,288, which represented 0.32% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
§ | Pre-Refunded bonds. Municipal bonds 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 9 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
Summary of abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
HUD — Housing and Urban Development
LOC — Letter of Credit
RADIAN — Insured by Radian Asset Assurance
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
HUD — Housing and Urban Development
LOC — Letter of Credit
RADIAN — Insured by Radian Asset Assurance
Net Asset Value and Offering Price Per Share – | ||
Delaware Tax-Free Minnesota Intermediate Fund | ||
Net asset value Class A (A) | $11.00 | |
Sales charge (2.75% of offering price) (B) | 0.31 | |
Offering price | $11.31 |
(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 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 98.30% | ||||||||
Corporate-Backed Revenue Bonds – 3.35% | ||||||||
Cloquet Pollution Control Revenue Refunding | ||||||||
(Potlatch Project) 5.90% 10/1/26 | $ | 1,700,000 | $ | 1,565,037 | ||||
Laurentian Energy Authority I Cogeneration Revenue | ||||||||
Series A 5.00% 12/1/21 | 1,750,000 | 1,693,930 | ||||||
Sartell Environmental Improvement Revenue Refunding | ||||||||
(International Paper) Series A 5.20% 6/1/27 | 1,750,000 | 1,621,865 | ||||||
4,880,832 | ||||||||
Education Revenue Bonds – 9.43% | ||||||||
Baytown Township Lease Revenue (St. Croix | ||||||||
Preparatory Academy) Series A 7.00% 8/1/38 | 500,000 | 475,795 | ||||||
Minnesota Higher Education Facilities Authority Revenue | ||||||||
(Augsburg College) | ||||||||
Series 6-C 5.00% 5/1/23 | 700,000 | 703,619 | ||||||
Series 6-J1 5.00% 5/1/36 | 1,000,000 | 949,580 | ||||||
(Bethel University) Series 6-R 5.50% 5/1/37 | 1,500,000 | 1,419,105 | ||||||
(Macalester College) Series 6-P 4.25% 3/1/32 | 1,000,000 | 955,870 | ||||||
(St. John’s University) Series 6-U 4.75% 10/1/33 | 825,000 | 806,636 | ||||||
(St. Olaf) Series 6-O | ||||||||
4.50% 10/1/32 | 1,000,000 | 926,210 | ||||||
5.00% 10/1/22 | 1,000,000 | 1,062,510 | ||||||
(University of St. Thomas) | ||||||||
Series 6-I 5.00% 4/1/23 | 1,500,000 | 1,580,220 | ||||||
Series 7-A 5.00% 10/1/39 | 1,000,000 | 1,008,300 | ||||||
University of Minnesota Series A 5.125% 4/1/34 | 1,000,000 | 1,068,290 | ||||||
University of Minnesota Special Purpose Revenue | ||||||||
(Supported Stadium Debt) 5.00% 8/1/29 | 2,660,000 | 2,784,860 | ||||||
13,740,995 | ||||||||
Electric Revenue Bonds – 6.04% | ||||||||
Chaska Electric Revenue Refunding | ||||||||
(Generating Facilities) Series A 5.25% 10/1/25 | 1,000,000 | 1,046,770 | ||||||
Minnesota Municipal Power Agency Electric Revenue | ||||||||
Series A 5.00% 10/1/34 | 2,750,000 | 2,784,760 | ||||||
Northern Municipal Power Agency Electric System Revenue | ||||||||
Series A | ||||||||
5.00% 1/1/16 (ASSURED GTY) | 1,200,000 | 1,352,472 | ||||||
5.00% 1/1/18 (ASSURED GTY) | 1,000,000 | 1,124,000 | ||||||
Southern Minnesota Municipal Power Agency Supply | ||||||||
System Revenue Series A 5.25% 1/1/16 (AMBAC) | 1,000,000 | 1,139,360 |
26
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Electric Revenue Bonds (continued) | ||||||||
Western Minnesota Municipal Power Agency Supply | ||||||||
Revenue Series A 5.00% 1/1/30 (NATL-RE) | $ | 1,335,000 | $ | 1,351,154 | ||||
8,798,516 | ||||||||
Health Care Revenue Bonds – 28.55% | ||||||||
Aitkin Health Care Facilities Revenue Refunding | ||||||||
(Riverwood Health Care Center) 5.50% 2/1/24 | 700,000 | 680,736 | ||||||
Apple Valley Economic Development Authority Health | ||||||||
Care Revenue (Augustanna Home St. Paul Project) | ||||||||
Series A 5.80% 1/1/30 | 1,000,000 | 916,220 | ||||||
Bemidji Health Care Facilities First Mortgage Revenue | ||||||||
(North Country Health Services) | ||||||||
5.00% 9/1/31 (RADIAN) | 1,350,000 | 1,257,404 | ||||||
Refunding 5.00% 9/1/20 | 1,150,000 | 1,171,091 | ||||||
Breckenridge Catholic Health Initiatives | ||||||||
Series A 5.00% 5/1/30 | 2,000,000 | 2,043,719 | ||||||
Detroit Lakes Housing & Health Facilities Revenue | ||||||||
Refunding (Mankato Lutheran Homes) | ||||||||
Series D 5.50% 8/1/21 | 500,000 | 498,010 | ||||||
Glencoe Health Care Facilities Revenue | ||||||||
(Glencoe Regional Health Services Project) | ||||||||
5.00% 4/1/20 | 1,100,000 | 1,105,346 | ||||||
5.00% 4/1/31 | 1,965,000 | 1,790,567 | ||||||
Mahtomedi Senior Housing Revenue Refunding | ||||||||
(St. Andrews Village Project) 5.75% 12/1/40 | 1,000,000 | 824,720 | ||||||
Maple Grove Health Care Facilities Revenue | ||||||||
(North Memorial Health Care) 5.00% 9/1/35 | 1,880,000 | 1,718,264 | ||||||
Maple Grove Health Care System Revenue | ||||||||
(Maple Grove Hospital) | ||||||||
5.25% 5/1/28 | 2,200,000 | 2,252,667 | ||||||
5.25% 5/1/37 | 1,000,000 | 951,350 | ||||||
Minneapolis Health Care System Revenue | ||||||||
(Fairview Health Services) | ||||||||
Series A 6.625% 11/15/28 | 1,900,000 | 2,134,440 | ||||||
Series B 6.50% 11/15/38 (ASSURED GTY) | 250,000 | 279,400 | ||||||
Series D 5.00% 11/15/34 (AMBAC) | 1,000,000 | 968,220 | ||||||
Minneapolis-St. Paul Housing & Redevelopment Authority | ||||||||
(Health Partners Obligation Group Project) | ||||||||
6.00% 12/1/17 | 525,000 | 549,911 |
27
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
Delaware Minnesota High-Yield Municipal Bond Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Health Care Revenue Bonds (continued) | ||||||||
Minnesota Agricultural & Economic Development | ||||||||
Board Revenue (Benedictine Health Systems) | ||||||||
5.75% 2/1/29 | $ | 1,000,000 | $ | 919,550 | ||||
Moorhead Economic Development Authority | ||||||||
Multifamily Housing Revenue Refunding | ||||||||
(Eventide Project) Series A 5.15% 6/1/29 | 550,000 | 473,787 | ||||||
Northfield Hospital Revenue 5.375% 11/1/31 | 1,000,000 | 929,230 | ||||||
Owatonna Senior Housing Revenue | ||||||||
(Senior Living Project) Series A | ||||||||
5.80% 10/1/29 | 400,000 | 368,488 | ||||||
6.00% 4/1/41 | 1,250,000 | 1,119,750 | ||||||
Rochester Minnesota Health Care & Housing Revenue | ||||||||
(Samaritan Bethany) Refunding Series A | ||||||||
6.875% 12/1/29 | 1,000,000 | 1,030,300 | ||||||
7.375% 12/1/41 | 375,000 | 387,983 | ||||||
Shakopee Health Care Facilities Revenue | ||||||||
(St. Francis Regional Medical Center) 5.25% 9/1/34 | 1,000,000 | 934,700 | ||||||
St. Cloud Health Care Revenue | ||||||||
(Centracare Health System Project) | ||||||||
5.50% 5/1/39 (ASSURED GTY) | 1,500,000 | 1,543,095 | ||||||
Series A 5.125% 5/1/30 | 1,125,000 | 1,122,806 | ||||||
St. Louis Park Health Care Facilities Revenue Refunding | ||||||||
(Park Nicollet Health Services) | ||||||||
Series C 5.50% 7/1/23 | 1,000,000 | 1,036,470 | ||||||
St. Paul Housing & Redevelopment Authority | ||||||||
Health Care Facilities Revenue | ||||||||
(Allina Health System) Series A 5.00% 11/15/18 (NATL-RE) | 1,900,000 | 2,017,230 | ||||||
(Health Partners Obligation Group Project) | ||||||||
5.25% 5/15/36 | 1,000,000 | 922,470 | ||||||
St. Paul Housing & Redevelopment Authority | ||||||||
Hospital Revenue (Health East Project) | ||||||||
6.00% 11/15/25 | 1,000,000 | 977,040 | ||||||
6.00% 11/15/30 | 1,000,000 | 927,340 | ||||||
Series A 5.70% 11/1/15 | 705,000 | 704,930 | ||||||
Series B 5.85% 11/1/17 | 250,000 | 248,453 | ||||||
St. Paul Housing and Redevelopment Authority | ||||||||
Multifamily Housing Revenue Refunding | ||||||||
(Marion Center Project) Series A 5.375% 5/1/43 | 1,000,000 | 832,120 |
28
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Health Care Revenue Bonds (continued) | ||||||||
Stillwater Health Care Revenue | ||||||||
(Health System Obligation Group) | ||||||||
5.00% 6/1/25 | $ | 2,000,000 | $ | 2,010,140 | ||||
5.00% 6/1/35 | 1,000,000 | 945,120 | ||||||
@ | Twin Valley Congregate Housing Revenue | |||||||
(Living Options Project) 5.95% 11/1/28 | 1,825,000 | 1,667,831 | ||||||
Winona Health Care Facilities Revenue Refunding | ||||||||
(Winona Health Obligation Group) 5.15% 7/1/31 | 1,500,000 | 1,347,540 | ||||||
41,608,438 | ||||||||
Housing Revenue Bonds – 12.58% | ||||||||
Chanhassen Multifamily Housing Revenue Refunding | ||||||||
(Heritage Park Apartments Project) | ||||||||
6.20% 7/1/30 (FHA) (AMT) (HUD Section 8) | 300,000 | 300,264 | ||||||
Chaska Multifamily Housing Revenue (West Suburban | ||||||||
Housing Partners Project) 5.875% 3/1/31 (AMT) | 1,000,000 | 769,650 | ||||||
@ | Hutchinson Multifamily Housing Revenue (Evergreen | |||||||
Apartments Project) 5.75% 11/1/28 (HUD Section 8) | 1,600,000 | 1,617,120 | ||||||
Minneapolis Multifamily Housing Revenue | ||||||||
(Grant Street Apartments Project) | ||||||||
Refunding Series A 7.25% 11/1/29 | 2,085,000 | 2,106,434 | ||||||
(Olson Townhomes Project) 6.00% 12/1/19 (AMT) | 1,265,000 | 1,265,228 | ||||||
(Trinity Apartments) Refunding | ||||||||
Series A 6.75% 5/1/21 (HUD Section 8) | 590,000 | 593,682 | ||||||
Minneapolis-St. Paul Housing Finance Board Single | ||||||||
Family Mortgage (City Living Project) | ||||||||
Series A-2 5.00% 12/1/38 (GNMA) (FNMA) (AMT) | 839,784 | 841,506 | ||||||
Minnesota Housing Finance Agency | ||||||||
(Rental Housing) | ||||||||
Series A 4.875% 8/1/24 (AMT) | 585,000 | 586,351 | ||||||
Series A-1 5.00% 8/1/40 (AMT) | 2,265,000 | 2,192,700 | ||||||
(Residential Housing) | ||||||||
Series G 5.00% 7/1/36 (AMT) | 1,000,000 | 982,680 | ||||||
Series I 4.85% 7/1/38 (AMT) | 1,145,000 | 1,089,101 | ||||||
Series L 5.10% 7/1/38 (AMT) | 1,500,000 | 1,486,575 | ||||||
Series M 4.875% 7/1/37 (AMT) | 2,500,000 | 2,417,374 | ||||||
(Single Family Mortgage) Series E 6.25% 1/1/23 (AMT) | 5,000 | 5,006 |
29
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
Delaware Minnesota High-Yield Municipal Bond Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Housing Revenue Bonds (continued) | ||||||||
St. Paul Housing & Redevelopment Authority | ||||||||
Multifamily Housing Revenue (Shelby Grotto Housing | ||||||||
Project) 5.50% 9/20/44 (GNMA) (FHA) (AMT) | $ | 750,000 | $ | 763,065 | ||||
Stillwater Multifamily Housing Revenue | ||||||||
(Orleans Homes Project) 5.50% 2/1/42 (AMT) | 750,000 | 606,300 | ||||||
@ | Washington County Housing & Redevelopment | |||||||
Authority Revenue Refunding | ||||||||
(Briar Pond Project) Series B 7.125% 8/20/34 | 805,000 | 704,319 | ||||||
18,327,355 | ||||||||
Lease Revenue Bonds – 0.90% | ||||||||
Hibbing Economic Development Authority Revenue | ||||||||
(Public Project - Hibbing Lease Obligation) | ||||||||
6.40% 2/1/12 | 275,000 | 275,160 | ||||||
St. Paul Port Authority Lease Revenue (Robert Street | ||||||||
Office Building Project) Series 3-11 5.00% 12/1/27 | 1,000,000 | 1,035,620 | ||||||
1,310,780 | ||||||||
Local General Obligation Bonds – 11.44% | ||||||||
Chaska Independent School District #112 | ||||||||
Series A 4.50% 2/1/28 (NATL-RE) | 1,000,000 | 1,030,280 | ||||||
Farmington Independent School District #192 | ||||||||
Series B 5.00% 2/1/27 (AGM) | 1,000,000 | 1,061,550 | ||||||
Foley Independent School District #51 (School Building) | ||||||||
Refunding Series A 5.00% 2/1/21 | 1,105,000 | 1,221,191 | ||||||
Hopkins Independent School District #270 Facilities | ||||||||
5.00% 2/1/26 (NATL-RE) | 1,055,000 | 1,118,216 | ||||||
Lakeville Independent School District #194 | ||||||||
Series A 4.75% 2/1/22 (AGM) | 1,000,000 | 1,041,960 | ||||||
Metropolitan Council Minneapolis-St. Paul | ||||||||
Metropolitan Area Waste Water Treatment | ||||||||
Series B 5.00% 12/1/21 | 500,000 | 555,175 | ||||||
Series C 5.00% 3/1/28 | 1,000,000 | 1,072,580 | ||||||
Minneapolis Various Purposes 4.00% 12/1/23 | 1,500,000 | 1,561,920 | ||||||
Moorhead Improvement Series B 5.00% 2/1/33 (NATL-RE) | 750,000 | 768,780 | ||||||
Perham Disposal System 6.00% 5/1/22 (AMT) | 1,500,000 | 1,517,205 | ||||||
South Washington County Independent School District #833 | ||||||||
Series A 4.75% 2/1/27 | 1,500,000 | 1,593,045 |
30
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 | $ | 610,000 | $ | 640,232 | |||||
5.125% 12/1/24 | 205,000 | 214,178 | |||||||
5.25% 12/1/26 | 1,540,000 | 1,610,409 | |||||||
White Bear Lake Independent School District #624 | |||||||||
(Formerly Joint Independent Consolidated | |||||||||
Ramsey County School District #39 & Washington & | |||||||||
Anoka Counties School District #103) | |||||||||
Series B 4.75% 2/1/22 | 1,500,000 | 1,663,904 | |||||||
16,670,625 | |||||||||
§Pre-Refunded Bonds – 8.69% | |||||||||
Andover Economic Development Authority Public | |||||||||
Facilities Lease Revenue (Andover Community Center) | |||||||||
5.20% 2/1/34-14 | 1,000,000 | 1,114,590 | |||||||
Duluth Economic Development Authority | |||||||||
Health Care Facilities Revenue | |||||||||
(Benedictine Health System - St. Mary’s Hospital) | |||||||||
5.25% 2/15/28-14 | 1,000,000 | 1,153,920 | |||||||
5.25% 2/15/33-14 | 2,250,000 | 2,596,320 | |||||||
Minneapolis Community Development Agency Supported | |||||||||
Development Revenue (Limited Tax Common Bond Fund) | |||||||||
Series G-3 5.45% 12/1/31-11 | 1,000,000 | 1,081,360 | |||||||
Minneapolis Health Care System Revenue | |||||||||
(Allina Health Systems) Series A 5.75% 11/15/32-12 | 1,500,000 | 1,697,805 | |||||||
(Fairview Health Services) Series A 5.625% 5/15/32-12 | 2,000,000 | 2,235,320 | |||||||
Minnesota Higher Education Facilities Authority Revenue | |||||||||
(College of Art & Design Project) | |||||||||
Series 5-D 6.75% 5/1/26-10 | 500,000 | 505,855 | |||||||
Puerto Rico Electric Power Authority Revenue Series II | |||||||||
5.25% 7/1/31-12 | 1,000,000 | 1,117,450 | |||||||
St. Louis Park Health Care Facilities Revenue (Park | |||||||||
Nicollet Health Services) Series B 5.25% 7/1/30-14 | 1,000,000 | 1,157,460 | |||||||
12,660,080 | |||||||||
Special Tax Revenue Bonds – 7.76% | |||||||||
Hennepin County Sales Tax Revenue | |||||||||
(First Lien - Ball Park Project) | |||||||||
Series B 5.00% 12/15/24 | 1,000,000 | 1,112,130 |
31
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
Delaware Minnesota High-Yield Municipal Bond Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Special Tax Revenue Bonds (continued) | |||||||||
Hennepin County Sales Tax Revenue (continued) | |||||||||
(Second Lien - Ballpark Project) Series B | |||||||||
5.00% 12/15/20 | $ | 1,500,000 | $ | 1,699,124 | |||||
5.00% 12/15/24 | 1,000,000 | 1,105,620 | |||||||
Minneapolis Supported Development Revenue | |||||||||
(Limited Tax-Common Bond Fund) | |||||||||
Series 2A 5.00% 6/1/28 (AMT) | 1,170,000 | 1,103,018 | |||||||
Minneapolis Tax Increment Revenue | |||||||||
@(Ivy Tower Project) 5.70% 2/1/29 | 785,000 | 537,011 | |||||||
(St. Anthony Falls Project) 5.65% 2/1/27 | 500,000 | 439,930 | |||||||
Minnesota 911 Revenue (Public Safety Radio Commission | |||||||||
System Project) 5.00% 6/1/24 (ASSURED GTY) | 1,000,000 | 1,094,160 | |||||||
Puerto Rico Commonwealth Infrastructure Financing | |||||||||
Authority Special Tax Revenue Series B 5.00% 7/1/46 | 800,000 | 709,880 | |||||||
Puerto Rico Sales Tax Financing Revenue First Subordinate | |||||||||
Series A 5.75% 8/1/37 | 930,000 | 961,406 | |||||||
St. Paul Port Authority (Brownsfields Redevelopment Tax) | |||||||||
Series 2 5.00% 3/1/37 | 1,500,000 | 1,538,325 | |||||||
Virgin Islands Public Finance Authority Revenue | |||||||||
(Senior Lien-Matching Fund Loan Note) | |||||||||
Series A 5.25% 10/1/24 | 1,000,000 | 1,012,560 | |||||||
11,313,164 | |||||||||
State General Obligation Bonds – 4.01% | |||||||||
Minnesota State | |||||||||
5.00% 6/1/14 | 1,000,000 | 1,158,240 | |||||||
5.00% 8/1/21 (AGM) | 1,250,000 | 1,390,375 | |||||||
Puerto Rico Commonwealth Public Improvement Series A | |||||||||
5.25% 7/1/22 | 1,000,000 | 1,015,010 | |||||||
Un-Refunded Balance 5.00% 7/1/34 | 185,000 | 171,256 | |||||||
Puerto Rico Commonwealth Refunding Public Improvement | |||||||||
Series C 6.00% 7/1/39 | 1,010,000 | 1,039,745 | |||||||
Puerto Rico Government Development Bank Senior Notes | |||||||||
Series B 5.00% 12/1/14 | 1,000,000 | 1,062,760 | |||||||
5,837,386 | |||||||||
Transportation Revenue Bond – 1.39% | |||||||||
Minneapolis - St. Paul Metropolitan Airports | |||||||||
Commission Revenue Series A 5.00% 1/1/28 (NATL-RE) | 2,000,000 | 2,021,540 | |||||||
2,021,540 |
32
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Water & Sewer Revenue Bonds – 4.16% | |||||||||
Minnesota Public Facilities Authority Clean Water | |||||||||
Revenue Series B 5.00% 3/1/18 | $ | 2,000,000 | $ | 2,351,700 | |||||
Minnesota Public Facilities Authority Water Pollution | |||||||||
Control Revenue Refunding | |||||||||
Series C 5.00% 3/1/18 | 1,000,000 | 1,141,420 | |||||||
Series D 5.00% 3/1/14 | 1,000,000 | 1,152,000 | |||||||
St. Paul Sewer Revenue Series D 5.00% 12/1/19 | 1,220,000 | 1,411,955 | |||||||
6,057,075 | |||||||||
Total Municipal Bonds (cost $141,743,534) | 143,226,786 | ||||||||
Number of shares | |||||||||
Short-Term Investments – 0.55% | |||||||||
Money Market Instrument – 0.07% | |||||||||
Federated Minnesota Municipal Cash Trust | 98,648 | 98,648 | |||||||
98,648 | |||||||||
Principal amount | |||||||||
•Variable Rate Demand Note – 0.48% | |||||||||
Minneapolis & St. Paul Minnesota Housing & | |||||||||
Redevelopment Authority Health Care System Revenue | |||||||||
(Allina Health System) Series B-2 0.14% 11/15/35 | |||||||||
(LOC - JPMorgan Chase Bank) | $ | 700,000 | 700,000 | ||||||
700,000 | |||||||||
Total Short-Term Investments (cost $798,648) | 798,648 | ||||||||
Total Value of Securities – 98.85% | |||||||||
(cost $142,542,182) | 144,025,434 | ||||||||
Receivables and Other Assets | |||||||||
Net of Liabilities – 1.15% | 1,681,898 | ||||||||
Net Assets Applicable to 14,094,931 | |||||||||
Shares Outstanding – 100.00% | $ | 145,707,332 | |||||||
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund | |||||||||
Class A ($114,087,435 / 11,040,662 Shares) | $10.33 | ||||||||
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund | |||||||||
Class B ($4,897,103 / 473,244 Shares) | $10.35 | ||||||||
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund | |||||||||
Class C ($26,722,794 / 2,581,025 Shares) | $10.35 |
33
Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
Delaware Minnesota High-Yield Municipal Bond Fund
Components of Net Assets at February 28, 2010: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 148,984,462 | ||
Undistributed net investment income | 97 | |||
Accumulated net realized loss on investments | (4,760,479 | ) | ||
Net unrealized appreciation of investments | 1,483,252 | |||
Total net assets | $ | 145,707,332 |
§ | Pre-Refunded bonds. Municipal bonds 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 9 in “Notes to financial statements.” |
@ | Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $4,526,281, which represented 3.11% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
Summary of abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FHA — Insured by the Federal Housing Administration
FNMA — Federal National Mortgage Association Collateral
GNMA — Government National Mortgage Association Collateral
HUD — Housing and Urban Development
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FHA — Insured by the Federal Housing Administration
FNMA — Federal National Mortgage Association Collateral
GNMA — Government National Mortgage Association Collateral
HUD — Housing and Urban Development
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
Net Asset Value and Offering Price Per Share – | |||
Delaware Minnesota High-Yield Municipal Bond Fund | |||
Net asset value Class A (A) | $ | 10.33 | |
Sales charge (4.50% of offering price) (B) | 0.49 | ||
Offering price | $ | 10.82 |
(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 28, 2010 (Unaudited) |
Delaware | Delaware | |||||||||||
Delaware | Tax-Free | Minnesota | ||||||||||
Tax-Free | Minnesota | High-Yield | ||||||||||
Minnesota | Intermediate | Municipal | ||||||||||
Fund | Fund | Bond Fund | ||||||||||
Investment Income: | ||||||||||||
Interest | $ | 14,576,928 | $ | 1,965,938 | $ | 3,521,242 | ||||||
Expenses: | ||||||||||||
Management fees | 1,645,868 | 235,447 | 390,265 | |||||||||
Distribution expenses – Class A | 706,024 | 101,843 | 138,959 | |||||||||
Distribution expenses – Class B | 43,733 | 886 | 24,465 | |||||||||
Distribution expenses – Class C | 174,967 | 61,200 | 128,689 | |||||||||
Dividend disbursing and transfer agent fees | ||||||||||||
and expenses | 151,215 | 32,850 | 52,452 | |||||||||
Accounting and administration expenses | 121,542 | 18,803 | 28,334 | |||||||||
Legal fees | 42,669 | 9,149 | 12,787 | |||||||||
Reports and statements to shareholders | 32,112 | 7,354 | 8,521 | |||||||||
Registration fees | 25,247 | 14,957 | 3,785 | |||||||||
Audit and tax | 25,006 | 8,103 | 9,877 | |||||||||
Trustees’ fees | 20,265 | 2,833 | 4,268 | |||||||||
Insurance fees | 10,100 | 1,360 | 2,264 | |||||||||
Pricing fees | 6,615 | 3,518 | 4,770 | |||||||||
Custodian fees | 6,194 | 1,270 | 1,501 | |||||||||
Consulting fees | 4,122 | 522 | 909 | |||||||||
Dues and services | 1,690 | 169 | 342 | |||||||||
Trustees’ expenses | 1,436 | 213 | 310 | |||||||||
3,018,805 | 500,477 | 812,498 | ||||||||||
Less fees waived | (34,681 | ) | (34,611 | ) | (51,786 | ) | ||||||
Less waived distribution expenses – Class A | — | (40,737 | ) | — | ||||||||
Total operating expenses | 2,984,124 | 425,129 | 760,712 | |||||||||
Net Investment Income | 11,592,804 | 1,540,809 | 2,760,530 |
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 (loss) on investments | $ | 1,058,752 | $ | 146,313 | $ | (10,939 | ) | |||
Net change in unrealized appreciation/ | ||||||||||
depreciation of investments | 11,472,358 | 1,299,557 | 5,959,399 | |||||||
Net Realized and Unrealized Gain | ||||||||||
on Investments | 12,531,110 | 1,445,870 | 5,948,460 | |||||||
Net Increase in Net Assets | ||||||||||
Resulting from Operations | $ | 24,123,914 | $ | 2,986,679 | $ | 8,708,990 |
See accompanying notes
37
Statements of changes in net assets
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 11,592,804 | $ | 23,410,864 | ||||
Net realized gain on investments | 1,058,752 | 398,012 | ||||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 11,472,358 | 4,329,928 | ||||||
Net increase in net assets resulting from operations | 24,123,914 | 28,138,804 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net Investment Income: | ||||||||
Class A | (10,908,175 | ) | (22,065,961 | ) | ||||
Class B | (136,865 | ) | (336,274 | ) | ||||
Class C | (547,431 | ) | (964,553 | ) | ||||
Net realized gain on investments: | ||||||||
Class A | — | (2,257,248 | ) | |||||
Class B | — | (43,630 | ) | |||||
Class C | — | (114,457 | ) | |||||
(11,592,471 | ) | (25,782,123 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 25,986,906 | 42,839,664 | ||||||
Class B | — | 137,140 | ||||||
Class C | 3,861,093 | 9,478,506 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 7,086,591 | 15,962,228 | ||||||
Class B | 93,906 | 264,058 | ||||||
Class C | 399,106 | 810,983 | ||||||
37,427,602 | 69,492,579 |
38
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (28,415,895 | ) | $ | (76,315,603 | ) | ||
Class B | (1,318,569 | ) | (2,471,909 | ) | ||||
Class C | (2,562,063 | ) | (4,080,940 | ) | ||||
(32,296,527 | ) | (82,868,452 | ) | |||||
Increase (decrease) in net assets derived from | ||||||||
capital share transactions | 5,131,075 | (13,375,873 | ) | |||||
Net Increase (Decrease) in Net Assets | 17,662,518 | (11,019,192 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 603,072,505 | 614,091,697 | ||||||
End of period | $ | 620,735,023 | $ | 603,072,505 | ||||
Distributions in excess of net investment income | $ | (145,617 | ) | $ | (144,872 | ) |
See accompanying notes
39
Statements of changes in net assets
Delaware Tax-Free Minnesota Intermediate Fund
Delaware Tax-Free Minnesota Intermediate Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 1,540,809 | $ | 2,618,389 | ||||
Net realized gain (loss) on investments | 146,313 | (536,519 | ) | |||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 1,299,557 | 1,614,867 | ||||||
Net increase in net assets resulting from operations | 2,986,679 | 3,696,737 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net Investment Income: | ||||||||
Class A | (1,379,872 | ) | (2,352,412 | ) | ||||
Class B | (2,241 | ) | (16,198 | ) | ||||
Class C | (155,251 | ) | (247,432 | ) | ||||
(1,537,364 | ) | (2,616,042 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 14,068,670 | 25,615,997 | ||||||
Class B | 13,787 | 23,351 | ||||||
Class C | 3,042,918 | 5,125,080 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 928,937 | 1,512,023 | ||||||
Class B | 2,026 | 12,783 | ||||||
Class C | 107,255 | 170,452 | ||||||
18,163,593 | 32,459,686 |
40
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (10,476,638 | ) | $ | (8,485,220 | ) | ||
Class B | (180,255 | ) | (608,734 | ) | ||||
Class C | (1,573,232 | ) | (1,331,367 | ) | ||||
(12,230,125 | ) | (10,425,321 | ) | |||||
Increase in net assets derived from | ||||||||
capital share transactions | 5,933,468 | 22,034,365 | ||||||
Net Increase in Net Assets | 7,382,783 | 23,115,060 | ||||||
Net Assets: | ||||||||
Beginning of period | 89,613,578 | 66,498,518 | ||||||
End of period | $ | 96,996,361 | $ | 89,613,578 | ||||
Undistributed net investment income | $ | 2,522 | $ | 2,522 |
See accompanying notes
41
Statements of changes in net assets
Delaware Minnesota High-Yield Municipal Bond Fund
Delaware Minnesota High-Yield Municipal Bond Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 2,760,530 | $ | 5,743,736 | ||||
Net realized loss on investments | (10,939 | ) | (3,479,426 | ) | ||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 5,959,399 | 509,407 | ||||||
Net increase in net assets resulting from operations | 8,708,990 | 2,773,717 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net Investment Income: | ||||||||
Class A | (2,242,248 | ) | (4,628,073 | ) | ||||
Class B | (80,365 | ) | (192,230 | ) | ||||
Class C | (422,601 | ) | (911,013 | ) | ||||
(2,745,214 | ) | (5,731,316 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 7,793,594 | 15,056,968 | ||||||
Class B | — | 73,695 | ||||||
Class C | 2,058,183 | 2,660,111 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 1,454,637 | 2,988,359 | ||||||
Class B | 54,952 | 121,542 | ||||||
Class C | 300,003 | 647,117 | ||||||
11,661,369 | 21,547,792 |
42
Six Months | Year | |||||||||||
Ended | Ended | |||||||||||
2/28/10 | 8/31/09 | |||||||||||
(Unaudited) | ||||||||||||
Capital Share Transactions (continued): | ||||||||||||
Cost of shares repurchased: | ||||||||||||
Class A | $ | (7,791,548 | ) | $ | (24,926,201 | ) | ||||||
Class B | (365,145 | ) | (992,296 | ) | ||||||||
Class C | (1,447,518 | ) | (6,740,684 | ) | ||||||||
(9,604,211 | ) | (32,659,181 | ) | |||||||||
Increase (decrease) in net assets derived from | ||||||||||||
capital share transactions | 2,057,158 | (11,111,389 | ) | |||||||||
Net Increase (Decrease) in Net Assets | 8,020,934 | (14,068,988 | ) | |||||||||
Net Assets: | ||||||||||||
Beginning of period | 137,686,398 | 151,755,386 | ||||||||||
End of period | $ | 145,707,332 | $ | 137,686,398 | ||||||||
Undistributed net investment income | $ | 97 | $ | 97 |
See accompanying notes
43
Financial highlights
Delaware Tax-Free Minnesota Fund Class A
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 fees waived and expense paid indirectly |
Interest and fees on short-term floating rate notes issued |
Total expenses prior to fees waived and expense paid indirectly3 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
44
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$12.180 | $12.120 | $12.170 | $12.490 | $12.690 | $12.620 | ||||||||||||||
0.237 | 0.474 | 0.495 | 0.511 | 0.511 | 0.527 | ||||||||||||||
0.260 | 0.107 | (0.041 | ) | (0.313 | ) | (0.172 | ) | 0.222 | |||||||||||
0.497 | 0.581 | 0.454 | 0.198 | 0.339 | 0.749 | ||||||||||||||
(0.237 | ) | (0.473 | ) | (0.502 | ) | (0.507 | ) | (0.513 | ) | (0.526 | ) | ||||||||
— | (0.048 | ) | (0.002 | ) | (0.011 | ) | (0.026 | ) | (0.153 | ) | |||||||||
(0.237 | ) | (0.521 | ) | (0.504 | ) | (0.518 | ) | (0.539 | ) | (0.679 | ) | ||||||||
$12.440 | $12.180 | $12.120 | $12.170 | $12.490 | $12.690 | ||||||||||||||
4.11% | 5.04% | 3.77% | 1.58% | 2.78% | 6.12% | ||||||||||||||
$575,674 | $559,393 | $574,914 | $578,194 | $381,720 | $364,491 | ||||||||||||||
0.93% | 0.92% | 0.93% | 0.94% | 0.93% | 0.93% | ||||||||||||||
— | 0.01% | 0.18% | 0.29% | 0.26% | 0.19% | ||||||||||||||
0.93% | 0.93% | 1.11% | 1.23% | 1.19% | 1.12% | ||||||||||||||
0.94% | 0.94% | 0.93% | 0.96% | 0.94% | 0.94% | ||||||||||||||
— | 0.01% | 0.18% | 0.29% | 0.26% | 0.19% | ||||||||||||||
0.94% | 0.95% | 1.11% | 1.25% | 1.20% | 1.13% | ||||||||||||||
3.86% | 4.03% | 4.05% | 4.12% | 4.11% | 4.19% | ||||||||||||||
3.85% | 4.01% | 4.05% | 4.10% | 4.10% | 4.18% | ||||||||||||||
22% | 20% | 17% | 7% | 13% | 10% |
3 Total expenses and total expenses prior to fees waived and expense paid indirectly 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 Note 8 in “Notes to financial statements”. |
45
Financial highlights
Delaware Tax-Free Minnesota Fund Class B
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 fees waived and expense paid indirectly |
Interest and fees on short-term floating rate notes issued |
Total expenses prior to fees waived and expense paid indirectly3 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
46
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$12.190 | $12.130 | $12.180 | $12.500 | $12.700 | $12.630 | ||||||||||||||
0.191 | 0.386 | 0.403 | 0.419 | 0.418 | 0.433 | ||||||||||||||
0.260 | 0.107 | (0.041 | ) | (0.314 | ) | (0.172 | ) | 0.222 | |||||||||||
0.451 | 0.493 | 0.362 | 0.105 | 0.246 | 0.655 | ||||||||||||||
(0.191 | ) | (0.385 | ) | (0.410 | ) | (0.414 | ) | (0.420 | ) | (0.432 | ) | ||||||||
— | (0.048 | ) | (0.002 | ) | (0.011 | ) | (0.026 | ) | (0.153 | ) | |||||||||
(0.191 | ) | (0.433 | ) | (0.412 | ) | (0.425 | ) | (0.446 | ) | (0.585 | ) | ||||||||
$12.450 | $12.190 | $12.130 | $12.180 | $12.500 | $12.700 | ||||||||||||||
3.72% | 4.26% | 2.99% | 0.82% | 2.01% | 5.33% | ||||||||||||||
$8,474 | $9,506 | $11,593 | $15,674 | $11,354 | $12,810 | ||||||||||||||
1.68% | 1.67% | 1.68% | 1.69% | 1.68% | 1.68% | ||||||||||||||
— | 0.01% | 0.18% | 0.29% | 0.26% | 0.19% | ||||||||||||||
1.68% | 1.68% | 1.86% | 1.98% | 1.94% | 1.87% | ||||||||||||||
1.69% | 1.69% | 1.68% | 1.71% | 1.69% | 1.69% | ||||||||||||||
— | 0.01% | 0.18% | 0.29% | 0.26% | 0.19% | ||||||||||||||
1.69% | 1.70% | 1.86% | 2.00% | 1.95% | 1.88% | ||||||||||||||
3.11% | 3.28% | 3.30% | 3.37% | 3.36% | 3.44% | ||||||||||||||
3.10% | 3.26% | 3.30% | 3.35% | 3.35% | 3.43% | ||||||||||||||
22% | 20% | 17% | 7% | 13% | 10% |
3 Total expenses and total expenses prior to fees waived and expense paid indirectly 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 Note 8 in “Notes to financial statements”. |
47
Financial highlights
Delaware Tax-Free Minnesota Fund Class C
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 fees waived and expense paid indirectly |
Interest and fees on short-term floating rate notes issued |
Total expenses prior to fees waived and expense paid indirectly3 |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
48
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$12.220 | $12.160 | $12.200 | $12.530 | $12.720 | $12.650 | ||||||||||||||
0.191 | 0.386 | 0.403 | 0.418 | 0.418 | 0.433 | ||||||||||||||
0.261 | 0.107 | (0.031 | ) | (0.323 | ) | (0.162 | ) | 0.222 | |||||||||||
0.452 | 0.493 | 0.372 | 0.095 | 0.256 | 0.655 | ||||||||||||||
(0.192 | ) | (0.385 | ) | (0.410 | ) | (0.414 | ) | (0.420 | ) | (0.432 | ) | ||||||||
— | (0.048 | ) | (0.002 | ) | (0.011 | ) | (0.026 | ) | (0.153 | ) | |||||||||
(0.192 | ) | (0.433 | ) | (0.412 | ) | (0.425 | ) | (0.446 | ) | (0.585 | ) | ||||||||
$12.480 | $12.220 | $12.160 | $12.200 | $12.530 | $12.720 | ||||||||||||||
3.71% | 4.25% | 3.06% | 0.73% | 2.08% | 5.32% | ||||||||||||||
$36,587 | $34,174 | $27,585 | $26,830 | $15,125 | $13,971 | ||||||||||||||
1.68% | 1.67% | 1.68% | 1.69% | 1.68% | 1.68% | ||||||||||||||
— | 0.01% | 0.18% | 0.29% | 0.26% | 0.19% | ||||||||||||||
1.68% | 1.68% | 1.86% | 1.98% | 1.94% | 1.87% | ||||||||||||||
1.69% | 1.69% | 1.68% | 1.71% | 1.69% | 1.69% | ||||||||||||||
— | 0.01% | 0.18% | 0.29% | 0.26% | 0.19% | ||||||||||||||
1.69% | 1.70% | 1.86% | 2.00% | 1.95% | 1.88% | ||||||||||||||
3.11% | 3.28% | 3.30% | 3.37% | 3.36% | 3.44% | ||||||||||||||
3.10% | 3.26% | 3.30% | 3.35% | 3.35% | 3.43% | ||||||||||||||
22% | 20% | 17% | 7% | 13% | 10% |
3 Total expenses and total expenses prior to fees waived and expense paid indirectly 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 Note 8 in “Notes to financial statements”. |
49
Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class A
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 assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes
50
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.820 | $10.720 | $10.610 | $10.860 | $11.010 | $10.890 | ||||||||||||||
0.184 | 0.384 | 0.414 | 0.445 | 0.429 | 0.407 | ||||||||||||||
0.179 | 0.100 | 0.110 | (0.250 | ) | (0.150 | ) | 0.120 | ||||||||||||
0.363 | 0.484 | 0.524 | 0.195 | 0.279 | 0.527 | ||||||||||||||
(0.183 | ) | (0.384 | ) | (0.414 | ) | (0.445 | ) | (0.429 | ) | (0.407 | ) | ||||||||
(0.183 | ) | (0.384 | ) | (0.414 | ) | (0.445 | ) | (0.429 | ) | (0.407 | ) | ||||||||
$11.000 | $10.820 | $10.720 | $10.610 | $10.860 | $11.010 | ||||||||||||||
3.38% | 4.67% | 5.00% | 1.80% | 2.62% | 4.93% | ||||||||||||||
$83,801 | $78,021 | $58,465 | $48,477 | $48,297 | $52,958 | ||||||||||||||
0.79% | 0.75% | 0.75% | 0.76% | 0.75% | 0.79% | ||||||||||||||
0.96% | 0.97% | 0.95% | 1.00% | 0.97% | 0.95% | ||||||||||||||
3.38% | 3.62% | 3.83% | 4.11% | 3.96% | 3.72% | ||||||||||||||
3.21% | 3.40% | 3.63% | 3.87% | 3.74% | 3.56% | ||||||||||||||
21% | 12% | 27% | 15% | 11% | 25% |
51
Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class B
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 assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
52
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.850 | $10.750 | $10.640 | $10.890 | $11.040 | $10.920 | ||||||||||||||
0.138 | 0.295 | 0.322 | 0.353 | 0.337 | 0.314 | ||||||||||||||
0.180 | 0.100 | 0.110 | (0.250 | ) | (0.150 | ) | 0.120 | ||||||||||||
0.318 | 0.395 | 0.432 | 0.103 | 0.187 | 0.434 | ||||||||||||||
(0.138 | ) | (0.295 | ) | (0.322 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | ||||||||
(0.138 | ) | (0.295 | ) | (0.322 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | ||||||||
$11.030 | $10.850 | $10.750 | $10.640 | $10.890 | $11.040 | ||||||||||||||
2.94% | 3.79% | 4.10% | 0.94% | 1.75% | 4.03% | ||||||||||||||
$157 | $317 | $908 | $1,713 | $1,993 | $2,811 | ||||||||||||||
1.64% | 1.60% | 1.60% | 1.61% | 1.60% | 1.64% | ||||||||||||||
1.71% | 1.72% | 1.70% | 1.75% | 1.72% | 1.70% | ||||||||||||||
2.53% | 2.77% | 2.98% | 3.26% | 3.11% | 2.87% | ||||||||||||||
2.46% | 2.65% | 2.88% | 3.12% | 2.99% | 2.81% | ||||||||||||||
21% | 12% | 27% | 15% | 11% | 25% |
53
Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class C
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 assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
54
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.840 | $10.740 | $10.630 | $10.880 | $11.030 | $10.910 | ||||||||||||||
0.138 | 0.295 | 0.322 | 0.353 | 0.337 | 0.314 | ||||||||||||||
0.179 | 0.100 | 0.110 | (0.250 | ) | (0.150 | ) | 0.120 | ||||||||||||
0.317 | 0.395 | 0.432 | 0.103 | 0.187 | 0.434 | ||||||||||||||
(0.137 | ) | (0.295 | ) | (0.322 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | ||||||||
(0.137 | ) | (0.295 | ) | (0.322 | ) | (0.353 | ) | (0.337 | ) | (0.314 | ) | ||||||||
$11.020 | $10.840 | $10.740 | $10.630 | $10.880 | $11.030 | ||||||||||||||
2.94% | 3.78% | 4.10% | 0.94% | 1.75% | 4.04% | ||||||||||||||
$13,038 | $11,276 | $7,126 | $4,936 | $5,162 | $5,996 | ||||||||||||||
1.64% | 1.60% | 1.60% | 1.61% | 1.60% | 1.64% | ||||||||||||||
1.71% | 1.72% | 1.70% | 1.75% | 1.72% | 1.70% | ||||||||||||||
2.53% | 2.77% | 2.98% | 3.26% | 3.11% | 2.87% | ||||||||||||||
2.46% | 2.65% | 2.88% | 3.12% | 2.99% | 2.81% | ||||||||||||||
21% | 12% | 27% | 15% | 11% | 25% |
55
Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class A
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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all periods shown 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 | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$ 9.910 | $10.000 | $10.180 | $10.530 | $10.610 | $10.240 | ||||||||||||||
0.205 | 0.422 | 0.418 | 0.430 | 0.445 | 0.469 | ||||||||||||||
0.419 | (0.091 | ) | (0.180 | ) | (0.350 | ) | (0.082 | ) | 0.372 | ||||||||||
0.624 | 0.331 | 0.238 | 0.080 | 0.363 | 0.841 | ||||||||||||||
(0.204 | ) | (0.421 | ) | (0.418 | ) | (0.430 | ) | (0.443 | ) | (0.471 | ) | ||||||||
(0.204 | ) | (0.421 | ) | (0.418 | ) | (0.430 | ) | (0.443 | ) | (0.471 | ) | ||||||||
$10.330 | $9.910 | $10.000 | $10.180 | $10.530 | $10.610 | ||||||||||||||
6.33% | 3.63% | 2.35% | 0.71% | 3.54% | 8.40% | ||||||||||||||
$114,087 | $107,951 | $116,999 | $109,807 | $87,504 | $63,802 | ||||||||||||||
0.91% | 0.89% | 0.89% | 0.90% | 0.89% | 0.89% | ||||||||||||||
0.98% | 0.97% | 0.97% | 1.00% | 1.00% | 0.98% | ||||||||||||||
4.05% | 4.49% | 4.11% | 4.09% | 4.26% | 4.50% | ||||||||||||||
3.98% | 4.41% | 4.03% | 3.99% | 4.15% | 4.41% | ||||||||||||||
4% | 12% | 10% | 10% | 4% | 3% |
57
Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class B
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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all periods shown 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 | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$9.920 | $10.010 | $10.190 | $10.550 | $10.630 | $10.250 | ||||||||||||||
0.168 | 0.352 | 0.341 | 0.351 | 0.367 | 0.391 | ||||||||||||||
0.429 | (0.091 | ) | (0.179 | ) | (0.360 | ) | (0.082 | ) | 0.381 | ||||||||||
0.597 | 0.261 | 0.162 | (0.009 | ) | 0.285 | 0.772 | |||||||||||||
(0.167 | ) | (0.351 | ) | (0.342 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | ||||||||
(0.167 | ) | (0.351 | ) | (0.342 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | ||||||||
$10.350 | $9.920 | $10.010 | $10.190 | $10.550 | $10.630 | ||||||||||||||
6.04% | 2.86% | 1.58% | (0.13% | ) | 2.77% | 7.68% | |||||||||||||
$4,897 | $4,995 | $5,907 | $7,334 | $9,578 | $10,505 | ||||||||||||||
1.66% | 1.64% | 1.64% | 1.65% | 1.64% | 1.64% | ||||||||||||||
1.73% | 1.72% | 1.72% | 1.75% | 1.75% | 1.73% | ||||||||||||||
3.30% | 3.74% | 3.36% | 3.34% | 3.51% | 3.75% | ||||||||||||||
3.23% | 3.66% | 3.28% | 3.24% | 3.40% | 3.66% | ||||||||||||||
4% | 12% | 10% | 10% | 4% | 3% |
59
Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class C
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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all periods shown 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 | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$9.930 | $10.020 | $10.200 | $10.550 | $10.630 | $10.250 | ||||||||||||||
0.168 | 0.352 | 0.342 | 0.351 | 0.367 | 0.391 | ||||||||||||||
0.419 | (0.091 | ) | (0.181 | ) | (0.350 | ) | (0.082 | ) | 0.381 | ||||||||||
0.587 | 0.261 | 0.161 | 0.001 | 0.285 | 0.772 | ||||||||||||||
(0.167 | ) | (0.351 | ) | (0.341 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | ||||||||
(0.167 | ) | (0.351 | ) | (0.341 | ) | (0.351 | ) | (0.365 | ) | (0.392 | ) | ||||||||
$10.350 | $ 9.930 | $10.020 | $10.200 | $10.550 | $10.630 | ||||||||||||||
5.93% | 2.85% | 1.58% | (0.04% | ) | 2.76% | 7.68% | |||||||||||||
$26,723 | $24,740 | $28,849 | $26,016 | $20,516 | $15,809 | ||||||||||||||
1.66% | 1.64% | 1.64% | 1.65% | 1.64% | 1.64% | ||||||||||||||
1.73% | 1.72% | 1.72% | 1.75% | 1.75% | 1.73% | ||||||||||||||
3.30% | 3.74% | 3.36% | 3.34% | 3.51% | 3.75% | ||||||||||||||
3.23% | 3.66% | 3.28% | 3.24% | 3.40% | 3.66% | ||||||||||||||
4% | 12% | 10% | 10% | 4% | 3% |
61
Notes to financial statements | |
Delaware Minnesota Municipal Bond Funds | February 28, 2010 (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 Delaware Tax-Free Minnesota Fund. Voyageur Intermediate Tax-Free Funds is organized as a Delaware statutory trust and offers Delaware Tax-Free Minnesota Intermediate Fund. Voyageur Mutual Funds, Voyageur Tax-Free Funds and Voyageur Intermediate Tax-Free Funds are individually referred to as a “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 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 maximum 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 for the Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and 0.75% for the Delaware Tax-Free Minnesota Intermediate Fund if redeemed within the first year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may be purchased only through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and 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 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 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 (U.S. GAAP) and are consistently followed by the Funds.
Security Valuation — Debt securities are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Short-term debt securities are valued at 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 (each, a “Board” and collectively, the “Boards”). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security.
Federal Income Taxes — No provision for federal income taxes has been made as 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. The Funds evaluate 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. Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (August 31, 2006 – August 31, 2009), and has concluded that no provision for federal income tax is required in the Funds’ financial statements.
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.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP 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 the Funds are charged directly to the Funds. 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
63
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
Delaware Minnesota Municipal Bond Funds
1. Significant Accounting Policies (continued)
amortized to interest income over the lives of the respective securities. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually.
The Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended February 28, 2010.
On July 1, 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source of authoritative nongovernmental U.S. GAAP, superseding existing literature of the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other sources. The Codification is effective for interim and annual periods ending after September 15, 2009. The Funds adopted the Codification for the six months ended February 28, 2010. There was no impact to financial statements as the Codification requirements are disclosure-only in nature.
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 voluntarily agreed to waive that portion, if any, of its management fee and reimburse Delaware Minnesota High-Yield Municipal Bond Fund to the extent necessary to ensure that total annual operating expenses, (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, nonroutine expenses)), do not exceed 0.70% of average daily net assets from January 1, 2010 until such time as the waiver is discontinued. For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by Delaware Minnesota High-Yield
64
Municipal Bond Fund’s Board and DMC. This expense waiver and reimbursement applies only to expenses paid directly by the Fund, and may be discontinued at any time because it is voluntary. Prior to January 1, 2010, DMC had contractually agreed to waive that portion, if any, of each Fund’s management fees and reimburse the Funds to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs and nonroutine expenses) did not exceed the specified percentages of average daily net assets as shown below:
Delaware Tax-Free | Delaware Minnesota | |||||
Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||
Minnesota Fund | Intermediate Fund | Bond Fund | ||||
Through December 31, 2009 | ||||||
Operating expense limitation | ||||||
as a percentage of average | ||||||
daily net assets (per annum) | 0.67% | 0.60% | 0.64% | |||
Expiration Date | 12/31/09 | 12/31/09 | 12/31/09 |
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 pay DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% 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. For the six months ended February 28, 2010, 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 | ||||
$15,219 | $2,354 | $3,548 |
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 limit Delaware Tax-Free Minnesota Intermediate Fund’s Class A shares 12b-1 fees through December 31, 2010 to no more than 0.15% of average daily net assets.
65
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
Delaware Minnesota Municipal Bond Funds
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
At February 28, 2010, 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 | $ | 256,403 | $ | 37,253 | $ | 55,994 | |||||||||
Dividend disbursing, transfer | |||||||||||||||
agent and fund accounting | |||||||||||||||
oversight fees and other | |||||||||||||||
expenses payable to DSC | 20,314 | 3,981 | 6,156 | ||||||||||||
Distribution fees payable | |||||||||||||||
to DDLP | 144,229 | 19,591 | 45,908 | ||||||||||||
Other expenses payable to | |||||||||||||||
DMC and affiliates* | 23,830 | 3,793 | 5,567 |
*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 each Fund by DMC and/or its affiliates’ employees. For the six months ended February 28, 2010, 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 | ||||
$22,290 | $3,066 | $4,618 |
For the six months ended February 28, 2010, 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 | ||||
$40,036 | $9,173 | $13,477 |
66
For the six months ended February 28, 2010, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B and Class C shares, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker/dealers on sales of those shares. The amounts received were as follows:
Delaware Tax-Free | Delaware Minnesota | ||||||||||||||
Delaware Tax-Free | Minnesota | High-Yield Municipal | |||||||||||||
Minnesota Fund | Intermediate Fund | Bond Fund | |||||||||||||
Class A | $ | — | $ | — | $ | — | |||||||||
Class B | 465 | — | 1,009 | ||||||||||||
Class C | 1,333 | 1,123 | 283 |
Trustees’ fees include expenses accrued by the Funds for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trusts. These officers and Trustees are paid no compensation by the Funds.
3. Investments
For the six months ended February 28, 2010, 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 | $ | 78,768,690 | $ | 19,163,907 | $ | 5,568,368 | |||||||||
Sales | 66,263,369 | 9,733,171 | 3,001,084 |
At February 28, 2010, 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 28, 2010, the cost of investments and unrealized appreciation (depreciation) 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 | $ | 595,243,001 | $ | 94,444,924 | $ | 142,408,844 | |||||||||
Aggregate unrealized appreciation | $ | 35,500,477 | $ | 4,572,699 | $ | 5,293,031 | |||||||||
Aggregate unrealized depreciation | (6,856,830 | ) | (291,389 | ) | (3,676,441 | ) | |||||||||
Net unrealized appreciation | $ | 28,643,647 | $ | 4,281,310 | $ | 1,616,590 |
U.S. GAAP defines fair value as the price that each Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the
67
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
Delaware Minnesota Municipal Bond Funds
3. Investments (continued)
reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
The following table summarizes the valuation of the Funds’ investments by the fair value hierarchy levels as of February 28, 2010:
Delaware Tax-Free Minnesota Fund | |||||||||
Level 1 | Level 2 | Total | |||||||
Municipal Bonds | $ | — | $ | 623,885,116 | $ | 623,885,116 | |||
Short-Term | 1,532 | — | 1,532 | ||||||
Total | $ | 1,532 | $ | 623,885,116 | $ | 623,886,648 |
Delaware Tax-Free Minnesota Intermediate Fund | |||||||||
Level 1 | Level 2 | Total | |||||||
Municipal Bonds | $ | — | $ | 98,421,137 | $ | 98,421,137 | |||
Short-Term | 305,097 | — | 305,097 | ||||||
Total | $ | 305,097 | $ | 98,421,137 | $ | 98,726,234 |
Delaware Minnesota High-Yield Municipal Bond Fund | |||||||||||||
Level 1 | Level 2 | Total | |||||||||||
Municipal Bonds | $ | — | $ | 143,226,786 | $ | 143,226,786 | |||||||
Short-Term | 98,648 | 700,000 | 798,648 | ||||||||||
Total | $ | 98,648 | $ | 143,926,786 | $ | 144,025,434 |
There were no Level 3 securities at the beginning or end of the period.
In January 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for the Funds’ year ending August 31, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
68
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. GAAP. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2010 and the year ended August 31, 2009 was as follows:
Delaware Tax-Free | Delaware Minnesota | ||||||||||||||
Delaware Tax-Free | Minnesota | High-Yield Municipal | |||||||||||||
Minnesota Fund | Intermediate Fund | Bond Fund | |||||||||||||
Six Months Ended 2/28/10* | |||||||||||||||
Ordinary income | $ | 25,263 | $ | 12,151 | $ | — | |||||||||
Tax-exempt income | 11,567,208 | 1,525,213 | 2,745,214 | ||||||||||||
Total | $ | 11,592,471 | $ | 1,537,364 | $ | 2,745,214 | |||||||||
Year Ended 8/31/09 | |||||||||||||||
Ordinary income | $ | 71,606 | $ | — | $ | 5,947 | |||||||||
Tax-exempt income | 23,418,382 | 2,616,042 | 5,725,369 | ||||||||||||
Long-term capital gain | 2,292,135 | — | — | ||||||||||||
Total | $ | 25,782,123 | $ | 2,616,042 | $ | 5,731,316 |
*Tax information for the period ended February 28, 2010 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 28, 2010, the estimated components of net assets on a tax basis were as follows:
Delaware Tax-Free | Delaware Minnesota | ||||||||||||||
Delaware Tax-Free | Minnesota | High-Yield Municipal | |||||||||||||
Minnesota Fund | Intermediate Fund | Bond Fund | |||||||||||||
Shares of beneficial interest | $ | 591,374,256 | $ | 93,577,105 | $ | 148,984,462 | |||||||||
Distributions payable | (395,449 | ) | (53,714 | ) | (91,965 | ) | |||||||||
Undistributed long-term capital gains | 555,102 | — | — | ||||||||||||
Undistributed tax-exempt income | 249,832 | 56,236 | 92,062 | ||||||||||||
Undistributed ordinary income | 307,635 | — | — | ||||||||||||
Realized losses 9/1/09-2/28/10 | — | (88,807 | ) | (3,472,773 | ) | ||||||||||
Post-October losses | — | — | (11,312 | ) | |||||||||||
Capital loss carryforwards | |||||||||||||||
as of 8/31/09 | — | (775,769 | ) | (1,409,732 | ) | ||||||||||
Unrealized appreciation of investments | 28,643,647 | 4,281,310 | 1,616,590 | ||||||||||||
Net assets | $ | 620,735,023 | $ | 96,996,361 | $ | 145,707,332 |
69
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
Delaware Minnesota Municipal Bond Funds
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.
Post-October losses represent losses realized on investment transactions from November 1, 2009 through February 28, 2010 that, in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following year.
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2010, the Funds recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
Delaware Tax-Free | Delaware Minnesota | ||||||||||||||
Delaware Tax-Free | Minnesota | High-Yield Municipal | |||||||||||||
Minnesota Fund | Intermediate Fund | Bond Fund | |||||||||||||
Undistributed (distributions in excess of) | |||||||||||||||
net investment income | $ | (1,078 | ) | $ | (3,445 | ) | $ | (15,316 | ) | ||||||
Accumulated realized gain (loss) | 1,078 | 3,445 | 15,316 |
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2009 will expire as follows:
Delaware Tax-Free | Delaware Minnesota | ||||||||
Minnesota | High-Yield Municipal | ||||||||
Year of Expiration | Intermediate Fund | Bond Fund | |||||||
2010 | $ | 4,037 | $ | 57,521 | |||||
2011 | 246,659 | 243,334 | |||||||
2012 | — | 684,248 | |||||||
2014 | 81,340 | — | |||||||
2015 | 109,745 | 96,079 | |||||||
2016 | — | 198,826 | |||||||
2017 | 333,988 | 129,724 | |||||||
Total | $ | 775,769 | $ | 1,409,732 |
For the six months ended February 28, 2010, the Funds had capital losses which may increase capital loss carryforwards as follows:
Delaware Tax-Free | Delaware Minnesota | ||
Minnesota | High-Yield Municipal | ||
Intermediate Fund | Bond Fund | ||
$88,807 | $3,472,773 |
70
6. Capital Shares
Transactions in capital shares were as follows:
Delaware Tax-Free | Delaware Minnesota | |||||||||||
Delaware Tax-Free | Minnesota | High-Yield Municipal | ||||||||||
Minnesota Fund | Intermediate Fund | Bond Fund | ||||||||||
Six Months | Year | Six Months | Year | Six Months | Year | |||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||
2/28/10 | 8/31/09 | 2/28/10 | 8/31/09 | 2/28/10 | 8/31/09 | |||||||
Shares sold: | ||||||||||||
Class A | 2,069,163 | 3,674,457 | 1,283,071 | 2,423,967 | 755,166 | 1,614,974 | ||||||
Class B | — | 11,946 | 1,264 | 2,214 | — | 7,863 | ||||||
Class C | 306,151 | 807,342 | 277,034 | 486,526 | 199,072 | 281,808 | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||||||
Class A | 603,135 | 1,360,233 | 88,191 | 143,180 | 148,182 | 317,830 | ||||||
Class B | 7,579 | 22,511 | 185 | 1,215 | 5,358 | 12,919 | ||||||
Class C | 36,962 | 68,882 | 10,019 | 16,111 | 31,006 | 68,762 | ||||||
3,022,990 | 5,945,371 | 1,659,764 | 3,073,213 | 1,138,784 | 2,304,156 | |||||||
Shares repurchased: | ||||||||||||
Class A | (2,296,773 | ) | (6,565,859 | ) | (959,150 | ) | (810,239 | ) | (759,895 | ) | (2,739,090 | ) |
Class B | (106,233 | ) | (210,875 | ) | (16,425 | ) | (58,625 | ) | (35,680 | ) | (107,260 | ) |
Class C | (206,368 | ) | (349,626 | ) | (143,488 | ) | (126,181 | ) | (141,633 | ) | (738,199 | ) |
(2,609,374 | ) | (7,126,360 | ) | (1,119,063 | ) | (995,045 | ) | (937,208 | ) | (3,584,549 | ) | |
Net increase (decrease) | 413,616 | (1,180,989 | ) | 540,701 | 2,078,168 | 201,576 | (1,280,393 | ) |
For the six months ended February 28, 2010 and the year ended August 31, 2009, the following shares and values were converted from Class B shares to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the statements of changes in net assets.
Six Months Ended | Year Ended | |||||||||||||
2/28/10 | 8/31/09 | |||||||||||||
Class B | Class A | Class B | Class A | |||||||||||
Shares | Shares | Value | Shares | Shares | Value | |||||||||
Delaware Tax-Free | ||||||||||||||
Minnesota Fund | 66,864 | 66,918 | $ | 831,340 | 97,466 | 97,549 | $ | 1,145,062 | ||||||
Delaware Tax-Free Minnesota | ||||||||||||||
Intermediate Fund | 11,945 | 11,977 | 131,502 | 39,832 | 39,916 | 410,681 | ||||||||
Delaware Minnesota High-Yield | ||||||||||||||
Municipal Bond Fund | 19,945 | 19,964 | 204,598 | 38,299 | 38,350 | 356,368 |
71
Notes to financial statements
Delaware Minnesota Municipal Bond Funds
Delaware Minnesota Municipal Bond Funds
7. Line of Credit
The Funds, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participate in a $35,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants are charged an annual commitment fee, which is allocated across the Participants on the basis of each Participant’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 agreement expires on November 16, 2010. The Funds had no amounts outstanding as of February 28, 2010 or at any time during the period then ended.
8. Derivatives
U.S. GAAP requires enhanced disclosures that enable investors to understand: 1) how and why an entity uses derivatives, 2) how they are accounted for, and 3) how they affect an entity’s results of operations and financial position.
Inverse Floaters — Each Fund 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. At February 28, 2010, the Funds held no investments in inverse floaters.
9. 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. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in each Fund. At February 28, 2010, the percentages of each Fund’s net assets insured by insurers are listed and these securities have been identified in the statements of net assets.
Delaware Tax-Free | Delaware Minnesota | |||
Delaware Tax-Free | Minnesota | High-Yield Municipal | ||
Minnesota Fund | Intermediate Fund | Bond Fund | ||
24% | 24% | 14% |
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The Funds invest a portion of their assets in high yield fixed income securities, which carry ratings of BB or lower by Standard & Poor’s Ratings Group (S&P) and/or Ba or lower by Moody’s Investors Service, Inc. (Moody’s). Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.
The Funds may invest in advanced refunded bonds, escrow secured bonds or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding”. “Advance refunded bonds” are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.
Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at 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, S&P, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.
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 Funds’ Board 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. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Funds’ 15% limit on investments in illiquid securities. As of February 28, 2010, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.
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Notes to financial statements
Delaware Minnesota Municipal Bond Funds
Delaware Minnesota Municipal Bond Funds
10. Contractual Obligations
The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds’ existing contracts and expects the risk of loss to be remote.
11. Sale of Delaware Investments to Macquarie Group
On August 18, 2009, Lincoln National Corporation (parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP, and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP and DSC are now wholly owned subsidiaries of Macquarie.
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreement between DMC and the Funds. On January 4, 2010, the new investment management agreement between DMC and the Funds that was approved by the shareholders became effective.
12. Subsequent Events
Management has evaluated whether any events or transactions occurred subsequent to February 28, 2010 through April 15, 2010, the date of issuance of the Funds’ financial statements, and determined that there were no material events or transactions that would require recognition or disclosure in the Funds’ financial statements.
74
Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
(Unaudited)
Delaware Minnesota Municipal Bond Funds
Proxy Results
At Joint Special Meetings of Shareholders of Voyageur Tax-Free Funds, on behalf of Delaware Tax-Free Minnesota Fund; Voyageur Intermediate Tax-Free Funds, on behalf of Delaware Tax-Free Minnesota Intermediate Fund; and Voyageur Mutual Funds, on behalf of Delaware Minnesota High-Yield Municipal Bond Fund (Voyageur Tax-Free Funds, Voyageur Intermediate Tax-Free Funds, and Voyageur Mutual Fund hereinafter each, a “Trust” and collectively, the “Trusts” and Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund hereinafter each, a “Fund” and collectively, the “Funds”) held on November 12, 2009 and reconvened on December 4, 2009 for Delaware Tax-Free Minnesota Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond Fund only and March 16, 2010, the shareholders of each Fund voted to (i) elect a Board of Trustees for each Trust; and to (ii) approve new investment advisory agreements between each Trust, on behalf of the respective Fund, and Delaware Management Company, respectively. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
The following proposals were submitted for a vote of the shareholders:
1. To elect a Board of Trustees for each Trust.
Voyageur Tax-Free Funds
% of | % of | % of | % of | ||||||||
outstanding | shares | outstanding | shares | ||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | ||||||
Thomas L. Bennett | 34,658,325.107 | 70.064 | 96.985 | 1,077,535.235 | 2.178 | 3.015 | |||||
Patrick P. Coyne | 34,637,532.827 | 70.022 | 96.927 | 1,098,327.515 | 2.220 | 3.073 | |||||
John A. Fry | 34,678,965.504 | 70.106 | 97.042 | 1,056,894.838 | 2.136 | 2.958 | |||||
Anthony D. Knerr | 34,658,281.949 | 70.064 | 96.985 | 1,077,578.393 | 2.178 | 3.015 | |||||
Lucinda S. Landreth | 34,690,535.224 | 70.129 | 97.075 | 1,045,325.118 | 2.113 | 2.925 | |||||
Ann R. Leven | 34,683,926.638 | 70.116 | 97.056 | 1,051,933.704 | 2.126 | 2.944 | |||||
Thomas F. Madison | 34,602,190.932 | 69.950 | 96.828 | 1,133,669.410 | 2.292 | 3.172 | |||||
Janet L. Yeomans | 34,292,557.980 | 70.133 | 97.081 | 1,043,302.362 | 2.109 | 2.919 | |||||
J. Richard Zecher | 34,643,543.675 | 70.034 | 96.943 | 1,092,316.667 | 2.208 | 3.057 |
Voyageur Intermediate Tax-Free Funds
% of | % of | % of | % of | ||||||||
outstanding | shares | outstanding | shares | ||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | ||||||
Thomas L. Bennett | 6,484,566.470 | 77.047 | 97.545 | 163,206.620 | 1.939 | 2.455 | |||||
Patrick P. Coyne | 6,484,949.955 | 77.052 | 97.551 | 162,823.125 | 1.934 | 2.449 | |||||
John A. Fry | 6,483,192.193 | 77.031 | 97.524 | 164,580.897 | 1.955 | 2.476 | |||||
Anthony D. Knerr | 6,485,116.711 | 77.054 | 97.553 | 162,656.379 | 1.932 | 2.447 | |||||
Lucinda S. Landreth | 6,487,230.281 | 77.079 | 97.585 | 160,542.809 | 1.907 | 2.415 | |||||
Ann R. Leven | 6,485,837.612 | 77.062 | 97.564 | 161,935.478 | 1.924 | 2.436 | |||||
Thomas F. Madison | 6,485,116.711 | 77.054 | 97.553 | 162,656.379 | 1.932 | 2.447 | |||||
Janet L. Yeomans | 6,487,230.281 | 77.079 | 97.585 | 160,542.809 | 1.907 | 2.415 | |||||
J. Richard Zecher | 6,482,808.708 | 77.026 | 97.519 | 164,964.382 | 1.960 | 2.481 |
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Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
(Unaudited)
Delaware Minnesota Municipal Bond Funds
Proxy Results (continued)
1. To elect a Board of Trustees for each Trust. (continued)
Voyageur Mutual Funds
% of | % of | % of | % of | |||||||||||||||||||||
outstanding | shares | outstanding | shares | |||||||||||||||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | |||||||||||||||||||
Thomas L. Bennett | 27,534,201.174 | 64.687 | 94.418 | 1,627,955.392 | 3.825 | 5.582 | ||||||||||||||||||
Patrick P. Coyne | 27,538,840.631 | 64.698 | 94.433 | 1,623,315.935 | 3.814 | 5.567 | ||||||||||||||||||
John A. Fry | 27,541,310.882 | 64.704 | 94.442 | 1,620,845.684 | 3.808 | 5.558 | ||||||||||||||||||
Anthony D. Knerr | 27,543,108.286 | 64.708 | 94.448 | 1,619,048.280 | 3.804 | 5.552 | ||||||||||||||||||
Lucinda S. Landreth | 27,542,973.819 | 64.708 | 94.448 | 1,619,182.747 | 3.804 | 5.552 | ||||||||||||||||||
Ann R. Leven | 27,540,505.439 | 64.702 | 94.439 | 1,621,651.127 | 3.810 | 5.561 | ||||||||||||||||||
Thomas F. Madison | 27,534,959.779 | 64.689 | 94.420 | 1,627,196.787 | 3.823 | 5.580 | ||||||||||||||||||
Janet L. Yeomans | 27,539,087.174 | 64.698 | 94.434 | 1,623,069.392 | 3.814 | 5.566 | ||||||||||||||||||
J. Richard Zecher | 27,532,297.843 | 64.683 | 94.411 | 1,629,858.723 | 3.829 | 5.589 |
2. | To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund, and Delaware Management Company. |
Delaware Tax-Free Minnesota Fund | ||
Shares Voted For | 25,635,126.154 | |
Percentage of Outstanding Shares | 51.823% | |
Percentage of Shares Voted | 71.790% | |
Shares Voted Against | 570,789.999 | |
Percentage of Outstanding Shares | 1.154% | |
Percentage of Shares Voted | 1.599% | |
Shares Abstained | 1,400,776.175 | |
Percentage of Outstanding Shares | 2.832% | |
Percentage of Shares Voted | 3.922% | |
Broker Non-Votes | 8,101,614.624 |
Delaware Tax-Free Minnesota Intermediate Fund | ||
Shares Voted For | 4,242,203.541 | |
Percentage of Outstanding Shares | 50.404% | |
Percentage of Shares Voted | 64.304% | |
Shares Voted Against | 70,842.414 | |
Percentage of Outstanding Shares | 0.842% | |
Percentage of Shares Voted | 1.073% | |
Shares Abstained | 130,166.113 | |
Percentage of Outstanding Shares | 1.547% | |
Percentage of Shares Voted | 1.974% | |
Broker Non-Votes | 2,153,938.780 |
76
Delaware Minnesota High-Yield Municipal Bond Fund | ||
Shares Voted For | 6,910,587.530 | |
Percentage of Outstanding Shares | 49.779% | |
Percentage of Shares Voted | 68.802% | |
Shares Voted Against | 194,397.369 | |
Percentage of Outstanding Shares | 1.401% | |
Percentage of Shares Voted | 1.935% | |
Shares Abstained | 315,809.744 | |
Percentage of Outstanding Shares | 2.274% | |
Percentage of Shares Voted | 3.145% | |
Broker Non-Votes | 2,623,411.893 |
77
Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
(Unaudited)
Delaware Minnesota Municipal Bond Funds
Board Consideration of New Investment Advisory Agreement
At a meeting held on September 3, 2009 (the “Meeting”), the Board of Trustees of the Delaware Investments® Family of Funds (the “Board”), including the independent Trustees, unanimously approved a new investment advisory agreement between each registrant on behalf of each series (each, a “Fund” and together, the “Funds”) and Delaware Management Company (“DMC”) in connection with the sale of Delaware Investments’ advisory business to Macquarie Bank Limited (the “Macquarie Group”) (the “Transaction”). In making its decision, the Board considered information furnished specifically in connection with the approval of the new investment advisory agreements with DMC (the “New Investment Advisory Agreements”) which included extensive materials about the Transaction and matters related to the proposed approvals. To assist the Board in considering the New Investment Advisory Agreements, Macquarie Group provided materials and information about Macquarie Group, including detailed written responses to the questions posed by the independent Trustees. DMC also provided materials and information about the Transaction, including detailed written responses to the questions posed by the independent Trustees.
At the Meeting, the Trustees discussed the Transaction with DMC management and with key Macquarie Group representatives. The Meeting included discussions of the strategic rationale for the Transaction and Macquarie Group’s general plans and intentions regarding the Funds and DMC. The Board members also inquired about the plans for, and anticipated roles and responsibilities of, key employees and officers of Delaware Management Holdings Inc. and DMC in connection with the Transaction.
In connection with the Trustees’ review of the New Investment Advisory Agreements for the Funds, DMC and/or Macquarie Group emphasized that:
- They expected that there would be no adverse changes as a result of the Transaction, in the nature, quality, or extent of services currently provided to the Funds and their shareholders, including investment management, distribution, or other shareholder services.
- No material changes in personnel or operations were contemplated in the operation of DMC under Macquarie Group as a result of the Transaction and no material changes were currently contemplated in connection with third party service providers to the Funds.
- Macquarie Group had no intention to cause DMC to alter the voluntary expense waivers and reimbursements currently in effect for the Funds.
- Under the agreement between Macquarie Group and Lincoln National Corporation (“LNC”) (the “Transaction Agreement”), Macquarie Group has agreed to conduct, and to cause its affiliates to conduct, their respective businesses in compliance with the conditions of Section 15(f) of the Investment Company Act of 1940 (the “1940 Act”) with respect to the Funds, to the extent within its control, including maintaining Board composition of at least 75% of the Board members qualifying as independent Trustees and not imposing any “unfair burden” on the Funds for at least two years from the closing of the Transaction (the “Closing”).
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In addition to the information provided by DMC and Macquarie Group as described above, the Trustees also considered all other factors they believed to be relevant to evaluating the New Investment Advisory Agreements, including the specific matters discussed below. In their deliberations, the Trustees did not identify any particular information that was controlling, and different Trustees may have attributed different weights to the various factors. However, for each Fund, the Trustees determined that the overall arrangements between the Fund and DMC, as provided in the respective New Investment Advisory Agreement, including the proposed advisory fee and the related administration arrangements between the Fund and DMC, were fair and reasonable in light of the services to be performed, expenses incurred, and such other matters as the Trustees considered relevant. Factors evaluated included:
- The potential for expanding distribution of Fund shares through access to Macquarie Group’s existing distribution channels;
- Delaware Investments’ acquisition of an exclusive wholesaling sales force from a subsidiary of LNC;
- The reputation, financial strength, and resources of Macquarie Group as well as its historic and ongoing commitment to the asset management business in Australia as well as other parts of the world;
- The terms and conditions of the New Investment Advisory Agreements, including that each Fund’s total contractual fee rate under the New Investment Advisory Agreement will remain the same;
- The Board’s full annual review (or initial approval) of the current investment advisory agreements at their in-person meeting in May 2009 as required by the 1940 Act and its determination that (i) DMC had the capabilities, resources, and personnel necessary to provide the satisfactory advisory and administrative services currently provided to each Fund and (ii) the advisory and/or management fees paid by each Fund, taking into account any applicable fee waivers and breakpoints, represented reasonable compensation to DMC in light of the services provided, the costs to DMC of providing those services, economies of scale, and the fees and other expenses paid by similar funds and such other matters that the Board considered relevant in the exercise of its reasonable judgment;
- The portfolio management teams for the Funds are not currently expected to change as a result of the Transaction;
- LNC and Macquarie Group were expected to execute a reimbursement agreement pursuant to which LNC and Macquarie Group would agree to pay (or reimburse) all reasonable out-of-pocket costs and expenses of the Funds in connection with the Board’s consideration of the Transaction, the New Investment Advisory Agreements and related agreements, and all costs related to the proxy solicitation (the “Expense Agreement”);
79
Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
(Unaudited)
Delaware Minnesota Municipal Bond Funds
Board Consideration of New Investment Advisory Agreement (continued)
- The likelihood that Macquarie Group would invest additional amounts in Delaware Investments, including DMC, which could result in increased assets under management, which in turn would allow some Funds the potential opportunity to achieve economies of scale and lower fees payable by Fund shareholders; and
- The compliance and regulatory history of Macquarie Group and its affiliates.
In making their decision relating to the approval of each Fund’s New Investment Advisory Agreement, the independent Trustees gave attention to all information furnished. The following discussion, however, identifies the primary factors taken into account by the Trustees and the conclusions reached in approving the New Investment Advisory Agreements.
Nature, Extent, and Quality of Service. The Trustees considered the services historically provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered that the New Investment Advisory Agreements would be substantially similar to the current investment advisory agreements between the Funds and DMC (the “Current Investment Advisory Agreements”), and therefore, considered the many reports furnished to them throughout 2008 and 2009 at regular Board meetings covering matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; the compliance of management personnel with the code of ethics adopted throughout the Delaware Investments® Family of Funds complex; and the adherence to fair value pricing procedures as established by the Board. The Trustees were pleased with the current staffing of DMC and the emphasis placed on research and risk management in the investment process. Favorable consideration was given to DMC’s efforts to maintain expenditures and, in some instances, increase financial and human resources committed to Fund matters.
The Board also considered the transfer agent and shareholder services that would continue to be provided to Fund shareholders by DMC’s affiliate, Delaware Service Company, Inc. (“DSC”). The Trustees noted, in particular, DSC’s commitment to maintain a high level of service as well as DMC’s expenditures to improve the delivery of shareholder services. The Board was assured that shareholders would continue to receive the benefits provided to Fund shareholders by being part of the Delaware Investments Family of Funds, including each shareholder’s ability to exchange an investment in one Delaware Investments Fund for the same class of shares in another Delaware Investments Fund without a sales charge, to reinvest Fund dividends into additional shares of any of the Funds, and the privilege to combine holdings in other Funds to obtain a reduced sales charge.
Based on the information provided by DMC and Macquarie Group, including that Macquarie Group and DMC currently expected no material changes as a result of the Transaction in (i) personnel or operations of DMC or (ii) third party service providers to the Funds, the Board concluded that the satisfactory nature, extent, and quality of services currently provided to the Funds and their shareholders were very likely to continue under the New Investment Advisory Agreements. Moreover, the Board concluded that the Funds would probably benefit from the expanded distribution resources that would become available to Delaware Investments following the Transaction. The Board also
80
concluded that it was very unlikely that any “unfair burden” would be imposed on any of the Funds for the first two years following the Closing as a result of the Transaction. Consequently, the Board concluded that it did not expect the Transaction to result in any adverse changes in the nature, quality, or extent of services (including investment management, distribution or other shareholder services) currently provided to the Funds and their shareholders.
Investment Performance. The Board considered the overall investment performance of DMC and the Funds. The Trustees placed significant emphasis on the investment performance of the Funds in view of its importance to shareholders. Although the Trustees gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Trustees gave particular weight to their review of investment performance in connection with the approval of the Current Investment Advisory Agreements at the Board meeting held in May 2009. At that meeting, the Trustees reviewed reports prepared by Lipper, Inc., an independent statistical compilation organization (“Lipper”), which showed each Fund’s investment performance as of December 31, 2008 in comparison to a group of funds selected by Lipper as being similar to the Fund (the “Performance Universe”). During the May 2009 agreement review process, the Trustees observed the significant improvements to relative investment performance of the Funds compared to the Funds’ performance as of December 31, 2007.
At their meeting on September 3, 2009, the Trustees, including the independent Trustees in consultation with their independent counsel, reviewed the investment performance of each Fund. The Trustees compared the performance of each Fund relative to that of its respective Performance Universe for the 1-, 3-, 5-, and 10-year periods ended June 30, 2009 and compared its relative investment performance against the corresponding relative investment performance of each Fund for such time periods ended December 31, 2008, to the extent applicable. As of June 30, 2009, 30 of the Funds had investment performance relative to that of the respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for all applicable time periods. At June 30, 2009, an additional 6 Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for a majority of the applicable time periods. At June 30, 2009, 15 additional Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative performance at December 31, 2008 and only 29 Funds had poorer relative investment performance at June 30, 2009 compared to that at December 31, 2008.
The Board therefore concluded that the investment performance of the Funds, on an aggregate basis, had continued to improve relative to their respective Performance Universe since the data reviewed at the May 2009 meeting. Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreement would likely have an adverse effect on the investment performance of any Fund because (i) DMC and Macquarie Group did not currently expect the Transaction to cause any material change to the Funds’ portfolio management teams responsible for investment performance, which the Board found to be satisfactory and improving; and (ii) as discussed in more detail below, the Funds’ expenses were not expected to increase as a result of the Transaction.
81
Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
(Unaudited)
Delaware Minnesota Municipal Bond Funds
Board Consideration of New Investment Advisory Agreement (continued)
Comparative Expenses. The Trustees also considered expense comparison data for the Funds previously provided in May 2009. At that meeting, DMC had provided the Board with information on pricing levels and fee structures for the Funds and comparative funds. The Trustees focused on the comparative analysis of the effective management fees and total expense ratios of each Fund versus the effective management fees and expense ratios of a group of funds selected by Lipper as being similar to each Fund (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into account any applicable breakpoints and fee limitations. Each Fund’s total expenses were also compared with those of its Expense Group. The Trustees also considered fees paid to Delaware Investments for nonmanagement services. At the September 3, 2009 meeting, DMC advised the Board that the more recent comparative expenses for the Funds remained consistent with the previous review in May 2009 and, consequently, the Trustees concluded that expenses of the Funds were satisfactory.
The Board also considered the Expense Agreement under negotiation in evaluating Fund expenses. The Trustees expected that the Expense Agreement would provide that LNC and Macquarie Group would pay or reimburse the Trusts for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the consideration of the New Investment Advisory Agreements (subject to certain limited exceptions).
Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreements likely would have an adverse effect on the Funds’ expenses because (i) each Fund’s contractual fee rates under the New Investment Advisory Agreement would remain the same; (ii) under the Expense Agreement, the Funds would be reimbursed for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the related proxy solicitation (subject to certain limited exceptions); and (iii) the expense ratios of certain Funds might decline as a result of the possible increased investment in Delaware Investments by Macquarie Group, as discussed below under “Economies of Scale.”
Management Profitability. At their meeting on September 3, 2009, the Board evaluated DMC’s profitability in connection with the operation of the Funds. The Board had previously considered DMC’s profitability in connection with the operation of the Funds at its May 2009 meeting. At that meeting, the Board reviewed an analysis that addressed the overall profitability of Delaware Investments’ business in providing management and other services to each of the Funds and the Delaware Investments® Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability.
At the May 2009 meeting, representatives of DMC had stated that the level of profits of DMC, to a certain extent, reflect operational cost savings and efficiencies initiated by Delaware Investments (including DMC and its affiliates that provide services to the Funds). The Board considered
82
Delaware Investments’ efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide U.S. Securities and Exchange Commission initiatives. At that meeting, the Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC. At the September 3, 2009 meeting, DMC advised the Board that DMC did not expect the Transaction to affect materially the profitability of Delaware Investments compared to the level of profitability considered during the May 2009 review. Moreover, the Trustees reviewed pro forma balance sheets of certain key companies in Delaware Investments as of June 30, 2009 (which were provided by Macquarie Group and DMC in response to the Trustees’ requests) and evaluated the projections of Delaware Investments’ capitalization following the Transaction for purposes of evaluating the financial ability of Delaware Investments to continue to provide the nature, extent, and quality of services as it had under the Current Investment Advisory Agreement.
Based on information provided by DMC and Macquarie Group, the Board concluded that DMC and Delaware Investments would be sufficiently capitalized following the Transaction to continue the same level and quality of services to the Funds under the New Investment Advisory Agreements as was the case under the Current Investment Advisory Agreements. The Board also concluded that Macquarie Group had sufficient financial strength and resources, as well as an ongoing commitment to a global asset management business, to continue investing in Delaware Investments, including DMC, to the extent that Macquarie Group determined it was appropriate. Finally, because services and costs were expected to be substantially the same (and DMC had represented that, correspondingly, profitability would be about the same), under the New Investment Advisory Agreements as under the Current Investment Advisory Agreements, the Trustees concluded that the profitability of Delaware Investments would not result in an inequitable charge on the Funds or their shareholders. Accordingly, the Board concluded that the fees charged under the New Investment Advisory Agreements would be reasonable in light of the services to be provided and the expected profitability of DMC.
Economies of Scale. The Trustees considered whether economies of scale would be realized by Delaware Investments as each Fund’s assets increase and the extent to which any economies of scale would be reflected in the management fees charged. The Trustees took into account DMC’s practice of maintaining the competitive nature of management fees based on its analysis of fees charged by comparable funds. DMC management believed, and the Board agreed, that the Funds were priced with breakpoints and relatively low management fees to reflect potential economies of scale to Fund shareholders.
The Board also acknowledged Macquarie Group’s statement that the Transaction would not by itself immediately provide additional economies of scale given Macquarie Group’s limited presence in the U.S. mutual fund market. Nonetheless, the Trustees concluded that additional economies of scale could potentially be achieved in the future if DMC were owned by Macquarie Group as a result of Macquarie Group’s willingness to invest further in Delaware Investments if appropriate opportunities arise. The Board further concluded that potential economies of scale could be achieved as a result of Delaware Investments’ expanded distribution capabilities arising from the Transaction, as well as opportunities that might arise from Macquarie Group’s global asset management business.
83
Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
(Unaudited)
Delaware Minnesota Municipal Bond Funds
Board Consideration of New Investment Advisory Agreement (continued)
Fall-Out Benefits. The Board acknowledged that DMC would continue to benefit from soft dollar arrangements using portfolio brokerage of each Fund that invests in equity securities and that DMC’s profitability would likely be somewhat lower without the benefit of practices with respect to allocating Fund portfolio brokerage for brokerage and research services. The Board also considered that Macquarie Group and Delaware Investments may derive reputational, strategic, and other benefits from their association with the Delaware Investments Family of Funds, including service relationships with DMC, DSC, and Delaware Distributors, L.P., and evaluated the extent to which Delaware Investments might derive ancillary benefits from Fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds and the benefits from allocation of Fund brokerage to improve trading efficiencies. However, the Board concluded that (i) any such benefits under the New Investment Advisory Agreements would not be dissimilar from those existing under the Current Investment Advisory Agreements; (ii) such benefits did not impose a cost or burden on the Funds or their shareholders; and (iii) such benefits would probably have an indirectly beneficial effect on the Funds and their shareholders because of the added importance that DMC and Macquarie Group might attach to the Funds as a result of the fall-out benefits that the Funds conveyed.
Board Review of Macquarie Group. The Trustees reviewed detailed information supplied by Macquarie Group about its operations as well as other information regarding Macquarie Group provided by independent legal counsel to the independent Trustees. Based on this review, the Trustees concluded that Delaware Investments would continue to have the financial ability to maintain the high quality of services required by the Funds. The Trustees noted that there would be a limited transition period during which some services previously provided by LNC to Delaware Investments would continue to be provided by LNC after the Closing, and concluded that this arrangement would help minimize disruption in Delaware Investments’ provision of services to the Funds following the Transaction.
The Board considered Macquarie Group’s support for Delaware Investments’ plans for Fund distribution by transferring wholesalers from Lincoln Financial Distributors, Inc., LNC’s retail distributor, to Delaware Investments, and Macquarie Group’s current intention to leave the Funds’ other service providers in place. The Board also considered Macquarie Group’s current strategic plans to increase its asset management activities, one of its core businesses, particularly in North America, and its statement that its acquisition of DMC is an important component of this strategic growth and the establishment of a significant presence in the United States. Based in part on the information provided by DMC and Macquarie Group, the Board concluded that Macquarie Group’s acquisition of Delaware Investments could potentially enhance the nature, quality, and extent of services provided to the Funds and their shareholders.
84
Conclusion. The Board concluded that the advisory fee rate under each New Investment Advisory Agreement was reasonable in relation to the services provided and that execution of the New Investment Advisory Agreement would be in the best interests of the shareholders. For each Fund, the Trustees noted that they had concluded in their most recent advisory agreement continuance considerations in May 2009 that the management fees and total expense ratios were at acceptable levels in light of the quality of services provided to the Funds and in comparison to those of the Funds’ respective peer groups; that the advisory fee schedule would not be increased and would stay the same for all of the Funds; that the total expense ratio had not changed materially since that determination; and that DMC had represented that the overall expenses for each Fund were not expected to be adversely affected by the Transaction. The Trustees also noted, with respect to the Funds that currently had the benefit of voluntary fee limitations, that Macquarie Group had no present intention to cause DMC to alter any voluntary expense limitations or reimbursements currently in effect. On that basis, the Trustees concluded that the total expense ratios and proposed advisory fees for the Funds anticipated to result from the Transaction were acceptable. In approving each New Investment Advisory Agreement, the Board stated that it anticipated reviewing the continuance of the New Investment Advisory Agreement in advance of the expiration of the initial two-year period.
85
About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA | Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA | Ann R. Leven Consultant ARL Associates New York, NY Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN | Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ |
Affiliated officers | |||
David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | David P. O’Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
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 profile 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. |
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 (SEC) 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 SEC’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 SEC’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 SEC’s Web site at www.sec.gov. |
86
Semiannual report Delaware Tax-Free USA Fund Delaware Tax-Free USA Intermediate Fund Delaware National High-Yield Municipal Bond Fund February 28, 2010 Fixed income mutual funds |
This semiannual report is for the information of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National 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 USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund. The figures in the semiannual report for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund prospectus contains this and other important information about the Fund. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit www.delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund at www.delawareinvestments.com.
Manage your investments online
- 24-hour access to your account information
- Obtain share prices
- Check your account balance and recent transactions
- Request statements or literature
- Make purchases and redemptions
On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Funds’ prospectus and any supplements thereto for more complete information.
Investments in Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including subsidiaries or related companies, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Funds, the repayment of capital from the Funds, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Sector allocations and credit quality breakdowns | 4 |
Statements of net assets | 7 |
Statements of operations | 48 |
Statements of changes in net assets | 50 |
Financial highlights | 56 |
Notes to financial statements | 79 |
Other Fund information | 92 |
About the organization | 102 |
Unless otherwise noted, views expressed herein are current as of Feb. 28, 2010, and are subject to change.
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. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2010 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the period September 1, 2009 to February 28, 2010
For the period September 1, 2009 to February 28, 2010
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. These 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 from September 1, 2009 to February 28, 2010.
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 Funds’ expenses shown in the tables reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Tax-Free USA Fund Expense analysis of an investment of $1,000 | |||||||||||
Beginning | Ending | Expenses | |||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||
9/1/09 | 2/28/10 | Expense Ratio | 9/1/09 to 2/28/10* | ||||||||
Actual Fund return | |||||||||||
Class A | $1,000.00 | $1,056.10 | 0.80% | $4.08 | |||||||
Class B | 1,000.00 | 1,052.10 | 1.56% | 7.94 | |||||||
Class C | 1,000.00 | 1,052.10 | 1.56% | 7.94 | |||||||
Institutional Class | 1,000.00 | 1,063.50 | 0.56% | 2.87 | |||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||
Class A | $1,000.00 | $1,020.83 | 0.80% | $4.01 | |||||||
Class B | 1,000.00 | 1,017.06 | 1.56% | 7.80 | |||||||
Class C | 1,000.00 | 1,017.06 | 1.56% | 7.80 | |||||||
Institutional Class | 1,000.00 | 1,022.02 | 0.56% | 2.81 | |||||||
Delaware Tax-Free USA Intermediate Fund Expense analysis of an investment of $1,000 | |||||||||||
Beginning | Ending | Expenses | |||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||
9/1/09 | 2/28/10 | Expense Ratio | 9/1/09 to 2/28/10* | ||||||||
Actual Fund return | |||||||||||
Class A | $1,000.00 | $1,043.30 | 0.75% | $3.80 | |||||||
Class B | 1,000.00 | 1,039.00 | 1.60% | 8.09 | |||||||
Class C | 1,000.00 | 1,039.00 | 1.60% | 8.09 | |||||||
Institutional Class | 1,000.00 | 1,053.20 | 0.60% | 3.05 | |||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||
Class A | $1,000.00 | $1,021.08 | 0.75% | $3.76 | |||||||
Class B | 1,000.00 | 1,016.86 | 1.60% | 8.00 | |||||||
Class C | 1,000.00 | 1,016.86 | 1.60% | 8.00 | |||||||
Institutional Class | 1,000.00 | 1,021.82 | 0.60% | 3.01 |
2
Delaware National High-Yield Municipal Bond Fund Expense analysis of an investment of $1,000 | |||||||||||
Beginning | Ending | Expenses | |||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||
9/1/09 | 2/28/10 | Expense Ratio | 9/1/09 to 2/28/10* | ||||||||
Actual Fund return | |||||||||||
Class A | $1,000.00 | $1,102.60 | 0.85% | $4.43 | |||||||
Class B | 1,000.00 | 1,098.40 | 1.60% | 8.32 | |||||||
Class C | 1,000.00 | 1,098.20 | 1.60% | 8.32 | |||||||
Institutional Class | 1,000.00 | 1,113.70 | 0.60% | 3.14 | |||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||
Class A | $1,000.00 | $1,020.58 | 0.85% | $4.26 | |||||||
Class B | 1,000.00 | 1,016.86 | 1.60% | 8.00 | |||||||
Class C | 1,000.00 | 1,016.86 | 1.60% | 8.00 | |||||||
Institutional Class | 1,000.00 | 1,021.82 | 0.60% | 3.01 |
*“Expenses Paid During Period” are equal to the Funds’ annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
3
Sector allocations and credit quality breakdowns | |
Delaware Tax-Free USA Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | |
Municipal Bonds | 98.87 | % |
Corporate Revenue Bonds | 17.53 | % |
Education Revenue Bonds | 7.24 | % |
Electric Revenue Bonds | 1.70 | % |
Escrowed to Maturity Bonds | 6.75 | % |
Health Care Revenue Bonds | 12.13 | % |
Housing Revenue Bonds | 0.92 | % |
Lease Revenue Bonds | 3.36 | % |
Local General Obligation Bonds | 5.38 | % |
Pre-Refunded Bonds | 13.18 | % |
Special Tax Revenue Bonds | 10.51 | % |
State General Obligation Bonds | 6.29 | % |
Transportation Revenue Bonds | 10.57 | % |
Water & Sewer Revenue Bonds | 3.31 | % |
Short-Term Investments | 0.31 | % |
Total Value of Securities | 99.18 | % |
Receivables and Other Assets Net of Liabilities | 0.82 | % |
Total Net Assets | 100.00 | % |
Credit quality breakdown (as a % of fixed income investments)* | ||
AAA | 24.31 | % |
AA | 11.67 | % |
A | 24.34 | % |
BBB | 27.62 | % |
BB | 1.74 | % |
B | 2.46 | % |
CCC | 1.45 | % |
Not Rated | 6.41 | % |
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
4
Delaware Tax-Free USA Intermediate Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | |
Municipal Bonds | 97.41 | % |
Corporate Revenue Bonds | 9.40 | % |
Education Revenue Bonds | 5.19 | % |
Electric Revenue Bonds | 2.41 | % |
Escrowed to Maturity Bonds | 0.08 | % |
Health Care Revenue Bonds | 11.79 | % |
Housing Revenue Bonds | 1.28 | % |
Lease Revenue Bonds | 2.24 | % |
Local General Obligation Bonds | 7.62 | % |
Pre-Refunded Bonds | 5.78 | % |
Resource Recovery Revenue Bonds | 0.20 | % |
Special Tax Revenue Bonds | 12.03 | % |
State General Obligation Bonds | 22.30 | % |
Transportation Revenue Bonds | 10.42 | % |
Water & Sewer Revenue Bonds | 6.67 | % |
Short-Term Investments | 1.33 | % |
Total Value of Securities | 98.74 | % |
Receivables and Other Assets Net of Liabilities | 1.26 | % |
Total Net Assets | 100.00 | % |
Credit quality breakdown (as a % of fixed income investments)* | ||
AAA | 23.76 | % |
AA | 24.94 | % |
A | 27.11 | % |
BBB | 17.85 | % |
BB | 1.34 | % |
B | 0.39 | % |
CCC | 0.57 | % |
Not Rated | 4.04 | % |
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
5
Sector allocations and credit quality breakdowns | |
Delaware National High-Yield Municipal Bond Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | |
Municipal Bonds | 98.31 | % |
Corporate Revenue Bonds | 22.87 | % |
Education Revenue Bonds | 17.48 | % |
Health Care Revenue Bonds | 31.17 | % |
Housing Revenue Bonds | 0.97 | % |
Lease Revenue Bonds | 2.81 | % |
Pre-Refunded Bonds | 1.55 | % |
Special Tax Revenue Bonds | 11.46 | % |
State General Obligation Bonds | 5.61 | % |
Transportation Revenue Bonds | 4.39 | % |
Short-Term Investments | 2.74 | % |
Total Value of Securities | 101.05 | % |
Liabilities Net of Receivables and Other Assets | (1.05 | %) |
Total Net Assets | 100.00 | % |
Credit quality breakdown (as a % of fixed income investments)* | ||
AAA | 6.93 | % |
AA | 2.27 | % |
A | 13.75 | % |
BBB | 41.33 | % |
BB | 7.43 | % |
B | 4.79 | % |
CCC | 1.45 | % |
Not Rated | 22.05 | % |
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
6
Statements of net assets | |
Delaware Tax-Free USA Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 98.87% | ||||||||
Corporate Revenue Bonds – 17.53% | ||||||||
Alliance Airport Authority, Texas Special | ||||||||
Facilities Revenue (American Airlines Project) | ||||||||
Series B 5.25% 12/1/29 (AMT) | $ | 2,250,000 | $ | 1,422,270 | ||||
• | Brazos, Texas Harbor Industrial Development | |||||||
Environmental Facilities Revenue | ||||||||
(Dow Chemical Co. Project) 5.90% 5/1/38 (AMT) | 1,940,000 | 1,910,085 | ||||||
Brazos, Texas River Authority Pollution Control Revenue | ||||||||
(Texas Utilities) 5.40% 5/1/29 (AMT) | 3,000,000 | 1,444,800 | ||||||
•(TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) | 3,500,000 | 1,872,640 | ||||||
Buckeye, Ohio Tobacco Settlement Financing Authority | ||||||||
Asset-Backed Series A-2 5.875% 6/1/47 | 8,040,000 | 6,047,768 | ||||||
Clayton County, Georgia Development Authority | ||||||||
Special Facilities Revenue (Delta Airlines) | ||||||||
Series B 9.00% 6/1/35 (AMT) | 3,800,000 | 3,855,366 | ||||||
Cloquet, Minnesota Pollution Control Revenue | ||||||||
(Potlatch Corp. Project) 5.90% 10/1/26 | 1,695,000 | 1,560,434 | ||||||
Harris County, Texas Industrial Development | ||||||||
Corporation Solid Waste Disposal Revenue | ||||||||
(Deer Park Refining Project) 5.00% 2/1/23 | 2,880,000 | 2,939,818 | ||||||
Hawaii State Department Budget & Finance Special | ||||||||
Purpose Revenue (Hawaiian Electric Co. Subsidiary) | ||||||||
6.50% 7/1/39 | 5,350,000 | 5,768,905 | ||||||
Indianapolis, Indiana Airport Authority Revenue Special | ||||||||
Facilities (Federal Express Corp. Project) | ||||||||
5.10% 1/15/17 (AMT) | 2,750,000 | 2,846,635 | ||||||
Series 1998 5.50% 5/1/29 (AMT) | 2,000,000 | 1,913,320 | ||||||
Iowa Finance Authority Pollution Control Facility Revenue | ||||||||
(Interstate Power) 5.00% 7/1/14 (FGIC) | 3,640,000 | 3,911,435 | ||||||
Mason County, West Virginia Pollution Control Revenue | ||||||||
(Appalachian Power Co. Project) Series K | ||||||||
6.05% 12/1/24 (AMBAC) | 3,000,000 | 3,036,600 | ||||||
Mississippi Business Finance Corporation Pollution Control | ||||||||
Revenue (System Energy Resources, Inc. Project) | ||||||||
5.90% 5/1/22 | 3,000,000 | 2,999,730 | ||||||
Missouri State Environmental Improvement & Energy | ||||||||
Resource Authority Pollution Control Revenue | ||||||||
Refunding (St. Joseph Light & Power Company Project) | ||||||||
5.85% 2/1/13 (AMBAC) | 2,200,000 | 2,205,082 |
7
Statements of net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Corporate Revenue Bonds (continued) | ||||||||
• | Mobile, Alabama Industrial Development Board | |||||||
Pollution Control Revenue (Alabama Power Co.) | ||||||||
Series B 4.875% 6/1/34 | $ | 4,750,000 | $ | 5,098,413 | ||||
M-S-R Energy Authority, California Gas Revenue Series A | ||||||||
6.125% 11/1/29 | 1,915,000 | 1,991,868 | ||||||
6.50% 11/1/39 | 3,915,000 | 4,161,762 | ||||||
Nassau County, New York Tobacco Settlement | ||||||||
Asset-Backed Series A-3 5.125% 6/1/46 | 2,215,000 | 1,789,698 | ||||||
New Jersey Economic Development Authority Special | ||||||||
Facility Revenue (Continental Airlines, Inc. Project) | ||||||||
6.25% 9/15/29 (AMT) | 2,000,000 | 1,771,660 | ||||||
• | New York City, New York Industrial Development | |||||||
Agency Special Facilities Revenue | ||||||||
(American Airlines - JFK International Airport) | ||||||||
7.625% 8/1/25 (AMT) | 4,620,000 | 4,554,673 | ||||||
7.75% 8/1/31 (AMT) | 2,000,000 | 2,007,180 | ||||||
Ohio State Air Quality Development Authority Revenue | ||||||||
Environmental Improvement (First Energy Generation) | ||||||||
Series A 5.70% 8/1/20 | 4,750,000 | 5,045,308 | ||||||
Owen County, Kentucky Waterworks System Revenue | ||||||||
(American Water Co.) Series B 5.625% 9/1/39 | 3,300,000 | 3,399,198 | ||||||
Pennsylvania Economic Development | ||||||||
Financing Authority Exempt Facilities Revenue | ||||||||
(Allegheny Energy Supply Co.) 7.00% 7/15/39 | 6,340,000 | 7,093,635 | ||||||
Petersburg, Indiana Pollution Control Revenue | ||||||||
(Indianapolis Power & Light Co. Project) | ||||||||
6.375% 11/1/29 (AMT) | 5,000,000 | 5,049,600 | ||||||
Phenix City, Alabama Industrial Development Board | ||||||||
Environmental Improvement Revenue (Mead Westvaco | ||||||||
Corp. Project) Series A 6.35% 5/15/35 (AMT) | 3,000,000 | 2,759,880 | ||||||
Richmond County, Georgia Development Authority | ||||||||
Environmental Improvement Revenue (International | ||||||||
Paper Co.) Series B 5.95% 11/15/25 (AMT) | 5,000,000 | 4,911,950 | ||||||
Salt Verde Financial Corporation, Arizona Gas | ||||||||
Revenue Senior 5.00% 12/1/37 | 5,500,000 | 4,707,725 | ||||||
South Carolina Jobs-Economic Development Authority | ||||||||
Industrial Revenue (South Carolina Electric & Gas Co. | ||||||||
Project) Series B 5.45% 11/1/32 (AMBAC) (AMT) | 500,000 | 494,825 |
8
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Corporate Revenue Bonds (continued) | ||||||||
Sugar Creek, Missouri Industrial Development | ||||||||
Revenue (Lafarge North America Project) | ||||||||
Series A 5.65% 6/1/37 (AMT) | $ | 500,000 | $ | 454,075 | ||||
Sweetwater County, Wyoming Solid Waste Disposal | ||||||||
Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) | 3,250,000 | 3,025,588 | ||||||
Tobacco Settlement Financing Corporation, Virginia Senior | ||||||||
ΩConvertible Series B-2 5.20% 6/1/46 | 2,500,000 | 1,530,375 | ||||||
Series B-1 5.00% 6/1/47 | 2,020,000 | 1,387,922 | ||||||
104,970,223 | ||||||||
Education Revenue Bonds – 7.24% | ||||||||
Amherst, New York Industrial Development Agency | ||||||||
Civic Facilities Revenue (UBF Faculty Student Housing) | ||||||||
Series A 5.75% 8/1/30 (AMBAC) | 1,300,000 | 1,319,630 | ||||||
Broward County, Florida Educational Facilities Authority | ||||||||
Revenue (Nova Southeastern Project) | ||||||||
5.25% 4/1/27 (RADIAN) | 1,000,000 | 948,060 | ||||||
California Statewide Communities Development Authority | ||||||||
Student Housing Revenue (East Campus Apartments, LLC) | ||||||||
Series A 5.625% 8/1/34 (ACA) | 3,400,000 | 3,258,458 | ||||||
Connecticut State Health & Educational Facilities Authority | ||||||||
Revenue (Yale University) Series A-1 5.00% 7/1/25 | 3,000,000 | 3,371,670 | ||||||
Gainesville, Georgia Redevelopment Authority Educational | ||||||||
Facilities Revenue (Riverside Military Academy Project) | ||||||||
5.125% 3/1/37 | 3,735,000 | 2,324,851 | ||||||
Marietta, Georgia Development Authority Revenue | ||||||||
(Life University Income Project) 7.00% 6/15/39 | 4,200,000 | 3,918,936 | ||||||
Massachusetts State Health & Educational | ||||||||
Facilities Authority Revenue | ||||||||
(Harvard University) Series A 5.50% 11/15/36 | 4,515,000 | 5,042,578 | ||||||
(Nichols College Project) Series C 6.125% 10/1/29 | 4,350,000 | 4,175,000 | ||||||
Missouri State Health & Educational Facilities Authority | ||||||||
Educational Facilities Revenue (Washington University) | ||||||||
Series A 5.375% 3/15/39 | 5,000,000 | 5,445,899 | ||||||
New Hampshire Higher Educational & Health Facilities | ||||||||
Authority Revenue (New Hampton School Issue) | ||||||||
5.375% 10/1/28 | 3,070,000 | 2,755,079 |
9
Statements of net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Education Revenue Bonds (continued) | ||||||||
New Jersey State Educational Facilities Authority Revenue | ||||||||
(University of Medical & Dentistry) | ||||||||
Series B 7.50% 12/1/32 | $ | 1,435,000 | $ | 1,626,472 | ||||
Provo, Utah Charter School Revenue (Freedom Academy | ||||||||
Foundation Project) 5.50% 6/15/37 | 1,750,000 | 1,322,895 | ||||||
Saint Louis, Missouri Industrial Development Authority | ||||||||
Revenue (Confluence Academy Project) Series A | ||||||||
5.25% 6/15/25 | 1,150,000 | 923,841 | ||||||
5.35% 6/15/32 | 2,300,000 | 1,724,011 | ||||||
Texas A & M University Revenue Financing System | ||||||||
5.00% 5/15/17 | 4,060,000 | 4,745,775 | ||||||
University of the Virgin Islands Series A 5.375% 6/1/34 | 500,000 | 476,840 | ||||||
43,379,995 | ||||||||
Electric Revenue Bonds – 1.70% | ||||||||
Chelan County, Washington Public Utilities District #001 | ||||||||
Consolidated Revenue (Chelan Hydro System) | ||||||||
Series A 5.45% 7/1/37 (AMBAC) (AMT) | 5,000,000 | 4,929,700 | ||||||
Puerto Rico Electric Power Authority Revenue | ||||||||
Series PP 5.00% 7/1/25 (NATL-RE) (FGIC) | 1,000,000 | 1,008,870 | ||||||
Series TT 5.00% 7/1/37 | 1,105,000 | 1,055,805 | ||||||
Series WW 5.50% 7/1/38 | 2,100,000 | 2,126,460 | ||||||
Sikeston, Missouri Electric Revenue Refunding | ||||||||
6.00% 6/1/13 (NATL-RE) | 1,000,000 | 1,063,740 | ||||||
10,184,575 | ||||||||
Escrowed to Maturity Bonds – 6.75% | ||||||||
Cape Girardeau County, Missouri Industrial Development | ||||||||
Authority Health Care Facilities Revenue (Southeast | ||||||||
Missouri Hospital) 5.25% 6/1/16 (NATL-RE) | 440,000 | 496,910 | ||||||
^ | Greene County, Missouri Single Family Mortgage Revenue | |||||||
Municipal Multiplier (Private Mortgage Insurance) | ||||||||
6.10% 3/1/16 | 1,225,000 | 1,046,995 | ||||||
Louisiana Public Facilities Authority Hospital Revenue | ||||||||
(Southern Baptist Hospital, Inc. Project) 8.00% 5/15/12 | 2,715,000 | 2,943,141 | ||||||
New Jersey State Highway Authority Garden State | ||||||||
Parkway General Revenue (Senior Parkway) | ||||||||
5.50% 1/1/14 (FGIC) | 5,000,000 | 5,821,300 | ||||||
5.50% 1/1/15 (FGIC) | 7,310,000 | 8,696,488 | ||||||
5.50% 1/1/16 (FGIC) | 1,000,000 | 1,201,070 |
10
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Escrowed to Maturity Bonds (continued) | ||||||||
Oklahoma State Turnpike Authority Revenue | ||||||||
(First Senior) 6.00% 1/1/22 | $ | 13,535,000 | $ | 17,487,224 | ||||
Virgin Islands Public Finance Authority Revenue | ||||||||
Series A 7.30% 10/1/18 | 2,200,000 | 2,744,368 | ||||||
40,437,496 | ||||||||
Health Care Revenue Bonds – 12.13% | ||||||||
Arizona Health Facilities Authority Revenue | ||||||||
(Banner Health) Series D 5.375% 1/1/32 | 2,500,000 | 2,555,175 | ||||||
Brevard County, Florida Health Facilities Authority Health | ||||||||
Care Facilities Revenue (Heath First Inc. Project) | ||||||||
Series B 7.00% 4/1/39 | 1,610,000 | 1,759,247 | ||||||
Butler County, Pennsylvania Hospital Authority Revenue | ||||||||
(Butler Health System Project) 7.125% 7/1/29 | 2,250,000 | 2,503,778 | ||||||
California Municipal Finance Authority Certificates | ||||||||
of Participation (Community Hospital Center) | ||||||||
5.50% 2/1/39 | 4,380,000 | 3,862,853 | ||||||
Cape Girardeau County, Missouri Industrial Development | ||||||||
Authority Health Care Facilities Revenue Unrefunded | ||||||||
Balance (St. Francis Medical Center) | ||||||||
Series A 5.50% 6/1/32 | 1,000,000 | 1,002,570 | ||||||
Chatham County, Georgia Hospital Authority Revenue | ||||||||
(Memorial Health Medical Center) | ||||||||
Series A 6.125% 1/1/24 | 1,805,000 | 1,806,967 | ||||||
@ | Cleveland-Cuyahoga County, Ohio Port Authority | |||||||
Revenue Senior Housing (St. Clarence - Geac) | ||||||||
Series A 6.25% 5/1/38 | 1,500,000 | 1,259,880 | ||||||
Colorado Health Facilities Authority Revenue (Evangelical | ||||||||
Lutheran) Series A 5.25% 6/1/34 | 4,275,000 | 3,892,901 | ||||||
Cuyahoga County, Ohio Revenue (Cleveland Clinic Health | ||||||||
Systems) Series A 5.50% 1/1/29 | 4,000,000 | 4,154,240 | ||||||
Fairfax County, Virginia Industrial Development | ||||||||
Authority Revenue (Inova Health Services) | ||||||||
Series A 5.50% 5/15/35 | 2,500,000 | 2,619,450 | ||||||
Gainesville & Hall County, Georgia Development Authority | ||||||||
Revenue Senior Living Facilities (Lanier Village Estates | ||||||||
Project) Series C 7.25% 11/15/29 | 1,000,000 | 1,020,850 | ||||||
Illinois Finance Authority Revenue (Silver Cross & Medical | ||||||||
Centers) 7.00% 8/15/44 | 5,500,000 | 5,721,980 |
11
Statements of net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Health Care Revenue Bonds (continued) | |||||||||
Illinois Health Facilities Authority Revenue (Elmhurst | |||||||||
Memorial Healthcare Project) 5.625% 1/1/28 | $ | 2,000,000 | $ | 1,924,700 | |||||
Lucas County, Ohio Health Care Facility Revenue (Sunset | |||||||||
Retirement Communities) Series A 6.625% 8/15/30 | 2,000,000 | 2,018,120 | |||||||
Maricopa County, Arizona Industrial Development | |||||||||
Authority Health Facilities Revenue (Catholic Healthcare | |||||||||
West) Series A 6.00% 7/1/39 | 3,690,000 | 3,850,515 | |||||||
Michigan State Hospital Finance Authority Revenue | |||||||||
(Ascension Health Credit Group) Series B 5.25% 11/15/26 | 3,500,000 | 3,619,000 | |||||||
(Trinity Health Credit) Series C 5.375% 12/1/30 | 6,000,000 | 6,050,760 | |||||||
New York State Dormitory Authority Revenue | |||||||||
Non State Supported Debt | |||||||||
(North Shore LI Jewish Health System) | |||||||||
Series A 5.50% 5/1/37 | 3,500,000 | 3,552,605 | |||||||
(Orange Regional Medical Center) 6.50% 12/1/21 | 2,745,000 | 2,801,547 | |||||||
North Carolina Medical Care Commission Health Care | |||||||||
Facilities Revenue (First Mortgage - Presbyterian | |||||||||
Homes) 5.40% 10/1/27 | 3,260,000 | 3,096,511 | |||||||
Ohio State Higher Educational Facility Community | |||||||||
Revenue (Cleveland Clinic Health System Obligation | |||||||||
Group) Series A 5.25% 1/1/33 | 2,000,000 | 2,062,100 | |||||||
Oregon Health Science University Revenue | |||||||||
^(Capital Appreciation Insured) Series A | |||||||||
5.50% 7/1/21 (NATL-RE) | 2,000,000 | 1,078,180 | |||||||
Series A 5.75% 7/1/39 | 3,700,000 | 3,907,755 | |||||||
Oregon State Facilities Authority Revenue | |||||||||
(Samaritan Health Services) Series A 5.25% 10/1/40 | 2,775,000 | 2,777,081 | |||||||
Puerto Rico Industrial, Tourist, Educational, Medical & | |||||||||
Environmental Control Facilities Revenue | |||||||||
(Hospital Auxilio Mutuo Obligated Group) | |||||||||
Series A 6.25% 7/1/24 (NATL-RE) | 1,200,000 | 1,201,140 | |||||||
Tallahassee, Florida Health Facilities Revenue | |||||||||
(Tallahassee Memorial Regional Medical Center) | |||||||||
Series B 6.00% 12/1/15 (NATL-RE) | 2,500,000 | 2,504,600 | |||||||
72,604,505 |
12
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Housing Revenue Bonds – 0.92% | |||||||||
Florida Housing Finance Agency | |||||||||
(Landings at Sea Forest Apartments) Series T | |||||||||
5.85% 12/1/18 (AMBAC) (FHA) (AMT) | $ | 300,000 | $ | 300,198 | |||||
6.05% 12/1/36 (AMBAC) (FHA) (AMT) | 700,000 | 700,147 | |||||||
(Spinnaker Cove Apartments) Series G | |||||||||
6.50% 7/1/36 (AMBAC) (FHA) (AMT) | 500,000 | 500,285 | |||||||
Missouri State Housing Development Commission | |||||||||
Mortgage Revenue Single Family Homeowner Loan A | |||||||||
5.20% 9/1/33 (GNMA) (FNMA) (AMT) | 190,000 | 191,064 | |||||||
Missouri State Housing Development Commission | |||||||||
Multifamily Housing Revenue | |||||||||
(Hyder) Series 3 5.60% 7/1/34 (FHA) (AMT) | 1,435,000 | 1,457,600 | |||||||
(San Remo) Series 5 5.45% 1/1/36 (FHA) (AMT) | 500,000 | 506,320 | |||||||
New Mexico Mortgage Finance Authority Revenue | |||||||||
Series B Class III 6.75% 7/1/25 (GNMA) (FNMA) | 90,000 | 93,694 | |||||||
Series E 6.95% 1/1/26 (GNMA) (AMT) | 105,000 | 107,837 | |||||||
Orange County, Florida Housing Finance Authority | |||||||||
Homeowner Revenue Series B | |||||||||
5.25% 3/1/33 (GNMA) (FNMA) (AMT) | 135,000 | 135,914 | |||||||
Oregon Health, Housing, Educational, & Cultural | |||||||||
Facilities Authority Revenue (Pier Park Project) | |||||||||
Series A 6.05% 4/1/18 (GNMA) (AMT) | 890,000 | 891,193 | |||||||
Santa Fe, New Mexico Single Family Mortgage Revenue | |||||||||
Series B-1 6.20% 11/1/16 (GNMA) (FNMA) (AMT) | 135,000 | 135,184 | |||||||
Volusia County, Florida Multifamily Housing Finance | |||||||||
Authority (San Marco Apartments) | |||||||||
Series A 5.60% 1/1/44 (AGM) (AMT) | 500,000 | 503,450 | |||||||
5,522,886 | |||||||||
Lease Revenue Bonds – 3.36% | |||||||||
Capital Trust Agency Florida Revenue | |||||||||
(Fort Lauderdale/Cargo Acquisition Project) | |||||||||
5.75% 1/1/32 (AMT) | 3,750,000 | 3,151,799 | |||||||
(Orlando/Cargo Acquisition Project) | |||||||||
6.75% 1/1/32 (AMT) | 2,395,000 | 2,057,018 | |||||||
Golden State Tobacco Securitization Corporation | |||||||||
Settlement Revenue Enhanced Asset-Backed | |||||||||
Series A 5.00% 6/1/45 | 3,450,000 | 2,915,354 |
13
Statements of net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Lease Revenue Bonds (continued) | |||||||||
Grapevine, Texas Industrial Development Corporation | |||||||||
Revenue (Air Cargo) 6.50% 1/1/24 (AMT) | $ | 905,000 | $ | 846,790 | |||||
Houston, Texas Industrial Development Corporation | |||||||||
Revenue (Air Cargo) 6.375% 1/1/23 (AMT) | 1,990,000 | 1,828,671 | |||||||
Loudoun County, Virginia Industrial Development | |||||||||
Authority Public Safety Facility Lease Revenue | |||||||||
Series A 5.25% 12/15/23 (AGM) | 700,000 | 768,145 | |||||||
Missouri State Development Finance Board Infrastructure | |||||||||
Facilities Revenue | |||||||||
(Branson Landing Project) Series A | |||||||||
5.25% 12/1/19 | 1,435,000 | 1,470,631 | |||||||
5.625% 12/1/28 | 2,430,000 | 2,450,339 | |||||||
(Sewer System Improvement Project) | |||||||||
Series C 5.00% 3/1/25 | 605,000 | 605,163 | |||||||
(Triumph Foods Project) Series A 5.25% 3/1/25 | 500,000 | 502,455 | |||||||
Puerto Rico Commonwealth Industrial Development | |||||||||
Company General Purpose Revenue | |||||||||
Series B 5.375% 7/1/16 | 1,000,000 | 1,000,950 | |||||||
Puerto Rico Public Buildings Authority Revenue | |||||||||
(Guaranteed Government Facilities) | |||||||||
Series F 5.25% 7/1/25 | 930,000 | 925,090 | |||||||
^ | St. Louis, Missouri Industrial Development Authority | ||||||||
Leasehold Revenue (Convention Center Hotel) | |||||||||
5.80% 7/15/20 (AMBAC) | 3,035,000 | 1,576,015 | |||||||
20,098,420 | |||||||||
Local General Obligation Bonds – 5.38% | |||||||||
Boerne, Texas Independent School District Building | |||||||||
5.25% 2/1/27 (PSF) | 4,000,000 | 4,176,800 | |||||||
Desert, California Community College District Election | |||||||||
2004 Series C 5.00% 8/1/37 (AGM) | 4,785,000 | 4,841,080 | |||||||
Los Angeles, California Unified School District Election of | |||||||||
2005 Series F 5.00% 1/1/34 | 6,180,000 | 6,211,702 | |||||||
Melrose Park, Illinois Tax Increment | |||||||||
Series B 6.00% 12/15/19 (AGM) | 1,250,000 | 1,293,463 | |||||||
New York City, New York | |||||||||
Series I 5.125% 3/1/23 | 5,875,000 | 6,091,259 | |||||||
Series I-1 5.375% 4/1/36 | 5,000,000 | 5,369,800 | |||||||
Series J 5.25% 6/1/28 | 2,055,000 | 2,123,843 | |||||||
Powell, Ohio 5.50% 12/1/32 (NATL-RE) | 2,000,000 | 2,109,800 | |||||||
32,217,747 |
14
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
§Pre-Refunded Bonds – 13.18% | |||||||||
Alexandria, Virginia Industrial Development Authority | |||||||||
Revenue (Institute for Defense Analyses) | |||||||||
Series A 5.90% 10/1/30-10 (AMBAC) | $ | 6,000,000 | $ | 6,266,340 | |||||
Deschutes County, Oregon Hospital Facilities Authority | |||||||||
Hospital Revenue (Cascade Health Services) | |||||||||
5.60% 1/1/32-12 | 1,250,000 | 1,364,025 | |||||||
Duluth, Minnesota Economic Development Authority | |||||||||
Health Care Facilities Revenue (Benedictine Health | |||||||||
System - St. Mary’s Hospital) 5.25% 2/15/33-14 | 4,000,000 | 4,615,680 | |||||||
Florida State Board of Education (Lottery Revenue) | |||||||||
Series A 6.00% 7/1/14-10 (FGIC) | 1,000,000 | 1,030,380 | |||||||
Golden State, California Tobacco Securitization | |||||||||
Corporation Settlement Revenue | |||||||||
Series B 5.625% 6/1/38-13 | 7,500,000 | 8,570,699 | |||||||
Henrico County, Virginia Economic Development Authority | |||||||||
Revenue (Bon Secours Health System) | |||||||||
Series A 5.60% 11/15/30-11 | 130,000 | 146,619 | |||||||
Highlands County, Florida Health Facilities Authority | |||||||||
(Adventist Health System/Sunbelt) | |||||||||
Series A 6.00% 11/15/31-11 | 1,500,000 | 1,645,665 | |||||||
Illinois Educational Facilities Authority Student Housing | |||||||||
Revenue (Educational Advancement Fund - University | |||||||||
Center Project) 6.25% 5/1/30-12 | 5,000,000 | 5,641,850 | |||||||
Jackson, Ohio Local School District (Stark & Summit | |||||||||
Counties) School Facilities Construction & Improvement | |||||||||
5.625% 12/1/25-10 (AGM) | 1,000,000 | 1,041,630 | |||||||
Jackson, Oregon School District #6 Central Point | |||||||||
5.25% 6/15/20-10 (FGIC) | 1,175,000 | 1,193,224 | |||||||
Lee County, Florida Airport Revenue | |||||||||
Series B 5.75% 10/1/33-10 (AGM) | 3,000,000 | 3,129,930 | |||||||
Linn County, Oregon Community School District #9 | |||||||||
Lebanon 5.60% 6/15/30-13 (FGIC) | 2,000,000 | 2,304,480 | |||||||
Maryland State Economic Development Corporation, | |||||||||
Student Housing Revenue (University of Maryland | |||||||||
College Park Project) 5.625% 6/1/35-13 | 1,125,000 | 1,296,281 | |||||||
Milledgeville-Baldwin County, Georgia Development | |||||||||
Authority Revenue (Georgia College & State University | |||||||||
Foundation Student Housing Project) 6.00% 9/1/33-14 | 1,000,000 | 1,211,590 |
15
Statements of net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
§Pre-Refunded Bonds (continued) | |||||||||
New Jersey State Educational Facilities Authority | |||||||||
Revenue (Stevens Institute of Technology) | |||||||||
Series B 5.25% 7/1/24-14 | $ | 2,085,000 | $ | 2,435,343 | |||||
New York City, New York Series J 5.25% 6/1/28-13 | 2,895,000 | 3,305,656 | |||||||
North Carolina Medical Care Commission Hospital | |||||||||
Revenue (Northeast Medical Center Project) | |||||||||
5.125% 11/1/34-14 | 1,250,000 | 1,465,663 | |||||||
Osceola County, Florida School Board Certificates of | |||||||||
Participation Series A 5.25% 6/1/27-12 (AMBAC) | 4,000,000 | 4,422,280 | |||||||
Payne County, Oklahoma Economic Development | |||||||||
Authority Student Housing Revenue (Collegiate | |||||||||
Housing Foundation - Oklahoma State University) | |||||||||
Series A 6.375% 6/1/30-11 | 4,000,000 | 4,300,720 | |||||||
Puerto Rico Commonwealth Highway & Transportation | |||||||||
Authority Revenue Series G 5.00% 7/1/42-13 | 525,000 | 595,718 | |||||||
Puerto Rico Electric Power Authority Revenue | |||||||||
Series II 5.25% 7/1/31-12 | 6,000,000 | 6,704,700 | |||||||
Series NN 5.125% 7/1/29-13 | 1,105,000 | 1,255,645 | |||||||
Puerto Rico Public Buildings Authority Revenue | |||||||||
(Guaranteed Government Facilities) | |||||||||
Series I 5.25% 7/1/33-14 | 175,000 | 202,715 | |||||||
Richmond, Virginia Public Utilities Revenue | |||||||||
5.00% 1/15/27-12 (AGM) | 10,000,000 | 10,830,999 | |||||||
St. Louis, Missouri Airport Revenue (Capital Improvement | |||||||||
Project) Series A 5.375% 7/1/21-12 (NATL-RE) | 1,635,000 | 1,807,558 | |||||||
Vancouver, Washington Limited Tax | |||||||||
5.50% 12/1/25-10 (AMBAC) | 1,250,000 | 1,300,850 | |||||||
Wisconsin Housing & Economic Developing Authority | |||||||||
Revenue 6.10% 6/1/21-17 (FHA) | 690,000 | 828,449 | |||||||
78,914,689 | |||||||||
Special Tax Revenue Bonds – 10.51% | |||||||||
Brooklyn Arena Local Development Corporation, New York | |||||||||
Pilot Revenue (Barclays Center Project) 6.50% 7/15/30 | 8,230,000 | 8,938,849 | |||||||
California State Economic Recovery Refunding | |||||||||
Series A 5.25% 7/1/21 | 3,130,000 | 3,482,814 | |||||||
Florida Enterprise Community Development District Special | |||||||||
Assessment 6.10% 5/1/16 (NATL-RE) | 695,000 | 697,836 |
16
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Special Tax Revenue Bonds (continued) | |||||||||
Henderson, Nevada Local Improvement Districts #T-18 | |||||||||
5.30% 9/1/35 | $ | 2,315,000 | $ | 921,393 | |||||
Hollywood, Florida Community Redevelopment Agency | |||||||||
Revenue (Beach CRA) 5.625% 3/1/24 | 1,200,000 | 1,157,736 | |||||||
Jacksonville, Florida Excise Taxes Revenue | |||||||||
Series B 5.00% 10/1/26 (AMBAC) | 1,000,000 | 1,025,640 | |||||||
Lammersville, California School District Community | |||||||||
Facilities District #2002 (Mountain House) | |||||||||
5.125% 9/1/35 | 4,125,000 | 3,167,051 | |||||||
Middlesex County, New Jersey Improvement Authority | |||||||||
Senior Revenue (Heldrich Center | |||||||||
Hotel/Conference Project) Series A | |||||||||
5.00% 1/1/32 | 1,500,000 | 846,525 | |||||||
5.125% 1/1/37 | 1,500,000 | 848,415 | |||||||
Missouri State Development Finance Board Infrastructure | |||||||||
Facilities Revenue (Crackerneck Creek Project) | |||||||||
Series C 5.00% 3/1/26 | 500,000 | 500,715 | |||||||
New Jersey Economic Development Authority Revenue | |||||||||
(Cigarette Tax) | |||||||||
5.50% 6/15/31 | 1,000,000 | 944,810 | |||||||
5.75% 6/15/34 | 1,935,000 | 1,866,153 | |||||||
New York City, New York Transitional Finance Authority | |||||||||
Series D 5.00% 2/1/31 | 5,000,000 | 5,113,200 | |||||||
New York Sales Tax Asset Receivables | |||||||||
Series A 5.25% 10/15/27 (AMBAC) | 1,000,000 | 1,112,690 | |||||||
New York State Dormitory Authority State | |||||||||
Personal Income Tax Revenue | |||||||||
Series A 5.00% 3/15/38 | 4,545,000 | 4,732,936 | |||||||
Series B 5.25% 3/15/38 | 6,000,000 | 6,381,900 | |||||||
Puerto Rico Sales Tax Financing Corporation | |||||||||
Sales Tax Revenue | |||||||||
Ω(Capital Appreciation) Series A 6.75% 8/1/32 | 10,780,000 | 8,204,550 | |||||||
•Series A 5.00% 8/1/39 | 5,500,000 | 5,775,385 | |||||||
Series A 5.75% 8/1/37 | 5,905,000 | 6,104,412 | |||||||
Tampa, Florida Sports Authority Revenue Sales Tax | |||||||||
(Tampa Bay Arena Project) 5.75% 10/1/20 (NATL-RE) | 1,000,000 | 1,092,040 | |||||||
62,915,050 |
17
Statements of net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
State General Obligation Bonds – 6.29% | |||||||||
California State | |||||||||
6.00% 4/1/38 | $ | 4,060,000 | $ | 4,194,711 | |||||
6.50% 4/1/33 | 2,570,000 | 2,782,462 | |||||||
Connecticut State Economic Recovery | |||||||||
Series A 5.00% 1/1/16 | 1,960,000 | 2,278,794 | |||||||
Guam Government Series A 7.00% 11/15/39 | 4,295,000 | 4,600,117 | |||||||
Maryland State & Local Facilities Land Capital | |||||||||
Improvement Second Series 5.00% 8/1/16 | 4,000,000 | 4,729,400 | |||||||
Massachusetts State Consolidated Loan | |||||||||
Series C 5.50% 11/1/15 | 1,860,000 | 2,226,308 | |||||||
Puerto Rico Commonwealth Public Improvement | |||||||||
Series A 5.125% 7/1/31 | 7,880,000 | 7,529,891 | |||||||
Series A 5.25% 7/1/23 | 500,000 | 504,215 | |||||||
Series A 5.50% 7/1/19 (NATL-RE) | 5,000,000 | 5,350,200 | |||||||
Series C 6.00% 7/1/39 | 3,370,000 | 3,469,247 | |||||||
37,665,345 | |||||||||
Transportation Revenue Bonds – 10.57% | |||||||||
Bay Area, California Toll Bridge Authority Revenue | |||||||||
(San Francisco Bay Area) Series F-1 5.625% 4/1/44 | 4,265,000 | 4,557,366 | |||||||
Branson, Missouri Regional Airport Transportation | |||||||||
Development District Revenue (Branson Airport Project) | |||||||||
Series B 6.00% 7/1/37 (AMT) | 1,500,000 | 981,585 | |||||||
Dallas-Fort Worth, Texas International Airport Revenue | |||||||||
Series A 5.50% 11/1/31 (NATL-RE) (FGIC) (AMT) | 1,500,000 | 1,509,420 | |||||||
Maryland State Economic Development Corporation | |||||||||
Revenue (Transportation Facilities Project) | |||||||||
Series A 5.75% 6/1/35 | 5,075,000 | 5,188,985 | |||||||
Missouri State Highways & Transportation Commission | |||||||||
State Road Revenue Series B 5.00% 5/1/24 | 9,000,000 | 9,888,300 | |||||||
New York State Thruway Authority General Revenue | |||||||||
Series H 5.00% 1/1/19 (NATL-RE) | 6,240,000 | 6,931,392 | |||||||
North Texas Tollway Authority Revenue (First Tier) | |||||||||
Series A 6.00% 1/1/24 | 3,345,000 | 3,638,825 | |||||||
Series E-3 5.75% 1/1/38 | 4,320,000 | 4,898,102 | |||||||
Ω | Pennsylvania State Turnpike Commission Turnpike | ||||||||
Revenue (Capital Appreciation) Subordinate | |||||||||
Series E 6.375% 12/1/38 | 10,000,000 | 6,400,000 |
18
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Transportation Revenue Bonds (continued) | |||||||||
Puerto Rico Commonwealth Highway & Transportation | |||||||||
Authority Revenue Series G 5.00% 7/1/42 | $ | 275,000 | $ | 250,833 | |||||
Sacramento County, California Airport System Revenue | |||||||||
(PFC/Grant) Series C 6.00% 7/1/41 | 6,500,000 | 6,989,190 | |||||||
Saint Louis, Missouri Airport Revenue (Lambert-St. Louis | |||||||||
International) Series A-1 6.625% 7/1/34 | 5,995,000 | 6,351,882 | |||||||
Texas Private Activity Bond Surface Transportation | |||||||||
Corporation Senior Lien Note (Mobility Partners) | |||||||||
6.875% 12/31/39 | 5,500,000 | 5,716,535 | |||||||
63,302,415 | |||||||||
Water & Sewer Revenue Bonds – 3.31% | |||||||||
Atlanta, Georgia Water & Wastewater Revenue | |||||||||
Series A 6.25% 11/1/39 | 5,500,000 | 5,852,604 | |||||||
Missouri State Environmental Improvement & Energy | |||||||||
Resource Authority Water Pollution Control Revenue | |||||||||
Unrefunded Balance (State Revolving Fund Project) | |||||||||
Series A 6.05% 7/1/16 (AGM) | 1,060,000 | 1,064,643 | |||||||
New York City, New York Municipal Water Finance | |||||||||
Authority Water & Sewer System Revenue | |||||||||
Fiscal 2009 Series A 5.75% 6/15/40 | 4,000,000 | 4,484,160 | |||||||
Series A 5.25% 6/15/34 | 3,705,000 | 3,781,953 | |||||||
Tampa, Florida Water and Sewer Revenue | |||||||||
6.00% 10/1/16 (AGM) | 1,000,000 | 1,203,870 | |||||||
Virgin Islands Water & Power Authority Water System | |||||||||
Revenue 5.50% 7/1/17 | 510,000 | 512,183 | |||||||
West Virginia State Water Development Authority | |||||||||
Revenue (Loan Program III) Series A | |||||||||
6.375% 7/1/39 (AMBAC) (AMT) | 2,890,000 | 2,926,848 | |||||||
19,826,261 | |||||||||
Total Municipal Bonds (cost $566,886,890) | 592,039,607 | ||||||||
Short-Term Investments – 0.31% | |||||||||
•Variable Rate Demand Notes – 0.31% | |||||||||
Allegheny County, Pennsylvania Industrial Development | |||||||||
Authority Revenue (Zoological Society) Series A | |||||||||
0.29% 6/1/19 (LOC – PNC Bank) | 550,000 | 550,000 |
19
Statements of net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Principal amount | Value | |||||||||
Short-Term Investments (continued) | ||||||||||
Variable Rate Demand Notes (continued) | ||||||||||
Minneapolis & St. Paul, Minnesota Housing & | ||||||||||
Redevelopment Authority Health Care Revenue | ||||||||||
(Allina Health System) Series B-2 0.14% 11/15/35 | ||||||||||
(LOC – JPMorgan Chase Bank) | $ | 400,000 | $ | 400,000 | ||||||
Pennsylvania State Higher Educational Facilities Authority | ||||||||||
Revenue (Association of Independent Colleges & | ||||||||||
Universities) Series G3 0.24% 11/1/20 (LOC – PNC Bank) | 900,000 | 900,000 | ||||||||
Total Short-Term Investments (cost $1,850,000) | 1,850,000 | |||||||||
Total Value of Securities – 99.18% | ||||||||||
(cost $568,736,890) | 593,889,607 | |||||||||
Receivables and Other Assets | ||||||||||
Net of Liabilities – 0.82% | 4,927,676 | |||||||||
Net Assets Applicable to 53,282,571 | ||||||||||
Shares Outstanding – 100.00% | $ | 598,817,283 | ||||||||
Net Asset Value – Delaware Tax-Free USA Fund | ||||||||||
Class A ($568,139,835 / 50,553,120 Shares) | $11.24 | |||||||||
Net Asset Value – Delaware Tax-Free USA Fund | ||||||||||
Class B ($6,830,173 / 608,068 Shares) | $11.23 | |||||||||
Net Asset Value – Delaware Tax-Free USA Fund | ||||||||||
Class C ($23,837,538 / 2,120,523 Shares) | $11.24 | |||||||||
Net Asset Value – Delaware Tax-Free USA Fund | ||||||||||
Institutional Class ($9,737 / 860 Shares) | $11.32 | |||||||||
Components of Net Assets at February 28, 2010: | ||||||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 583,884,892 | ||||||||
Undistributed net investment income | 66,906 | |||||||||
Accumulated net realized loss on investments | (10,287,232 | ) | ||||||||
Net unrealized appreciation of investments | 25,152,717 | |||||||||
Total net assets | $ | 598,817,283 |
20
§ | Pre-Refunded Bonds. Municipals bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
@ | Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $1,259,880, which represented 0.21% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
Summary of Abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
FNMA — Federal National Mortgage Association collateral
GNMA — Government National Mortgage Association collateral
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
PSF — Insured by the Permanent School Fund
RADIAN — Insured by Radian Asset Assurance
AMBAC — Insured by the AMBAC Assurance Corporation
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
FNMA — Federal National Mortgage Association collateral
GNMA — Government National Mortgage Association collateral
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
PSF — Insured by the Permanent School Fund
RADIAN — Insured by Radian Asset Assurance
Net Asset Value and Offering Price Per Share – | ||
Delaware Tax-Free USA Fund | ||
Net asset value Class A (A) | $ | 11.24 |
Sales charge (4.50% of offering price) (B) | 0.53 | |
Offering price | $ | 11.77 |
(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
21
Statements of net assets | |
Delaware Tax-Free USA Intermediate Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | ||||||||
Municipal Bonds – 97.41% | |||||||||
Corporate Revenue Bonds – 9.40% | |||||||||
Allegheny County, Pennsylvania Industrial Development | |||||||||
Authority Revenue (Environmental Improvement - U.S. | |||||||||
Steel Corp. Project) 6.50% 5/1/17 | $ | 2,315,000 | $ | 2,448,321 | |||||
Alliance Airport Authority, Texas Special Facilities Revenue | |||||||||
(Federal Express Corp. Project) 4.85% 4/1/21 (AMT) | 2,000,000 | 1,985,340 | |||||||
• | Brazos, Texas Harbor Industrial Development Environmental | ||||||||
Facilities Revenue (Dow Chemical Co. Project) | |||||||||
5.90% 5/1/38 (AMT) | 1,010,000 | 994,426 | |||||||
Brazos, Texas River Authority Pollution Control Revenue | |||||||||
(Texas Utilities) 5.40% 5/1/29 (AMT) | 1,000,000 | 481,600 | |||||||
Buckeye, Ohio Tobacco Settlement Financing Authority | |||||||||
Asset-Backed Series A-2 | |||||||||
5.125% 6/1/24 | 5,000,000 | 4,615,700 | |||||||
5.875% 6/1/47 | 5,645,000 | 4,246,225 | |||||||
• | Chesapeake, Virginia Economic Development Authority | ||||||||
Pollution Control Revenue (Electric & Power Co. Project) | |||||||||
Series A 3.60% 2/1/32 | 1,150,000 | 1,196,863 | |||||||
Chesterfield County, Virginia Economic Development | |||||||||
Authority Pollution Control Revenue | |||||||||
(Virginia Electric & Power) Series A 5.00% 5/1/23 | 1,460,000 | 1,568,858 | |||||||
Clayton County, Georgia Development Authority Special | |||||||||
Facilities Revenue (Delta Air Lines) | |||||||||
Series A 8.75% 6/1/29 | 1,770,000 | 1,835,419 | |||||||
Harris County, Texas Industrial Development Corporation | |||||||||
Solid Waste Disposal Revenue | |||||||||
(Deer Park Refining Project) 5.00% 2/1/23 | 2,750,000 | 2,807,118 | |||||||
Indianapolis, Indiana Airport Authority Revenue Special | |||||||||
Facilities (Federal Express Corp. Project) | |||||||||
5.10% 1/15/17 (AMT) | 750,000 | 776,355 | |||||||
Iowa Finance Authority Pollution Control Facilities Revenue | |||||||||
(Interstate Power) 5.00% 7/1/14 (FGIC) | 2,000,000 | 2,149,140 | |||||||
Maryland Economic Development Corporation Pollution | |||||||||
Control Revenue (Potomac Electric Project) | |||||||||
6.20% 9/1/22 | 1,780,000 | 2,043,404 | |||||||
Memphis-Shelby County, Tennessee Airport Authority | |||||||||
Special Facilities Revenue (Federal Express Corp. Project) | |||||||||
5.05% 9/1/12 | 1,000,000 | 1,067,550 | |||||||
Michigan State Strategic Fund Limited Obligation Revenue | |||||||||
(Dow Chemical Project) Series B-2 6.25% 6/1/14 | 4,500,000 | 5,084,865 |
22
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Corporate Revenue Bonds (continued) | ||||||||
• | Mobile, Alabama Industrial Development Board Pollution | |||||||
Control Revenue (Alabama Power Co.) | ||||||||
Series B 4.875% 6/1/34 | $ | 2,840,000 | $ | 3,048,314 | ||||
M-S-R Energy Authority, California Gas Revenue | ||||||||
Series A 6.125% 11/1/29 | 3,640,000 | 3,786,110 | ||||||
Ohio State Air Quality Development Authority Revenue | ||||||||
Environmental Improvement (First Energy) | ||||||||
Series A 5.70% 2/1/14 | 2,225,000 | 2,381,128 | ||||||
Series A 5.70% 8/1/20 | 4,320,000 | 4,588,574 | ||||||
Series C 5.625% 6/1/18 | 2,370,000 | 2,534,241 | ||||||
(USX Project) 5.00% 11/1/15 | 1,000,000 | 1,049,230 | ||||||
• | Pennsylvania Economic Development Financing Authority | |||||||
Exempt Facilities Revenue (Exelon Generation Co. | ||||||||
Project) 5.00% 12/1/42 | 1,355,000 | 1,437,370 | ||||||
Prattville, Alabama Industrial Development Board | ||||||||
Environmental Improvement Revenue (International | ||||||||
Paper Co. Project) Series A 6.70% 3/1/24 (AMT) | 1,000,000 | 1,010,490 | ||||||
• | Sabine, Texas River Authority Pollution Control Revenue | |||||||
(TXU Electric Co. Project) Series A 5.50% 5/1/22 | 1,000,000 | 951,570 | ||||||
Sugar Creek, Missouri Industrial Development Revenue | ||||||||
(Lafarge North America Project) | ||||||||
Series A 5.65% 6/1/37 (AMT) | 500,000 | 454,075 | ||||||
54,542,286 | ||||||||
Education Revenue Bonds – 5.19% | ||||||||
California Municipal Finance Authority Educational Revenue | ||||||||
(American Heritage Education Foundation Project) | ||||||||
Series A 5.25% 6/1/26 | 1,000,000 | 894,940 | ||||||
California Statewide Communities Development | ||||||||
Authority Student Housing Revenue | ||||||||
(Irvine, LLC - UCI East Campus) 6.00% 5/15/23 | 3,150,000 | 3,333,803 | ||||||
Chattanooga, Tennessee Health Educational & Housing | ||||||||
Facilities Board Revenue (CDFI Phase I, LLC Project) | ||||||||
Series B 5.50% 10/1/20 | 1,030,000 | 939,391 | ||||||
Connecticut State Health & Educational Facilities Authority | ||||||||
Revenue (Yale University) Series A-1 5.00% 7/1/25 | 8,500,000 | 9,553,064 | ||||||
Fulton County, Georgia Development Authority Revenue | ||||||||
(Molecular Science Building Project) | ||||||||
5.25% 5/1/21 (NATL-RE) | 1,000,000 | 1,098,800 |
23
Statements of net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | �� | ||||||||
Education Revenue Bonds (continued) | |||||||||
Grand Traverse, Michigan Public School Academy Revenue | |||||||||
5.00% 11/1/36 | $ | 1,000,000 | $ | 758,780 | |||||
Marietta, Georgia Development Authority Revenue | |||||||||
(Life University Income Project) 6.25% 6/15/20 | 1,180,000 | 1,114,829 | |||||||
Massachusetts State Health & Educational Facilities | |||||||||
Authority Revenue | |||||||||
(Nichols College Project) Series C 6.125% 10/1/29 | 1,000,000 | 959,770 | |||||||
•(Northeastern University) 4.125% 10/1/37 | 2,360,000 | 2,455,792 | |||||||
Michigan Higher Education Facilities Authority Revenue | |||||||||
(Kalamazoo College Project) 5.50% 12/1/19 | 500,000 | 521,455 | |||||||
Nassau County, New York Industrial Development Agency | |||||||||
Civic Facility Revenue (New York Institute of Technology | |||||||||
Project) Series A 4.75% 3/1/26 | 1,710,000 | 1,694,849 | |||||||
New York State Dormitory Authority Revenue | |||||||||
(Brooklyn Law School) Series A 5.50% 7/1/18 (RADIAN) | 1,000,000 | 1,037,610 | |||||||
(Non State Supported Debt - Rockefeller University) | |||||||||
Series A 5.00% 7/1/27 | 1,055,000 | 1,173,519 | |||||||
Ohio State Higher Educational Facility Revenue | |||||||||
(John Carroll University) 5.50% 11/15/18 | 335,000 | 357,676 | |||||||
Ohio State University General Receipts Revenue | |||||||||
Series B 5.25% 6/1/21 | 180,000 | 198,936 | |||||||
University of California Revenue | |||||||||
Series A 5.125% 5/15/20 (AMBAC) | 250,000 | 269,928 | |||||||
University of Oklahoma Research Facilities Revenue | |||||||||
5.00% 3/1/23 (AMBAC) | 1,065,000 | 1,098,217 | |||||||
University of Virginia General Revenue Series B | |||||||||
5.00% 6/1/20 | 1,250,000 | 1,337,738 | |||||||
5.00% 6/1/21 | 1,250,000 | 1,333,425 | |||||||
30,132,522 | |||||||||
Electric Revenue Bonds – 2.41% | |||||||||
• | Burke County, Georgia Development Authority Pollution | ||||||||
Control Revenue (Oglethorpe Power) | |||||||||
Series C-2 4.625% 1/1/37 (AMBAC) | 3,320,000 | 3,333,247 | |||||||
Metropolitan Government Nashville & Davidson County, | |||||||||
Tennessee Electric Revenue Series B 5.50% 5/15/14 | 1,000,000 | 1,168,470 | |||||||
Orlando, Florida Utilities Commission Water & Electric | |||||||||
Revenue 5.25% 10/1/20 | 555,000 | 596,769 |
24
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Electric Revenue Bonds (continued) | |||||||||
Rochester, Minnesota Electric Utilities Revenue | |||||||||
Series C 5.00% 12/1/18 (NATL-RE) | $ | 2,000,000 | $ | 2,275,800 | |||||
South Carolina State Public Service Authority Revenue | |||||||||
Series A 5.125% 1/1/21 (AGM) | 1,000,000 | 1,078,660 | |||||||
Texas Municipal Power Agency Revenue | |||||||||
4.00% 9/1/11 (AMBAC) | 750,000 | 751,845 | |||||||
Vernon, California Electric System Revenue | |||||||||
Series A 5.125% 8/1/21 | 4,500,000 | 4,761,225 | |||||||
13,966,016 | |||||||||
Escrowed to Maturity Bonds – 0.08% | |||||||||
California State Economic Recovery Series A 5.25% 7/1/14 | 225,000 | 265,104 | |||||||
Southcentral, Pennsylvania General Authority Revenue | |||||||||
(Wellspan Health Obligated Project) 5.625% 5/15/26 | 180,000 | 192,596 | |||||||
457,700 | |||||||||
Health Care Revenue Bonds – 11.79% | |||||||||
Allegheny County, Pennsylvania Municipal Development | |||||||||
Authority Revenue (University of Pittsburgh Medical | |||||||||
Center) Series A 5.00% 9/1/14 | 4,000,000 | 4,519,160 | |||||||
Berks County, Pennsylvania Hospital Authority Revenue | |||||||||
(Reading Hospital & Medical Center Project) | |||||||||
Series A-3 5.25% 11/1/24 | 4,405,000 | 4,591,376 | |||||||
Butler County, Pennsylvania Hospital Authority Revenue | |||||||||
(Butler Health System Project) 7.125% 7/1/29 | 2,250,000 | 2,503,778 | |||||||
California Municipal Finance Authority Certificates of | |||||||||
Participation (Community Hospitals Center) | |||||||||
5.25% 2/1/24 | 1,695,000 | 1,588,198 | |||||||
California Statewide Communities Development Authority | |||||||||
Revenue (Kaiser Permanente) Series A 5.00% 4/1/19 | 5,325,000 | 5,760,478 | |||||||
Cape Girardeau County, Missouri Industrial Development | |||||||||
Authority Health Care Facilities Revenue | |||||||||
(St. Francis Medical Center) Series A 5.50% 6/1/34 | 640,000 | 640,902 | |||||||
Chatham County, Georgia Hospital Authority Revenue | |||||||||
(Memorial Health Medical Center) | |||||||||
Series A 6.125% 1/1/24 | 905,000 | 905,986 | |||||||
@ | Cleveland-Cuyahoga County, Ohio Port Authority | ||||||||
Revenue (Saint Clarence - Geac) Series A | |||||||||
6.125% 5/1/26 | 715,000 | 642,778 |
25
Statements of net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Health Care Revenue Bonds (continued) | |||||||||
Cumberland County, Pennsylvania Municipal Authority | |||||||||
Revenue (Diakon Lutheran Social Ministries) | |||||||||
6.25% 1/1/24 | $ | 2,625,000 | $ | 2,740,684 | |||||
Cuyahoga County, Ohio Revenue | |||||||||
(Cleveland Clinic Health System) Series A 6.00% 1/1/21 | 1,000,000 | 1,080,560 | |||||||
Dauphin County, Pennsylvania General Authority Health | |||||||||
System Revenue (Pinnacle Health System Project) | |||||||||
Series A 6.00% 6/1/29 | 4,500,000 | 4,711,050 | |||||||
Georgia Medical Center Hospital Authority Revenue | |||||||||
(Spring Harbor Green Island Project) 5.25% 7/1/37 | 2,300,000 | 1,817,023 | |||||||
Lycoming County, Pennsylvania Authority Health System | |||||||||
Revenue (Susquehanna Health System Project) | |||||||||
5.50% 7/1/28 | 2,500,000 | 2,494,075 | |||||||
Maryland State Health & Higher Education Facilities | |||||||||
Authority Revenue | |||||||||
•(John Hopkins Health Systems) 5.00% 5/15/46 | 790,000 | 869,387 | |||||||
(Union Hospital of Cecil County) 5.625% 7/1/32 | 500,000 | 505,260 | |||||||
Massachusetts State Health & Educational Facilities | |||||||||
Authority Revenue (Caregroup) Series E-2 5.375% 7/1/21 | 1,970,000 | 2,037,433 | |||||||
Michigan State Hospital Finance Authority Revenue | |||||||||
(Oakwood Obligation Group) 5.50% 11/1/14 | 2,230,000 | 2,369,420 | |||||||
Minneapolis, Minnesota Health Care System Revenue | |||||||||
(Fairview Health) Series A 6.375% 11/15/23 | 3,710,000 | 4,161,322 | |||||||
New York State Dormitory Authority Revenue Non State | |||||||||
Supported Debt | |||||||||
(North Shore LI Jewish Health System) Series A 5.50% 5/1/30 | 1,700,000 | 1,754,247 | |||||||
(Orange Regional Medical Center) 6.50% 12/1/21 | 2,000,000 | 2,041,200 | |||||||
North Carolina Medical Care Commission Health Care | |||||||||
Facilities Revenue (First Mortgage - Presbyterian Homes) | |||||||||
5.40% 10/1/27 | 780,000 | 740,883 | |||||||
Ohio State Higher Educational Facilities Commission | |||||||||
Revenue (Cleveland Clinic Health System | |||||||||
Obligation Group) Series A | |||||||||
5.00% 1/1/17 | 2,000,000 | 2,224,920 | |||||||
5.00% 1/1/18 | 1,000,000 | 1,104,270 | |||||||
Oregon State Facilities Authority Revenue (Samaritan | |||||||||
Health Services) Series A 5.25% 10/1/40 | 1,685,000 | 1,686,264 |
26
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Health Care Revenue Bonds (continued) | |||||||||
Scottsdale, Arizona Industrial Development Authority | |||||||||
Hospital Revenue (Scottsdale Healthcare) | |||||||||
Series A 5.00% 9/1/19 | $ | 3,065,000 | $ | 3,155,540 | |||||
South Carolina Jobs-Economic Development Authority | |||||||||
Hospital Revenue (Palmetto Health) 5.50% 8/1/26 | 5,000,000 | 4,993,349 | |||||||
St. Louis Park, Minnesota Health Care Facilities Revenue | |||||||||
(Nicollet Health Services) Series C 5.50% 7/1/18 | 4,240,000 | 4,556,516 | |||||||
St. Mary Hospital Authority, Pennsylvania Health System | |||||||||
Revenue (Catholic Health East) Series A 5.25% 11/15/16 | 1,200,000 | 1,278,360 | |||||||
St. Paul, Minnesota Housing & Redevelopment Authority | |||||||||
Hospital Revenue (Health East Project) 6.00% 11/15/25 | 1,000,000 | 977,040 | |||||||
68,451,459 | |||||||||
Housing Revenue Bonds – 1.28% | |||||||||
California Housing Finance Agency Revenue | |||||||||
(Home Mortgage) Series M 5.95% 8/1/25 (AMT) | 2,700,000 | 2,810,538 | |||||||
Puerto Rico Housing Finance Authority Subordinate | |||||||||
(Capital Fund Modernization) 5.50% 12/1/16 | 4,120,000 | 4,623,299 | |||||||
7,433,837 | |||||||||
Lease Revenue Bonds – 2.24% | |||||||||
Capital Trust Agency Florida Revenue (Fort Lauderdale/ | |||||||||
Cargo Acquisition Project) 5.75% 1/1/32 (AMT) | 1,750,000 | 1,470,840 | |||||||
Golden State, California Tobacco Securitization Corporation | |||||||||
Settlement Revenue Refunding Asset-Backed Series A | 1,170,000 | 1,169,988 | |||||||
5.00% 6/1/18 | |||||||||
5.00% 6/1/21 (AMBAC) | 1,000,000 | 982,530 | |||||||
Michigan State Building Authority Revenue Series I | |||||||||
5.00% 10/15/24 | 2,860,000 | 2,906,990 | |||||||
5.50% 10/15/18 | 2,050,000 | 2,157,994 | |||||||
New York State Municipal Bond Bank Agency Special | |||||||||
School Purpose Revenue Series C 5.25% 6/1/22 | 1,000,000 | 1,052,660 | |||||||
• | Puerto Rico Public Buildings Authority Revenue | ||||||||
(Guaranteed Government Facilities) | |||||||||
Series J 5.00% 7/1/28 | 1,000,000 | 1,028,920 | |||||||
Tobacco Settlement Financing New York Revenue | |||||||||
(Asset-Backed) Series B 5.00% 6/1/12 | 2,060,000 | 2,240,806 | |||||||
13,010,728 |
27
Statements of net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Local General Obligation Bonds – 7.62% | |||||||||
Chicago, Illinois Board of Education Refunding Dedicated | |||||||||
Revenue Series B 5.00% 12/1/23 (AMBAC) | $ | 3,500,000 | $ | 3,717,245 | |||||
Chicago, Illinois Modern Schools Across Chicago | |||||||||
Series J 5.00% 12/1/23 (AMBAC) | 2,865,000 | 3,056,239 | |||||||
Chicago, Illinois Project & Refunding | |||||||||
Series C 5.50% 1/1/40 (NATL-RE) (FGIC) | 2,940,000 | 2,994,831 | |||||||
Dallas, Texas 5.125% 2/15/15 | 3,000,000 | 3,507,120 | |||||||
Fairfax County, Virginia Refunding & Public Improvement | |||||||||
5.25% 4/1/14 | 3,500,000 | 4,081,840 | |||||||
Gwinnett County, Georgia School District | |||||||||
5.00% 2/1/11 | 3,000,000 | 3,132,780 | |||||||
5.00% 2/1/21 | 4,975,000 | 5,923,434 | |||||||
Lansing, Michigan Community College | |||||||||
(College Building and Site) | |||||||||
5.00% 5/1/21 (NATL-RE) | 1,325,000 | 1,426,137 | |||||||
Los Angeles, California Unified School District | |||||||||
(Election 1997) Series F | |||||||||
5.00% 7/1/21 (FGIC) | 2,880,000 | 2,993,040 | |||||||
(Election 2004) Series G | |||||||||
5.00% 7/1/13 (AMBAC) | 2,000,000 | 2,227,640 | |||||||
5.00% 7/1/31 (AMBAC) | 3,870,000 | 3,880,178 | |||||||
Middlesex County, New Jersey Improvement Authority | |||||||||
Revenue (County Guaranteed Open Space Trust) | |||||||||
5.25% 9/15/20 | 1,000,000 | 1,122,250 | |||||||
New York City, New York | |||||||||
Series A-1 5.00% 8/1/19 | 3,500,000 | 3,886,995 | |||||||
Series G 5.25% 8/1/15 | 1,000,000 | 1,114,950 | |||||||
Series I 5.00% 8/1/21 | 1,000,000 | 1,065,610 | |||||||
Series J 5.50% 6/1/23 | 100,000 | 105,260 | |||||||
44,235,549 | |||||||||
§Pre-Refunded Bonds – 5.78% | |||||||||
Benton & Linn Counties, Oregon School District #509J | |||||||||
5.00% 6/1/21-13 (AGM) | 1,000,000 | 1,131,050 | |||||||
Cook County, Illinois Series A 5.375% 11/15/21-11 (FGIC) | 2,160,000 | 2,291,695 | |||||||
Duluth, Minnesota Economic Development | |||||||||
Authority Health Care Facilities Revenue | |||||||||
(Benedictine Health System - St. Mary’s Hospital) | 1,000,000 | 1,153,920 | |||||||
5.25% 2/15/28-14 | |||||||||
5.50% 2/15/23-14 | 1,000,000 | 1,163,570 |
28
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
§Pre-Refunded Bonds (continued) | |||||||||
Forest Grove, Oregon Revenue Campus | |||||||||
(Pacific University) 6.30% 5/1/25-10 (RADIAN) | $ | 1,000,000 | $ | 1,011,140 | |||||
Illinois Educational Facilities Authority Student | |||||||||
Housing Revenue (Educational Advancement - | |||||||||
University Center Project) 6.00% 5/1/22-12 | 750,000 | 842,235 | |||||||
Lancaster County, Pennsylvania Hospital Authority | |||||||||
Revenue (Lancaster General Hospital Project) | |||||||||
5.75% 3/15/21-13 | 1,000,000 | 1,151,630 | |||||||
Lunenburg County, Virginia | |||||||||
Series B 5.25% 2/1/29-13 (NATL-RE) | 715,000 | 813,684 | |||||||
Miami-Dade County, Florida Educational Facilities | |||||||||
Authority Revenue (University of Miami) | |||||||||
Series A 5.00% 4/1/34-14 (AMBAC) | 3,500,000 | 4,018,071 | |||||||
Michigan State Building Authority Revenue | |||||||||
(Facilities Program) | |||||||||
Series I 5.00% 10/15/24-11 | 140,000 | 150,130 | |||||||
Series I 5.50% 10/15/18-11 | 125,000 | 135,061 | |||||||
Minneapolis, Minnesota Health Care System Revenue | |||||||||
(Allina Health Systems) Series A 5.75% 11/15/32-12 | 500,000 | 565,935 | |||||||
New Jersey State Educational Facilities Authority | |||||||||
Revenue (Georgian Court College Project) | |||||||||
Series C 6.50% 7/1/33-13 | 500,000 | 590,385 | |||||||
New Jersey State Transportation Trust Fund Authority | |||||||||
(Transportation System) Series C 5.50% 6/15/22-13 | 1,700,000 | 1,952,688 | |||||||
New York City, New York Series J 5.50% 6/1/23-13 | 900,000 | 1,034,892 | |||||||
North Texas Health Facilities Development Corporation | |||||||||
Hospital Revenue (United Regional Health Care System, | |||||||||
Inc. Project) 6.00% 9/1/23-13 | 1,000,000 | 1,158,980 | |||||||
• | Ohio State Higher Educational Facility Revenue | ||||||||
Adjustable Medium Term (Kenyon College Project) | |||||||||
4.70% 7/1/37-13 | 1,000,000 | 1,119,910 | |||||||
Ohio State University General Receipts | |||||||||
(Ohio State University) Series B 5.25% 6/1/21-13 | 820,000 | 933,185 | |||||||
Pennsylvania State First Series 5.125% 1/15/19-11 | 3,515,000 | 3,699,643 | |||||||
Pennsylvania State Higher Educational Facilities Authority | |||||||||
College & University Revenue (Geneva College Project) | |||||||||
6.125% 4/1/22-12 | 1,000,000 | 1,111,960 |
29
Statements of net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
§Pre-Refunded Bonds (continued) | |||||||||
Puerto Rico Commonwealth Highway & Transportation | |||||||||
Authority Revenue Series J 5.50% 7/1/21-14 | $ | 1,000,000 | $ | 1,165,190 | |||||
Puerto Rico Public Buildings Authority Revenue | |||||||||
(Guaranteed Government Facilities) | |||||||||
Series I 5.50% 7/1/23-14 | 2,000,000 | 2,337,720 | |||||||
Southcentral, Pennsylvania General Authority Revenue | |||||||||
(Welllspan Health Obligated Project) | |||||||||
5.625% 5/15/26-11 | 820,000 | 880,967 | |||||||
University of North Carolina Revenue (Chapel Hill) | |||||||||
Series A 5.375% 12/1/14-11 | 2,000,000 | 2,127,280 | |||||||
Virginia State Resource Authority Clean Water Revenue | |||||||||
(State Revolving Fund) 6.00% 10/1/16-10 | 1,000,000 | 1,034,810 | |||||||
33,575,731 | |||||||||
Resource Recovery Revenue Bonds – 0.20% | |||||||||
Pennsylvania Economic Development Financing | |||||||||
Authority Resource Recovery Revenue | |||||||||
(Subordinate Colver Project) | |||||||||
Series G 5.125% 12/1/15 (AMT) | 1,300,000 | 1,174,069 | |||||||
1,174,069 | |||||||||
Special Tax Revenue Bonds – 12.03% | |||||||||
Baltimore, Maryland Convention Center Hotel Revenue | |||||||||
Subordinated Series B 5.00% 9/1/16 | 1,200,000 | 1,074,408 | |||||||
Brooklyn Arena Local Development Corporation | |||||||||
New York Pilot Revenue (Barclays Center Project) | |||||||||
6.50% 7/15/30 | 5,500,000 | 5,973,714 | |||||||
California State Economic Recovery Series A | |||||||||
5.25% 7/1/14 | 775,000 | 883,864 | |||||||
5.25% 7/1/21 | 2,740,000 | 3,048,853 | |||||||
Casa Grande, Arizona Excise Tax Revenue | |||||||||
5.00% 4/1/22 (AMBAC) | 1,600,000 | 1,633,760 | |||||||
Columbia County, Georgia Sales Tax 5.00% 4/1/16 | 1,265,000 | 1,478,241 | |||||||
Dallas, Texas Convention Center Hotel Development | |||||||||
Revenue Series A | |||||||||
5.00% 1/1/24 | 3,420,000 | 3,513,298 | |||||||
5.25% 1/1/23 | 5,375,000 | 5,682,288 |
30
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Special Tax Revenue Bonds (continued) | |||||||||
Guam Government Limited Obligation Revenue | |||||||||
(Section 30) Series A | |||||||||
5.375% 12/1/24 | $ | 1,750,000 | $ | 1,774,413 | |||||
5.625% 12/1/29 | 1,185,000 | 1,203,119 | |||||||
Hampton, Virginia Convention Center Revenue | |||||||||
5.25% 1/15/23 (AMBAC) | 1,000,000 | 1,045,620 | |||||||
Louisiana State Citizens Property Insurance | |||||||||
Corporation Assessment Revenue | |||||||||
Series C-2 6.75% 6/1/26 (ASSURED GTY) | 3,600,000 | 4,215,348 | |||||||
Metropolitan Pier & Exposition Authority, Illinois | |||||||||
Dedicate State Tax Revenue | |||||||||
(McCormick Place Expansion Project) | |||||||||
Series A 5.50% 12/15/24 (NATL-RE) (FGIC) | 2,000,000 | 2,027,300 | |||||||
Middlesex County, New Jersey Improvement Authority | |||||||||
Senior Revenue (Heldrich Center Hotel/Conference | |||||||||
Project) Series A 5.00% 1/1/32 | 1,000,000 | 564,350 | |||||||
@ | Modesto, California Special Tax Community Facilities | ||||||||
District #04-1 (Village 2) 5.15% 9/1/36 | 1,500,000 | 1,103,475 | |||||||
New Jersey Economic Development Authority Revenue | |||||||||
(Cigarette Tax) | |||||||||
5.00% 6/15/11 (FGIC) | 2,750,000 | 2,809,345 | |||||||
5.50% 6/15/31 | 1,000,000 | 944,810 | |||||||
5.625% 6/15/18 | 1,000,000 | 1,000,250 | |||||||
• | New York City, New York Transitional Finance Authority | ||||||||
Revenue Refunding - Future Tax Secured | |||||||||
Series A 5.50% 11/1/26 | 1,000,000 | 1,075,890 | |||||||
New York State Urban Development Corporation Revenue | |||||||||
(State Personal Income Tax) Series A-1 5.00% 12/15/28 | 4,000,000 | 4,300,280 | |||||||
Oregon Department of Administrative Services Lottery | |||||||||
Revenue Series A 5.25% 4/1/26 | 2,000,000 | 2,253,180 | |||||||
Puerto Rico Sales Tax Financing Corporation Sales Tax | |||||||||
Revenue Series A | |||||||||
•5.00% 8/1/39 | 4,500,000 | 4,725,315 | |||||||
5.25% 8/1/27 | 4,685,000 | 4,793,270 | |||||||
6.125% 8/1/29 | 2,500,000 | 2,584,725 | |||||||
Richmond Heights, Missouri Tax Increment & Transaction | |||||||||
Sales Tax Revenue Refunding & Improvement | |||||||||
(Francis Place Redevelopment Project) 5.625% 11/1/25 | 1,000,000 | 860,860 |
31
Statements of net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Special Tax Revenue Bonds (continued) | |||||||||
@ | St. Joseph, Missouri Industrial Development Authority Tax | ||||||||
Increment Revenue (Shoppes at North Village Project) | |||||||||
Series A 5.10% 11/1/19 | $ | 250,000 | $ | 230,938 | |||||
Series B 5.375% 11/1/23 | 1,000,000 | 891,470 | |||||||
Washington State Motor Vehicle Fuel Tax | |||||||||
Series B 5.00% 7/1/16 | 4,250,000 | 4,949,890 | |||||||
Wyandotte County, Kansas City, Kansas Unified | |||||||||
Government Special Obligation Revenue Refunding- | |||||||||
Sales Tax-2nd Lien-Area B 5.00% 12/1/20 | 1,500,000 | 1,533,015 | |||||||
Wyoming State Loan & Investment Board Facilities | |||||||||
Revenue 5.00% 10/1/24 | 1,550,000 | 1,635,421 | |||||||
69,810,710 | |||||||||
State General Obligation Bonds – 22.30% | |||||||||
California State 5.25% 11/1/17 | 1,000,000 | 1,068,090 | |||||||
California State Various Purpose | |||||||||
5.00% 10/1/18 | 5,000,000 | 5,393,750 | |||||||
6.50% 4/1/33 | 4,500,000 | 4,872,015 | |||||||
California Statewide Communities Development Authority | |||||||||
Revenue (Purchase Proposition 1A Receivables Program) | |||||||||
5.00% 6/15/13 | 2,690,000 | 2,898,636 | |||||||
Connecticut State Economic Recovery | |||||||||
Series A 5.00% 1/1/16 | 4,700,000 | 5,464,455 | |||||||
Connecticut State Series C 5.00% 11/1/24 | 2,000,000 | 2,252,800 | |||||||
Florida State Board Education Capital Outlay Public | |||||||||
Education Series D 5.75% 6/1/22 | 2,000,000 | 2,045,200 | |||||||
Georgia State | |||||||||
5.00% 8/1/12 | 3,125,000 | 3,452,750 | |||||||
5.00% 7/1/17 | 4,810,000 | 5,711,779 | |||||||
Series D 5.00% 7/1/11 | 6,865,000 | 7,292,848 | |||||||
Guam Government Series A 7.00% 11/15/39 | 1,560,000 | 1,670,822 | |||||||
Illinois State Refunding Series B 5.00% 1/1/13 | 3,475,000 | 3,797,411 | |||||||
Maryland State 5.00% 8/1/17 | 1,500,000 | 1,754,265 | |||||||
Maryland State & Local Facilities Loan Capital Improvement | |||||||||
First Series 5.00% 3/15/19 | 3,675,000 | 4,222,355 | |||||||
Second Series 5.00% 7/15/14 | 975,000 | 1,134,422 | |||||||
Series C 5.00% 11/1/17 | 2,750,000 | 3,276,323 |
32
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
State General Obligation Bonds (continued) | |||||||||
Massachusetts State Consolidated Loan | |||||||||
Series A 5.25% 8/1/13 | $ | 5,000,000 | $ | 5,716,650 | |||||
Series C 5.50% 11/1/15 | 4,090,000 | 4,895,485 | |||||||
Minnesota State 5.00% 6/1/14 | 900,000 | 1,042,416 | |||||||
Mississippi State Series A 5.00% 10/1/17 | 4,860,000 | 5,690,331 | |||||||
North Carolina State Public Improvement Series A | |||||||||
5.00% 3/1/12 | 4,000,000 | 4,357,000 | |||||||
5.00% 3/1/15 | 1,200,000 | 1,403,772 | |||||||
North Carolina State Refunding Series B 5.00% 4/1/15 | 4,000,000 | 4,684,480 | |||||||
Ohio State | |||||||||
Series A 5.00% 6/15/13 | 3,750,000 | 4,219,763 | |||||||
Series D 5.00% 9/15/14 | 3,500,000 | 4,060,735 | |||||||
Pennsylvania State | |||||||||
5.50% 2/1/13 | 3,200,000 | 3,628,160 | |||||||
Second Series A 5.00% 8/1/13 | 4,000,000 | 4,545,480 | |||||||
Puerto Rico Commonwealth Government Development | |||||||||
Bank 4.75% 12/1/15 (NATL-RE) | 4,765,000 | 4,904,757 | |||||||
Puerto Rico Commonwealth Public Improvement Series A | |||||||||
5.00% 7/1/16 (ASSURED GTY) | 2,110,000 | 2,329,060 | |||||||
5.25% 7/1/22 | 3,470,000 | 3,499,391 | |||||||
5.25% 7/1/23 | 1,125,000 | 1,134,484 | |||||||
5.50% 7/1/17 | 4,415,000 | 4,728,244 | |||||||
• | Puerto Rico Commonwealth Series A 5.00% 7/1/30 | 1,000,000 | 1,043,350 | ||||||
• | Puerto Rico Public Finance Corporation Commonwealth | ||||||||
Appropriation (LOC-Puerto Rico Government Bank) | |||||||||
Series A 5.75% 8/1/27 | 1,000,000 | 1,034,750 | |||||||
Virginia State | |||||||||
5.00% 6/1/23 | 2,000,000 | 2,277,720 | |||||||
Series D 5.00% 6/1/19 | 5,715,000 | 6,809,537 | |||||||
Washington State Variable Purpose Series A 5.00% 7/1/16 | 1,000,000 | 1,164,680 | |||||||
129,478,166 | |||||||||
Transportation Revenue Bonds – 10.42% | |||||||||
Broward County, Florida Airport System Revenue | |||||||||
Series O 5.375% 10/1/29 | 3,895,000 | 4,020,068 | |||||||
Charlotte, North Carolina Airport Revenue | |||||||||
(Charlotte Douglas) Series A | |||||||||
5.00% 7/1/13 | 2,375,000 | 2,640,881 | |||||||
5.00% 7/1/15 | 750,000 | 848,738 |
33
Statements of net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Transportation Revenue Bonds (continued) | |||||||||
Chicago, Illinois O’ Hare International Airport | |||||||||
Revenue General-Airport-Third Lien | |||||||||
Series A-2 5.75% 1/1/20 (AGM) (AMT) | $ | 1,000,000 | $ | 1,050,850 | |||||
Dallas-Fort Worth, Texas International Airport Revenue | |||||||||
Series A | |||||||||
5.00% 11/1/22 | 680,000 | 722,024 | |||||||
5.00% 11/1/23 | 750,000 | 792,285 | |||||||
5.00% 11/1/24 | 400,000 | 420,352 | |||||||
Georgia Federal Highway Road and Tollway Authority | |||||||||
Revenue Bonds 5.00% 6/1/10 (NATL-RE) | 2,000,000 | 2,025,500 | |||||||
Idaho Housing & Finance Association Grant Revenue | |||||||||
(Antic Federal Highway Transportation) | |||||||||
Series A 5.25% 7/15/21 (ASSURED GTY) | 2,760,000 | 3,124,154 | |||||||
Maryland State Economic Development Revenue | |||||||||
(Transportation Facilities Project) | |||||||||
Series A 5.375% 6/1/25 | 2,470,000 | 2,511,694 | |||||||
Metropolitan, New York Transportation Authority Revenue | |||||||||
Series A 5.00% 11/15/18 | 2,500,000 | 2,812,375 | |||||||
Series C 6.50% 11/15/28 | 2,860,000 | 3,288,571 | |||||||
Metropolitan, Washington D.C. Airport Authority Systems | |||||||||
Revenue Series A 5.50% 10/1/19 (NATL-RE) (FGIC) (AMT) | 1,000,000 | 1,042,160 | |||||||
New York State Thruway Authority Revenue | |||||||||
(General Highway and Bridge Trust Fund) | |||||||||
Series B 5.25% 4/1/13 (AMBAC) | 3,300,000 | 3,721,773 | |||||||
North Texas Tollway Authority Revenue System (First Tier) | |||||||||
Series A 6.00% 1/1/20 | 3,925,000 | 4,401,260 | |||||||
•Series E-3 5.75% 1/1/38 | 2,470,000 | 2,800,535 | |||||||
Pennsylvania State Turnpike Commission Revenue | |||||||||
Series A 5.25% 12/1/20 (AMBAC) | 1,230,000 | 1,360,515 | |||||||
Sacramento County, California Airport System Revenue | |||||||||
(PFC/Grant) Series D | |||||||||
5.50% 7/1/28 | 2,020,000 | 2,172,247 | |||||||
5.625% 7/1/29 | 1,685,000 | 1,816,801 | |||||||
Saint Louis, Missouri Airport Revenue | |||||||||
(Lambert-St. Louis International) | |||||||||
Series A-1 6.125% 7/1/24 | 3,780,000 | 4,050,119 | |||||||
Texas Private Activity Bond Surface Transportation | |||||||||
Corporate Senior Note (Mobility Partners) | |||||||||
7.50% 12/31/31 | 3,565,000 | 3,872,695 |
34
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Transportation Revenue Bonds (continued) | |||||||||
Texas State Transportation Commission Highway Fund | |||||||||
Revenue (First Tier) 5.00% 4/1/18 | $ | 1,700,000 | $ | 1,960,202 | |||||
Triborough, New York Bridge & Tunnel Authority Revenue | |||||||||
Series A 5.00% 11/15/17 | 1,720,000 | 2,003,181 | |||||||
•Series B-1 5.00% 11/15/25 | 4,000,000 | 4,453,040 | |||||||
•Series B-3 5.00% 11/15/38 | 1,800,000 | 2,021,526 | |||||||
Virginia Port Authority Commonwealth Port Fund Revenue | |||||||||
Resolution 5.00% 7/1/12 (AMT) | 500,000 | 536,600 | |||||||
60,470,146 | |||||||||
Water & Sewer Revenue Bonds – 6.67% | |||||||||
Alabama Water Pollution Control Authority Revenue | |||||||||
5.50% 8/15/23 (AMBAC) | 1,000,000 | 1,001,980 | |||||||
Arizona Water Infrastructure Finance Authority Revenue | |||||||||
Water Quality) Series A 5.00% 10/1/21 | 2,430,000 | 2,788,279 | |||||||
Atlanta, Georgia Water & Wastewater Revenue | |||||||||
Series A 6.00% 11/1/25 | 2,925,000 | 3,172,777 | |||||||
Series B 5.50% 11/1/23 (AGM) | 3,000,000 | 3,300,390 | |||||||
Dallas, Texas Waterworks & Sewer System Revenue | |||||||||
5.00% 10/1/24 (AGM) | 6,500,000 | 6,520,865 | |||||||
Florida Water Pollution Control Financing Corporation | |||||||||
Revenue (Water Pollution Control) | |||||||||
Series A 5.00% 1/15/25 | 5,000,000 | 5,401,700 | |||||||
King County, Washington Sewer Revenue Refunding | |||||||||
Series B 5.00% 1/1/14 (NATL-RE) | 3,500,000 | 3,985,065 | |||||||
Massachusetts State Water Pollution Abatement Trust | |||||||||
5.00% 8/1/16 | 2,170,000 | 2,545,388 | |||||||
New York State Environmental Facilities Corporation | |||||||||
Revenue (State Clean Water & Drinking Water | |||||||||
Revolving Foundation) | |||||||||
Series A 5.00% 6/15/22 | 1,405,000 | 1,588,170 | |||||||
Series D 5.00% 9/15/23 | 3,360,000 | 3,730,978 | |||||||
Portland, Oregon Sewer System Revenue (First Lien) | |||||||||
Series A 5.00% 6/15/18 | 4,000,000 | 4,662,880 | |||||||
38,698,472 | |||||||||
Total Municipal Bonds (cost $541,154,180) | 565,437,391 |
35
Statements of net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Principal amount | Value | |||||||||
Short-Term Investments – 1.33% | ||||||||||
•Variable Rate Demand Notes – 1.33% | ||||||||||
Allegheny County, Pennsylvania Industrial Development | ||||||||||
Authority Revenue (Zoological Society) | ||||||||||
Series A 0.29% 6/1/19 (LOC – PNC Bank) | $ | 100,000 | $ | 100,000 | ||||||
Minneapolis & St. Paul, Minnesota Housing & | ||||||||||
Redevelopment Authority Health Care Revenue | ||||||||||
(Allina Health System) | ||||||||||
Series B-2 0.14% 11/15/35 (LOC – JPMorgan Chase Bank) | 700,000 | 700,000 | ||||||||
Pittsburgh, Pennsylvania Water & Sewer Authority Water & | ||||||||||
Sewer Systems Revenue First Lien | ||||||||||
Series B2 0.16% 9/1/39 (LOC – PNC Bank) | 500,000 | 500,000 | ||||||||
Robbinsdale, Minnesota Revenue (North Memorial) | ||||||||||
Series A-3 0.14% 5/1/33 (LOC – Wells Fargo Bank) | 4,800,000 | 4,800,000 | ||||||||
University of Minnesota | ||||||||||
Series C 0.23% 12/1/36 (SPA – JPMorgan Chase Bank) | 1,600,000 | 1,600,000 | ||||||||
Total Short-Term Investments (cost $7,700,000) | 7,700,000 | |||||||||
Total Value of Securities – 98.74% | ||||||||||
(cost $548,854,180) | 573,137,391 | |||||||||
Receivables and Other Assets | ||||||||||
Net of Liabilities – 1.26% | 7,342,504 | |||||||||
Net Assets Applicable to 49,441,743 | ||||||||||
Shares Outstanding – 100.00% | $ | 580,479,895 | ||||||||
Net Asset Value – Delaware Tax-Free USA Intermediate Fund | ||||||||||
Class A ($528,683,883 / 45,028,348 Shares) | $11.74 | |||||||||
Net Asset Value – Delaware Tax-Free USA Intermediate Fund | ||||||||||
Class B ($675,102 / 57,555 Shares) | $11.73 | |||||||||
Net Asset Value – Delaware Tax-Free USA Intermediate Fund | ||||||||||
Class C ($50,502,968 / 4,303,717 Shares) | $11.73 | |||||||||
Net Asset Value – Delaware Tax-Free USA Intermediate Fund | ||||||||||
Institutional Class ($617,942 / 52,123 Shares) | $11.86 |
36
Components of Net Assets at February 28, 2010: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 561,570,141 | ||
Undistributed net investment income | 16,225 | |||
Accumulated net realized loss on investments | (5,389,682 | ) | ||
Net unrealized appreciation of investments | 24,283,211 | |||
Total net assets | $ | 580,479,895 |
§ | Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
@ | Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $2,868,661, which represented 0.49% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
AMBAC — Insured by the AMBAC Assurance Corporation
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
CDFI — Community Development Financial Institutions
FGIC — Insured by the Financial Guaranty Insurance Company
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
SPA — Stand-by Purchase Agreement
CDFI — Community Development Financial Institutions
FGIC — Insured by the Financial Guaranty Insurance Company
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
SPA — Stand-by Purchase Agreement
Net Asset Value and Offering Price Per Share – | |||
Delaware Tax-Free USA Intermediate Fund | |||
Net asset value Class A (A) | $ | 11.74 | |
Sales charge (2.75% of offering price) (B) | 0.33 | ||
Offering price | $ | 12.07 |
(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
37
Statements of net assets | |
Delaware National High-Yield Municipal Bond Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 98.31% | ||||||||
Corporate Revenue Bonds – 22.87% | ||||||||
Allegheny County, Pennsylvania Industrial Development | ||||||||
Authority Revenue (Environmental Improvement - | ||||||||
U.S. Steel Corp.) 6.875% 5/1/30 | $ | 1,000,000 | $ | 1,035,800 | ||||
• | Beaver County, Pennsylvania Industrial Development | |||||||
Authority Pollution Control Revenue (First Energy | ||||||||
General Corp. Project) Series C 7.125% 6/1/28 (AMT) | 1,000,000 | 1,047,920 | ||||||
• | Brazos, Texas Harbor Industrial Development | |||||||
Environmental Facilities Revenue (Dow Chemical Co. | ||||||||
Project) 5.90% 5/1/38 (AMT) | 190,000 | 187,070 | ||||||
• | Brazos, Texas River Authority Pollution Control Revenue | |||||||
(TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) | 1,000,000 | 535,040 | ||||||
Buckeye, Ohio Tobacco Settlement Financing Authority | ||||||||
Asset-Backed Series A-2 6.50% 6/1/47 | 1,000,000 | 826,430 | ||||||
Clayton County, Georgia Development Authority Special | ||||||||
Facilities Revenue (Delta Airlines) | ||||||||
Series B 9.00% 6/1/35 (AMT) | 1,000,000 | 1,014,570 | ||||||
Cloquet, Minnesota Pollution Control Revenue | ||||||||
(Potlatch Corp. Project) 5.90% 10/1/26 | 750,000 | 690,458 | ||||||
De Soto Parish, Louisiana Environmental Improvement | ||||||||
Revenue (International Paper Co. Project) | ||||||||
Series A 6.35% 2/1/25 (AMT) | 1,650,000 | 1,663,464 | ||||||
Golden State, California Tobacco Securitization Settlement | ||||||||
Revenue Refunding Asset-Backed Senior Series A-1 | ||||||||
5.75% 6/1/47 | 3,000,000 | 2,212,109 | ||||||
Gulf Coast, Texas Waste Disposal Authority Revenue | ||||||||
(Valero Energy Corp. Project) 6.65% 4/1/32 (AMT) | 1,000,000 | 1,010,210 | ||||||
Hawaii State Department Budget & Finance Special Purpose | ||||||||
Revenue (Hawaiian Electric Co. Subsidiary) 6.50% 7/1/39 | 970,000 | 1,045,951 | ||||||
Michigan Tobacco Settlement Finance Authority | ||||||||
Revenue Asset-Backed Series A 6.00% 6/1/48 | 555,000 | 439,971 | ||||||
Mississippi Business Finance Corporation Pollution | ||||||||
Control Revenue (System Energy Resources, Inc. | ||||||||
Project) 5.90% 5/1/22 | 900,000 | 899,919 | ||||||
M-S-R Energy Authority, California Gas Revenue | ||||||||
Series C 6.50% 11/1/39 | 1,000,000 | 1,063,030 | ||||||
Nassau County, New York Tobacco Settlement | ||||||||
Asset-Backed Series A-3 5.125% 6/1/46 | 525,000 | 424,195 | ||||||
New Jersey Economic Development Authority Special | ||||||||
Facility Revenue (Continental Airlines Inc. Project) | ||||||||
6.40% 9/15/23 (AMT) | 1,000,000 | 917,680 |
38
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Corporate Revenue Bonds (continued) | ||||||||
New York City, New York Industrial Development Agency | ||||||||
Special Facilities Revenue | ||||||||
•(American Airlines - JFK International Airport) | ||||||||
7.75% 8/1/31 (AMT) | $ | 1,000,000 | $ | 1,003,590 | ||||
(JetBlue Airways Corp. Project) 5.125% 5/15/30 (AMT) | 1,000,000 | 759,690 | ||||||
Pennsylvania Economic Development Financing Authority | ||||||||
Exempt Facilities Revenue (Allegheny Energy Supply Co.) | ||||||||
7.00% 7/15/39 | 1,000,000 | 1,118,870 | ||||||
Petersburg, Indiana Pollution Control Revenue (Indianapolis | ||||||||
Power & Light Co. Project) 6.375% 11/1/29 (AMT) | 1,000,000 | 1,009,920 | ||||||
Phenix City, Alabama Industrial Development Board | ||||||||
Environmental Improvement Revenue (Mead Westvaco | ||||||||
Corp. Project) Series A 6.35% 5/15/35 (AMT) | 500,000 | 459,980 | ||||||
Salt Verde Financial Corporation, Arizona Gas Revenue | ||||||||
Senior 5.00% 12/1/37 | 1,000,000 | 855,950 | ||||||
St. John Baptist Parish, Louisiana Revenue (Marathon | ||||||||
Oil Corp.) Series A 5.125% 6/1/37 | 1,000,000 | 938,950 | ||||||
Sugar Creek, Missouri Industrial Development Revenue | ||||||||
(Lafarge North America Project) | ||||||||
Series A 5.65% 6/1/37 (AMT) | 500,000 | 454,075 | ||||||
Sweetwater County, Wyoming Solid Waste Disposal | ||||||||
Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) | 1,000,000 | 930,950 | ||||||
Tobacco Settlement Financing Corporation, Virginia | ||||||||
Senior Series B-1 5.00% 6/1/47 | 1,000,000 | 687,090 | ||||||
Toledo, Lucas County, Ohio Port Authority Development | ||||||||
Revenue (Toledo Express Airport Project) Series C | ||||||||
6.375% 11/15/32 (AMT) | 1,000,000 | 946,310 | ||||||
24,179,192 | ||||||||
Education Revenue Bonds – 17.48% | ||||||||
California Statewide Communities Development | ||||||||
Authority Revenue (California Baptist University | ||||||||
Project) Series A 5.50% 11/1/38 | 1,000,000 | 810,170 | ||||||
California Statewide Communities Development | ||||||||
Authority Student Housing Revenue (East Campus | ||||||||
Apartments, LLC) Series A 5.625% 8/1/34 (ACA) | 1,000,000 | 958,370 | ||||||
Chattanooga, Tennessee Health Educational & Housing | ||||||||
Facilities Board Revenue (CDFI Phase I, LLC Project) | ||||||||
Subordinate Series B 6.00% 10/1/35 | 1,000,000 | 855,360 |
39
Statements of net assets
Delaware National High-Yield Municipal Bond Fund
Delaware National High-Yield Municipal Bond Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Education Revenue Bonds (continued) | ||||||||
Idaho Housing & Finance Association Nonprofit | ||||||||
Facilities Revenue (North Star Charter School Project) | ||||||||
Series A 9.50% 7/1/39 | $ | 1,000,000 | $ | 1,142,630 | ||||
Indiana State Finance Authority Revenue Educational Facilities | ||||||||
(Drexel Foundation - Thea Bowman Academy | ||||||||
Charter School) 7.00% 10/1/39 | 1,000,000 | 1,030,170 | ||||||
(Irvington Community) Series A 9.00% 7/1/39 | 1,000,000 | 1,159,989 | ||||||
Marietta, Georgia Development Authority Revenue | ||||||||
(Life University Income Project) 7.00% 6/15/39 | 1,000,000 | 933,080 | ||||||
Maryland State Economic Development Corporation | ||||||||
Student Housing Revenue (University of Maryland | ||||||||
College Park Projects) 5.75% 6/1/33 | 930,000 | 943,950 | ||||||
@ | Maryland State Health & Higher Educational | |||||||
Facilities Authority Revenue (Washington | ||||||||
Christian Academy Project) Series A 5.50% 7/1/38 | 1,170,000 | 561,612 | ||||||
Massachusetts State Health & Educational | ||||||||
Facilities Authority Revenue | ||||||||
(Nichols College Project) Series C 6.125% 10/1/29 | 1,000,000 | 959,770 | ||||||
(Springfield College) 5.625% 10/15/40 | 1,000,000 | 999,200 | ||||||
Michigan Public Education Facilities Authority Revenue | ||||||||
(Limited Obligation - Landmark Academy) | ||||||||
7.00% 12/1/39 | 1,000,000 | 1,014,460 | ||||||
Minnesota State Higher Education Facilities Authority | ||||||||
Revenue (Bethel University) Series 6-R 5.50% 5/1/37 | 1,000,000 | 946,070 | ||||||
New Jersey State Educational Facilities Authority Revenue | ||||||||
(Fairleigh Dickinson Project) Series C 5.50% 7/1/23 | 750,000 | 751,088 | ||||||
(University of Medical & Dentistry) Series B 7.50% 12/1/32 | 1,000,000 | 1,133,430 | ||||||
Ohio State Higher Educational Facility Revenue | ||||||||
(Otterbein College Project) Series A 5.50% 12/1/28 | 950,000 | 1,015,265 | ||||||
Oregon State Facilities Authority Revenue | ||||||||
(College Housing Northwest Project) | ||||||||
Series A 5.45% 10/1/32 | 1,000,000 | 874,320 | ||||||
Pennsylvania State Higher Educational Facilities | ||||||||
Authority Revenue (Edinboro University Foundation | ||||||||
Student Housing) 6.00% 7/1/42 | 1,000,000 | 957,360 | ||||||
Philadelphia, Pennsylvania Authority for Industrial | ||||||||
Development Revenue (First Philadelphia Charter | ||||||||
Project) Series A 5.75% 8/15/32 | 745,000 | 673,756 |
40
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Education Revenue Bonds (continued) | ||||||||
Provo, Utah Charter School Revenue (Freedom Academy | ||||||||
Foundation Project) 5.50% 6/15/37 | $ | 1,000,000 | $ | 755,940 | ||||
18,475,990 | ||||||||
Health Care Revenue Bonds – 31.17% | ||||||||
Alhambra, California Revenue (Atherton Baptist Homes) | ||||||||
Series A 7.625% 1/1/40 | 1,000,000 | 1,010,660 | ||||||
Apple Valley, Minnesota Economic Development | ||||||||
Authority Health Care Revenue (Augustana Home | ||||||||
St. Paul Project) Series A 6.00% 1/1/40 | 1,000,000 | 902,920 | ||||||
Bexar County, Texas Health Facilities Development | ||||||||
Corporation Revenue (Army Retirement Residence | ||||||||
Project) 5.875% 7/1/30 | 1,000,000 | 998,140 | ||||||
Brevard County, Florida Healthcare Facilities Authority | ||||||||
Health Care Facilities Revenue (Heath First Inc. Project) | ||||||||
Series B 7.00% 4/1/39 | 1,000,000 | 1,092,700 | ||||||
Butler County, Pennsylvania Hospital Authority Revenue | ||||||||
(Butler Health System Project) 7.125% 7/1/29 | 900,000 | 1,001,511 | ||||||
California Municipal Finance Authority Certificates of | ||||||||
Participation (Community Hospital Center) 5.50% 2/1/39 | 730,000 | 643,809 | ||||||
California Statewide Communities Development | ||||||||
Authority Revenue (Senior Living - Southern California) | ||||||||
7.25% 11/15/41 | 500,000 | 533,320 | ||||||
Chatham County, Georgia Hospital Authority Revenue | ||||||||
(Memorial Health Medical Center) | ||||||||
Series A 6.125% 1/1/24 | 750,000 | 750,818 | ||||||
@ | Cleveland-Cuyahoga County, Ohio Port Authority | |||||||
Revenue Senior Housing (St. Clarence - Geac) | ||||||||
Series A 6.25% 5/1/38 | 1,000,000 | 839,920 | ||||||
Colorado Health Facilities Authority Revenue | ||||||||
(Christian Living Community Project) | ||||||||
Series A 5.75% 1/1/37 | 500,000 | 425,805 | ||||||
East Rochester, New York Housing Authority Revenue | ||||||||
Refunding (Senior Living - Woodland Village Project) | ||||||||
5.50% 8/1/33 | 500,000 | 414,700 | ||||||
Gainesville & Hall County, Georgia Development | ||||||||
Authority Revenue Senior Living Facilities | ||||||||
(Lanier Village Estates Project) Series C 7.25% 11/15/29 | 1,000,000 | 1,020,850 | ||||||
Hamden, Connecticut Facilities Revenue | ||||||||
(Whitney Center Project) Series A 7.75% 1/1/43 | 1,000,000 | 1,041,400 |
41
Statements of net assets
Delaware National High-Yield Municipal Bond Fund
Delaware National High-Yield Municipal Bond Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Health Care Revenue Bonds (continued) | ||||||||
Hawaii State Department Budget & Finance Special | ||||||||
Purpose Senior Living Revenue | ||||||||
(Craigside Project) Series A 9.00% 11/15/44 | $ | 1,000,000 | $ | 1,085,470 | ||||
Illinois Finance Authority Revenue | ||||||||
(Provena Health) Series A 7.75% 8/15/34 | 1,000,000 | 1,128,860 | ||||||
(Silver Cross & Medical Centers) 7.00% 8/15/44 | 1,000,000 | 1,040,360 | ||||||
Illinois Health Facilities Authority Revenue | ||||||||
(Elmhurst Memorial Healthcare Project) 5.625% 1/1/28 | 1,000,000 | 962,350 | ||||||
Kentucky Economic Development Finance Authority | ||||||||
Hospital Revenue (Owensboro Medical Health System) | ||||||||
Series A 6.50% 3/1/45 | 1,000,000 | 995,880 | ||||||
Lancaster County, Pennsylvania Hospital Authority Revenue | ||||||||
(Brethren Village Project) Series A 6.375% 7/1/30 | 725,000 | 690,461 | ||||||
Lebanon County, Pennsylvania Health Facilities Authority | ||||||||
Center Revenue (Pleasant View Retirement) | ||||||||
Series A 5.30% 12/15/26 | 1,000,000 | 854,590 | ||||||
Medford, Oregon Hospital Facilities Authority Revenue | ||||||||
(Asante Health System) Series A 5.00% 8/15/40 (AGM) | 1,000,000 | 996,570 | ||||||
New Jersey Health Care Facilities Financing Authority | ||||||||
Revenue (St. Josephs Healthcare System) 6.625% 7/1/38 | 860,000 | 867,843 | ||||||
New York State Dormitory Authority Revenue Non State | ||||||||
Supported Debt (Orange Regional Medical Center) | ||||||||
6.25% 12/1/37 | 1,000,000 | 906,330 | ||||||
North Carolina Medical Care Commission Health Care | ||||||||
Facilities Revenue (First Mortgage - Presbyterian Homes) | ||||||||
5.60% 10/1/36 | 1,000,000 | 898,330 | ||||||
Orange County, Florida Health Facilities Authority | ||||||||
Revenue (Orlando Regional Healthcare) | ||||||||
Series C 5.25% 10/1/35 | 1,000,000 | 984,720 | ||||||
Oregon State Facilities Authority Revenue | ||||||||
(Samaritan Health Services) Series A 5.25% 10/1/40 | 1,000,000 | 1,000,750 | ||||||
Pennsylvania Economic Development Financing Authority | ||||||||
Health System Revenue (Evalbert Einstein Healthcare) | ||||||||
Series A 6.25% 10/15/23 | 1,000,000 | 1,065,450 | ||||||
Pennsylvania State Higher Educational Facilities Authority | ||||||||
Revenue (University of Pittsburgh Medical Center) | ||||||||
Series E 5.00% 5/15/31 | 1,000,000 | 1,003,100 |
42
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Health Care Revenue Bonds (continued) | ||||||||
Richland County, Ohio Hospital Facilities Revenue | ||||||||
(Medcentral Health System Project) | ||||||||
Series B 6.375% 11/15/30 | $ | 500,000 | $ | 508,260 | ||||
South Carolina Jobs-Economic Development Authority | ||||||||
Hospital Revenue (Palmetto Health) 5.75% 8/1/39 | 1,000,000 | 976,390 | ||||||
@ | St. Joseph County, Indiana Industrial Economic | |||||||
Development Revenue (Madison Center Project) | ||||||||
5.50% 2/15/21 | 1,150,000 | 1,150,138 | ||||||
St. Paul, Minnesota Housing & Redevelopment | ||||||||
Authority Hospital Revenue (Healtheast Project) | ||||||||
6.00% 11/15/30 | 1,000,000 | 927,340 | ||||||
Travis County, Texas Health Facilities Development | ||||||||
Corporation Revenue (Westminister Manor Project) | ||||||||
7.125% 11/1/40 | 1,000,000 | 1,005,790 | ||||||
Washington State Health Care Facilities Authority Revenue | ||||||||
(Multicare Health System) | ||||||||
Series B 6.00% 8/15/39 (ASSURED GTY) | 1,250,000 | 1,328,237 | ||||||
Winchester, Virginia Industrial Development Authority | ||||||||
Residential Care Facility Revenue (Westminster - | ||||||||
Canterbury Project) Series A 5.30% 1/1/35 | 1,000,000 | 890,060 | ||||||
Yavapai County, Arizona Industrial Development Authority | ||||||||
Hospital Revenue (Yavapai Regional Medical Center) | ||||||||
Series A 6.00% 8/1/33 | 1,000,000 | 1,004,860 | ||||||
32,948,692 | ||||||||
Housing Revenue Bonds – 0.97% | ||||||||
North Carolina Housing Finance Agency Homeownership | ||||||||
Revenue Series 27-A 5.55% 7/1/38 (AMT) | 1,000,000 | 1,028,150 | ||||||
1,028,150 | ||||||||
Lease Revenue Bonds – 2.81% | ||||||||
Missouri State Development Finance Board Infrastructure | ||||||||
Facilities Revenue (Branson Landing Project) | ||||||||
Series A 5.50% 12/1/24 | 720,000 | 730,577 | ||||||
New York, New York City Industrial Development Agency | ||||||||
Special Airport Facilities (Airis JFK I, LLC Project) | ||||||||
Series A 5.50% 7/1/28 (AMT) | 905,000 | 749,593 | ||||||
Oklahoma City, Oklahoma Industrial & Cultural Facilities | ||||||||
Subordinated (Air Cargo - Obligated Group) | ||||||||
6.75% 1/1/23 (AMT) | 1,160,000 | 1,035,358 |
43
Statements of net assets
Delaware National High-Yield Municipal Bond Fund
Delaware National High-Yield Municipal Bond Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Lease Revenue Bonds (continued) | ||||||||
Onondaga County, New York Industrial Development | ||||||||
Authority Revenue Subordinated (Air Cargo Project) | ||||||||
7.25% 1/1/32 (AMT) | $ | 500,000 | $ | 456,240 | ||||
2,971,768 | ||||||||
§Pre-Refunded Bonds – 1.55% | ||||||||
Bexar County, Texas Health Facilities Development | ||||||||
Corporation Revenue (Army Retirement Residence | ||||||||
Project) 6.30% 7/1/32-12 | 1,000,000 | 1,127,270 | ||||||
Minnesota State Higher Education Facilities Authority | ||||||||
Revenue (College of Art & Design Project) | ||||||||
Series 5-D 6.75% 5/1/26-10 | 500,000 | 505,855 | ||||||
1,633,125 | ||||||||
Special Tax Revenue Bonds – 11.46% | ||||||||
Baltimore, Maryland Convention Center Hotel Revenue | ||||||||
Subordinated Series B 5.875% 9/1/39 | 1,000,000 | 806,990 | ||||||
Brooklyn Arena Local Development Corporation, New York | ||||||||
Pilot Revenue (Barclays Center Project) 6.50% 7/15/30 | 1,000,000 | 1,086,130 | ||||||
Chicago, Illinois Tax Increment Allocation | ||||||||
(Chatham Ridge Redevelopment Project) | ||||||||
5.95% 12/15/12 | 750,000 | 764,430 | ||||||
Farms New Kent, Virginia Community Development | ||||||||
Authority Special Assessment Series C 5.80% 3/1/36 | 1,000,000 | 735,090 | ||||||
Henderson, Nevada Local Improvement Districts #T-18 | ||||||||
5.30% 9/1/35 | 665,000 | 264,677 | ||||||
Lancaster, California Redevelopment Agency Tax Allocation | ||||||||
(Combined Redevelopment Project Areas) 6.875% 8/1/39 | 500,000 | 534,475 | ||||||
Middlesex County, New Jersey Improvement Authority | ||||||||
Senior Revenue (Heldrich Center Hotel/Conference | ||||||||
Project) Series A | ||||||||
5.00% 1/1/32 | 500,000 | 282,175 | ||||||
5.125% 1/1/37 | 870,000 | 492,081 | ||||||
New Jersey Economic Development Authority Revenue | ||||||||
(Cigarette Tax) 5.75% 6/15/34 | 965,000 | 930,665 | ||||||
Prescott Valley, Arizona Improvement District Special | ||||||||
Assessment (Sewer Collection System Roadway Repair | ||||||||
Project) 7.90% 1/1/12 | 80,000 | 83,364 | ||||||
Puerto Rico Sales Tax Financing Corporation Sales Tax Revenue | ||||||||
Ω(Capital Appreciation) Series A 6.75% 8/1/32 | 2,030,000 | 1,545,012 | ||||||
Series A 5.75% 8/1/37 | 940,000 | 971,744 |
44
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Special Tax Revenue Bonds (continued) | ||||||||
Richmond Heights, Missouri Tax Increment & Transaction | ||||||||
Sales Tax Revenue Refunding & Improvement | ||||||||
(Francis Place Redevelopment Project) 5.625% 11/1/25 | $ | 1,200,000 | $ | 1,033,032 | ||||
@ | Southwestern Illinois Development Authority Revenue | |||||||
(Local Government Program - Collinsville Limited Project) | ||||||||
5.35% 3/1/31 | 500,000 | 376,485 | ||||||
@ | St. Joseph, Missouri Industrial Development Authority Tax | |||||||
Increment Revenue (Shoppes at North Village Project) Series A | ||||||||
5.375% 11/1/24 | 1,000,000 | 878,990 | ||||||
5.50% 11/1/27 | 500,000 | 433,200 | ||||||
Winter Garden Village at Fowler Groves Community | ||||||||
Development District, Florida Special Assessment Revenue | ||||||||
5.65% 5/1/37 | 975,000 | 895,304 | ||||||
12,113,844 | ||||||||
State General Obligation Bonds – 5.61% | ||||||||
Georgia State Series I 5.00% 7/1/20 | 3,000,000 | 3,577,320 | ||||||
Guam Government Series A 6.75% 11/15/29 | 1,565,000 | 1,659,776 | ||||||
Puerto Rico Commonwealth Refunding | ||||||||
(Public Improvement) Series C 6.00% 7/1/39 | 675,000 | 694,879 | ||||||
5,931,975 | ||||||||
Transportation Revenue Bonds – 4.39% | ||||||||
Branson, Missouri Regional Airport Transportation Development | ||||||||
District (Airport Project) Series A 6.00% 7/1/37 | 500,000 | 343,435 | ||||||
Maryland State Economic Development Corporation | ||||||||
Revenue (Transportation Facilities Project) Series A | ||||||||
5.75% 6/1/35 | 1,000,000 | 1,022,460 | ||||||
Sacramento County, California Airport Services Revenue | ||||||||
(PFC/Grant) Series C 6.00% 7/1/41 | 1,000,000 | 1,075,260 | ||||||
Saint Louis, Missouri Airport Revenue (Lambert - St. Louis | ||||||||
International) Series A-1 6.625% 7/1/34 | 1,090,000 | 1,154,888 | ||||||
Texas Private Activity Bond Surface Transportation | ||||||||
Corporation Senior Lien Note (Mobility Partners) | ||||||||
6.875% 12/31/39 | 1,000,000 | 1,039,370 | ||||||
4,635,413 | ||||||||
Total Municipal Bonds (cost $105,045,685) | 103,918,149 |
45
Statements of net assets
Delaware National High-Yield Municipal Bond Fund
Delaware National High-Yield Municipal Bond Fund
Principal amount | Value | |||||||||
Short-Term Investments – 2.74% | ||||||||||
•Variable Rate Demand Notes – 2.74% | ||||||||||
Colorado Educational & Cultural Facilities Authority | ||||||||||
Revenue (National Jewish Federal Bond Program) | ||||||||||
0.17% 2/1/35 (LOC – Bank of America) | $ | 400,000 | $ | 400,000 | ||||||
Lincoln County, Wyoming Pollution Control Revenue | ||||||||||
(Exxon Project) 0.09% 8/1/15 | 1,000,000 | 1,000,000 | ||||||||
Minneapolis & St. Paul, Minnesota Housing & | ||||||||||
Redevelopment Authority Health Care Revenue | ||||||||||
(Allina Health System) Series B-2 0.14% 11/15/35 | ||||||||||
(LOC – JPMorgan Chase Bank) | 1,000,000 | 1,000,000 | ||||||||
Pittsburgh, Pennsylvania Water & Sewer Authority | ||||||||||
Water & Sewer System Revenue First Lien | ||||||||||
Series B2 0.16% 9/1/39 (LOC – PNC Bank) | 500,000 | 500,000 | ||||||||
Total Short-Term Investments (cost $2,900,000) | 2,900,000 | |||||||||
Total Value of Securities – 101.05% | ||||||||||
(cost $107,945,685) | 106,818,149 | |||||||||
Liabilities Net of Receivables | ||||||||||
and Other Assets – (1.05%) | (1,107,181 | ) | ||||||||
Net Assets Applicable to 11,034,719 | ||||||||||
Shares Outstanding – 100.00% | $ | 105,710,968 | ||||||||
Net Asset Value – Delaware National High-Yield Municipal | ||||||||||
Bond Fund Class A ($88,480,462 / 9,242,211 Shares) | $9.57 | |||||||||
Net Asset Value – Delaware National High-Yield Municipal | ||||||||||
Bond Fund Class B ($1,483,006 / 154,620 Shares) | $9.59 | |||||||||
Net Asset Value – Delaware National High-Yield Municipal | ||||||||||
Bond Fund Class C ($15,727,307 / 1,635,800 Shares) | $9.61 | |||||||||
Net Asset Value – Delaware National High-Yield Municipal | ||||||||||
Bond Fund Institutional Class ($20,193 / 2,088 Shares) | $9.67 | |||||||||
Components of Net Assets at February 28, 2010: | ||||||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 109,461,683 | ||||||||
Distributions in excess of net investment income | (3,573 | ) | ||||||||
Accumulated net realized loss on investments | (2,619,606 | ) | ||||||||
Net unrealized depreciation of investments | (1,127,536 | ) | ||||||||
Total net assets | $ | 105,710,968 |
46
§ | Pre-Refunded Bonds. Municipals bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
@ | Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $4,240,345, which represented 4.01% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
CDFI — Community Development Financial Institutions
LOC — Letter of Credit
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
CDFI — Community Development Financial Institutions
LOC — Letter of Credit
Net Asset Value and Offering Price Per Share – | |||
Delaware National High-Yield Municipal Bond Fund | |||
Net asset value Class A (A) | $ | 9.57 | |
Sales charge (4.50% of offering price) (B) | 0.45 | ||
Offering price | $ | 10.02 |
(A) | Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchases of $100,000 or more. |
See accompanying notes
47
Statements of operations | |
Six Months Ended February 28, 2010 (Unaudited) |
Delaware | Delaware | Delaware | ||||||||||||
Tax-Free | Tax-Free USA | National High-Yield | ||||||||||||
USA Fund | Intermediate Fund | Municipal Bond Fund | ||||||||||||
Investment Income: | ||||||||||||||
Interest | $ | 15,823,075 | $ | 11,932,099 | $ | 2,878,338 | ||||||||
Expenses: | ||||||||||||||
Management fees | 1,580,586 | 1,339,967 | 248,614 | |||||||||||
Distribution expenses – Class A | 659,364 | 736,117 | 96,787 | |||||||||||
Distribution expenses – Class B | 37,298 | 3,942 | 7,333 | |||||||||||
Distribution expenses – Class C | 110,388 | 221,646 | 54,835 | |||||||||||
Dividend disbursing and transfer | ||||||||||||||
agent fees and expenses | 211,714 | 281,972 | 41,307 | |||||||||||
Accounting and administration expenses | 116,327 | 107,428 | 18,047 | |||||||||||
Registration fees | 46,063 | 55,250 | 27,271 | |||||||||||
Legal fees | 35,657 | 35,312 | 6,798 | |||||||||||
Reports and statements to shareholders | 32,674 | 40,832 | 3,625 | |||||||||||
Audit and tax | 23,485 | 20,392 | 7,802 | |||||||||||
Trustees’ fees | 17,519 | 16,108 | 2,696 | |||||||||||
Pricing fees | 9,756 | 8,739 | 4,473 | |||||||||||
Insurance fees | 9,179 | 7,847 | 1,226 | |||||||||||
Custodian fees | 6,410 | 6,322 | 973 | |||||||||||
Consulting fees | 3,741 | 3,077 | 464 | |||||||||||
Due and services | 1,503 | 1,305 | 172 | |||||||||||
Trustees’ expenses | 1,353 | 1,208 | 186 | |||||||||||
2,903,017 | 2,887,464 | 522,609 | ||||||||||||
Less expenses absorbed or waived | (456,714 | ) | (311,068 | ) | (91,794 | ) | ||||||||
Less waived distribution expenses – Class A | — | (368,058 | ) | — | ||||||||||
Total operating expenses | 2,446,303 | 2,208,338 | 430,815 | |||||||||||
Net Investment Income | 13,376,772 | 9,723,761 | 2,447,523 |
48
Delaware | Delaware | Delaware | |||||||||||
Tax-Free | Tax-Free USA | National High-Yield | |||||||||||
USA Fund | Intermediate Fund | Municipal Bond Fund | |||||||||||
Net Realized and Unrealized Gain | |||||||||||||
on Investments: | |||||||||||||
Net realized gain on investments | $ | 2,540,203 | $ | 3,410,910 | $ | 695,527 | |||||||
Net change in unrealized appreciation/ | |||||||||||||
depreciation of investments | 15,634,707 | 9,666,141 | 5,309,989 | ||||||||||
Net Realized and Unrealized Gain | |||||||||||||
on Investments | 18,174,910 | 13,077,051 | 6,005,516 | ||||||||||
Net Increase in Net Assets | |||||||||||||
Resulting from Operations | $ | 31,551,682 | $ | 22,800,812 | $ | 8,453,039 |
See accompanying notes
49
Statements of changes in net assets
Delaware Tax-Free USA Fund
Delaware Tax-Free USA Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 13,376,772 | $ | 24,505,230 | ||||
Net realized gain (loss) on investments | 2,540,203 | (2,838,744 | ) | |||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 15,634,707 | 1,152,242 | ||||||
Net increase in net assets resulting from operations | 31,551,682 | 22,818,728 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (12,804,772 | ) | (23,405,639 | ) | ||||
Class B | (144,406 | ) | (352,615 | ) | ||||
Class C | (427,491 | ) | (681,841 | ) | ||||
Institutional Class | (90 | ) | (32 | ) | ||||
(13,376,759 | ) | (24,440,127 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 38,339,077 | 118,535,984 | ||||||
Class B | 86,533 | 70,203 | ||||||
Class C | 3,686,170 | 6,869,985 | ||||||
Institutional Class | 8,470 | 1,022 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 6,835,343 | 12,514,345 | ||||||
Class B | 64,405 | 172,056 | ||||||
Class C | 314,296 | 484,088 | ||||||
Institutional Class | 29 | 32 | ||||||
49,334,323 | 138,647,715 |
50
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (30,689,671 | ) | $ | (104,004,049 | ) | ||
Class B | (1,740,782 | ) | (3,624,046 | ) | ||||
Class C | (1,392,772 | ) | (3,541,888 | ) | ||||
Institutional Class | (15 | ) | — | |||||
(33,823,240 | ) | (111,169,983 | ) | |||||
Increase in net assets derived from | ||||||||
capital share transactions | 15,511,083 | 27,477,732 | ||||||
Net Increase in Net Assets | 33,686,006 | 25,856,333 | ||||||
Net Assets: | ||||||||
Beginning of period | 565,131,277 | 539,274,944 | ||||||
End of period | $ | 598,817,283 | $ | 565,131,277 | ||||
Undistributed net investment income | $ | 66,906 | $ | 66,893 |
See accompanying notes
51
Statements of changes in net assets
Delaware Tax-Free USA Intermediate Fund
Delaware Tax-Free USA Intermediate Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 9,723,761 | $ | 15,162,112 | ||||
Net realized gain (loss) on investments | 3,410,910 | (2,348,573 | ) | |||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 9,666,141 | 11,254,947 | ||||||
Net increase in net assets resulting from operations | 22,800,812 | 24,068,486 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (9,079,674 | ) | (14,270,823 | ) | ||||
Class B | (11,234 | ) | (25,400 | ) | ||||
Class C | (631,171 | ) | (817,862 | ) | ||||
Institutional Class | (1,682 | ) | (26 | ) | ||||
(9,723,761 | ) | (15,114,111 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 131,573,672 | 235,187,166 | ||||||
Class B | — | 184,940 | ||||||
Class C | 13,312,641 | 19,373,068 | ||||||
Institutional Class | 611,565 | 1,022 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 6,222,993 | 9,817,928 | ||||||
Class B | 8,086 | 18,329 | ||||||
Class C | 469,170 | 581,579 | ||||||
Institutional Class | 1,374 | 24 | ||||||
152,199,501 | 265,164,056 |
52
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (80,877,568 | ) | $ | (201,015,285 | ) | ||
Class B | (213,474 | ) | (616,595 | ) | ||||
Class C | (4,580,396 | ) | (5,491,621 | ) | ||||
Institutional Class | (789 | ) | — | |||||
(85,672,227 | ) | (207,123,501 | ) | |||||
Increase in net assets derived from | ||||||||
capital share transactions | 66,527,274 | 58,040,555 | ||||||
Net Increase in Net Assets | 79,604,325 | 66,994,930 | ||||||
Net Assets: | ||||||||
Beginning of period | 500,875,570 | 433,880,640 | ||||||
End of period | $ | 580,479,895 | $ | 500,875,570 | ||||
Undistributed net investment income | $ | 16,225 | $ | 16,225 |
See accompanying notes
53
Statements of changes in net assets
Delaware National High-Yield Municipal Bond Fund
Delaware National High-Yield Municipal Bond Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 2,447,523 | $ | 4,135,883 | ||||
Net realized gain (loss) on investments | 695,527 | (898,271 | ) | |||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 5,309,989 | (3,755,920 | ) | |||||
Net increase (decrease) in net assets resulting | ||||||||
from operations | 8,453,039 | (518,308 | ) | |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (2,151,324 | ) | (3,657,847 | ) | ||||
Class B | (35,511 | ) | (110,366 | ) | ||||
Class C | (263,855 | ) | (335,892 | ) | ||||
Institutional Class | (161 | ) | (47 | ) | ||||
(2,450,851 | ) | (4,104,152 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 22,562,529 | 12,889,514 | ||||||
Class B | 14,560 | 289,157 | ||||||
Class C | 8,164,964 | 2,516,187 | ||||||
Institutional Class | 18,454 | 1,016 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 1,310,493 | 2,236,012 | ||||||
Class B | 16,927 | 50,724 | ||||||
Class C | 167,611 | 220,675 | ||||||
Institutional Class | 158 | 45 | ||||||
32,255,696 | 18,203,330 |
54
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (9,428,997 | ) | $ | (10,110,767 | ) | ||
Class B | (100,818 | ) | (1,746,311 | ) | ||||
Class C | (1,048,199 | ) | (1,588,149 | ) | ||||
Institutional Class | (15 | ) | — | |||||
(10,578,029 | ) | (13,445,227 | ) | |||||
Increase in net assets derived from | ||||||||
capital share transactions | 21,677,667 | 4,758,103 | ||||||
Net Increase in Net Assets | 27,679,855 | 135,643 | ||||||
Net Assets: | ||||||||
Beginning of period | 78,031,113 | 77,895,470 | ||||||
End of period | $ | 105,710,968 | $ | 78,031,113 | ||||
Undistributed (distributions in excess of) | ||||||||
net investment income | $ | (3,573 | ) | $ | 13,405 |
See accompanying notes
55
Financial highlights
Delaware Tax-Free USA Fund Class A
Delaware Tax-Free USA 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during some of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.
See accompanying notes
56
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.890 | $10.970 | $11.230 | $11.570 | $11.760 | $11.460 | ||||||||||||||
0.257 | 0.479 | 0.462 | 0.466 | 0.458 | 0.512 | ||||||||||||||
0.350 | (0.081 | ) | (0.260 | ) | (0.337 | ) | (0.186 | ) | 0.300 | ||||||||||
0.607 | 0.398 | 0.202 | 0.129 | 0.272 | 0.812 | ||||||||||||||
(0.257 | ) | (0.478 | ) | (0.462 | ) | (0.469 | ) | (0.462 | ) | (0.512 | ) | ||||||||
(0.257 | ) | (0.478 | ) | (0.462 | ) | (0.469 | ) | (0.462 | ) | (0.512 | ) | ||||||||
$11.240 | $10.890 | $10.970 | $11.230 | $11.570 | $11.760 | ||||||||||||||
5.61% | 3.91% | 1.82% | 1.08% | 2.42% | 7.23% | ||||||||||||||
$568,140 | $536,420 | $510,822 | $735,584 | $656,813 | $453,982 | ||||||||||||||
0.80% | 0.84% | 0.85% | 0.87% | 0.86% | 0.86% | ||||||||||||||
0.96% | 0.97% | 0.94% | 0.95% | 1.00% | 0.98% | ||||||||||||||
4.63% | 4.60% | 4.13% | 4.03% | 3.97% | 4.43% | ||||||||||||||
4.47% | 4.47% | 4.04% | 3.95% | 3.83% | 4.31% | ||||||||||||||
28% | 66% | 28% | 36% | 41% | 47% |
57
Financial highlights
Delaware Tax-Free USA Fund Class B
Delaware Tax-Free USA 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown 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 | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.880 | $10.960 | $11.230 | $11.570 | $11.760 | $11.460 | ||||||||||||||
0.214 | 0.399 | 0.378 | 0.378 | 0.370 | 0.423 | ||||||||||||||
0.350 | (0.080 | ) | (0.270 | ) | (0.337 | ) | (0.186 | ) | 0.300 | ||||||||||
0.564 | 0.319 | 0.108 | 0.041 | 0.184 | 0.723 | ||||||||||||||
(0.214 | ) | (0.399 | ) | (0.378 | ) | (0.381 | ) | (0.374 | ) | (0.423 | ) | ||||||||
(0.214 | ) | (0.399 | ) | (0.378 | ) | (0.381 | ) | (0.374 | ) | (0.423 | ) | ||||||||
$11.230 | $10.880 | $10.960 | $11.230 | $11.570 | $11.760 | ||||||||||||||
5.21% | 3.13% | 0.96% | 0.32% | 1.63% | 6.42% | ||||||||||||||
$6,830 | $8,168 | $11,812 | $17,286 | $22,189 | $16,507 | ||||||||||||||
1.56% | 1.60% | 1.61% | 1.63% | 1.63% | 1.63% | ||||||||||||||
1.72% | 1.73% | 1.70% | 1.71% | 1.73% | 1.71% | ||||||||||||||
3.87% | 3.84% | 3.37% | 3.27% | 3.20% | 3.66% | ||||||||||||||
3.71% | 3.71% | 3.28% | 3.19% | 3.10% | 3.58% | ||||||||||||||
28% | 66% | 28% | 36% | 41% | 47% |
59
Financial highlights
Delaware Tax-Free USA Fund Class C
Delaware Tax-Free USA 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown 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 | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.890 | $10.970 | $11.230 | $11.570 | $11.760 | $11.460 | ||||||||||||||
0.214 | 0.399 | 0.377 | 0.378 | 0.370 | 0.423 | ||||||||||||||
0.350 | (0.080 | ) | (0.260 | ) | (0.337 | ) | (0.186 | ) | 0.300 | ||||||||||
0.564 | 0.319 | 0.117 | 0.041 | 0.184 | 0.723 | ||||||||||||||
(0.214 | ) | (0.399 | ) | (0.377 | ) | (0.381 | ) | (0.374 | ) | (0.423 | ) | ||||||||
(0.214 | ) | (0.399 | ) | (0.377 | ) | (0.381 | ) | (0.374 | ) | (0.423 | ) | ||||||||
$11.240 | $10.890 | $10.970 | $11.230 | $11.570 | $11.760 | ||||||||||||||
5.21% | 3.13% | 0.96% | 0.41% | 1.63% | 6.42% | ||||||||||||||
$23,837 | $20,542 | $16,641 | $16,871 | $15,110 | $5,963 | ||||||||||||||
1.56% | 1.60% | 1.61% | 1.63% | 1.63% | 1.63% | ||||||||||||||
1.72% | 1.73% | 1.70% | 1.71% | 1.73% | 1.71% | ||||||||||||||
3.87% | 3.84% | 3.37% | 3.27% | 3.20% | 3.66% | ||||||||||||||
3.71% | 3.71% | 3.28% | 3.19% | 3.10% | 3.58% | ||||||||||||||
28% | 66% | 28% | 36% | 41% | 47% |
61
Financial highlights
Delaware Tax-Free USA Fund Institutional Class
Delaware Tax-Free USA Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months Ended | 12/31/082 | ||||||||
2/28/101 | to | ||||||||
(Unaudited) | 8/31/09 | ||||||||
Net asset value, beginning of period | $10.890 | $10.020 | |||||||
Income from investment operations: | |||||||||
Net investment income | 0.267 | 0.322 | |||||||
Net realized and unrealized gain on investments | 0.430 | 0.870 | |||||||
Total from investment operations | 0.697 | 1.192 | |||||||
Less dividends and distributions from: | |||||||||
Net investment income | (0.267 | ) | (0.322 | ) | |||||
Total dividends and distributions | (0.267 | ) | (0.322 | ) | |||||
Net asset value, end of period | $11.320 | $10.890 | |||||||
Total return3 | 6.35% | 12.15% | |||||||
Ratios and supplemental data: | |||||||||
Net assets, end of period (000 omitted) | $10 | $1 | |||||||
Ratio of expenses to average net assets | 0.56% | 0.60% | |||||||
Ratio of expenses to average net assets | |||||||||
prior to fees waived and expense paid indirectly | 0.72% | 0.73% | |||||||
Ratio of net investment income to average net assets | 4.87% | 4.84% | |||||||
Ratio of net investment income to average net assets | |||||||||
prior to fees waived and expense paid indirectly | 4.71% | 4.71% | |||||||
Portfolio turnover | 28% | 66% | 4 |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
4 Portfolio turnover is representative of the Fund for the entire year.
See accompanying notes
62
Financial highlights
Delaware Tax-Free USA Intermediate Fund Class A
Delaware Tax-Free USA 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 assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.
See accompanying notes
64
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.460 | $11.250 | $11.210 | $11.470 | $11.610 | $11.390 | ||||||||||||||
0.213 | 0.388 | 0.383 | 0.414 | 0.408 | 0.410 | ||||||||||||||
0.280 | 0.210 | 0.041 | (0.260 | ) | (0.140 | ) | 0.220 | ||||||||||||
0.493 | 0.598 | 0.424 | 0.154 | 0.268 | 0.630 | ||||||||||||||
(0.213 | ) | (0.388 | ) | (0.384 | ) | (0.414 | ) | (0.408 | ) | (0.410 | ) | ||||||||
(0.213 | ) | (0.388 | ) | (0.384 | ) | (0.414 | ) | (0.408 | ) | (0.410 | ) | ||||||||
$11.740 | $11.460 | $11.250 | $11.210 | $11.470 | $11.610 | ||||||||||||||
4.33% | 5.49% | 3.83% | 1.34% | 2.38% | 5.63% | ||||||||||||||
$528,684 | $459,782 | $407,729 | $306,215 | $204,525 | $120,273 | ||||||||||||||
0.75% | 0.75% | 0.75% | 0.76% | 0.75% | 0.79% | ||||||||||||||
1.02% | 1.03% | 1.03% | 1.03% | 1.07% | 1.11% | ||||||||||||||
3.69% | 3.51% | 3.38% | 3.60% | 3.56% | 3.55% | ||||||||||||||
3.42% | 3.23% | 3.10% | 3.33% | 3.24% | 3.23% | ||||||||||||||
30% | 47% | 28% | 40% | 37% | 18% |
65
Financial highlights
Delaware Tax-Free USA Intermediate Fund Class B
Delaware Tax-Free USA 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 assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
66
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.450 | $11.240 | $11.200 | $11.460 | $11.610 | $11.380 | ||||||||||||||
0.164 | 0.294 | 0.287 | 0.317 | 0.311 | 0.313 | ||||||||||||||
0.280 | 0.210 | 0.041 | (0.260 | ) | (0.150 | ) | 0.230 | ||||||||||||
0.444 | 0.504 | 0.328 | 0.057 | 0.161 | 0.543 | ||||||||||||||
(0.164 | ) | (0.294 | ) | (0.288 | ) | (0.317 | ) | (0.311 | ) | (0.313 | ) | ||||||||
(0.164 | ) | (0.294 | ) | (0.288 | ) | (0.317 | ) | (0.311 | ) | (0.313 | ) | ||||||||
$11.730 | $11.450 | $11.240 | $11.200 | $11.460 | $11.610 | ||||||||||||||
3.90% | 4.61% | 2.95% | 0.48% | 1.43% | 4.83% | ||||||||||||||
$675 | $861 | $1,272 | $1,786 | $2,413 | $3,203 | ||||||||||||||
1.60% | 1.60% | 1.60% | 1.61% | 1.60% | 1.64% | ||||||||||||||
1.72% | 1.73% | 1.73% | 1.73% | 1.77% | 1.81% | ||||||||||||||
2.84% | 2.66% | 2.53% | 2.75% | 2.71% | 2.70% | ||||||||||||||
2.72% | 2.53% | 2.40% | 2.63% | 2.54% | 2.53% | ||||||||||||||
30% | 47% | 28% | 40% | 37% | 18% |
67
Financial highlights
Delaware Tax-Free USA Intermediate Fund Class C
Delaware Tax-Free USA 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 assets |
Ratio of expenses to average net assets |
prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
68
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.450 | $11.240 | $11.200 | $11.470 | $11.610 | $11.390 | ||||||||||||||
0.164 | 0.294 | 0.287 | 0.317 | 0.311 | 0.313 | ||||||||||||||
0.280 | 0.210 | 0.041 | (0.270 | ) | (0.140 | ) | 0.220 | ||||||||||||
0.444 | 0.504 | 0.328 | 0.047 | 0.171 | 0.533 | ||||||||||||||
(0.164 | ) | (0.294 | ) | (0.288 | ) | (0.317 | ) | (0.311 | ) | (0.313 | ) | ||||||||
(0.164 | ) | (0.294 | ) | (0.288 | ) | (0.317 | ) | (0.311 | ) | (0.313 | ) | ||||||||
$11.730 | $11.450 | $11.240 | $11.200 | $11.470 | $11.610 | ||||||||||||||
3.90% | 4.60% | 2.95% | 0.39% | 1.52% | 4.74% | ||||||||||||||
$50,503 | $40,232 | $24,880 | $28,237 | $28,004 | $25,125 | ||||||||||||||
1.60% | 1.60% | 1.60% | 1.61% | 1.60% | 1.64% | ||||||||||||||
1.72% | 1.73% | 1.73% | 1.73% | 1.77% | 1.81% | ||||||||||||||
2.84% | 2.66% | 2.53% | 2.75% | 2.71% | 2.70% | ||||||||||||||
2.72% | 2.53% | 2.40% | 2.63% | 2.54% | 2.53% | ||||||||||||||
30% | 47% | 28% | 40% | 37% | 18% |
69
Financial highlights
Delaware Tax-Free USA Intermediate Fund Institutional Class
Delaware Tax-Free USA Intermediate Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months Ended | 12/31/082 | ||||||||
2/28/101 | to | ||||||||
(Unaudited) | 8/31/09 | ||||||||
Net asset value, beginning of period | $11.460 | $10.800 | |||||||
Income from investment operations: | |||||||||
Net investment income | 0.205 | 0.269 | |||||||
Net realized and unrealized gain on investments | 0.400 | 0.660 | |||||||
Total from investment operations | 0.605 | 0.929 | |||||||
Less dividends and distributions from: | |||||||||
Net investment income | (0.205 | ) | (0.269 | ) | |||||
Total dividends and distributions | (0.205 | ) | (0.269 | ) | |||||
Net asset value, end of period | $11.860 | $11.460 | |||||||
Total return3 | 5.32% | 8.68% | |||||||
Ratios and supplemental data: | |||||||||
Net assets, end of period (000 omitted) | $618 | $1 | |||||||
Ratio of expenses to average net assets | 0.60% | 0.60% | |||||||
Ratio of expenses to average net assets | |||||||||
prior to fees waived and expense paid indirectly | 0.72% | 0.73% | |||||||
Ratio of net investment income to average net assets | 3.84% | 3.65% | |||||||
Ratio of net investment income to average net assets | |||||||||
prior to fees waived and expense paid indirectly | 3.72% | 3.52% | |||||||
Portfolio turnover | 30% | 47% | 4 |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
4 Portfolio turnover is representative of the Fund for the entire year.
See accompanying notes
70
Financial highlights
Delaware National High-Yield Municipal Bond Fund Class A
Delaware National 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
72
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$8.920 | $9.510 | $10.030 | $10.320 | $10.380 | $10.010 | ||||||||||||||
0.257 | 0.505 | 0.484 | 0.482 | 0.477 | 0.503 | ||||||||||||||
0.652 | (0.595 | ) | (0.520 | ) | (0.290 | ) | (0.060 | ) | 0.371 | ||||||||||
0.909 | (0.090 | ) | (0.036 | ) | 0.192 | 0.417 | 0.874 | ||||||||||||
(0.259 | ) | (0.500 | ) | (0.484 | ) | (0.482 | ) | (0.477 | ) | (0.504 | ) | ||||||||
(0.259 | ) | (0.500 | ) | (0.484 | ) | (0.482 | ) | (0.477 | ) | (0.504 | ) | ||||||||
$9.570 | $8.920 | $9.510 | $10.030 | $10.320 | $10.380 | ||||||||||||||
10.26% | (0.38% | ) | (0.37% | ) | 1.82% | 4.15% | 8.93% | ||||||||||||
$88,481 | $68,812 | $67,762 | $65,143 | $68,663 | $66,451 | ||||||||||||||
0.85% | 0.90% | 0.90% | 0.91% | 0.90% | 0.93% | ||||||||||||||
1.06% | 1.08% | 1.04% | 1.03% | 1.02% | 1.01% | ||||||||||||||
5.52% | 6.06% | 4.94% | 4.66% | 4.66% | 4.92% | ||||||||||||||
5.31% | 5.88% | 4.80% | 4.54% | 4.54% | 4.84% | ||||||||||||||
37% | 67% | 24% | 37% | 73% | 36% |
73
Financial highlights
Delaware National High-Yield Municipal Bond Fund Class B
Delaware National 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
74
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$8.940 | $9.530 | $10.050 | $10.350 | $10.400 | $10.030 | ||||||||||||||
0.223 | 0.440 | 0.410 | 0.404 | 0.400 | 0.426 | ||||||||||||||
0.652 | (0.592 | ) | (0.520 | ) | (0.300 | ) | (0.050 | ) | 0.371 | ||||||||||
0.875 | (0.152 | ) | (0.110 | ) | 0.104 | 0.350 | 0.797 | ||||||||||||
(0.225 | ) | (0.438 | ) | (0.410 | ) | (0.404 | ) | (0.400 | ) | (0.427 | ) | ||||||||
(0.225 | ) | (0.438 | ) | (0.410 | ) | (0.404 | ) | (0.400 | ) | (0.427 | ) | ||||||||
$9.590 | $8.940 | $9.530 | $10.050 | $10.350 | $10.400 | ||||||||||||||
9.84% | (1.11% | ) | (1.12% | ) | 0.96% | 3.47% | 8.10% | ||||||||||||
$1,483 | $1,448 | $3,135 | $5,972 | $9,519 | $13,046 | ||||||||||||||
1.60% | 1.65% | 1.65% | 1.66% | 1.65% | 1.68% | ||||||||||||||
1.81% | 1.83% | 1.79% | 1.78% | 1.77% | 1.76% | ||||||||||||||
4.77% | 5.31% | 4.19% | 3.91% | 3.91% | 4.17% | ||||||||||||||
4.56% | 5.13% | 4.05% | 3.79% | 3.79% | 4.09% | ||||||||||||||
37% | 67% | 24% | 37% | 73% | 36% |
75
Financial highlights
Delaware National High-Yield Municipal Bond Fund Class C
Delaware National 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
See accompanying notes
76
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$8.960 | $9.550 | $10.070 | $10.360 | $10.420 | $10.040 | ||||||||||||||
0.223 | 0.441 | 0.410 | 0.404 | 0.400 | 0.426 | ||||||||||||||
0.652 | (0.592 | ) | (0.520 | ) | (0.290 | ) | (0.060 | ) | 0.381 | ||||||||||
0.875 | (0.151 | ) | (0.110 | ) | 0.114 | 0.340 | 0.807 | ||||||||||||
(0.225 | ) | (0.439 | ) | (0.410 | ) | (0.404 | ) | (0.400 | ) | (0.427 | ) | ||||||||
(0.225 | ) | (0.439 | ) | (0.410 | ) | (0.404 | ) | (0.400 | ) | (0.427 | ) | ||||||||
$9.610 | $8.960 | $9.550 | $10.070 | $10.360 | $10.420 | ||||||||||||||
9.82% | (1.11% | ) | (1.12% | ) | 1.06% | 3.36% | 8.19% | ||||||||||||
$15,727 | $7,770 | $6,998 | $4,848 | $5,332 | $5,234 | ||||||||||||||
1.60% | 1.65% | 1.65% | 1.66% | 1.65% | 1.68% | ||||||||||||||
1.81% | 1.83% | 1.79% | 1.78% | 1.77% | 1.76% | ||||||||||||||
4.77% | 5.31% | 4.19% | 3.91% | 3.91% | 4.17% | ||||||||||||||
4.56% | 5.13% | 4.05% | 3.79% | 3.79% | 4.09% | ||||||||||||||
37% | 67% | 24% | 37% | 73% | 36% |
77
Financial highlights
Delaware National High-Yield Municipal Bond Fund Institutional Class
Delaware National High-Yield Municipal Bond Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months Ended | 12/31/082 | |||||||
2/28/101 | to | |||||||
(Unaudited) | 8/31/09 | |||||||
Net asset value, beginning of period | $8.930 | $7.590 | ||||||
Income from investment operations: | ||||||||
Net investment income | 0.265 | 0.342 | ||||||
Net realized and unrealized gain on investments | 0.742 | 1.338 | ||||||
Total from investment operations | 1.007 | 1.680 | ||||||
Less dividends and distributions from: | ||||||||
Net investment income | (0.267 | ) | (0.340 | ) | ||||
Total dividends and distributions | (0.267 | ) | (0.340 | ) | ||||
Net asset value, end of period | $9.670 | $8.930 | ||||||
Total return3 | 11.37% | 22.55% | ||||||
Ratios and supplemental data: | ||||||||
Net assets, end of period (000 omitted) | $20 | $1 | ||||||
Ratio of expenses to average net assets | 0.60% | 0.65% | ||||||
Ratio of expenses to average net assets | ||||||||
prior to fees waived and expense paid indirectly | 0.81% | 0.85% | ||||||
Ratio of net investment income to average net assets | 5.77% | 6.41% | ||||||
Ratio of net investment income to average net assets | ||||||||
prior to fees waived and expense paid indirectly | 5.56% | 6.21% | ||||||
Portfolio turnover | 37% | 67% | 4 |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
4 Portfolio turnover is representative of the Fund for the entire year. |
See accompanying notes
78
Notes to financial statements | |
Delaware National Tax-Free Funds | February 28, 2010 (Unaudited) |
Delaware Group® Tax-Free Fund is organized as a Delaware statutory trust and offers two series: Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund. Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund and Delaware Tax-Free New York Fund. Delaware Group Tax-Free Fund and Voyageur Mutual Funds are individually referred to as a “Trust” and collectively as the “Trusts”. These financial statements and the related notes pertain to Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund and Delaware National 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 diversified under the Investment Company Act of 1940, as amended. The Funds offer Class A, Class B, Class C and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of up to 4.50% for Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund, and up to 2.75% for Delaware Tax-Free USA 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 for Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund; and of 0.75% for Delaware Tax-Free USA Intermediate Fund if redeemed within the first year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may be purchased only through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares of the Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares of the Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class B shares of Delaware Tax-Free USA Intermediate Fund were sold with a CDSC that declines from 2% to zero depending upon the period of time the shares were held. Class B shares of the Delaware Tax-Free USA Intermediate Fund will automatically convert to Class A shares on a quarterly basis approximately five years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund is to seek as high a level of current interest income exempt from federal income tax as is available from municipal obligations and as is consistent with prudent investment management and preservation of capital.
The investment objective of Delaware National Municipal Bond Fund is to seek a high level of current income exempt from federal income tax primarily through investment in medium- and lower-grade municipal obligations.
79
Notes to financial statements
Delaware National Tax-Free Funds
Delaware National Tax-Free Funds
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Funds.
Security Valuation — Debt securities are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. 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 (each a “Board” and collectively the “Boards”). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security.
Federal Income Taxes — No provision for federal income taxes has been made as 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. The Funds evaluate 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. Management has analyzed each Fund’s tax positions taken on federal income tax returns for all open tax years (August 31, 2006 – August 31, 2009), and has concluded that no provision for federal income tax is required for each Fund’s financial statements.
Class Accounting — Investment income and common expenses are allocated to the various classes of each Fund on the basis of “settled shares” of each class in relation to the net assets of each Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of each Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP 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
80
amortized to interest income over the lives of the respective securities. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually.
The Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the period ended February 28, 2010.
On July 1, 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source of authoritative nongovernmental U.S. GAAP, superseding existing literature of the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other sources. The Codification is effective for interim and annual periods ending after September 15, 2009. The Funds adopted the Codification for the six months ended February 28, 2010. There was no impact to financial statements as the Codification requirements are disclosure-only in nature.
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 Tax-Free | Delaware National High-Yield | |||
USA Fund | USA Intermediate Fund | Municipal 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% |
Effective January 1, 2010, DMC has voluntarily agreed to waive that portion, if any, of its management fee and/or pay/reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations), do not exceed 0.56%, 0.60%, and 0.60% of average daily net assets of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund, respectively. For purposes of these waivers and reimbursements, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Funds’ Boards and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Funds and may be discontinued at any time because they are voluntary. Prior to January 1, 2010, DMC had contractually agreed to waive that portion, if any, of its management fee
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Notes to financial statements
Delaware National Tax-Free Funds
Delaware National Tax-Free Funds
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
and reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and nonroutine expenses), did not exceed 0.60%, 0.60%, and 0.65% of average daily net assets of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund, respectively.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, each Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% 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. For the six months ended February 28, 2010, each Fund was charged for these services as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | |||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||
$14,566 | $13,452 | $2,260 |
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 0.30% of the average daily net assets of the Class A shares for Delaware Tax-Fee USA Intermediate Fund, 0.25% of the average daily net assets of the Class A shares for the Delaware National High-Yield Municipal Bond Fund and 1.00% of the average daily net assets of the Class B and C shares for all the Funds. The Board for Delaware Tax-Free USA Fund has adopted a formula for calculating 12b-1 plan fees for the Fund’s Class A shares that went into effect on June 1, 1992. The total 12b-1 fees to be paid by Class A shareholders of the Fund will be the sum of 0.10% of the average daily net assets representing shares that were acquired prior to June 1, 1992 and 0.30% of the average daily net assets representing shares that were acquired on or after June 1, 1992. Effective April 21, 2006, the maximum amount of the Class A 12b-1 fees was reduced to 0.25% and the total 12b-1 fees to be paid to Class A shareholders of the Fund will be the sum of 0.10% of the average daily net assets representing shares that were acquired prior to June 1, 1992 and 0.25% of the average daily net assets representing shares that were acquired on or after June 1, 1992. All Class A shareholders will bear 12b-1 fees at the same rate, the blended rate based upon the allocation of the rates described above. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to waive distribution and service fees through January 1, 2010 in order to prevent distribution and service fees of Class A shares from exceeding 0.15% of average daily net assets for the Delaware Tax-Free USA Intermediate Fund.
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At February 28, 2010, each Fund had liabilities payable to affiliates as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | |||||||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||||||
Investment management fees | |||||||||
payable to DMC | $175,722 | $175,161 | $27,920 | ||||||
Dividend disbursing, transfer | |||||||||
agent and fund accounting | |||||||||
oversight fees and other | |||||||||
expenses payable to DSC | 27,704 | 39,920 | 5,181 | ||||||
Distribution fees payable | |||||||||
to DDLP | 128,858 | 97,693 | 29,071 | ||||||
Other expenses payable to | |||||||||
DMC and affiliates* | 22,991 | 21,586 | 3,823 |
*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 each Fund by DMC and/or its affiliates’ employees. For the six months ended February 28, 2010, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | |||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||
$18,938 | $17,605 | $3,000 |
For the six months ended February 28, 2010, DDLP earned commissions on sales of Class A shares for each Fund as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | |||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||
$21,932 | $28,344 | $27,367 |
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Notes to financial statements
Delaware National Tax-Free Funds
Delaware National Tax-Free Funds
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
For the six months ended February 28, 2010, DDLP received gross CDSC commissions on redemptions 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-dealer on sales of those shares. The amounts received were as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | ||||||||||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | ||||||||||
Class A | $ | — | $ | — | $ | — | ||||||
Class B | 3,393 | 1,110 | 372 | |||||||||
Class C | 516 | 3,694 | 370 |
Trustees’ fees include expenses accrued by the Funds for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trusts. These officers and Trustees are paid no compensation by the Funds.
3. Investments
For the six months ended February 28, 2010, the Funds made purchases and sales of investment securities other than short-term investments as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | ||||||||||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | ||||||||||
Purchases | $ | 98,834,212 | $ | 133,570,531 | $ | 35,717,071 | ||||||
Sales | 79,978,707 | 77,731,939 | 16,184,970 |
At February 28, 2010, 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 28, 2010, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | ||||||||||||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | ||||||||||||
Cost of investments | $ | 568,736,890 | $ | 548,854,180 | $ | 107,916,548 | ||||||||
Aggregate unrealized | ||||||||||||||
appreciation | $ | 40,171,659 | $ | 28,056,038 | $ | 4,526,685 | ||||||||
Aggregate unrealized | ||||||||||||||
depreciation | (15,018,942 | ) | (3,772,827 | ) | (5,625,084 | ) | ||||||||
Net unrealized appreciation | ||||||||||||||
(depreciation) | $ | 25,152,717 | $ | 24,283,211 | $ | (1,098,399 | ) |
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U.S. GAAP defines fair value as the price that the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
The following table summarizes the valuation of each Fund’s investments by fair value hierarchy levels as of February 28, 2010:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | ||||||||||||||
Municipal Bonds | USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||||||||||||
Level 1 | $ | — | $ | — | $ | — | ||||||||||
Level 2 | 593,889,607 | 573,137,391 | 106,818,149 | |||||||||||||
Level 3 | — | — | — | |||||||||||||
Total | $ | 593,889,607 | $ | 573,137,391 | $ | 106,818,149 |
There were no Level 3 securities at the beginning or end of the period.
In January 2010, the FASB issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for each Fund’s year ending August 31, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
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Notes to financial statements
Delaware National Tax-Free Funds
Delaware National Tax-Free 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. GAAP. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2010 and the year ended August 31, 2009 was as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | |||||||||||||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||||||||||||
Six months ended 2/28/10* | |||||||||||||||
Tax-exempt income | $ | 13,102,897 | $ | 9,589,762 | $ | 2,399,406 | |||||||||
Ordinary income | 273,862 | 133,999 | 51,445 | ||||||||||||
Total | $ | 13,376,759 | $ | 9,723,761 | $ | 2,450,851 | |||||||||
Year ended 8/31/09 | |||||||||||||||
Tax-exempt income | $ | 24,389,642 | $ | 15,114,111 | $ | 4,103,777 | |||||||||
Ordinary income | 50,485 | — | 375 | ||||||||||||
Total | $ | 24,440,127 | $ | 15,114,111 | $ | 4,104,152 |
*Tax information for the period ended February 28, 2010 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 28, 2010, the estimated components of net assets on a tax basis were as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | |||||||||||||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||||||||||||
Shares of beneficial interest | $ | 583,884,892 | $ | 561,570,141 | $ | 109,461,683 | |||||||||
Distributions payable | (451,446 | ) | (329,190 | ) | (88,396 | ) | |||||||||
Undistributed tax-exempt | |||||||||||||||
income | 518,352 | 345,415 | 84,823 | ||||||||||||
Realized gains | |||||||||||||||
9/1/09 – 2/28/10 | 1,266,695 | 2,885,468 | 131,614 | ||||||||||||
Post-October losses | (237,351 | ) | — | (787 | ) | ||||||||||
Capital loss carryforward | |||||||||||||||
as of 8/31/09 | (11,316,576 | ) | (8,275,150 | ) | (2,779,570 | ) | |||||||||
Unrealized appreciation | |||||||||||||||
(depreciation) | |||||||||||||||
of investments | 25,152,717 | 24,283,211 | (1,098,399 | ) | |||||||||||
Net assets | $ | 598,817,283 | $ | 580,479,895 | $ | 105,710,968 |
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The differences between book basis and tax basis components of the net assets are primarily attributable to tax deferral of losses on wash sales and tax treatment of market discount and premium on debt instruments.
Post-October losses represent losses realized on investment transactions from November 1, 2009 through February 28, 2010 that, in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2010, the Delaware National High-Yield Municipal Bond Fund recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
Undistributed net investment income | $ | (13,650 | ) |
Accumulated net realized gain | 13,650 |
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2009 will expire as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | ||||||||||||||
Year of Expiration | USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||||||||||||
2010 | $ | — | $ | — | $ | 70,671 | ||||||||||
2011 | — | 249,429 | 997,721 | |||||||||||||
2012 | — | 5,791 | 980,742 | |||||||||||||
2014 | — | 119,427 | — | |||||||||||||
2015 | — | — | 355,701 | |||||||||||||
2016 | 797,494 | 2,127,384 | — | |||||||||||||
2017 | 10,519,082 | 5,773,119 | 374,735 | |||||||||||||
Total | $ | 11,316,576 | $ | 8,275,150 | $ | 2,779,570 |
For the six months ended February 28, 2010, the Funds had capital gains which may decrease the capital loss carryforwards.
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | |||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | |||
$1,266,695 | $2,885,468 | $131,614 |
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Notes to financial statements
Delaware National Tax-Free Funds
Delaware National Tax-Free Funds
6. Capital Shares
Transactions in capital shares were as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware National High-Yield | ||||||||||||||||
USA Fund | USA Intermediate Fund | Municipal Bond Fund | ||||||||||||||||
Six Months | Year | Six Months | Year | Six Months | Year | |||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||
2/28/10 | 8/31/09 | 2/28/10 | 8/31/09 | 2/28/10 | 8/31/09 | |||||||||||||
Shares sold: | ||||||||||||||||||
Class A | 3,392,790 | 11,607,343 | 11,139,618 | 21,288,665 | 2,381,296 | 1,543,457 | ||||||||||||
Class B | 7,080 | 7,042 | — | 16,760 | 1,252 | 36,455 | ||||||||||||
Class C | 314,636 | 662,828 | 1,116,341 | 1,748,249 | 857,127 | 298,334 | ||||||||||||
Institutional Class | 754 | 102 | 51,976 | 95 | 1,934 | 134 | ||||||||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||||||||||||
Class A | 647,660 | 1,198,786 | 709,961 | 885,386 | 147,002 | 269,659 | ||||||||||||
Class B | 6,408 | 16,525 | 920 | 1,659 | 2,108 | 6,137 | ||||||||||||
Class C | 43,446 | 46,310 | 67,913 | 52,363 | 22,443 | 26,475 | ||||||||||||
Institutional Class | 2 | 3 | 117 | 2 | 17 | 5 | ||||||||||||
4,412,776 | 13,538,939 | 13,086,846 | 23,993,179 | 3,413,179 | 2,180,656 | |||||||||||||
Shares repurchased: | ||||||||||||||||||
Class A | (2,746,932 | ) | (10,115,087 | ) | (6,948,986 | ) | (18,287,462 | ) | (996,919 | ) | (1,230,554 | ) | ||||||
Class B | (155,877 | ) | (350,505 | ) | (18,562 | ) | (56,382 | ) | (10,685 | ) | (209,703 | ) | ||||||
Class C | (123,463 | ) | (339,849 | ) | (393,834 | ) | (500,042 | ) | (110,599 | ) | (190,984 | ) | ||||||
Institutional Class | (1 | ) | — | (67 | ) | — | (2 | ) | — | |||||||||
(3,026,273 | ) | (10,805,441 | ) | (7,361,449 | ) | (18,843,886 | ) | (1,118,205 | ) | (1,631,241 | ) | |||||||
Net increase | 1,386,503 | 2,733,498 | 5,725,397 | 5,149,293 | 2,294,974 | 549,415 |
For the six months ended February 28, 2010 and the year ended August 31, 2009, 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 above and the statements of changes in net assets.
Six Months Ended | Year Ended | |||||||||||
2/28/10 | 8/31/09 | |||||||||||
Class B | Class A | Class B | Class A | |||||||||
Shares | Shares | Value | Shares | Shares | Value | |||||||
Delaware Tax-Free | ||||||||||||
USA Fund | 45,747 | 45,706 | $511,497 | 161,252 | 161,199 | $1,668,006 | ||||||
Delaware Tax-Free | ||||||||||||
USA Intermediate Fund | 5,747 | 5,742 | 66,938 | 23,056 | 23,046 | 253,527 | ||||||
Delaware National High-Yield | ||||||||||||
Municipal Bond Fund | 6,867 | 6,882 | 64,710 | 26,693 | 26,746 | 211,723 |
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7. Line of Credit
Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participates in a $35,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants are charged an annual commitment fee, which is allocated across the Participants on the basis of each Participant’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 agreement expires on November 16, 2010. The Funds had no amounts outstanding as of February 28, 2010, or at any time during the period then ended.
8. Credit and Market Risk
The Funds concentrate their investments in securities issued by municipalities. The value of these investments may be adversely affected by new legislation within the states, regional or local economic conditions, as applicable, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in the Funds. At February 28, 2010, 10.43% of the Delaware Tax-Free USA Fund’s net assets, 14.30% of the Delaware Tax-Free USA Intermediate Fund’s net assets, and 3.11% of the Delaware National High-Yield Municipal Bond Fund’s net assets were insured by bond insurers. These securities have been identified in the statements of net assets.
Each Fund may invest a portion of its assets in high yield fixed income securities, which carry ratings of BB or lower by Standard & Poor’s Ratings Group (S&P) and/or Ba or lower by Moody’s Investors Service, Inc. (Moody’s). Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.
The Funds may invest in advanced refunded bonds, escrow secured bonds or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding”. “Advance refunded bonds” are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest
89
Notes to financial statements
Delaware National Tax-Free Funds
Delaware National Tax-Free Funds
8. 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, S&P, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.
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 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. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. As of February 28, 2010, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.
9. Contractual Obligations
The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed each Fund’s existing contracts and expects the risk of loss to be remote.
90
10. Sale of Delaware Investments to Macquarie Group
On August 18, 2009, Lincoln National Corporation (parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP and DSC are now wholly owned subsidiaries of Macquarie.
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreements between DMC and the Funds. On January 4, 2010, the new investment management agreements between DMC and the Funds that were approved by the shareholders became effective.
11. Subsequent Event
Management has evaluated whether any events or transactions occurred subsequent to February 28, 2010 through April 15, 2010, the date of issuance of each Fund’s financial statements, and determined that there were no material events or transactions that would require recognition or disclosure in the Funds’ financial statements.
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Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
(Unaudited)
Delaware National Tax-Free Funds
Proxy Results
At Joint Special Meetings of Shareholders of Delaware Group® Tax-Free Fund, on behalf of Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund, and Voyageur Mutual Funds, on behalf of Delaware National High-Yield Municipal Bond Fund (Delaware Group Tax-Free Fund and Voyageur Mutual Fund hereinafter each, a “Trust” and collectively, the “Trusts” and Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund hereinafter each, a “Fund” and collectively, the “Funds”) held on November 12, 2009 and reconvened on December 4, 2009 for Delaware Tax-Free USA Intermediate Fund and Delaware National High-Yield Municipal Bond Fund only and March 16, 2010, the shareholders of each Fund voted to (i) elect a Board of Trustees for each Trust; and to (ii) approve new investment advisory agreements between each Trust, on behalf of the respective Fund(s), and Delaware Management Company, respectively. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
The following proposals were submitted for a vote of the shareholders:
1. To elect a Board of Trustees for each Trust.
Delaware Group Tax-Free Fund
% of | % of | % of | % of | |||||||||
outstanding | shares | outstanding | shares | |||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | |||||||
Thomas L. Bennett | 57,663,480.933 | 59.738 | 93.260 | 4,167,443.865 | 4.317 | 6.740 | ||||||
Patrick P. Coyne | 57,670,502.981 | 59.745 | 93.271 | 4,160,421.817 | 4.310 | 6.729 | ||||||
John A. Fry | 57,765,224.307 | 59.750 | 93.279 | 4,155,700.491 | 4.305 | 6.721 | ||||||
Anthony D. Knerr | 57,615,106.318 | 59.688 | 93.182 | 4,215,818.480 | 4.367 | 6.818 | ||||||
Lucinda S. Landreth | 57,681,544.675 | 59.757 | 93.289 | 4,149,380.123 | 4.298 | 6.711 | ||||||
Ann R. Leven | 57,665,095.874 | 59.740 | 93.263 | 4,165,828.924 | 4.315 | 6.737 | ||||||
Thomas F. Madison | 57,580,216.101 | 59.652 | 93.125 | 4,250,708.697 | 4.403 | 6.875 | ||||||
Janet L. Yeomans | 57,681,074.073 | 59.756 | 93.288 | 4,149,850.725 | 4.299 | 6.712 | ||||||
J. Richard Zecher | 57,636,553.113 | 59.710 | 93.216 | 4,194,371.685 | 4.345 | 6.784 |
Voyageur Mutual Fund
% of | % of | % of | % of | |||||||||
outstanding | shares | outstanding | shares | |||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | |||||||
Thomas L. Bennett | 27,534,201.174 | 64.687 | 94.418 | 1,627,955.392 | 3.825 | 5.582 | ||||||
Patrick P. Coyne | 27,538,840.631 | 64.698 | 94.433 | 1,623,315.935 | 3.814 | 5.567 | ||||||
John A. Fry | 27,541,310.882 | 64.704 | 94.442 | 1,620,845.684 | 3.808 | 5.558 | ||||||
Anthony D. Knerr | 27,543,108.286 | 64.708 | 94.448 | 1,619,048.280 | 3.804 | 5.552 | ||||||
Lucinda S. Landreth | 27,542,973.819 | 64.708 | 94.448 | 1,619,182.747 | 3.804 | 5.552 | ||||||
Ann R. Leven | 27,540,505.439 | 64.702 | 94.439 | 1,621,651.127 | 3.810 | 5.561 | ||||||
Thomas F. Madison | 27,534,959.779 | 64.689 | 94.420 | 1,627,196.787 | 3.823 | 5.580 | ||||||
Janet L. Yeomans | 27,539,087.174 | 64.698 | 94.434 | 1,623,069.392 | 3.814 | 5.566 | ||||||
J. Richard Zecher | 27,532,297.843 | 64.683 | 94.411 | 1,629,858.723 | 3.829 | 5.589 |
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2. To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund(s), and Delaware Management Company.
Delaware Tax-Free USA Fund | ||
Shares Voted For | 24,966,636.809 | |
Percentage of Outstanding Shares | 48.161% | |
Percentage of Shares Voted | 70.120% | |
Shares Voted Against | 541,765.486 | |
Percentage of Outstanding Shares | 1.045% | |
Percentage of Shares Voted | 1.521% | |
Shares Abstained | 1,698,792.191 | |
Percentage of Outstanding Shares | 3.277% | |
Percentage of Shares Voted | 4.772% | |
Broker Non-Votes | 8,398,482.448 |
Delaware Tax-Free USA Intermediate Fund | ||
Shares Voted For | 17,330,532.228 | |
Percentage of Outstanding Shares | 38.782% | |
Percentage of Shares Voted | 67.129% | |
Shares Voted Against | 177,979.836 | |
Percentage of Outstanding Shares | 0.398% | |
Percentage of Shares Voted | 0.689% | |
Shares Abstained | 545,651.634 | |
Percentage of Outstanding Shares | 1.221% | |
Percentage of Shares Voted | 2.114% | |
Broker Non-Votes | 7,762,659.315 |
Delaware National High-Yield Municipal Bond Fund | ||
Shares Voted For | 3,610,477.879 | |
Percentage of Outstanding Shares | 40.739% | |
Percentage of Shares Voted | 67.476% | |
Shares Voted Against | 94,516.225 | |
Percentage of Outstanding Shares | 1.066% | |
Percentage of Shares Voted | 1.766% | |
Shares Abstained | 127,978.565 | |
Percentage of Outstanding Shares | 1.445% | |
Percentage of Shares Voted | 2.392% | |
Broker Non-Votes | 1,517,805.114 |
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Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
(Unaudited)
Delaware National Tax-Free Funds
Board Consideration of New Investment Advisory Agreement
At a meeting held on September 3, 2009 (the “Meeting”), the Board of Trustees of the Delaware Investments® Family of Funds (the “Board”), including the independent Trustees, unanimously approved a new investment advisory agreement between each registrant on behalf of each series (each, a “Fund” and together, the “Funds”) and Delaware Management Company (“DMC”) in connection with the sale of Delaware Investments’ advisory business to Macquarie Bank Limited (the “Macquarie Group”) (the “Transaction”). In making its decision, the Board considered information furnished specifically in connection with the approval of the new investment advisory agreements with DMC (the “New Investment Advisory Agreements”) which included extensive materials about the Transaction and matters related to the proposed approvals. To assist the Board in considering the New Investment Advisory Agreements, Macquarie Group provided materials and information about Macquarie Group, including detailed written responses to the questions posed by the independent Trustees. DMC also provided materials and information about the Transaction, including detailed written responses to the questions posed by the independent Trustees.
At the Meeting, the Trustees discussed the Transaction with DMC management and with key Macquarie Group representatives. The Meeting included discussions of the strategic rationale for the Transaction and Macquarie Group’s general plans and intentions regarding the Funds and DMC. The Board members also inquired about the plans for, and anticipated roles and responsibilities of, key employees and officers of Delaware Management Holdings Inc. and DMC in connection with the Transaction.
In connection with the Trustees’ review of the New Investment Advisory Agreements for the Funds, DMC and/or Macquarie Group emphasized that:
- They expected that there would be no adverse changes as a result of the Transaction, in the nature, quality, or extent of services currently provided to the Funds and their shareholders, including investment management, distribution, or other shareholder services.
- No material changes in personnel or operations were contemplated in the operation of DMC under Macquarie Group as a result of the Transaction and no material changes were currently contemplated in connection with third party service providers to the Funds.
- Macquarie Group had no intention to cause DMC to alter the voluntary expense waivers and reimbursements currently in effect for the Funds.
- Under the agreement between Macquarie Group and Lincoln National Corporation (“LNC”) (the “Transaction Agreement”), Macquarie Group has agreed to conduct, and to cause its affiliates to conduct, their respective businesses in compliance with the conditions of Section 15(f) of the Investment Company Act of 1940 (the “1940 Act”) with respect to the Funds, to the extent within its control, including maintaining Board composition of at least 75% of the Board members qualifying as independent Trustees and not imposing any “unfair burden” on the Funds for at least two years from the closing of the Transaction (the “Closing”).
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In addition to the information provided by DMC and Macquarie Group as described above, the Trustees also considered all other factors they believed to be relevant to evaluating the New Investment Advisory Agreements, including the specific matters discussed below. In their deliberations, the Trustees did not identify any particular information that was controlling, and different Trustees may have attributed different weights to the various factors. However, for each Fund, the Trustees determined that the overall arrangements between the Fund and DMC, as provided in the respective New Investment Advisory Agreement, including the proposed advisory fee and the related administration arrangements between the Fund and DMC, were fair and reasonable in light of the services to be performed, expenses incurred, and such other matters as the Trustees considered relevant. Factors evaluated included:
- The potential for expanding distribution of Fund shares through access to Macquarie Group’s existing distribution channels;
- Delaware Investments’ acquisition of an exclusive wholesaling sales force from a subsidiary of LNC;
- The reputation, financial strength, and resources of Macquarie Group as well as its historic and ongoing commitment to the asset management business in Australia as well as other parts of the world;
- The terms and conditions of the New Investment Advisory Agreements, including that each Fund’s total contractual fee rate under the New Investment Advisory Agreement will remain the same;
- The Board’s full annual review (or initial approval) of the current investment advisory agreements at their in-person meeting in May 2009 as required by the 1940 Act and its determination that (i) DMC had the capabilities, resources, and personnel necessary to provide the satisfactory advisory and administrative services currently provided to each Fund and (ii) the advisory and/or management fees paid by each Fund, taking into account any applicable fee waivers and breakpoints, represented reasonable compensation to DMC in light of the services provided, the costs to DMC of providing those services, economies of scale, and the fees and other expenses paid by similar funds and such other matters that the Board considered relevant in the exercise of its reasonable judgment;
- The portfolio management teams for the Funds are not currently expected to change as a result of the Transaction;
- LNC and Macquarie Group were expected to execute a reimbursement agreement pursuant to which LNC and Macquarie Group would agree to pay (or reimburse) all reasonable out-of-pocket costs and expenses of the Funds in connection with the Board’s consideration of the Transaction, the New Investment Advisory Agreements and related agreements, and all costs related to the proxy solicitation (the “Expense Agreement”);
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Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
(Unaudited)
Delaware National Tax-Free Funds
Board Consideration of New Investment Advisory Agreement (continued)
- The likelihood that Macquarie Group would invest additional amounts in Delaware Investments, including DMC, which could result in increased assets under management, which in turn would allow some Funds the potential opportunity to achieve economies of scale and lower fees payable by Fund shareholders; and
- The compliance and regulatory history of Macquarie Group and its affiliates.
In making their decision relating to the approval of each Fund’s New Investment Advisory Agreement, the independent Trustees gave attention to all information furnished. The following discussion, however, identifies the primary factors taken into account by the Trustees and the conclusions reached in approving the New Investment Advisory Agreements.
Nature, Extent, and Quality of Service. The Trustees considered the services historically provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered that the New Investment Advisory Agreements would be substantially similar to the current investment advisory agreements between the Funds and DMC (the “Current Investment Advisory Agreements”), and therefore, considered the many reports furnished to them throughout 2008 and 2009 at regular Board meetings covering matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; the compliance of management personnel with the code of ethics adopted throughout the Delaware Investments® Family of Funds complex; and the adherence to fair value pricing procedures as established by the Board. The Trustees were pleased with the current staffing of DMC and the emphasis placed on research and risk management in the investment process. Favorable consideration was given to DMC’s efforts to maintain expenditures and, in some instances, increase financial and human resources committed to Fund matters.
The Board also considered the transfer agent and shareholder services that would continue to be provided to Fund shareholders by DMC’s affiliate, Delaware Service Company, Inc. (“DSC”). The Trustees noted, in particular, DSC’s commitment to maintain a high level of service as well as DMC’s expenditures to improve the delivery of shareholder services. The Board was assured that shareholders would continue to receive the benefits provided to Fund shareholders by being part of the Delaware Investments Family of Funds, including each shareholder’s ability to exchange an investment in one Delaware Investments Fund for the same class of shares in another Delaware Investments Fund without a sales charge, to reinvest Fund dividends into additional shares of any of the Funds, and the privilege to combine holdings in other Funds to obtain a reduced sales charge.
Based on the information provided by DMC and Macquarie Group, including that Macquarie Group and DMC currently expected no material changes as a result of the Transaction in (i) personnel or operations of DMC or (ii) third party service providers to the Funds, the Board concluded that the satisfactory nature, extent, and quality of services currently provided to the Funds and their shareholders were very likely to continue under the New Investment Advisory
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Agreements. Moreover, the Board concluded that the Funds would probably benefit from the expanded distribution resources that would become available to Delaware Investments following the Transaction. The Board also concluded that it was very unlikely that any “unfair burden” would be imposed on any of the Funds for the first two years following the Closing as a result of the Transaction. Consequently, the Board concluded that it did not expect the Transaction to result in any adverse changes in the nature, quality, or extent of services (including investment management, distribution or other shareholder services) currently provided to the Funds and their shareholders.
Investment Performance. The Board considered the overall investment performance of DMC and the Funds. The Trustees placed significant emphasis on the investment performance of the Funds in view of its importance to shareholders. Although the Trustees gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Trustees gave particular weight to their review of investment performance in connection with the approval of the Current Investment Advisory Agreements at the Board meeting held in May 2009. At that meeting, the Trustees reviewed reports prepared by Lipper, Inc., an independent statistical compilation organization (“Lipper”), which showed each Fund’s investment performance as of December 31, 2008 in comparison to a group of funds selected by Lipper as being similar to the Fund (the “Performance Universe”). During the May 2009 agreement review process, the Trustees observed the significant improvements to relative investment performance of the Funds compared to the Funds’ performance as of December 31, 2007.
At their meeting on September 3, 2009, the Trustees, including the independent Trustees in consultation with their independent counsel, reviewed the investment performance of each Fund. The Trustees compared the performance of each Fund relative to that of its respective Performance Universe for the 1-, 3-, 5-, and 10-year periods ended June 30, 2009 and compared its relative investment performance against the corresponding relative investment performance of each Fund for such time periods ended December 31, 2008, to the extent applicable. As of June 30, 2009, 30 of the Funds had investment performance relative to that of the respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for all applicable time periods. At June 30, 2009, an additional 6 Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for a majority of the applicable time periods. At June 30, 2009, 15 additional Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative performance at December 31, 2008 and only 29 Funds had poorer relative investment performance at June 30, 2009 compared to that at December 31, 2008.
The Board therefore concluded that the investment performance of the Funds, on an aggregate basis, had continued to improve relative to their respective Performance Universe since the data reviewed at the May 2009 meeting. Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreement
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Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
(Unaudited)
Delaware National Tax-Free Funds
Board Consideration of New Investment Advisory Agreement (continued)
would likely have an adverse effect on the investment performance of any Fund because (i) DMC and Macquarie Group did not currently expect the Transaction to cause any material change to the Funds’ portfolio management teams responsible for investment performance, which the Board found to be satisfactory and improving; and (ii) as discussed in more detail below, the Funds’ expenses were not expected to increase as a result of the Transaction.
Comparative Expenses. The Trustees also considered expense comparison data for the Funds previously provided in May 2009. At that meeting, DMC had provided the Board with information on pricing levels and fee structures for the Funds and comparative funds. The Trustees focused on the comparative analysis of the effective management fees and total expense ratios of each Fund versus the effective management fees and expense ratios of a group of funds selected by Lipper as being similar to each Fund (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into account any applicable breakpoints and fee limitations. Each Fund’s total expenses were also compared with those of its Expense Group. The Trustees also considered fees paid to Delaware Investments for nonmanagement services. At the September 3, 2009 meeting, DMC advised the Board that the more recent comparative expenses for the Funds remained consistent with the previous review in May 2009 and, consequently, the Trustees concluded that expenses of the Funds were satisfactory.
The Board also considered the Expense Agreement under negotiation in evaluating Fund expenses. The Trustees expected that the Expense Agreement would provide that LNC and Macquarie Group would pay or reimburse the Trusts for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the consideration of the New Investment Advisory Agreements (subject to certain limited exceptions).
Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreements likely would have an adverse effect on the Funds’ expenses because (i) each Fund’s contractual fee rates under the New Investment Advisory Agreement would remain the same; (ii) under the Expense Agreement, the Funds would be reimbursed for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the related proxy solicitation (subject to certain limited exceptions); and (iii) the expense ratios of certain Funds might decline as a result of the possible increased investment in Delaware Investments by Macquarie Group, as discussed below under “Economies of Scale.”
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Management Profitability. At their meeting on September 3, 2009, the Board evaluated DMC’s profitability in connection with the operation of the Funds. The Board had previously considered DMC’s profitability in connection with the operation of the Funds at its May 2009 meeting. At that meeting, the Board reviewed an analysis that addressed the overall profitability of Delaware Investments’ business in providing management and other services to each of the Funds and the Delaware Investments® Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability.
At the May 2009 meeting, representatives of DMC had stated that the level of profits of DMC, to a certain extent, reflect operational cost savings and efficiencies initiated by Delaware Investments (including DMC and its affiliates that provide services to the Funds). The Board considered Delaware Investments’ efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide U.S. Securities and Exchange Commission initiatives. At that meeting, the Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC. At the September 3, 2009 meeting, DMC advised the Board that DMC did not expect the Transaction to affect materially the profitability of Delaware Investments compared to the level of profitability considered during the May 2009 review. Moreover, the Trustees reviewed pro forma balance sheets of certain key companies in Delaware Investments as of June 30, 2009 (which were provided by Macquarie Group and DMC in response to the Trustees’ requests) and evaluated the projections of Delaware Investments’ capitalization following the Transaction for purposes of evaluating the financial ability of Delaware Investments to continue to provide the nature, extent, and quality of services as it had under the Current Investment Advisory Agreement.
Based on information provided by DMC and Macquarie Group, the Board concluded that DMC and Delaware Investments would be sufficiently capitalized following the Transaction to continue the same level and quality of services to the Funds under the New Investment Advisory Agreements as was the case under the Current Investment Advisory Agreements. The Board also concluded that Macquarie Group had sufficient financial strength and resources, as well as an ongoing commitment to a global asset management business, to continue investing in Delaware Investments, including DMC, to the extent that Macquarie Group determined it was appropriate. Finally, because services and costs were expected to be substantially the same (and DMC had represented that, correspondingly, profitability would be about the same), under the New Investment Advisory Agreements as under the Current Investment Advisory Agreements, the Trustees concluded that the profitability of Delaware Investments would not result in an inequitable charge on the Funds or their shareholders. Accordingly, the Board concluded that the fees charged under the New Investment Advisory Agreements would be reasonable in light of the services to be provided and the expected profitability of DMC.
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Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
(Unaudited)
Delaware National Tax-Free Funds
Board Consideration of New Investment Advisory Agreement (continued)
Economies of Scale. The Trustees considered whether economies of scale would be realized by Delaware Investments as each Fund’s assets increase and the extent to which any economies of scale would be reflected in the management fees charged. The Trustees took into account DMC’s practice of maintaining the competitive nature of management fees based on its analysis of fees charged by comparable funds. DMC management believed, and the Board agreed, that the Funds were priced with breakpoints and relatively low management fees to reflect potential economies of scale to Fund shareholders.
The Board also acknowledged Macquarie Group’s statement that the Transaction would not by itself immediately provide additional economies of scale given Macquarie Group’s limited presence in the U.S. mutual fund market. Nonetheless, the Trustees concluded that additional economies of scale could potentially be achieved in the future if DMC were owned by Macquarie Group as a result of Macquarie Group’s willingness to invest further in Delaware Investments if appropriate opportunities arise. The Board further concluded that potential economies of scale could be achieved as a result of Delaware Investments’ expanded distribution capabilities arising from the Transaction, as well as opportunities that might arise from Macquarie Group’s global asset management business.
Fall-Out Benefits. The Board acknowledged that DMC would continue to benefit from soft dollar arrangements using portfolio brokerage of each Fund that invests in equity securities and that DMC’s profitability would likely be somewhat lower without the benefit of practices with respect to allocating Fund portfolio brokerage for brokerage and research services. The Board also considered that Macquarie Group and Delaware Investments may derive reputational, strategic, and other benefits from their association with the Delaware Investments Family of Funds, including service relationships with DMC, DSC, and Delaware Distributors, L.P., and evaluated the extent to which Delaware Investments might derive ancillary benefits from Fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds and the benefits from allocation of Fund brokerage to improve trading efficiencies. However, the Board concluded that (i) any such benefits under the New Investment Advisory Agreements would not be dissimilar from those existing under the Current Investment Advisory Agreements; (ii) such benefits did not impose a cost or burden on the Funds or their shareholders; and (iii) such benefits would probably have an indirectly beneficial effect on the Funds and their shareholders because of the added importance that DMC and Macquarie Group might attach to the Funds as a result of the fall-out benefits that the Funds conveyed.
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Board Review of Macquarie Group. The Trustees reviewed detailed information supplied by Macquarie Group about its operations as well as other information regarding Macquarie Group provided by independent legal counsel to the independent Trustees. Based on this review, the Trustees concluded that Delaware Investments would continue to have the financial ability to maintain the high quality of services required by the Funds. The Trustees noted that there would be a limited transition period during which some services previously provided by LNC to Delaware Investments would continue to be provided by LNC after the Closing, and concluded that this arrangement would help minimize disruption in Delaware Investments’ provision of services to the Funds following the Transaction.
The Board considered Macquarie Group’s support for Delaware Investments’ plans for Fund distribution by transferring wholesalers from Lincoln Financial Distributors, Inc., LNC’s retail distributor, to Delaware Investments, and Macquarie Group’s current intention to leave the Funds’ other service providers in place. The Board also considered Macquarie Group’s current strategic plans to increase its asset management activities, one of its core businesses, particularly in North America, and its statement that its acquisition of DMC is an important component of this strategic growth and the establishment of a significant presence in the United States. Based in part on the information provided by DMC and Macquarie Group, the Board concluded that Macquarie Group’s acquisition of Delaware Investments could potentially enhance the nature, quality, and extent of services provided to the Funds and their shareholders.
Conclusion. The Board concluded that the advisory fee rate under each New Investment Advisory Agreement was reasonable in relation to the services provided and that execution of the New Investment Advisory Agreement would be in the best interests of the shareholders. For each Fund, the Trustees noted that they had concluded in their most recent advisory agreement continuance considerations in May 2009 that the management fees and total expense ratios were at acceptable levels in light of the quality of services provided to the Funds and in comparison to those of the Funds’ respective peer groups; that the advisory fee schedule would not be increased and would stay the same for all of the Funds; that the total expense ratio had not changed materially since that determination; and that DMC had represented that the overall expenses for each Fund were not expected to be adversely affected by the Transaction. The Trustees also noted, with respect to the Funds that currently had the benefit of voluntary fee limitations, that Macquarie Group had no present intention to cause DMC to alter any voluntary expense limitations or reimbursements currently in effect. On that basis, the Trustees concluded that the total expense ratios and proposed advisory fees for the Funds anticipated to result from the Transaction were acceptable. In approving each New Investment Advisory Agreement, the Board stated that it anticipated reviewing the continuance of the New Investment Advisory Agreement in advance of the expiration of the initial two-year period.
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About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA | Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA | Ann R. Leven Consultant ARL Associates New York, NY Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN | Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ |
Affiliated officers | |||
David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | David P. O’Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
This semiannual report is for the information of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National 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 USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund and the Delaware Investments Fund profile 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. |
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 (SEC) 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 SEC’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 SEC’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 SEC’s Web site at www.sec.gov. |
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Semiannual report Delaware Tax-Free Arizona Fund Delaware Tax-Free California Fund Delaware Tax-Free Colorado Fund Delaware Tax-Free Idaho Fund Delaware Tax-Free New York Fund February 28, 2010 Fixed income mutual funds |
This semiannual report is for the information of Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund. The figures in the semiannual report for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. You should consider the investment objectives, risks, charges, and expenses of the Funds carefully before investing. The Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund prospectus contains this and other important information about the Funds. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit www.delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund at www.delawareinvestments.com.
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On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Funds’ prospectus and any supplements thereto for more complete information.
Investments in Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including subsidiaries or related companies, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | ||
Disclosure of Fund expenses | 1 | |
Sector allocations and credit quality breakdowns | 4 | |
Statements of net assets | 9 | |
Statements of operations | 48 | |
Statements of changes in net assets | 50 | |
Financial highlights | 60 | |
Notes to financial statements | 90 | |
Other Fund information | 104 | |
About the organization | 115 |
Unless otherwise noted, views expressed herein are current as of Feb. 28, 2010, and are subject to change.
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. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2010 Delaware Management Holdings, Inc.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the period September 1, 2009 to February 28, 2010
For the period September 1, 2009 to February 28, 2010
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. These 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 from September 1, 2009 to February 28, 2010.
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 Funds’ expenses shown in the tables reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Tax-Free Arizona Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning Account Value 9/1/09 | Ending Account Value 2/28/10 | Annualized Expense Ratio | Expenses Paid During Period 9/1/09 to 2/28/10* | |||||||||||||||||
Actual Fund return | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,042.70 | 0.81 | % | $ | 4.10 | ||||||||||||
Class B | 1,000.00 | 1,038.80 | 1.56 | % | 7.89 | |||||||||||||||
Class C | 1,000.00 | 1,038.80 | 1.56 | % | 7.89 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,020.78 | 0.81 | % | $ | 4.06 | ||||||||||||
Class B | 1,000.00 | 1,017.06 | 1.56 | % | 7.80 | |||||||||||||||
Class C | 1,000.00 | 1,017.06 | 1.56 | % | 7.80 |
Delaware Tax-Free California Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning Account Value 9/1/09 | Ending Account Value 2/28/10 | Annualized Expense Ratio | Expenses Paid During Period 9/1/09 to 2/28/10* | |||||||||||||||||
Actual Fund return | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,063.20 | 0.82 | % | $ | 4.19 | ||||||||||||
Class B | 1,000.00 | 1,059.10 | 1.57 | % | 8.02 | |||||||||||||||
Class C | 1,000.00 | 1,059.20 | 1.57 | % | 8.02 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,020.73 | 0.82 | % | $ | 4.11 | ||||||||||||
Class B | 1,000.00 | 1,017.01 | 1.57 | % | 7.85 | |||||||||||||||
Class C | 1,000.00 | 1,017.01 | 1.57 | % | 7.85 |
Delaware Tax-Free Colorado Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning Account Value 9/1/09 | Ending Account Value 2/28/10 | Annualized Expense Ratio | Expenses Paid During Period 9/1/09 to 2/28/10* | |||||||||||||||||
Actual Fund return | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,048.20 | 0.91 | % | $ | 4.62 | ||||||||||||
Class B | 1,000.00 | 1,043.30 | 1.66 | % | 8.41 | |||||||||||||||
Class C | 1,000.00 | 1,043.30 | 1.66 | % | 8.41 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,020.28 | 0.91 | % | $ | 4.56 | ||||||||||||
Class B | 1,000.00 | 1,016.56 | 1.66 | % | 8.30 | |||||||||||||||
Class C | 1,000.00 | 1,016.56 | 1.66 | % | 8.30 |
2
Delaware Tax-Free Idaho Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning Account Value 9/1/09 | Ending Account Value 2/28/10 | Annualized Expense Ratio | Expenses Paid During Period 9/1/09 to 2/28/10* | |||||||||||||||||
Actual Fund return | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,040.00 | 0.93 | % | $ | 4.70 | ||||||||||||
Class B | 1,000.00 | 1,036.20 | 1.68 | % | 8.48 | |||||||||||||||
Class C | 1,000.00 | 1,036.20 | 1.68 | % | 8.48 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,020.18 | 0.93 | % | $ | 4.66 | ||||||||||||
Class B | 1,000.00 | 1,016.46 | 1.68 | % | 8.40 | |||||||||||||||
Class C | 1,000.00 | 1,016.46 | 1.68 | % | 8.40 |
Delaware Tax-Free New York Fund
Expense analysis of an investment of $1,000
Expense analysis of an investment of $1,000
Beginning Account Value 9/1/09 | Ending Account Value 2/28/10 | Annualized Expense Ratio | Expenses Paid During Period 9/1/09 to 2/28/10* | |||||||||||||||||
Actual Fund return | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,049.80 | 0.80 | % | $ | 4.07 | ||||||||||||
Class B | 1,000.00 | 1,046.00 | 1.55 | % | 7.86 | |||||||||||||||
Class C | 1,000.00 | 1,046.00 | 1.55 | % | 7.86 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,020.83 | 0.80 | % | $ | 4.01 | ||||||||||||
Class B | 1,000.00 | 1,017.11 | 1.55 | % | 7.75 | |||||||||||||||
Class C | 1,000.00 | 1,017.11 | 1.55 | % | 7.75 |
*“Expenses Paid During Period” are equal to a Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
3
Sector allocations and credit quality breakdowns | |
Delaware Tax-Free Arizona Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | ||||
Municipal Bonds | 99.00 | % | |||
Corporate Revenue Bonds | 6.78 | % | |||
Education Revenue Bonds | 10.23 | % | |||
Electric Revenue Bonds | 5.38 | % | |||
Health Care Revenue Bonds | 13.09 | % | |||
Housing Revenue Bond | 0.01 | % | |||
Lease Revenue Bonds | 12.93 | % | |||
Local General Obligation Bonds | 5.14 | % | |||
Pre-Refunded Bonds | 9.42 | % | |||
Special Tax Revenue Bonds | 15.41 | % | |||
State General Obligation Bonds | 7.52 | % | |||
Transportation Revenue Bonds | 5.37 | % | |||
Water & Sewer Revenue Bonds | 7.72 | % | |||
Total Value of Securities | 99.00 | % | |||
Receivables and Other Assets Net of Liabilities | 1.00 | % | |||
Total Net Assets | 100.00 | % | |||
Credit quality breakdown (as a % of fixed income investments)* | |||||
AAA | 12.20 | % | |||
AA | 29.67 | % | |||
A | 26.42 | % | |||
BBB | 29.64 | % | |||
B | 1.22 | % | |||
Not Rated | 0.85 | % | |||
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations. |
4
Delaware Tax-Free California Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | ||||
Municipal Bonds | 98.78 | % | |||
Corporate Revenue Bonds | 5.70 | % | |||
Education Revenue Bonds | 9.32 | % | |||
Electric Revenue Bonds | 4.18 | % | |||
Health Care Revenue Bonds | 16.82 | % | |||
Housing Revenue Bonds | 7.26 | % | |||
Lease Revenue Bonds | 7.83 | % | |||
Local General Obligation Bonds | 6.29 | % | |||
Pre-Refunded Bonds | 3.01 | % | |||
Resource Recovery Revenue Bond | 1.26 | % | |||
Special Tax Revenue Bonds | 19.66 | % | |||
State General Obligation Bonds | 7.32 | % | |||
Transportation Revenue Bonds | 6.17 | % | |||
Water & Sewer Revenue Bonds | 3.96 | % | |||
Short-Term Investments | 0.62 | % | |||
Money Market Instrument | 0.38 | % | |||
Variable Rate Demand Note | 0.24 | % | |||
Total Value of Securities | 99.40 | % | |||
Receivables and Other Assets Net of Liabilities | 0.60 | % | |||
Total Net Assets | 100.00 | % | |||
Credit quality breakdown (as a % of fixed income investments)* | |||||
AAA | 10.79 | % | |||
AA | 15.33 | % | |||
A | 43.82 | % | |||
BBB | 16.16 | % | |||
BB | 1.93 | % | |||
B | 2.29 | % | |||
Not Rated | 9.68 | % | |||
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations. |
5
Sector allocations and credit quality breakdowns | |
Delaware Tax-Free Colorado Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | ||||
Municipal Bonds | 99.07 | % | |||
Corporate Revenue Bond | 2.17 | % | |||
Education Revenue Bonds | 11.42 | % | |||
Electric Revenue Bonds | 5.86 | % | |||
Escrowed to Maturity Bond | 2.23 | % | |||
Health Care Revenue Bonds | 21.12 | % | |||
Housing Revenue Bonds | 2.11 | % | |||
Lease Revenue Bonds | 3.62 | % | |||
Local General Obligation Bonds | 15.03 | % | |||
Pre-Refunded Bonds | 15.11 | % | |||
Special Tax Revenue Bonds | 8.56 | % | |||
State General Obligation Bonds | 6.09 | % | |||
Transportation Revenue Bonds | 3.49 | % | |||
Water & Sewer Revenue Bonds | 2.26 | % | |||
Short-Term Investment | 1.02 | % | |||
Total Value of Securities | 100.09 | % | |||
Liabilities Net of Receivables and Other Assets | (0.09 | %) | |||
Total Net Assets | 100.00 | % | |||
Credit quality breakdown (as a % of fixed income investments)* | |||||
AAA | 13.37 | % | |||
AA | 27.92 | % | |||
A | 29.16 | % | |||
BBB | 18.55 | % | |||
B | 1.09 | % | |||
Not Rated | 9.91 | % | |||
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations. |
6
Delaware Tax-Free Idaho Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | ||||
Municipal Bonds | 97.33 | % | |||
Corporate Revenue Bonds | 4.52 | % | |||
Education Revenue Bonds | 9.56 | % | |||
Electric Revenue Bonds | 1.38 | % | |||
Health Care Revenue Bonds | 1.81 | % | |||
Housing Revenue Bonds | 7.00 | % | |||
Lease Revenue Bonds | 3.61 | % | |||
Local General Obligation Bonds | 21.59 | % | |||
Pre-Refunded Bonds | 14.42 | % | |||
Special Tax Revenue Bonds | 17.08 | % | |||
State General Obligation Bonds | 5.70 | % | |||
Transportation Revenue Bonds | 7.93 | % | |||
Water & Sewer Revenue Bonds | 2.73 | % | |||
Short-Term Investment | 1.41 | % | |||
Total Value of Securities | 98.74 | % | |||
Receivables and Other Assets Net of Liabilities | 1.26 | % | |||
Total Net Assets | 100.00 | % | |||
Credit quality breakdown (as a % of fixed income investments)* | |||||
AAA | 19.31 | % | |||
AA | 34.49 | % | |||
A | 29.15 | % | |||
BBB | 12.46 | % | |||
BB | 2.98 | % | |||
B | 1.40 | % | |||
Not Rated | 0.21 | % | |||
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations. |
7
Sector allocations and credit quality breakdowns | |
Delaware Tax-Free New York Fund | As of February 28, 2010 |
Sector designations may be different than the sector designations presented in other Fund materials.
Sector | Percentage of net assets | ||||
Municipal Bonds | 95.98 | % | |||
Corporate Revenue Bonds | 7.93 | % | |||
Education Revenue Bonds | 22.90 | % | |||
Electric Revenue Bonds | 2.97 | % | |||
Health Care Revenue Bonds | 8.54 | % | |||
Housing Revenue Bonds | 1.95 | % | |||
Lease Revenue Bonds | 8.94 | % | |||
Local General Obligation Bonds | 3.17 | % | |||
Pre-Refunded Bonds | 6.27 | % | |||
Special Tax Revenue Bonds | 20.51 | % | |||
State General Obligation Bonds | 4.70 | % | |||
Transportation Revenue Bonds | 6.22 | % | |||
Water & Sewer Revenue Bonds | 1.88 | % | |||
Short-Term Investments | 4.16 | % | |||
Total Value of Securities | 100.14 | % | |||
Liabilities Net of Receivables and Other Assets | (0.14 | %) | |||
Total Net Assets | 100.00 | % | |||
Credit quality breakdown (as a % of fixed income investments)* | |||||
AAA | 12.55 | % | |||
AA | 27.41 | % | |||
A | 30.76 | % | |||
BBB | 22.38 | % | |||
BB | 2.98 | % | |||
B | 2.39 | % | |||
Not Rated | 1.53 | % | |||
Total | 100.00 | % |
*Bond ratings are determined by independent, nationally recognized statistical rating organizations. |
8
Statements of net assets | |
Delaware Tax-Free Arizona Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 99.00% | ||||||||
Corporate Revenue Bonds – 6.78% | ||||||||
Maricopa County Pollution Control (Palo Verde Project) | ||||||||
Series A 5.05% 5/1/29 (AMBAC) | $ | 2,000,000 | $ | 1,875,980 | ||||
• | Navajo County Pollution Control Revenue Refunding | |||||||
(Arizona Public Services Company-Cholla) | ||||||||
Series D 5.75% 6/1/34 | 1,500,000 | 1,577,670 | ||||||
Pima County Industrial Development Authority Pollution | ||||||||
Control Revenue (Tucson Electric Power Company-San | ||||||||
Juan) Series A 4.95% 10/1/20 | 1,500,000 | 1,507,305 | ||||||
Pima County Industrial Development Authority Revenue | ||||||||
Remarketed (Tucson Electric Power) | ||||||||
5.75% 9/1/29 | 750,000 | 758,190 | ||||||
Salt Verde Financial Corporation Gas Revenue Senior | ||||||||
5.00% 12/1/37 | 2,895,000 | 2,477,975 | ||||||
8,197,120 | ||||||||
Education Revenue Bonds – 10.23% | ||||||||
Arizona Health Facilities Authority Healthcare | ||||||||
Education Revenue (Kirksville College) | ||||||||
5.125% 1/1/30 | 1,500,000 | 1,497,120 | ||||||
Arizona State Board of Regents | ||||||||
(University of Arizona System Revenue) | ||||||||
Series A 5.00% 6/1/21 | 1,255,000 | 1,400,266 | ||||||
Series A 5.00% 6/1/39 | 1,500,000 | 1,539,045 | ||||||
Arizona State University Certificates of Participation | ||||||||
(Research Infrastructure Project) | ||||||||
5.00% 9/1/30 (AMBAC) | 2,000,000 | 2,027,380 | ||||||
Arizona State University Energy Management Revenue | ||||||||
(Arizona State University-Tempe Campus II Project) | ||||||||
4.50% 7/1/24 | 1,385,000 | 1,416,786 | ||||||
Energy Management Services Energy Conservation Revenue | ||||||||
(Arizona State University-Main Campus Project) | ||||||||
5.25% 7/1/17 (NATL-RE) | 1,500,000 | 1,633,950 | ||||||
Pima County Industrial Development Authority Educational | ||||||||
Revenue Refunding (Tucson Country Day School Project) | ||||||||
5.00% 6/1/37 | 1,000,000 | 754,060 | ||||||
South Campus Group Student Housing Revenue | ||||||||
(Arizona State University-South Campus Project) | ||||||||
5.625% 9/1/35 (NATL-RE) | 1,000,000 | 1,003,620 |
9
Statements of net assets
Delaware Tax-Free Arizona Fund
Delaware Tax-Free Arizona Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Education Revenue Bonds (continued) | ||||||||
Tucson Industrial Development Authority Lease Revenue | ||||||||
(University of Arizona-Marshall Foundation) Series A | ||||||||
5.00% 7/15/27 (AMBAC) | $ | 1,000,000 | $ | 1,007,540 | ||||
University of Arizona Certificates of Participation | ||||||||
(University of Arizona Project) | ||||||||
Series A 5.125% 6/1/21 (AMBAC) | 85,000 | 90,480 | ||||||
12,370,247 | ||||||||
Electric Revenue Bonds – 5.38% | ||||||||
Mesa Utilities System Revenue Refunding | ||||||||
5.00% 7/1/18 (NATL-RE) (FGIC) | 2,150,000 | 2,428,920 | ||||||
Puerto Rico Electric Power Authority Revenue Series WW | ||||||||
5.00% 7/1/28 | 1,430,000 | 1,428,198 | ||||||
5.50% 7/1/38 | 600,000 | 607,560 | ||||||
Salt River Project Agricultural Improvement & | ||||||||
Power District Electric System Revenue | ||||||||
Series B 5.00% 1/1/31 (NATL-RE) (IBC) | 2,000,000 | 2,042,680 | ||||||
6,507,358 | ||||||||
Health Care Revenue Bonds – 13.09% | ||||||||
Arizona Health Facilities Authority Revenue | ||||||||
(Catholic Healthcare West) Series D 5.00% 7/1/28 | 1,500,000 | 1,482,165 | ||||||
Glendale Industrial Development Authority Hospital | ||||||||
Revenue (John C. Lincoln Health) 5.00% 12/1/42 | 2,500,000 | 2,171,925 | ||||||
Maricopa County Industrial Development Authority Health | ||||||||
Facilities Revenue (Catholic Healthcare West) Series A | ||||||||
5.50% 7/1/26 | 1,000,000 | 1,020,030 | ||||||
6.00% 7/1/39 | 2,500,000 | 2,608,750 | ||||||
Scottsdale Industrial Development Authority | ||||||||
Hospital Revenue (Scottsdale Healthcare) | ||||||||
Series A 5.25% 9/1/30 | 1,250,000 | 1,236,063 | ||||||
University Medical Center Hospital Revenue | ||||||||
5.00% 7/1/24 | 800,000 | 790,272 | ||||||
5.00% 7/1/35 | 2,000,000 | 1,864,000 | ||||||
6.50% 7/1/39 | 2,500,000 | 2,659,899 | ||||||
Yavapai County Industrial Development Authority | ||||||||
Revenue (Yavapai Regional Medical Center) | ||||||||
Series A 5.25% 8/1/21 (RADIAN) | 2,000,000 | 1,991,420 | ||||||
15,824,524 |
10
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Housing Revenue Bond – 0.01% | ||||||||
Pima County Industrial Development Authority | ||||||||
Single Family Housing Revenue | ||||||||
Series A-1 6.125% 11/1/33 | ||||||||
(GNMA) (FNMA) (FHLMC) (AMT) | $ | 15,000 | $ | 15,026 | ||||
15,026 | ||||||||
Lease Revenue Bonds – 12.93% | ||||||||
Arizona Game & Fish Department & | ||||||||
Community Beneficial Interest Certificates | ||||||||
(Administration Building Project) 5.00% 7/1/32 | 1,300,000 | 1,294,722 | ||||||
Arizona State Certificates of Participation Department | ||||||||
Administration Series A 5.25% 10/1/25 (AGM) | 1,500,000 | 1,598,880 | ||||||
Marana Municipal Property Facilities Revenue | ||||||||
5.00% 7/1/28 (AMBAC) | 575,000 | 590,278 | ||||||
Maricopa County Industrial Development Authority | ||||||||
Correctional Contract Revenue (Phoenix West Prison) | ||||||||
Series B 5.375% 7/1/22 (ACA) | 1,000,000 | 980,930 | ||||||
Phoenix Industrial Development Authority Lease | ||||||||
Revenue (Capitol Mall II, LLC Project) | ||||||||
5.00% 9/15/28 (AMBAC) | 2,000,000 | 2,002,260 | ||||||
Pima County Industrial Development Authority Lease | ||||||||
Revenue Metro Police Facility (Nevada Project) Series A | ||||||||
5.25% 7/1/31 | 1,500,000 | 1,543,425 | ||||||
5.375% 7/1/39 | 1,500,000 | 1,525,800 | ||||||
Pinal County Certificates of Participation | ||||||||
5.00% 12/1/29 | 1,300,000 | 1,293,435 | ||||||
5.125% 6/1/21 (AMBAC) | 3,000,000 | 3,074,039 | ||||||
Puerto Rico Public Buildings Authority Revenue | ||||||||
(Guaranteed Government Facilities) Series D | ||||||||
5.25% 7/1/27 | 470,000 | 463,129 | ||||||
5.25% 7/1/36 | 270,000 | 258,836 | ||||||
University of Arizona Certificates of Participation | ||||||||
Prerefunded (University of Arizona Project) | ||||||||
Series B 5.00% 6/1/31 (AMBAC) | 1,000,000 | 1,003,210 | ||||||
15,628,944 |
11
Statements of net assets
Delaware Tax-Free Arizona Fund
Delaware Tax-Free Arizona Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Local General Obligation Bonds – 5.14% | ||||||||
Cochise County Unified School District #68 | ||||||||
(Sierra Vista) 7.50% 7/1/10 (NATL-RE) (FGIC) | $ | 1,000,000 | $ | 1,022,960 | ||||
Coconino & Yavapai Counties Joint Unified School | ||||||||
District #9 (Sedona Oak Creek Project of 2007) | ||||||||
Series A 4.50% 7/1/18 (AGM) | 1,520,000 | 1,728,073 | ||||||
Series B 5.375% 7/1/28 | 1,350,000 | 1,453,113 | ||||||
DC Ranch Community Facilities | ||||||||
5.00% 7/15/27 (AMBAC) | 1,000,000 | 971,670 | ||||||
• | Gila County Unified School District #10 | |||||||
(Payson School Improvement Project of 2006) | ||||||||
Series A 5.25% 7/1/27 (AMBAC) | 1,000,000 | 1,032,520 | ||||||
6,208,336 | ||||||||
§Pre-Refunded Bonds – 9.42% | ||||||||
Phoenix Variable Purpose Series B 5.00% 7/1/27-12 | 2,435,000 | 2,507,904 | ||||||
Puerto Rico Commonwealth Highway & | ||||||||
Transportation Authority Revenue Series K | ||||||||
5.00% 7/1/35-15 | 750,000 | 882,060 | ||||||
Puerto Rico Electric Power Authority Revenue | ||||||||
Series NN 5.00% 7/1/32-13 (NATL-RE) | 1,750,000 | 1,981,385 | ||||||
Puerto Rico Public Buildings Authority Revenue | ||||||||
(Guaranteed Government Facilities) | ||||||||
Series D 5.25% 7/1/27-12 | 1,280,000 | 1,408,230 | ||||||
Series I 5.25% 7/1/33-14 | 5,000 | 5,792 | ||||||
Southern Arizona Capital Facilities Finance | ||||||||
Revenue (University of Arizona Project) | ||||||||
5.10% 9/1/33-12 (NATL-RE) | 3,250,000 | 3,603,568 | ||||||
University of Arizona Certificates of Participation | ||||||||
(University of Arizona Project) | ||||||||
Series A 5.125% 6/1/21-12 (AMBAC) | 915,000 | 1,002,904 | ||||||
11,391,843 | ||||||||
Special Tax Revenue Bonds – 15.41% | ||||||||
Arizona State Transportation Board Excise Tax Revenue | ||||||||
(Maricopa County Regional Area Road Foundation) | ||||||||
5.00% 7/1/19 | 1,500,000 | 1,695,390 | ||||||
Arizona Tourism & Sports Authority Tax Revenue | ||||||||
(Multipurpose Stadium Facilities) | ||||||||
Series A 5.00% 7/1/28 (NATL-RE) | 1,345,000 | 1,355,626 |
12
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Special Tax Revenue Bonds (continued) | ||||||||
Flagstaff Aspen Place Sawmill Improvement District | ||||||||
Revenue 5.00% 1/1/32 | $ | 1,350,000 | $ | 1,350,162 | ||||
Gilbert Public Facilities Municipal Property | ||||||||
Revenue 5.00% 7/1/25 | 1,250,000 | 1,331,563 | ||||||
Marana Tangerine Farm Road Improvement District | ||||||||
Revenue 4.60% 1/1/26 | 924,000 | 836,728 | ||||||
Mesa Street & Highway Revenue 5.00% 7/1/20 (AGM) | 1,000,000 | 1,144,650 | ||||||
Peoria Municipal Development Authority Transition | ||||||||
Sales Tax, Excise Tax & State Shared Revenue | ||||||||
(Senior Lien & Subordinated Lien) 4.50% 1/1/16 | 1,000,000 | 1,122,600 | ||||||
Phoenix Civic Improvement Transition Excise Tax Revenue | ||||||||
(Light Rail Project) 5.00% 7/1/20 (AMBAC) | 2,270,000 | 2,443,586 | ||||||
Puerto Rico Commonwealth Infrastructure Financing | ||||||||
Authority Special Tax Revenue Refunding | ||||||||
Series C 5.50% 7/1/25 (AMBAC) | 1,955,000 | 2,003,836 | ||||||
Puerto Rico Sales Tax Financing Corporation | ||||||||
Revenue Series A | ||||||||
ΩCapital Appreciation-First Subordinate 6.75% 8/1/32 | 3,045,000 | 2,317,518 | ||||||
First Subordinate | ||||||||
•5.00% 8/1/39 | 1,500,000 | 1,575,105 | ||||||
5.75% 8/1/37 | 1,405,000 | 1,452,447 | ||||||
18,629,211 | ||||||||
State General Obligation Bonds – 7.52% | ||||||||
Guam Government Series A | ||||||||
6.75% 11/15/29 | 115,000 | 121,964 | ||||||
7.00% 11/15/39 | 1,250,000 | 1,338,800 | ||||||
Puerto Rico Commonwealth Public Improvement | ||||||||
Refunding Series A | ||||||||
5.50% 7/1/17 | 1,765,000 | 1,890,227 | ||||||
5.50% 7/1/19 | 1,300,000 | 1,384,942 | ||||||
Series C 6.00% 7/1/39 | 1,010,000 | 1,039,745 | ||||||
Un-Refunded Balance Series A | ||||||||
5.125% 7/1/30 (FSA) | 480,000 | 481,920 | ||||||
5.125% 7/1/31 | 2,000,000 | 1,911,140 | ||||||
Virgin Islands Public Finance Authority | ||||||||
(Gross Receipts Taxes Loan Note) | ||||||||
5.00% 10/1/31 (ACA) | 1,000,000 | 927,670 | ||||||
9,096,408 |
13
Statements of net assets
Delaware Tax-Free Arizona Fund
Delaware Tax-Free Arizona Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Transportation Revenue Bonds – 5.37% | |||||||||
Arizona State Transportation Board Grant Anticipation | |||||||||
Notes Series A 5.00% 7/1/14 | $ | 1,250,000 | $ | 1,423,250 | |||||
Arizona State Transportation Board Highway | |||||||||
Revenue Subordinated Series A 5.00% 7/1/23 | 1,000,000 | 1,079,130 | |||||||
Phoenix Civic Improvement Airport | |||||||||
Revenue (Senior Lien) Series B | |||||||||
5.25% 7/1/27 (NATL-RE) (FGIC) (AMT) | 1,000,000 | 1,005,620 | |||||||
5.25% 7/1/32 (NATL-RE) (FGIC) (AMT) | 3,000,000 | 2,980,260 | |||||||
6,488,260 | |||||||||
Water & Sewer Revenue Bonds – 7.72% | |||||||||
Phoenix Civic Improvement Corporation | |||||||||
Waste System Revenue (Junior Lien) | |||||||||
5.00% 7/1/26 (NATL-RE) (FGIC) | 3,750,000 | 3,806,785 | |||||||
Phoenix Civic Improvement Wastewater Corporation | |||||||||
Systems Revenue (Junior Lien) | |||||||||
5.00% 7/1/19 (NATL-RE) | 2,750,000 | 3,072,658 | |||||||
Refunding 5.00% 7/1/24 (NATL-RE) (FGIC) | 1,000,000 | 1,034,570 | |||||||
Scottsdale Water & Sewer Revenue 5.25% 7/1/22 | 1,150,000 | 1,418,652 | |||||||
9,332,665 | |||||||||
Total Municipal Bonds (cost $115,787,713) | 119,689,942 | ||||||||
Total Value of Securities – 99.00% | |||||||||
(cost $115,787,713) | 119,689,942 | ||||||||
Receivables and Other Assets | |||||||||
Net of Liabilities – 1.00% | 1,208,111 | ||||||||
Net Assets Applicable to 10,660,132 | |||||||||
Shares Outstanding – 100.00% | $ | 120,898,053 | |||||||
Net Asset Value – Delaware Tax-Free Arizona Fund | |||||||||
Class A ($108,625,920 / 9,579,914 Shares) | $11.34 | ||||||||
Net Asset Value – Delaware Tax-Free Arizona Fund | |||||||||
Class B ($4,708,051 / 414,923 Shares) | $11.35 | ||||||||
Net Asset Value – Delaware Tax-Free Arizona Fund | |||||||||
Class C ($7,564,082 / 665,295 Shares) | $11.37 |
14
Components of Net Assets at February 28, 2010: | |||
Shares of beneficial interest (unlimited authorization – no par) | $ | 117,512,086 | |
Undistributed net investment income | 26,197 | ||
Accumulated net realized loss on investments | (542,459 | ) | |
Net unrealized appreciation of investments | 3,902,229 | ||
Total net assets | $ | 120,898,053 |
§ | Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in ”Notes to financial statements.” |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHLMC — Insured by the Federal Home Loan Mortgage Corporation
FNMA — Federal National Mortgage Association collateral
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association collateral
IBC — Insured by Integrity Building Corporation
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHLMC — Insured by the Federal Home Loan Mortgage Corporation
FNMA — Federal National Mortgage Association collateral
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association collateral
IBC — Insured by Integrity Building Corporation
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
Net Asset Value and Offering Price Per Share – | ||
Delaware Tax-Free Arizona Fund | ||
Net asset value Class A (A) | $ | 11.34 |
Sales charge (4.50% of offering price) (B) | 0.53 | |
Offering price | $ | 11.87 |
(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
15
Statements of net assets | |
Delaware Tax-Free California Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | ||||||||
Municipal Bonds – 98.78% | |||||||||
Corporate Revenue Bonds – 5.70% | |||||||||
Chula Vista Industrial Development Revenue | |||||||||
(San Diego Gas & Electric) Series D | |||||||||
5.875% 1/1/34 | $ | 1,000,000 | $ | 1,099,970 | |||||
Golden State Tobacco Securitization Corporation | |||||||||
Settlement Revenue (Asset-Backed Senior Notes) | |||||||||
Series A-1 | |||||||||
5.125% 6/1/47 | 1,075,000 | 722,873 | |||||||
5.75% 6/1/47 | 1,000,000 | 737,370 | |||||||
M-S-R Energy Authority Gas Revenue Series A | |||||||||
6.50% 11/1/39 | 2,000,000 | 2,126,060 | |||||||
4,686,273 | |||||||||
Education Revenue Bonds – 9.32% | |||||||||
California Educational Facilities Authority Revenue | |||||||||
(University of the Pacific) 5.50% 11/1/39 | 1,000,000 | 1,013,400 | |||||||
(Woodbury University) 5.00% 1/1/36 | 1,000,000 | 826,280 | |||||||
California Municipal Finance Authority | |||||||||
Educational Revenue | |||||||||
(American Heritage Foundation Project) | |||||||||
Series A 5.25% 6/1/36 | 1,000,000 | 837,940 | |||||||
California Statewide Communities Development | |||||||||
Authority Revenue | |||||||||
(California Baptist University Project) | |||||||||
Series A 5.50% 11/1/38 | 1,000,000 | 810,170 | |||||||
(Viewpoint School Project) 5.75% 10/1/33 (ACA) | 1,000,000 | 882,710 | |||||||
(Windrush School Project) 5.50% 7/1/37 | 1,000,000 | 784,130 | |||||||
California Statewide Communities Development | |||||||||
Authority Student Housing Revenue | |||||||||
(East Campus Apartments, LLC) | |||||||||
Series A 5.625% 8/1/34 (ACA) | 1,000,000 | 958,370 | |||||||
San Diego County Certificates of Participation | |||||||||
(University of San Diego) 5.375% 10/1/41 | 1,000,000 | 988,700 | |||||||
University of California Revenue | |||||||||
(Multiple Purpose Projects) | |||||||||
Series L 5.00% 5/15/19 | 500,000 | 563,490 | |||||||
7,665,190 |
16
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Electric Revenue Bonds – 4.18% | |||||||||
Chino Basin Regional Financing Authority Revenue | |||||||||
Series A 5.00% 11/1/24 (AMBAC) | $ | 845,000 | $ | 882,729 | |||||
Puerto Rico Electric Power Authority Revenue | |||||||||
Series WW 5.50% 7/1/38 | 400,000 | 405,040 | |||||||
Southern California Public Power Authority Revenue | |||||||||
(Transmission Project) Series A 5.00% 7/1/22 | 1,000,000 | 1,090,330 | |||||||
Vernon Electric System Revenue Series A 5.125% 8/1/21 | 1,000,000 | 1,058,050 | |||||||
3,436,149 | |||||||||
Health Care Revenue Bonds – 16.82% | |||||||||
Association Bay Area Governments Finance Authority | |||||||||
for California Nonprofit Corporations | |||||||||
(San Diego Hospital Association) | |||||||||
Series A 6.125% 8/15/20 | 1,250,000 | 1,277,776 | |||||||
(Sharp Health Care) Series B 6.25% 8/1/39 | 1,000,000 | 1,081,310 | |||||||
California Health Facilities Financing Authority Revenue | |||||||||
(Adventist Health System West) Series A 5.75% 9/1/39 | 1,000,000 | 1,017,580 | |||||||
(Catholic Health Care West) | |||||||||
Series A 6.00% 7/1/39 | 1,000,000 | 1,048,740 | |||||||
Series E 5.625% 7/1/25 | 1,000,000 | 1,047,670 | |||||||
Series G 5.25% 7/1/23 | 1,000,000 | 1,018,580 | |||||||
(Children’s Hospital Orange County) | |||||||||
Series A 6.50% 11/1/38 | 1,000,000 | 1,054,220 | |||||||
(St. Joseph Health System) Series A 5.75% 7/1/39 | 1,000,000 | 1,035,740 | |||||||
(The Episcopal Home) Series A 5.30% 2/1/32 (RADIAN) | 1,000,000 | 917,930 | |||||||
California Infrastructure & Economic Development Bank | |||||||||
Revenue (Kaiser Hospital Associates I, LLC) | |||||||||
Series A 5.55% 8/1/31 | 1,000,000 | 1,011,140 | |||||||
California Municipal Finance Authority Certificates of | |||||||||
Participation (Community Hospital of Central California) | |||||||||
5.50% 2/1/39 | 1,000,000 | 881,930 | |||||||
California Statewide Communities Development | |||||||||
Authority Revenue | |||||||||
(Kaiser Permanente) Series A 5.00% 4/1/19 | 1,000,000 | 1,081,780 | |||||||
(Southern California Senior Living) 7.25% 11/15/41 | 500,000 | 533,320 | |||||||
(Valleycare Health Systems) Series A 5.125% 7/15/31 | 1,000,000 | 818,360 | |||||||
13,826,076 |
17
Statements of net assets
Delaware Tax-Free California Fund
Delaware Tax-Free California Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Housing Revenue Bonds – 7.26% | |||||||||
California Housing Finance Agency Revenue | |||||||||
(Home Mortgage) | |||||||||
Series K 5.30% 8/1/23 (AMT) | $ | 1,000,000 | $ | 988,610 | |||||
Series M 5.95% 8/1/25 (AMT) | 1,000,000 | 1,040,940 | |||||||
California Statewide Communities Development | |||||||||
Multifamily Housing Authority Revenue | |||||||||
(Citrus Gardens Apartments) Series D-1 5.375% 7/1/32 | 1,000,000 | 942,290 | |||||||
(Silver Ridge Apartments) Series H 5.80% 8/1/33 | |||||||||
(FNMA) (AMT) | 1,000,000 | 1,031,240 | |||||||
Palm Springs Mobile Home Park Revenue (Sahara | |||||||||
Mobile Home Park) Series A 5.75% 5/15/37 | 1,000,000 | 957,530 | |||||||
Santa Clara County Multifamily Housing Authority | |||||||||
Revenue (Rivertown Apartments Project) | |||||||||
Series A 5.85% 8/1/31 (AMT) | 1,000,000 | 1,004,540 | |||||||
5,965,150 | |||||||||
Lease Revenue Bonds – 7.83% | |||||||||
California State Public Works Board Lease Revenue | |||||||||
(General Services) Series A 6.25% 4/1/34 | 1,000,000 | 1,024,300 | |||||||
Elsinore Valley Municipal Water District Certificates | |||||||||
of Participation Series A 5.00% 7/1/24 (BHAC) | 1,000,000 | 1,084,730 | |||||||
Franklin-McKinley School District Certificates | |||||||||
of Participation (Financing Project) | |||||||||
Series B 5.00% 9/1/27 (AMBAC) | 1,060,000 | 1,072,232 | |||||||
Puerto Rico Public Buildings Authority Revenue | |||||||||
(Guaranteed Government Facilities) | |||||||||
Series M-2 5.50% 7/1/35 (AMBAC) | 700,000 | 719,950 | |||||||
San Diego County Certificates of Participation | |||||||||
5.75% 7/1/31 (NATL-RE) | 1,000,000 | 1,009,290 | |||||||
San Mateo Joint Powers Financing Authority Lease | |||||||||
Revenue Refunding (Capital Projects) | |||||||||
Series A 5.25% 7/15/26 | 1,000,000 | 1,085,880 | |||||||
Ω | San Mateo Unified High School District Certificates | ||||||||
of Participation Capital Appreciation | |||||||||
(Partnership Phase I Projects) | |||||||||
Series B 5.00% 12/15/43 (AMBAC) | 1,000,000 | 437,480 | |||||||
6,433,862 |
18
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Local General Obligation Bonds – 6.29% | |||||||||
^ | Anaheim School District Election 2002 | ||||||||
4.58% 8/1/25 (NATL-RE) | $ | 1,000,000 | $ | 376,380 | |||||
Central Unified School District Election 2008 | |||||||||
Series A 5.625% 8/1/33 (ASSURED GTY) | 1,000,000 | 1,066,640 | |||||||
Fairfield-Suisun Unified School District Election 2002 | |||||||||
5.50% 8/1/28 (NATL-RE) | 500,000 | 533,925 | |||||||
Grossmont Union High School District Election 2004 | |||||||||
5.00% 8/1/23 (NATL-RE) | 1,000,000 | 1,062,040 | |||||||
Santa Barbara Community College District Election 2008 | |||||||||
Series A 5.25% 8/1/33 | 1,000,000 | 1,044,250 | |||||||
Sierra Joint Community College Improvement | |||||||||
District #2 (Western Nevada) | |||||||||
Series A 5.25% 8/1/21 (BHAC) (FGIC) | 1,000,000 | 1,083,520 | |||||||
5,166,755 | |||||||||
§Pre-Refunded Bonds – 3.01% | |||||||||
California Department of Water Resources | |||||||||
(Central Valley Project) Series X | |||||||||
5.00% 12/1/29-12 (NATL-RE) (FGIC) | 5,000 | 5,581 | |||||||
Commerce Joint Powers Financing Authority Revenue | |||||||||
(Redevelopment Projects) Series A | |||||||||
5.00% 8/1/28-13 (RADIAN) | 60,000 | 68,209 | |||||||
Golden State Tobacco Securitization Corporation Settlement | |||||||||
Revenue (Asset-Backed Senior Notes) Series B | |||||||||
5.50% 6/1/43-13 (RADIAN) | 1,000,000 | 1,138,760 | |||||||
5.625% 6/1/33-13 | 1,000,000 | 1,142,759 | |||||||
Port Oakland Revenue Series L 5.375% 11/1/27-12 | |||||||||
(NATL-RE) (FGIC) (AMT) | 110,000 | 123,272 | |||||||
2,478,581 | |||||||||
Resource Recovery Revenue Bond – 1.26% | |||||||||
South Bayside Waste Management Authority | |||||||||
Revenue (Shoreway Environmental Center) | |||||||||
Series A 6.00% 9/1/36 | 1,000,000 | 1,032,910 | |||||||
1,032,910 |
19
Statements of net assets
Delaware Tax-Free California Fund
Delaware Tax-Free California Fund
Principal amount | Value | ||||||||
Municipal Bonds (continued) | |||||||||
Special Tax Revenue Bonds – 19.66% | |||||||||
California State Economic Recovery Refunding | |||||||||
Series A 5.25% 7/1/21 | $ | 1,000,000 | $ | 1,112,720 | |||||
Commerce Joint Powers Financing Authority Revenue | |||||||||
(Redevelopment Projects) Un-Refunded Balance | |||||||||
Series A 5.00% 8/1/28 (RADIAN) | 940,000 | 817,997 | |||||||
Fremont Community Facilities District #1 | |||||||||
(Special Tax Pacific Commons) 5.375% 9/1/36 | 1,000,000 | 804,280 | |||||||
Glendale Redevelopment Agency Tax Allocation Revenue | |||||||||
(Central Glendale Redevelopment Project) | |||||||||
5.50% 12/1/24 | 1,000,000 | 996,910 | |||||||
Lake Elsinore Public Financing Authority Tax Allocation | |||||||||
Series A 5.50% 9/1/30 | 1,000,000 | 985,490 | |||||||
Lammersville School District Community Facilities | |||||||||
District #2002 (Mountain House) 5.125% 9/1/35 | 500,000 | 383,885 | |||||||
Lancaster Redevelopment Agency Tax Allocation | |||||||||
Combined Revenue (Combined Redevelopment | |||||||||
Project Areas) 6.875% 8/1/39 | 500,000 | 534,475 | |||||||
@ | Modesto Special Tax Community Facilities District #04-1 | ||||||||
(Village 2) 5.15% 9/1/36 | 1,000,000 | 735,650 | |||||||
@ | Palm Drive Health Care District Parcel Tax Revenue | ||||||||
5.25% 4/1/30 | 2,000,000 | 1,572,040 | |||||||
Poway Redevelopment Agency Tax Allocation Revenue | |||||||||
5.75% 6/15/33 (NATL-RE) | 270,000 | 270,043 | |||||||
Poway Unified School District Community Facilities | |||||||||
District #1 Special Tax Refunding | |||||||||
5.00% 10/1/17 (AGM) | 1,000,000 | 1,142,750 | |||||||
Puerto Rico Sales Tax Financing Corporation Revenue Series A | |||||||||
5.25% 8/1/27 | 1,000,000 | 1,023,110 | |||||||
ΩCapital Appreciation-First Subordinate 6.75% 8/1/32 | 2,040,000 | 1,552,624 | |||||||
First Subordinate | |||||||||
•5.00% 8/1/39 | 1,000,000 | 1,050,070 | |||||||
5.75% 8/1/37 | 930,000 | 961,406 | |||||||
Roseville Westpark Special Tax Public Community | |||||||||
Facilities District #1 5.25% 9/1/37 | 500,000 | 377,215 | |||||||
San Bernardino County Special Tax Community | |||||||||
Facilities District #2002-1 5.90% 9/1/33 | 2,000,000 | 1,842,861 | |||||||
16,163,526 |
20
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
State General Obligation Bonds – 7.32% | ||||||||
California State Various Purposes 6.00% 4/1/38 | $ | 515,000 | $ | 532,088 | ||||
Guam Government Series A 6.75% 11/15/29 | 1,755,000 | 1,861,283 | ||||||
Puerto Rico Commonwealth Government Development | ||||||||
Bank Senior Notes Series B 5.00% 12/1/15 | 1,000,000 | 1,056,080 | ||||||
Puerto Rico Commonwealth Public Improvement | ||||||||
Series A 5.25% 7/1/15 | 1,750,000 | 1,870,434 | ||||||
Series C 6.00% 7/1/39 | 675,000 | 694,879 | ||||||
6,014,764 | ||||||||
Transportation Revenue Bonds – 6.17% | ||||||||
Bay Area Toll Bridge Authority Revenue | ||||||||
(San Francisco Bay Area) | ||||||||
Series F-1 5.625% 4/1/44 | 2,000,000 | 2,137,100 | ||||||
Port Oakland Revenue Series L 5.375% 11/1/27 | ||||||||
(NATL-RE) (FGIC) (AMT) | 890,000 | 855,094 | ||||||
Sacramento County Airport Services Revenue (PFC/Grant) | ||||||||
Series C 6.00% 7/1/41 | 1,000,000 | 1,075,260 | ||||||
San Diego Redevelopment Agency | ||||||||
(Centre City Redevelopment Project) | ||||||||
Series A 6.40% 9/1/25 | 1,000,000 | 1,002,120 | ||||||
5,069,574 | ||||||||
Water & Sewer Revenue Bonds – 3.96% | ||||||||
California Department of Water Resources Systems | ||||||||
Revenue (Central Valley Project) Series A | ||||||||
5.00% 12/1/22 | 1,000,000 | 1,129,520 | ||||||
5.00% 12/1/24 | 1,000,000 | 1,103,540 | ||||||
Un-Refunded Balance Series X | ||||||||
5.00% 12/1/29 (NATL-RE) (FGIC) | 995,000 | 1,019,029 | ||||||
3,252,089 | ||||||||
Total Municipal Bonds (cost $81,269,253) | 81,190,899 |
21
Statements of net assets
Delaware Tax-Free California Fund
Delaware Tax-Free California Fund
Number of shares | Value | |||||||||
Short-Term Investments – 0.62% | ||||||||||
Money Market Instrument – 0.38% | ||||||||||
Federated California Municipal Cash Trust | 311,090 | $ | 311,090 | |||||||
311,090 | ||||||||||
Principal amount | ||||||||||
•Variable Rate Demand Note – 0.24% | ||||||||||
California Infrastructure & Economic Development Bank | ||||||||||
Revenue (Asian Art Museum Foundation) | ||||||||||
0.11% 6/1/34 (LOC, JP Morgan Chase Bank) (NATL-RE) | $ | 200,000 | 200,000 | |||||||
200,000 | ||||||||||
Total Short-Term Investments (cost $511,090) | 511,090 | |||||||||
Total Value of Securities – 99.40% | ||||||||||
(cost $81,780,343) | 81,701,989 | |||||||||
Receivables and Other Assets | ||||||||||
Net of Liabilities – 0.60% | 490,237 | |||||||||
Net Assets Applicable to 7,438,115 | ||||||||||
Shares Outstanding – 100.00% | $ | 82,192,226 | ||||||||
Net Asset Value – Delaware Tax-Free California Fund | ||||||||||
Class A ($64,722,850 / 5,859,945 Shares) | $11.04 | |||||||||
Net Asset Value – Delaware Tax-Free California Fund | ||||||||||
Class B ($3,942,847 / 355,519 Shares) | $11.09 | |||||||||
Net Asset Value – Delaware Tax-Free California Fund | ||||||||||
Class C ($13,526,529 / 1,222,651 Shares) | $11.06 | |||||||||
Components of Net Assets at February 28, 2010: | ||||||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 82,343,166 | ||||||||
Undistributed net investment income | 18,787 | |||||||||
Accumulated net realized loss on investments | (91,373 | ) | ||||||||
Net unrealized depreciation of investments | (78,354 | ) | ||||||||
Total net assets | $ | 82,192,226 |
22
^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
§ | Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
@ | Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $2,307,690, which represented 2.81% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
BHAC — Insured by the Berkshire Hathaway Assurance Company
FGIC — Insured by the Financial Guaranty Insurance Company
FNMA — Federal National Mortgage Association collateral
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
BHAC — Insured by the Berkshire Hathaway Assurance Company
FGIC — Insured by the Financial Guaranty Insurance Company
FNMA — Federal National Mortgage Association collateral
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
Net Asset Value and Offering Price Per Share – | ||
Delaware Tax-Free California Fund | ||
Net asset value Class A (A) | $ | 11.04 |
Sales charge (4.50% of offering price) (B) | 0.52 | |
Offering price | $ | 11.56 |
(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
23
Statements of net assets | |
Delaware Tax-Free Colorado Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 99.07% | ||||||||
Corporate Revenue Bond – 2.17% | ||||||||
Public Authority Energy National Gas Purpose | ||||||||
Revenue Series 2008 6.50% 11/15/38 | $ | 5,000,000 | $ | 5,383,050 | ||||
5,383,050 | ||||||||
Education Revenue Bonds – 11.42% | ||||||||
Boulder County Development Revenue | ||||||||
(University Corporation for Atmospheric Research) | ||||||||
5.00% 9/1/33 (NATL-RE) | 1,000,000 | 1,001,390 | ||||||
5.00% 9/1/35 (AMBAC) | 1,000,000 | 1,005,750 | ||||||
Colorado Educational & Cultural Facilities | ||||||||
Authority Revenue | ||||||||
(Charter School Project) 5.50% 5/1/36 (XLCA) | 2,280,000 | 2,283,169 | ||||||
(Johnson & Wales University Project) | ||||||||
Series A 5.00% 4/1/28 (XLCA) | 1,000,000 | 949,690 | ||||||
(Liberty Common Charter School Project) | ||||||||
5.125% 12/1/33 (XLCA) | 2,740,000 | 2,653,827 | ||||||
(Montessori Districts Charter School Projects) | ||||||||
6.125% 7/15/32 | 5,590,000 | 5,532,479 | ||||||
(Pinnacle Charter School Project) | ||||||||
5.00% 6/1/33 (XLCA) | 2,170,000 | 2,066,643 | ||||||
(University of Northern Colorado Student | ||||||||
Housing Project) 5.125% 7/1/37 (NATL-RE) | 4,000,000 | 3,730,040 | ||||||
(Woodrow Wilson Charter School Project) | ||||||||
5.25% 12/1/34 (XLCA) | 1,960,000 | 1,891,420 | ||||||
Colorado School Mines Auxiliary Facilities | ||||||||
5.00% 12/1/37 (AMBAC) | 425,000 | 418,693 | ||||||
Colorado State Board Governors University Enterprise | ||||||||
System Revenue Series A 5.00% 3/1/39 | 2,300,000 | 2,375,808 | ||||||
University of Colorado Enterprise System | ||||||||
Revenue Series A 5.00% 6/1/30 (AMBAC) | 2,000,000 | 2,070,480 | ||||||
University of Puerto Rico Revenue Series Q | ||||||||
5.00% 6/1/36 | 2,750,000 | 2,401,520 | ||||||
28,380,909 | ||||||||
Electric Revenue Bonds – 5.86% | ||||||||
Colorado Springs Utilities Revenue | ||||||||
Series A 5.00% 11/15/29 | 5,000,000 | 5,065,350 | ||||||
Platte River Power Authority Revenue Series HH | ||||||||
5.00% 6/1/27 | 2,795,000 | 3,046,718 | ||||||
5.00% 6/1/29 | 2,355,000 | 2,530,942 |
24
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Electric Revenue Bonds (continued) | ||||||||
Puerto Rico Electric Power Authority Revenue | ||||||||
Series TT 5.00% 7/1/37 | $ | 525,000 | $ | 501,627 | ||||
Series WW 5.00% 7/1/28 | 2,400,000 | 2,396,976 | ||||||
Series WW 5.50% 7/1/38 | 1,000,000 | 1,012,600 | ||||||
14,554,213 | ||||||||
Escrowed to Maturity Bond – 2.23% | ||||||||
Colorado Health Facilities Authority Revenue | ||||||||
(Catholic Health Initiatives) Series A 5.50% 3/1/32 | 5,000,000 | 5,529,550 | ||||||
5,529,550 | ||||||||
Health Care Revenue Bonds – 21.12% | ||||||||
Aurora Hospital Revenue (Childrens Hospital) | ||||||||
Series D 5.00% 12/1/23 (AGM) (FSA) | 2,775,000 | 2,925,988 | ||||||
Colorado Health Facilities Authority Revenue | ||||||||
•(Adventist Health/Sunbelt) 5.125% 11/15/24 | 1,375,000 | 1,413,816 | ||||||
(Catholic Health Initiatives) | ||||||||
Series A 4.75% 9/1/40 | 1,000,000 | 985,720 | ||||||
Series A 5.00% 7/1/39 | 2,500,000 | 2,531,500 | ||||||
Series D 6.25% 10/1/33 | 2,000,000 | 2,221,540 | ||||||
(Christian Living Community Project) | ||||||||
Series A 5.75% 1/1/37 | 1,500,000 | 1,277,415 | ||||||
(Covenant Retirement Communities) | ||||||||
Series A 5.50% 12/1/33 (RADIAN) | 5,000,000 | 4,459,250 | ||||||
(Evangelical Lutheran) | ||||||||
5.00% 6/1/35 | 2,000,000 | 1,750,720 | ||||||
6.125% 6/1/38 | 5,250,000 | 5,279,662 | ||||||
Series A 5.25% 6/1/34 | 2,750,000 | 2,504,205 | ||||||
(Parkview Medical Center) 5.00% 9/1/25 | 1,000,000 | 996,470 | ||||||
(Porter Place) Series A 6.00% 1/20/36 (GNMA) | 5,000,000 | 5,067,250 | ||||||
(Vail Valley Medical Center Project) 5.80% 1/15/27 | 3,475,000 | 3,490,116 | ||||||
(Valley View Hospital Association) 5.50% 5/15/28 | 1,000,000 | 993,090 | ||||||
Colorado Springs Hospital Revenue 6.25% 12/15/33 | 2,500,000 | 2,650,100 | ||||||
Delta County Memorial Hospital District Enterprise | ||||||||
Revenue 5.35% 9/1/17 | 4,000,000 | 4,051,480 | ||||||
Denver Health & Hospital Authority Health Care Revenue | ||||||||
Series A 4.75% 12/1/36 | 1,500,000 | 1,212,510 |
25
Statements of net assets
Delaware Tax-Free Colorado Fund
Delaware Tax-Free Colorado Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Health Care Revenue Bonds (continued) | ||||||||
University of Colorado Hospital Authority | ||||||||
Revenue Series A | ||||||||
5.00% 11/15/37 | $ | 2,690,000 | $ | 2,580,786 | ||||
5.25% 11/15/39 | 3,500,000 | 3,473,645 | ||||||
6.00% 11/15/29 | 2,460,000 | 2,594,980 | ||||||
52,460,243 | ||||||||
Housing Revenue Bonds – 2.11% | ||||||||
Colorado Housing & Finance Authority | ||||||||
(Multifamily Housing Insured Mortgage) | ||||||||
Series C3 6.15% 10/1/41 | 1,590,000 | 1,591,431 | ||||||
(Single Family Mortgage) | ||||||||
Series A 5.50% 11/1/29 (FHA) | 1,500,000 | 1,580,535 | ||||||
Puerto Rico Housing Finance Authority | ||||||||
Subordinate (Capital Foundation of Modernization) | ||||||||
5.125% 12/1/27 | 2,040,000 | 2,060,645 | ||||||
5,232,611 | ||||||||
Lease Revenue Bonds – 3.62% | ||||||||
Aurora Certificates of Participation Refunding | ||||||||
Series A 5.00% 12/1/30 | 2,370,000 | 2,479,802 | ||||||
Colorado Educational & Cultural National | ||||||||
Conference of State Legislatures Office Building | ||||||||
Facilities Authority Revenue 5.25% 6/1/21 | 2,000,000 | 2,022,500 | ||||||
@ | Conejos & Alamosa Counties School #11J | |||||||
Certificates of Participation 6.50% 4/1/11 | 520,000 | 520,629 | ||||||
El Paso County Certificates of Participation (Detention | ||||||||
Facilities Project) Series B 5.00% 12/1/27 (AMBAC) | 1,500,000 | 1,527,780 | ||||||
Puerto Rico Public Buildings Authority Revenue | ||||||||
(Guaranteed Government Facilities) | ||||||||
Series I 5.25% 7/1/33 | 1,475,000 | 1,415,499 | ||||||
•Series M-2 5.50% 7/1/35 (AMBAC) | 1,000,000 | 1,028,500 | ||||||
8,994,710 | ||||||||
Local General Obligation Bonds – 15.03% | ||||||||
Adams & Arapahoe Counties Joint School | ||||||||
District #28J (Aurora) 6.00% 12/1/28 | 2,500,000 | 2,882,375 | ||||||
Arapahoe County Water & Wastewater | ||||||||
Public Improvement District Refunding | ||||||||
Series A 5.125% 12/1/32 (NATL-RE) | 2,555,000 | 2,561,643 |
26
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Local General Obligation Bonds (continued) | ||||||||
Boulder Larimer & Weld Counties | ||||||||
(St. Vrain Valley School District #1J) | ||||||||
5.00% 12/15/33 | $ | 2,500,000 | $ | 2,597,225 | ||||
Denver City & County Justice System | ||||||||
5.50% 8/1/16 | 5,000,000 | 5,974,702 | ||||||
(Facilities & Zoo) 5.00% 8/1/19 | 1,020,000 | 1,146,245 | ||||||
Denver City & County School District #1 | ||||||||
Series A 5.00% 12/1/29 | 960,000 | 1,034,035 | ||||||
Denver West Metropolitan District | ||||||||
5.00% 12/1/33 (RADIAN) | 1,400,000 | 1,111,838 | ||||||
Douglas County School District #1 | ||||||||
(Douglas & Elbert Counties) Series B | ||||||||
5.00% 12/15/24 | 2,355,000 | 2,547,969 | ||||||
El Paso County School District #2 (Harrison) | ||||||||
5.00% 12/1/27 (NATL-RE) | 2,115,000 | 2,204,020 | ||||||
Garfield County School District #2 | ||||||||
5.00% 12/1/25 (AGM) (FSA) | 3,280,000 | 3,526,128 | ||||||
Grand County School District #2 (East Grand) | ||||||||
5.25% 12/1/25 (FSA) | 2,485,000 | 2,716,577 | ||||||
Gunnison Watershed School District #1J | ||||||||
Series 2009 5.25% 12/1/33 | 1,400,000 | 1,479,408 | ||||||
Jefferson County School District #R-001 | ||||||||
5.25% 12/15/24 | 2,500,000 | 2,952,950 | ||||||
La Plata County School District #9-R (Durango) | ||||||||
5.125% 11/1/24 (NATL-RE) | 1,000,000 | 1,067,620 | ||||||
@ | North Range Metropolitan | |||||||
District #1 4.50% 12/15/31 (ACA) | 1,500,000 | 1,040,025 | ||||||
District #2 5.50% 12/15/37 | 1,200,000 | 839,160 | ||||||
Sand Creek Metropolitan District Refunding & Improvement | ||||||||
5.00% 12/1/31 (XLCA) | 500,000 | 422,480 | ||||||
Weld County School District #4 | ||||||||
5.00% 12/1/19 (AGM) (FSA) | 1,085,000 | 1,245,667 | ||||||
37,350,067 | ||||||||
§Pre-Refunded Bonds – 15.11% | ||||||||
Boulder County Hospital Revenue | ||||||||
(Development Longmont United Hospital Project) | ||||||||
6.00% 12/1/30-10 (RADIAN) | 1,500,000 | 1,564,710 |
27
Statements of net assets
Delaware Tax-Free Colorado Fund
Delaware Tax-Free Colorado Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
§Pre-Refunded Bonds (continued) | ||||||||
Colorado Educational & Cultural Facilities | ||||||||
Authority Revenue | ||||||||
(Littleton Academy Charter School Project) | ||||||||
6.125% 1/15/31-12 | $ | 2,000,000 | $ | 2,201,620 | ||||
(Stargate Charter School Project) 6.125% 5/1/33-13 | 2,000,000 | 2,314,740 | ||||||
(University of Denver Project) | ||||||||
Series A 5.00% 3/1/27-12 (NATL-RE) | 5,000,000 | 5,433,599 | ||||||
• | Colorado Health Facilities Authority Revenue | |||||||
(Adventist Health/Sunbelt) 5.125% 11/15/24-16 | 75,000 | 89,043 | ||||||
Douglas County School District #1 | ||||||||
(Douglas & Elbert Counties) | ||||||||
Series B 5.125% 12/15/25-12 (AGM) (FSA) | 2,000,000 | 2,236,400 | ||||||
El Paso County Certificates of Participation | ||||||||
(Judicial Building Project) | ||||||||
Series A 5.00% 12/1/27-12 (AMBAC) | 2,000,000 | 2,216,240 | ||||||
Fremont County School District #1 (Canon City) | ||||||||
5.00% 12/1/24-13 (NATL-RE) | 1,735,000 | 1,989,178 | ||||||
Garfield Pitkin & Eagle County School | ||||||||
District #1 (Roaring Fork County) | ||||||||
Series A 5.00% 12/15/27-14 (AGM) (FSA) | 1,500,000 | 1,752,075 | ||||||
Lincoln Park Metropolitan District 7.75% 12/1/26-11 | 2,500,000 | 2,816,575 | ||||||
Loveland Special Improvements District #1 | ||||||||
7.50% 7/1/29-10 | 4,980,000 | 5,196,778 | ||||||
North Range Metropolitan District #1 | ||||||||
7.25% 12/15/31-11 | 3,385,000 | 3,761,514 | ||||||
Northwest Parkway Public Highway Authority | ||||||||
Series A 5.25% 6/15/41-11 (AGM) (FSA) | 3,150,000 | 3,405,371 | ||||||
Puerto Rico Commonwealth Series A 5.25% 7/1/30-16 | 1,235,000 | 1,473,516 | ||||||
Puerto Rico Public Buildings Authority Revenue | ||||||||
(Guaranteed Government Facilities) | ||||||||
Series I 5.25% 7/1/33-14 | 25,000 | 28,959 | ||||||
University of Colorado Enterprise System Revenue | ||||||||
Refunding Series 2001A 5.375% 6/1/26-11 | 1,000,000 | 1,062,980 | ||||||
37,543,298 |
28
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Special Tax Revenue Bonds – 8.56% | ||||||||
Aspen Sales Tax Revenue (Parks & Open Spaces) | ||||||||
Series B 5.25% 11/1/23 (AGM) (FSA) | $ | 2,040,000 | $ | 2,209,565 | ||||
@ | Baptist Road Rural Transportation Authority | |||||||
Sales & Use Tax Revenue 5.00% 12/1/26 | 2,000,000 | 1,300,080 | ||||||
Park Meadows Business Improvement District | ||||||||
Shared Sales Tax Revenue | ||||||||
5.30% 12/1/27 | 950,000 | 834,452 | ||||||
5.35% 12/1/31 | 720,000 | 610,870 | ||||||
Puerto Rico Commonwealth Highway & Transportation | ||||||||
Authority Revenue Series K 5.00% 7/1/30 | 2,200,000 | 2,086,788 | ||||||
Puerto Rico Commonwealth Infrastructure Financing | ||||||||
Authority Special Tax Revenue Series B 5.00% 7/1/46 | 1,200,000 | 1,064,820 | ||||||
Puerto Rico Sales Tax Financing Corporation | ||||||||
Revenue First Subordinate Series A | ||||||||
•5.00% 8/1/39 | 2,500,000 | 2,625,175 | ||||||
5.25% 8/1/27 | 1,100,000 | 1,125,421 | ||||||
5.75% 8/1/37 | 3,095,000 | 3,199,518 | ||||||
ΩCapital Appreciation 6.75% 8/1/32 | 5,075,000 | 3,862,531 | ||||||
Regional Transportation District Sales Tax Revenue | ||||||||
Series A 5.25% 11/1/18 | 2,000,000 | 2,346,580 | ||||||
21,265,800 | ||||||||
State General Obligation Bonds – 6.09% | ||||||||
Guam Government Series A 7.00% 11/15/39 | 2,500,000 | 2,677,600 | ||||||
Puerto Rico Commonwealth Government Development | ||||||||
Bank Senior Notes Series B | ||||||||
5.00% 12/1/14 | 1,000,000 | 1,062,760 | ||||||
5.00% 12/1/15 | 1,000,000 | 1,056,080 | ||||||
Puerto Rico Commonwealth Public Improvement | ||||||||
Series A 5.25% 7/1/21 | 4,000,000 | 4,048,640 | ||||||
Series C 6.00% 7/1/39 | 1,685,000 | 1,734,623 | ||||||
Refunding Series A 5.25% 7/1/15 | 1,650,000 | 1,763,553 | ||||||
Puerto Rico Commonwealth | ||||||||
Series A 5.25% 7/1/30 | 765,000 | 749,034 | ||||||
Series B 5.00% 7/1/35 | 190,000 | 175,131 | ||||||
Virgin Islands Public Finance Authority Revenue | ||||||||
(Gross Receipts Taxes Loan Note) | ||||||||
5.00% 10/1/31 (ACA) | 2,000,000 | 1,855,340 | ||||||
15,122,761 |
29
Statements of net assets
Delaware Tax-Free Colorado Fund
Delaware Tax-Free Colorado Fund
Principal amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Transportation Revenue Bonds – 3.49% | ||||||||||
Denver City & County Airport Revenue | ||||||||||
5.25% 11/15/36 | $ | 2,500,000 | $ | 2,576,575 | ||||||
Series A 5.00% 11/15/25 (NATL-RE) (FGIC) | 2,000,000 | 2,102,260 | ||||||||
Series B 5.00% 11/15/33 (XLCA) | 4,000,000 | 3,988,680 | ||||||||
8,667,515 | ||||||||||
Water & Sewer Revenue Bonds – 2.26% | ||||||||||
Colorado Springs Utilities Systems Improvement Revenue | ||||||||||
Series C 5.50% 11/15/48 | 3,250,000 | 3,411,004 | ||||||||
Eagle River Water & Sanitation District Enterprise Revenue | ||||||||||
5.00% 12/1/29 (ASSURED GTY) | 250,000 | 263,003 | ||||||||
5.125% 12/1/39 (ASSURED GTY) | 850,000 | 872,602 | ||||||||
Pueblo Board Waterworks Revenue | ||||||||||
5.00% 11/1/21 (AGM) (FSA) | 1,000,000 | 1,069,070 | ||||||||
5,615,679 | ||||||||||
Total Municipal Bonds (cost $239,825,572) | 246,100,406 | |||||||||
Number of shares | ||||||||||
Short-Term Investment – 1.02% | ||||||||||
Money Market Instrument – 1.02% | ||||||||||
Dreyfus Cash Management Fund | 2,536,650 | 2,536,650 | ||||||||
Total Short-Term Investment (cost $2,536,650) | 2,536,650 | |||||||||
Total Value of Securities – 100.09% | ||||||||||
(cost $242,362,222) | 248,637,056 | |||||||||
Liabilities Net of Receivables and | ||||||||||
Other Assets – (0.09%) | (219,936 | ) | ||||||||
Net Assets Applicable to 22,838,222 | ||||||||||
Shares Outstanding – 100.00% | $ | 248,417,120 | ||||||||
Net Asset Value – Delaware Tax-Free Colorado Fund | ||||||||||
Class A ($232,516,628 / 21,379,748 Shares) | $10.88 | |||||||||
Net Asset Value – Delaware Tax-Free Colorado Fund | ||||||||||
Class B ($2,023,024 / 185,865 Shares) | $10.88 | |||||||||
Net Asset Value – Delaware Tax-Free Colorado Fund | ||||||||||
Class C ($13,877,468 / 1,272,609 Shares) | $10.90 |
30
Components of Net Assets at February 28, 2010: | |||
Shares of beneficial interest (unlimited authorization – no par) | $ | 246,563,644 | |
Undistributed net investment income | 6,252 | ||
Accumulated net realized loss on investments | (4,427,610 | ) | |
Net unrealized appreciation of investments | 6,274,834 | ||
Total net assets | $ | 248,417,120 |
@ | Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $3,699,894, which represented 1.49% of the Fund’s net assets. See Note 8 in “Notes to financial statements.” |
§ | Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association collateral
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
XLCA — Insured by XL Capital Assurance
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association collateral
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
XLCA — Insured by XL Capital Assurance
31
Statements of net assets
Delaware Tax-Free Colorado Fund
Delaware Tax-Free Colorado Fund
Net Asset Value and Offering Price Per Share – | |||
Delaware Tax-Free Colorado Fund | |||
Net asset value Class A (A) | $ | 10.88 | |
Sales charge (4.50% of offering price) (B) | 0.51 | ||
Offering price | $ | 11.39 |
(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
32
Delaware Tax-Free Idaho Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 97.33% | ||||||||
Corporate Revenue Bonds – 4.52% | ||||||||
Meridian Economic Industrial Development Revenue | ||||||||
(Hi-Micro Project) 5.85% 8/15/11 (AMT) | $ | 660,000 | $ | 662,132 | ||||
Nez Perce County Pollution Control Revenue | ||||||||
(Potlatch Project) 6.00% 10/1/24 | 2,535,000 | 2,407,312 | ||||||
Power County Pollution Control Revenue | ||||||||
(FMC Project) 5.625% 10/1/14 | 2,475,000 | 2,462,501 | ||||||
5,531,945 | ||||||||
Education Revenue Bonds – 9.56% | ||||||||
Boise State University Revenue | ||||||||
5.00% 4/1/17 (AMBAC) | 500,000 | 533,215 | ||||||
Series A 4.25% 4/1/32 (NATL-RE) | 1,500,000 | 1,455,960 | ||||||
Series A 5.00% 4/1/18 (NATL-RE) (FGIC) | 1,500,000 | 1,601,265 | ||||||
Series A 5.00% 4/1/39 | 1,000,000 | 1,042,260 | ||||||
Un-Refunded Series 07 5.375% 4/1/22 (FGIC) | 15,000 | 15,805 | ||||||
Idaho Housing & Financing Association Nonprofit | ||||||||
Facilities Revenue (North Star Charter School Project) | ||||||||
Series A 9.50% 7/1/39 | 1,000,000 | 1,142,630 | ||||||
Idaho State University Revenue Refunding & Improvement | ||||||||
5.00% 4/1/20 (AGM) | 1,130,000 | 1,214,400 | ||||||
5.00% 4/1/23 (AGM) | 2,115,000 | 2,193,740 | ||||||
University of Idaho (General Refunding) | ||||||||
Series A 5.00% 4/1/21 (AMBAC) | 1,150,000 | 1,219,932 | ||||||
•Series B 4.50% 4/1/41 (AGM) | 1,000,000 | 1,052,140 | ||||||
University of Puerto Rico Revenue | ||||||||
Series Q 5.00% 6/1/36 | 250,000 | 218,320 | ||||||
11,689,667 | ||||||||
Electric Revenue Bonds – 1.38% | ||||||||
Boise-Kuna Irrigation District Revenue | ||||||||
(Arrowrock Hydroelectric Project) 6.30% 6/1/31 | 1,000,000 | 1,075,120 | ||||||
Puerto Rico Electric Power Authority Revenue | ||||||||
Series TT 5.00% 7/1/37 | 210,000 | 200,651 | ||||||
Series WW 5.50% 7/1/38 | 400,000 | 405,040 | ||||||
1,680,811 | ||||||||
Health Care Revenue Bonds – 1.81% | ||||||||
Idaho Health Facilities Authority Revenue | ||||||||
(St. Luke’s Medical Center Project) 6.75% 11/1/37 | 1,000,000 | 1,100,480 | ||||||
(Trinity Health Credit Group) Series B 6.125%12/1/28 | 1,000,000 | 1,113,470 | ||||||
2,213,950 |
33
Statements of net assets
Delaware Tax-Free Idaho Fund
Delaware Tax-Free Idaho Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Housing Revenue Bonds – 7.00% | ||||||||
Idaho Housing Agency Single Family Mortgage Revenue | ||||||||
Series A 6.05% 7/1/13 (AMBAC) (FHA) (VA) (AMT) | $ | 15,000 | $ | 15,022 | ||||
Series A 6.10% 7/1/16 (FHA) (VA) (AMT) | 25,000 | 25,034 | ||||||
Series B 6.45% 7/1/15 (AMT) | 10,000 | 10,016 | ||||||
Series C-2 6.35% 7/1/15 (AMT) | 10,000 | 10,015 | ||||||
Series E 6.35% 7/1/15 (FHA) (AMT) | 20,000 | 20,030 | ||||||
Series G-2 6.15% 7/1/15 (FHA) (VA) (AMT) | 75,000 | 75,105 | ||||||
Idaho Housing & Finance Association | ||||||||
Single Family Mortgage Revenue | ||||||||
Series B Class I 5.00% 7/1/37 (AMT) | 815,000 | 815,293 | ||||||
Series B Class I 5.50% 7/1/38 | 985,000 | 1,023,582 | ||||||
Series C Class II 4.95% 7/1/31 | 1,000,000 | 1,011,130 | ||||||
Series C Class III 5.35% 1/1/25 (AMT) | 225,000 | 229,082 | ||||||
Series D Class III 5.45% 7/1/23 (AMT) | 795,000 | 814,454 | ||||||
Series E 4.85% 7/1/28 (AMT) | 1,500,000 | 1,483,739 | ||||||
Series E Class III 4.875% 1/1/26 (AMT) | 145,000 | 145,207 | ||||||
Series E Class III 5.00% 1/1/28 (AMT) | 885,000 | 860,406 | ||||||
Series I Class I 5.45% 1/1/39 (AMT) | 1,000,000 | 1,018,440 | ||||||
Puerto Rico Housing Finance Authority Subordinate- | ||||||||
Capital Foundation Modernization | ||||||||
5.125% 12/1/27 | 1,000,000 | 1,010,120 | ||||||
8,566,675 | ||||||||
Lease Revenue Bonds – 3.61% | ||||||||
Boise City Certificate of Participation | ||||||||
5.375% 9/1/20 (NATL-RE) (FGIC) (AMT) | 2,100,000 | 2,106,573 | ||||||
Boise City Revenue Series A 5.375% 12/1/31 (NATL-RE) | 500,000 | 513,515 | ||||||
Idaho State Building Authority Revenue | ||||||||
Series A 5.00% 9/1/43 (XLCA) | 1,000,000 | 1,005,260 | ||||||
Series B 5.00% 9/1/21 (NATL-RE) | 750,000 | 790,568 | ||||||
4,415,916 | ||||||||
Local General Obligation Bonds – 21.59% | ||||||||
Ada & Canyon Counties Joint School District #2 Meridian | ||||||||
(School Board Guaranteed Program) | ||||||||
4.50% 7/30/22 | 1,500,000 | 1,663,695 | ||||||
4.75% 2/15/20 | 1,000,000 | 1,084,990 | ||||||
5.50% 7/30/16 | 1,305,000 | 1,565,426 |
34
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Local General Obligation Bonds (continued) | ||||||||
Bannock County School District #025 | ||||||||
(Pocatello School Board Guaranteed Program) | ||||||||
5.00% 8/15/15 | $ | 1,040,000 | $ | 1,189,510 | ||||
5.00% 8/15/16 | 1,100,000 | 1,239,315 | ||||||
Boise City Independent School District | ||||||||
5.00% 8/1/24 (AGM) | 1,500,000 | 1,661,895 | ||||||
Canyon County School District #132 Caldwell | ||||||||
5.00% 7/30/15 (NATL-RE) (FGIC) | 2,000,000 | 2,273,700 | ||||||
Class A 5.00% 9/15/22 (AGM) | 1,725,000 | 1,953,149 | ||||||
Class A 5.00% 9/15/23 (AGM) | 1,810,000 | 2,037,046 | ||||||
Idaho Bond Bank Authority Revenue Series A | ||||||||
5.00% 9/15/28 | 1,000,000 | 1,093,980 | ||||||
5.25% 9/15/26 | 2,000,000 | 2,267,020 | ||||||
Lemhi County 5.20% 8/1/27 (AGM) | 2,145,000 | 2,239,595 | ||||||
Nampa Series B 5.00% 8/1/21 (NATL-RE) (FGIC) | 2,475,000 | 2,634,414 | ||||||
Power & Cassia Counties Joint School District #381 | ||||||||
American Falls 5.00% 8/1/17 | 1,155,000 | 1,225,143 | ||||||
Twin Falls County School District #413 Filer | ||||||||
5.25% 9/15/25 | 2,000,000 | 2,280,200 | ||||||
26,409,078 | ||||||||
§Pre-Refunded Bonds – 14.42% | ||||||||
Ada & Canyon Counties Joint School District #2 Meridian | ||||||||
(School Board Guaranteed Program) | ||||||||
5.00% 7/30/20-12 | 1,555,000 | 1,714,325 | ||||||
5.125% 7/30/19-12 | 1,005,000 | 1,093,510 | ||||||
Un-Refunded 5.00% 7/30/20-12 | 600,000 | 651,060 | ||||||
Boise State University Revenue Refunding & Improvement | ||||||||
5.125% 4/1/31-12 (FGIC) | 1,000,000 | 1,093,830 | ||||||
5.375% 4/1/22-12 (FGIC) | 985,000 | 1,082,545 | ||||||
Puerto Rico Commonwealth Highway & Transportation | ||||||||
Authority Revenue | ||||||||
Series D 5.25% 7/1/38-12 | 1,000,000 | 1,098,220 | ||||||
Series Y 5.00% 7/1/36-16 | 1,250,000 | 1,472,863 | ||||||
Puerto Rico Commonwealth Infrastructure Financing | ||||||||
Authority Revenue Series A 5.375% 10/1/24-10 | 1,750,000 | 1,822,100 | ||||||
Puerto Rico Commonwealth Public Improvement Revenue | ||||||||
Series A 5.125% 7/1/31-11 | 1,010,000 | 1,075,822 |
35
Statements of net assets
Delaware Tax-Free Idaho Fund
Delaware Tax-Free Idaho Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
§Pre-Refunded Bonds (continued) | ||||||||
Puerto Rico Electric Power Authority Revenue | ||||||||
Series II 5.25% 7/1/31-12 | $ | 1,000,000 | $ | 1,117,450 | ||||
Series NN 5.125% 7/1/29-13 | 105,000 | 119,315 | ||||||
Series RR 5.00% 7/1/35-15 (FGIC) | 1,545,000 | 1,810,987 | ||||||
Puerto Rico Public Buildings Authority Revenue | ||||||||
(Guaranteed Government Facilities) | ||||||||
Series I 5.50% 7/1/23-14 | 1,000,000 | 1,168,860 | ||||||
University of Idaho Revenue | ||||||||
(Student Fee Housing Improvements Project) | ||||||||
5.25% 4/1/31-11 (FGIC) | 2,195,000 | 2,312,805 | ||||||
17,633,692 | ||||||||
Special Tax Revenue Bonds – 17.08% | ||||||||
Boise Urban Renewal Agency Parking Revenue | ||||||||
(Tax Increment) | ||||||||
Series A 6.125% 9/1/15 | 1,160,000 | 1,174,535 | ||||||
Series B 6.125% 9/1/15 | 950,000 | 961,904 | ||||||
Bonner County Local Improvement District #93-1 | ||||||||
6.50% 4/30/10 | 60,000 | 60,226 | ||||||
Coeur D’Alene Local Improvement District #6 | ||||||||
Series 1996 6.05% 7/1/10 | 90,000 | 91,246 | ||||||
Series 1997 6.10% 7/1/12 | 40,000 | 40,488 | ||||||
Series 1998 6.10% 7/1/14 | 45,000 | 45,452 | ||||||
Idaho Bond Bank Authority Revenue | ||||||||
Series B 4.125% 9/15/36 (NATL-RE) | 755,000 | 715,967 | ||||||
Series B 5.00% 9/15/30 (NATL-RE) | 725,000 | 766,630 | ||||||
Series C 4.00% 9/15/29 | 1,320,000 | 1,316,423 | ||||||
Puerto Rico Commonwealth Highway & Transportation | ||||||||
Authority Revenue | ||||||||
Series K 5.00% 7/1/30 | 890,000 | 844,201 | ||||||
Series W 5.50% 7/1/15 | 175,000 | 189,142 | ||||||
Puerto Rico Sales Tax Financing Corporation Revenue Series A | ||||||||
5.25% 8/1/57 | 1,000,000 | 992,860 | ||||||
Ω | Capital Appreciation-First Subordinate 6.75% 8/1/32 | 5,040,000 | 3,835,893 | |||||
First Subordinate | ||||||||
5.25% 8/1/27 | 3,000,000 | 3,069,329 | ||||||
5.50% 8/1/42 | 1,500,000 | 1,502,204 | ||||||
5.75% 8/1/37 | 3,350,000 | 3,463,129 |
36
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Special Tax Revenue Bonds (continued) | ||||||||
Virgin Islands Public Finance Authority Revenue | ||||||||
(Senior Lien-Matching Fund Loan Note) Series A | ||||||||
5.25% 10/1/20 | $ | 500,000 | $ | 510,190 | ||||
5.25% 10/1/21 | 500,000 | 509,325 | ||||||
5.25% 10/1/24 | 800,000 | 810,048 | ||||||
20,899,192 | ||||||||
State General Obligation Bonds – 5.70% | ||||||||
Guam Government Series A 6.75% 11/15/29 | 1,565,000 | 1,659,776 | ||||||
Puerto Rico Commonwealth Government Development | ||||||||
Bank Refunding Remarketed | ||||||||
4.75% 12/1/15 (NATL-RE) | 1,000,000 | 1,029,330 | ||||||
Puerto Rico Commonwealth Public Improvement | ||||||||
Series A 5.25% 7/1/22 | 1,000,000 | 1,008,470 | ||||||
Series C 6.00% 7/1/39 | 1,500,000 | 1,544,175 | ||||||
Un-Refunded Series A 5.125% 7/1/31 | 1,815,000 | 1,734,360 | ||||||
6,976,111 | ||||||||
Transportation Revenue Bonds – 7.93% | ||||||||
Idaho Housing & Finance Association Grant Revenue | ||||||||
(Anticipated Federal Highway Trust) | ||||||||
4.00% 7/15/17 | 500,000 | 546,545 | ||||||
4.75% 7/15/19 | 1,410,000 | 1,583,881 | ||||||
5.00% 7/15/24 (NATL-RE) | 2,000,000 | 2,141,780 | ||||||
5.25% 7/15/20 (ASSURED GTY) | 2,750,000 | 3,136,266 | ||||||
5.25% 7/15/25 (ASSURED GTY) | 1,500,000 | 1,652,055 | ||||||
Puerto Rico Commonwealth Highway & Transportation | ||||||||
Authority Revenue Un-Refunded | ||||||||
Series G 5.00% 7/1/33 | 690,000 | 641,472 | ||||||
9,701,999 | ||||||||
Water & Sewer Revenue Bonds – 2.73% | ||||||||
Idaho Bond Bank Authority Revenue | ||||||||
Series C 5.375% 9/15/38 | 1,000,000 | 1,077,340 | ||||||
Moscow Sewer Revenue 5.00% 11/1/22 (AGM) | 2,175,000 | 2,265,828 | ||||||
3,343,168 | ||||||||
Total Municipal Bonds (cost $113,787,659) | 119,062,204 |
37
Statements of net assets
Delaware Tax-Free Idaho Fund
Delaware Tax-Free Idaho Fund
Number of shares | Value | ||||
Short-Term Investment – 1.41% | |||||
Money Market Instrument – 1.41% | |||||
Dreyfus Cash Management Fund | 1,727,684 | $ | 1,727,684 | ||
Total Short-Term Investment (cost $1,727,684) | 1,727,684 | ||||
Total Value of Securities – 98.74% | |||||
(cost $115,515,343) | 120,789,888 | ||||
Receivables and Other Assets | |||||
Net of Liabilities – 1.26% | 1,544,617 | ||||
Net Assets Applicable to 10,430,836 | |||||
Shares Outstanding – 100.00% | $ | 122,334,505 | |||
Net Asset Value – Delaware Tax-Free Idaho Fund | |||||
Class A ($93,004,765 / 7,928,338 Shares) | $11.73 | ||||
Net Asset Value – Delaware Tax-Free Idaho Fund | |||||
Class B ($3,014,065 / 257,425 Shares) | $11.71 | ||||
Net Asset Value – Delaware Tax-Free Idaho Fund | |||||
Class C ($26,315,675 / 2,245,073 Shares) | $11.72 | ||||
Components of Net Assets at February 28, 2010: | |||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 117,058,432 | |||
Distributions in excess of net investment income | (11,301 | ) | |||
Accumulated net realized gain on investments | 12,829 | ||||
Net unrealized appreciation of investments | 5,274,545 | ||||
Total net assets | $ | 122,334,505 |
§ | Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
38
Summary of abbreviations: AGM — Insured by Assured Guaranty Municipal Corporation AMBAC — Insured by the AMBAC Assurance Corporation AMT — Subject to the Alternative Minimum Tax ASSURED GTY — Insured by the Assured Guaranty Corporation FGIC — Insured by the Financial Guaranty Insurance Company FHA — Insured by the Federal Housing Administration NATL-RE — Insured by the National Public Finance Guarantee Corporation VA — Insured by the Veterans Administration XLCA — Insured by XL Capital Assurance |
Net Asset Value and Offering Price Per Share – | |||
Delaware Tax-Free Idaho Fund | |||
Net asset value Class A (A) | $ | 11.73 | |
Sales charge (4.50% of offering price) (B) | 0.55 | ||
Offering price | $ | 12.28 |
(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
39
Statements of net assets | |
Delaware Tax-Free New York Fund | February 28, 2010 (Unaudited) |
Principal amount | Value | |||||||
Municipal Bonds – 95.98% | ||||||||
Corporate Revenue Bonds – 7.93% | ||||||||
Jefferson County Industrial Development Agency | ||||||||
Solid Waste Disposal (International Paper) | ||||||||
Series A 5.20% 12/1/20 (AMT) | $ | 350,000 | $ | 343,473 | ||||
Liberty Development Corporation Revenue | ||||||||
(Goldman Sachs Headquarters) 5.25% 10/1/35 | 500,000 | 507,539 | ||||||
Nassau County Tobacco Settlement Refunding | ||||||||
(Asset-Backed) Series A-3 5.125% 6/1/46 | 500,000 | 403,995 | ||||||
New York City Industrial Development Agency Revenue | ||||||||
(Brooklyn Navy Yard Cogen Partners) | ||||||||
5.75% 10/1/36 (AMT) | 450,000 | 346,001 | ||||||
• | New York City Industrial Development Agency | |||||||
Special Facilities Revenue | ||||||||
(American Airlines-JFK International Airport) | ||||||||
7.625% 8/1/25 (AMT) | 250,000 | 246,465 | ||||||
7.75% 8/1/31 (AMT) | 250,000 | 250,898 | ||||||
New York Energy Research & Development Authority | ||||||||
Pollution Control Revenue Refunding | ||||||||
(Central Hudson Gas) | ||||||||
Series A 5.45% 8/1/27 (AMBAC) | 500,000 | 505,224 | ||||||
Suffolk County Industrial Development Agency Revenue | ||||||||
(Keyspan-Port Jefferson Energy Center) | ||||||||
5.25% 6/1/27 (AMT) | 250,000 | 246,078 | ||||||
TSASC Tobacco Settlement Refunding (Asset-Backed) | ||||||||
Series 1 5.125% 6/1/42 | 250,000 | 203,520 | ||||||
3,053,193 | ||||||||
Education Revenue Bonds – 22.90% | ||||||||
Albany Industrial Development Agency Civic Facilities | ||||||||
Revenue (Brighter Choice Charter School) | ||||||||
Series A 5.00% 4/1/37 | 250,000 | 199,810 | ||||||
Amherst Industrial Development Agency Civic Facilities | ||||||||
Revenue (UBF Faculty Student Housing) | ||||||||
Series A 5.75% 8/1/30 (AMBAC) | 200,000 | 203,020 | ||||||
Dutchess County Industrial Development Agency | ||||||||
(Marist College) 5.00% 7/1/20 | 500,000 | 509,840 | ||||||
Hempstead Town Local Development Corporation | ||||||||
Revenue (Molloey College Project) 5.75% 7/1/23 | 400,000 | 424,916 |
40
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Education Revenue Bonds (continued) | ||||||||
Madison County Industrial Development Agency Civic | ||||||||
Facility Revenue (Colgate University Project) | ||||||||
Series A 5.00% 7/1/39 (NATL-RE) | $ | 400,000 | $ | 405,588 | ||||
New York State Dormitory Authority Revenue | ||||||||
(Columbia University) Series A 5.00% 7/1/23 | 500,000 | 528,739 | ||||||
(Pratt Institute) Series C 5.125% 7/1/39 (ASSURED GTY) | 300,000 | 309,078 | ||||||
•Series B 5.25% 11/15/23 | 250,000 | 271,738 | ||||||
Un-Refunded Series B 7.50% 5/15/11 | 125,000 | 135,018 | ||||||
New York State Dormitory Authority Revenue | ||||||||
Non-State Supported Debt | ||||||||
(Brooklyn Law School) 5.75% 7/1/33 | 340,000 | 348,367 | ||||||
(Cornell University) Series A | ||||||||
4.75% 7/1/29 | 100,000 | 104,960 | ||||||
5.00% 7/1/34 | 170,000 | 180,078 | ||||||
5.00% 7/1/39 | 500,000 | 525,304 | ||||||
(Ithaca College) 5.00% 7/1/16 | 400,000 | 441,108 | ||||||
(Manhattan Marymount) 5.00% 7/1/24 | 350,000 | 354,148 | ||||||
(Mt. Sinai School Medicine) 5.125% 7/1/39 | 500,000 | 501,255 | ||||||
(New York University) Series A 5.25% 7/1/48 | 400,000 | 411,680 | ||||||
(Rockefeller University) Series A 5.00% 7/1/27 | 250,000 | 278,085 | ||||||
(Teachers College) 5.50% 3/1/39 | 250,000 | 261,008 | ||||||
(University of Rochester) | ||||||||
Series A 5.125% 7/1/39 | 250,000 | 258,713 | ||||||
ΩSeries A-2 4.375% 7/1/20 | 250,000 | 242,690 | ||||||
Onondaga County Trust for Cultural Resources Revenue | ||||||||
(Syracuse University Project) | ||||||||
Series B 5.00% 12/1/19 | 350,000 | 406,473 | ||||||
St. Lawrence County Industrial Development Agency | ||||||||
Civic Faculty Revenue | ||||||||
(St. Lawrence University) Series A 5.00% 10/1/16 | 500,000 | 566,794 | ||||||
Suffolk County Industrial Development Agency | ||||||||
Civic Faculty Revenue Refunding | ||||||||
(New York Institute of Technology Project) | ||||||||
Series A 5.00% 3/1/26 | 600,000 | 601,841 | ||||||
Yonkers Industrial Development Agency | ||||||||
Civic Faculty Revenue | ||||||||
(Sarah Lawrence) Series A 6.00% 6/1/29 | 325,000 | 340,243 | ||||||
8,810,494 |
41
Statements of net assets
Delaware Tax-Free New York Fund
Delaware Tax-Free New York Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Electric Revenue Bonds – 2.97% | ||||||||
Long Island Power Authority New York Electric System Revenue | ||||||||
Series A 5.75% 4/1/39 | $ | 350,000 | $ | 381,531 | ||||
Series B 5.75% 4/1/33 | 250,000 | 272,133 | ||||||
Puerto Rico Electric Power Authority Revenue | ||||||||
Series TT 5.00% 7/1/37 | 100,000 | 95,548 | ||||||
Series WW 5.00% 7/1/28 | 190,000 | 189,761 | ||||||
Series WW 5.50% 7/1/38 | 200,000 | 202,520 | ||||||
1,141,493 | ||||||||
Health Care Revenue Bonds – 8.54% | ||||||||
Albany Industrial Development Agency Civic Facility | ||||||||
Revenue (St. Peter’s Hospital Project) | ||||||||
Series A 5.25% 11/15/32 | 500,000 | 472,705 | ||||||
East Rochester Housing Authority Revenue Refunding | ||||||||
(Senior Living-Woodland Village Project) 5.50% 8/1/33 | 200,000 | 165,880 | ||||||
New York Dormitory Authority Revenue | ||||||||
(Catholic Health Long Island Obligation Group) | ||||||||
5.00% 7/1/27 | 400,000 | 380,368 | ||||||
(Chapel Oaks) 5.45% 7/1/26 (LOC, Allied Irish Bank) | 450,000 | 452,043 | ||||||
(Millard Fillmore Hospital) 5.375% 2/1/32 (AMBAC) (FHA) | 225,000 | 225,005 | ||||||
(Winthrop South Nassau Hospital) Series B 5.50% 7/1/23 | 500,000 | 507,275 | ||||||
New York Dormitory Authority Revenue | ||||||||
Non-State Supported Debt (Memorial Sloan-Kettering) | ||||||||
Series 1 5.00% 7/1/35 | 225,000 | 229,397 | ||||||
(North Shore Long Island Jewish Group) | ||||||||
Series A 5.50% 5/1/37 | 500,000 | 507,514 | ||||||
(Orange Regional Medical Center) 6.125% 12/1/29 | 365,000 | 346,352 | ||||||
3,286,539 | ||||||||
Housing Revenue Bonds – 1.95% | ||||||||
New York City Housing Development Multifamily Housing | ||||||||
Revenue Series G-1 4.875% 11/1/39 (AMT) | 250,000 | 242,543 | ||||||
New York State Housing Finance Agency Revenue | ||||||||
(Affordable Housing) Series A 5.25% 11/1/41 | 500,000 | 507,235 | ||||||
749,778 | ||||||||
Lease Revenue Bonds – 8.94% | ||||||||
Battery Park City Authority Revenue Series A 5.00% 11/1/26 | 250,000 | 264,428 | ||||||
Erie County Industrial Development Agency | ||||||||
School Faculty Revenue (City School District of Buffalo) | ||||||||
Series A 5.25% 5/1/25 | 500,000 | 545,995 |
42
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Lease Revenue Bonds (continued) | ||||||||
Hudson Yards Infrastructure Revenue | ||||||||
Series A 5.00% 2/15/47 | $ | 500,000 | $ | 478,430 | ||||
New York City Industrial Development Agency | ||||||||
Special Airport Facility Revenue | ||||||||
(Airis JFK I Project) Series A 5.50% 7/1/28 (AMT) | 500,000 | 414,140 | ||||||
Onondaga County Industrial Development Authority | ||||||||
Revenue Subordinated | ||||||||
(Air Cargo) 7.25% 1/1/32 (AMT) | 500,000 | 456,240 | ||||||
Tobacco Settlement Financing Authority | ||||||||
Revenue (Asset-Backed) Series B-1C | ||||||||
5.50% 6/1/20 | 200,000 | 215,122 | ||||||
5.50% 6/1/21 | 500,000 | 536,790 | ||||||
United Nations Development Corporation | ||||||||
Revenue Refunding Series A 5.00% 7/1/26 | 500,000 | 527,465 | ||||||
3,438,610 | ||||||||
Local General Obligation Bonds – 3.17% | ||||||||
New York City | ||||||||
Series D 5.00% 11/1/34 | 125,000 | 127,498 | ||||||
Subordinated Series C-1 5.00% 10/1/19 | 500,000 | 556,085 | ||||||
Subordinated Series I-1 5.375% 4/1/36 | 500,000 | 536,980 | ||||||
1,220,563 | ||||||||
§Pre-Refunded Bonds – 6.27% | ||||||||
Albany Parking Authority Revenue | ||||||||
Series A 5.625% 7/15/25-11 | 280,000 | 303,100 | ||||||
New York Dormitory Authority Revenue | ||||||||
(North Shore Long Island Jewish Group Project) | ||||||||
5.50% 5/1/33-13 | 500,000 | 572,085 | ||||||
Pre-Refunding Series B 7.50% 5/15/11-10 | 75,000 | 76,128 | ||||||
Puerto Rico Commonwealth Highway & | ||||||||
Transportation Authority Revenue | ||||||||
Series Y 5.50% 7/1/36-16 | 475,000 | 573,781 | ||||||
Puerto Rico Commonwealth Series B 5.25% 7/1/32-16 | 155,000 | 184,935 | ||||||
Puerto Rico Electric Power Authority Revenue | ||||||||
Series II 5.25% 7/1/31-12 | 500,000 | 558,725 | ||||||
Series NN 5.125% 7/1/29-13 | 125,000 | 142,041 | ||||||
2,410,795 |
43
Statements of net assets
Delaware Tax-Free New York Fund
Delaware Tax-Free New York Fund
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
Special Tax Revenue Bonds – 20.51% | ||||||||
Brooklyn Arena Local Development Corporation Pilot | ||||||||
Revenue (Barclays Center Project) 6.50% 7/15/30 | $ | 500,000 | $ | 543,065 | ||||
Metropolitan Transportation Authority Revenue | ||||||||
(Dedicated Tax Fund) Series B 5.00% 11/15/34 | 500,000 | 521,875 | ||||||
New York City Industrial Development Agency Revenue | ||||||||
(Yankee Stadium Project-Pilot) 5.00% 3/1/46 (FGIC) | 300,000 | 280,587 | ||||||
New York City Transitional Finance Authority Revenue | ||||||||
(Subordinated Future Tax Secured) | ||||||||
Series B 5.00% 11/1/18 | 500,000 | 568,989 | ||||||
New York City Trust for Cultural Resources Revenue Refunding | ||||||||
(American Museum of National History) | ||||||||
Series A 5.00% 7/1/44 (NATL-RE) | 250,000 | 253,788 | ||||||
(Museum of Modern Art) Series 1A 5.00% 4/1/31 | 250,000 | 263,928 | ||||||
New York Dormitory Authority State Personal Income Tax | ||||||||
Revenue Series C 5.00% 3/15/15 | 250,000 | 290,018 | ||||||
New York Dormitory Authority State Supported Debt | ||||||||
Revenue (Consolidated Services Contract) | ||||||||
5.00% 7/1/17 (AGM) (FSA) | 500,000 | 569,544 | ||||||
New York Sales Tax Asset Receivables | ||||||||
Series A 5.25% 10/15/27 (AMBAC) | 500,000 | 556,344 | ||||||
New York State Thruway Authority | ||||||||
(State Personal Income Tax Revenue-Education) | ||||||||
Series A 5.00% 3/15/38 | 500,000 | 520,675 | ||||||
New York State Urban Development Revenue | ||||||||
Personal Income Tax Series A-1 5.00% 12/15/22 | 250,000 | 277,760 | ||||||
Puerto Rico Commonwealth Highway & Transportation | ||||||||
Authority Revenue Series K 5.00% 7/1/30 | 235,000 | 222,907 | ||||||
Puerto Rico Commonwealth Infrastructure Financing | ||||||||
Authority Revenue Series B 5.00% 7/1/15 | 250,000 | 261,915 | ||||||
Puerto Rico Sales Tax Financing Corporation Revenue Series A | ||||||||
5.25% 8/1/57 | 325,000 | 322,680 | ||||||
ΩCapital Appreciation-First Subordinate 6.75% 8/1/32 | 510,000 | 388,156 | ||||||
First Subordinate | ||||||||
•5.00% 8/1/39 | 500,000 | 525,035 | ||||||
5.50% 8/1/42 | 500,000 | 500,735 | ||||||
5.75% 8/1/37 | 485,000 | 501,378 | ||||||
Schenectady Metroplex Development Authority Revenue | ||||||||
Series A 5.375% 12/15/21 | 500,000 | 523,040 | ||||||
7,892,419 |
44
Principal amount | Value | |||||||
Municipal Bonds (continued) | ||||||||
State General Obligation Bonds – 4.70% | ||||||||
Guam Government Series A 7.00% 11/15/39 | $ | 395,000 | $ | 423,061 | ||||
New York State Series A | ||||||||
5.00% 3/1/38 | 500,000 | 519,730 | ||||||
5.00% 2/15/39 | 250,000 | 260,825 | ||||||
Puerto Rico Commonwealth Government Development | ||||||||
Bank Refunding Remarketed 4.75% 12/1/15 (NATL-RE) | 230,000 | 236,746 | ||||||
Puerto Rico Commonwealth Public Improvement | ||||||||
Refunding Series C 6.00% 7/1/39 | 270,000 | 277,952 | ||||||
Puerto Rico Commonwealth Series B 5.25% 7/1/32 | 95,000 | 91,840 | ||||||
1,810,154 | ||||||||
Transportation Revenue Bonds – 6.22% | ||||||||
Albany Parking Authority Revenue Series A 5.625% 7/15/25 | 220,000 | 223,984 | ||||||
Metropolitan Transportation Authority Revenue | ||||||||
Series 2008C 6.50% 11/15/28 | 200,000 | 229,970 | ||||||
•Series B 5.00% 11/15/27 | 200,000 | 222,348 | ||||||
Series F 5.00% 11/15/15 | 150,000 | 170,541 | ||||||
New York State Thruway Authority General Revenue Series H | ||||||||
5.00% 1/1/14 (NATL-RE) | 500,000 | 560,590 | ||||||
5.00% 1/1/15 (NATL-RE) | 250,000 | 282,010 | ||||||
Port Authority New York & New Jersey | ||||||||
(Consolidated-One Hundred Fifty-Third) 5.00% 7/15/35 | 250,000 | 260,235 | ||||||
Triborough Bridge & Tunnel Authority Revenue | ||||||||
Series C 5.00% 11/15/24 | 200,000 | 220,516 | ||||||
•Subordinated Series B-1 5.00% 11/15/25 | 200,000 | 222,652 | ||||||
2,392,846 | ||||||||
Water & Sewer Revenue Bonds – 1.88% | ||||||||
New York City Municipal Water Finance Authority | ||||||||
Water & Sewer System Revenue | ||||||||
(Fiscal 2009) Series A 5.75% 6/15/40 | 200,000 | 224,208 | ||||||
(Second General Resolution) Series FF-2 5.50% 6/15/40 | 250,000 | 275,203 | ||||||
New York State Environmental Facilities Corporation | ||||||||
State Clean Water & Drinking Water Revolving Funds | ||||||||
(New York City Municipal Project) | ||||||||
Subordinated Series B 5.00% 6/15/21 | 200,000 | 222,594 | ||||||
722,005 | ||||||||
Total Municipal Bonds (cost $35,086,159) | 36,928,889 |
45
Statements of net assets
Delaware Tax-Free New York Fund
Delaware Tax-Free New York Fund
Principal amount | Value | ||||||||
Short-Term Investments – 4.16% | |||||||||
•Variable Rate Demand Notes – 4.16% | |||||||||
New York City Industrial Development Agency Civic Facility | |||||||||
Revenue Remarketed (New York Law School Project) | |||||||||
Series B-2 0.40% 7/1/36 | $ | 300,000 | $ | 300,000 | |||||
New York City Subseries A-7 0.14% 8/1/20 | 1,300,000 | 1,300,000 | |||||||
Total Short-Term Investments (cost $1,600,000) | 1,600,000 | ||||||||
Total Value of Securities – 100.14% | |||||||||
(cost $36,686,159) | 38,528,889 | ||||||||
Liabilities Net of Receivables | |||||||||
and Other Assets – (0.14%) | (53,637 | ) | |||||||
Net Assets Applicable to 3,582,593 | |||||||||
Shares Outstanding – 100.00% | $ | 38,475,252 | |||||||
Net Asset Value – Delaware Tax-Free New York Fund | |||||||||
Class A ($28,593,584 / 2,660,807 Shares) | $10.75 | ||||||||
Net Asset Value – Delaware Tax-Free New York Fund | |||||||||
Class B ($829,666 / 77,373 Shares) | $10.72 | ||||||||
Net Asset Value – Delaware Tax-Free New York Fund | |||||||||
Class C ($9,052,002 / 844,413 Shares) | $10.72 | ||||||||
Components of Net Assets at February 28, 2010: | |||||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 36,641,785 | |||||||
Distributions in excess of net investment income | (651 | ) | |||||||
Accumulated net realized loss on investments | (8,612 | ) | |||||||
Net unrealized appreciation of investments | 1,842,730 | ||||||||
Total net assets | $ | 38,475,252 |
Ω | Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective. |
§ | Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.” |
• | Variable rate security. The rate shown is the rate as of February 28, 2010. |
46
Summary of abbreviations: | ||
AGM — Insured by Assured Guaranty Municipal Corporation | ||
AMBAC — Insured by the AMBAC Assurance Corporation | ||
AMT — Subject to Alternative Minimum Tax | ||
ASSURED GTY — Insured by the Assured Guaranty Corporation | ||
FHA — Insured by the Federal Housing Administration | ||
FGIC — Insured by the Financial Guaranty Insurance Company | ||
FSA — Insured by Financial Security Assurance | ||
LOC — Letter of Credit | ||
NATL-RE — Insured by the National Public Finance Guarantee Corporation |
Net Asset Value and Offering Price Per Share – | |||
Delaware Tax-Free New York Fund | |||
Net asset value Class A (A) | $ | 10.75 | |
Sales charge (4.50% of offering price) (B) | 0.51 | ||
Offering price | $ | 11.26 |
(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
47
Statements of operations | |
Six Months Ended February 28, 2010 (Unaudited) |
Delaware Tax-Free | Delaware Tax-Free | Delaware Tax-Free | |||||||||
Arizona Fund | California Fund | Colorado Fund | |||||||||
Investment Income: | |||||||||||
Interest | $ | 2,963,871 | $ | 2,172,084 | $ | 6,324,731 | |||||
Expenses: | |||||||||||
Management fees | 310,592 | 222,222 | 677,425 | ||||||||
Distribution expenses – Class A | 139,312 | 78,761 | 288,697 | ||||||||
Distribution expenses – Class B | 26,633 | 22,247 | 12,146 | ||||||||
Distribution expenses – Class C | 37,629 | 66,524 | 63,967 | ||||||||
Dividend disbursing and transfer agent | |||||||||||
fees and expenses | 33,733 | 27,902 | 65,802 | ||||||||
Accounting and administration expenses | 25,374 | 16,134 | 49,183 | ||||||||
Legal fees | 11,783 | 7,175 | 17,875 | ||||||||
Audit and tax | 9,525 | 8,107 | 13,117 | ||||||||
Reports and statements to shareholders | 8,557 | 5,956 | 17,109 | ||||||||
Registration fees | 7,457 | 3,302 | 4,231 | ||||||||
Pricing fees | 3,910 | 3,842 | 4,390 | ||||||||
Trustees’ fees | 3,744 | 2,424 | 7,405 | ||||||||
Insurance fees | 2,112 | 1,356 | 4,016 | ||||||||
Custodian fees | 1,318 | 862 | 2,509 | ||||||||
Consulting fees | 857 | 544 | 1,607 | ||||||||
Dues and services | 308 | 216 | 641 | ||||||||
Trustees’ expenses | 276 | 177 | 573 | ||||||||
623,120 | 467,751 | 1,230,693 | |||||||||
Less fees waived | (70,644 | ) | (68,268 | ) | (48,381 | ) | |||||
Total operating expenses | 552,476 | 399,483 | 1,182,312 | ||||||||
Net Investment Income | 2,411,395 | 1,772,601 | 5,142,419 | ||||||||
Net Realized and Unrealized Gain | |||||||||||
on Investments: | |||||||||||
Net realized gain on investments | 853,830 | 123,716 | 677,070 | ||||||||
Net change in unrealized appreciation/ | |||||||||||
depreciation of investments | 1,943,371 | 3,067,593 | 5,605,838 | ||||||||
Net Realized and Unrealized Gain | |||||||||||
on Investments | 2,797,201 | 3,191,309 | 6,282,908 | ||||||||
Net Increase in Net Assets | |||||||||||
Resulting from Operations | $ | 5,208,596 | $ | 4,963,910 | $ | 11,425,327 |
See accompanying notes
48
Delaware Tax-Free | Delaware Tax-Free | ||||||
Idaho Fund | New York Fund | ||||||
Investment Income: | |||||||
Interest | $ | 2,655,253 | $ | 814,825 | |||
Expenses: | |||||||
Management fees | 315,318 | 92,277 | |||||
Distribution expenses – Class A | 111,007 | 31,748 | |||||
Distribution expenses – Class B | 16,033 | 4,165 | |||||
Distribution expenses – Class C | 111,704 | 35,503 | |||||
Dividend disbursing and transfer agent | |||||||
fees and expenses | 30,265 | 18,673 | |||||
Accounting and administration expenses | 22,891 | 6,699 | |||||
Legal fees | 10,304 | 3,264 | |||||
Audit and tax | 8,661 | 6,283 | |||||
Reports and statements to shareholders | 7,947 | 3,094 | |||||
Pricing fees | 4,380 | 4,468 | |||||
Trustees’ fees | 3,447 | 1,004 | |||||
Registration fees | 3,010 | 5,194 | |||||
Insurance fees | 1,650 | 426 | |||||
Custodian fees | 1,337 | 494 | |||||
Consulting fees | 644 | 168 | |||||
Trustees’ expenses | 257 | 71 | |||||
Dues and services | 203 | 55 | |||||
649,058 | 213,586 | ||||||
Less fees waived | (22,204 | ) | (49,598 | ) | |||
Total operating expenses | 626,854 | 163,988 | |||||
Net Investment Income | 2,028,399 | 650,837 | |||||
Net Realized and Unrealized Gain | |||||||
on Investments: | |||||||
Net realized gain on investments | 99,017 | 4,710 | |||||
Net change in unrealized appreciation/ | |||||||
depreciation of investments | 2,239,984 | 910,946 | |||||
Net Realized and Unrealized Gain | |||||||
on Investments | 2,339,001 | 915,656 | |||||
Net Increase in Net Assets | |||||||
Resulting from Operations | $ | 4,367,400 | $ | 1,566,493 |
See accompanying notes
49
Statements of changes in net assets
Delaware Tax-Free Arizona Fund
Delaware Tax-Free Arizona Fund
Six Months | Year | ||||||
Ended | Ended | ||||||
2/28/10 | 8/31/09 | ||||||
(Unaudited) | |||||||
Increase in Net Assets from Operations: | |||||||
Net investment income | $ | 2,411,395 | $ | 4,979,083 | |||
Net realized gain on investments | 853,830 | 676,245 | |||||
Net change in unrealized | |||||||
appreciation/depreciation of investments | 1,943,371 | 283,443 | |||||
Net increase in net assets resulting from operations | 5,208,596 | 5,938,771 | |||||
Dividends and Distributions to Shareholders from: | |||||||
Net investment income: | |||||||
Class A | (2,197,987 | ) | (4,473,743 | ) | |||
Class B | (85,095 | ) | (247,800 | ) | |||
Class C | (120,160 | ) | (235,244 | ) | |||
(2,403,242 | ) | (4,956,787 | ) | ||||
Capital Share Transactions: | |||||||
Proceeds from shares sold: | |||||||
Class A | 2,806,733 | 8,072,718 | |||||
Class B | — | 20,443 | |||||
Class C | 665,269 | 1,098,183 | |||||
Net asset value of shares issued upon reinvestment | |||||||
of dividends and distributions: | |||||||
Class A | 1,087,466 | 2,209,302 | |||||
Class B | 45,031 | 128,925 | |||||
Class C | 74,068 | 146,249 | |||||
4,678,567 | 11,675,820 |
50
Six Months | Year | ||||||
Ended | Ended | ||||||
2/28/10 | 8/31/09 | ||||||
(Unaudited) | |||||||
Capital Share Transactions (continued): | |||||||
Cost of shares repurchased: | |||||||
Class A | $ | (11,453,562 | ) | $ | (19,633,059 | ) | |
Class B | (1,993,380 | ) | (3,235,890 | ) | |||
Class C | (593,873 | ) | (2,787,126 | ) | |||
(14,040,815 | ) | (25,656,075 | ) | ||||
Decrease in net assets derived from | |||||||
capital share transactions | (9,362,248 | ) | (13,980,255 | ) | |||
Net Decrease in Net Assets | (6,556,894 | ) | (12,998,271 | ) | |||
Net Assets: | |||||||
Beginning of period | 127,454,947 | 140,453,218 | |||||
End of period1 | $ | 120,898,053 | $ | 127,454,947 | |||
1Including undistributed net investment income | $ | 26,197 | $ | 26,196 |
See accompanying notes
51
Statements of changes in net assets
Delaware Tax-Free California Fund
Delaware Tax-Free California Fund
Six Months | Year | ||||||
Ended | Ended | ||||||
2/28/10 | 8/31/09 | ||||||
(Unaudited) | |||||||
Increase (Decrease) in Net Assets from Operations: | |||||||
Net investment income | $ | 1,772,601 | $ | 3,401,520 | |||
Net realized gain on investments | 123,716 | 709,018 | |||||
Net change in unrealized | |||||||
appreciation/depreciation of investments | 3,067,593 | (2,723,629 | ) | ||||
Net increase in net assets resulting from operations | 4,963,910 | 1,386,909 | |||||
Dividends and Distributions to Shareholders from: | |||||||
Net investment income: | |||||||
Class A | (1,434,393 | ) | (2,701,738 | ) | |||
Class B | (84,594 | ) | (195,352 | ) | |||
Class C | (253,021 | ) | (487,982 | ) | |||
(1,772,008 | ) | (3,385,072 | ) | ||||
Capital Share Transactions: | |||||||
Proceeds from shares sold: | |||||||
Class A | 5,441,784 | 8,313,126 | |||||
Class B | 72,778 | 90,914 | |||||
Class C | 1,073,161 | 2,115,521 | |||||
Net asset value of shares issued upon reinvestment | |||||||
of dividends and distributions: | |||||||
Class A | 816,057 | 1,547,832 | |||||
Class B | 63,142 | 137,850 | |||||
Class C | 175,416 | 358,106 | |||||
7,642,338 | 12,563,349 |
52
Six Months | Year | ||||||
Ended | Ended | ||||||
2/28/10 | 8/31/09 | ||||||
(Unaudited) | |||||||
Capital Share Transactions (continued): | |||||||
Cost of shares repurchased: | |||||||
Class A | $ | (5,113,300 | ) | $ | (14,448,671 | ) | |
Class B | (1,322,228 | ) | (1,676,431 | ) | |||
Class C | (1,806,384 | ) | (3,594,180 | ) | |||
(8,241,912 | ) | (19,719,282 | ) | ||||
Decrease in net assets derived from | |||||||
capital share transactions | (599,574 | ) | (7,155,933 | ) | |||
Net Increase (Decrease) in Net Assets | 2,592,328 | (9,154,096 | ) | ||||
Net Assets: | |||||||
Beginning of period | 79,599,898 | 88,753,994 | |||||
End of period1 | $ | 82,192,226 | $ | 79,599,898 | |||
1Including undistributed net investment income | $ | 18,787 | $ | 18,763 |
See accompanying notes
53
Statements of changes in net assets
Delaware Tax-Free Colorado Fund
Delaware Tax-Free Colorado Fund
Six Months | Year | ||||||
Ended | Ended | ||||||
2/28/10 | 8/31/09 | ||||||
(Unaudited) | |||||||
Increase (Decrease) in Net Assets from Operations: | |||||||
Net investment income | $ | 5,142,419 | $ | 10,196,318 | |||
Net realized gain on investments | 677,070 | 3,397,919 | |||||
Net change in unrealized | |||||||
appreciation/depreciation of investments | 5,605,838 | (4,848,204 | ) | ||||
Net increase in net assets resulting from operations | 11,425,327 | 8,746,033 | |||||
Dividends and Distributions to Shareholders from: | |||||||
Net investment income: | |||||||
Class A | (4,905,642 | ) | (9,697,369 | ) | |||
Class B | (42,369 | ) | (116,434 | ) | |||
Class C | (223,889 | ) | (355,221 | ) | |||
(5,171,900 | ) | (10,169,024 | ) | ||||
Capital Share Transactions: | |||||||
Proceeds from shares sold: | |||||||
Class A | 9,384,375 | 14,183,751 | |||||
Class B | — | 10,613 | |||||
Class C | 2,684,725 | 2,881,769 | |||||
Net asset value of shares issued upon reinvestment | |||||||
of dividends and distributions: | |||||||
Class A | 3,094,932 | 6,074,319 | |||||
Class B | 19,977 | 50,248 | |||||
Class C | 162,038 | 248,362 | |||||
15,346,047 | 23,449,062 |
54
Six Months | Year | ||||||
Ended | Ended | ||||||
2/28/10 | 8/31/09 | ||||||
(Unaudited) | |||||||
Capital Share Transactions (continued): | |||||||
Cost of shares repurchased: | |||||||
Class A | $ | (12,231,987 | ) | $ | (27,122,635 | ) | |
Class B | (756,040 | ) | (1,264,891 | ) | |||
Class C | (822,583 | ) | (1,437,234 | ) | |||
(13,810,610 | ) | (29,824,760 | ) | ||||
Increase (decrease) in net assets derived from | |||||||
capital share transactions | 1,535,437 | (6,375,698 | ) | ||||
Net Increase (Decrease) in Net Assets | 7,788,864 | (7,798,689 | ) | ||||
Net Assets: | |||||||
Beginning of period | 240,628,256 | 248,426,945 | |||||
End of period1 | $ | 248,417,120 | $ | 240,628,256 | |||
1Including undistributed net investment income | $ | 6,252 | $ | 43,501 |
See accompanying notes
55
Statements of changes in net assets
Delaware Tax-Free Idaho Fund
Delaware Tax-Free Idaho Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 2,028,399 | $ | 3,502,126 | ||||
Net realized gain on investments | 99,017 | 242,232 | ||||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 2,239,984 | 2,073,940 | ||||||
Net increase in net assets resulting from operations | 4,367,400 | 5,818,298 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (1,677,579 | ) | (2,944,277 | ) | ||||
Class B | (48,447 | ) | (136,217 | ) | ||||
Class C | (339,141 | ) | (403,213 | ) | ||||
(2,065,167 | ) | (3,483,707 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 7,385,655 | 17,915,127 | ||||||
Class B | 9,917 | 63,569 | ||||||
Class C | 8,084,516 | 8,501,134 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 1,146,361 | 1,894,609 | ||||||
Class B | 34,269 | 98,426 | ||||||
Class C | 234,546 | 249,454 | ||||||
16,895,264 | 28,722,319 |
56
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (3,775,749 | ) | $ | (7,521,138 | ) | ||
Class B | (457,355 | ) | (1,954,363 | ) | ||||
Class C | (1,610,323 | ) | (1,450,880 | ) | ||||
(5,843,427 | ) | (10,926,381 | ) | |||||
Increase in net assets derived from | ||||||||
capital share transactions | 11,051,837 | 17,795,938 | ||||||
Net Increase in Net Assets | 13,354,070 | 20,130,529 | ||||||
Net Assets: | ||||||||
Beginning of period | 108,980,435 | 88,849,906 | ||||||
End of period1 | $ | 122,334,505 | $ | 108,980,435 | ||||
1Including undistributed (distributions in excess of) | ||||||||
net investment income | $ | (11,301 | ) | $ | 5,851 |
See accompanying notes
57
Statements of changes in net assets
Delaware Tax-Free New York Fund
Delaware Tax-Free New York Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 650,837 | $ | 900,508 | ||||
Net realized gain on investments | 4,710 | 190,585 | ||||||
Net change in unrealized | ||||||||
appreciation/depreciation of investments | 910,946 | 482,416 | ||||||
Net increase in net assets resulting from operations | 1,566,493 | 1,573,509 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (519,354 | ) | (738,485 | ) | ||||
Class B | (13,901 | ) | (39,735 | ) | ||||
Class C | (118,423 | ) | (116,762 | ) | ||||
(651,678 | ) | (894,982 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 6,618,707 | 10,366,325 | ||||||
Class B | 9,343 | 47,828 | ||||||
Class C | 4,419,871 | 3,939,824 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 305,790 | 403,783 | ||||||
Class B | 8,181 | 22,930 | ||||||
Class C | 77,572 | 62,861 | ||||||
11,439,464 | 14,843,551 |
58
Six Months | Year | |||||||
Ended | Ended | |||||||
2/28/10 | 8/31/09 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares repurchased: | ||||||||
Class A | $ | (1,808,898 | ) | $ | (3,831,875 | ) | ||
Class B | (235,092 | ) | (593,493 | ) | ||||
Class C | (1,284,034 | ) | (585,220 | ) | ||||
(3,328,024 | ) | (5,010,588 | ) | |||||
Increase in net assets derived from | ||||||||
capital share transactions | 8,111,440 | 9,832,963 | ||||||
Net Increase in Net Assets | 9,026,255 | 10,511,490 | ||||||
Net Assets: | ||||||||
Beginning of period | 29,448,997 | 18,937,507 | ||||||
End of period1 | $ | 38,475,252 | $ | 29,448,997 | ||||
1Including undistributed (distributions in excess of) | ||||||||
net investment income | $ | (651 | ) | $ | 3,746 |
See accompanying notes
59
Financial highlights
Delaware Tax-Free Arizona Fund Class A
Delaware Tax-Free Arizona 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 |
Ratio of expenses to average net assets prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets prior to fees waived 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 during all of the periods shown 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 | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.090 | $10.930 | $11.070 | $11.350 | $11.560 | $11.410 | ||||||||||||||
0.222 | 0.431 | 0.444 | 0.465 | 0.467 | 0.468 | ||||||||||||||
0.249 | 0.158 | (0.140 | ) | (0.280 | ) | (0.210 | ) | 0.174 | |||||||||||
0.471 | 0.589 | 0.304 | 0.185 | 0.257 | 0.642 | ||||||||||||||
(0.221 | ) | (0.429 | ) | (0.444 | ) | (0.465 | ) | (0.467 | ) | (0.468 | ) | ||||||||
— | — | — | — | — | (0.024 | ) | |||||||||||||
(0.221 | ) | (0.429 | ) | (0.444 | ) | (0.465 | ) | (0.467 | ) | (0.492 | ) | ||||||||
$11.340 | $11.090 | $10.930 | $11.070 | $11.350 | $11.560 | ||||||||||||||
4.27% | 5.64% | 2.78% | 1.63% | 2.31% | 5.74% | ||||||||||||||
$108,626 | $113,689 | $122,027 | $125,636 | $131,468 | $134,874 | ||||||||||||||
0.81% | 0.75% | 0.75% | 0.76% | 0.76% | 0.80% | ||||||||||||||
0.93% | 0.91% | 0.91% | 0.91% | 0.91% | 0.91% | ||||||||||||||
3.96% | 4.07% | 4.02% | 4.11% | 4.12% | 4.07% | ||||||||||||||
3.84% | 3.91% | 3.86% | 3.96% | 3.97% | 3.96% | ||||||||||||||
15% | 27% | 29% | 9% | 8% | 3% |
61
Financial highlights
Delaware Tax-Free Arizona Fund Class B
Delaware Tax-Free Arizona 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 |
Ratio of expenses to average net assets prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
62
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.100 | $10.940 | $11.070 | $11.360 | $11.570 | $11.420 | ||||||||||||||
0.180 | 0.352 | 0.361 | 0.380 | 0.382 | 0.382 | ||||||||||||||
0.249 | 0.158 | (0.130 | ) | (0.290 | ) | (0.210 | ) | 0.174 | |||||||||||
0.429 | 0.510 | 0.231 | 0.090 | 0.172 | 0.556 | ||||||||||||||
(0.179 | ) | (0.350 | ) | (0.361 | ) | (0.380 | ) | (0.382 | ) | (0.382 | ) | ||||||||
— | — | — | — | — | (0.024 | ) | |||||||||||||
(0.179 | ) | (0.350 | ) | (0.361 | ) | (0.380 | ) | (0.382 | ) | (0.406 | ) | ||||||||
$11.350 | $11.100 | $10.940 | $11.070 | $11.360 | $11.570 | ||||||||||||||
3.88% | 4.85% | 2.10% | 0.78% | 1.54% | 4.95% | ||||||||||||||
$4,708 | $6,509 | $9,620 | $12,407 | $16,413 | $19,005 | ||||||||||||||
1.56% | 1.50% | 1.50% | 1.51% | 1.51% | 1.55% | ||||||||||||||
1.68% | 1.66% | 1.66% | 1.66% | 1.66% | 1.66% | ||||||||||||||
3.21% | 3.32% | 3.27% | 3.36% | 3.37% | 3.32% | ||||||||||||||
3.09% | 3.16% | 3.11% | 3.21% | 3.22% | 3.21% | ||||||||||||||
15% | 27% | 29% | 9% | 8% | 3% |
63
Financial highlights
Delaware Tax-Free Arizona Fund Class C
Delaware Tax-Free Arizona 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 |
Ratio of expenses to average net assets prior to fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
64
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.120 | $10.960 | $11.090 | $11.380 | $11.580 | $11.430 | ||||||||||||||
0.180 | 0.352 | 0.361 | 0.380 | 0.381 | 0.382 | ||||||||||||||
0.249 | 0.158 | (0.130 | ) | (0.290 | ) | (0.200 | ) | 0.174 | |||||||||||
0.429 | 0.510 | 0.231 | 0.090 | 0.181 | 0.556 | ||||||||||||||
(0.179 | ) | (0.350 | ) | (0.361 | ) | (0.380 | ) | (0.381 | ) | (0.382 | ) | ||||||||
— | — | — | — | — | (0.024 | ) | |||||||||||||
(0.179 | ) | (0.350 | ) | (0.361 | ) | (0.380 | ) | (0.381 | ) | (0.406 | ) | ||||||||
$11.370 | $11.120 | $10.960 | $11.090 | $11.380 | $11.580 | ||||||||||||||
3.88% | 4.84% | 2.09% | 0.77% | 1.63% | 4.94% | ||||||||||||||
$7,564 | $7,257 | $8,806 | $7,609 | $8,117 | $8,591 | ||||||||||||||
1.56% | 1.50% | 1.50% | 1.51% | 1.51% | 1.55% | ||||||||||||||
1.68% | 1.66% | 1.66% | 1.66% | 1.66% | 1.66% | ||||||||||||||
3.21% | 3.32% | 3.27% | 3.36% | 3.37% | 3.32% | ||||||||||||||
3.09% | 3.16% | 3.11% | 3.21% | 3.22% | 3.21% | ||||||||||||||
15% | 27% | 29% | 9% | 8% | 3% |
65
Financial highlights
Delaware Tax-Free California Fund Class A
Delaware Tax-Free California 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
66
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.620 | $10.800 | $11.010 | $11.400 | $11.490 | $11.110 | ||||||||||||||
0.248 | 0.448 | 0.449 | 0.454 | 0.450 | 0.462 | ||||||||||||||
0.420 | (0.182 | ) | (0.210 | ) | (0.390 | ) | (0.090 | ) | 0.380 | ||||||||||
0.668 | 0.266 | 0.239 | 0.064 | 0.360 | 0.842 | ||||||||||||||
(0.248 | ) | (0.446 | ) | (0.449 | ) | (0.454 | ) | (0.450 | ) | (0.462 | ) | ||||||||
(0.248 | ) | (0.446 | ) | (0.449 | ) | (0.454 | ) | (0.450 | ) | (0.462 | ) | ||||||||
$11.040 | $10.620 | $10.800 | $11.010 | $11.400 | $11.490 | ||||||||||||||
6.32% | 2.74% | 2.21% | 0.51% | 3.24% | 7.72% | ||||||||||||||
$64,723 | $61,132 | $67,174 | $76,537 | $75,995 | $60,744 | ||||||||||||||
0.82% | 0.88% | 0.88% | 0.89% | 0.88% | 0.84% | ||||||||||||||
0.99% | 0.97% | 0.97% | 0.97% | 0.97% | 1.06% | ||||||||||||||
4.55% | 4.42% | 4.11% | 3.98% | 3.97% | 4.03% | ||||||||||||||
4.38% | 4.33% | 4.02% | 3.90% | 3.88% | 3.81% | ||||||||||||||
21% | 59% | 34% | 21% | 14% | 11% |
67
Financial highlights
Delaware Tax-Free California Fund Class B
Delaware Tax-Free California 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
68
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.670 | $10.840 | $11.060 | $11.440 | $11.530 | $11.160 | ||||||||||||||
0.208 | 0.373 | 0.367 | 0.368 | 0.365 | 0.377 | ||||||||||||||
0.420 | (0.172 | ) | (0.220 | ) | (0.380 | ) | (0.090 | ) | 0.370 | ||||||||||
0.628 | 0.201 | 0.147 | (0.012 | ) | 0.275 | 0.747 | |||||||||||||
(0.208 | ) | (0.371 | ) | (0.367 | ) | (0.368 | ) | (0.365 | ) | (0.377 | ) | ||||||||
(0.208 | ) | (0.371 | ) | (0.367 | ) | (0.368 | ) | (0.365 | ) | (0.377 | ) | ||||||||
$11.090 | $10.670 | $10.840 | $11.060 | $11.440 | $11.530 | ||||||||||||||
5.91% | 2.07% | 1.34% | (0.15% | ) | 2.46% | 6.80% | |||||||||||||
$3,943 | $4,938 | $6,589 | $9,384 | $14,918 | $18,254 | ||||||||||||||
1.57% | 1.63% | 1.63% | 1.64% | 1.63% | 1.59% | ||||||||||||||
1.74% | 1.72% | 1.72% | 1.72% | 1.72% | 1.81% | ||||||||||||||
3.80% | 3.67% | 3.36% | 3.23% | 3.22% | 3.28% | ||||||||||||||
3.63% | 3.58% | 3.27% | 3.15% | 3.13% | 3.06% | ||||||||||||||
21% | 59% | 34% | 21% | 14% | 11% |
69
Financial highlights
Delaware Tax-Free California Fund Class C
Delaware Tax-Free California 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
70
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.640 | $10.810 | $11.030 | $11.420 | $11.500 | $11.130 | ||||||||||||||
0.207 | 0.373 | 0.367 | 0.368 | 0.365 | 0.377 | ||||||||||||||
0.420 | (0.172 | ) | (0.220 | ) | (0.390 | ) | (0.080 | ) | 0.370 | ||||||||||
0.627 | 0.201 | 0.147 | (0.022 | ) | 0.285 | 0.747 | |||||||||||||
(0.207 | ) | (0.371 | ) | (0.367 | ) | (0.368 | ) | (0.365 | ) | (0.377 | ) | ||||||||
(0.207 | ) | (0.371 | ) | (0.367 | ) | (0.368 | ) | (0.365 | ) | (0.377 | ) | ||||||||
$11.060 | $10.640 | $10.810 | $11.030 | $11.420 | $11.500 | ||||||||||||||
5.92% | 2.07% | 1.35% | (0.24% | ) | 2.56% | 6.81% | |||||||||||||
$13,526 | $13,530 | $14,991 | $13,453 | $12,768 | $9,756 | ||||||||||||||
1.57% | 1.63% | 1.63% | 1.64% | 1.63% | 1.59% | ||||||||||||||
1.74% | 1.72% | 1.72% | 1.72% | 1.72% | 1.81% | ||||||||||||||
3.80% | 3.67% | 3.36% | 3.23% | 3.22% | 3.28% | ||||||||||||||
3.63% | 3.58% | 3.27% | 3.15% | 3.13% | 3.06% | ||||||||||||||
21% | 59% | 34% | 21% | 14% | 11% |
71
Financial highlights
Delaware Tax-Free Colorado Fund Class A
Delaware Tax-Free Colorado 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
72
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.600 | $10.640 | $10.730 | $11.040 | $11.200 | $11.070 | ||||||||||||||
0.220 | 0.452 | 0.448 | 0.464 | 0.488 | 0.495 | ||||||||||||||
0.288 | (0.041 | ) | (0.089 | ) | (0.310 | ) | (0.160 | ) | 0.130 | ||||||||||
0.508 | 0.411 | 0.359 | 0.154 | 0.328 | 0.625 | ||||||||||||||
(0.228 | ) | (0.451 | ) | (0.449 | ) | (0.464 | ) | (0.488 | ) | (0.495 | ) | ||||||||
(0.228 | ) | (0.451 | ) | (0.449 | ) | (0.464 | ) | (0.488 | ) | (0.495 | ) | ||||||||
$10.880 | $10.600 | $10.640 | $10.730 | $11.040 | $11.200 | ||||||||||||||
4.82% | 4.11% | 3.38% | 1.38% | 3.03% | 5.78% | ||||||||||||||
$232,517 | $226,393 | $234,630 | $246,695 | $258,773 | $270,149 | ||||||||||||||
0.91% | 0.90% | 0.93% | 0.94% | 0.93% | 0.94% | ||||||||||||||
0.95% | 0.95% | 0.95% | 0.96% | 0.94% | 0.94% | ||||||||||||||
4.22% | 4.43% | 4.16% | 4.22% | 4.43% | 4.46% | ||||||||||||||
4.18% | 4.38% | 4.14% | 4.20% | 4.42% | 4.46% | ||||||||||||||
9% | 27% | 15% | 12% | 8% | 8% |
73
Financial highlights
Delaware Tax-Free Colorado Fund Class B
Delaware Tax-Free Colorado 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
74
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.610 | $10.640 | $10.730 | $11.050 | $11.200 | $11.080 | ||||||||||||||
0.181 | 0.375 | 0.367 | 0.382 | 0.405 | 0.412 | ||||||||||||||
0.277 | (0.031 | ) | (0.089 | ) | (0.320 | ) | (0.150 | ) | 0.120 | ||||||||||
0.458 | 0.344 | 0.278 | 0.062 | 0.255 | 0.532 | ||||||||||||||
(0.188 | ) | (0.374 | ) | (0.368 | ) | (0.382 | ) | (0.405 | ) | (0.412 | ) | ||||||||
(0.188 | ) | (0.374 | ) | (0.368 | ) | (0.382 | ) | (0.405 | ) | (0.412 | ) | ||||||||
$10.880 | $10.610 | $10.640 | $10.730 | $11.050 | $11.200 | ||||||||||||||
4.33% | 3.43% | 2.60% | 0.53% | 2.35% | 4.89% | ||||||||||||||
$2,023 | $2,693 | $3,961 | $5,326 | $8,221 | $10,370 | ||||||||||||||
1.66% | 1.65% | 1.68% | 1.69% | 1.68% | 1.69% | ||||||||||||||
1.70% | 1.70% | 1.70% | 1.71% | 1.69% | 1.69% | ||||||||||||||
3.47% | 3.68% | 3.41% | 3.47% | 3.68% | 3.71% | ||||||||||||||
3.43% | 3.63% | 3.39% | 3.45% | 3.67% | 3.71% | ||||||||||||||
9% | 27% | 15% | 12% | 8% | 8% |
75
Financial highlights
Delaware Tax-Free Colorado Fund Class C
Delaware Tax-Free Colorado 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
76
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.630 | $10.660 | $10.750 | $11.070 | $11.220 | $11.090 | ||||||||||||||
0.181 | 0.375 | 0.367 | 0.382 | 0.405 | 0.413 | ||||||||||||||
0.277 | (0.031 | ) | (0.089 | ) | (0.320 | ) | (0.150 | ) | 0.130 | ||||||||||
0.458 | 0.344 | 0.278 | 0.062 | 0.255 | 0.543 | ||||||||||||||
(0.188 | ) | (0.374 | ) | (0.368 | ) | (0.382 | ) | (0.405 | ) | (0.413 | ) | ||||||||
(0.188 | ) | (0.374 | ) | (0.368 | ) | (0.382 | ) | (0.405 | ) | (0.413 | ) | ||||||||
$10.900 | $10.630 | $10.660 | $10.750 | $11.070 | $11.220 | ||||||||||||||
4.33% | 3.43% | 2.60% | 0.53% | 2.34% | 4.99% | ||||||||||||||
$13,877 | $11,542 | $9,836 | $10,152 | $9,971 | $9,170 | ||||||||||||||
1.66% | 1.65% | 1.68% | 1.69% | 1.68% | 1.69% | ||||||||||||||
1.70% | 1.70% | 1.70% | 1.71% | 1.69% | 1.69% | ||||||||||||||
3.47% | 3.68% | 3.41% | 3.47% | 3.68% | 3.71% | ||||||||||||||
3.43% | 3.63% | 3.39% | 3.45% | 3.67% | 3.71% | ||||||||||||||
9% | 27% | 15% | 12% | 8% | 8% |
77
Financial highlights
Delaware Tax-Free Idaho Fund Class A
Delaware Tax-Free Idaho 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
78
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.490 | $11.260 | $11.260 | $11.450 | $11.630 | $11.490 | ||||||||||||||
0.217 | 0.436 | 0.437 | 0.448 | 0.449 | 0.452 | ||||||||||||||
0.240 | 0.228 | — | (0.190 | ) | (0.180 | ) | 0.140 | ||||||||||||
0.457 | 0.664 | 0.437 | 0.258 | 0.269 | 0.592 | ||||||||||||||
(0.217 | ) | (0.434 | ) | (0.437 | ) | (0.448 | ) | (0.449 | ) | (0.452 | ) | ||||||||
(0.217 | ) | (0.434 | ) | (0.437 | ) | (0.448 | ) | (0.449 | ) | (0.452 | ) | ||||||||
$11.730 | $11.490 | $11.260 | $11.260 | $11.450 | $11.630 | ||||||||||||||
4.00% | 6.12% | 3.93% | 2.27% | 2.40% | 5.25% | ||||||||||||||
$93,005 | $86,445 | $72,237 | $69,931 | $62,808 | $60,554 | ||||||||||||||
0.93% | 0.88% | 0.85% | 0.86% | 0.85% | 0.87% | ||||||||||||||
0.97% | 0.96% | 0.96% | 0.98% | 0.98% | 0.98% | ||||||||||||||
3.70% | 3.94% | 3.87% | 3.92% | 3.95% | 3.92% | ||||||||||||||
3.66% | 3.86% | 3.76% | 3.80% | 3.82% | 3.81% | ||||||||||||||
7% | 10% | 11% | 8% | 15% | 27% |
79
Financial highlights
Delaware Tax-Free Idaho Fund Class B
Delaware Tax-Free Idaho 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
80
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.470 | $11.240 | $11.240 | $11.430 | $11.610 | $11.480 | ||||||||||||||
0.175 | 0.353 | 0.353 | 0.363 | 0.364 | 0.366 | ||||||||||||||
0.239 | 0.228 | — | (0.190 | ) | (0.180 | ) | 0.130 | ||||||||||||
0.414 | 0.581 | 0.353 | 0.173 | 0.184 | 0.496 | ||||||||||||||
(0.174 | ) | (0.351 | ) | (0.353 | ) | (0.363 | ) | (0.364 | ) | (0.366 | ) | ||||||||
(0.174 | ) | (0.351 | ) | (0.353 | ) | (0.363 | ) | (0.364 | ) | (0.366 | ) | ||||||||
$11.710 | $11.470 | $11.240 | $11.240 | $11.430 | $11.610 | ||||||||||||||
3.62% | 5.34% | 3.17% | 1.51% | 1.64% | 4.39% | ||||||||||||||
$3,014 | $3,359 | $5,123 | $6,003 | $7,892 | $10,911 | ||||||||||||||
1.68% | 1.63% | 1.60% | 1.61% | 1.60% | 1.62% | ||||||||||||||
1.72% | 1.71% | 1.71% | 1.73% | 1.73% | 1.73% | ||||||||||||||
2.95% | 3.19% | 3.12% | 3.17% | 3.20% | 3.17% | ||||||||||||||
2.91% | 3.11% | 3.01% | 3.05% | 3.07% | 3.06% | ||||||||||||||
7% | 10% | 11% | 8% | 15% | 27% |
81
Financial highlights
Delaware Tax-Free Idaho Fund Class C
Delaware Tax-Free Idaho 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
82
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$11.480 | $11.250 | $11.250 | $11.440 | $11.630 | $11.490 | ||||||||||||||
0.175 | 0.353 | 0.352 | 0.363 | 0.364 | 0.366 | ||||||||||||||
0.239 | 0.228 | — | (0.190 | ) | (0.190 | ) | 0.140 | ||||||||||||
0.414 | 0.581 | 0.352 | 0.173 | 0.174 | 0.506 | ||||||||||||||
(0.174 | ) | (0.351 | ) | (0.352 | ) | (0.363 | ) | (0.364 | ) | (0.366 | ) | ||||||||
(0.174 | ) | (0.351 | ) | (0.352 | ) | (0.363 | ) | (0.364 | ) | (0.366 | ) | ||||||||
$11.720 | $11.480 | $11.250 | $11.250 | $11.440 | $11.630 | ||||||||||||||
3.62% | 5.34% | 3.16% | 1.51% | 1.56% | 4.47% | ||||||||||||||
$26,316 | $19,176 | $11,490 | $11,535 | $13,430 | $15,678 | ||||||||||||||
1.68% | 1.63% | 1.60% | 1.61% | 1.60% | 1.62% | ||||||||||||||
1.72% | 1.71% | 1.71% | 1.73% | 1.73% | 1.73% | ||||||||||||||
2.95% | 3.19% | 3.12% | 3.17% | 3.20% | 3.17% | ||||||||||||||
2.91% | 3.11% | 3.01% | 3.05% | 3.07% | 3.06% | ||||||||||||||
7% | 10% | 11% | 8% | 15% | 27% |
83
Financial highlights
Delaware Tax-Free New York Fund Class A
Delaware Tax-Free New York 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
84
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.450 | $10.300 | $10.300 | $10.550 | $10.700 | $10.470 | ||||||||||||||
0.217 | 0.409 | 0.411 | 0.435 | 0.449 | 0.453 | ||||||||||||||
0.300 | 0.148 | — | (0.250 | ) | (0.150 | ) | 0.230 | ||||||||||||
0.517 | 0.557 | 0.411 | 0.185 | 0.299 | 0.683 | ||||||||||||||
(0.217 | ) | (0.407 | ) | (0.411 | ) | (0.435 | ) | (0.449 | ) | (0.453 | ) | ||||||||
(0.217 | ) | (0.407 | ) | (0.411 | ) | (0.435 | ) | (0.449 | ) | (0.453 | ) | ||||||||
$10.750 | $10.450 | $10.300 | $10.300 | $10.550 | $10.700 | ||||||||||||||
4.98% | 5.65% | 4.04% | 1.75% | 2.90% | 6.65% | ||||||||||||||
$28,593 | $22,780 | $15,340 | $14,817 | $13,519 | $13,153 | ||||||||||||||
0.80% | 0.85% | 0.85% | 0.79% | 0.65% | 0.66% | ||||||||||||||
1.10% | 1.10% | 1.09% | 1.10% | 1.09% | 1.12% | ||||||||||||||
4.06% | 4.10% | 3.97% | 4.13% | 4.28% | 4.29% | ||||||||||||||
3.76% | 3.85% | 3.73% | 3.82% | 3.84% | 3.83% | ||||||||||||||
2% | 36% | 28% | 14% | 20% | 13% |
85
Financial highlights
Delaware Tax-Free New York Fund Class B
Delaware Tax-Free New York 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
86
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.420 | $10.270 | $10.280 | $10.530 | $10.670 | $10.450 | ||||||||||||||
0.177 | 0.334 | 0.333 | 0.357 | 0.370 | 0.374 | ||||||||||||||
0.300 | 0.148 | (0.010 | ) | (0.250 | ) | (0.140 | ) | 0.220 | |||||||||||
0.477 | 0.482 | 0.323 | 0.107 | 0.230 | 0.594 | ||||||||||||||
(0.177 | ) | (0.332 | ) | (0.333 | ) | (0.357 | ) | (0.370 | ) | (0.374 | ) | ||||||||
(0.177 | ) | (0.332 | ) | (0.333 | ) | (0.357 | ) | (0.370 | ) | (0.374 | ) | ||||||||
$10.720 | $10.420 | $10.270 | $10.280 | $10.530 | $10.670 | ||||||||||||||
4.60% | 4.88% | 3.17% | 0.99% | 2.23% | 5.77% | ||||||||||||||
$830 | $1,018 | $1,549 | $2,164 | $2,858 | $3,023 | ||||||||||||||
1.55% | 1.60% | 1.60% | 1.54% | 1.40% | 1.41% | ||||||||||||||
1.85% | 1.85% | 1.84% | 1.85% | 1.84% | 1.87% | ||||||||||||||
3.31% | 3.35% | 3.22% | 3.38% | 3.53% | 3.54% | ||||||||||||||
3.01% | 3.10% | 2.98% | 3.07% | 3.09% | 3.08% | ||||||||||||||
2% | 36% | 28% | 14% | 20% | 13% |
87
Financial highlights
Delaware Tax-Free New York Fund Class C
Delaware Tax-Free New York 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 fees waived and expense paid indirectly |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
88
Six Months Ended | Year Ended | ||||||||||||||||||
2/28/101 | 8/31/09 | 8/31/08 | 8/31/07 | 8/31/06 | 8/31/05 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$10.420 | $10.270 | $10.280 | $10.530 | $10.670 | $10.450 | ||||||||||||||
0.177 | 0.333 | 0.333 | 0.357 | 0.370 | 0.376 | ||||||||||||||
0.300 | 0.148 | (0.010 | ) | (0.250 | ) | (0.140 | ) | 0.220 | |||||||||||
0.477 | 0.481 | 0.323 | 0.107 | 0.230 | 0.596 | ||||||||||||||
(0.177 | ) | (0.331 | ) | (0.333 | ) | (0.357 | ) | (0.370 | ) | (0.376 | ) | ||||||||
(0.177 | ) | (0.331 | ) | (0.333 | ) | (0.357 | ) | (0.370 | ) | (0.376 | ) | ||||||||
$10.720 | $10.420 | $10.270 | $10.280 | $10.530 | $10.670 | ||||||||||||||
4.60% | 4.88% | 3.17% | 0.99% | 2.23% | 5.80% | ||||||||||||||
$9,052 | $5,651 | $2,049 | $2,131 | $2,068 | $886 | ||||||||||||||
1.55% | 1.60% | 1.60% | 1.54% | 1.40% | 1.41% | ||||||||||||||
1.85% | 1.85% | 1.84% | 1.85% | 1.84% | 1.87% | ||||||||||||||
3.31% | 3.35% | 3.22% | 3.38% | 3.53% | 3.54% | ||||||||||||||
3.01% | 3.10% | 2.98% | 3.07% | 3.09% | 3.08% | ||||||||||||||
2% | 36% | 28% | 14% | 20% | 13% |
89
Notes to financial statements | |
Delaware multiple state tax-free funds | Six Months Ended February 28, 2010 (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 Mutual Funds II is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Colorado Fund. Voyageur Insured Funds is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Arizona Fund. Voyageur Mutual Funds, Voyageur Mutual Funds II, and Voyageur Insured Funds are individually referred to as a “Trust” and collectively as the “Trusts.” These financial statements and related notes pertain to Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund (each, a “Fund” or, collectively, the “Funds”). The above Trusts are open-end investment companies. The Funds are considered 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 maximum front-end sales charge of up to 4.50%. 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. 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% to zero 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. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months.
The investment objective of each Fund is to seek as high a level of current income exempt from federal income tax and personal income tax in their respective states, as is consistent with preservation of capital.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Funds.
Security Valuation — Debt securities are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Open-end investment companies are valued at their published net asset value. Short-term debt securities are valued at market 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 (each, a “Board” and collectively, the “Boards”). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security.
90
Federal Income Taxes — No provision for federal income taxes has been made as 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. The Funds evaluate 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. Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (August 31, 2006 – August 31, 2009), and has concluded that no provision for federal income tax is required in the Funds’ financial statements.
Class Accounting — Investment income and common expenses are allocated to the various classes of each Fund on the basis of “settled shares” of each class in relation to the net assets of each Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of each Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP 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 the Funds are charged directly to the Funds. 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.
The Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended February 28, 2010.
On July 1, 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source of authoritative nongovernmental U.S. GAAP, superseding existing literature of the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other sources. The Codification is effective for interim and annual periods ending after September 15, 2009. The Funds adopted the Codification for the six months ended February 28, 2010. There was no impact to financial statements as the Codification requirements are disclosure-only in nature.
91
Notes to financial statements
Delaware multiple state tax-free funds
Delaware multiple state tax-free funds
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 | Delaware | Delaware | Delaware | Delaware | |||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||||||||
On the first $500 million | 0.500 | % | 0.550 | % | 0.550 | % | 0.550 | % | 0.550 | % | |||||
On the next $500 million | 0.475 | % | 0.500 | % | 0.500 | % | 0.500 | % | 0.500 | % | |||||
On the next $1.5 billion | 0.450 | % | 0.450 | % | 0.450 | % | 0.450 | % | 0.450 | % | |||||
In excess of $2.5 billion | 0.425 | % | 0.425 | % | 0.425 | % | 0.425 | % | 0.425 | % |
DMC has voluntarily agreed to waive that portion, if any, of its management fee and reimburse each Fund to the extent necessary to ensure that total annual operating expenses, (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, nonroutine expenses)), do not exceed specified percentages of average daily net assets as shown below until such time as the waivers are discontinued. For purposes of these waivers and reimbursements, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by each Fund’s Board and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Funds.
Delaware | Delaware | Delaware | Delaware | Delaware | ||||||||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | ||||||||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | ||||||||||||||||
Effective September 11, 2009 | ||||||||||||||||||||
and renewed January 1, 2010 | ||||||||||||||||||||
operating expense limitation | ||||||||||||||||||||
as a percentage of | ||||||||||||||||||||
average daily net assets | ||||||||||||||||||||
(per annum) | —% | 0.57% | —% | —% | 0.55% | |||||||||||||||
Through December 31, 2009, | ||||||||||||||||||||
operating expense limitation | ||||||||||||||||||||
as a percentage of | ||||||||||||||||||||
average daily net assets | ||||||||||||||||||||
(per annum) | 0.50% | 0.63% | 0.64% | 0.65% | 0.60% | |||||||||||||||
Expiration date | 12/31/09 | 12/31/09 | 12/31/09 | 12/31/09 | 12/31/09 |
92
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these services, the Funds pay DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% 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. For the six months ended February 28, 2010, each Fund was charged for these services as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | |||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||
$3,106 | $2,020 | $6,158 | $2,867 | $839 |
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.
At February 28, 2010, each Fund had liabilities payable to affiliates as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | ||||||||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | ||||||||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | ||||||||||||||||
Investment management | ||||||||||||||||||||
fee payable to DMC | $46,305 | $21,848 | $104,795 | $51,238 | $ 5,791 | |||||||||||||||
Dividend disbursing, | ||||||||||||||||||||
transfer agent, fund | ||||||||||||||||||||
accounting oversight | ||||||||||||||||||||
fees and other expenses | ||||||||||||||||||||
payable to DSC | 4,154 | 3,149 | 8,487 | 3,804 | 2,097 | |||||||||||||||
Distribution fees | ||||||||||||||||||||
payable to DDLP | 30,211 | 25,734 | 56,655 | 39,848 | 12,517 | |||||||||||||||
Other expenses payable to | ||||||||||||||||||||
DMC and affiliates* | 4,729 | 3,153 | 9,579 | 4,627 | 1,367 |
*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.
93
Notes to financial statements
Delaware multiple state tax-free funds
Delaware multiple state tax-free funds
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
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 each Fund by DMC and/or its affiliates’ employees. For the six months ended February 28, 2010, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | |||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||
$4,005 | $2,617 | $7,991 | $3,747 | $1,108 |
For the six months ended February 28, 2010, DDLP earned commissions on sales of Class A shares for each Fund as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | |||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||
$4,906 | $2,932 | $13,520 | $27,227 | $18,569 |
For the six months ended February 28, 2010, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B, and Class C shares, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | ||||||||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | ||||||||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | ||||||||||||||||
Class A | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Class B | 860 | 230 | 303 | 462 | — | |||||||||||||||
Class C | 445 | 308 | 459 | 7,192 | 828 |
Trustees’ fees include expenses accrued by the Funds for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC, and DDLP are officers and/or Trustees of the Trusts. These officers and Trustees are paid no compensation by the Funds.
3. Investments
For the six months ended February 28, 2010, the Funds made purchases and sales of investment securities other than short-term investments as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | |||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||||||
Purchases | $ | 8,990,919 | $8,485,477 | $ | 15,582,684 | $ | 16,827,186 | $7,591,797 | |||||
Sales | 17,881,010 | 9,960,648 | 11,352,945 | 3,794,625 | 339,868 |
94
At February 28, 2010, 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 28, 2010, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | ||||||||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | ||||||||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | ||||||||||||||||
Cost of | ||||||||||||||||||||
investments | $ | 115,735,553 | $ | 81,772,727 | $ | 242,364,999 | $ | 115,511,902 | $ | 36,683,112 | ||||||||||
Aggregate | ||||||||||||||||||||
unrealized | ||||||||||||||||||||
appreciation | $ | 5,072,610 | $ | 3,193,249 | $ | 11,315,281 | $ | 5,689,613 | $ | 2,166,170 | ||||||||||
Aggregate | ||||||||||||||||||||
unrealized | ||||||||||||||||||||
depreciation | (1,118,221 | ) | (3,263,987 | ) | (5,043,224 | ) | (411,627 | ) | (320,393 | ) | ||||||||||
Net unrealized | ||||||||||||||||||||
appreciation | ||||||||||||||||||||
(depreciation) | $ | 3,954,389 | $ | (70,738 | ) | $ | 6,272,057 | $ | 5,277,986 | $ | 1,845,777 |
U.S. GAAP defines fair value as the price that the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs, which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
95
Notes to financial statements
Delaware multiple state tax-free funds
Delaware multiple state tax-free funds
3. Investments (continued)
The following table summarizes the valuation of the Funds’ investments by fair value hierarchy levels as of February 28, 2010:
Delaware Tax-Free Arizona Fund | |||||||||
Level 2 | |||||||||
Municipal Bonds | $119,689,942 | ||||||||
Delaware Tax-Free California Fund | |||||||||
Level 1 | Level 2 | Total | |||||||
Municipal Bonds | $ | — | $ | 81,190,899 | $ | 81,190,899 | |||
Short-Term | 311,090 | 200,000 | 511,090 | ||||||
Total | $ | 311,090 | $ | 81,390,899 | $ | 81,701,989 | |||
Delaware Tax-Free Colorado Fund | |||||||||
Level 1 | Level 2 | Total | |||||||
Municipal Bonds | $ | — | $ | 246,100,406 | $ | 246,100,406 | |||
Short-Term | 2,536,650 | — | 2,536,650 | ||||||
Total | $ | 2,536,650 | $ | 246,100,406 | $ | 248,637,056 | |||
Delaware Tax-Free Idaho Fund | |||||||||
Level 1 | Level 2 | Total | |||||||
Municipal Bonds | $ | — | $ | 119,062,204 | $ | 119,062,204 | |||
Short-Term | 1,727,684 | — | 1,727,684 | ||||||
Total | $ | 1,727,684 | $ | 119,062,204 | $ | 120,789,888 | |||
Delaware Tax-Free New York Fund | |||||||||
Level 1 | Level 2 | Total | |||||||
Municipal Bonds | $ | — | $ | 36,928,889 | $ | 36,928,889 | |||
Short-Term | — | 1,600,000 | 1,600,000 | ||||||
Total | $ | — | $ | 38,528,889 | $ | 38,528,889 |
There were no Level 3 securities at the beginning or end of the period.
In January 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for the Funds’ year ending August 31, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
96
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. GAAP. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2010 and the year ended August 31, 2009 was as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | |||||||||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||||||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||||||||||||||
Six Months Ended 2/28/10* | |||||||||||||||||||||
Tax-exempt income | $ | 2,329,053 | $ | 1,721,593 | $ | 5,049,157 | $ | 1,969,503 | $ | 639,398 | |||||||||||
Ordinary income | 74,189 | 50,415 | 122,743 | 95,664 | 12,280 | ||||||||||||||||
Total | $ | 2,403,242 | $ | 1,772,008 | $ | 5,171,900 | $ | 2,065,167 | $ | 651,678 | |||||||||||
Year Ended 8/31/09 | |||||||||||||||||||||
Tax-exempt income | $ | 4,956,787 | $ | 3,385,072 | $ | 10,156,494 | $ | 3,483,707 | $ | 894,982 | |||||||||||
Ordinary income | — | — | 12,530 | — | — | ||||||||||||||||
Total | $ | 4,956,787 | $ | 3,385,072 | $ | 10,169,024 | $ | 3,483,707 | $ | 894,982 |
*Tax information for the period ended February 28, 2010 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
97
Notes to financial statements
Delaware multiple state tax-free funds
Delaware multiple state tax-free funds
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 28, 2010, the estimated components of net assets on a tax basis were as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | ||||||||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | ||||||||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | ||||||||||||||||
Shares of | ||||||||||||||||||||
beneficial | ||||||||||||||||||||
interest | $ | 117,512,086 | $ | 82,343,166 | $ | 246,563,644 | $ | 117,058,432 | $ | 36,641,785 | ||||||||||
Distributions | ||||||||||||||||||||
payable | (76,597 | ) | (59,199 | ) | (170,577 | ) | (81,767 | ) | (22,704 | ) | ||||||||||
Undistributed | ||||||||||||||||||||
tax-exempt | ||||||||||||||||||||
income | 102,794 | 77,986 | 176,829 | 70,466 | 22,053 | |||||||||||||||
Realized gains | ||||||||||||||||||||
9/1/09 – | ||||||||||||||||||||
2/28/10 | 853,852 | 217,477 | 677,120 | 99,011 | 3,270 | |||||||||||||||
Post-October | ||||||||||||||||||||
losses | — | (88,772 | ) | — | — | — | ||||||||||||||
Capital loss | ||||||||||||||||||||
carryforwards as | ||||||||||||||||||||
of 8/31/09 | (1,448,471 | ) | (227,694 | ) | (5,101,953 | ) | (89,623 | ) | (14,929 | ) | ||||||||||
Unrealized | ||||||||||||||||||||
appreciation | ||||||||||||||||||||
(depreciation) of | ||||||||||||||||||||
investments | 3,954,389 | (70,738 | ) | 6,272,057 | 5,277,986 | 1,845,777 | ||||||||||||||
Net assets | $ | 120,898,053 | $ | 82,192,226 | $ | 248,417,120 | $ | 122,334,505 | $ | 38,475,252 |
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales and tax treatment of market discount and premium on debt instruments.
Post-October losses represent losses realized on investment transactions from November 1, 2009 through February 28, 2010 that, in accordance with federal income tax regulations, each Fund has elected to defer and treat as having arisen in the following fiscal year.
98
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2010, the Funds recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end:
Delaware | Delaware | Delaware | Delaware | Delaware | |||||||||||||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||||||||||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||||||||||||
Undistributed | |||||||||||||||||||
(distributions in excess of) | |||||||||||||||||||
net investment income | $ | (8,152 | ) | $ | (569 | ) | $ | (7,768 | ) | $ | 19,616 | $ | (3,556 | ) | |||||
Accumulated net realized | |||||||||||||||||||
gain (loss) | 8,152 | 569 | 7,768 | (19,616 | ) | 3,556 |
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2009 will expire as follows:
Delaware | Delaware | Delaware | Delaware | Delaware | ||||||||||||||||||||
Year of | Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||||||||||||||||
Expiration | Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||||||||||||||||
2010 | $ | — | $ | — | $ | — | $ | 9,312 | $ | — | ||||||||||||||
2011 | — | 6,039 | — | — | — | |||||||||||||||||||
2012 | 1,448,471 | — | 2,796,560 | — | — | |||||||||||||||||||
2013 | — | — | 57,695 | — | — | |||||||||||||||||||
2014 | — | — | 2,203,520 | 23,435 | — | |||||||||||||||||||
2015 | — | — | — | 56,876 | — | |||||||||||||||||||
2016 | — | 221,655 | 44,178 | — | 14,929 | |||||||||||||||||||
Total | $ | 1,448,471 | $ | 227,694 | $ | 5,101,953 | $ | 89,623 | $ | 14,929 |
For the six months ended February 28, 2010, the Funds had capital gains which may reduce capital loss carryforwards.
Delaware | Delaware | Delaware | Delaware | Delaware | |||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||
$853,852 | $217,477 | $677,120 | $99,011 | $3,270 |
99
Notes to financial statements
Delaware multiple state tax-free funds
Delaware multiple state tax-free funds
6. Capital Shares
Transactions in capital shares were as follows:
Delaware Tax-Free | Delaware Tax-Free | Delaware Tax-Free | ||||||||||||||||
Arizona Fund | California Fund | Colorado Fund | ||||||||||||||||
Six Months | Year | Six Months | Year | Six Months | Year | |||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||
2/28/10 | 8/31/09 | 2/28/10 | 8/31/09 | 2/28/10 | 8/31/09 | |||||||||||||
Shares sold: | ||||||||||||||||||
Class A | 238,804 | 756,808 | 490,841 | 825,013 | 852,300 | 1,387,638 | ||||||||||||
Class B | — | 1,968 | 6,562 | 9,030 | — | 1,049 | ||||||||||||
Class C | 55,074 | 102,547 | 91,322 | 208,816 | 243,575 | 281,038 | ||||||||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||||||||||||
Class A | 105,105 | 207,965 | 79,230 | 152,565 | 295,109 | 595,084 | ||||||||||||
Class B | 4,646 | 12,138 | 5,784 | 13,524 | 1,884 | 4,925 | ||||||||||||
Class C | 10,074 | 13,735 | 22,204 | 35,227 | 18,459 | 24,239 | ||||||||||||
413,703 | 1,095,161 | 695,943 | 1,244,175 | 1,411,327 | 2,293,973 | |||||||||||||
Shares repurchased: | ||||||||||||||||||
Class A | (1,014,731 | ) | (1,879,717 | ) | (465,208 | ) | (1,444,076 | ) | (1,128,914 | ) | (2,677,810 | ) | ||||||
Class B | (176,171 | ) | (307,293 | ) | (119,828 | ) | (167,397 | ) | (69,963 | ) | (124,079 | ) | ||||||
Class C | (52,384 | ) | (267,390 | ) | (162,564 | ) | (358,482 | ) | (75,544 | ) | (141,654 | ) | ||||||
(1,243,286 | ) | (2,454,400 | ) | (747,600 | ) | (1,969,955 | ) | (1,274,421 | ) | (2,943,543 | ) | |||||||
Net increase | ||||||||||||||||||
(decrease) | (829,583 | ) | (1,359,239 | ) | (51,657 | ) | (725,780 | ) | 136,906 | (649,570 | ) |
Delaware Tax-Free | Delaware Tax-Free | |||||||||||
Idaho Fund | New York Fund | |||||||||||
Six Months | Year | Six Months | Year | |||||||||
Ended | Ended | Ended | Ended | |||||||||
2/28/10 | 8/31/09 | 2/28/10 | 8/31/09 | |||||||||
Shares sold: | ||||||||||||
Class A | 622,761 | 1,615,020 | 617,416 | 1,035,723 | ||||||||
Class B | 727 | 5,765 | 880 | 4,787 | ||||||||
Class C | 691,613 | 758,087 | 408,631 | 396,933 | ||||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||||||
Class A | 107,707 | 171,510 | 32,700 | 40,258 | ||||||||
Class B | 3,065 | 8,957 | 768 | 2,303 | ||||||||
Class C | 22,010 | 22,570 | 14,843 | 6,249 | ||||||||
1,447,883 | 2,581,909 | 1,075,238 | 1,486,253 | |||||||||
Shares repurchased: | ||||||||||||
Class A | (324,505 | ) | (679,777 | ) | (169,691 | ) | (385,163 | ) | ||||
Class B | (39,213 | ) | (177,717 | ) | (21,974 | ) | (60,185 | ) | ||||
Class C | (138,424 | ) | (131,937 | ) | (121,254 | ) | (60,407 | ) | ||||
(502,142 | ) | (989,431 | ) | (312,919 | ) | (505,755 | ) | |||||
Net increase | 945,741 | 1,592,478 | 762,319 | 980,498 |
100
For the six months ended February 28, 2010 and the year ended August 31, 2009, 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 above and the statements of changes in net assets.
Six Months Ended | Year Ended | |||||||||||||
2/28/10 | 8/31/09 | |||||||||||||
Class B | Class A | Class B | Class A | |||||||||||
Shares | Shares | Value | Shares | Shares | Value | |||||||||
Delaware Tax-Free | ||||||||||||||
Arizona Fund | 108,371 | 108,467 | $ | 1,231,308 | 126,754 | 126,825 | $ | 1,338,820 | ||||||
Delaware Tax-Free | ||||||||||||||
California Fund | 58,900 | 59,124 | 649,036 | 92,283 | 92,659 | 913,283 | ||||||||
Delaware Tax-Free | ||||||||||||||
Colorado Fund | 29,504 | 29,506 | 319,777 | 28,997 | 29,016 | 288,928 | ||||||||
Delaware Tax-Free | ||||||||||||||
Idaho Fund | 20,438 | 20,403 | 238,806 | 58,929 | 58,820 | 644,988 | ||||||||
Delaware Tax-Free | ||||||||||||||
New York Fund | 21,600 | 21,539 | 231,114 | 33,488 | 33,413 | 327,019 |
7. Line of Credit
The Funds, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participate in a $35,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants are charged an annual commitment fee, which is allocated across the Participants on the basis of each Participant’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 agreement expires on November 16, 2010. The Funds had no amounts outstanding as of February 28, 2010 or at any time during the period then ended.
8. Credit and Market Risk
The Funds concentrate their investments in securities issued by municipalities. The value of these investments may be adversely affected by new legislation within the states, regional or local economic conditions, as applicable, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse
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Notes to financial statements
Delaware multiple state tax-free funds
Delaware multiple state tax-free funds
8. Credit and Market Risk (continued)
impact on the value of insured bonds held in the Funds. At February 28, 2010, the percentages of each Fund’s net assets insured by bond insurers are listed below and these securities have been identified in the statements of net assets.
Delaware | Delaware | Delaware | Delaware | Delaware | |||||
Tax-Free | Tax-Free | Tax-Free | Tax-Free | Tax-Free | |||||
Arizona Fund | California Fund | Colorado Fund | Idaho Fund | New York Fund | |||||
40% | 20% | 23% | 31% | 11% |
The Funds may invest in advanced refunded bonds, escrow secured bonds or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding”. Advance refunded bonds are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities, which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.
Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s Investors Service Inc., Standard & Poor’s Rating 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 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. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. As of February 28, 2010, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.
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9. Contractual Obligations
The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds’ existing contracts and expects the risk of loss to be remote.
10. Sale of Delaware Investments to Macquarie Group
On August 18, 2009, Lincoln National Corporation (parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP, and DSC are now wholly owned subsidiaries of Macquarie.
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreement between DMC and the Funds. On January 4, 2010, the new investment management agreement between DMC and the Funds that was approved by the shareholders became effective.
11. Subsequent Events
Management has evaluated whether any events or transactions occurred subsequent to February 28, 2010 through April 15, 2010, the date of issuance of the Funds’ financial statements, and determined that there were no material events or transactions that would require recognition or disclosure in the Funds’ financial statements.
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Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
(Unaudited)
Delaware multiple state tax-free funds
Proxy Results
At Joint Special Meetings of Shareholders of Voyageur Insured Funds, on behalf of Delaware Tax-Free Arizona Fund; Voyageur Mutual Funds, on behalf of Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund; and Voyageur Mutual Funds II, on behalf of Delaware Tax-Free Colorado Fund (Voyageur Insured Funds, Voyageur Mutual Fund, and Voyageur Mutual Funds II hereinafter each, a “Trust” and collectively, the “Trusts” and Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund hereinafter each, a “Fund” and collectively, the “Funds”) held on November 12, 2009 and reconvened on December 17, 2009 for Delaware Tax-Free California Fund, December 4, 2009 for Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund only and March 16, 2010, the shareholders of each Fund voted to (i) elect a Board of Trustees for each Trust; and to (ii) approve new investment advisory agreements between each Trust, on behalf of the respective Fund(s), and Delaware Management Company, respectively. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
The following proposals were submitted for a vote of the shareholders:
1. To elect a Board of Trustees for each Trust.
Voyageur Insured Funds
% of | % of | % of | % of | |||||||||
outstanding | shares | outstanding | shares | |||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | |||||||
Thomas L. Bennett | 7,510,444.878 | 65.587 | 94.052 | 474,979.649 | 4.148 | 5.948 | ||||||
Patrick P. Coyne | 7,510,706.365 | 65.589 | 94.055 | 474,718.162 | 4.146 | 5.945 | ||||||
John A. Fry | 7,512,009.667 | 65.600 | 94.072 | 473,414.860 | 4.135 | 5.928 | ||||||
Anthony D. Knerr | 7,512,519.072 | 65.605 | 94.078 | 472,905.455 | 4.130 | 5.922 | ||||||
Lucinda S. Landreth | 7,506,669.072 | 65.554 | 94.005 | 478,755.455 | 4.181 | 5.995 | ||||||
Ann R. Leven | 7,506,669.072 | 65.554 | 94.005 | 478,755.455 | 4.181 | 5.995 | ||||||
Thomas F. Madison | 7,510,196.960 | 65.585 | 94.049 | 475,227.567 | 4.150 | 5.951 | ||||||
Janet L. Yeomans | 7,506,669.072 | 65.554 | 94.005 | 478,755.455 | 4.181 | 5.995 | ||||||
J. Richard Zecher | 7,512,009.667 | 65.600 | 94.072 | 473,414.860 | 4.135 | 5.928 |
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Voyageur Mutual Funds
% of | % of | % of | % of | |||||||||
outstanding | shares | outstanding | shares | |||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | |||||||
Thomas L. Bennett | 27,534,201.174 | 64.687 | 94.418 | 1,627,955.392 | 3.825 | 5.582 | ||||||
Patrick P. Coyne | 27,538,840.631 | 64.698 | 94.433 | 1,623,315.935 | 3.814 | 5.567 | ||||||
John A. Fry | 27,541,310.882 | 64.704 | 94.442 | 1,620,845.684 | 3.808 | 5.558 | ||||||
Anthony D. Knerr | 27,543,108.286 | 64.708 | 94.448 | 1,619,048.280 | 3.804 | 5.552 | ||||||
Lucinda S. Landreth | 27,542,973.819 | 64.708 | 94.448 | 1,619,182.747 | 3.804 | 5.552 | ||||||
Ann R. Leven | 27,540,505.439 | 64.702 | 94.439 | 1,621,651.127 | 3.810 | 5.561 | ||||||
Thomas F. Madison | 27,534,959.779 | 64.689 | 94.420 | 1,627,196.787 | 3.823 | 5.580 | ||||||
Janet L. Yeomans | 27,539,087.174 | 64.698 | 94.434 | 1,623,069.392 | 3.814 | 5.566 | ||||||
J. Richard Zecher | 27,532,297.843 | 64.683 | 94.411 | 1,629,858.723 | 3.829 | 5.589 |
Voyageur Mutual Funds II
% of | % of | % of | % of | |||||||||
outstanding | shares | outstanding | shares | |||||||||
Shares voted for | shares | voted | Shares withheld | shares | voted | |||||||
Thomas L. Bennett | 14,479,703.149 | 63.926 | 97.135 | 427,065.079 | 1.885 | 2.865 | ||||||
Patrick P. Coyne | 14,469,317.651 | 63.880 | 97.065 | 437,450.577 | 1.931 | 2.935 | ||||||
John A. Fry | 14,488,749.660 | 63.966 | 97.196 | 418,018.568 | 1.845 | 2.804 | ||||||
Anthony D. Knerr | 14,482,486.274 | 63.938 | 97.154 | 424,281.954 | 1.873 | 2.846 | ||||||
Lucinda S. Landreth | 14,488,816.962 | 63.966 | 97.196 | 417,951.266 | 1.845 | 2.804 | ||||||
Ann R. Leven | 14,478,371.695 | 63.920 | 97.126 | 428,396.533 | 1.891 | 2.874 | ||||||
Thomas F. Madison | 14,378,358.428 | 63.478 | 96.455 | 528,409.800 | 2.333 | 3.545 | ||||||
Janet L. Yeomans | 14,486,139.464 | 63.954 | 97.178 | 420,628.764 | 1.857 | 2.822 | ||||||
J. Richard Zecher | 14,486,180.936 | 63.954 | 97.179 | 420,587.292 | 1.857 | 2.821 |
2. | To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund(s), and Delaware Management Company. |
Delaware Tax-Free Arizona Fund | ||
Shares Voted For | 5,503,268.604 | |
Percentage of Outstanding Shares | 48.059% | |
Percentage of Shares Voted | 68.305% | |
Shares Voted Against | 318,946.724 | |
Percentage of Outstanding Shares | 2.785% | |
Percentage of Shares Voted | 3.958% | |
Shares Abstained | 303,633.649 | |
Percentage of Outstanding Shares | 2.651% | |
Percentage of Shares Voted | 3.769% | |
Broker Non-Votes | 1,931,085.658 |
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Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
(Unaudited)
Delaware multiple state tax-free funds
Proxy Results (continued)
Delaware Tax-Free California Fund | |
Shares Voted For | 3,161,738.551 |
Percentage of Outstanding Shares | 42.260% |
Percentage of Shares Voted | 67.222% |
Shares Voted Against | 113,090.044 |
Percentage of Outstanding Shares | 1.512% |
Percentage of Shares Voted | 2.404% |
Shares Abstained | 269,836.501 |
Percentage of Outstanding Shares | 3.606% |
Percentage of Shares Voted | 5.737% |
Broker Non-Votes | 1,158,761.563 |
Delaware Tax-Free Colorado Fund | |
Shares Voted For | 10,641,098.445 |
Percentage of Outstanding Shares | 46.979% |
Percentage of Shares Voted | 70.809% |
Shares Voted Against | 394,714.534 |
Percentage of Outstanding Shares | 1.742% |
Percentage of Shares Voted | 2.627% |
Shares Abstained | 468,241.663 |
Percentage of Outstanding Shares | 2.068% |
Percentage of Shares Voted | 3.115% |
Broker Non-Votes | 3,523,768.881 |
Delaware Tax-Free Idaho Fund | |
Shares Voted For | 4,722,925.538 |
Percentage of Outstanding Shares | 50.058% |
Percentage of Shares Voted | 67.836% |
Shares Voted Against | 490,745.060 |
Percentage of Outstanding Shares | 5.202% |
Percentage of Shares Voted | 7.049% |
Shares Abstained | 198,509.218 |
Percentage of Outstanding Shares | 2.104% |
Percentage of Shares Voted | 2.851% |
Broker Non-Votes | 1,550,081.012 |
Delaware Tax-Free New York Fund | |
Shares Voted For | 1,323,953.644 |
Percentage of Outstanding Shares | 45.593% |
Percentage of Shares Voted | 67.540% |
Shares Voted Against | 18,938.743 |
Percentage of Outstanding Shares | 0.652% |
Percentage of Shares Voted | 0.966% |
Shares Abstained | 60,164.796 |
Percentage of Outstanding Shares | 2.072% |
Percentage of Shares Voted | 3.069% |
Broker Non-Votes | 557,205.446 |
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Board Consideration of New Investment Advisory Agreement
At a meeting held on September 3, 2009 (the “Meeting”), the Board of Trustees of the Delaware Investments® Family of Funds (the “Board”), including the independent Trustees, unanimously approved a new investment advisory agreement between each registrant on behalf of each series (each, a “Fund” and together, the “Funds”) and Delaware Management Company (“DMC”) in connection with the sale of Delaware Investments’ advisory business to Macquarie Bank Limited (the “Macquarie Group”) (the “Transaction”). In making its decision, the Board considered information furnished specifically in connection with the approval of the new investment advisory agreements with DMC (the “New Investment Advisory Agreements”), which included extensive materials about the Transaction and matters related to the proposed approvals. To assist the Board in considering the New Investment Advisory Agreements, Macquarie Group provided materials and information about Macquarie Group, including detailed written responses to the questions posed by the independent Trustees. DMC also provided materials and information about the Transaction, including detailed written responses to the questions posed by the independent Trustees.
At the Meeting, the Trustees discussed the Transaction with DMC management and with key Macquarie Group representatives. The Meeting included discussions of the strategic rationale for the Transaction and Macquarie Group’s general plans and intentions regarding the Funds and DMC. The Board members also inquired about the plans for, and anticipated roles and responsibilities of, key employees and officers of Delaware Management Holdings Inc. and DMC in connection with the Transaction.
In connection with the Trustees’ review of the New Investment Advisory Agreements for the Funds, DMC and/or Macquarie Group emphasized that:
- They expected that there would be no adverse changes as a result of the Transaction, in the nature, quality, or extent of services currently provided to the Funds and their shareholders, including investment management, distribution, or other shareholder services.
- No material changes in personnel or operations were contemplated in the operation of DMC under Macquarie Group as a result of the Transaction and no material changes were currently contemplated in connection with third party service providers to the Funds.
- Macquarie Group had no intention to cause DMC to alter the voluntary expense waivers and reimbursements currently in effect for the Funds.
- Under the agreement between Macquarie Group and Lincoln National Corporation (“LNC”) (the “Transaction Agreement”), Macquarie Group has agreed to conduct, and to cause its affiliates to conduct, their respective businesses in compliance with the conditions of Section 15(f) of the Investment Company Act of 1940 (the “1940 Act”) with respect to the Funds, to the extent within its control, including maintaining Board composition of at least 75% of the Board members qualifying as independent Trustees and not imposing any “unfair burden” on the Funds for at least two years from the closing of the Transaction (the “Closing”).
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Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
(Unaudited)
Delaware multiple state tax-free funds
Board Consideration of New Investment Advisory Agreement (continued)
In addition to the information provided by DMC and Macquarie Group as described above, the Trustees also considered all other factors they believed to be relevant to evaluating the New Investment Advisory Agreements, including the specific matters discussed below. In their deliberations, the Trustees did not identify any particular information that was controlling, and different Trustees may have attributed different weights to the various factors. However, for each Fund, the Trustees determined that the overall arrangements between the Fund and DMC, as provided in the respective New Investment Advisory Agreement, including the proposed advisory fee and the related administration arrangements between the Fund and DMC, were fair and reasonable in light of the services to be performed, expenses incurred, and such other matters as the Trustees considered relevant. Factors evaluated included:
- The potential for expanding distribution of Fund shares through access to Macquarie Group’s existing distribution channels;
- Delaware Investments’ acquisition of an exclusive wholesaling sales force from a subsidiary of LNC;
- The reputation, financial strength, and resources of Macquarie Group as well as its historic and ongoing commitment to the asset management business in Australia as well as other parts of the world;
- The terms and conditions of the New Investment Advisory Agreements, including that each Fund’s total contractual fee rate under the New Investment Advisory Agreement will remain the same;
- The Board’s full annual review (or initial approval) of the current investment advisory agreements at their in-person meeting in May 2009 as required by the 1940 Act and its determination that (i) DMC had the capabilities, resources, and personnel necessary to provide the satisfactory advisory and administrative services currently provided to each Fund and (ii) the advisory and/or management fees paid by each Fund, taking into account any applicable fee waivers and breakpoints, represented reasonable compensation to DMC in light of the services provided, the costs to DMC of providing those services, economies of scale, and the fees and other expenses paid by similar funds and such other matters that the Board considered relevant in the exercise of its reasonable judgment;
- The portfolio management teams for the Funds are not currently expected to change as a result of the Transaction;
- LNC and Macquarie Group were expected to execute a reimbursement agreement pursuant to which LNC and Macquarie Group would agree to pay (or reimburse) all reasonable out-of-pocket costs and expenses of the Funds in connection with the Board’s consideration of the Transaction, the New Investment Advisory Agreements and related agreements, and all costs related to the proxy solicitation (the “Expense Agreement”);
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- The likelihood that Macquarie Group would invest additional amounts in Delaware Investments, including DMC, which could result in increased assets under management, which in turn would allow some Funds the potential opportunity to achieve economies of scale and lower fees payable by Fund shareholders; and
- The compliance and regulatory history of Macquarie Group and its affiliates.
In making their decision relating to the approval of each Fund’s New Investment Advisory Agreement, the independent Trustees gave attention to all information furnished. The following discussion, however, identifies the primary factors taken into account by the Trustees and the conclusions reached in approving the New Investment Advisory Agreements.
Nature, Extent, and Quality of Service. The Trustees considered the services historically provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered that the New Investment Advisory Agreements would be substantially similar to the current investment advisory agreements between the Funds and DMC (the “Current Investment Advisory Agreements”), and therefore, considered the many reports furnished to them throughout 2008 and 2009 at regular Board meetings covering matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; the compliance of management personnel with the code of ethics adopted throughout the Delaware Investments® Family of Funds complex; and the adherence to fair value pricing procedures as established by the Board. The Trustees were pleased with the current staffing of DMC and the emphasis placed on research and risk management in the investment process. Favorable consideration was given to DMC’s efforts to maintain expenditures and, in some instances, increase financial and human resources committed to Fund matters.
The Board also considered the transfer agent and shareholder services that would continue to be provided to Fund shareholders by DMC’s affiliate, Delaware Service Company, Inc. (“DSC”). The Trustees noted, in particular, DSC’s commitment to maintain a high level of service as well as DMC’s expenditures to improve the delivery of shareholder services. The Board was assured that shareholders would continue to receive the benefits provided to Fund shareholders by being part of the Delaware Investments Family of Funds, including each shareholder’s ability to exchange an investment in one Delaware Investments Fund for the same class of shares in another Delaware Investments Fund without a sales charge, to reinvest Fund dividends into additional shares of any of the Funds, and the privilege to combine holdings in other Funds to obtain a reduced sales charge.
Based on the information provided by DMC and Macquarie Group, including that Macquarie Group and DMC currently expected no material changes as a result of the Transaction in (i) personnel or operations of DMC or (ii) third party service providers to the Funds, the Board concluded that the satisfactory nature, extent, and quality of services currently provided to the Funds and their shareholders were very likely to continue under the New Investment Advisory
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Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
(Unaudited)
Delaware multiple state tax-free funds
Board Consideration of New Investment Advisory Agreement (continued)
Agreements. Moreover, the Board concluded that the Funds would probably benefit from the expanded distribution resources that would become available to Delaware Investments following the Transaction. The Board also concluded that it was very unlikely that any “unfair burden” would be imposed on any of the Funds for the first two years following the Closing as a result of the Transaction. Consequently, the Board concluded that it did not expect the Transaction to result in any adverse changes in the nature, quality, or extent of services (including investment management, distribution or other shareholder services) currently provided to the Funds and their shareholders.
Investment Performance. The Board considered the overall investment performance of DMC and the Funds. The Trustees placed significant emphasis on the investment performance of the Funds in view of its importance to shareholders. Although the Trustees gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Trustees gave particular weight to their review of investment performance in connection with the approval of the Current Investment Advisory Agreements at the Board meeting held in May 2009. At that meeting, the Trustees reviewed reports prepared by Lipper, Inc., an independent statistical compilation organization (“Lipper”), which showed each Fund’s investment performance as of December 31, 2008 in comparison to a group of funds selected by Lipper as being similar to the Fund (the “Performance Universe”). During the May 2009 agreement review process, the Trustees observed the significant improvements to relative investment performance of the Funds compared to the Funds’ performance as of December 31, 2007.
At their meeting on September 3, 2009, the Trustees, including the independent Trustees in consultation with their independent counsel, reviewed the investment performance of each Fund. The Trustees compared the performance of each Fund relative to that of its respective Performance Universe for the 1-, 3-, 5-, and 10-year periods ended June 30, 2009 and compared its relative investment performance against the corresponding relative investment performance of each Fund for such time periods ended December 31, 2008, to the extent applicable. As of June 30, 2009, 30 of the Funds had investment performance relative to that of the respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for all applicable time periods. At June 30, 2009, an additional 6 Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for a majority of the applicable time periods. At June 30, 2009, 15 additional Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative performance at December 31, 2008 and only 29 Funds had poorer relative investment performance at June 30, 2009 compared to that at December 31, 2008.
The Board therefore concluded that the investment performance of the Funds, on an aggregate basis, had continued to improve relative to their respective Performance Universe since the data reviewed at the May 2009 meeting. Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreement would likely have an adverse effect on the investment performance of any Fund because (i) DMC
110
and Macquarie Group did not currently expect the Transaction to cause any material change to the Funds’ portfolio management teams responsible for investment performance, which the Board found to be satisfactory and improving; and (ii) as discussed in more detail below, the Funds’ expenses were not expected to increase as a result of the Transaction.
Comparative Expenses. The Trustees also considered expense comparison data for the Funds previously provided in May 2009. At that meeting, DMC had provided the Board with information on pricing levels and fee structures for the Funds and comparative funds. The Trustees focused on the comparative analysis of the effective management fees and total expense ratios of each Fund versus the effective management fees and expense ratios of a group of funds selected by Lipper as being similar to each Fund (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into account any applicable breakpoints and fee limitations. Each Fund’s total expenses were also compared with those of its Expense Group. The Trustees also considered fees paid to Delaware Investments for nonmanagement services. At the September 3, 2009 meeting, DMC advised the Board that the more recent comparative expenses for the Funds remained consistent with the previous review in May 2009 and, consequently, the Trustees concluded that expenses of the Funds were satisfactory.
The Board also considered the Expense Agreement under negotiation in evaluating Fund expenses. The Trustees expected that the Expense Agreement would provide that LNC and Macquarie Group would pay or reimburse the Trusts for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the consideration of the New Investment Advisory Agreements (subject to certain limited exceptions).
Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreements likely would have an adverse effect on the Funds’ expenses because (i) each Fund’s contractual fee rates under the New Investment Advisory Agreement would remain the same; (ii) under the Expense Agreement, the Funds would be reimbursed for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the related proxy solicitation (subject to certain limited exceptions); and (iii) the expense ratios of certain Funds might decline as a result of the possible increased investment in Delaware Investments by Macquarie Group, as discussed below under “Economies of Scale.”
Management Profitability. At their meeting on September 3, 2009, the Board evaluated DMC’s profitability in connection with the operation of the Funds. The Board had previously considered DMC’s profitability in connection with the operation of the Funds at its May 2009 meeting. At that meeting, the Board reviewed an analysis that addressed the overall profitability of Delaware Investments’ business in providing management and other services to each of the Funds and the Delaware Investments® Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability.
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Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
(Unaudited)
Delaware multiple state tax-free funds
Board Consideration of New Investment Advisory Agreement (continued)
At the May 2009 meeting, representatives of DMC had stated that the level of profits of DMC, to a certain extent, reflect operational cost savings and efficiencies initiated by Delaware Investments (including DMC and its affiliates that provide services to the Funds). The Board considered Delaware Investments’ efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide U.S. Securities and Exchange Commission initiatives. At that meeting, the Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC. At the September 3, 2009 meeting, DMC advised the Board that DMC did not expect the Transaction to affect materially the profitability of Delaware Investments compared to the level of profitability considered during the May 2009 review. Moreover, the Trustees reviewed pro forma balance sheets of certain key companies in Delaware Investments as of June 30, 2009 (which were provided by Macquarie Group and DMC in response to the Trustees’ requests) and evaluated the projections of Delaware Investments’ capitalization following the Transaction for purposes of evaluating the financial ability of Delaware Investments to continue to provide the nature, extent, and quality of services as it had under the Current Investment Advisory Agreement.
Based on information provided by DMC and Macquarie Group, the Board concluded that DMC and Delaware Investments would be sufficiently capitalized following the Transaction to continue the same level and quality of services to the Funds under the New Investment Advisory Agreements as was the case under the Current Investment Advisory Agreements. The Board also concluded that Macquarie Group had sufficient financial strength and resources, as well as an ongoing commitment to a global asset management business, to continue investing in Delaware Investments, including DMC, to the extent that Macquarie Group determined it was appropriate. Finally, because services and costs were expected to be substantially the same (and DMC had represented that, correspondingly, profitability would be about the same), under the New Investment Advisory Agreements as under the Current Investment Advisory Agreements, the Trustees concluded that the profitability of Delaware Investments would not result in an inequitable charge on the Funds or their shareholders. Accordingly, the Board concluded that the fees charged under the New Investment Advisory Agreements would be reasonable in light of the services to be provided and the expected profitability of DMC.
Economies of Scale. The Trustees considered whether economies of scale would be realized by Delaware Investments as each Fund’s assets increase and the extent to which any economies of scale would be reflected in the management fees charged. The Trustees took into account DMC’s practice of maintaining the competitive nature of management fees based on its analysis of fees charged by comparable funds. DMC management believed, and the Board agreed, that the Funds were priced with breakpoints and relatively low management fees to reflect potential economies of scale to Fund shareholders.
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The Board also acknowledged Macquarie Group’s statement that the Transaction would not by itself immediately provide additional economies of scale given Macquarie Group’s limited presence in the U.S. mutual fund market. Nonetheless, the Trustees concluded that additional economies of scale could potentially be achieved in the future if DMC were owned by Macquarie Group as a result of Macquarie Group’s willingness to invest further in Delaware Investments if appropriate opportunities arise. The Board further concluded that potential economies of scale could be achieved as a result of Delaware Investments’ expanded distribution capabilities arising from the Transaction, as well as opportunities that might arise from Macquarie Group’s global asset management business.
Fall-Out Benefits. The Board acknowledged that DMC would continue to benefit from soft dollar arrangements using portfolio brokerage of each Fund that invests in equity securities and that DMC’s profitability would likely be somewhat lower without the benefit of practices with respect to allocating Fund portfolio brokerage for brokerage and research services. The Board also considered that Macquarie Group and Delaware Investments may derive reputational, strategic, and other benefits from their association with the Delaware Investments® Family of Funds, including service relationships with DMC, DSC, and Delaware Distributors, L.P., and evaluated the extent to which Delaware Investments might derive ancillary benefits from Fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds and the benefits from allocation of Fund brokerage to improve trading efficiencies. However, the Board concluded that (i) any such benefits under the New Investment Advisory Agreements would not be dissimilar from those existing under the Current Investment Advisory Agreements; (ii) such benefits did not impose a cost or burden on the Funds or their shareholders; and (iii) such benefits would probably have an indirectly beneficial effect on the Funds and their shareholders because of the added importance that DMC and Macquarie Group might attach to the Funds as a result of the fall-out benefits that the Funds conveyed.
Board Review of Macquarie Group. The Trustees reviewed detailed information supplied by Macquarie Group about its operations as well as other information regarding Macquarie Group provided by independent legal counsel to the independent Trustees. Based on this review, the Trustees concluded that Delaware Investments would continue to have the financial ability to maintain the high quality of services required by the Funds. The Trustees noted that there would be a limited transition period during which some services previously provided by LNC to Delaware Investments would continue to be provided by LNC after the Closing, and concluded that this arrangement would help minimize disruption in Delaware Investments’ provision of services to the Funds following the Transaction.
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Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
(Unaudited)
Delaware multiple state tax-free funds
Board Consideration of New Investment Advisory Agreement (continued)
The Board considered Macquarie Group’s support for Delaware Investments’ plans for Fund distribution by transferring wholesalers from Lincoln Financial Distributors, Inc., LNC’s retail distributor, to Delaware Investments, and Macquarie Group’s current intention to leave the Funds’ other service providers in place. The Board also considered Macquarie Group’s current strategic plans to increase its asset management activities, one of its core businesses, particularly in North America, and its statement that its acquisition of DMC is an important component of this strategic growth and the establishment of a significant presence in the United States. Based in part on the information provided by DMC and Macquarie Group, the Board concluded that Macquarie Group’s acquisition of Delaware Investments could potentially enhance the nature, quality, and extent of services provided to the Funds and their shareholders.
Conclusion. The Board concluded that the advisory fee rate under each New Investment Advisory Agreement was reasonable in relation to the services provided and that execution of the New Investment Advisory Agreement would be in the best interests of the shareholders. For each Fund, the Trustees noted that they had concluded in their most recent advisory agreement continuance considerations in May 2009 that the management fees and total expense ratios were at acceptable levels in light of the quality of services provided to the Funds and in comparison to those of the Funds’ respective peer groups; that the advisory fee schedule would not be increased and would stay the same for all of the Funds; that the total expense ratio had not changed materially since that determination; and that DMC had represented that the overall expenses for each Fund were not expected to be adversely affected by the Transaction. The Trustees also noted, with respect to the Funds that currently had the benefit of voluntary fee limitations, that Macquarie Group had no present intention to cause DMC to alter any voluntary expense limitations or reimbursements currently in effect. On that basis, the Trustees concluded that the total expense ratios and proposed advisory fees for the Funds anticipated to result from the Transaction were acceptable. In approving each New Investment Advisory Agreement, the Board stated that it anticipated reviewing the continuance of the New Investment Advisory Agreement in advance of the expiration of the initial two-year period.
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About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett Private Investor Rosemont, PA John A. Fry President Franklin & Marshall College Lancaster, PA | Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA | Ann R. Leven Consultant ARL Associates New York, NY Thomas F. Madison President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN | Janet L. Yeomans Vice President and Treasurer 3M Corporation St. Paul, MN J. Richard Zecher Founder Investor Analytics Scottsdale, AZ |
Affiliated officers | |||
David F. Connor Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | David P. O’Connor Senior Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
This semiannual report is for the information of Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund and the Delaware Investments Fund profile 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. |
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 (SEC) 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 SEC’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 SEC’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 SEC’s Web site at www.sec.gov. |
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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 MUTUAL FUNDS
PATRICK P. COYNE | ||
By: | Patrick P. Coyne | |
Title: | Chief Executive Officer | |
Date: | May 5, 2010 |
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, 2010 |
RICHARD SALUS | ||
By: | Richard Salus | |
Title: | Chief Financial Officer | |
Date: | May 5, 2010 |