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