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: 811-4989
Exact name of registrant as specified in charter: Voyageur Mutual Funds II
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 28, 2005
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 Colorado Fund of the Registrant, information on which is
included in the following shareholder reports.
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
FIXED INCOME
SEMIANNUAL REPORT FEBRUARY 28, 2005
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DELAWARE TAX-FREE COLORADO FUND
[LOGO]
POWERED BY RESEARCH.(SM)
TABLE
OF CONTENTS
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DISCLOSURE OF FUND EXPENSES 1
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SECTOR ALLOCATION 2
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FINANCIAL STATEMENTS:
Statements of Net Assets 3
Statements of Operations 6
Statements of Changes in Net Assets 7
Financial Highlights 8
Notes to Financial Statements 11
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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) 2005 Delaware Distributors, L.P.
DISCLOSURE For the Period September 1, 2004 to February 28, 2005
OF FUND EXPENSES
As a shareholder of a fund, you incur two types of costs:
(1) transaction costs, including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; redemption fees; and exchange
fees; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other fund expenses. The following examples are
intended to help you understand your ongoing costs (in dollars) of investing in
a fund and to compare these costs with the ongoing costs of investing in other
mutual funds. The Examples are based on an investment of $1,000 invested at the
beginning of the period and held for the entire period September 1, 2004 to
February 28, 2005.
ACTUAL EXPENSES
The first section of the tables shown, "Actual Fund Return," provides
information about actual account values and actual expenses. You may use the
information in this section of the table, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first section under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the tables shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The Fund's actual expenses shown in the table reflect fee waivers in
effect. The expenses shown in the table assume reinvestment of all dividends and
distributions. In each case, "Expenses Paid During Period" are equal to the
Fund's annualized expense ratio, multiplied by the average account value over
the period, multiplied by 181/365 (to reflect the one-half year period).
DELAWARE TAX-FREE COLORADO FUND
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/04 to
9/1/04 2/28/05 Ratio 2/28/05
- -----------------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000.00 $1,023.40 0.93% $4.67
Class B 1,000.00 1,019.60 1.68% 8.41
Class C 1,000.00 1,019.60 1.68% 8.41
- -----------------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,020.18 0.93% $4.66
Class B 1,000.00 1,016.46 1.68% 8.40
Class C 1,000.00 1,016.46 1.68% 8.40
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1
SECTOR ALLOCATION As of February 28, 2005
DELAWARE TAX-FREE COLORADO FUND
The SEC adopted a requirement that all funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following chart lists the Fund's categories of portfolio holdings
as a percentage of total net assets and is provided in compliance with such
requirement.
PERCENTAGE
SECTOR OF NET ASSETS
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MUNICIPAL BONDS 97.69%
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Airport Revenue Bonds 4.35%
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Charter School Revenue Bonds 6.40%
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City General Obligation Bonds 0.88%
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Continuing Care/Retirement Revenue Bonds 5.02%
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Convention Center/Auditorium/Hotel Revenue Bonds 1.05%
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Dedicated Tax & Fees Revenue Bonds 0.61%
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Escrowed to Maturity Bonds 2.26%
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Higher Education Revenue Bonds 11.87%
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Hospital Revenue Bonds 7.92%
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Miscellaneous Revenue Bonds 4.13%
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Multifamily Housing Revenue Bonds 6.48%
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Municipal Lease Revenue Bonds 8.16%
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Political Subdivision General Obligation Bonds 8.54%
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Pre-Refunded Bonds 3.79%
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Public Utility District Revenue Bonds 1.74%
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Recreational Area Revenue Bonds 1.86%
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School District General Obligation Bonds 8.11%
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School District Revenue Bonds 0.84%
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Tax Increment/Special Assessment Bonds 1.87%
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Territorial General Obligation Bonds 1.45%
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Territorial Revenue Bonds 1.59%
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Transportation Revenue Bonds 1.27%
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Turnpike/Toll Road Revenue Bonds 5.81%
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Water & Sewer Revenue Bonds 1.69%
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SHORT-TERM INVESTMENTS 0.84%
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Variable Rate Demand Notes 0.84%
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TOTAL MARKET VALUE OF SECURITIES 98.53%
- ------------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 1.47%
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TOTAL NET ASSETS 100.00%
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2
STATEMENTS DELAWARE TAX-FREE COLORADO FUND
OF NET ASSETS February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS - 97.69%
Airport Revenue Bonds - 4.35%
Denver City & County Airport Revenue
Series B 5.00% 11/15/33 (XLCA) $ 4,000,000 $ 4,132,400
Series E 5.25% 11/15/23 (MBIA) 8,250,000 8,752,920
-----------
12,885,320
-----------
Charter School Revenue Bonds - 6.40%
Colorado Educational & Cultural
Facilities Authority
(Liberty Common Charter School Project)
5.125% 12/1/33 (XLCA) 2,740,000 2,858,806
(Lincoln Academy Charter School Project)
8.375% 3/1/26 2,000,000 2,000,380
(Littleton Academy Charter
School Project) 6.125% 1/15/31 2,330,000 2,350,574
(Montessori Districts Charter
School Projects) 6.125% 7/15/32 5,590,000 5,591,174
(Pinnacle Charter School Project)
5.00% 6/1/33 (XLCA) 2,170,000 2,238,702
(Renaissance Charter School Project)
6.75% 6/1/29 2,000,000 1,951,980
(Stargate Charter School Project)
6.125% 5/1/33 2,000,000 1,972,060
-----------
18,963,676
-----------
City General Obligation Bonds - 0.88%
Bowles Metropolitan District
5.00% 12/1/33 (FSA) 2,500,000 2,599,575
-----------
2,599,575
-----------
Continuing Care/Retirement Revenue Bonds - 5.02%
Colorado Health Facilities
Authority Revenue
(Covenant Retirement Communities)
Series A 5.50% 12/1/33 (RADIAN) 5,000,000 5,327,400
(Evangelical Lutheran) Series A
5.25% 6/1/34 2,000,000 2,056,400
(Porter Place) Series A
6.00% 1/20/36 (GNMA) 5,000,000 5,375,250
Mesa County Residential Care
Facilities Mortgage Revenue
(Hilltop Community Resources) Series A
5.375% 12/1/28 (RADIAN) 2,000,000 2,122,680
-----------
14,881,730
-----------
Convention Center/Auditorium/Hotel Revenue Bonds - 1.05%
Denver Convention Center Series A
5.00% 12/1/33 (XLCA) 3,000,000 3,099,690
-----------
3,099,690
-----------
Dedicated Tax & Fees Revenue Bonds - 0.61%
Pueblo Urban Renewal Authority Tax
Increment Revenue 6.625% 12/1/19 1,755,000 1,819,865
-----------
1,819,865
-----------
Escrowed to Maturity Bonds - 2.26%
Colorado Health Facilities Authority
(Catholic Health Initiatives)
5.50% 3/1/32 5,000,000 5,584,900
Galleria Metropolitan District
7.25% 12/1/09 1,005,000 1,103,249
-----------
6,688,149
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Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Higher Education Revenue Bonds - 11.87%
Boulder County Development Revenue
University Corporation for
Atmospheric Research
5.00% 9/1/33 (MBIA) $ 1,000,000 $ 1,031,880
5.00% 9/1/35 (AMBAC) 2,000,000 2,075,040
Colorado Educational & Cultural
Facilities Authority
(Johnson & Wales University Project)
Series A 5.00% 4/1/28 (XLCA) 1,000,000 1,036,650
(Regis University Project)
5.00% 6/1/22 (RADIAN) 1,820,000 1,881,188
5.00% 6/1/24 (RADIAN) 1,700,000 1,748,093
(University of Denver Project) Series A
5.375% 3/1/23 (AMBAC) 2,000,000 2,183,500
5.00% 3/1/27 (MBIA) 5,000,000 5,183,800
(University of Northern Colorado
Student Housing Project)
5.125% 7/1/37 (MBIA) 7,500,000 7,776,600
Colorado School Mines Auxiliary Facilities
Revenue 5.00% 12/1/37 (AMBAC) 3,130,000 3,242,743
Colorado Springs Revenue
(Colorado College Project)
5.375% 6/1/32 5,570,000 5,908,879
Colorado State University Systems
Series B 5.00% 3/1/35 (AMBAC) 2,000,000 2,069,740
University of Colorado Enterprise System
5.375% 6/1/26 1,000,000 1,068,830
-----------
35,206,943
-----------
Hospital Revenue Bonds - 7.92%
Boulder County Hospital
Revenue Development
(Longmont United Hospital Project)
5.60% 12/1/27 (RADIAN) 1,250,000 1,320,763
6.00% 12/1/30 (RADIAN) 5,000,000 5,547,700
Colorado Health Facilities Authority
(Longmont United Hospital)
5.00% 12/1/19 (ACA) 1,150,000 1,179,440
(Vail Valley Medical Center Project)
5.80% 1/15/27 3,475,000 3,665,534
Company Health Facilities Authority
Revenue 5.00% 1/15/17 1,000,000 1,030,220
Delta County Memorial Hospital District
5.35% 9/1/17 4,000,000 4,132,720
Denver Health & Hospital Authority
Healthcare Revenue Series A
5.375% 12/1/28 (ACA) 2,770,000 2,815,511
University of Colorado Hospital Authority
Series A 5.60% 11/15/31 3,650,000 3,782,130
-----------
23,474,018
-----------
3
STATEMENTS DELAWARE TAX-FREE COLORADO FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Miscellaneous Revenue Bonds - 4.13%
Colorado Educational & Cultural Facilities
Authority Revenue 5.25% 6/1/21 $ 2,000,000 $ 2,094,760
Lowry Economic Redevelopment
Authority Revenue
Series A (Private Placement)
7.30% 12/1/10 915,000 952,579
7.80% 12/1/10 8,770,000 9,202,361
-----------
12,249,700
-----------
Multifamily Housing Revenue Bonds - 6.48%
Adams County Housing Authority
Mortgage Revenue (Greenbriar Project)
6.75% 7/1/21 1,730,000 1,779,893
Burlingame Multifamily Housing Revenue
Series A 6.00% 11/1/29 (MBIA) 1,250,000 1,319,375
Colorado Housing & Finance Authority
(Multifamily Housing Insured Mortgage)
Series A3 6.25% 10/1/26 (FHA) 6,205,000 6,492,230
Series C3 6.15% 10/1/41 1,590,000 1,674,397
Denver City and County Multifamily
Housing Revenue Federal
Housing Authority
(Insured Mortgage Loan - Garden Court)
5.40% 7/1/39 (FHA) 2,000,000 2,054,480
Englewood Multifamily Housing Revenue
(Marks Apartments Project)
6.65% 12/1/26 5,700,000 5,881,203
-----------
19,201,578
-----------
Municipal Lease Revenue Bonds - 8.16%
Aurora Certificates of Participation
5.50% 12/1/30 (AMBAC) 8,000,000 8,681,439
Conejos & Alamosa Counties School
District Region Certificates of Participation
6.50% 4/1/11 1,205,000 1,256,815
El Paso County Certificates of Participation
(Detention Facilities Project) Series B
5.00% 12/1/27 (AMBAC) 1,500,000 1,560,015
(Judicial Building Project) Series A
5.00% 12/1/27 (AMBAC) 2,000,000 2,080,020
Fremont County Certificates of Participation
Refunding & Improvement Series A
5.25% 12/15/24 (MBIA) 3,045,000 3,281,414
Paint Brush Hills Metropolitan District
Certificates of Participation
7.75% 9/1/21 1,531,761 1,531,042
Pueblo County Certificates of Participation
6.50% 12/1/24 5,460,000 5,779,574
-----------
24,170,319
-----------
Political Subdivision General Obligation Bonds - 8.54%
Arapahoe County Water & Wastewater
Public Improvement District Refunding
Series A 5.125% 12/1/32 (MBIA) 4,500,000 4,709,160
Denver West Metropolitan District
5.00% 12/1/33 (RADIAN) 4,000,000 4,087,920
Lincoln Park Metropolitan District
7.75% 12/1/26 2,560,000 2,732,032
Meridian Metropolitan District Refunding
Series A 5.00% 12/1/31 (RADIAN) 7,000,000 7,128,030
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Political Subdivision General Obligation Bonds (continued)
North Range Metropolitan District #1
7.25% 12/15/31 $ 3,400,000 $ 3,424,582
Saddle Rock Colorado Metropolitan
District 5.35% 12/1/31 (RADIAN) 1,580,000 1,656,456
Tri-Pointe Commercial Metropolitan
District 7.75% 12/1/19 5,000,000 1,575,000
-----------
25,313,180
-----------
*Pre-Refunded Bonds - 3.79%
Colorado Educational & Cultural
Facilities Authority
(Core Knowledge Charter School Project)
7.00% 11/1/29-09 1,000,000 1,167,270
(Pinnacle Charter School Project)
6.00% 12/1/21-11 1,750,000 2,015,948
Greeley County Building Authority
Certificates of Participation
6.10% 8/15/16-07 2,600,000 2,812,888
Silver Dollar Metropolitan District
7.05% 12/1/30-06 4,875,000 5,235,165
-----------
11,231,271
-----------
Public Utility District Revenue Bonds - 1.74%
Colorado Springs Utilities Revenue
Series A 5.00% 11/15/29 5,000,000 5,156,300
-----------
5,156,300
-----------
Recreational Area Revenue Bonds - 1.86%
Aurora Golf Course Enterprise
System Revenue
(Saddle Rock Golf Course)
6.20% 12/1/15 2,000,000 2,025,100
South Suburban Park &
Recreation District
(Golf & Ice Arena Facility)
6.00% 11/1/15 2,330,000 2,407,542
Westminster Golf Course
5.55% 12/1/23 (RADIAN) 1,000,000 1,069,550
-----------
5,502,192
-----------
School District General Obligation Bonds - 8.11%
Douglas County School District
No Re 1 Building
(Douglas & Elbert Counties) Series B
5.00% 12/15/30 (FSA) 2,335,000 2,438,767
5.125% 12/15/25 (FSA) 2,000,000 2,133,860
El Paso County School District #2
(Harrison) 5.00% 12/1/27 (MBIA) 2,115,000 2,203,851
El Paso County School District #49
(Falcon) 5.50% 12/1/21 (FGIC) 3,580,000 3,986,902
Fremont County School District No Re 1
(Canon City) 5.00% 12/1/24 (MBIA) 1,735,000 1,829,228
Garfield County School District No Re 2
5.00% 12/1/25 (FSA) 1,000,000 1,050,280
Garfield Pitkin & Eagle County
5.00% 12/15/27 (FSA) 3,000,000 3,152,790
Jefferson County Colorado
School District No Re 1
5.00% 12/15/24 (FSA) 2,065,000 2,193,877
4
STATEMENTS DELAWARE TAX-FREE COLORADO FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
School District General Obligation Bonds (continued)
La Plata County School District No 9-R
5.125% 11/1/24 (MBIA) $ 1,000,000 $ 1,071,640
Larimer & Weld County School
District No Re 5J Series A
5.00% 11/15/29 (MBIA) 1,240,000 1,297,400
Mesa County Colorado Valley School
District #51 5.00% 12/1/23 (MBIA) 2,500,000 2,665,825
------------
24,024,420
------------
School District Revenue Bonds - 0.84%
Colorado Educational & Cultural Facilities
5.50% 5/1/36 (XLCA) 2,280,000 2,480,435
------------
2,480,435
------------
Tax Increment/Special Assessment Bonds - 1.87%
Loveland Special Improvements District #1
7.50% 7/1/29 5,540,000 5,555,124
------------
5,555,124
------------
Territorial General Obligation Bonds - 1.45%
Puerto Rico Commonwealth Public
Improvement Series A 5.25% 7/1/21 4,000,000 4,307,360
------------
4,307,360
------------
Territorial Revenue Bonds - 1.59%
Puerto Rico Electric Power Authority
Power Revenue Series NN
5.00% 7/1/32 (MBIA) 1,000,000 1,045,720
Puerto Rico Public Buildings
Authority Revenue Series I
5.25% 7/1/33 1,500,000 1,593,165
Virgin Islands Public Finance Authority
5.00% 10/1/31 (ACA) 2,000,000 2,059,060
------------
4,697,945
------------
Transportation Revenue Bonds - 1.27%
Colorado Department Transportation
Revenue (Anticipation Notes) Series B
5.00% 12/15/14 (FGIC) 3,400,000 3,762,338
------------
3,762,338
------------
Turnpike/Toll Road Revenue Bonds - 5.81%
E-470 Public Highway Authority Series A
5.75% 9/1/35 (MBIA) 3,100,000 3,499,559
Northwest Parkway Public Highway
Authority Series A 5.25% 6/15/41 (FSA) 13,000,000 13,727,870
------------
17,227,429
------------
Water & Sewer Revenue Bonds - 1.69%
Erie Water Enterprise Revenue
5.00% 12/1/23 (ACA) 1,750,000 1,759,975
Ute Utility Water Conservancy District
Water Revenue 5.75% 6/15/20 (MBIA) 2,900,000 3,249,653
------------
5,009,628
------------
TOTAL MUNICIPAL BONDS
(cost $275,563,974) 289,508,185
------------
Principal Market
Amount Value
SHORT-TERM INVESTMENTS - 0.84%
**Variable Rate Demand Notes - 0.84%
Colorado Health Facilities Authority
Revenue 1.87% 12/1/20 $ 2,500,000 $ 2,500,000
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,500,000) 2,500,000
------------
TOTAL MARKET VALUE OF SECURITIES - 98.53%
(cost $278,063,974) 292,008,185
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.47% 4,359,751
------------
NET ASSETS APPLICABLE TO 26,739,349 SHARES
OUTSTANDING - 100.00% $296,367,936
============
Net Asset Value - Delaware Tax-Free Colorado
Fund Class A ($275,746,424 / 24,880,914 Shares) $11.08
------
Net Asset Value - Delaware Tax-Free Colorado
Fund Class B ($11,296,023 / 1,018,589 Shares) $11.09
------
Net Asset Value - Delaware Tax-Free Colorado
Fund Class C ($9,325,489 / 839,846 Shares) $11.10
------
COMPONENTS OF NET ASSETS AT FEBRUARY 28, 2005:
Shares of beneficial interest
(unlimited authorization -- no par) $288,466,193
Distribution in excess of net investment income (76)
Accumulated net realized loss on investments (6,042,392)
Net unrealized appreciation of investments 13,944,211
------------
Total net assets $296,367,936
============
*For Pre-Refunded Bonds are municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed
by the year in which the bond is pre-refunded.
**Variable Rate Notes. The interest shown is the rate as of February 28, 2005.
SUMMARY OF ABBREVIATIONS:
ACA - Insured by American Capital Access
AMBAC - Insured by the AMBAC Assurance Corporation
FGIC - Insured by the Financial Guaranty Insurance Corporation
FHA - Insured by the Federal Housing Administration
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
XLCA - Insured by XL Capital Assurance
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE TAX-FREE COLORADO FUND
Net asset value Class A (A) $11.08
Sales charge (4.50% of offering price) 0.52
------
Offering price (B) $11.60
======
(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 28, 2005 (Unaudited)
OF OPERATIONS
Delaware
Tax-Free
Colorado Fund
INVESTMENT INCOME:
Interest $7,995,420
----------
EXPENSES:
Management fees 808,535
Distribution expenses -- Class A 342,108
Distribution expenses -- Class B 59,072
Distribution expenses -- Class C 45,573
Legal and professional fees 3,306
Reports and statements to shareholders 45,681
Registration fees 4,066
Dividend disbursement and transfer agent fees and expenses 79,003
Accounting and administration expenses 48,892
Custodian fees 8,801
Trustees' fees 8,120
Other 8,420
----------
1,461,577
Less expenses absorbed or waived (7,635)
Less expenses paid indirectly (1,596)
----------
Total expenses 1,452,346
----------
NET INVESTMENT INCOME 6,543,074
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 570,615
Net change in unrealized appreciation/depreciation
of investments (245,026)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 325,589
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,868,663
==========
See accompanying notes
6
STATEMENTS
OF CHANGES IN NET ASSETS
Delaware Tax-Free Colorado Fund
Six Months Year
Ended Ended
2/28/05 8/31/04
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 6,543,074 $ 14,471,591
Net realized gain (loss) on investments 570,615 (4,565,021)
Net change in unrealized appreciation/depreciation of investments (245,026) 11,114,857
------------ ------------
Net increase in net assets resulting from operations 6,868,663 21,021,427
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (6,148,894) (13,609,362)
Class B (221,031) (502,768)
Class C (170,194) (352,469)
------------ ------------
(6,540,119) (14,464,599)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 8,168,802 13,656,841
Class B 627,874 1,476,128
Class C 957,510 2,007,890
Net asset value of shares issued upon reinvestment of dividends and distributions:
Class A 3,704,680 8,258,947
Class B 140,174 327,698
Class C 119,233 249,923
------------ ------------
13,718,273 25,977,427
------------ ------------
Cost of shares repurchased:
Class A (12,959,615) (51,015,972)
Class B (1,899,999) (2,762,319)
Class C (1,344,018) (1,473,488)
------------ ------------
(16,203,632) (55,251,779)
------------ ------------
Decrease in net assets derived from capital share transactions (2,485,359) (29,274,352)
------------ ------------
NET DECREASE IN NET ASSETS (2,156,815) (22,717,524)
NET ASSETS:
Beginning of period 298,524,751 321,242,275
------------ ------------
End of period(1) $296,367,936 $298,524,751
============ ============
(1) Including undistributed (distributions in excess of) net investment income $ (76) $ --
============ ============
See accompanying notes
7
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE TAX-FREE COLORADO FUND CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(1) 8/31/04 8/31/03 8/31/02(3) 8/31/01 8/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $11.070 $10.830 $11.080 $11.120 $10.630 $10.780
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.248 0.510 0.527 0.532 0.549 0.543
Net realized and unrealized gain (loss) on investments 0.010 0.240 (0.250) (0.040) 0.490 (0.150)
------- ------- ------- ------- ------- -------
Total from investment operations 0.258 0.750 0.277 0.492 1.039 0.393
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.248) (0.510) (0.527) (0.532) (0.549) (0.543)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.248) (0.510) (0.527) (0.532) (0.549) (0.543)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.080 $11.070 $10.830 $11.080 $11.120 $10.630
======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 2.34% 7.04% 2.52% 4.60% 10.05% 3.89%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $275,746 $276,534 $299,528 $314,695 $318,550 $304,409
Ratio of expenses to average net assets 0.93% 0.95% 0.99% 0.95% 1.00% 1.00%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.94% 0.95% 0.99% 0.95% 1.00% 1.04%
Ratio of net investment income to average net assets 4.50% 4.63% 4.76% 4.86% 5.09% 5.22%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.49% 4.63% 4.76% 4.86% 5.09% 5.18%
Portfolio turnover 11% 13% 30% 36% 64% 53%
(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. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of less than $0.001, a decrease in net realized
and unrealized gain (loss) per share of less than $0.001, and an increase in
the ratio of net investment income to average net assets of less than 0.01%.
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
8
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE TAX-FREE COLORADO FUND CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(1) 8/31/04 8/31/03 8/31/02(3) 8/31/01 8/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $11.080 $10.830 $11.090 $11.120 $10.630 $10.790
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.206 0.427 0.444 0.450 0.468 0.463
Net realized and unrealized gain (loss) on investments 0.010 0.250 (0.260) (0.030) 0.490 (0.160)
------- ------- ------- ------- ------- -------
Total from investment operations 0.216 0.677 0.184 0.420 0.958 0.303
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.206) (0.427) (0.444) (0.450) (0.468) (0.463)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.206) (0.427) (0.444) (0.450) (0.468) (0.463)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.090 $11.080 $10.830 $11.090 $11.120 $10.630
======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 1.96% 6.34% 1.66% 3.92% 9.24% 3.00%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $11,296 $12,411 $13,108 $14,843 $14,330 $13,441
Ratio of expenses to average net assets 1.68% 1.70% 1.74% 1.70% 1.75% 1.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.69% 1.70% 1.74% 1.70% 1.75% 1.79%
Ratio of net investment income to average net assets 3.75% 3.88% 4.01% 4.11% 4.34% 4.47%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.74% 3.88% 4.01% 4.11% 4.34% 4.43%
Portfolio turnover 11% 13% 30% 36% 64% 53%
(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. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of less than $0.001, a decrease in net realized
and unrealized gain (loss) per share of less than $0.001, and an increase in
the ratio of net investment income to average net assets of less than 0.01%.
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
9
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE TAX-FREE COLORADO FUND CLASS C
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(1) 8/31/04 8/31/03 8/31/02(3) 8/31/01 8/31/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $11.090 $10.850 $11.100 $11.130 $10.640 $10.790
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.207 0.427 0.444 0.450 0.468 0.465
Net realized and unrealized gain (loss) on investments 0.010 0.240 (0.250) (0.030) 0.490 (0.150)
------- ------- ------- ------- ------- -------
Total from investment operations 0.217 0.667 0.194 0.420 0.958 0.315
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.207) (0.427) (0.444) (0.450) (0.468) (0.465)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.207) (0.427) (0.444) (0.450) (0.468) (0.465)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.100 $11.090 $10.850 $11.100 $11.130 $10.640
======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 1.96% 6.23% 1.74% 3.91% 9.23% 3.11%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $9,326 $9,579 $8,606 $8,074 $5,617 $4,254
Ratio of expenses to average net assets 1.68% 1.70% 1.74% 1.70% 1.75% 1.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.69% 1.70% 1.74% 1.70% 1.75% 1.79%
Ratio of net investment income to average net assets 3.75% 3.88% 4.01% 4.11% 4.34% 4.47%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.74% 3.88% 4.01% 4.11% 4.34% 4.43%
Portfolio turnover 11% 13% 30% 36% 64% 53%
(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. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of less than $0.001, a decrease in net realized
and unrealized gain (loss) per share of less than $0.001, and an increase in
the ratio of net investment income to average net assets of less than
0.01%.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
10
NOTES February 28, 2005 (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 U.S. generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation -- Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of each Fund's Board of
Trustees.
Federal Income Taxes -- Each Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting -- Investment income and common expenses are allocated to the
classes of each Fund on the basis of "settled shares" of each class in relation
to the net assets of each Fund. Realized and unrealized gain (loss) on
investments are allocated to the various classes of each Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates -- The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other -- Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. Security transactions
are recorded on the date the securities are purchased or sold (trade date).
Costs used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities. Each Fund declares dividends
daily from net investment income and pays such dividends monthly and declares
and pays distributions from net realized gain on investments, if any, annually.
The Funds receive earnings credits from their custodian when positive cash
balances are maintained, which are used to offset custody fees. The expense paid
under the above arrangement is included custodian fees on the Statements of
Operations with the corresponding expense offset shown as "expense paid
indirectly". The amount of this expense for the six months ended February 28,
2005 was as follows:
Delaware
Tax-Free
Colorado Fund
-------------
Earnings credits $1,596
11
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
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
Colorado Fund
-------------
On the first $500 million 0.550%
On the next $500 million 0.500%
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 reimburse each Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs, and extraordinary expenses do not
exceed specified percentages of average daily net assets, as shown below.
Delaware
Tax-Free
Colorado Fund
-------------
Operating expense limitation as a percentage
of average daily net assets (per annum) 0.75%
Expiration date 10/31/04
Effective November 1, 2004 operating
expense limitation as a percentage of
average daily net assets (per annum) 0.68%
Expiration date 12/29/05
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 28, 2005, each Fund had liabilities payable to affiliates as
follows:
Delaware
Tax-Free
Colorado Fund
-------------
Investment management fees payable
to (recievable from) DMC $124,985
Dividend disbursing, transfer agent,
accounting, and administration fees,
and other expenses payable to DSC 20,914
Other expenses payable to DMC
and affiliates* 83,138
*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, fees for audit, legal
and tax services, registration fees and trustees' fees.
As provided in the investment management agreement, the Funds bear the cost of
certain legal services expenses, including internal legal services provided to
the Funds by DMC employees. For the six months ended February 28, 2005, the
Delaware Tax-Free Arizona Fund and Delaware Tax-Free California Insured Fund was
charged $548 and $822, respectively, for internal legal services provided by
DMC.
For the six months ended February 28, 2005, DDLP earned commissions on sales of
Class A shares for each Fund as follows:
Delaware
Tax-Free
Colorado Fund
-------------
$17,572
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 28, 2005, the Funds made purchases
and sales of investment securities as follows:
Delaware
Tax-Free
Colorado Fund
-------------
Purchases other than short-term investments $16,033,851
Sales other than short-term investments 18,732,401
12
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
At February 28, 2005, the cost of investments for federal income tax purposes
has been estimated since the final tax characteristics cannot be determined
until fiscal year end. At February 28, 2005, the cost of investments and
unrealized appreciation (depreciation) for each Fund were as follows:
Delaware
Tax-Free
Colorado Fund
-------------
Cost of investments $278,051,888
============
Aggregate unrealized appreciation $ 17,386,783
Aggregate unrealized depreciation (3,430,486)
------------
Net unrealized appreciation $ 13,956,297
============
4. DIVIDEND AND DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. The tax character of dividends and distributions
paid during the six months ended February 28, 2005 and the year ended August 31,
2004 was as follows:
Delaware Tax-Free
Colorado Fund
Six Months Year
Ended Ended
2/28/05* 8/31/04
---------------------------
Tax-exempt income $6,540,119 $14,464,599
Long-term capital gain -- --
---------- -----------
Total $6,540,119 $14,464,599
========== ===========
*Tax information for the period ended February 28, 2005, 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 28, 2005, the
estimated components of net assets on a tax basis were as follows:
Delaware
Tax-Free
Colorado Fund
-------------
Shares of beneficial interest $288,466,193
Undistributed ordinary income --
Undistributed tax-exempt income (76)
Undistributed long-term capital gains (losses) --
Capital loss carryforwards (6,054,478)
Unrealized appreciation of investments 13,956,297
------------
Net assets $296,367,936
============
For financial reporting purposes, capital accounts are adjusted to reflect the
tax character of permanent book/tax differences. For the six months ended
February 28, 2005, the Funds recorded an estimate of these differences since the
final tax characteristics cannot be determined until fiscal year end.
Reclassifications are primarily due to tax treatment of market discount and
premium on certain debt instruments. Results of operations and net assets were
not affected by these reclassifications.
Delaware
Tax-Free
Colorado Fund
-------------
Undistributed Net Investment Income $(3,031)
Accumulated Realized Gain (Loss) 3,031
13
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
4. DIVIDEND AND DISTRIBUTION INFORMATION (CONTINUED)
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Capital loss carryforward
amounts remaining at February 28, 2005 will expire as follows:
Delaware
Tax-Free
Colorado Fund
-------------
2008 $ --
2009 2,054,025
2011 --
2012 4,571,043
----------
Total $6,625,068
==========
For the six months ended February 28, 2005, the following Funds had net capital
gains (losses) which may be offset to the capital loss carryforwards.
Delaware
Tax-Free
Colorado Fund
-------------
$570,590
5. CAPITAL SHARES
Delaware Tax-Free
Colorado Fund
-----------------
Six Months Year
Ended Ended
2/28/05 8/31/04
Shares sold:
Class A 734,450 1,232,689
Class B 56,561 132,430
Class C 86,499 181,664
Shares issued upon reinvestments
of dividends and distributions:
Class A 333,406 748,959
Class B 12,606 29,702
Class C 10,710 22,627
---------- ----------
1,234,232 2,348,071
---------- ----------
Shares repurchased:
Class A (1,167,141) (4,660,958)
Class B (171,035) (251,515)
Class C (121,135) (133,918)
---------- ----------
(1,459,311) (5,046,391)
---------- ----------
Net increase (decrease) (225,079) (2,698,320)
========== ==========
For the six months ended February 28, 2005 and the year ended August 31, 2004,
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 Statement of Changes in Net Assets.
Six Months Ended Year Ended
2/28/05 8/31/04
------------------------------- -------------------------------
Class B Class A Class B Class A
shares shares Amount shares shares Amount
Delaware Tax-Free Colorado Fund 92,408 92,450 1,025,259 52,002 52,026 576,296
14
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
6. PROXY RESULTS
The shareholders of Voyageur Mutual Funds, Voyageur Insured Funds, Voyageur
Investment Trust and Voyageur Mutual Funds II (each, a "Trust") voted on the
following proposals (as applicable) at the special meeting of shareholders on
March 23, 2005 or as adjourned. The description of each proposal and number of
shares voted are as follows:
1. To elect a Board of Trustees for each of the Trusts.
Voyageur Mutual Funds II
-------------------------------------
Shares Voted
Shares Voted For Withheld Authority
- --------------------------------------------------------------------------
Thomas L. Bennett 16,682,794.335 597,061.142
- --------------------------------------------------------------------------
Jude T. Driscoll 16,715,574.706 574,280.771
- --------------------------------------------------------------------------
John A. Fry 16,720,892.248 568,963.229
- --------------------------------------------------------------------------
Anthony D. Knerr 16,721,519.015 568,336.462
- --------------------------------------------------------------------------
Lucinda S. Landreth 16,684,563.373 605,292.104
- --------------------------------------------------------------------------
Ann R. Leven 16,712,163.325 577,692.152
- --------------------------------------------------------------------------
Thomas F. Madison 16,651,912.403 934,943.074
- --------------------------------------------------------------------------
Janet L. Yeomans 16,719,492.755 570,362.722
- --------------------------------------------------------------------------
J. Richard Zecher 16,686,028.246 603,827.231
- --------------------------------------------------------------------------
2. To approve the use of a "manager of managers" structure whereby the
investment manager of the funds of each Trust will be able to hire and
replace subadvisers without shareholder approval.
For Against Abstain
--- ------- -------
Delaware Tax-Free Colorado Fund 14,474,563.372 858,374.253 933,204.852
7. LINE OF CREDIT
The Funds, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $183,100,000 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 28, 2005, or at any time during
the period.
8. CREDIT AND MARKET RISK
The Funds concentrate their investments in securities issued by municipalities.
The value of these investments may be adversely affected by new legislation
within the states, regional or local economic conditions, 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.
9. CONTRACTUAL OBLIGATIONS
The Funds enter into contracts in the normal course of business that contain a
variety of indemnifications. The Funds' maximum exposure under these
arrangements is unknown. However, the Funds have not had prior claims or losses
pursuant to these contracts. Management has reviewed the Funds' existing
contracts and expects the risk of loss to be remote.
15
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,
Tax-Free California Insured Fund, and Delaware Tax-Free Colorado Fund, but may
be used with a 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, 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 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
JUDE T. DRISCOLL MICHAEL P. BISHOF INVESTMENT MANAGER
Chairman Senior Vice President and Delaware Management Company
Delaware Investments Family of Funds Chief Financial Officer Philadelphia, PA
Philadelphia, PA Delaware Investments Family of Funds
Philadelphia, PA NATIONAL DISTRIBUTOR
THOMAS L. BENNETT Delaware Distributors, L.P.
Private Investor RICHELLE S. MAESTRO Philadelphia, PA
Rosemont, PA Executive Vice President,
Chief Legal Officer and Secretary SHAREHOLDER SERVICING, DIVIDEND
JOHN A. FRY Delaware Investments Family of Funds DISBURSING AND TRANSFER AGENT
President Philadelphia, PA Delaware Service Company, Inc.
Franklin & Marshall College 2005 Market Street
Lancaster, PA JOHN J. O'CONNOR Philadelphia, PA 19103-7094
Senior Vice President and Treasurer
ANTHONY D. KNERR Delaware Investments Family of Funds FOR SHAREHOLDERS
Managing Director Philadelphia, PA 800 523-1918
Anthony Knerr & Associates
New York, NY FOR SECURITIES DEALERS AND FINANCIAL
INSTITUTIONS REPRESENTATIVES ONLY
LUCINDA S. LANDRETH 800 362-7500
Former Chief Investment Officer
Assurant, Inc. WEB SITE
Philadelphia, PA www.delawareinvestments.com
ANN R. LEVEN
Former Treasurer/Chief Fiscal Officer
National Gallery of Art
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
JANET L. YEOMANS
Vice President/Mergers & Acquisitions
3M Corporation
St. Paul, MN
J. RICHARD ZECHER
Founder
Investor Analytics
Scottsdale, AZ
- --------------------------------------------------------------------------------
Each Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. Each Fund's Forms N-Q, as well as a description of the policies and
procedures that each Fund uses to determine how to vote proxies (if any)
relating to portfolio securities is available without charge (i) upon request,
by calling 800 523-1918; (ii) on each Fund's Web site at
http://www.delawareinvestments.com; and (iii) on the Commission's Web site at
http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC; information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Information (if any) regarding how each Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through each Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
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(9269) Printed in the USA
SA-WEST [2/05] IVES 4/05 J10087
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Included as part of report to shareholders filed under Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrant's principal executive officer and principal financial
officer have evaluated the registrant's disclosure controls and procedures
within 90 days of the filing of this report and have concluded that they are
effective in providing reasonable assurance that the information required to be
disclosed by the registrant in its reports or statements filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission.
There were no significant changes in the registrant's internal control
over financial reporting that occurred during the second fiscal quarter of the
period covered by the report to stockholders included herein (i.e., the
registrant's second fiscal quarter) that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
Item 12. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are
attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1
under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are
furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf, by the undersigned, thereunto duly authorized.
VOYAGEUR MUTUAL FUNDS II
Jude T. Driscoll
- --------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: May 2, 2005
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: May 2, 2005
Michael P. Bishof
- --------------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: May 2, 2005