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: 811-4364
Exact name of registrant as specified in charter: Voyageur Intermediate Tax Free Funds
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service: David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
Registrant's telephone number, including area code: (800) 523-1918
Date of fiscal year end: August 31
Date of reporting period: February 28, 2006
Item 1. Reports to Stockholders
The Registrant's shareholder report is combined with the shareholder
reports of other investment company registrants. This Form N-CSR pertains to the
DELAWARE TAX-FREE MINNESOTA INTERMEDIATE FUND of the Registrant, information on
which is included in the following shareholder reports.
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FIXED INCOME [DELAWARE INVESTMENTS(R) LOGO]
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Semiannual Report FEBRUARY 28, 2006
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DELAWARE TAX-FREE MINNESOTA FUND
DELAWARE TAX-FREE MINNESOTA INSURED FUND
DELAWARE TAX-FREE MINNESOTA INTERMEDIATE FUND
DELAWARE MINNESOTA HIGH-YIELD MUNICIPAL BOND FUND
[POWERED BY RESEARCH(R) LOGO]
Table
OF CONTENTS
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DISCLOSURE OF FUND EXPENSES 1
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SECTOR ALLOCATIONS 3
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FINANCIAL STATEMENTS:
Statements of Net Assets 5
Statements of Operations 17
Statements of Changes in Net Assets 18
Financial Highlights 20
Notes to Financial Statements 32
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ABOUT THE ORGANIZATION 38
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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)2006 Delaware Distributors, L.P.
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Disclosure For the Period September 1, 2005 to February 28, 2006
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OF FUND EXPENSES
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs,
including sales charges (loads) on purchase payments, reinvested dividends, or
other distributions; redemption fees; and exchange fees; and (2) ongoing costs,
including management fees; distribution and/or service (12b-1) fees; and other
Fund expenses. The following examples are intended to help you understand your
ongoing costs (in dollars) of investing in a Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The Examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire period September 1, 2005 to February 28,
2006.
Actual Expenses
The first section of the tables shown, "Actual Fund Return," provides
information about actual account values and actual expenses. You may use the
information in this section of the table, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first section under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
Hypothetical Example for Comparison Purposes
The second section of the tables shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Funds' actual expense ratios and an assumed rate of return of 5% per year
before expenses, which is not the Funds' actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in a Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of each table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. Each Fund's actual expenses shown in the tables reflect fee waivers in
effect. The expenses shown in each table assume reinvestment of all dividends
and distributions.
"Expenses Paid During Period" are equal to the Funds' annualized expense ratio,
multiplied by the average account value over the period, multiplied by 181/365
(to reflect the one-half year period).
Delaware Tax-Free Minnesota Fund
Expense Analysis of an Investment of $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/05 to
9/1/05 2/28/06 Ratio 2/28/06
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Actual Fund Return
Class A $ 1,000.00 $ 1,009.20 0.94% $ 4.68
Class B 1,000.00 1,005.40 1.69% 8.40
Class C 1,000.00 1,005.40 1.69% 8.40
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Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.13 0.94% $ 4.71
Class B 1,000.00 1,016.41 1.69% 8.45
Class C 1,000.00 1,016.41 1.69% 8.45
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Delaware Tax-Free Minnesota Insured Fund
Expense Analysis of an Investment of $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/05 to
9/1/05 2/28/06 Ratio 2/28/06
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Actual Fund Return
Class A $ 1,000.00 $ 1,007.30 0.89% $ 4.43
Class B 1,000.00 1,003.60 1.64% 8.15
Class C 1,000.00 1,004.40 1.64% 8.15
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Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.38 0.89% $ 4.46
Class B 1,000.00 1,016.66 1.64% 8.20
Class C 1,000.00 1,016.66 1.64% 8.20
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1
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Disclosure For the Period September 1, 2005 to February 28, 2006
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OF FUND EXPENSES (CONTINUED)
Delaware Tax-Free Minnesota Intermediate Fund
Expense Analysis of an Investment of $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/05 to
9/1/05 2/28/06 Ratio 2/28/06
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Actual Fund Return
Class A $ 1,000.00 $ 1,007.30 0.75% $ 3.73
Class B 1,000.00 1,003.10 1.60% 7.95
Class C 1,000.00 1,003.10 1.60% 7.95
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Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,021.08 0.75% $ 3.76
Class B 1,000.00 1,016.86 1.60% 8.00
Class C 1,000.00 1,016.86 1.60% 8.00
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Delaware Minnesota High-Yield Municipal Bond Fund
Expense Analysis of an Investment of $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/05 to
9/1/05 2/28/06 Ratio 2/28/06
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Actual Fund Return
Class A $ 1,000.00 $ 1,011.50 0.89% $ 4.44
Class B 1,000.00 1,007.70 1.64% 8.16
Class C 1,000.00 1,007.70 1.64% 8.16
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Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.38 0.89% $ 4.46
Class B 1,000.00 1,016.66 1.64% 8.20
Class C 1,000.00 1,016.66 1.64% 8.20
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2
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Sector Allocations As of February 28, 2006
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Sector designations may be different than the sector designations presented in
other Fund materials.
DELAWARE TAX-FREE MINNESOTA FUND
Percentage
Sector of Net Assets
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Municipal Bonds 94.57%
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Airport Revenue Bonds 5.17%
Combined Utilities 0.26%
Continuing Care/Retirement Revenue Bonds 4.39%
Corporate-Backed Revenue Bonds 4.16%
Dedicated Tax & Fees Revenue Bonds 1.26%
Electric & Gas Revenue Bonds 13.15%
Escrowed to Maturity Bonds 0.33%
Higher Education Revenue Bonds 4.75%
Hospital Revenue Bonds 19.20%
Multifamily Housing Revenue Bonds 7.46%
Municipal Lease Revenue Bonds 2.56%
Political Subdivision General Obligation Bonds 3.81%
Pre-Refunded Bonds 9.24%
School District General Obligation Bonds 10.20%
Single Family Housing Revenue Bonds 1.09%
State General Obligation Bonds 4.10%
Tax Increment/Special Assessment Bonds 0.50%
Territorial General Obligation Bonds 1.58%
Water & Sewer Revenue Bonds 1.36%
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Short-Term Investments 4.81%
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Money Market Instruments 0.70%
Variable Rate Demand Notes 4.11%
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Total Market Value of Securities 99.38%
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Receivables and Other Assets Net of Liabilities 0.62%
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Total Net Assets 100.00%
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DELAWARE TAX-FREE MINNESOTA INSURED FUND
Percentage
Sector of Net Assets
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Municipal Bonds 97.41%
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Airport Revenue Bonds 4.73%
Combined Utilities 0.80%
Corporate-Backed Revenue Bonds 0.77%
Dedicated Tax & Fees Revenue Bonds 0.80%
Electric & Gas Revenue Bonds 6.44%
Escrowed to Maturity Bonds 17.43%
Higher Education Revenue Bonds 5.90%
Hospital Revenue Bonds 16.58%
Multifamily Housing Revenue Bonds 5.63%
Municipal Lease Revenue Bonds 5.26%
Political Subdivision General Obligation Bonds 0.56%
Pre-Refunded Bonds 7.90%
School District General Obligation Bonds 22.03%
Single Family Housing Revenue Bonds 0.14%
State General Obligation Bonds 2.44%
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Short-Term Investments 1.57%
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Money Market Instruments 0.30%
Variable Rate Demand Notes 1.27%
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Total Market Value of Securities 98.98%
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Receivables and Other Assets Net of Liabilities 1.02%
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Total Net Assets 100.00%
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3
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Sector Allocations As of February 28, 2006
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Sector designations may be different than the sector designations presented in
other Fund materials.
DELAWARE TAX-FREE MINNESOTA INTERMEDIATE FUND
Percentage
Sector of Net Assets
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Municipal Bonds 97.89%
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Airport Revenue Bonds 1.44%
Continuing Care/Retirement Revenue Bonds 5.16%
Electric & Gas Revenue Bonds 7.05%
Escrowed to Maturity Bonds 2.06%
General Corporate Bonds 1.92%
Higher Education Revenue Bonds 4.79%
Hospital Revenue Bonds 15.08%
Library/Museum Revenue Bonds 4.19%
Multifamily Housing Revenue Bonds 4.57%
Municipal Lease Revenue Bonds 4.00%
Political Subdivision General Obligation Bonds 8.63%
Pre-Refunded Bonds 4.43%
School District General Obligation Bonds 23.20%
Single Family Housing Revenue Bonds 2.41%
State General Obligation Bonds 7.03%
Territorial General Obligation Bonds 1.93%
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Short-Term Investments 1.91%
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Money Market Instruments 1.91%
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Total Market Value of Securities 99.80%
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Receivables and Other Assets Net of Liabilities 0.20%
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Total Net Assets 100.00%
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DELAWARE MINNESOTA HIGH-YIELD MUNICIPAL BOND FUND
Percentage
Sector of Net Assets
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Municipal Bonds 95.63%
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Airline Revenue Bonds 0.67%
Airport Revenue Bonds 2.07%
Continuing Care/Retirement Revenue Bonds 17.34%
Corporate-Backed Revenue Bonds 3.50%
Dedicated Tax & Fees Revenue Bonds 1.07%
Electric & Gas Revenue Bonds 8.84%
Higher Education Revenue Bonds 4.68%
Hospital Revenue Bonds 21.38%
Multifamily Housing Revenue Bonds 14.62%
Municipal Lease Revenue Bonds 2.61%
Political Subdivision General Obligation Bonds 4.26%
Pre-Refunded Bonds 7.00%
School District General Obligation Bonds 2.90%
Single Family Housing Revenue Bonds 0.80%
State General Obligation Bonds 1.07%
Tax Increment/Special Assessment Bonds 2.31%
Territorial General Obligation Bonds 0.51%
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Short-Term Investments 4.92%
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Money Market Instruments 1.14%
Variable Rate Demand Notes 3.78%
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Total Market Value of Securities 100.55%
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Liabilities Net of Receivables and Other Assets (0.55%)
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Total Net Assets 100.00%
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4
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Delaware Tax-Free Minnesota Fund
Statements February 28, 2006 (Unaudited)
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OF NET ASSETS
Principal Market
Amount Value
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Municipal Bonds - 94.57%
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Airport Revenue Bonds - 5.17%
Minneapolis/St. Paul Metropolitan Airports
Commission Revenue Series A
5.00% 1/1/22 (AMBAC) $ 3,440,000 $ 3,554,002
5.00% 1/1/35 (AMBAC) 5,145,000 5,374,569
5.25% 1/1/16(MBIA) 1,460,000 1,572,289
5.25% 1/1/32 (FGIC) 5,000,000 5,285,900
Minneapolis/St. Paul Metropolitan Airports
Commission Revenue Series C
5.25% 1/1/32(FGIC) 2,250,000 2,378,655
5.50% 1/1/17 (FGIC) 2,500,000 2,685,625
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20,851,040
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Combined Utilities - 0.26%
Shakopee Public Utilities Commission
Revenue 5.125% 2/1/26 (MBIA) 1,000,000 1,034,920
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1,034,920
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Continuing Care/Retirement Revenue Bonds - 4.39%
Apple Valley Economic Development
Authority Health Care Revenue
(Augustana Home St. Paul Project)
Series A 6.00% 1/1/40 2,700,000 2,733,966
(Evercare Senior Living Projects)
Series A 6.125% 6/1/35 4,000,000 3,980,680
Bloomington Housing & Redevelopment
Authority Housing Revenue (Senior
Summerhouse Bloomington Project,
Presbyterian Homes Housing &
Assisted Living, Inc.) 6.125% 5/1/35 3,420,000 3,495,479
Minneapolis Health Care Facility Revenue
(Jones-Harrison Residence Project)
5.60% 10/1/30 1,550,000 1,551,163
Minnesota Agriculture & Economic
Development Board Revenue
(Benedictine Health Systems)
5.75% 2/1/29 1,895,000 1,917,948
Rochester Multifamily Revenue
(Wedum Shorewood Campus Project)
6.60% 6/1/36 3,890,000 4,020,510
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17,699,746
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Corporate-Backed Revenue Bonds - 4.16%
Cloquet Pollution Control Revenue
(Potlatch Corp. Project) 5.90% 10/1/26 6,500,000 6,585,085
Sartell Environmental Improvement
Revenue (International Paper)
Series A 5.20% 6/1/27 5,465,000 5,595,559
Seaway Port Authority of Duluth Industrial
Development Dock & Wharf Revenues
(Cargill, Inc. Project)
Series E 6.125% 11/1/14 4,500,000 4,608,045
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16,788,689
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Dedicated Tax & Fees Revenue Bonds - 1.26%
^Minneapolis Community Development
Agency Tax Increment Revenue
6.674% 9/1/09 (MBIA) 5,750,000 5,086,220
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5,086,220
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Principal Market
Amount Value
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Municipal Bonds (continued)
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Electric & Gas Revenue Bonds - 13.15%
Chaska Electric Revenue (Generating
Facilities) Series A 5.00% 10/1/30 $ 3,000,000 $ 3,106,230
Laurentian Energy Authority I Series A
5.00% 12/1/21 8,000,000 8,104,879
Minnesota State Municipal Power Agency
Series A 5.00% 10/1/34 4,250,000 4,388,550
Series A 5.125% 10/1/29 3,000,000 3,138,780
5.00% 10/1/35 3,000,000 3,106,230
Northern Minnesota Municipal Power
Agency Electric System Revenue
^Series A 5.849% 1/1/09 (AMBAC) 3,815,000 3,455,818
Series B 4.75% 1/1/20 (AMBAC) 2,500,000 2,582,675
Rochester Electric Utilities Revenue
5.25% 12/1/30 4,915,000 5,127,623
Southern Minnesota Municipal Power
Agency Supply System Revenue Series A
5.00% 1/1/12 (AMBAC) 4,205,000 4,504,438
5.00% 1/1/13 (MBIA) 5,820,000 6,271,516
5.25% 1/1/15 (AMBAC) 3,000,000 3,320,370
**Southern Minnesota Municipal Power
Agency Supply System Revenue,
Inverse Floater ROLs
Series II-R-189-3 7.196% 1/1/14 (AMBAC) 2,000,000 2,397,040
Series II-R-189 7.316% 1/1/15 (AMBAC) 2,950,000 3,580,061
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53,084,210
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Escrowed to Maturity Bonds - 0.33%
Southern Minnesota Municipal Power
Agency Supply System Revenue
Series B 5.50% 1/1/15 (AMBAC) 990,000 1,058,389
Western Minnesota Municipal Power
Agency Supply Revenue Series A
9.75% 1/1/16 (MBIA) 185,000 269,649
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1,328,038
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Higher Education Revenue Bonds - 4.75%
Minnesota State Colleges & Universities
Revenue Fund Series A
5.00% 10/1/29 (MBIA) 1,665,000 1,769,878
Minnesota State Higher Education
Facilities Authority Revenue
(Augsburg College) Series 6-C
5.00% 5/1/20 1,250,000 1,303,138
(College of St. Benedict) Series 4-G
6.20% 3/1/16 1,000,000 1,001,520
(Hamline University) Series 4-1
6.00% 10/1/12 270,000 271,909
6.00% 10/1/16 390,000 394,298
(St. Catherine College) Series 5-N1
5.25% 10/1/22 1,500,000 1,572,645
5.375% 10/1/32 1,000,000 1,052,010
University of Minnesota
Series A 5.50% 7/1/21 2,000,000 2,313,420
**University of Minnesota,
Inverse Floater ROLs Series II-R-29
7.683% 7/1/21 5,250,000 6,895,349
8.19% 7/1/18 1,920,000 2,612,506
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19,186,673
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5
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Delaware Tax-Free Minnesota Fund
Statements
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OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
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Municipal Bonds (continued)
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Hospital Revenue Bonds - 19.20%
Bemidji Hospital Facilities First Meeting
Revenue (North Country Health
Services)
5.00% 9/1/24 (RADIAN) $ 740,000 $ 769,985
6.05% 9/1/16 600,000 600,978
6.05% 9/1/24 1,825,000 1,827,902
Breckenridge Catholic Health Initiatives
5.00% 5/1/30 2,000,000 2,092,720
Duluth Economic Development Authority
Health Care Facilities Revenue Benedictine
Health System (St. Mary's Hospital)
5.25% 2/15/33 10,000,000 10,331,499
5.50% 2/15/23 1,000,000 1,065,950
Maple Grove Health Care Facilities Revenue
(North Memorial Health Care)
5.00% 9/1/29 1,000,000 1,035,590
5.00% 9/1/35 5,850,000 6,012,689
Marshall Medical Center Gross Revenue
(Weiner Memorial Medical Center
Project) 6.00% 11/1/28 1,000,000 1,047,280
Minneapolis Health Care System Revenue
(Allina Health Systems) Series A
5.75% 11/15/32 9,500,000 10,206,420
(Fairview Health Services) Series D
5.00% 11/15/30 (AMBAC) 1,500,000 1,580,130
5.00% 11/15/34 (AMBAC) 2,500,000 2,625,650
Minnesota Agricultural & Economic
Development Broad Revenue
(Fairview Health Care System)
Series A 6.375% 11/15/29 15,000 16,293
Rochester Health Care Facilities Revenue
(Mayo Foundation) Series B
5.50% 11/15/27 700,000 731,129
**Rochester Health Care Facilities Revenue
(Mayo Foundation),
Inverse Floater ROLs Series II-R-28
Series A 7.683% 11/15/27 2,100,000 2,286,795
Series B 7.683% 11/15/27 8,375,000 9,119,956
Shakopee Health Care Facilities Revenue
(St. Francis Regional Medical Center)
5.10% 9/1/25 2,000,000 2,068,740
5.25% 9/1/34 7,000,000 7,223,790
St. Louis Park Health Care Facilities Revenue
(Park Nicollet Health Services)
Series B 5.25% 7/1/30 9,420,000 9,790,018
St. Paul Housing & Redevelopment
Authority Hospital Revenue
(Health East Project)
Series A 5.70% 11/1/15 1,300,000 1,346,579
6.00% 11/15/35 4,340,000 4,703,735
Washington County Housing &
Redevelopment Authority Hospital Facilities
Revenue
(Health East Project) 5.50% 11/15/27 1,000,000 1,021,320
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77,505,148
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Multifamily Housing Revenue Bonds - 7.46%
Brooklyn Center Multifamily Housing
Revenue (Shingle Creek)
5.40% 5/20/43 (GNMA) (AMT) 1,000,000 1,027,530
Principal Market
Amount Value
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Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Multifamily Housing Revenue Bonds (continued)
Carver County Housing & Redevelopment
Authority Multifamily Revenue
(Lake Grace Apartments Project)
Series A 6.00% 7/1/28 $ 1,435,000 $ 1,475,654
Eden Prairie Multifamily Housing Revenue
(Tanager Creek Apartments)
Series A 8.05% 6/20/31 (GNMA) 7,605,000 7,883,495
Hopkins Multifamily Housing Revenue
(Hopkins Renaissance Project-Section 8)
6.375% 4/1/20 1,000,000 1,033,380
@Hutchinson Multifamily Housing Revenue
(Evergreen Apartments Project-Section 8)
5.75% 11/1/28 910,000 849,412
Minneapolis Multifamily Housing Revenue
(Grant Street Apartments Project)
Series A 7.25% 11/1/29 750,000 767,865
(Seward Towers Project)
5.00% 5/20/36 (GNMA) 4,000,000 4,163,200
(Sumner Field) Series A
5.50% 11/20/26) (GNMA) (AMT) 1,000,000 1,046,490
(Trinity Apartments-Section 8) Series A
6.75% 5/1/21 1,810,000 1,869,459
@Park Rapids Multifamily Revenue
(The Court Apartments Project-Section 8)
6.30% 2/1/20 2,870,000 2,670,018
St. Cloud Housing & Redevelopment
Authority Revenue (Sterling Heights
Apartments Project) 7.55% 4/1/39 (AMT) 1,000,000 1,046,310
Stillwater Multifamily Housing Revenue
(Stillwater Cottages Project)
Series A 7.00% 11/1/27 1,000,000 1,027,260
7.25% 11/1/27 (AMT) 1,540,000 1,583,459
Wadena Housing & Redevelopment
Authority Multifamily Housing Revenue
(Humphrey Manor East Project)
6.00% 2/1/19 1,860,000 1,832,825
Washington County Housing &
Redevelopment Authority Governmental
Revenue (Briar Pond) Series C
7.25% 8/20/34 960,000 894,173
Willmar Housing & Redevelopment
Authority Multifamily Housing Revenue
(Highland Apartments-Section 8)
5.85% 6/1/19 960,000 960,000
-------------
30,130,530
-------------
Municipal Lease Revenue Bonds - 2.56%
Puerto Rico Public Buildings Authority
Revenue (Government Facilities)
Series D 5.25% 7/1/36 1,070,000 1,124,014
St. Paul Port Authority Lease Revenue
(Cedar Street Office Building Project)
5.00% 12/1/22 2,500,000 2,659,100
5.125% 12/1/27 1,000,000 1,059,890
(Robert Street Office Building Project)
4.75% 12/1/23 2,000,000 2,064,720
5.00% 12/1/27 2,500,000 2,635,325
Series 9 5.25% 12/1/27 725,000 776,163
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10,319,212
-------------
6
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Delaware Tax-Free Minnesota Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Political Subdivision General Obligation
Bonds - 3.81%
Dakota County Capital Improvement
Series A 4.75% 2/1/26 $ 1,000,000 $ 1,025,780
Hennepin County Regional Railroad
Authority 5.00% 12/1/31 4,030,000 4,203,169
Metropolitan Council Waste Water
Treatment Series B 5.00% 12/1/21 1,200,000 1,291,068
Minneapolis Library 5.00% 12/1/25 1,500,000 1,589,070
Ramsey County State Aid Series C
5.00% 2/1/28 1,060,000 1,116,646
St. Peter's Hospital Series A
5.00% 9/1/24 (MBIA) 1,905,000 2,002,117
Todd Morrison Cass & Wadena Counties
United Hospital District
(Health Care Facilities-Lakewood)
5.00% 12/1/21 2,000,000 2,081,140
5.00% 12/1/34 1,000,000 1,021,260
5.125% 12/1/24 1,000,000 1,043,660
-------------
15,373,910
-------------
- -/-Pre-Refunded Bonds - 9.24%
Chaska Electric Revenue Series A
6.00% 10/1/25-10 1,000,000 1,104,040
Little Canada Multifamily Housing Revenue
Alternative Development (Montreal
Courts Apartments Project) Series A
6.10% 12/1/17-07 1,270,000 1,308,760
6.25% 12/1/27-07 2,900,000 3,023,453
Minneapolis Health Care System Revenue
(Fairview Health Services) Series A
5.625% 5/15/32-12 11,525,000 12,851,183
Minneapolis Tax Increment Revenue
Series E 5.00% 3/1/13-09 6,265,000 6,543,479
Minnesota Agricultural & Economic
Development Broad Revenue
(Fairview Health Care System)
Series A 6.375% 11/15/29-10 485,000 545,591
Minnesota Higher Education Facilities Series 4-1
6.00% 10/1/12-06 980,000 994,739
6.00% 10/1/16-06 1,400,000 1,421,056
Minnesota Public Facilities Authority Water
Pollution Control Revenue
Series A 5.00% 3/1/20-10 3,000,000 3,166,710
Series B 4.75% 3/1/19-09 2,000,000 2,073,580
Puerto Rico Public Buildings Authority
Guaranteed Government Facilities
Revenue Series D 5.25% 7/1/36-12 2,930,000 3,180,163
Southern Minnesota Municipal Power
Agency Supply System Revenue
Series A 5.75% 1/1/18-16 (MBIA) 1,000,000 1,068,730
-------------
37,281,484
-------------
School District General Obligation Bonds - 10.20%
Bloomington Independent School
District #271 Series B 5.00% 2/1/17 5,300,000 5,540,143
Cambridge Independent School
District #911 Series A
4.75% 2/1/30 (MBIA) 1,035,000 1,064,166
Farmington Independent School
District #192 Capital Appreciation Series B
5.00% 2/1/27 (FSA) 6,705,000 7,113,401
^5.34% 2/1/21 (FSA) 1,500,000 720,420
^5.422% 2/1/20 (FSA) 1,650,000 836,798
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
School District General Obligation Bonds
(continued)
^Lakeville Independent School
District #194 Capital Appreciation
Series B 5.450% 2/1/19 (FSA) $ 8,000,000 $ 4,197,920
Lakeville Independent School
District #194 Series A
4.75% 2/1/22 (FSA) 5,500,000 5,731,990
^Mahtomedi Independent School
District #832 Capital Appreciation
Series B 5.898% 2/1/14 (MBIA) 1,540,000 1,130,144
Prior Lake Independent School
District #719 Series B 5.00% 2/1/19 (FSA) 3,145,000 3,390,027
**Rockford Independent School
District #883, Inverse Floater ROLs
Series II-R-30-A 7.936% 2/1/23 (FSA) 3,510,000 4,014,352
^Rosemont Independent School
District #196 Capital Appreciation Series B
5.931% 4/1/11 (FSA) 2,600,000 2,161,588
5.96% 4/1/12 (FSA) 1,850,000 1,474,598
6.008% 4/1/13 (FSA) 1,915,000 1,461,854
^Sartell Independent School
District #748 Capital Appreciation Series B
5.976% 2/1/13 (MBIA) 540,000 412,285
6.099% 2/1/15 (MBIA) 1,075,000 753,134
6.15% 2/1/16 (MBIA) 1,750,000 1,172,500
-------------
41,175,320
-------------
Single Family Housing Revenue Bonds - 1.09%
Minnesota State Housing Finance Agency
Single Family Mortgage
Series A 5.30% 7/1/19 635,000 665,601
Series B 5.35% 1/1/33 (AMT) 2,970,000 3,046,091
Series J 5.90% 7/1/28 (AMT) 525,000 542,640
St. Louis Park Residential Mortgage
Revenue Series A
7.25% 4/20/23 (GNMA) 128,000 128,099
-------------
4,382,431
-------------
State General Obligation Bonds - 4.10%
Minnesota State
5.00% 11/1/20 (FSA) 8,175,000 8,644,245
5.00% 8/1/21 2,400,000 2,559,648
Minnesota State Refunding Various
Purposes 5.00% 6/1/13 5,175,000 5,346,189
-------------
16,550,082
-------------
Tax Increment/Special Assessment Bonds - 0.50%
Minneapolis Tax Increment Revenue
(St. Anthony Falls Project) 5.75% 2/1/27 1,000,000 1,021,310
St. Paul Housing & Redevelopment
Authority Tax Increment
(Upper Landing Project)
Series A 6.80% 3/1/29 1,000,000 1,015,440
-------------
2,036,750
-------------
Territorial General Obligation Bonds - 1.58%
Puerto Rico Commonwealth Public
Improvement Series A
5.00% 7/1/34 4,500,000 4,637,430
5.50% 7/1/19 (MBIA) 1,500,000 1,738,380
-------------
6,375,810
-------------
7
- --------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Water & Sewer Revenue Bonds - 1.36%
**Minnesota Public Facilities Authority
Water Pollution Control Revenue,
Inverse Floater ROLs
Series II-R-31 7.176% 3/1/18 $ 5,000,000 $ 5,509,550
-------------
5,509,550
-------------
Total Municipal Bonds (cost $363,130,666) 381,699,763
-------------
Number of
Shares
- --------------------------------------------------------------------------------
Short-Term Investments - 4.81%
- --------------------------------------------------------------------------------
Money Market Instruments - 0.70%
Federated Minnesota Municipal Cash Trust 2,823,937 2,823,937
-------------
2,823,937
-------------
Principal
Amount
oVariable Rate Demand Notes - 4.11%
Hennepin County
Series A 3.05% 12/1/25 (SPA) $ 6,150,000 6,150,000
Midwest Consortium of Municipal Utilities
Revenue Series A (LOC - U.S. Bank N.A.)
3.20% 1/1/25 2,000,000 2,000,000
Minneapolis Convention Center
Series A 3.05% 12/1/14 (SPA) 1,570,000 1,570,000
3.05% 12/1/18 1,200,000 1,200,000
Minneapolis Guthrie Parking Ramp
3.05% 12/1/33 (SPA) 2,895,000 2,895,000
Minneapolis Library 3.05% 12/1/32 1,035,000 1,035,000
Minneapolis Tax Increment Mill Quarter
3.05% 3/1/32 (SPA) 1,060,000 1,060,000
Minnesota State Higher Education
St. Catherine 3.15% 10/1/32 700,000 700,000
-------------
16,610,000
-------------
Total Short-Term Investments
(cost $19,433,937) 19,433,937
-------------
Total Market Value of Securities - 99.38%
(cost $382,564,603) 401,133,700
Receivables and Other Assets
Net of Liabilities - 0.62% 2,499,106
-------------
Net Assets Applicable to 32,247,619
Shares Outstanding - 100.00% $ 403,632,806
=============
Net Asset Value - Delaware Tax-Free Minnesota Fund Class A
($376,235,697 / 30,062,381 Shares) $ 12.52
-------------
Net Asset Value - Delaware Tax-Free Minnesota Fund Class B
($12,965,091 / 1,035,103 Shares) $ 12.53
-------------
Net Asset Value - Delaware Tax-Free Minnesota Fund Class C
($14,432,018 / 1,150,135 Shares) $ 12.55
-------------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 384,593,993
Undistributed net investment income 147,934
Accumulated net realized gain on investments 321,782
Net unrealized appreciation of investments 18,569,097
-------------
Total net assets $ 403,632,806
=============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
LOC - Letter of Credit
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
ROLs - Residual Options Long
SPA - Stand-by Purchase Agreement
- -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is
followed by the year in which the bond is pre-refunded. See Note 7 in
"Notes to Financial Statements."
** An inverse floater bond is a type of bond with variable or floating
interest rates that move in the opposite direction of short-term interest
rates. Interest rate disclosed is in effect as of February 28, 2006. See
Note 7 in "Notes to Financial Statements."
o Variable rate security. The interest rate shown is the rate as of February
28, 2006.
^ Zero coupon security. The interest rate shown is the yield at the time of
purchase.
@ Illiquid security. At February 28, 2006, the aggregate amount of illiquid
securities equals $3,519,430, which represented 0.87% of the Fund's net
assets. See Note 7 in "Notes to Financial Statements."
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Minnesota Fund
Net asset value Class A (A) $ 12.52
Sales charge (4.50% of offering price) (B) 0.59
-------------
Offering price $ 13.11
=============
(A) Net asset value per share, as illustrated, is the amount which would be
paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
8
- --------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Insured Fund
Statements February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 97.41%
- --------------------------------------------------------------------------------
Airport Revenue Bonds - 4.73%
Minneapolis/St. Paul Metropolitan
Airports Commission Revenue
Series A 5.00% 1/1/22 (MBIA) $ 2,000,000 $ 2,100,860
Series A 5.125% 1/1/25 (FGIC) 100,000 104,293
Series C 5.125% 1/1/20 (FGIC) 2,000,000 2,113,820
Series C 5.25% 1/1/32 (FGIC) 6,595,000 6,972,102
-------------
11,291,075
-------------
Combined Utilities - 0.80%
Shakopee Public Utilities Commission
Revenue 5.125% 2/1/26 (MBIA) 1,850,000 1,914,602
-------------
1,914,602
-------------
Corporate-Backed Revenue Bonds - 0.77%
Sartell Environmental Improvement
Revenue (International Paper)
Series A 5.20% 6/1/27 1,800,000 1,843,002
-------------
1,843,002
-------------
Dedicated Tax & Fees Revenue Bonds - 0.80%
Virgin Islands Public Finance Authority
(Matching Fund Loan) Series A
5.25% 10/1/22 1,785,000 1,919,607
-------------
1,919,607
-------------
Electric & Gas Revenue Bonds - 6.44%
Minnesota State Municipal Power Agency
Series A 5.00% 10/1/34 2,000,000 2,065,200
**Northern Municipal Power Agency Electric
System Revenue, Inverse Floater ROLs
Series II-R-32 7.176% 1/1/13 (FSA) 4,585,000 5,172,201
Puerto Rico Electric Power
Authority Power Revenue
Series GG 4.75% 9/1/21 (FSA) 1,000,000 1,036,980
Series OO 5.00% 7/1/13 (CIFG) 3,640,000 3,942,848
Southern Minnesota Municipal Power
Agency Supply System Revenue
Series A 5.25% 1/1/15 (AMBAC) 1,500,000 1,660,185
Western Minnesota Municipal Power
Agency Series B 5.00% 1/1/15 (MBIA) 1,365,000 1,485,366
-------------
15,362,780
-------------
Escrowed to Maturity Bonds - 17.43%
Dakota/Washington Counties Housing &
Redevelopment Authority Anoka
Single Family Residential Mortgage
Revenue 8.45% 9/1/19 (GNMA) (AMT) 9,000,000 12,985,200
Dakota/Washington Counties Housing &
Redevelopment Authority Bloomington
Mortgage Single Family Residential
Mortgage Revenue
8.15% 9/1/16 (GNMA) (MBIA) (AMT) 405,000 546,839
8.375% 9/1/21 (GNMA) (FHA) (AMT) 14,115,000 20,769,093
Southern Minnesota Municipal Power
Agency Supply Revenue Series A
5.75% 1/1/18 3,790,000 4,050,487
5.75% 1/1/18 (AMBAC) 670,000 716,049
Western Minnesota Municipal Power
Agency Supply Revenue Series A
6.60% 1/1/10 1,650,000 1,766,127
9.75% 1/1/16 (MBIA) 530,000 772,507
-------------
41,606,302
-------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Higher Education Revenue Bonds - 5.90%
Minnesota State Colleges & Universities
Revenue Fund
Series A 5.00% 10/1/22 (FSA) $ 5,135,000 $ 5,455,783
Series A 5.00% 10/1/29 (MBIA) 4,000,000 4,251,960
Minnesota State Higher Education
Facilities Authority Revenue
(St. Catherine College) Series 5-N1
5.00% 10/1/18 2,200,000 2,284,304
St. Cloud Housing & Redevelopment
Authority Revenue (State University
Foundation Project) 5.00% 5/1/23 2,000,000 2,096,660
-------------
14,088,707
-------------
Hospital Revenue Bonds - 16.58%
Duluth Economic Development Authority
Health Care Facilities Benedictine
Health System (St. Mary's Hospital)
5.25% 2/15/28 8,500,000 8,810,250
Minneapolis Health Care System Revenue
(Allina Health Systems)
Series A 5.75% 11/15/32 7,800,000 8,380,008
(Fairview Health Services)
Series D 5.00% 11/15/34 (AMBAC) 8,250,000 8,664,645
Minneapolis/St. Paul Housing &
Redevelopment Authority
Health Care Systems
(Allina Health Systems)
5.00% 11/15/13 (AMBAC) 6,490,000 6,497,658
(Healthpartners Obligation Group Project)
5.625% 12/1/22 650,000 698,932
5.875% 12/1/29 1,000,000 1,078,600
Minnesota Agricultural & Economic
Development Board Revenue
(Fairview Health Care System)
Series A 5.75% 11/15/26 (MBIA) 180,000 189,504
St. Louis Park Health Care Facilities
Revenue (Park Nicollet Health Services)
Series B 5.50% 7/1/25 2,000,000 2,135,540
St. Paul Housing & Redevelopment
Authority Hospital Revenue
(St. Paul/Ramsey Medical Center Project)
5.50% 5/15/13 (AMBAC) 1,000,000 1,001,620
Willmar (Rice Memorial Hospital Project)
5.00% 2/1/22 (FSA) 1,000,000 1,060,250
5.00% 2/1/25 (FSA) 1,000,000 1,055,290
-------------
39,572,297
-------------
Multifamily Housing Revenue Bonds - 5.63%
Eagan Multifamily Revenue
(Woodridge Apartments) Series A
5.90% 8/1/20 (GNMA) 1,000,000 1,033,180
Hopkins Multifamily Revenue
(Auburn Apartments Project)
Series A 8.05% 6/20/31 (GNMA) 3,790,000 3,931,708
Minneapolis Multifamily Housing Revenue
(Bottineau Commons Project)
5.45% 4/20/43 (GNMA) (AMT) 1,500,000 1,571,325
(Seward Towers Project)
5.00% 5/20/36 (GNMA) 4,000,000 4,163,200
9
- --------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Insured Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Multifamily Housing Revenue Bonds (continued)
Minnesota State Housing Finance Agency
Rental Housing Revenue Series C-2
5.95% 2/1/15 (AMBAC) $ 1,642,000 $ 1,660,505
White Bear Lake Multifamily Revenue
(Lake Square) Series A
5.875% 2/1/15 (FHA) 1,055,000 1,088,222
-------------
13,448,140
-------------
Municipal Lease Revenue Bonds - 5.26%
Hopkins Housing & Redevelopment
Authority Public Works and Fire Station
Series A 5.00% 2/1/23 (MBIA) 1,210,000 1,277,651
Minneapolis Special School
District #001 Series A
5.00% 2/1/18 (FSA) 1,545,000 1,638,704
5.00% 2/1/19 (FSA) 1,535,000 1,628,098
5.00% 2/1/20 (FSA) 1,690,000 1,788,831
St. Paul Port Authority Lease Revenue
(Cedar Street Office Building Project)
5.125% 12/1/27 2,000,000 2,119,780
5.25% 12/1/27 3,840,000 4,096,973
-------------
12,550,037
-------------
Political Subdivision General Obligation
Bonds - 0.56%
Dakota County Community Development
Agency Governmental Housing
Development 5.00% 1/1/21 1,275,000 1,336,366
-------------
1,336,366
-------------
- -/-Pre-Refunded Bonds - 7.90%
Minneapolis Community Development
Agency Supported Development
Revenue Series G-3 5.45% 12/1/31-11 2,000,000 2,185,100
Minneapolis Health Care System Revenue
(Fairview Health Services) Series A
5.625% 5/15/32-12 5,400,000 6,021,378
Minnesota Agricultural & Economic
Development Board Revenue
(Fairview Health Care System)
Series A 5.75% 11/15/26-07 (MBIA) 10,070,000 10,653,758
-------------
18,860,236
-------------
School District General Obligation Bonds - 22.03%
Big Lake Independent School
District #727 Series A
5.00% 2/1/17 (FSA) 1,040,000 1,088,672
5.00% 2/1/20 (FSA) 1,000,000 1,046,800
Centennial Independent School
District #012 Series A
5.00% 2/1/18 (FSA) 1,270,000 1,347,026
Farmington Independent School
District #192 Series B
5.00% 2/1/27 (FSA) 4,000,000 4,243,640
Lakeville Independent School District #194
Series A 4.75% 2/1/22 (FSA) 2,350,000 2,449,123
Morris Independent School District #769
5.00% 2/1/24 (MBIA) 4,875,000 5,234,873
Mounds View Independent School
District #621
5.00% 2/1/20 (MBIA) 2,970,000 3,143,686
5.375% 2/1/24 (FGIC) 6,170,000 6,622,013
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
School District General Obligation Bonds
(continued)
Osseo Independent School District #279
Series A 5.00% 2/1/21 (FSA) $ 3,570,000 $ 3,775,489
Robbinsdale Independent School
District #281 5.00% 2/1/21 (FSA) 1,310,000 1,385,404
**Rockford Independent School District #883,
Inverse Floater ROLs Series II-R-30-B
7.886% 2/1/21 (FSA) 1,605,000 1,831,995
^Rosemount Independent School
District #196 Series B
5.80% 4/1/09 (FSA) 1,860,000 1,669,796
5.85% 4/1/10 (FSA) 2,240,000 1,934,957
^Sauk Rapids Independent School
District #047 Series B
5.982% 2/1/15 (FSA) 2,700,000 1,750,437
6.083% 2/1/17 (FSA) 2,245,000 1,280,930
**South Washington County Independent
School District #833,
Inverse Floater ROLs Series II-R-34-A
7.886% 2/1/20 (MBIA) 3,440,000 3,944,992
7.886% 2/1/21 (MBIA) 3,645,000 4,180,086
St. Michael Independent School District #885
5.00% 2/1/20 (FSA) 1,970,000 2,085,206
5.00% 2/1/27 (FSA) 3,435,000 3,589,609
-------------
52,604,734
-------------
Single Family Housing Revenue Bonds - 0.14%
Dakota County Housing & Redevelopment
Authority Single Family Mortgage
Revenue Series B 5.85% 10/1/30
(GNMA) (FNMA) (AMT) 328,000 336,731
-------------
336,731
-------------
State General Obligation Bonds - 2.44%
Minnesota State 5.00% 11/1/20 (FSA) 5,500,000 5,815,700
-------------
5,815,700
-------------
Total Municipal Bonds (cost $216,165,822) 232,550,316
-------------
Number of
Shares
- --------------------------------------------------------------------------------
Short-Term Investments - 1.57%
- --------------------------------------------------------------------------------
Money Market Instruments - 0.30%
Federated Minnesota Municipal Cash Trust 701,005 701,005
-------------
701,005
-------------
Principal
Amount
oVariable Rate Demand Notes - 1.27%
Midwest Consortium of Municipal Utilities
Revenue Series A (LOC - U.S. Bank N.A.)
3.20% 1/1/25 $ 1,900,000 1,900,000
Minneapolis Convention Center Series A
3.05% 12/1/14 (SPA) 1,140,000 1,140,000
-------------
3,040,000
-------------
Total Short-Term Investments
(cost $3,741,005) 3,741,005
-------------
10
- --------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Insured Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Market Value of Securities - 98.98%
(cost $219,906,827) $ 236,291,321
Receivables and Other Assets
Net of Liabilities - 1.02% 2,435,781
-------------
Net Assets Applicable to 21,800,442
Shares Outstanding - 100.00% $ 238,727,102
=============
Net Asset Value - Delaware Tax-Free
Minnesota Insured Fund Class A
($214,789,192 / 19,615,153 Shares) $ 10.95
-------------
Net Asset Value - Delaware Tax-Free
Minnesota Insured Fund Class B
($11,487,928 / 1,050,054 Shares) $ 10.94
-------------
Net Asset Value - Delaware Tax-Free
Minnesota Insured Fund Class C
($12,449,982 / 1,135,235 Shares) $ 10.97
-------------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 222,056,876
Accumulated net realized gain on investments 285,732
Net unrealized appreciation of investments 16,384,494
-------------
Total net assets $ 238,727,102
=============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Subject to Alternative Minimum Tax
CIFG - CDC IXIS Financial Guaranty
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
FNMA - Insured by Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
LOC - Letter of Credit
MBIA - Insured by the Municipal Bond Insurance Association
ROLs - Residual Option Longs
- -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is
followed by the year in which the bond is pre-refunded. See Note 7 in
"Notes to Financial Statements."
** An inverse floater bond is a type of bond with variable or floating
interest rates that move in the opposite direction of short-term interest
rates. Interest rate disclosed is in effect as of February 28, 2006. See
Note 7 in "Notes to Financial Statements."
o Variable rate security. The interest rate shown is the rate as of February
28, 2006.
^ Zero coupon security. The interest rate shown is the yield at the time of
purchase.
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Minnesota Insured Fund
Net asset value Class A (A) $ 10.95
Sales charge (4.50% of offering price) (B) 0.52
-------------
Offering price $ 11.47
=============
(A) Net asset value per share, as illustrated, is the amount which would be
paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
11
- --------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Intermediate Fund
Statements February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 97.89%
- --------------------------------------------------------------------------------
Airport Revenue Bonds - 1.44%
Minneapolis/St. Paul Metropolitan
Airports Commission Series 14
5.50% 1/1/11 (AMT) $ 750,000 $ 812,588
-------------
812,588
-------------
Continuing Care/Retirement Revenue Bonds - 5.16%
Apple Valley Economic Development
Authority Health Care Revenue
(Evercare Senior Living Projects)
Series A 6.00% 12/1/25 500,000 500,690
Moorhead Economic Development
Authority Multifamily Revenue
(Eventide Lutheran Home Project)
Series B 6.00% 6/1/18 1,000,000 1,000,710
Oakdale Elderly Housing Revenue
(PHM/Oakdale, Inc. Project)
5.75% 3/1/18 1,400,000 1,408,134
-------------
2,909,534
-------------
Electric & Gas Revenue Bonds - 7.05%
Chaska Electric Revenue (Generating
Facilities) Series A 5.25% 10/1/25 1,000,000 1,069,930
Laurentian Energy Authority I Cogeneration
Revenue Series A 5.00% 12/1/21 750,000 759,833
Southern Minnesota Municipal Power
Agency Supply System Revenue Series A
5.00% 1/1/12 (AMBAC) 1,000,000 1,071,210
5.00% 1/1/13 (MBIA) 1,000,000 1,077,580
-------------
3,978,553
-------------
Escrowed to Maturity Bonds - 2.06%
University of Minnesota Series A
5.75% 7/1/16 1,000,000 1,164,020
-------------
1,164,020
-------------
General Corporate Bonds - 1.92%
Minneapolis Community Development
Agency Supported Revenue Common
Bond Fund Series 4 6.20% 6/1/17 (AMT) 1,055,000 1,080,816
-------------
1,080,816
-------------
Higher Education Revenue Bonds - 4.79%
Minnesota State Higher Education
Facilities Authority Revenue
(College of Art & Design)
Series 5-D 6.625% 5/1/20 1,000,000 1,080,770
(University of St. Thomas)
Series 5-Y 5.25% 10/1/19 530,000 572,946
St. Cloud Housing & Redevelopment
Authority Revenue (State University
Foundation Project) 5.00% 5/1/23 1,000,000 1,048,330
-------------
2,702,046
-------------
Hospital Revenue Bonds - 15.08%
Bemidji Hospital Facilities First Meeting
Revenue (North Country Health
Services) 5.00% 9/1/24 (RADIAN) 500,000 520,260
Glencoe Health Care Facilities Revenue
(Glencoe Regional Health Services
Project) 5.00% 4/1/20 1,250,000 1,286,288
Maple Grove Minnesota Health Care
Facilities Revenue (North Memorial
Health Care) 5.00% 9/1/29 1,000,000 1,035,590
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Hospital Revenue Bonds (continued)
Minneapolis Health Care System Revenue
(Allina Health Systems) Series A
5.75% 11/15/32 $ 1,500,000 $ 1,611,539
Minneapolis/St. Paul Housing &
Redevelopment Authority Health
Care System (Health Partners Obligation
Group Project) 6.00% 12/1/17 1,125,000 1,247,366
St. Louis Park Health Care Facilities
Revenue (Park Nicollet Health Services)
Series B 5.50% 7/1/25 1,500,000 1,601,654
St. Paul Housing & Redevelopment
Authority Hospital Revenue (Health
East Project) Series B 5.85% 11/1/17 1,160,000 1,202,700
-------------
8,505,397
-------------
Library/Museum Revenue Bonds - 4.19%
Minneapolis Art Center Facilities Revenue
(Walker Art Center Project)
5.125% 7/1/21 2,250,000 2,361,488
-------------
2,361,488
-------------
Multifamily Housing Revenue Bonds - 4.57%
Minneapolis Multifamily Housing Revenue
(Trinity Apartments-Section 8)
Series A 6.75% 5/1/21 1,885,000 1,946,923
@Park Rapids Multifamily Revenue
(The Court Apartments Project-Section 8)
6.05% 8/1/12 655,000 627,922
-------------
2,574,845
-------------
Municipal Lease Revenue Bonds - 4.00%
Edina Housing & Redevelopment Authority
Public Project Revenue (Appropriate
Lease Obligation) 5.125% 2/1/19 1,000,000 1,055,930
Hibbing Economic Development Authority
Revenue (Hibbing Lease Obligation)
6.10% 2/1/08 285,000 288,662
Virginia Housing & Redeveloping Authority
Health Care Facility Lease Revenue
5.25% 10/1/25 880,000 911,830
-------------
2,256,422
-------------
Political Subdivision General Obligation
Bonds - 8.63%
Dakota County Capital Improvement
Series A 4.75% 2/1/17 1,000,000 1,040,680
Dakota County Community Development
Agency Governmental Housing
Refunding (Senior Housing Facilities)
Series A 5.00% 1/1/22 1,150,000 1,225,613
Hennepin County Series B 4.75% 12/1/14 1,000,000 1,042,930
Ramsey County (Capital Improvement Plan)
Series B 5.25% 2/1/11 1,445,000 1,561,163
-------------
4,870,386
-------------
- -/-Pre-Refunded Bonds - 4.43%
Minneapolis Health Care System Revenue
(Fairview Health Services) Series A
5.625% 5/15/32-12 1,750,000 1,951,373
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue
Series D 5.25% 7/1/38-12 500,000 545,050
-------------
2,496,423
-------------
12
- --------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Intermediate Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
School District General Obligation Bonds - 23.20%
Big Lake Independent School
District #727 Series C
5.00% 2/1/16 (FSA) $ 1,180,000 $ 1,250,694
5.00% 2/1/17 (FSA) 1,000,000 1,054,100
Centennial Independent School
District #012 Series A
5.00% 2/1/18 (FSA) 1,000,000 1,060,650
5.00% 2/1/20 (FSA) 750,000 795,488
Hopkins Independent School
District #270 5.125% 2/1/17 (FGIC) 2,000,000 2,134,439
Moorhead Independent School
District #152 5.00% 4/1/10 (FGIC) 2,585,000 2,736,092
Osseo Independent School District #279
Series A 5.00% 2/1/21 (FSA) 1,500,000 1,586,340
South Washington County Independent
School District #833 Series B
5.00% 2/1/16 (FSA) 1,560,000 1,660,308
St. Paul Independent School
District #625 Series B
5.00% 2/1/20 (FSA) 750,000 809,018
-------------
13,087,129
-------------
Single Family Housing Revenue Bonds - 2.41%
Minnesota State Housing Finance Agency
Residential Housing Series I
5.10% 7/1/20 (AMT) 845,000 872,040
Minnesota State Housing Finance Agency
Single Family Mortgage Series J
5.90% 7/1/28 (AMT) 470,000 485,792
-------------
1,357,832
-------------
State General Obligation Bonds - 7.03%
Minnesota State 5.00% 8/1/21 2,550,000 2,719,626
Minnesota State Refunding & Variable
Purpose 5.00% 11/1/16 1,200,000 1,246,620
-------------
3,966,246
-------------
Territorial General Obligation Bonds - 1.93%
oPuerto Rico Public Finance Corporation
Commonwealth Appropriation Series A
(LOC - Puerto Rico Government Bank)
5.75% 8/1/27 1,000,000 1,087,510
-------------
1,087,510
-------------
Total Municipal Bonds (cost $53,153,954) 55,211,235
-------------
Number of
Shares
- --------------------------------------------------------------------------------
Short-Term Investments - 1.91%
- --------------------------------------------------------------------------------
Money Market Instruments - 1.91%
Federated Minnesota Municipal Cash Trust 1,080,553 1,080,553
-------------
Total Short-Term Investments (cost $1,080,553) 1,080,553
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Market Value of Securities - 99.80%
(cost $54,234,507) $ 56,291,788
Receivables and Other Assets
Net of Liabilities - 0.20% 111,609
-------------
Net Assets Applicable to 5,181,055 Shares
Outstanding - 100.00% $ 56,403,397
=============
Net Asset Value - Delaware Tax-Free Minnesota
Intermediate Fund Class A
($49,293,177 / 4,529,063 Shares) $ 10.88
-------------
Net Asset Value - Delaware Tax-Free Minnesota
Intermediate Fund Class B
($2,206,611 / 202,239 Shares) $ 10.91
-------------
Net Asset Value - Delaware Tax-Free Minnesota
Intermediate Fund Class C
($4,903,609 / 449,753 Shares) $ 10.90
-------------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 55,733,282
Accumulated net realized loss on investments (1,387,166)
Net unrealized appreciation of investments 2,057,281
-------------
Total net assets $ 56,403,397
=============
- -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is
followed by the year in which the bond is pre-refunded. See Note 7 in
"Notes to Financial Statements."
o Variable rate security. The interest rate shown is the rate as of February
28, 2006.
@ Illiquid security. At February 28, 2006, the aggregate amount of illiquid
securities equals $627,922, which represented 1.11% of the Fund's net
assets. See Note 7 in "Notes to Financial Statements."
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
LOC - Letter of Credit
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Minnesota Intermediate Fund
Net asset value Class A (A) $ 10.88
Sales charge (2.75% of offering price) (B) 0.31
-------------
Offering price $ 11.19
=============
(A) Net asset value per share, as illustrated, is the amount which would be
paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
13
- --------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund
Statements February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 95.63%
- --------------------------------------------------------------------------------
Airline Revenue Bonds - 0.67%
++Minneapolis/St. Paul Metropolitan Airports
Commission Special Facilities Revenue
(Northwest Airlines, Inc. Project)
Series A 7.00% 4/1/25 (AMT) $ 1,000,000 $ 678,150
-------------
678,150
-------------
Airport Revenue Bonds - 2.07%
Minneapolis/St. Paul Metropolitan Airports
Commission Revenue Series A
5.00% 1/1/28 (MBIA) 2,000,000 2,083,920
-------------
2,083,920
-------------
Continuing Care/Retirement Revenue Bonds - 17.34%
Apple Valley Economic Development
Authority Health Care Revenue
(Augustanna Home St. Paul Project)
Series A 5.80% 1/1/30 1,000,000 1,002,880
(Evercare Senior Living Project)
Series A 6.125% 6/1/35 1,000,000 995,170
Buhl Nursing Home Revenue
(Forest Health Services Project)
Series A 6.75% 8/1/33 1,000,000 1,042,680
Detroit Lakes Housing & Health Facilities
Revenue Refunding (Mankato Lutheran
Homes) Series D 5.50% 8/1/21 500,000 506,035
Mahtomedi Senior Housing Revenue
(St. Andrews Village Project)
5.75% 12/1/40 1,000,000 1,005,010
Minneapolis Health Care Facilities Revenue
(Augustana Chapel View Homes)
Series D 5.75% 6/1/29 1,000,000 1,021,930
(Jones-Harrison Residence Project)
5.60% 10/1/30 1,500,000 1,501,124
Minnesota Agriculture & Economic
Development Board Revenue
(Benedictine Health Systems)
5.75% 2/1/29 1,000,000 1,012,110
Moorhead Economic Development
Authority Multifamily Revenue
(Eventide Lutheran Home Project)
Series B 6.00% 6/1/18 870,000 870,618
Northfield Health Care Facilities Revenue
(Northfield Retirement Center Project)
Series A 6.00% 5/1/28 1,000,000 1,000,330
Oakdale Elderly Housing Revenue
(PHM/Oakdale, Inc. Project)
6.00% 3/1/28 1,800,000 1,810,439
Owatonna Senior Housing Revenue
(Senior Living Project) Series A
5.80% 10/1/29 400,000 400,732
6.00% 4/1/41 1,250,000 1,261,688
Rochester Multifamily Revenue
(Wedum Shorewood Campus Project)
6.60% 6/1/36 990,000 1,023,215
Shoreview Elderly Housing Revenue
(PHM/Shoreview Inc. Project)
6.15% 12/1/33 1,250,000 1,285,700
Twin Valley Congregate Housing Revenue
(Living Options, Inc. Project)
5.95% 11/1/28 1,825,000 1,688,307
-------------
17,427,968
-------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Corporate-Backed Revenue Bonds - 3.50%
Cloquet Pollution Control Revenue
(Potlatch Corp. Project) 5.90% 10/1/26 $ 1,700,000 $ 1,722,253
Sartell Environmental Improvement
Revenue (International Paper)
Series A 5.20% 6/1/27 1,750,000 1,791,808
-------------
13,514,061
-------------
Dedicated Tax & Fees Revenue Bonds - 1.07%
Virgin Islands Public Finance Authority
Revenue (Matching Fund Loan)
Series A 5.25% 10/1/24 1,000,000 1,072,430
-------------
1,072,430
-------------
Electric & Gas Revenue Bonds - 8.84%
Chaska Electric Revenue (Generating
Facilities) Series A 5.25% 10/1/25 1,000,000 1,069,930
Laurentian Energy Authority I Cogeneration
Revenue Series A 5.00% 12/1/21 1,750,000 1,772,943
Minnesota State Municipal Power Agency
Electric Revenue
5.00% 10/1/35 1,000,000 1,035,410
Series A 5.00% 10/1/34 2,750,000 2,839,650
Puerto Rico Electric Power Authority Power
Revenue Series II 5.25% 7/1/31 1,000,000 1,057,920
Southern Minnesota Municipal Power
Agency Supply System Revenue
Series A 5.25% 1/1/16 (AMBAC) 1,000,000 1,112,430
-------------
8,888,283
-------------
Higher Education Revenue Bonds - 4.68%
Minnesota State Higher Education
Facilities Authority Revenue
(Augsburg College)
Series 6-C 5.00% 5/1/23 700,000 726,341
(College of Art & Design)
Series 5-D 6.75% 5/1/26 500,000 541,990
(St. Catherine College)
Series 5-N1 5.375% 10/1/32 2,000,000 2,104,020
(University St. Thomas)
Series 6-I 5.00% 4/1/23 1,250,000 1,328,350
-------------
4,700,701
-------------
Hospital Revenue Bonds - 21.38%
Bermidji Health Care Facilities First Meeting
Revenue (North Country Health Services)
5.00% 9/1/31 (RADIAN) 2,500,000 2,586,949
Duluth Economic Development Authority
Health Care Facilities Revenue
Benedictine Health System
(St. Mary's Hospital) 5.25% 2/15/33 2,250,000 2,324,588
Glencoe Health Care Facilities Revenue
(Glencoe Regional Health Services
Project) 5.00% 4/1/31 1,100,000 1,103,542
Maple Grove Health Care Facilities
Revenue (North Memorial Health Care)
5.00% 9/1/35 3,590,000 3,689,837
Minneapolis Health Care System Revenue
(Allina Health Systems)
Series A 5.75% 11/15/32 2,000,000 2,148,720
(Fairview Health Services)
Series D 5.00% 11/15/34 (AMBAC) 1,000,000 1,050,260
14
- --------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Hospital Revenue Bonds (continued)
Minneapolis/St. Paul Housing &
Redevelopment Authority Health Care
System (Health Partners Obligation
Group Project) 6.00% 12/1/17 $ 1,125,000 $ 1,247,366
Shakopee Health Care Facilities Revenue
(St. Francis Regional Medical Center)
5.25% 9/1/34 1,000,000 1,031,970
St. Louis Park Health Care Facilities
Revenue (Park Nicollet Health Services)
Series B 5.25% 7/1/30 1,000,000 1,039,280
St. Paul Housing & Redevelopment
Authority Hospital Revenue
(Health East Project)
6.00% 11/15/25 1,000,000 1,090,180
Series A 5.70% 11/1/15 800,000 828,664
Series B 5.85% 11/1/17 250,000 259,203
Stillwater Health Care Revenue
5.00% 6/1/25 2,000,000 2,064,960
5.00% 6/1/35 1,000,000 1,020,580
-------------
21,486,099
-------------
Multifamily Housing Revenue Bonds - 14.62%
Chanhassen Multifamily Housing Revenue
(Heritage Park Apartments
Project-Section 8)
6.20% 7/1/30 (FHA) (AMT) 300,000 308,745
Chaska Multifamily Housing Revenue
(West Suburban Housing Partners
Project) 5.875% 3/1/31 (AMT) 1,000,000 911,230
@Hutchinson Multifamily Housing Revenue
(Evergreen Apartments Project-Section 8)
5.75% 11/1/28 2,000,000 1,866,840
Minneapolis Multifamily Housing Revenue
(Grant Street Apartments Project)
Series A 7.25% 11/1/29 2,085,000 2,134,664
(Olson Townhomes Project)
6.00% 12/1/19 (AMT) 1,555,000 1,555,342
(Trinity Apartments-Section 8)
Series A 6.75% 5/1/21 690,000 712,667
Minnesota State Housing Finance Agency
Rental Housing
Series A 4.875% 8/1/24 (AMT) 585,000 595,185
Series A-1 5.00% 8/1/40 (AMT) 1,000,000 1,005,410
St. Anthony Multifamily Housing Revenue
(Chandler Place Project) Series A
6.05% 11/20/16 (GNMA) (FHA) 135,000 138,453
St. Cloud Housing & Redevelopment
Authority Revenue (Sterling Heights
Apartments Project) 7.55% 4/1/39 (AMT) 530,000 554,544
St. Paul Housing & Redevelopment
Authority Multifamily Housing Revenue
(Selby Grotto Housing Project)
5.50% 9/20/44 (GNMA) (FHA) (AMT) 750,000 770,873
Stillwater Multifamily Revenue
(Stillwater Cottages Project)
Series A 6.75% 11/1/11 205,000 210,765
Series A 7.00% 11/1/27 340,000 349,268
7.00% 11/1/16 (AMT) 680,000 699,040
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Multifamily Housing Revenue Bonds (continued)
Washington County Housing &
Redevelopment Authority
Governmental Revenue
(Briar Pond Project)
Series B 7.125% 8/20/34 $ 845,000 $ 788,301
(Woodland Park Apartments Project)
4.70% 10/1/32 2,075,000 2,085,894
-------------
14,687,221
-------------
Municipal Lease Revenue Bonds - 2.61%
Andover Economic Development Authority
Public Facilities Lease Revenue
(Andover Community Center)
5.20% 2/1/34 1,000,000 1,041,120
Hibbing Economic Development Authority
Revenue (Hibbing Lease Obligation
Project) 6.40% 2/1/12 530,000 530,710
St. Paul Port Authority Lease Revenue
(Robert Street Office Building Project)
5.00% 12/1/27 1,000,000 1,054,130
-------------
2,625,960
-------------
Political Subdivision General Obligation
Bonds - 4.26%
Metropolitan Council Waste Water
Treatment Series B 5.00% 12/1/21 500,000 537,945
Moorhead Series B 5.00% 2/1/33 (MBIA) 750,000 789,293
Perham Disposal System
6.00% 5/1/22 (AMT) 1,500,000 1,593,840
Todd Morrison Cass & Wadena Counties
United Hospital District
(Health Care Facilities-Lakewood)
5.00% 12/1/21 610,000 634,748
5.125% 12/1/24 205,000 213,950
5.25% 12/1/26 490,000 513,613
-------------
4,283,389
-------------
- -/-Pre-Refunded Bonds - 7.00%
Little Canada Multifamily Housing Revenue
Alternative Development (Montreal
Courts Apartments Project)
Series A 6.25% 12/1/27-07 1,250,000 1,303,213
Minneapolis Community Development
Agency Supported Development
Revenue Series G-3 5.45% 12/1/31-11 1,000,000 1,092,550
Minneapolis Health Care System Revenue
(Fairview Health Services)
Series A 5.625% 5/15/32-12 2,000,000 2,230,139
Perham Hospital District Senior
Congregate Housing Facilities Revenue
(Briarwood Project) 6.25% 2/1/22-07 620,000 644,403
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue Series D 5.25% 7/1/38-12 1,500,000 1,635,150
Rice County Certificates of Participation
Series A 6.00% 12/1/21-06 125,000 127,479
-------------
7,032,934
-------------
School District General Obligation Bonds - 2.90%
Farmington Independent School
District #192 Series B
5.00% 2/1/27 (FSA) 1,000,000 1,060,910
15
- --------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
School District General Obligation Bonds
(continued)
Lakeville Independent School
District #194 Series A
4.75% 2/1/22 (FSA) $ 1,000,000 $ 1,042,180
St. Paul Independent School District #625
Series B 5.00% 2/1/20 (FSA) 750,000 809,018
-------------
2,912,108
-------------
Single Family Housing Revenue Bonds - 0.80%
Minnesota State Housing Finance Agency
Single Family Mortgage
Series E 6.25% 1/1/23 (AMT) 15,000 15,317
Series J 5.90% 7/1/28 (AMT) 730,000 754,528
Series M 5.875% 1/1/17 30,000 30,186
-------------
800,031
-------------
State General Obligation Bonds - 1.07%
**Minnesota State Inverse Floater ROLs
6.821% 11/1/17 1,000,000 1,076,080
-------------
1,076,080
-------------
Tax Increment/Special Assessment Bonds - 2.31%
Minneapolis Tax Increment Revenue
(Ivory Tower Project) 5.70% 2/1/29 785,000 795,896
Minneapolis Tax Increment Revenue
Refunding (St. Anthony Falls Project)
5.65% 2/1/27 500,000 507,210
St. Paul Housing & Redevelopment
Authority Tax Increment (Upper Landing
Project) Series A 6.80% 3/1/29 1,000,000 1,015,440
-------------
2,318,546
-------------
Territorial General Obligation Bonds - 0.51%
Puerto Rico Commonwealth Public
Improvement Series A 5.00% 7/1/34 500,000 515,270
-------------
515,270
-------------
Total Municipal Bonds (cost $93,760,379) 96,103,151
-------------
Number of
Shares
- --------------------------------------------------------------------------------
Short-Term Investments - 4.92%
- --------------------------------------------------------------------------------
Money Market Instruments - 1.14%
Federated Minnesota Municipal Cash Trust 1,141,494 1,141,494
-------------
1,141,494
-------------
Principal
Amount
oVariable Rate Demand Notes - 3.78%
Eagan Revenue Anticipation Notes
3.23% 5/30/12 $ 800,000 800,000
Hennepin County Series A
3.05% 12/1/25 (SPA) 1,000,000 1,000,000
Minneapolis Convention Center
Series A 3.05% 12/1/14 (SPA) 1,000,000 1,000,000
Minneapolis Guthrie Parking Ramp
3.05% 12/1/33 (SPA) 1,000,000 1,000,000
-------------
3,800,000
-------------
Total Short-Term Investments (cost $4,941,494) 4,941,494
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Market Value of Securities - 100.55%
(cost $98,701,873) $ 101,044,645
Liabilities Net of Receivables and Other
Assets - (0.55%) (548,792)
-------------
Net Assets Applicable to 9,556,444
Shares Outstanding - 100.00% $ 100,495,853
=============
Net Asset Value - Delaware Minnesota High-Yield
Municipal Bond Fund Class A
($71,510,735 / 6,803,558 Shares) $ 10.51
-------------
Net Asset Value - Delaware Minnesota High-Yield
Municipal Bond Fund Class B
($10,554,463 / 1,002,507 Shares) $ 10.53
-------------
Net Asset Value - Delaware Minnesota High-Yield
Municipal Bond Fund Class C
($18,430,655 / 1,750,379 Shares) $ 10.53
-------------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 100,491,739
Undistributed net investment income 294
Accumulated net realized loss on investments (2,338,952)
Net unrealized appreciation of investments 2,342,772
-------------
Total net assets $ 100,495,853
=============
- -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is
followed by the year in which the bond is pre-refunded. See Note 7 in
"Notes to Financial Statements."
** An inverse floater bond is a type of bond with variable or floating
interest rates that move in the opposite direction of short-term interest
rates. Interest rate disclosed is in effect as of February 28, 2006. See
Note 7 in "Notes to Financial Statements."
o Variable rate security. The interest rate shown is the rate as of February
28, 2006.
++ Non-income producing security. Security is currently in default.
@ Illiquid security. At February 28, 2006, the aggregate amount of illiquid
securities equals $1,866,840, which represented 1.86% of the Fund's net
assets. See Note 7 in "Notes to Financial Statements."
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
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
ROLs - Residual Option Longs
SPA - Stand-by Purchase Agreement
Net Asset Value and Offering Price per Share -
Delaware Minnesota High-Yield Municipal Bond Fund
Net asset value Class A (A) $ 10.51
Sales charge (4.50% of offering price) (B) 0.50
-------------
Offering price $ 11.01
=============
(A) Net asset value per share, as illustrated, is the amount which would be
paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
16
- --------------------------------------------------------------------------------
Delaware Minnesota Municipal Bond Funds
Statements Six Months Ended February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF OPERATIONS
Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Minnesota Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
Investment Income:
Interest $ 9,901,604 $ 5,865,041 $ 1,349,168 $ 2,380,977
----------- ----------- ----------- -----------
Expenses:
Management fees 1,079,278 598,997 146,048 255,488
Distribution expenses -- Class A 456,784 270,135 63,239 81,918
Distribution expenses -- Class B 62,643 58,156 12,630 52,080
Distribution expenses -- Class C 70,990 59,790 26,598 83,567
Dividend disbursing and transfer agent fees and
expenses 102,042 68,812 19,493 29,566
Accounting and administration expenses 78,493 47,920 11,684 18,581
Legal and professional fees 30,456 22,140 9,313 11,324
Registration fees 17,000 15,425 7,970 6,750
Trustees' fees 11,274 6,822 1,654 2,675
Reports and statements to shareholders 10,876 12,265 5,366 4,977
Custodian fees 8,049 5,257 1,541 2,917
Insurance fees 5,482 2,451 538 1,472
Pricing fees 2,007 1,058 644 1,225
Taxes (other than taxes on income) 779 537 230 179
Other 9,925 6,129 2,142 1,367
----------- ----------- ----------- -----------
1,946,078 1,175,894 309,090 554,086
Less expenses absorbed or waived (7,560) (20,556) (30,872) (39,484)
Less waived distribution expenses -- Class A -- -- (25,296) --
Less expense paid indirectly (1,685) (231) (429) (33)
----------- ----------- ----------- -----------
Total operating expenses 1,936,833 1,155,107 252,493 514,569
----------- ----------- ----------- -----------
Net Investment Income 7,964,771 4,709,934 1,096,675 1,866,408
----------- ----------- ----------- -----------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments 424,079 (108,140) (112,049) 34,629
Net change in unrealized appreciation/depreciation of
investments (4,977,425) (2,971,577) (594,726) (816,753)
----------- ----------- ----------- -----------
Net Realized and Unrealized Loss on Investments (4,553,346) (3,079,717) (706,775) (782,124)
----------- ----------- ----------- -----------
Net Increase in Net Assets Resulting from Operations $ 3,411,425 $ 1,630,217 $ 389,900 $ 1,084,284
=========== =========== =========== ===========
See accompanying notes
17
- --------------------------------------------------------------------------------
Delaware Minnesota Municipal Bond Funds
Statements
- --------------------------------------------------------------------------------
OF CHANGES IN NET ASSETS
Delaware Tax-Free Delaware Tax-Free Minnesota
Minnesota Fund Insured Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/06 8/31/05 2/28/06 8/31/05
(Unaudited) (Unaudited)
Increase (Decrease) in Net Assets from Operations:
Net investment income $ 7,964,771 $ 15,842,204 $ 4,709,934 $ 10,006,289
Net realized gain (loss) on investments 424,079 521,727 (108,140) 483,566
Net change in unrealized appreciation/depreciation of
investments (4,977,425) 6,325,529 (2,971,577) 2,576,840
------------ ------------ ------------ ---------------
Net increase in net assets resulting from operations 3,411,425 22,689,460 1,630,217 13,066,695
------------ ------------ ------------ ---------------
Dividends and Distributions to Shareholders from:
Net investment income:
Class A (7,591,083) (14,918,426) (4,304,924) (9,106,255)
Class B (213,089) (468,436) (188,284) (438,591)
Class C (240,881) (416,235) (193,003) (415,840)
Net realized gain on investments:
Class A (767,541) (4,220,929) (438,581) (1,001,479)
Class B (26,047) (174,978) (23,729) (62,572)
Class C (29,894) (135,698) (24,664) (55,205)
------------ ------------ ------------ ---------------
(8,868,535) (20,334,702) (5,173,185) (11,079,942)
------------ ------------ ------------ ---------------
Capital Share Transactions:
Proceeds from shares sold:
Class A 26,744,754 32,762,383 3,399,998 13,305,078
Class B 644,827 1,032,796 236,508 762,589
Class C 2,299,782 4,082,514 1,132,490 2,220,317
Net asset value of shares issued upon reinvestment
of dividends and distributions:
Class A 5,473,155 12,557,067 3,273,057 6,840,725
Class B 153,532 421,984 164,340 389,371
Class C 212,631 431,656 154,788 323,100
------------ ------------ ------------ ---------------
35,528,681 51,288,400 8,361,181 23,841,180
------------ ------------ ------------ ---------------
Cost of shares repurchased:
Class A (15,385,525) (31,030,615) (15,357,614) (22,291,529)
Class B (467,921) (3,294,771) (1,075,329) (3,218,588)
Class C (1,857,497) (1,444,705) (934,703) (2,404,134)
------------ ------------ ------------ ---------------
(17,710,943) (35,770,091) (17,367,646) (27,914,251)
------------ ------------ ------------ ---------------
Increase (decrease) in net assets derived from capital
share transactions 17,817,738 15,518,309 (9,006,465) (4,073,071)
------------ ------------ ------------ ---------------
Net Increase (Decrease) in Net Assets 12,360,628 17,873,067 (12,549,433) (2,086,318)
Net Assets:
Beginning of period 391,272,178 373,399,111 251,276,535 253,362,853
------------ ------------ ------------ ---------------
End of period $403,632,806 $391,272,178 $238,727,102 $ 251,276,535
============ ============ ============ ===============
Undistributed net investment income $ 147,934 $ 147,934 $ -- $ --
See accompanying notes
18
- --------------------------------------------------------------------------------
Delaware Minnesota Municipal Bond Funds
Statements
- --------------------------------------------------------------------------------
OF CHANGES IN NET ASSETS (CONTINUED)
Delaware Tax-Free Delaware Minnesota High-Yield
Minnesota Intermediate Fund Municipal Bond Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/06 8/31/05 2/28/06 8/31/05
(Unaudited) (Unaudited)
Increase (Decrease) in Net Assets from Operations:
Net investment income $ 1,096,675 $ 2,350,094 $ 1,866,408 $ 3,196,642
Net realized gain (loss) on investments (112,049) 799,234 34,629 26,471
Net change in unrealized appreciation/depreciation of
investments (594,726) (107,313) (816,753) 2,717,449
------------ ------------- ------------ ---------------
Net increase in net assets resulting from operations 389,900 3,042,015 1,084,284 5,940,562
------------ ------------- ------------ ---------------
Dividends and Distributions to Shareholders from:
Net investment income:
Class A (978,723) (2,063,392) (1,386,136) (2,292,733)
Class B (37,941) (85,793) (180,751) (419,856)
Class C (80,029) (200,891) (290,212) (482,033)
------------ ------------- ------------ ---------------
(1,096,693) (2,350,076) (1,857,099) (3,194,622)
------------ ------------- ------------ ---------------
Capital Share Transactions:
Proceeds from shares sold:
Class A 2,049,924 8,856,040 12,589,768 22,657,439
Class B 10,970 46,423 1,110,843 1,226,522
Class C 566,681 735,412 3,715,184 5,727,603
Net asset value of shares issued upon reinvestment of
dividends and distributions:
Class A 727,318 1,526,786 850,359 1,387,489
Class B 28,689 62,528 116,998 256,713
Class C 60,182 157,534 201,188 291,405
------------ ------------- ------------ ---------------
3,443,764 11,384,723 18,584,340 31,547,171
------------ ------------- ------------ ---------------
Cost of shares repurchased:
Class A (5,838,734) (15,027,594) (5,188,387) (4,758,836)
Class B (608,658) (550,863) (1,079,982) (3,831,970)
Class C (1,650,808) (2,157,860) (1,163,753) (2,120,433)
------------ ------------- ------------ ---------------
(8,098,200) (17,736,317) (7,432,122) (10,711,239)
------------ ------------- ------------ ---------------
Increase (decrease) in net assets derived from capital
share transactions (4,654,436) (6,351,594) 11,152,218 20,835,932
------------ ------------- ------------ ---------------
Net Increase (Decrease) in Net Assets (5,361,229) (5,659,655) 10,379,403 23,581,872
Net Assets:
Beginning of period 61,764,626 67,424,281 90,116,450 66,534,578
------------ ------------- ------------ ---------------
End of period $ 56,403,397 $ 61,764,626 $100,495,853 $ 90,116,450
============ ============= ============ ===============
Undistributed net investment income $ -- $ -- $ 294 $ --
See accompanying notes
19
Financial
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Fund Class A
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 12.690 $ 12.620 $ 12.450 $ 12.610 $ 12.570 $ 12.120
Income (loss) from investment operations:
Net investment income 0.254 0.527 0.590 0.622 0.634 0.615
Net realized and unrealized gain (loss) on investments (0.141) 0.222 0.348 (0.148) 0.037 0.450
-------- -------- -------- -------- -------- --------
Total from investment operations 0.113 0.749 0.938 0.474 0.671 1.065
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.257) (0.526) (0.600) (0.625) (0.631) (0.615)
Net realized gain on investments (0.026) (0.153) (0.168) (0.009) -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.283) (0.679) (0.768) (0.634) (0.631) (0.615)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.520 $ 12.690 $ 12.620 $ 12.450 $ 12.610 $ 12.570
======== ======== ======== ======== ======== ========
Total return(3) 0.92% 6.12% 7.72% 3.80% 5.54% 9.02%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $376,236 $364,491 $348,000 $340,029 $356,522 $363,033
Ratio of expenses to average net assets 0.94% 0.93% 0.94% 0.97% 0.98% 1.00%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 0.94% 0.94% 0.94% 0.97% 0.98% 1.00%
Ratio of net investment income to average net assets 4.11% 4.19% 4.68% 4.90% 5.11% 5.00%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 4.11% 4.18% 4.68% 4.90% 5.11% 5.00%
Portfolio turnover 18% 10% 25% 27% 13% 10%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes for the year ended August 31, 2002 was an
increase in net investment income per share of $0.003, a decrease in net
realized and unrealized gain (loss) per share of $0.003, and an increase
in the ratio of net investment income to average net assets of 0.03%. Per
share data and ratios for periods prior to September 1, 2001 have not been
restated to reflect these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
20
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Fund Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 12.700 $ 12.630 $ 12.460 $ 12.620 $ 12.580 $ 12.120
Income (loss) from investment operations:
Net investment income 0.208 0.433 0.496 0.529 0.540 0.523
Net realized and unrealized gain (loss) on investments (0.141) 0.222 0.348 (0.150) 0.037 0.460
-------- -------- -------- -------- -------- --------
Total from investment operations 0.067 0.655 0.844 0.379 0.577 0.983
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.211) (0.432) (0.506) (0.530) (0.537) (0.523)
Net realized gain on investments (0.026) (0.153) (0.168) (0.009) -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.237) (0.585) (0.674) (0.539) (0.537) (0.523)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.530 $ 12.700 $ 12.630 $ 12.460 $ 12.620 $ 12.580
======== ======== ======== ======== ======== ========
Total return(3) 0.54% 5.33% 6.91% 3.02% 4.75% 8.29%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 12,965 $ 12,810 $ 14,588 $ 16,394 $ 17,043 $ 15,927
Ratio of expenses to average net assets 1.69% 1.68% 1.69% 1.72% 1.73% 1.75%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 1.69% 1.69% 1.69% 1.72% 1.73% 1.75%
Ratio of net investment income to average net assets 3.36% 3.44% 3.93% 4.15% 4.36% 4.25%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.36% 3.43% 3.93% 4.15% 4.36% 4.25%
Portfolio turnover 18% 10% 25% 27% 13% 10%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes for the year ended August 31, 2002 was an
increase in net investment income per share of $0.003, a decrease in net
realized and unrealized gain (loss) per share of $0.003, and an increase
in the ratio of net investment income to average net assets of 0.03%. Per
share data and ratios for periods prior to September 1, 2001 have not been
restated to reflect these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
21
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Fund Class C
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 12.720 $ 12.650 $ 12.480 $ 12.640 $ 12.590 $ 12.140
Income (loss) from investment operations:
Net investment income 0.208 0.433 0.495 0.529 0.540 0.523
Net realized and unrealized gain (loss) on investments (0.141) 0.222 0.348 (0.151) 0.047 0.450
-------- -------- -------- -------- -------- --------
Total from investment operations 0.067 0.655 0.843 0.378 0.587 0.973
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.211) (0.432) (0.505) (0.529) (0.537) (0.523)
Net realized gain on investments (0.026) (0.153) (0.168) (0.009) -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.237) (0.585) (0.673) (0.538) (0.537) (0.523)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.550 $ 12.720 $ 12.650 $ 12.480 $ 12.640 $ 12.590
======== ======== ======== ======== ======== ========
Total return(3) 0.54% 5.32% 6.90% 3.01% 4.82% 8.20%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 14,432 $ 13,971 $ 10,811 $ 10,161 $ 7,682 $ 6,042
Ratio of expenses to average net assets 1.69% 1.68% 1.69% 1.72% 1.73% 1.75%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 1.69% 1.69% 1.69% 1.72% 1.73% 1.75%
Ratio of net investment income to average net assets 3.36% 3.44% 3.93% 4.15% 4.36% 4.25%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.36% 3.43% 3.93% 4.15% 4.36% 4.25%
Portfolio turnover 18% 10% 25% 27% 13% 10%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes for the year ended August 31, 2002 was an
increase in net investment income per share of $0.003, a decrease in net
realized and unrealized gain (loss) per share of $0.003, and an increase
in the ratio of net investment income to average net assets of 0.03%. Per
share data and ratios for periods prior to September 1, 2001 have not been
restated to reflect these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
22
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Insured Fund Class A
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.110 $ 11.020 $ 10.740 $ 10.940 $ 10.900 $ 10.480
Income (loss) from investment operations:
Net investment income 0.217 0.446 0.479 0.498 0.514 0.514
Net realized and unrealized gain (loss) on investments (0.139) 0.138 0.282 (0.197) 0.038 0.421
----------- --------- --------- ---------- ---------- ---------
Total from investment operations 0.078 0.584 0.761 0.301 0.552 0.935
----------- --------- --------- ---------- ---------- ---------
Less dividends and distributions from:
Net investment income (0.216) (0.445) (0.481) (0.501) (0.512) (0.515)
Net realized gain on investments (0.022) (0.049) -- -- -- --
----------- --------- --------- ---------- ---------- ---------
Total dividends and distributions (0.238) (0.494) (0.481) (0.501) (0.512) (0.515)
----------- --------- --------- ---------- ---------- ---------
Net asset value, end of period $ 10.950 $ 11.110 $ 11.020 $ 10.740 $ 10.940 $ 10.900
=========== ========= ========= ========== ========== =========
Total return(3) 0.73% 5.42% 7.20% 2.75% 5.25% 9.14%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 214,789 $ 226,671 $ 227,018 $ 231,738 $ 239,763 $ 242,716
Ratio of expenses to average net assets 0.89% 0.89% 0.89% 0.93% 0.96% 0.90%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 0.91% 0.90% 0.89% 0.93% 0.96% 0.90%
Ratio of net investment income to average net assets 4.01% 4.05% 4.37% 4.52% 4.78% 4.82%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.99% 4.04% 4.37% 4.52% 4.78% 4.82%
Portfolio turnover 9% 10% 15% 30% 15% 7%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
23
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Insured Fund Class B
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.100 $ 11.010 $ 10.730 $ 10.940 $ 10.890 $ 10.470
Income (loss) from investment operations:
Net investment income 0.177 0.364 0.397 0.415 0.433 0.434
Net realized and unrealized gain (loss) on investments (0.139) 0.137 0.282 (0.207) 0.048 0.422
----------- --------- --------- ---------- ---------- ---------
Total from investment operations 0.038 0.501 0.679 0.208 0.481 0.856
----------- --------- --------- ---------- ---------- ---------
Less dividends and distributions from:
Net investment income (0.176) (0.362) (0.399) (0.418) (0.431) (0.436)
Net realized gain on investments (0.022) (0.049) -- -- -- --
----------- --------- --------- ---------- ---------- ---------
Total dividends and distributions (0.198) (0.411) (0.399) (0.418) (0.431) (0.436)
----------- --------- --------- ---------- ---------- ---------
Net asset value, end of period $ 10.940 $ 11.100 $ 11.010 $ 10.730 $ 10.940 $ 10.890
=========== ========= ========= ========== ========== =========
Total return(3) 0.36% 4.64% 6.41% 1.89% 4.56% 8.34%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 11,488 $ 12,337 $ 14,317 $ 15,647 $ 14,341 $ 12,732
Ratio of expenses to average net assets 1.64% 1.64% 1.64% 1.68% 1.71% 1.65%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 1.66% 1.65% 1.64% 1.68% 1.71% 1.65%
Ratio of net investment income to average net assets 3.26% 3.30% 3.62% 3.77% 4.03% 4.07%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.24% 3.29% 3.62% 3.77% 4.03% 4.07%
Portfolio turnover 9% 10% 15% 30% 15% 7%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
24
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Insured Fund Class C
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.120 $ 11.030 $ 10.750 $ 10.950 $ 10.910 $ 10.480
Income (loss) from investment operations:
Net investment income 0.177 0.364 0.396 0.414 0.433 0.434
Net realized and unrealized gain (loss) on investments (0.129) 0.137 0.282 (0.197) 0.038 0.432
-------- -------- -------- --------- ---------- --------
Total from investment operations 0.048 0.501 0.678 0.217 0.471 0.866
-------- -------- -------- --------- ---------- --------
Less dividends and distributions from:
Net investment income (0.176) (0.362) (0.398) (0.417) (0.431) (0.436)
Net realized gain on investments (0.022) (0.049) -- -- -- --
-------- -------- -------- --------- ---------- --------
Total dividends and distributions (0.198) (0.411) (0.398) (0.417) (0.431) (0.436)
-------- -------- -------- --------- ---------- --------
Net asset value, end of period $ 10.970 $ 11.120 $ 11.030 $ 10.750 $ 10.950 $ 10.910
======== ======== ======== ========= ========== ========
Total return(3) 0.44% 4.63% 6.39% 1.97% 4.46% 8.42%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 12,450 $ 12,269 $ 12,028 $ 11,966 $ 6,083 $ 4,265
Ratio of expenses to average net assets 1.64% 1.64% 1.64% 1.68% 1.71% 1.65%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 1.66% 1.65% 1.64% 1.68% 1.71% 1.65%
Ratio of net investment income to average net assets 3.26% 3.30% 3.62% 3.77% 4.03% 4.07%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.24% 3.29% 3.62% 3.77% 4.03% 4.07%
Portfolio turnover 9% 10% 15% 30% 15% 7%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
25
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Intermediate Fund Class A
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.010 $ 10.890 $ 10.630 $ 10.720 $ 10.580 $ 10.350
Income (loss) from investment operations:
Net investment income 0.209 0.407 0.444 0.469 0.512 0.526
Net realized and unrealized gain (loss) on investments (0.130) 0.120 0.260 (0.088) 0.138 0.230
--------- --------- -------- -------- ---------- --------
Total from investment operations 0.079 0.527 0.704 0.381 0.650 0.756
--------- --------- -------- -------- ---------- --------
Less dividends and distributions from:
Net investment income (0.209) (0.407) (0.444) (0.471) (0.510) (0.526)
--------- --------- -------- -------- ---------- --------
Total dividends and distributions (0.209) (0.407) (0.444) (0.471) (0.510) (0.526)
--------- --------- -------- -------- ---------- --------
Net asset value, end of period $ 10.880 $ 11.010 $ 10.890 $ 10.630 $ 10.720 $ 10.580
========= ========= ======== ======== ========== ========
Total return(3) 0.73% 4.93% 6.73% 3.59% 6.34% 7.50%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 49,293 $ 52,958 $ 57,012 $ 57,635 $ 51,034 $ 49,089
Ratio of expenses to average net assets 0.75% 0.79% 0.84% 0.86% 0.85% 0.90%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid
indirectly 0.95% 0.95% 0.95% 0.96% 0.85% 0.93%
Ratio of net investment income to average net assets 3.86% 3.72% 4.10% 4.32% 4.86% 5.04%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly 3.66% 3.56% 3.99% 4.22% 4.86% 5.01%
Portfolio turnover 10% 25% 30% 23% 35% 24%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 these changes 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 and distributor, as applicable. Performance would have been
lower had the expense limitation not been in effect.
See accompanying notes
26
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Intermediate Fund Class B
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.040 $ 10.920 $ 10.650 $ 10.740 $ 10.600 $ 10.370
Income (loss) from investment operations:
Net investment income 0.163 0.314 0.352 0.377 0.423 0.438
Net realized and unrealized gain (loss) on
investments (0.130) 0.120 0.270 (0.088) 0.137 0.232
-------- -------- -------- -------- -------- --------
Total from investment operations 0.033 0.434 0.622 0.289 0.560 0.670
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.163) (0.314) (0.352) (0.379) (0.420) (0.440)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.163) (0.314) (0.352) (0.379) (0.420) (0.440)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.910 $ 11.040 $ 10.920 $ 10.650 $ 10.740 $ 10.600
======== ======== ======== ======== ======== ========
Total return(3) 0.31% 4.03% 5.91% 2.70% 5.43% 6.59%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 2,206 $ 2,811 $ 3,224 $ 4,002 $ 2,852 $ 2,443
Ratio of expenses to average net assets 1.60% 1.64% 1.69% 1.71% 1.70% 1.75%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 1.70% 1.70% 1.70% 1.73% 1.70% 1.78%
Ratio of net investment income to average net assets 3.01% 2.87% 3.25% 3.47% 4.01% 4.19%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly 2.91% 2.81% 3.24% 3.45% 4.01% 4.16%
Portfolio turnover 10% 25% 30% 23% 35% 24%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
27
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Intermediate Fund Class C
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.030 $ 10.910 $ 10.640 $ 10.730 $ 10.590 $ 10.360
Income (loss) from investment operations:
Net investment income 0.163 0.314 0.352 0.377 0.423 0.437
Net realized and unrealized gain (loss) on
investments (0.130) 0.120 0.270 (0.088) 0.137 0.233
-------- -------- -------- -------- -------- --------
Total from investment operations 0.033 0.434 0.622 0.289 0.560 0.670
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.163) (0.314) (0.352) (0.379) (0.420) (0.440)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.163) (0.314) (0.352) (0.379) (0.420) (0.440)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.900 $ 11.030 $ 10.910 $ 10.640 $ 10.730 $ 10.590
======== ======== ======== ======== ======== ========
Total return(3) 0.31% 4.04% 5.91% 2.71% 5.44% 6.59%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 4,904 $ 5,996 $ 7,188 $ 6,544 $ 4,887 $ 3,059
Ratio of expenses to average net assets 1.60% 1.64% 1.69% 1.71% 1.70% 1.75%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 1.70% 1.70% 1.70% 1.73% 1.70% 1.78%
Ratio of net investment income to average net assets 3.01% 2.87% 3.25% 3.47% 4.01% 4.19%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly 2.91% 2.81% 3.24% 3.45% 4.01% 4.16%
Portfolio turnover 10% 25% 30% 23% 35% 24%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 these changes 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, as applicable. Performance would have been lower had
the expense limitation not been in effect.
See accompanying notes
28
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund Class A
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 10.610 $ 10.240 $ 9.910 $ 9.950 $ 9.900 $ 9.650
Income (loss) from investment operations:
Net investment income 0.220 0.469 0.512 0.550 0.586 0.581
Net realized and unrealized gain (loss) on
investments (0.101) 0.372 0.328 (0.030) 0.056 0.243
-------- -------- -------- -------- -------- --------
Total from investment operations 0.119 0.841 0.840 0.520 0.642 0.824
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.219) (0.471) (0.510) (0.560) (0.592) (0.574)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.219) (0.471) (0.510) (0.560) (0.592) (0.574)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.510 $ 10.610 $ 10.240 $ 9.910 $ 9.950 $ 9.900
======== ======== ======== ======== ======== ========
Total return(3) 1.15% 8.40% 8.65% 5.33% 6.74% 8.84%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 71,511 $ 63,802 $ 42,636 $ 36,644 $ 34,867 $ 34,615
Ratio of expenses to average net assets 0.89% 0.89% 0.75% 0.75% 0.75% 0.75%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 0.97% 0.98% 1.00% 1.04% 1.01% 0.94%
Ratio of net investment income to average net assets 4.23% 4.50% 5.03% 5.48% 5.98% 6.01%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid
indirectly 4.15% 4.41% 4.78% 5.19% 5.72% 5.82%
Portfolio turnover 6% 3% 24% 32% 33% 13%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 for periods prior to September 1, 2001 have not been restated
to reflect these changes 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
29
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 10.630 $ 10.250 $ 9.930 $ 9.970 $ 9.910 $ 9.650
Income (loss) from investment operations:
Net investment income 0.181 0.391 0.435 0.475 0.513 0.509
Net realized and unrealized gain (loss) on investments (0.101) 0.381 0.318 (0.030) 0.063 0.248
-------- -------- -------- -------- -------- --------
Total from investment operations 0.080 0.772 0.753 0.445 0.576 0.757
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.180) (0.392) (0.433) (0.485) (0.516) (0.497)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.180) (0.392) (0.433) (0.485) (0.516) (0.497)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.530 $ 10.630 $ 10.250 $ 9.930 $ 9.970 $ 9.910
======== ======== ======== ======== ======== ========
Total return(3) 0.77% 7.68% 7.71% 4.55% 6.03% 8.09%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 10,554 $ 10,505 $ 12,463 $ 12,513 $ 13,379 $ 12,932
Ratio of expenses to average net assets 1.64% 1.64% 1.50% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 1.72% 1.73% 1.75% 1.79% 1.76% 1.69%
Ratio of net investment income to average net assets 3.48% 3.75% 4.28% 4.73% 5.23% 5.26%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.40% 3.66% 4.03% 4.44% 4.97% 5.07%
Portfolio turnover 6% 3% 24% 32% 33% 13%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 for periods prior to September 1, 2001 have not been restated
to reflect these changes 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
30
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund Class C
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 10.630 $ 10.250 $ 9.930 $ 9.970 $ 9.910 $ 9.650
Income (loss) from investment operations:
Net investment income 0.181 0.391 0.435 0.475 0.513 0.509
Net realized and unrealized gain (loss) on investments (0.101) 0.381 0.318 (0.030) 0.063 0.248
-------- -------- -------- -------- -------- --------
Total from investment operations 0.080 0.772 0.753 0.445 0.576 0.757
-------- -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income (0.180) (0.392) (0.433) (0.485) (0.516) (0.497)
-------- -------- -------- -------- -------- --------
Total dividends and distributions (0.180) (0.392) (0.433) (0.485) (0.516) (0.497)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.530 $ 10.630 $ 10.250 $ 9.930 $ 9.970 $ 9.910
======== ======== ======== ======== ======== ========
Total return(3) 0.77% 7.68% 7.71% 4.54% 6.03% 8.09%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 18,431 $ 15,809 $ 11,435 $ 10,754 $ 7,840 $ 6,807
Ratio of expenses to average net assets 1.64% 1.64% 1.50% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 1.72% 1.73% 1.75% 1.79% 1.76% 1.69%
Ratio of net investment income to average net assets 3.48% 3.75% 4.28% 4.73% 5.23% 5.26%
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.40% 3.66% 4.03% 4.44% 4.97% 5.07%
Portfolio turnover 6% 3% 24% 32% 33% 13%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
required amortization of all premiums and discounts on debt securities.
The effect of these changes 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 for periods prior to September 1, 2001 have not been restated
to reflect these changes 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
31
- --------------------------------------------------------------------------------
Delaware Minnesota Municipal Bond Funds
Notes February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS
Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust
and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund,
Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free California
Fund, Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund. Voyageur
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 Tax Free Funds (the "Trust") is organized as a
Delaware statutory trust and offers the Delaware Tax-Free Minnesota Fund.
Voyageur Intermediate Tax Free Funds (the "Trust") is organized as a Delaware
statutory trust and offers the Delaware Tax-Free Minnesota Intermediate Fund.
These financial statements and related notes pertain to Delaware Tax-Free
Minnesota Fund, Delaware Tax-Free Minnesota Insured Fund, Delaware Tax-Free
Minnesota Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond
Fund (each referred to as a "Fund" or, 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, and offer
Class A, Class B, and Class C shares. Class A shares are sold with a front-end
sales charge of up to 4.50% for Delaware Tax-Free Minnesota Fund, Delaware
Tax-Free Minnesota Insured Fund and Delaware Minnesota High-Yield Municipal Bond
Fund and up to 2.75% for Delaware Tax-Free Minnesota Intermediate Fund. Class B
shares are sold with a contingent deferred sales charge that declines from 4% to
zero for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Insured
Fund and Delaware Minnesota High-Yield Municipal Bond Fund and that declines
from 2% to zero for Delaware Tax-Free Minnesota Intermediate Fund, depending
upon the period of time the shares are held. Class B shares will automatically
convert to Class A on a quarterly basis approximately eight years after purchase
for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Insured Fund
and Delaware Minnesota High-Yield Municipal Bond Fund and approximately five
years after purchase for Delaware Tax-Free Minnesota Intermediate Fund. Class C
shares are sold with a contingent deferred sales charge of 1%, if redeemed
during the first twelve months.
The investment objective of Delaware Tax-Free Minnesota Fund and Delaware
Tax-Free Minnesota Insured Fund is to seek as high a level of current income
exempt from federal income tax and from the Minnesota state personal income tax,
as is consistent with preservation of capital.
The investment objective of Delaware Tax-Free Minnesota Intermediate Fund is to
seek to provide investors with preservation of capital and, secondarily, current
income exempt from federal income tax and from the Minnesota state personal
income tax, by maintaining a dollar-weighted average effective portfolio
maturity of 10 years or less.
The investment objective of Delaware Minnesota High-Yield Municipal Bond Fund is
to seek as high a level of current income exempt from federal income tax and
from the Minnesota state personal income tax, primarily through investment in
medium- and lower-grade municipal obligations.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Open-end investment
companies are valued at their published net asset value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of each Fund's Board of
Trustees. In determining whether market quotations are readily available or fair
valuation will be used, various factors will be taken into consideration, such
as market closures, aftermarket trading or significant events after local market
trading (e.g., government actions or pronouncements, trading volume or
volatility on markets, exchanges among dealers, or news events).
Federal Income Taxes - Each Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting - Investment income and common expenses are allocated to the
classes of the Funds on the basis of "settled shares" of each class in relation
to the net assets of the Funds. Realized and unrealized gain (loss) on
investments are allocated to the various classes of the Funds on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other - Expenses common to all funds within the Delaware Investments(R) Family
of Funds are allocated amongst the funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. Security transactions
are recorded on the date the securities are purchased or sold (trade date) for
financial reporting purposes. Costs used in calculating realized gains and
losses on the sale of investment securities are those of the specific securities
sold. Interest income is recorded on the accrual basis. Discounts and premiums
are amortized to interest income over the lives of the respective securities.
Each Fund declares dividends daily from net investment income and pays such
dividends monthly and declares and pays distributions from net realized gain on
investments, if any, annually.
The Funds receive earnings credits from their custodian when positive cash
balances are maintained, which are used to offset custody fees. The expense paid
under the above arrangement is included in custodian fees on the Statements of
Operations with the corresponding expense offset shown as "expense paid
indirectly."
32
- --------------------------------------------------------------------------------
Delaware Minnesota Municipal Bond Funds
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 Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
On the first $500 million 0.550% 0.500% 0.500% 0.550%
On the next $500 million 0.500% 0.475% 0.475% 0.500%
On the next $1.5 billion 0.450% 0.450% 0.450% 0.450%
In excess of $2.5 billion 0.425% 0.425% 0.425% 0.425%
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse each Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs and extraordinary expenses, do not
exceed specified percentages of average daily net assets as shown below.
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Operating expense limitation
as a percentage of average
daily net assets (per annum) 0.69% 0.64% 0.60% 0.64%
Expiration date 10/31/06 10/31/06 10/31/06 10/31/06
Effective December 30, 2005,
operating expense limitation
as a percentage of average
daily net assets (per annum) 0.68% 0.64% 0.60% 0.64%
Expiration date 12/31/06 12/31/06 12/31/06 12/31/06
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. Each Fund pays
DSC a monthly fee computed at the annual rate of 0.04% of each Fund's average
daily net assets for accounting and administration services. Each Fund pays DSC
a monthly fee based on the number of shareholder accounts for dividend
disbursing and transfer agent services.
Pursuant to a distribution agreement and distribution plan, each Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.25% of the average daily net
assets of the Class A shares and 1.00% of the average daily net assets of the
Class B and C shares. DDLP has contracted to waive distribution fees through
December 31, 2006 in order to prevent distribution and service fees of Class A
shares from exceeding 0.15% of average daily net assets for Delaware Tax-Free
Minnesota Intermediate Fund.
At February 28, 2006, the Funds had liabilities payable to affiliates as
follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Investment management fee
payable to DMC $166,311 $86,117 $16,671 $33,844
Dividend disbursing, transfer agent,
accounting and administration fees
and expenses payable to DSC 62,562 40,188 12,633 17,823
Distribution fee payable to DDLP 97,000 51,889 8,545 45,184
Other expenses payable
to DMC and affiliates* 20,907 8,863 4,629 9,148
* DMC, as part of its administrative services, pays operating expenses on
behalf of each Fund and is reimbursed on a periodic basis. Such expenses
include items such as printing of shareholder reports, fees for audit,
legal and tax services, registration fees and trustees' fees.
As provided in the investment management agreement, each Fund bears the cost of
certain legal services expenses, including internal legal services provided to
each Fund by DMC employees. For the six months ended February 28, 2006, each
Fund was charged internal legal services provided by DMC as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
- ----------------- ----------------- ----------------- -------------------
$14,674 $8,934 $2,179 $3,472
33
- --------------------------------------------------------------------------------
Delaware Minnesota Municipal Bond Funds
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
2. Investment Management, Administration Agreements and Other Transactions with
Affiliates (continued)
For the six months ended February 28, 2006, DDLP earned commissions on sales of
Class A shares for each Fund as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
- ----------------- ----------------- ----------------- -------------------
$38,062 $12,282 $2,625 $32,848
For the six months ended February 28, 2006, DDLP received gross contingent
deferred sales charge commissions on redemption of each Fund's Class A, Class B
and Class C shares, respectively. These commissions were entirely used to offset
up-front commissions previously paid by DDLP to broker-dealers on sales of those
shares. The amounts received were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Class A $ 637 $ 32 $1,692 $9,896
Class B 1,861 4,966 1,758 3,445
Class C 1,300 1,987 993 3,213
Certain officers of DMC, DSC, and DDLP are officers and/or trustees of the
Trusts. These officers and trustees are paid no compensation by the Funds.
3. Investments
For the six months ended February 28, 2006, the Funds made purchases and sales
of investment securities other than short-term investments as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Purchases $39,425,366 $10,080,534 $2,855,170 $15,240,177
Sales 34,101,825 13,179,100 6,455,541 2,460,055
At February 28, 2006, the cost of investments for federal income tax purposes
has been estimated since the final tax characteristics cannot be determined
until fiscal year end. At February 28, 2006, the cost of investments and
unrealized appreciation (depreciation) for each Fund were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Cost of investments $ 382,382,401 $ 219,507,859 $ 54,233,764 $ 98,639,056
============= =============== =============== ===============
Aggregate unrealized appreciation $ 19,252,802 $ 16,847,279 $ 2,124,977 $ 3,115,360
Aggregate unrealized depreciation (501,503) (63,817) (66,953) (709,771)
------------- --------------- --------------- ---------------
Net unrealized appreciation $ 18,751,299 $ 16,783,462 $ 2,058,024 $ 2,405,589
============= =============== =============== ===============
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. Additionally, net short-term gains on sales of
investment securities are treated as ordinary income for federal income tax
purposes. The tax character of dividends and distributions paid during the six
months ended February 28, 2006 and year ended August 31, 2005 was as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Six months ended 2/28/06*
Tax-exempt income $ 8,045,053 $ 4,686,211 $1,096,693 $1,857,099
Ordinary income 31,672 -- -- --
Long-term capital gain 791,810 486,974 -- --
----------- ----------- ---------- ----------
Total $ 8,868,535 $ 5,173,185 $1,096,693 $1,857,099
=========== =========== ========== ==========
Year ended 8/31/05
Tax-exempt income $15,803,097 $ 9,960,686 $2,350,076 $3,194,622
Long-term capital gain 4,531,605 1,119,256 -- --
----------- ----------- ---------- ----------
Total $20,334,702 $11,079,942 $2,350,076 $3,194,622
=========== =========== ========== ==========
* Tax information for the period ended February 28, 2006 is an estimate and
the tax character of dividends and distributions may be redesignated at
fiscal year end.
34
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Delaware Minnesota Municipal Bond Funds
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
4. Dividend and Distribution Information (continued)
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of February 28, 2006, the
estimated components of net assets on a tax basis were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Shares of beneficial interest $384,593,993 $222,056,876 $55,733,282 $100,491,739
Undistributed tax-exempt income 147,934 -- -- 294
Undistributed long-term capital gain 139,580 (10,836) -- --
Capital loss carryforwards -- -- (1,275,535) (2,433,778)
Six month period realized gains (losses) -- -- (81,340) 32,009
Post-October losses -- (102,400) (31,034) --
Unrealized appreciation of investments 18,751,299 16,783,462 2,058,024 2,405,589
------------ ------------ ----------- ------------
Net assets $403,632,806 $238,727,102 $56,403,397 $100,495,853
============ ============ =========== ============
The differences between book basis and tax basis components of net assets are
primarily attributable to tax deferral of losses on wash sales and tax treatment
of market discount and premium on debt instruments.
Post-October losses represent losses realized on investment transactions from
November 1, 2005 through February 28, 2006 that, in accordance with federal
income tax regulations, each Fund has elected to defer and treat as having
arisen in the following fiscal year.
For financial reporting purposes, capital accounts are adjusted to reflect the
tax character of permanent book/tax differences. Reclassifications are primarily
due to tax treatment of market discount on certain debt instruments. Results of
operations and net assets were not affected by these reclassifications. For the
six months ended February 28, 2006, the Funds recorded an estimate of these
differences since the final tax characteristics cannot be determined until
fiscal year end.
Delaware Tax-Free Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------- ----------------- ----------------- -------------------
Undistributed (Accumulated)
net investment income (loss) $ 80,282 $ (23,723) $ 18 $ (9,015)
Accumulated realized gain (loss) (80,282) 23,723 (18) 9,015
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Capital loss carryforwards
remaining at August 31, 2005 will expire as follows:
Delaware Tax-Free Delaware Minnesota
Year of Minnesota High-Yield
Expiration Intermediate Fund Municipal Bond Fund
- ---------- ----------------- -------------------
2008 $ -- $ 181,123
2009 1,024,839 1,267,552
2010 4,037 57,521
2011 246,659 243,334
2012 -- 684,248
---------- ----------
Total $1,275,535 $2,433,778
========== ==========
For the six months ended February 28, 2006, the Delaware Tax-Free Minnesota
Intermediate Fund had capital losses of $81,340 which may increase the capital
loss carryforwards and Delaware Minnesota High-Yield Municipal Bond Fund had
capital gains $32,009 which may reduce the capital loss carryforwards.
35
- --------------------------------------------------------------------------------
Delaware Minnesota Municipal Bond Funds
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
5. Capital Shares
Transactions in capital shares were as follows:
Delaware Tax-Free Delaware Tax-Free
Minnesota Fund Minnesota Insured Fund
------------------------- ------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/06 8/31/05 2/28/06 8/31/05
Shares sold:
Class A 2,140,052 2,605,601 311,445 1,206,325
Class B 51,547 82,005 21,547 68,954
Class C 183,801 323,335 103,724 200,888
Shares issued upon reinvestments
of dividends and distributions:
Class A 438,005 999,673 299,506 620,080
Class B 12,278 33,587 15,053 35,325
Class C 16,975 34,287 14,142 29,235
---------- ---------- ---------- ----------
2,842,658 4,078,488 765,417 2,160,807
---------- ---------- ---------- ----------
Shares repurchased:
Class A (1,233,675) (2,466,727) (1,407,217) (2,021,780)
Class B (37,238) (262,319) (98,433) (293,001)
Class C (148,622) (114,430) (85,796) (217,296)
---------- ---------- ---------- ----------
(1,419,535) (2,843,476) (1,591,446) (2,532,077)
---------- ---------- ---------- ----------
Net increase (decrease) 1,423,123 1,235,012 (826,029) (371,270)
========== ========== ========== ==========
Delaware Tax-Free Delaware Minnesota High-Yield
Minnesota Intermediate Fund Municipal Bond Fund
--------------------------- -----------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/06 8/31/05 2/28/06 8/31/05
Shares sold:
Class A 188,954 811,048 1,204,683 2,173,370
Class B 991 4,238 106,016 117,618
Class C 52,171 67,333 354,780 547,300
Shares issued upon reinvestment
of dividends and distributions:
Class A 66,854 139,829 81,252 133,229
Class B 2,631 5,713 11,163 24,644
Class C 5,522 14,403 19,190 27,930
---------- ---------- ---------- ----------
317,123 1,042,564 1,777,084 3,024,091
---------- ---------- ---------- ----------
Shares repurchased:
Class A (537,393) (1,375,055) (496,572) (458,057)
Class B (56,029) (50,607) (103,253) (369,311)
Class C (151,659) (196,858) (111,289) (202,901)
---------- ---------- ---------- ----------
(745,081) (1,622,520) (711,114) (1,030,269)
---------- ---------- ---------- ----------
Net increase (decrease) (427,958) (579,956) 1,065,970 1,993,822
========== ========== ========== ==========
For the six months ended February 28, 2006 and the year ended August 31, 2005,
the following shares were converted from Class B to Class A shares. The
respective amounts are included in Class B redemptions and Class A subscriptions
in the tables above and the Statements of Changes in Net Assets.
Six Months Ended Year Ended
2/28/06 8/31/05
---------------------------- --------------------------------
Class B Class A Class B Class A
shares shares Value shares shares Value
------- ------- -------- ------- ------- ----------
Delaware Tax-Free Minnesota Fund 13,341 13,351 $167,692 113,069 113,158 $1,420,503
Delaware Tax-Free Minnesota Insured Fund 34,632 34,599 378,170 122,887 122,776 1,352,796
Delaware Tax-Free Minnesota Intermediate Fund 5,907 5,925 64,157 21,297 21,349 231,714
Delaware Minnesota High-Yield Municipal Bond Fund 68,110 68,229 711,826 192,047 192,388 1,991,365
36
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Delaware Minnesota Municipal Bond Funds
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
6. Line of Credit
Each Fund, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participates in a $225,000,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Funds had no amounts outstanding as of February 28, 2006, or at any time during
the period.
7. Credit and Market Risk
The Funds concentrate their investments in securities issued by municipalities,
mainly in Minnesota. The value of these investments may be adversely affected by
new legislation within the state, regional or local economic conditions, and
differing levels of supply and demand for municipal bonds. Many municipalities
insure repayment for their obligations. Although bond insurance reduces the risk
of loss due to default by an issuer, such bonds remain subject to the risk that
market value may fluctuate for other reasons and there is no assurance that the
insurance company will meet its obligations. These securities have been
identified in the Statements of Net Assets.
The Funds may invest in inverse floating rate securities ("inverse floaters"), a
type of derivative tax-exempt obligation with floating or variable interest
rates that move in the opposite direction of short-term interest rates, usually
at an accelerated speed. Consequently, the market values of inverse floaters
will generally be more volatile than other tax-exempt investments. Such
securities are identified on the Statements of Net Assets.
The Funds may invest in advanced refunded bonds, escrow secured bonds or
defeased bonds. Under current federal tax laws and regulations, state and local
government borrowers are permitted to refinance outstanding bonds by issuing new
bonds. The issuer refinances the outstanding debt to either reduce interest
costs or to remove or alter restrictive covenants imposed by the bonds being
refinanced. A refunding transaction where the municipal securities are being
refunded within 90 days or less from the issuance of the refunding issue is
known as a "current refunding." "Advance refunded bonds" are bonds in which the
refunded bond issue remains outstanding for more than 90 days following the
issuance of the refunding issue. In an advance refunding, the issuer will use
the proceeds of a new bond issue to purchase high grade interest bearing debt
securities which are then deposited in an irrevocable escrow account held by an
escrow agent to secure all future payments of principal and interest and bond
premium of the advance refunded bond. Bonds are "escrowed to maturity" when the
proceeds of the refunding issue are deposited in an escrow account for
investment sufficient to pay all of the principal and interest on the original
interest payment and maturity dates. Bonds are considered "pre-refunded" when
the refunding issue's proceeds are escrowed only until a permitted call date or
dates on the refunded issue with the refunded issue being redeemed at the time,
including any required premium. Bonds become "defeased" when the rights and
interests of the bondholders and of their lien on the pledged revenues or other
security under the terms of the bond contract are substituted with an
alternative source of revenues (the escrow securities) sufficient to meet
payments of principal and interest to maturity or to the first call dates.
Escrowed secured bonds will often receive a rating of AAA from Moody's Investors
Service, Inc., Standard & Poor's Rating Group, and/or Fitch due to the strong
credit quality of the escrow securities and the irrevocable nature of the escrow
deposit agreement. The Tax-Free Minnesota Insured Fund will purchase escrow
secured bonds without additional insurance only where the escrow is invested in
securities of the U.S. government or agencies or instrumentalities of the U.S.
government.
Each Fund may invest a portion of its total assets in illiquid securities, which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of these securities may impair each Fund from disposing of them in a
timely manner and at a fair price when it is necessary or desirable to do so.
While maintaining oversight, each Fund's Board of Trustees has delegated to DMC
the day-to-day functions of determining whether individual securities are liquid
for purposes of each Fund's limitation on investments in illiquid assets. At
February 28, 2006, there were no Rule 144A securities. Illiquid securities have
been identified on the Statements of Net Assets.
8. Contractual Obligations
The Funds enter into contracts in the normal course of business that contain a
variety of indemnifications. The Funds' maximum exposure under these
arrangements is unknown. However, the Funds have not had prior claims or losses
pursuant to these contracts. Management has reviewed each Fund's existing
contracts and expects the risk of loss to be remote.
37
- --------------------------------------------------------------------------------
About
- --------------------------------------------------------------------------------
THE ORGANIZATION
This semiannual report is for the information of Delaware Tax-Free Minnesota
Fund, Delaware Tax-Free Minnesota Insured Fund, Delaware Tax-Free Minnesota
Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current prospectus for Delaware Tax-Free Minnesota Fund,
Delaware Tax-Free Minnesota Insured Fund, Delaware Tax-Free Minnesota
Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund and the
Delaware Investments(R) Performance Update for the most recently completed
calendar quarter. The prospectus sets forth details about charges, expenses,
investment objectives, and operating policies of the Fund. You should read the
prospectus carefully before you invest. The figures in this report represent
past results that are not a guarantee of future results. The return and
principal value of an investment in the Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Board of Trustees
Jude T. Driscoll
Chairman
Delaware Investments(R) Family of Funds
Philadelphia, PA
Thomas L. Bennett
Private Investor
Rosemont, PA
John A. Fry
President
Franklin & Marshall College
Lancaster, PA
Anthony D. Knerr
Founder/Managing Director
Anthony Knerr & Associates
New York, NY
Lucinda S. Landreth
Former Chief Investment Officer
Assurant, Inc.
Philadelphia, PA
Ann R. Leven
Former Treasurer/Chief Fiscal Officer
National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN
J. Richard Zecher
Founder
Investor Analytics
Scottsdale, AZ
Affiliated Officers
Michael P. Bishof
Senior Vice President and
Chief Financial Officer
Delaware Investments(R) Family of Funds
Philadelphia, PA
David F. Connor
Vice President, Deputy General Counsel and Secretary
Delaware Investments(R) Family of Funds
Philadelphia, PA
David P. O'Connor
Senior Vice President, General Counsel and Chief Legal Officer
Delaware Investments(R) Family of Funds
Philadelphia, PA
John J. O'Connor
Senior Vice President and Treasurer
Delaware Investments(R) Family of Funds
Philadelphia, PA
Contact Information
Investment Manager
Delaware Management Company,
a Series of Delaware Management Business Trust
Philadelphia, PA
National Distributor
Delaware Distributors, L.P.
Philadelphia, PA
Shareholder Servicing, Dividend Disbursing and Transfer Agent
Delaware Service Company, Inc.
2005 Market Street
Philadelphia, PA 19103-7094
For Shareholders
800 523-1918
For Securities Dealers and Financial Institutions Representatives Only
800 362-7500
Web Site
www.delawareinvestments.com
Delaware Investments is the marketing name for Delaware Management Holdings,
Inc. and its subsidiaries.
- --------------------------------------------------------------------------------
Each Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. Each Fund's Forms N-Q, as well as a description of the policies and
procedures that each Fund uses to determine how to vote proxies (if any)
relating to portfolio securities is available without charge (i) upon request,
by calling 800 523-1918; (ii) on the Funds' Web site at
http://www.delawareinvestments.com; and (iii) on the Commission's Web site at
http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC; information on the
operation of the Public Reference Room may be obtained by calling 800 SEC-0330.
Information (if any) regarding how each Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through the Funds' Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
- --------------------------------------------------------------------------------
38
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[DELAWARE INVESTMENTS(R) LOGO]
- --------------------------------------------------------------------------------
Contact Information
Web Site
www.delawareinvestments.com
E-mail
service@delinvest.com
Shareholder Service Center
800 523-1918
Call the Shareholder Service Center Monday to Friday, 8:00 a.m. to 7:00 p.m.
Eastern Time:
o For fund information, literature, price, yield, and performance figures.
o For information on existing regular investment accounts and retirement
plan accounts including wire investments, wire redemptions, telephone
redemptions, and telephone exchanges.
Delaphone Service
800 362-FUND (800 362-3863)
o For convenient access to account information or current performance
information on all Delaware Investments(R) Funds seven days a week, 24
hours a day, use this Touch-Tone(R) service.
- --------------------------------------------------------------------------------
(344) Printed in the USA
SA-MNALL[2/06] CGI 4/06 SEMI-0603 MINN PO10935
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 INTERMEDIATE TAX FREE FUNDS
Jude T. Driscoll
-------------------------
By: Jude T. Driscoll
Title: Chief Executive Officer
Date: May 8, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Jude T. Driscoll
-------------------------
By: Jude T. Driscoll
Title: Chief Executive Officer
Date: May 8, 2006
Michael P. Bishof
-------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: May 8, 2006