UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-6411
Exact name of registrant as specified in charter: Delaware Investments
Municipal Trust
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 reports are combined with the shareholder
reports of other investment company registrants. This Form N-CSR pertains to the
DELAWARE TAX-FREE FLORIDA INSURED FUND, DELAWARE TAX-FREE MISSOURI INSURED FUND
AND DELAWARE TAX-FREE OREGON INSURED FUND of the Registrant, information on
which is included in the following shareholder reports.
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[DELAWARE INVESTMENTS(R) LOGO]
FIXED INCOME
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Semiannual Report FEBRUARY 28, 2006
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DELAWARE TAX-FREE FLORIDA INSURED FUND
DELAWARE TAX-FREE NEW YORK FUND
[POWERED BY RESEARCH(R) LOGO]
Table
OF CONTENTS
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DISCLOSURE OF FUND EXPENSES 1
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SECTOR ALLOCATIONS 2
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FINANCIAL STATEMENTS:
Statements of Net Assets 3
Statements of Operations 8
Statements of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 16
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ABOUT THE ORGANIZATION 21
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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 the Funds and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. Each Funds' 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 Florida 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 $ 1,009.50 0.87% $ 4.33
Class B 1,000.00 1,005.80 1.62% 8.06
Class C 1,000.00 1,006.60 1.62% 8.06
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Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.48 0.87% $ 4.36
Class B 1,000.00 1,016.76 1.62% 8.10
Class C 1,000.00 1,016.76 1.62% 8.10
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Delaware Tax-Free New York 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 $ 1,009.70 0.65% $ 3.24
Class B 1,000.00 1,007.00 1.40% 6.97
Class C 1,000.00 1,007.00 1.40% 6.97
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Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,021.57 0.65% $ 3.26
Class B 1,000.00 1,017.85 1.40% 7.00
Class C 1,000.00 1,017.85 1.40% 7.00
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1
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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 Florida Insured Fund
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Percentage
Sector of Net Assets
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Municipal Bonds 98.37%
Airport Revenue Bonds 1.48%
Dedicated Tax & Fees Revenue Bonds 16.27%
Electric & Gas Revenue Bonds 1.99%
Higher Education Revenue Bonds 5.10%
Hospital Revenue Bonds 15.51%
Multifamily Housing Revenue Bonds 26.94%
Municipal Lease Revenue Bonds 10.70%
Ports & Harbors Revenue Bonds 0.30%
Pre-Refunded Bonds 10.73%
Public Utility District Revenue Bonds 1.17%
Single Family Housing Revenue Bonds 0.29%
Tax Increment/Special Assessment Bonds 2.08%
Territorial General Obligation Bonds 2.76%
Water & Sewer Revenue Bonds 3.05%
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Total Market Value of Securities 98.37%
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Receivables and Other Assets Net of Liabilities 1.63%
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Total Net Assets 100.00%
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Delaware Tax-Free New York Fund
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Percentage
Sector of Net Assets
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Municipal Bonds 96.33%
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Airport Revenue Bonds 5.79%
City General Obligation Bonds 4.78%
Continuing Care/Retirement Revenue Bonds 2.63%
Corporate-Backed Revenue Bonds 2.95%
Dedicated Tax & Fees Revenue Bonds 8.95%
Electric & Gas Revenue Bonds 14.96%
Higher Education Revenue Bonds 11.54%
Hospital Revenue Bonds 8.75%
Municipal Lease Revenue Bonds 14.85%
Parking Revenue Bonds 3.00%
Pre-Refunded Bonds 12.23%
Water & Sewer Revenue Bonds 5.90%
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Variable Rate Demand Notes 2.24%
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Total Market Value of Securities 98.57%
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Receivables and Other Assets Net of Liabilities 1.43%
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Total Net Assets 100.00%
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2
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Delaware Tax-Free Florida Insured Fund
Statements February 28, 2006 (Unaudited)
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OF NET ASSETS
Principal Market
Amount Value
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Municipal Bonds - 98.37%
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Airport Revenue Bonds - 1.48%
Miami-Dade County Aviation Revenue
(Miami International Airport)
Series B 5.00% 10/1/37 (FGIC) $ 1,000,000 $ 1,046,140
Miami-Dade County Aviation Revenue
Series A 5.00% 10/1/33 (FSA) (AMT) 500,000 513,670
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1,559,810
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Dedicated Tax & Fees Revenue Bonds - 16.27%
Florida State Board of Education
(Lottery Revenue) Series A
6.00% 7/1/14 (FGIC) 1,000,000 1,103,970
Florida State Department of Transportation
5.00% 7/1/31 (FGIC) 1,875,000 1,963,388
Jacksonville Excise Taxes Revenue Series B
5.00% 10/1/26 (AMBAC) 1,000,000 1,045,320
5.125% 10/1/32 (FGIC) 1,000,000 1,049,980
**Palm Beach County Florida Criminal
Justice Facilities Revenue Inverse Floater
8.01%6/1/12 (FGIC) 7,500,000 9,254,400
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue
Series G 5.00% 7/1/42 800,000 818,696
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue Series K 5.00% 7/1/35 1,000,000 1,033,110
^Puerto Rico Commonwealth
Infrarastructure Financing Authority
Series A 4.60% 7/1/30 (FGIC) 2,500,000 836,225
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17,105,089
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Electric & Gas Revenue Bonds - 1.99%
Florida State Municipal Power Agency
Revenue (Stanton II Project)
5.00% 10/1/26 (AMBAC) 2,000,000 2,094,160
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2,094,160
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Higher Education Revenue Bonds - 5.10%
Broward County Educational Facilities
Authority Revenue
(Nova Southeastern University)
5.25% 4/1/27 (RADIAN) 1,000,000 1,044,950
Miami-Dade County Educational
Facilities Authority (University of Miami)
Series A 5.75% 4/1/29 (AMBAC) 2,000,000 2,172,520
University of Central Florida Athletics
Association Certificates of Participation
Series A 5.25% 10/1/34 (FGIC) 2,000,000 2,143,660
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5,361,130
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Hospital Revenue Bonds - 15.51%
Escambia County Health Facilities
Authority (Florida Health Care Facilities --
VHA Program)
5.95% 7/1/20 (AMBAC) 560,000 593,936
Highlands County Health Facilities Authority
(Adventist Health System/Sunbelt)
Series A 6.00% 11/15/31 1,500,000 1,619,445
Principal Market
Amount Value
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Municipal Bonds (continued)
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Hospital Revenue Bonds (continued)
Indian River County Hospital District
(Indian River Memorial Hospital)
6.10% 10/1/18 (FSA) $ 3,000,000 $ 3,103,680
Miami-Dade County Public Facilities
Revenue (Jackson Health Systems)
Series A 5.00% 6/1/35 (MBIA) 1,500,000 1,568,895
North Miami Health Facilities Authority
(Catholic Health Services)
(LOC Suntrust Bank-Miami)
6.00% 8/15/16 500,000 513,820
Orange County Health Facilities Authority
Revenue (Adventist Health System)
5.625% 11/15/32 1,000,000 1,074,010
Palm Beach County Health Facilities
Authority Revenue
(Boca Raton Community Hospital)
5.625% 12/1/31 2,000,000 2,106,500
South Broward Hospital District Revenue
(Memorial Health Care System)
5.625% 5/1/32 3,000,000 3,220,410
Tallahassee Health Facilities
(Tallahassee Memorial Regional
Medical Center) Series B
6.00% 12/1/15 (MBIA) 2,500,000 2,505,050
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16,305,746
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Multifamily Housing Revenue Bonds - 26.94%
Duval Housing Finance Authority
(St. Augustine Apartments)
6.00% 3/1/21 300,000 306,066
Florida Housing Finance Agency
(Crossings Indian Run Apartments HUD)
Series V 6.10% 12/1/26 (AMBAC) (AMT) 750,000 771,060
(Landings at Sea Forest Apartments)
Series T
5.85% 12/1/18 (AMBAC) (FHA) (AMT) 390,000 400,834
6.05% 12/1/36 (AMBAC) (FHA) (AMT) 700,000 718,459
(Leigh Meadows Apartments HUD)
Series N 6.20% 9/1/26 (AMBAC) (AMT) 2,765,000 2,836,669
6.30% 9/1/36 (AMBAC) (AMT) 2,000,000 2,051,440
(Mariner Club Apartments) Series K-1
6.25% 9/1/26 (AMBAC) (AMT) 2,000,000 2,052,260
6.375% 9/1/36 (AMBAC) (AMT) 3,500,000 3,591,175
(Riverfront Apartments Section 8 HUD)
Series A 6.25% 4/1/37 (AMBAC) (AMT) 1,000,000 1,032,720
(Spinnaker Cove Apartments)
Series G 6.50% 7/1/36
(AMBAC) (FHA) (AMT) 500,000 512,150
(Sterling Palms Apartments) Series D-1
6.30% 12/1/16 (AMBAC) (AMT) 925,000 946,275
6.40% 12/1/26 (AMBAC) (AMT) 1,500,000 1,536,555
6.50% 6/1/36 (AMBAC) (AMT) 6,540,000 6,691,727
(The Vineyards Project) Series H
6.40% 11/1/15 500,000 511,200
(Woodbridge Apartments) Series L
6.15% 12/1/26 (AMBAC) (AMT) 1,750,000 1,799,683
6.25% 6/1/36 (AMBAC) (AMT) 2,000,000 2,056,220
Volusia County Multifamily Housing
Finance Authority (San Marco Apartments)
Series A 5.60% 1/1/44 (FSA) (AMT) 500,000 514,865
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28,329,358
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3
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Delaware Tax-Free Florida Insured 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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Municipal Lease Revenue Bonds - 10.70%
Florida Municipal Loan Council Revenue
Series B 5.00% 11/1/29 (MBIA) $ 1,590,000 $ 1,681,759
Lake County Florida School Board
5.00% 6/1/30 (AMBAC) 1,750,000 1,837,850
Osceola County School Board Series A
5.25% 6/1/27 (AMBAC) 4,000,000 4,281,280
Palm Beach County School Board
Certificates of Participation Series D
5.00% 8/1/28 (FSA) 300,000 311,925
Pasco County Florida School Board
Series A 5.00% 8/1/30 (AMBAC) 1,000,000 1,050,970
Puerto Rico Public Buildings Authority
Revenue (Government Facilities)
Series F 5.25% 7/1/25 930,000 1,036,708
St. Augustine Capital Improvement Revenue
5.00% 10/1/34 (AMBAC) 1,000,000 1,051,050
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11,251,542
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Ports & Harbors Revenue Bonds - 0.30%
Jacksonville Port Authority Seaport Revenue
5.70% 11/1/30 (MBIA) (AMT) 295,000 315,199
-----------
315,199
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- -/-Pre-Refunded Bonds - 10.73%
Jacksonville Port Authority Seaport Revenue
5.70% 11/1/30-10 (MBIA) (AMT) 205,000 221,363
Lee County Florida Airport Revenue
Series B 5.75% 10/1/33-10 (FSA) 3,000,000 3,306,150
Northern Palm Beach County Improvement
District Special Assessment
(Abacoa Water Control)
7.20% 8/1/16-06 300,000 310,530
Puerto Rico Commonwealth Highway &
Transportation Authority Highway
RevenueSeries D
5.25% 7/1/38-12 3,000,000 3,270,300
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue Series J
5.50% 7/1/22-14 1,600,000 1,790,992
Tampa Utilities Tax Revenue Series A
6.00% 10/1/17-09 (AMBAC) 1,000,000 1,094,080
6.125% 10/1/18-09 (AMBAC) 1,000,000 1,098,090
Volusia County Industrial Development
Authority Mortgage Revenue (Bishops
Glen Retirement Health Facilities Project)
7.50% 11/1/16-06 180,000 187,981
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11,279,486
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Principal Market
Amount Value
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Municipal Bonds (continued)
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Public Utility District Revenue Bonds - 1.17%
Ocala Utility System Revenue Series B
5.25% 10/1/25 (FGIC) $ 1,125,000 $ 1,231,841
-----------
1,231,841
-----------
Single Family Housing Revenue Bonds - 0.29%
Orange County Florida Housing Finance
Authority Homeowner Revenue Series
B 5.25%3/1/33 (GNMA) (FNMA) (AMT) 295,000 300,776
-----------
300,776
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Tax Increment/Special Assessment Bonds - 2.08%
Enterprise Community Development District
Special Assessment 6.10% 5/1/16 (MBIA) 695,000 696,599
Hollywood Community Redevelopment
Agency 5.625% 3/1/24 1,200,000 1,283,940
Julington Creek Plantation Community
Development District Special Assessment
5.00% 5/1/29 (MBIA) 200,000 208,992
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2,189,531
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Territorial General Obligation Bonds - 2.76%
Puerto Rico Commonwealth
Public Improvement Series A
5.50% 7/1/19 (MBIA) 2,500,000 2,897,300
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2,897,300
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Water & Sewer Revenue Bonds - 3.05%
Tampa Water and Sewer Revenue
6.00% 10/1/16 (FSA) 1,000,000 1,180,940
Village Center Community Development
District Utility Revenue
5.00% 10/1/36 (MBIA) 500,000 523,620
Winter Haven Utilities Systems Revenue
Refunding & Improvement
5.00% 10/1/30 (MBIA) 1,415,000 1,499,546
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3,204,106
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Total Municipal Bonds (cost $98,000,827) 103,425,074
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4
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Delaware Tax-Free Florida Insured Fund
Statements
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OF NET ASSETS (CONTINUED)
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Total Market Value of Securities - 98.37%
(cost $98,000,827) $ 103,425,074
Receivables and Other Assets
Net of Liabilities - 1.63% 1,715,627
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Net Assets Applicable to 9,395,937
Shares Outstanding - 100.00% $ 105,140,701
=============
Net Asset Value - Delaware Tax-Free Florida Insured Fund
Class A ($96,523,421 / 8,626,174 Shares) $ 11.19
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Net Asset Value - Delaware Tax-Free Florida Insured Fund
Class B ($4,942,438 / 441,517 Shares) $ 11.19
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Net Asset Value - Delaware Tax-Free Florida Insured Fund
Class C ($3,674,842 / 328,246 Shares) $ 11.20
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Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 100,442,884
Accumulated net realized loss on investments (726,430)
Net unrealized appreciation of investments 5,424,247
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Total net assets $ 105,140,701
=============
** An inverse floater bond is a type of bond with variable or floating
interest rates that move in the opposite direction of short-term rates.
Interest rate disclosed is in effect as of February 28, 2006. See Note 8
in "Notes to Financial Statements."
- -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is
followed by the year in which the bond is pre-refunded. See Note 8 in
"Notes to Financial Statements."
^ Zero coupon security. The interest rate shown is the yield at the time of
purchase.
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Summary of Abbreviations:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FNMA - Insured by Federal National Mortgage Association
FSA - Insured by the 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
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Florida Insured Fund
Net asset value Class A (A) $ 11.19
Sales charge (4.50% of offering price) (B) 0.53
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Offering price $ 11.72
=============
(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
5
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Delaware Tax-Free New York Fund
Statements February 28, 2006 (Unaudited)
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OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
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Municipal Bonds - 96.33%
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Airport Revenue Bonds - 5.79%
New York City Industrial Development
(JFK Airis Project) 5.50% 7/1/28 (AMT) $ 500,000 $ 503,750
Onondaga County Industrial Development
Authority Revenue Subordinated
(Air Cargo Project) 7.25% 1/1/32 (AMT) 500,000 530,860
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1,034,610
-----------
City General Obligation Bonds - 4.78%
New York City
Series C 5.375% 11/15/27 310,000 321,309
Series J 5.25% 6/1/28 500,000 532,040
-----------
853,349
-----------
Continuing Care/Retirement Revenue Bonds - 2.63%
New York State Dormitory Authority Revenue
(Chapel Oaks) 5.45% 7/1/26
(LOC Allied Irish Bank) 450,000 469,868
-----------
469,868
-----------
Corporate-Backed Revenue Bonds - 2.95%
oDutchess County Industrial Development
Agency (IBM Project)
5.45% 12/1/29 (AMT) 500,000 527,660
-----------
527,660
-----------
Dedicated Tax & Fees Revenue Bonds - 8.95%
New York State Sales Tax Asset
Receivables Series A
5.25% 10/15/27 (AMBAC) 500,000 543,500
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue
Series Y 5.50% 7/1/36 475,000 521,944
Schenectady Metroplex Development
Authority Revenue Series A
5.375% 12/15/21 500,000 532,720
-----------
1,598,164
-----------
Electric & Gas Revenue Bonds - 14.96%
New York City Industrial
Development Agency
(Brooklyn Navy Yard Cogen Partners)
5.75% 10/1/36 (AMT) 450,000 453,380
New York State Energy Research &
Development Authority Pollution
Control Revenue (Central Hudson Gas)
Series A 5.45% 8/1/27 (AMBAC) 500,000 532,800
Puerto Rico Electric Power Authority
Power Revenue
Series II 5.25% 7/1/31 500,000 528,960
Series NN 5.125% 7/1/29 600,000 633,125
Suffolk County Industrial Development
Agency Revenue (Keyspan-Port
Jefferson Project) 5.25% 6/1/27 (AMT) 500,000 522,180
-----------
2,670,445
-----------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Higher Education Revenue Bonds - 11.54%
Amherst Industrial Development Agency
Civic Facilities Revenue (UBF Faculty
Student Housing) Series A
5.75% 8/1/30 (AMBAC) $ 200,000 $ 220,446
Dutchess County Industrial Development
Agency (Marist College) 5.00% 7/1/20 500,000 521,010
New York State Dormitory Authority Revenue
(Columbia University) Series A
5.00% 7/1/23 500,000 530,370
(Pratt Institute) 6.00% 7/1/20 (RADIAN) 500,000 542,755
(State University) Series B
7.50% 5/15/11 220,000 246,220
-----------
2,060,801
-----------
Hospital Revenue Bonds - 8.75%
New York State Dormitory Authority Revenue
(Mental Health) Series D
5.90% 2/15/12 25,000 26,006
(Millard Fillmore Hospital)
5.375% 2/1/32 (AMBAC) (FHA) 450,000 468,639
(North Shore Long Island
Jewish Group Project) 5.50% 5/1/33 500,000 536,515
(Winthrop South Nassau Hospital)
Series B 5.50% 7/1/23 500,000 531,095
-----------
1,562,255
-----------
Municipal Lease Revenue Bonds - 14.85%
Albany Industrial Development Agency
Civic Facility Revenue (Charitable
Leadership Project) Series A
5.75% 7/1/26 500,000 521,210
Battery Park City Authority Revenue Series A
5.00% 11/1/26 500,000 528,840
5.25% 11/1/22 485,000 527,273
New York City Industrial Development
Agency Civic Facility Revenue (American
National Red Cross Project)
5.00% 2/1/36 (AMBAC) 500,000 527,810
Tobacco Settlement Financing Series B-1C
5.50% 6/1/21 500,000 547,634
-----------
2,652,767
-----------
Parking Revenue Bonds - 3.00%
Albany Parking Authority Revenue Series A
5.625% 7/15/25 500,000 535,350
-----------
535,350
-----------
- -/-Pre-Refunded Bonds - 12.23%
Metropolitan Transportation Authority
Dedicated Tax Series A
6.125% 4/1/17-10 (FGIC) 1,000,000 1,101,230
New York City Series C
5.375% 11/15/27-07 140,000 145,975
New York State Dormitory Authority Lease
5.375% 5/15/21-13 500,000 554,575
New York State Dormitory Authority Revenue
(Mental Health) Series D
5.90% 2/15/12-07 225,000 234,709
(State University) Series B
7.50% 5/15/11-09 130,000 147,675
-----------
2,184,164
-----------
6
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Delaware Tax-Free New York Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Water & Sewer Revenue Bonds - 5.90%
New York City Municipal Water Finance
Authority Water & Sewer System Revenue
Series A 5.125% 6/15/34 $ 500,000 $ 526,345
Series B 5.00% 6/15/36 500,000 527,775
-----------
1,054,120
-----------
Total Municipal Bonds (cost $16,262,965) 17,203,553
-----------
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oVariable Rate Demand Notes - 2.24%
- --------------------------------------------------------------------------------
New York City Series E5 3.02% 8/1/15 400,000 400,000
-----------
Total Variable Rate Demand Notes
(cost $400,000) 400,000
-----------
Total Market Value of Securities - 98.57%
(cost $16,662,965) 17,603,553
Receivables and Other Assets
Net of Liabilities - 1.43% 256,072
-----------
Net Assets Applicable to 1,688,503
Shares Outstanding - 100.00% $17,859,625
===========
Net Asset Value - Delaware Tax-Free New York Fund
Class A ($13,784,698 / 1,302,619 Shares) $ 10.58
-----------
Net Asset Value - Delaware Tax-Free New York Fund
Class B ($2,794,841 / 264,631 Shares) $ 10.56
-----------
Net Asset Value - Delaware Tax-Free New York Fund
Class C ($1,280,086 / 121,253 Shares) $ 10.56
-----------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $17,139,922
Distributions in excess of net investment income (655)
Accumulated net realized loss on investments (220,230)
Net unrealized appreciation of investments 940,588
Total net assets $17,859,625
===========
- -/- Pre-Refunded Bonds. Municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is
followed by the year in which the bond is pre-refunded. See Note 8 in
"Notes to Financial Statements."
o Variable rate security. The interest rate shown is the rate as of February
28, 2006.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance
Company
FHA - Insured by the Federal Housing Administration
LOC - Letter of Credit
RADIAN - Insured by Radian Asset Assurance
Net Asset Value and Offering Price per Share -
Delaware Tax-Free New York Fund
Net asset value Class A (A) $ 10.58
Sales charge (4.50% of offering price) (B) 0.50
------------
Offering price $ 11.08
============
(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
7
- --------------------------------------------------------------------------------
Statements Six Months Ended February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF OPERATIONS
Delaware Delaware
Tax-Free Tax-Free
Florida Insured Fund New York Fund
Investment Income:
Interest $ 2,764,679 $ 417,269
Expenses:
Management fees 261,638 46,978
Distribution expenses -- Class A 120,305 16,491
Distribution expenses -- Class B 25,682 14,205
Distribution expenses -- Class C 16,420 5,151
Dividend disbursing and transfer agent fees and expenses 35,931 7,156
Accounting and administration expenses 20,931 3,417
Legal & professional fees 15,034 6,174
Reports and statements to shareholders 10,770 935
Registration fees 8,000 4,275
Trustees' fees 2,991 489
Custodian fees 2,768 878
Insurance fees 1,127 232
Pricing fees 943 500
Other 3,899 1,473
-------------------- -------------
526,439 108,354
Less expenses absorbed or waived (39,487) (37,609)
Less expense paid indirectly (1,839) (750)
-------------------- -------------
Total operating expenses 485,113 69,995
-------------------- -------------
Net Investment Income 2,279,566 347,274
-------------------- -------------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments (36,173) 2,977
Net change in unrealized appreciation/depreciation of investments (1,285,279) (177,638)
-------------------- -------------
Net Realized and Unrealized Loss on Investments (1,321,452) (174,661)
-------------------- -------------
Net Increase in Net Assets Resulting from Operations $ 958,114 $ 172,613
==================== =============
See accompanying notes
8
- --------------------------------------------------------------------------------
Statements
- --------------------------------------------------------------------------------
OF CHANGES IN NET ASSETS
Delaware Tax-Free Delaware Tax-Free
Florida Insured Fund New York Fund
Six Months Ended Year Ended Six Months Ended Year 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 $ 2,279,566 $ 4,400,282 $ 347,274 $ 685,440
Net realized gain (loss) on investments (36,173) 332,797 2,977 73,048
Net change in unrealized appreciation/depreciation of
investments (1,285,279) 426,912 (177,638) 267,666
----------------- ------------- --------------- -------------
Net increase in net assets resulting from operations 958,114 5,159,991 172,613 1,026,154
----------------- ------------- --------------- -------------
Dividends and Distributions to Shareholders from:
Net investment income:
Class A (2,125,293) (4,136,398) (279,585) (519,496)
Class B (94,082) (195,487) (49,696) (105,732)
Class C (60,191) (68,397) (17,993) (60,212)
----------------- ------------- --------------- -------------
(2,279,566) (4,400,282) (347,274) (685,440)
----------------- ------------- --------------- -------------
Capital Share Transactions:
Proceeds from shares sold:
Class A 4,917,873 8,716,486 1,433,219 1,917,681
Class B 16,916 392,192 124,193 388,800
Class C 638,989 339,297 413,196 449,842
Net assets from reorganization(1):
Class A -- 10,617,811 -- --
Class B -- 2,665,962 -- --
Class C -- 2,237,525 -- --
Net asset value of shares issued upon reinvestment of
dividends and distributions:
Class A 1,083,534 1,690,235 198,387 374,723
Class B 29,552 49,113 21,991 48,934
Class C 31,558 34,037 15,875 20,784
----------------- ------------- --------------- -------------
6,718,422 26,742,658 2,206,861 3,200,764
----------------- ------------- --------------- -------------
Cost of shares repurchased:
Class A (6,590,462) (10,965,231) (863,444) (921,789)
Class B (566,983) (2,629,629) (342,275) (335,650)
Class C (267,639) (419,581) (28,783) (1,931,944)
----------------- ------------- --------------- -------------
(7,425,084) (14,014,441) (1,234,502) (3,189,383)
----------------- ------------- --------------- -------------
Increase (decrease) in net assets derived from capital
share transactions (706,662) 12,728,217 972,359 11,381
----------------- ------------- --------------- -------------
Net Increase (Decrease) in Net Assets (2,028,114) 13,487,926 797,698 352,095
Net Assets:
Beginning of period 107,168,815 93,680,889 17,061,927 16,709,832
----------------- ------------- --------------- -------------
End of period $ 105,140,701 $ 107,168,815 $ 17,859,625 $ 17,061,927
================= ============= =============== =============
(Distributions in excess of net investment income) $ -- $ -- $ (655) $ (655)
(1) See Note 6 in "Notes to Financial Statements."
See accompanying notes
9
Financial
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund Class A
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.330 $ 11.250 $ 11.110 $ 11.330 $ 11.230 $ 10.770
Income (loss) from investment operations:
Net investment income 0.245 0.507 0.533 0.523 0.532 0.527
Net realized and unrealized gain (loss) on investments (0.140) 0.080 0.140 (0.220) 0.100 0.460
--------- -------- -------- -------- --------- --------
Total from investment operations 0.105 0.587 0.673 0.303 0.632 0.987
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.245) (0.507) (0.533) (0.523) (0.532) (0.527)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.245) (0.507) (0.533) (0.523) (0.532) (0.527)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 11.190 $ 11.330 $ 11.250 $ 11.110 $ 11.330 $ 11.230
========= ======== ======== ======== ========= ========
Total Return(3) 0.95% 5.32% 6.15% 2.68% 5.83% 9.39%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 96,523 $ 98,326 $ 87,591 $ 95,951 $ 105,773 $107,365
Ratio of expenses to average net assets 0.87% 0.88% 0.90% 0.90% 0.90% 0.90%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.94% 0.98% 0.94% 0.94% 0.99% 0.97%
Ratio of net investment income to average net assets 4.42% 4.48% 4.72% 4.60% 4.80% 4.81%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.35% 4.38% 4.68% 4.56% 4.71% 4.74%
Portfolio turnover 5% 17% 3% 26% 46% 12%
(1) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit & Accounting Guide for Investment companies
that requires amortization of all premiums and discounts on debt
securities. This change had no impact for the year ended August 31, 2002.
Per share data and ratios for periods prior to September 1, 2001 have not
been restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. Performance would have been lower had the expense
limitation not been in effect.
See accompanying notes
10
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund Class B
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.230 $ 10.770
Income (loss) from investment operations:
Net investment income 0.204 0.422 0.448 0.437 0.445 0.443
Net realized and unrealized gain (loss) on investments (0.140) 0.070 0.140 (0.210) 0.100 0.460
--------- -------- -------- -------- --------- --------
Total from investment operations 0.064 0.492 0.588 0.227 0.545 0.903
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.204) (0.422) (0.448) (0.437) (0.445) (0.443)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.204) (0.422) (0.448) (0.437) (0.445) (0.443)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 11.190 $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.230
========= ======== ======== ======== ========= ========
Total Return(3) 0.58% 4.45% 5.36% 2.00% 5.01% 8.56%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 4,943 $ 5,532 $ 5,002 $ 5,800 $ 5,223 $ 5,014
Ratio of expenses to average net assets 1.62% 1.63% 1.65% 1.65% 1.65% 1.65%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.69% 1.73% 1.69% 1.69% 1.74% 1.72%
Ratio of net investment income to average net assets 3.67% 3.74% 3.97% 3.85% 4.05% 4.06%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.60% 3.64% 3.93% 3.81% 3.96% 3.99%
Portfolio turnover 5% 17% 3% 26% 46% 12%
(1) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit & Accounting Guide for Investment companies
that requires amortization of all premiums and discounts on debt
securities. This change had no impact for the year ended August 31, 2002.
Per share data and ratios for periods prior to September 1, 2001 have not
been restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. Performance would have been lower had the expense
limitation not been in effect.
See accompanying notes
11
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund Class C
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
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 $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.240 $ 10.780
Income (loss) from investment operations:
Net investment income 0.203 0.422 0.448 0.437 0.447 0.443
Net realized and unrealized gain (loss) on investments (0.130) 0.070 0.140 (0.210) 0.090 0.460
--------- -------- -------- -------- --------- --------
Total from investment operations 0.073 0.492 0.588 0.227 0.537 0.903
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.203) (0.422) (0.448) (0.437) (0.447) (0.443)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.203) (0.422) (0.448) (0.437) (0.447) (0.443)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 11.200 $ 11.330 $ 11.260 $ 11.120 $ 11.330 $ 11.240
========= ======== ======== ======== ========= ========
Total Return(3) 0.66% 4.45% 5.36% 2.00% 4.93% 8.45%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 3,675 $ 3,311 $ 1,088 $ 846 $ 560 $ 53
Ratio of expenses to average net assets 1.62% 1.63% 1.65% 1.65% 1.65% 1.65%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.69% 1.73% 1.69% 1.69% 1.74% 1.72%
Ratio of net investment income to average net assets 3.67% 3.74% 3.97% 3.85% 4.05% 4.06%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.60% 3.64% 3.93% 3.81% 3.96% 3.99%
Portfolio turnover 5% 17% 3% 26% 46% 12%
(1) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit & Accounting Guide for Investment companies
that requires amortization of all premiums and discounts on debt
securities. This change had no impact for the year ended August 31, 2002.
Per share data and ratios for periods prior to September 1, 2001 have not
been restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. Performance would have been lower had the expense
limitation not been in effect.
See accompanying notes
12
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free New York 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 $ 10.700 $ 10.470 $ 10.220 $ 10.340 $ 10.350 $ 9.820
Income (loss) from investment operations:
Net investment income 0.222 0.453 0.479 0.484 0.503 0.523
Net realized and unrealized gain (loss) on investments (0.120) 0.230 0.250 (0.120) (0.010) 0.530
--------- -------- -------- -------- --------- --------
Total from investment operations 0.102 0.683 0.729 0.364 0.493 1.053
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.222) (0.453) (0.479) (0.484) (0.503) (0.523)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.222) (0.453) (0.479) (0.484) (0.503) (0.523)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.580 $ 10.700 $ 10.470 $ 10.220 $ 10.340 $ 10.350
========= ======== ======== ======== ========= ========
Total Return(3) 0.97% 6.65% 7.26% 3.56% 4.98% 11.03%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 13,785 $ 13,153 $ 11,523 $ 11,436 $ 9,490 $ 10,169
Ratio of expenses to average net assets(4) 0.65% 0.66% 0.50% 0.50% 0.50% 0.50%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.09% 1.12% 1.02% 1.05% 1.15% 1.02%
Ratio of net investment income to average net assets 4.24% 4.29% 4.60% 4.65% 4.98% 5.23%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.80% 3.83% 4.08% 4.10% 4.33% 4.71%
Portfolio turnover 23% 13% 26% 64% 43% 27%
(1) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit & Accounting Guide for Investment companies
that requires amortization of all premiums and discounts on debt
securities. This change had no impact for the year ended August 31, 2002.
Per share data and ratios for periods prior to September 1, 2001 have not
been restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. Performance would have been lower had the expense
limitation not been in effect.
(4) Ratios for the years ended August 31, 2003 and 2002, including fees paid
indirectly in accordance with Securities and Exchange Commission rules,
were 0.51%.
See accompanying notes
13
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free New York 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 $ 10.670 $ 10.450 $ 10.200 $ 10.330 $ 10.330 $ 9.810
Income (loss) from investment operations:
Net investment income 0.183 0.374 0.401 0.406 0.426 0.448
Net realized and unrealized gain (loss) on investments (0.110) 0.220 0.250 (0.130) -- 0.520
--------- -------- -------- -------- --------- --------
Total from investment operations 0.073 0.594 0.651 0.276 0.426 0.968
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.183) (0.374) (0.401) (0.406) (0.426) (0.448)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.183) (0.374) (0.401) (0.406) (0.426) (0.448)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.560 $ 10.670 $ 10.450 $ 10.200 $ 10.330 $ 10.330
========= ======== ======== ======== ========= ========
Total Return(3) 0.70% 5.77% 6.47% 2.69% 4.30% 10.12%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 2,795 $ 3,023 $ 2,858 $ 3,238 $ 3,352 $ 2,507
Ratio of expenses to average net assets(4) 1.40% 1.41% 1.25% 1.25% 1.25% 1.25%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.84% 1.87% 1.77% 1.80% 1.90% 1.77%
Ratio of net investment income to average net assets 3.49% 3.54% 3.85% 3.90% 4.23% 4.48%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.05% 3.08% 3.33% 3.35% 3.58% 3.96%
Portfolio turnover 23% 13% 26% 64% 43% 27%
(1) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit & Accounting Guide for Investment companies
that requires amortization of all premiums and discounts on debt
securities. This change had no impact for the year ended August 31, 2002.
Per share data and ratios for periods prior to September 1, 2001 have not
been restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. Performance would have been lower had the expense
limitation not been in effect.
(4) Ratios for the years ended August 31, 2003 and 2002, including fees paid
indirectly in accordance with Securities and Exchange Commission rules,
were 1.26%.
See accompanying notes
14
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free New York 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 $ 10.670 $ 10.450 $ 10.200 $ 10.320 $ 10.330 $ 9.800
Income (loss) from investment operations:
Net investment income 0.183 0.376 0.401 0.406 0.426 0.449
Net realized and unrealized gain (loss) on investments (0.110) 0.220 0.250 (0.120) (0.010) 0.530
--------- -------- -------- -------- --------- --------
Total from investment operations 0.073 0.596 0.651 0.286 0.416 0.979
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.183) (0.376) (0.401) (0.406) (0.426) (0.449)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.183) (0.376) (0.401) (0.406) (0.426) (0.449)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.560 $ 10.670 $ 10.450 $ 10.200 $ 10.320 $ 10.330
========= ======== ======== ======== ========= ========
Total Return(3) 0.70% 5.80% 6.47% 2.79% 4.20% 10.23%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 1,280 $ 886 $ 2,329 $ 2,828 $ 1,115 $ 1,206
Ratio of expenses to average net assets(4) 1.40% 1.41% 1.25% 1.25% 1.25% 1.25%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.84% 1.87% 1.77% 1.80% 1.90% 1.77%
Ratio of net investment income to average net assets 3.49% 3.54% 3.85% 3.90% 4.23% 4.48%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.05% 3.08% 3.33% 3.35% 3.58% 3.96%
Portfolio turnover 23% 13% 26% 64% 43% 27%
(1) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit & Accounting Guide for Investment companies
that requires amortization of all premiums and discounts on debt
securities. This change had no impact for the year ended August 31, 2002.
Per share data and ratios for periods prior to September 1, 2001 have not
been restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. Performance would have been lower had the expense
limitation not been in effect.
(4) Ratios for the years ended August 31, 2003 and 2002, including fees paid
indirectly in accordance with Securities and Exchange Commission rules,
were 1.26%.
See accompanying notes
15
- --------------------------------------------------------------------------------
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. Delaware
Investments Municipal Trust (the "Trust") (formerly Voyageur Investment Trust)
is organized as a Delaware statutory trust and offers three series: Delaware
Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund and
Delaware Tax-Free Oregon Insured Fund. These financial statements and the
related notes pertain to Delaware Tax-Free Florida Insured Fund and Delaware
Tax-Free New York Fund (referred to as a "Fund" or, collectively, the "Funds").
The 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%. Class B shares are sold with a contingent deferred
sales charge that declines from 4% to zero depending upon the period of time the
shares are held. Class B shares will automatically convert to Class A shares on
a quarterly basis approximately eight years after purchase. Class C shares are
sold with a contingent deferred sales charge of 1%, if redeemed during the first
twelve months.
The investment objective of Delaware Tax-Free Florida Insured Fund and Delaware
Tax-Free New York Fund is to seek a high a level of current income exempt from
federal income tax and the state personal income tax in their respective states,
as is consistent with preservation of capital.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation -- Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of each Fund's Board of
Trustees. 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."
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 Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
--------------- --------
On the first $500 million 0.500% 0.550%
On the next $500 million 0.475% 0.500%
On the next $1.5 billion 0.450% 0.450%
In excess of $2.5 billion 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 Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
--------------- ---------
The operating expense limitation as a
percentage of average daily
net assets (per annum) 0.62% 0.40%
Expiration date 12/29/05 12/29/05
Effective December 30, 2005,
operating expense limitation as a
percentage of average daily
net assets (per annum) 0.61% 0.40%
Expiration date 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 also 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.
16
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
2. Investment Management, Administration Agreements and Other Transactions
with Affiliates (continued)
At February 28, 2006, the Funds had liabilities payable to affiliates as
follows:
Delaware Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
--------------- --------
Investment management
fee payable to DMC $ 33,105 $ 1,389
Dividend disbursing,
transfer agent,
accounting and
administration fees
and other expenses
payable to DSC 20,345 4,675
Distribution fee payable
to DDLP 22,097 5,472
Other expenses payable
to DMC and affiliates* 11,249 1,104
* 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 for internal legal services provided by DMC as follows:
Delaware Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
--------------- --------
$3,904 $636
For the six months ended February 28, 2006, DDLP earned commissions on sales of
Class A shares for each Fund as follows:
Delaware Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
--------------- --------
$9,573 $3,939
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. These commissions were entirely used to offset up-front
commissions previously paid by DDLP to broker-dealers on sales of those shares.
The amounts received were as follows:
Delaware Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
--------------- --------
Class A $ 37 $ --
Class B -- 1,178
Class C 509 99
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 Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
--------------- ----------
Purchases $2,611,265 $2,395,787
Sales 3,401,604 1,872,599
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 Delaware
Tax-Free Tax-Free
Florida Insured New York
Fund Fund
------------- ------------
Cost of investments $ 98,000,827 $ 16,662,965
============= ============
Aggregate unrealized appreciation 5,443,753 951,114
Aggregate unrealized depreciation (19,506) (10,526)
------------- ------------
Net unrealized appreciation $ 5,424,247 $ 940,588
============= ============
17
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from 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
Florida Insured Fund New York Fund
----------------------- ----------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/06* 8/31/05 2/28/06* 8/31/05
---------- ---------- --------- ----------
Tax-exempt income $2,279,566 $4,400,282 $347,274 $685,440
* Tax information for the six months ended February 28, 2006 is an estimate
and the tax character of dividends and distributions may be redesignated
at fiscal year end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of February 28, 2006, the
estimated components of net assets on a tax basis were as follows:
Delaware Tax-Free Delaware Tax-Free
Florida Insured Fund New York Fund
-------------------- -----------------
Shares of beneficial interest $ 100,442,884 $ 17,139,922
Distributions in excess of net
investment income -- (655)
Capital loss carryforwards (690,257) (223,207)
Six month period realized
gains (losses) (36,173) 6,847
Post-October losses -- (3,870)
Unrealized appreciation of investments 5,424,247 940,588
------------- ------------
Net assets $ 105,140,701 $ 17,859,625
============= ============
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 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:
Year of Delaware Tax-Free Delaware Tax-Free
Expiration Florida Insured Fund New York Fund
- ---------- -------------------- ------------------
2008 $ 690,257 $ --
2009 -- 223,207
--------- ---------
Total $ 690,257 $ 223,207
========= =========
For the six months ended February 28, 2006, the Delaware Tax-Free Florida
Insured Fund had capital losses of $36,173, which may increase the capital loss
carryforwards and Delaware Tax-Free New York Fund had capital gains of $6,847,
which may reduce the capital loss carryforwards.
18
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
5. Capital Shares
Transactions in capital shares were as follows:
Delaware Tax-Free Delaware Tax-Free
Florida Insured Fund New York 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 440,430 771,683 136,003 181,145
Class B 1,506 34,695 11,823 36,925
Class C 57,223 30,020 39,481 42,532
Shares issued from reorganization:
Class A -- 948,019 -- --
Class B -- 238,033 -- --
Class C -- 199,779 -- --
Shares issued upon reinvestment of
dividends and distributions:
Class A 96,888 149,719 18,793 35,395
Class B 2,642 4,348 2,088 4,632
Class C 2,821 3,014 1,508 1,966
---------- ---------- ---------- --------
601,510 2,379,310 209,696 302,595
---------- ---------- ---------- --------
Shares repurchased:
Class A (590,637) (973,048) (81,929) (87,166)
Class B (50,738) (233,220) (32,514) (31,706)
Class C (23,936) (37,307) (2,740) (184,316)
---------- ---------- ---------- --------
(665,311) (1,243,575) (117,183) (303,188)
---------- ---------- ---------- --------
Net increase (decrease) (63,801) (1,135,735) 92,513 (593)
---------- ---------- ---------- --------
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 table above and the Statements of Changes in Net Assets.
Six Months Ended Year Ended
2/28/06 8/31/05
------------------------------------------ --------------------------------------------
Class B Shares Class A Shares Value Class B Shares Class A Shares Value
-------------- -------------- -------- -------------- -------------- ----------
Delaware Tax-Free Florida Insured Fund 22,302 22,322 $249,796 62,454 62,490 $ 703,111
Delaware Tax-Free New York Fund 15,906 15,860 166,696 8,994 8,977 95,273
6. Fund Reorganization
Effective April 11, 2005, Delaware Tax-Free Florida Insured Fund (the "Fund")
acquired all of the assets and assumed all of the liabilities of Delaware
Tax-Free Florida Fund, an open-end investment company, pursuant to a Plan and
Agreement of Reorganization (the "Reorganization"). The shareholders of Delaware
Tax-Free Florida Fund received shares of the respective class of the Fund equal
to the aggregate net asset value of their shares prior to the Reorganization
based on the net asset value per share of the respective classes of the Fund.
The Reorganization was treated as a non-taxable event and, accordingly, the
Fund's basis in the securities acquired reflected the historical cost basis as
of the date of transfer. The net assets, net unrealized appreciation and
accumulated net realized loss of Delaware Tax-Free Florida Fund as of the close
of business on April 8, 2005 were as follows:
Accumulated
Net Unrealized Net Realized
Net Assets Appreciation Losses
----------- -------------- ------------
Delaware Tax-Free Florida Fund $15,521,298 $648,070 $(515,360)*
* Includes prior capital loss carry forwards.
The net assets of the Fund prior to the Reorganization were $92,098,392. The
combined net assets of the Fund after the reorganization were $107,619,690.
7. Line of Credit
Each Fund, along with certain other funds in the Delaware Investments(R) 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 six month period.
19
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
8. Credit and Market Risk
The Funds concentrate their investments in securities issued by each
corresponding state's municipalities. The value of these investments may be
adversely affected by new legislation within the states, regional or local
economic conditions, and differing levels of supply and demand for municipal
bonds. Many municipalities insure repayment for their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that market value may fluctuate for other reasons and
there is no assurance that the insurance company will meet its obligations.
These securities have been identified in the Statements of Net Assets.
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 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 that time,
including any required premium. Bonds become "defeased" when the rights and
interests of the bondholders and of their lien on the pledged revenues or other
security under the terms of the bond contract and are substituted with an
alternative source of revenues (the escrow securities) sufficient to meet
payments of principal and interest to maturity or to the first call dates.
Escrowed secured bonds will often receive a rating of AAA from Moody's Investors
Service, Inc., Standard & Poor's Ratings Group, and/or Fitch due to the strong
credit quality of the escrow securities and the irrevocable nature of the escrow
deposit agreement. The Delaware Tax-Free Florida 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 up to 15% 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 and no securities have
been determined to be illiquid under the Funds' Liquidity Procedures.
9. Contractual Obligations
The Funds enter into contracts in the normal course of business that contain a
variety of indemnifications. The Funds' maximum exposure under these
arrangements is unknown. However, the Funds have not had prior claims or losses
pursuant to these contracts. Management has reviewed each Fund's existing
contracts and expects the risk of loss to be remote.
20
- --------------------------------------------------------------------------------
About
- --------------------------------------------------------------------------------
THE ORGANIZATION
This semiannual report is for the information of Delaware Tax-Free Florida
Insured Fund and Delaware Tax-Free New York Fund shareholders, but it may be
used with prospective investors when preceded or accompanied by a current
prospectus for Delaware Tax-Free Florida Insured Fund and Delaware Tax-Free New
York 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 Fund 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 Fund Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
- --------------------------------------------------------------------------------
21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[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.
- --------------------------------------------------------------------------------
(330) Printed in the USA
SA-FLNY [2/06] CGI 4/06 SEMI-0603 FLNY PO10934
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[DELAWARE INVESTMENTS(R) LOGO]
FIXED INCOME
- --------------------------------------------------------------------------------
Semiannual Report FEBRUARY 28, 2006
- --------------------------------------------------------------------------------
DELAWARE TAX-FREE IDAHO FUND
DELAWARE TAX-FREE MISSOURI INSURED FUND
(Closed to new investors)
DELAWARE TAX-FREE OREGON INSURED FUND
(Closed to new investors)
[POWERED BY RESEARCH(R) LOGO]
Table
OF CONTENTS
- ------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES 1
- ------------------------------------------------------------
SECTOR ALLOCATIONS 2
- ------------------------------------------------------------
FINANCIAL STATEMENTS:
Statements of Net Assets 4
Statements of Operations 13
Statements of Changes in Net Assets 14
Financial Highlights 15
Notes to Financial Statements 24
- ------------------------------------------------------------
OTHER FUND INFORMATION 28
- ------------------------------------------------------------
ABOUT THE ORGANIZATION 29
- ------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Disclosure For the Period September 1, 2005 to February 28, 2006
- --------------------------------------------------------------------------------
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 Fund's annualized expense ratio,
multiplied by the average account value over the period, multiplied by the
181/365 (to reflect the one-half year period).
Delaware Tax-Free Idaho 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
- -------------------------------------------------------------------------------------------------------
Actual Fund Return
Class A $ 1,000.00 $ 1,007.40 0.85% $ 4.23
Class B 1,000.00 1,004.60 1.60% 7.95
Class C 1,000.00 1,003.70 1.60% 7.95
- -------------------------------------------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.58 0.85% $ 4.26
Class B 1,000.00 1,016.86 1.60% 8.00
Class C 1,000.00 1,016.86 1.60% 8.00
- -------------------------------------------------------------------------------------------------------
Delaware Tax-Free Missouri 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
- -------------------------------------------------------------------------------------------------------
Actual Fund Return
Class A $ 1,000.00 $ 1,008.80 0.90% $ 4.48
Class B 1,000.00 1,006.10 1.65% 8.21
Class C 1,000.00 1,006.00 1.65% 8.21
- -------------------------------------------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.33 0.90% $ 4.51
Class B 1,000.00 1,016.61 1.65% 8.25
Class C 1,000.00 1,016.61 1.65% 8.25
- -------------------------------------------------------------------------------------------------------
Delaware Tax-Free Oregon 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
- -------------------------------------------------------------------------------------------------------
Actual Fund Return
Class A $ 1,000.00 $ 1,007.00 0.85% $ 4.23
Class B 1,000.00 1,003.30 1.60% 7.95
Class C 1,000.00 1,003.30 1.60% 7.95
- -------------------------------------------------------------------------------------------------------
Hypothetical 5% Return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.58 0.85% $ 4.26
Class B 1,000.00 1,016.86 1.60% 8.00
Class C 1,000.00 1,016.86 1.60% 8.00
- -------------------------------------------------------------------------------------------------------
1
- --------------------------------------------------------------------------------
Sector Allocations As of February 28, 2006
- --------------------------------------------------------------------------------
Sector designations may be different than the sector designations presented in
other Fund materials.
Delaware Tax-Free Idaho Fund
Percentage
Sector of Net Assets
- ---------------------------------------------------------------
Municipal Bonds 98.75%
- ---------------------------------------------------------------
Corporate-Backed Revenue Bonds 7.20%
Dedicated Tax & Fees Revenue Bonds 8.98%
Electric & Gas Revenue Bonds 1.79%
Escrowed to Maturity Bonds 2.15%
Higher Education Revenue Bonds 14.13%
Hospital Revenue Bonds 5.37%
Multifamily Housing Revenue Bonds 1.10%
Municipal Lease Revenue Bonds 8.91%
Political Subdivision General Obligation Bonds 5.62%
Pre-Refunded Bonds 7.95%
School District General Obligation Bonds 15.16%
Single Family Housing Revenue Bonds 5.79%
State General Obligation Bonds 1.24%
Tax Increment/Special Assessment Bonds 5.38%
Territorial General Obligation Bonds 5.07%
Water & Sewer Revenue Bonds 2.91%
- ---------------------------------------------------------------
Short-Term Investments 1.53%
- ---------------------------------------------------------------
Money Market Instruments 0.17%
Variable Rate Demand Notes 1.36%
- ---------------------------------------------------------------
Total Market Value of Securities 100.28%
- ---------------------------------------------------------------
Liabilities Net of Receivables and Other Assets (0.28%)
- ---------------------------------------------------------------
Total Net Assets 100.00%
- ---------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund
(Closed to new investors)
Percentage
Sector of Net Assets
- ---------------------------------------------------------------
Municipal Bonds 91.25%
- ---------------------------------------------------------------
Airport Revenue Bonds 3.45%
City General Obligation Bonds 2.18%
Corporate-Backed Revenue Bonds 2.03%
Dedicated Tax & Fees Revenue Bonds 8.18%
Electric & Gas Revenue Bonds 13.45%
Escrowed to Maturity Bonds 3.05%
Higher Education Revenue Bonds 3.06%
Hospital Revenue Bonds 11.78%
Multifamily Housing Revenue Bonds 5.95%
Municipal Lease Revenue Bonds 14.10%
Political Subdivision General Obligation Bonds 3.89%
Pre-Refunded Bonds 6.27%
School District General Obligation Bonds 4.00%
Single Family Housing Revenue Bonds 1.46%
Territorial General Obligation Bonds 2.52%
Water & Sewer Revenue Bonds 5.88%
- ---------------------------------------------------------------
Short-Term Investments 7.83%
- ---------------------------------------------------------------
Money Market Instruments 0.99%
Variable Rate Demand Notes 6.84%
- ---------------------------------------------------------------
Total Market Value of Securities 99.08%
- ---------------------------------------------------------------
Receivables and Other Assets Net of Liabilities 0.92%
- ---------------------------------------------------------------
Total Net Assets 100.00%
- ---------------------------------------------------------------
2
- --------------------------------------------------------------------------------
Sector Allocations (CONTINUED) As of February 28, 2006
- --------------------------------------------------------------------------------
Sector designations may be different than the sector designations presented in
other Fund materials.
Delaware Tax-Free Oregon Insured Fund
(Closed to new investors)
Percentage
Sector of Net Assets
- ---------------------------------------------------------------
Municipal Bonds 96.03%
- ---------------------------------------------------------------
Airport Revenue Bonds 3.33%
Dedicated Tax & Fees Revenue Bonds 1.16%
Electric & Gas Revenue Bonds 7.46%
Escrowed to Maturity Bonds 2.35%
Higher Education Revenue Bonds 15.27%
Hospital Revenue Bonds 1.17%
Investor Owned Utilities Revenue Bonds 1.34%
Multifamily Housing Revenue Bonds 2.37%
Municipal Lease Revenue Bonds 8.82%
Political Subdivision General Obligation Bonds 5.12%
Pre-Refunded Bonds 25.88%
School District General Obligation Bonds 11.21%
Single Family Housing Revenue Bonds 2.65%
Tax Increment/Special Assessment Bonds 2.70%
Territorial General Obligation Bonds 4.45%
Water & Sewer Revenue Bonds 0.75%
- ---------------------------------------------------------------
Short-Term Investments 3.04%
- ---------------------------------------------------------------
Money Market Instruments 0.77%
Variable Rate Demand Notes 2.27%
- ---------------------------------------------------------------
Total Market Value of Securities 99.07%
- ---------------------------------------------------------------
Receivables and Other Assets Net of Liabilities 0.93%
- ---------------------------------------------------------------
Total Net Assets 100.00%
- ---------------------------------------------------------------
3
- --------------------------------------------------------------------------------
Delaware Tax-Free Idaho Fund
Statements February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF NET ASSETS
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 98.75%
- --------------------------------------------------------------------------------
Corporate-Backed Revenue Bonds - 7.20%
Meridian Economic Development
Corporation Revenue Refunding
Industrial Development
(Hi-Micro Project)
5.85% 8/15/11 (AMT) $ 1,250,000 $ 1,258,975
Nez Perce County Pollution Control
Revenue Refunding
(Potlatch Corporation Project)
6.00% 10/1/24 2,535,000 2,592,317
Power County Pollution Control
Revenue Refunding
(FMC Corporation Project)
5.625% 10/1/14 2,475,000 2,514,179
-------------
6,365,471
-------------
Dedicated Tax & Fees Revenue Bonds - 8.98%
Idaho Bond Bank Authority Revenue
Series A
5.00% 9/1/14 (AMBAC) 350,000 382,365
5.00% 9/1/15 (AMBAC) 400,000 435,464
5.00% 9/1/16 (AMBAC) 315,000 341,901
Puerto Rico Commonwealth Highway &
Transportation Authority Revenue
Series G 5.00% 7/1/33 2,000,000 2,055,520
Series W 5.50% 7/1/15 175,000 193,130
Series Y 5.00% 7/1/36 2,000,000 2,071,800
Virgin Islands Public Finance Authority
5.25% 10/1/20 500,000 538,825
5.25% 10/1/21 500,000 539,200
5.25% 10/1/24 800,000 857,944
5.50% 10/1/14 500,000 522,720
-------------
7,938,869
-------------
Electric & Gas Revenue Bonds - 1.79%
Puerto Rico Electric Power Authority
Power Revenue
Series II 5.25% 7/1/31 1,000,000 1,057,920
Series NN 5.125% 7/1/29 500,000 527,605
-------------
1,585,525
-------------
Escrowed to Maturity Bonds - 2.15%
Puerto Rico Commonwealth Infrastructure
Financing Authority Special
Series A 5.375% 10/1/24 1,750,000 1,897,123
-------------
1,897,123
-------------
Higher Education Revenue Bonds - 14.13%
Boise State University Idaho Revenue
5.00% 4/1/17 (AMBAC) 500,000 534,250
5.00% 4/1/18 (FGIC) 1,645,000 1,772,438
5.125% 4/1/31 (FGIC) 1,000,000 1,050,320
5.375% 4/1/22 (FGIC) 1,000,000 1,082,470
Idaho State University Revenue
Refunding and Improvement
5.00% 4/1/20 (FSA) 1,130,000 1,203,800
5.00% 4/1/23 (FSA) 2,115,000 2,239,700
North Idaho College Dormitory Housing
Certificate of Participation
6.45% 10/1/16 1,000,000 1,031,950
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Higher Education Revenue Bonds (continued)
University of Idaho University Revenue
Refunding General Series A
5.00% 4/1/21 (AMBAC) $ 1,150,000 $ 1,240,988
University of Idaho University
Revenue Student Fee
(Housing Improvements Project)
5.25% 4/1/31 (FGIC) 2,195,000 2,332,122
-------------
12,488,038
-------------
Hospital Revenue Bonds - 5.37%
Idaho Health Facilities Authority
Hospital Revenue
(Idaho Elks Rehabilitation
Hospital Project)
5.30% 7/15/18 625,000 641,300
5.45% 7/15/23 2,000,000 2,050,800
(Portneuf Medical Center Project)
Series A 5.00% 9/1/35 (RADIAN) 2,000,000 2,049,560
-------------
4,741,660
-------------
Multifamily Housing Revenue Bonds - 1.10%
Idaho State Housing Agency
Housing Revenue (Park Place Project)
Series A 6.50% 12/1/36 (FHA) (AMT) 955,000 969,659
-------------
969,659
-------------
Municipal Lease Revenue Bonds - 8.91%
Blaine School District #61
Certificate of Participation
5.00% 7/30/10 (AMBAC) 1,000,000 1,057,660
Boise City Certificate of Participation
5.375% 9/1/20 (FGIC) (AMT) 2,100,000 2,208,738
Boise City Revenue Refunding Series A
5.375% 12/1/31 (MBIA) 500,000 537,730
Idaho State Building Authority
Building Revenue Series A
5.00% 9/1/21 (MBIA) 1,150,000 1,188,008
5.00% 9/1/43 (XLCA) 1,000,000 1,039,640
Series B 5.00% 9/1/21 (MBIA) 750,000 793,320
Puerto Rico Public Buildings
Authority Revenue (Government Facilities)
Series J 5.00% 7/1/28 1,000,000 1,051,180
-------------
7,876,276
-------------
Political Subdivision General Obligation Bonds - 5.62%
Lemhi County 5.20% 8/1/27 (FSA) 2,145,000 2,287,664
Nampa Idaho 5.00% 8/1/21 (FGIC) 2,475,000 2,676,762
-------------
4,964,426
-------------
- -/-Pre-Refunded Bonds - 7.95%
Ammon Urban Renewal Agency
Revenue Sub Lien Tax Increment
Series B 6.25% 8/1/18-06 445,000 450,438
Idaho Health Facilities Authority
Hospital Revenue
(Bannock Regional Medical Center Project)
6.375% 5/1/17-06 1,445,000 1,480,822
(Bonner General Hospital Project)
6.50% 10/1/28-07 1,500,000 1,595,595
4
- --------------------------------------------------------------------------------
Delaware Tax-Free Idaho Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
- -/-Pre-Refunded Bonds (continued)
Puerto Rico Commonwealth
Highway & Transportation Authority
Highway Revenue
Series D 5.25% 7/1/38-12 $ 1,000,000 $ 1,090,100
Puerto Rico Commonwealth Public
Improvement Series A
5.125% 7/1/31-11 1,010,000 1,088,012
University of Idaho University
Revenue Student Fee
(Telecommunications)
5.85% 4/1/11-06 (FSA) 1,300,000 1,315,938
-------------
7,020,905
-------------
School District General Obligation Bonds - 15.16%
Ada & Canyon Counties Joint
School District #2 Meridian
4.75% 2/15/20 1,000,000 1,056,400
5.00% 7/30/20 2,155,000 2,295,399
5.125% 7/30/19 1,005,000 1,077,561
5.50% 7/30/16 1,305,000 1,492,959
Bannock County School District #025
(Pocatello Idaho School Board
Guaranteed Program)
5.00% 8/15/15 1,040,000 1,134,307
5.00% 8/15/16 1,100,000 1,196,085
Canyon County School District #132 Caldwell
5.00% 7/30/15 (FGIC) 2,000,000 2,193,840
Kootenai County School
District #273 Post Falls
5.00% 8/15/16 740,000 809,160
5.00% 8/15/18 840,000 914,264
Power & Cassia Counties Joint School
District #381 American Falls
5.00% 8/1/17 1,155,000 1,226,113
-------------
13,396,088
-------------
Single Family Housing Revenue Bonds - 5.79%
Idaho Housing & Finance Association
Single Family Mortgage
Series A Class III 4.875%7/1/26 (AMT) 1,000,000 1,007,080
Series C Class III 5.35% 1/1/25 (AMT) 355,000 365,586
Series D Class III 5.45% 7/1/23 (AMT) 1,450,000 1,509,189
Series E Class I 5.35% 1/1/33 (AMT) 90,000 92,678
Series E Class III 4.875% 1/1/26 (AMT) 1,500,000 1,509,015
Idaho State Housing Agency
Single Family Mortgage
Series A 6.05% 7/1/13
(AMBAC) (FHA) (VA) (AMT) 60,000 60,377
Series A 6.10% 7/1/16 (FHA) (VA) (AMT) 80,000 80,517
Series A-1 6.85% 7/1/12 (AMT) 5,000 5,043
Series B 6.45% 7/1/15 (FHA) (VA) (AMT) 30,000 30,116
Series C-2 6.35% 7/1/15 (AMT) 45,000 45,500
Series E 6.35% 7/1/15 (FHA) (AMT) 75,000 76,443
Series E-1 6.60% 7/1/11 15,000 15,116
Series G-2 6.15% 7/1/15 (FHA) (VA) (AMT) 315,000 317,044
-------------
5,113,704
-------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
State General Obligation Bonds - 1.24%
Puerto Rico Public Buildings Authority
Revenue Government Facility Series I
5.50% 7/1/23 $ 1,000,000 $ 1,096,530
-------------
1,096,530
-------------
Tax Increment/Special Assessment Bonds - 5.38%
Boise Urban Renewal Agency Parking
Revenue Refunding Tax Increment
Series A 6.125% 9/1/15 2,090,000 2,149,482
Series B 6.125% 9/1/15 1,700,000 1,748,382
Bonner County Local Improvement
District #93-1
6.35% 4/30/06 185,000 185,740
6.40% 4/30/07 195,000 195,774
6.50% 4/30/08 110,000 110,444
6.50% 4/30/10 100,000 100,383
Coeur D'Alene Local Improvement District #6
Series 1995 6.00% 7/1/09 85,000 85,550
Series 1996 6.05% 7/1/10 90,000 90,591
Series 1997 6.10% 7/1/12 40,000 40,251
Series 1998 6.10% 7/1/14 45,000 45,278
-------------
4,751,875
-------------
Territorial General Obligation Bonds - 5.07%
Puerto Rico Commonwealth Public
Improvement Series A
5.00% 7/1/30 2,000,000 2,102,360
5.125% 7/1/31 2,315,000 2,381,765
-------------
4,484,125
-------------
Water & Sewer Revenue Bonds - 2.91%
Chubbuck Water Revenue
Certificate of Participation
6.35% 4/1/08 125,000 125,256
6.40% 4/1/10 135,000 135,269
Moscow Sewer Revenue
5.00% 11/1/22 (FSA) 2,175,000 2,312,068
-------------
2,572,593
-------------
Total Municipal Bonds (cost $84,462,736) 87,262,867
=============
Number
of Shares
- --------------------------------------------------------------------------------
Short-Term Investments - 1.53%
- --------------------------------------------------------------------------------
Money Market Instruments - 0.17%
Dreyfus Tax-Exempt Cash Management Fund 154,300 154,300
-------------
154,300
-------------
Principal
Amount
o Variable Rate Demand Notes - 1.36%
Boise City Housing Authority
Multifamily Revenue
(Civic Plaza Housing Project)
Series C 3.28% 3/1/33 $ 1,200,000 1,200,000
-------------
1,200,000
-------------
Total Short-Term Investments (cost $1,354,300) 1,354,300
=============
5
- --------------------------------------------------------------------------------
Delaware Tax-Free Idaho Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Market Value of Securities - 100.28%
(cost $85,817,036) $ 88,617,167
Liabilities Net of Receivables and
Other Assets - (0.28%) (251,361)
-------------
Net Assets Applicable to 7,691,141 Shares
Outstanding - 100.00% $ 88,365,806
=============
Net Asset Value - Delaware Tax-Free Idaho Fund
Class A ($63,819,771 / 5,553,313 Shares) $ 11.49
-------------
Net Asset Value - Delaware Tax-Free Idaho Fund
Class B ($9,713,869 / 846,520 Shares) $ 11.48
-------------
Net Asset Value - Delaware Tax-Free Idaho Fund
Class C ($14,832,166 / 1,291,308 Shares) $ 11.49
-------------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 85,940,108
Distributions in excess of net investment income (11,301)
Accumulated net realized loss on investments (363,132)
Net unrealized appreciation of investments 2,800,131
-------------
Total net assets $ 88,365,806
=============
o Variable rate security. The interest rate shown is the rate as of February
28, 2006.
- -/- 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."
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHA -Insured by the Federal Housing Administration
FSA - Insured by Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
VA - Insured by the Veterans Administration
XLCA - Insured by XL Capital Assurance
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Idaho Fund
Net asset value Class A (A) $ 11.49
Sales charge (4.50% of offering price) (B) 0.54
-------------
Offering price $ 12.03
=============
(A) Net asset value per share, as illustrated, is the amount which would be
paid upon redemption or repurchase of shares.
(B) See current prospectus for purchases of $100,000 or more.
See accompanying notes
6
- --------------------------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund
Statements February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 91.25%
- --------------------------------------------------------------------------------
Airport Revenue Bonds - 3.45%
St. Louis Airport
(Capital Improvement Project)
Series A 5.375% 7/1/21 (MBIA) $ 1,635,000 $ 1,763,527
-------------
1,763,527
-------------
City General Obligation Bonds - 2.18%
Des Peres Refunding
5.375% 2/1/20 (AMBAC) 1,000,000 1,112,240
-------------
1,112,240
-------------
Corporate-Backed Revenue Bonds - 2.03%
Missouri State Development Finance Board
Infrastructure Facilities
(Triumph Foods Project)
Series A 5.25% 3/1/25 500,000 520,750
Sugar Creek Industrial Development Revenue
(Lafarge North America Project)
Series A 5.65% 6/1/37 (AMT) 500,000 519,840
-------------
1,040,590
-------------
Dedicated Tax & Fees Revenue Bonds - 8.18%
Bi-State Development Agency Illinois
Metropolitan District
(Metrolink Cross County Project)
Series B 5.00% 10/1/32 (FSA) 2,000,000 2,101,020
Jackson County Special Obligation
5.00% 12/1/27 (MBIA) 1,000,000 1,045,090
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue Series A 4.75% 7/1/38 (MBIA) 1,000,000 1,039,290
-------------
4,185,400
-------------
Electric & Gas Revenue Bonds - 13.45%
Missouri State Environmental
Improvement & Energy Resource
Authority Pollution Control
Revenue Refunding (St. Joseph Light &
Power Company Project)
5.85% 2/1/13 (AMBAC) 2,200,000 2,226,466
Puerto Rico Electric Power
Authority Power Revenue
Series NN 5.125% 7/1/29 400,000 422,084
Series PP 5.00% 7/1/25 (FGIC) 1,000,000 1,064,080
&Puerto Rico Electric Power Authority
Power Revenue, Inverse Floater
ROLs 5.635% 7/1/19 (FSA) 1,925,000 2,023,233
Sikeston Electric Revenue Refunding
6.00% 6/1/13 (MBIA) 1,000,000 1,143,120
-------------
6,878,983
-------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Escrowed to Maturity Bonds - 3.05%
Cape Girardeau County Industrial
Development Authority Health
Care Facilities Revenue
(Southeast Missouri Hospital)
5.25% 6/1/16 (MBIA) $ 440,000 $ 481,228
^Greene County Single Family Mortgage
Revenue Municipal Multiplier
(Private Mortgage Insurance)
6.10% 3/1/16 1,225,000 812,481
Liberty Sewer System Revenue
6.00% 2/1/08 (MBIA) 260,000 267,665
-------------
1,561,374
-------------
Higher Education Revenue Bonds - 3.06%
Missouri State Health & Educational
Facilities Authority Educational
Facilities Revenue
(University of Health Sciences)
5.00% 6/1/31 (MBIA) 1,000,000 1,035,660
University of the Virgin Islands
Series A 5.375% 6/1/34 500,000 528,415
-------------
1,564,075
-------------
Hospital Revenue Bonds - 11.78%
Cape Girardeau County Industrial
Development Authority Health Care
Facilities Revenue Unrefunded Balance
(Southeast Missouri Hospital)
5.25% 6/1/16 (MBIA) 560,000 606,620
(St. Francis Medical Center)
Series A 5.50% 6/1/32 1,000,000 1,063,240
Hannibal Industrial Development Authority
Health Facilities Revenue Refunding
(Hannibal Regional Hospital) Series A
5.625% 3/1/12 (FSA) 1,000,000 1,021,660
5.75% 3/1/22 (FSA) 1,000,000 1,021,740
Joplin Industrial Development Authority
Health Facilities Revenue
(Freeman Health System Project)
5.375% 2/15/35 255,000 263,405
5.75% 2/15/35 405,000 436,027
Missouri State Health & Educational
Facilities Authority Health
Facilities Revenue Refunding
(Lake Regional Health System Project)
5.70% 2/15/34 500,000 530,775
(SSM Health Care)
Series AA 6.40% 6/1/10 (MBIA) 500,000 554,470
North Kansas City Hospital Revenue
Series A 5.00% 11/15/28 (FSA) 500,000 525,590
-------------
6,023,527
-------------
7
- --------------------------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
Multifamily Housing Revenue Bonds - 5.95%
Missouri State Housing Development
Commission Multifamily Housing
Hyder Series 3 5.60% 7/1/34
(FHA) (AMT) $ 1,435,000 $ 1,496,849
San Remo Series 5 5.45% 1/1/36
(FHA) (AMT) 500,000 517,120
St. Louis County Industrial Development
Authority Housing Development
Revenue Refunding
(Southfield & Oak Forest Apartment-A)
5.20% 1/20/36 (GNMA) 1,000,000 1,030,220
-------------
3,044,189
-------------
Municipal Lease Revenue Bonds - 14.10%
Chesterfield Certificates of Participation
5.00% 12/1/24 (FGIC) 1,000,000 1,063,860
Missouri State Development Finance Board
Infrastructure Facilities Revenue
(Branson Landing Project) Series A
5.25% 12/1/19 435,000 455,493
5.50% 12/1/24 500,000 531,685
(Crackerneck Creek Project)
Series C 5.00% 3/1/26 500,000 513,845
(Hartman Heritage Center Phase II)
5.00% 4/1/21 (AMBAC) 335,000 354,705
St. Charles County Public Water
Supply District #2
Certificate of Participation
(Missouri Project)
Series A 5.25% 12/1/28 (MBIA) 1,000,000 1,066,420
Series B 5.10% 12/1/25 (MBIA) 500,000 521,110
St. Louis College District Leasehold Revenue
5.00% 3/1/23 (AMBAC) 1,000,000 1,064,500
^St. Louis Industrial Development
Authority Leasehold Revenue
(Convention Center Hotel)
5.80% 7/15/20 (AMBAC) 3,035,000 1,641,449
-------------
7,213,067
-------------
Political Subdivision General Obligation Bonds - 3.89%
Jackson County Special Obligation
5.50% 12/1/17 (MBIA) 845,000 929,593
Taney County Reorganization School
District R-V Hollister School District
5.00% 3/1/22 (FSA) 1,000,000 1,057,770
-------------
1,987,363
-------------
- -/-Pre-Refunded Bonds - 6.27%
Greene County Reorganization School District R8
(Direct Deposit Project)
5.10% 3/1/22-12 (FSA) 1,500,000 1,595,340
Liberty Sewer System Revenue
6.15% 2/1/15-09 (MBIA) 1,500,000 1,611,540
-------------
3,206,880
-------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
- --------------------------------------------------------------------------------
School District General Obligation Bonds - 4.00%
Camdenton Reorganized School
District R-III Camden County
Refunding & Improvement
5.25% 3/1/24 (FSA) $ 1,000,000 $ 1,094,960
^St. Charles County Francis Howell
School District (Capital Appreciation
Direct Deposit Project)
Series A 5.15% 3/1/17 (FGIC) 1,500,000 952,110
-------------
2,047,070
-------------
Single Family Housing Revenue Bonds - 1.46%
Missouri State Housing Development
Commission Mortgage Revenue
Series C 7.45% 9/1/27
(GNMA) (FNMA) (AMT) 135,000 137,277
Missouri State Housing Development
Commission Mortgage Revenue
Single Family Homeowner
Loan A 7.20% 9/1/26
(GNMA) (FNMA) (AMT) 110,000 110,915
Loan B 7.55% 9/1/27
(GNMA) (FNMA) (AMT) 45,000 45,775
Loan C 7.25% 9/1/26
(GNMA) (FNAM) (AMT) 125,000 126,941
Missouri State Housing Development
Commission Mortgage Revenue
Single Family Mortgage Series A
5.20% 9/1/33 (GNMA) (FNMA) (AMT) 320,000 326,311
-------------
747,219
-------------
Territorial General Obligation Bonds - 2.52%
Puerto Rico Commonwealth Improvement
5.25% 7/1/27 (FSA) 705,000 752,559
Series A 5.25% 7/1/23 500,000 535,505
-------------
1,288,064
-------------
Water & Sewer Revenue Bonds - 5.88%
Metropolitan St. Louis Sewer District
Wastewater Revenue
5.00% 5/1/34 (MBIA) 1,250,000 1,313,662
Missouri State Development Finance
Board Infrastructure Facilities Revenue
(Sewer System Improvement Project)
Series C 5.00% 3/1/25 605,000 623,192
Missouri State Environmental
Improvement & Energy Resource
Authority Water Pollution Control
Revenue Unrefunded Balance
(State Revolving Fund Project)
Series A 6.05% 7/1/16 (FSA) 1,060,000 1,069,233
-------------
3,006,087
-------------
Total Municipal Bonds (cost $44,143,885) 46,669,655
=============
8
- --------------------------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Number Market
of Shares Value
- --------------------------------------------------------------------------------
Short-Term Investments - 7.83%
- --------------------------------------------------------------------------------
Money Market Instruments - 0.99%
Dreyfus Tax-Exempt Cash
Management Fund 506,707 $ 506,707
-------------
506,707
-------------
Principal
Amount
oVariable Rate Demand Notes - 6.84%
Kansas City Municipal Assistance
Revenue Leasehold
Series A 3.17% 4/15/34 (AMBAC) $ 2,500,000 2,500,000
Missouri State Health & Educational
Facilities Authority Revenue
(St. Louis University)
Series A 3.00% 10/1/35 (MBIA) 1,000,000 1,000,000
-------------
3,500,000
-------------
Total Short-Term Investments
(cost $4,006,707) 4,006,707
=============
Total Market Value of Securities - 99.08%
(cost $48,150,592) 50,676,362
Receivables and Other Assets
Net of Liabilities - 0.92% 471,578
-------------
Net Assets Applicable to 4,784,153 Shares
Outstanding - 100.00% $ 51,147,940
=============
Net Asset Value - Delaware Tax-Free Missouri
Insured Fund Class A
($47,511,795 / 4,444,138 Shares) $ 10.69
-------------
Net Asset Value - Delaware Tax-Free Missouri
Insured Fund Class B
($2,339,521 / 218,914 Shares) $ 10.69
-------------
Net Asset Value - Delaware Tax-Free Missouri
Insured Fund Class C
($1,296,624 / 121,101 Shares) $ 10.71
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 48,571,559
Accumulated net realized gain on investments 50,611
Net unrealized appreciation of investments 2,525,770
-------------
Total net assets $ 51,147,940
=============
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.
- -/- 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."
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHA -Insured by the Federal Housing Administration
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA- Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
ROLs - Residual Options Long
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Missouri Insured Fund
Net asset value Class A (A) $ 10.69
Sales charge (4.50% of offering price) (B) 0.50
-------------
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
9
- --------------------------------------------------------------------------------
Delaware Tax-Free Oregon Insured Fund
Statements February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- -------------------------------------------------------------------------------
Municipal Bonds - 96.03%
- -------------------------------------------------------------------------------
Airport Revenue Bonds - 3.33%
Portland Airport Revenue
(Portland International Airport)
Series 11 5.625% 7/1/26 (FGIC) (AMT) $ 1,500,000 $ 1,538,595
-------------
1,538,595
-------------
Dedicated Tax & Fees Revenue Bonds - 1.16%
Oregon State Department of Administrative
Services Lottery Revenue Refunding
Series A 5.00% 4/1/18 (FSA) 500,000 537,295
-------------
537,295
-------------
Electric & Gas Revenue Bonds - 7.46%
Emerald Peoples Utilities District
Series A 5.25% 11/1/22 (FSA) 750,000 813,300
Puerto Rico Electric Power Authority
Power Revenue Series NN
5.125% 7/1/29 1,000,000 1,055,210
**Puerto Rico Electric Power
Authority Power Revenue
Inverse Floater ROLs
5.635% 7/1/19 (FSA) 1,500,000 1,576,545
-------------
3,445,055
-------------
Escrowed to Maturity Bonds - 2.35%
Umatilla County Hospital Facility
Authority Revenue
(Catholic Health Initiatives)
Series A 5.50% 3/1/32 1,000,000 1,083,570
-------------
1,083,570
-------------
Higher Education Revenue Bonds - 15.27%
Oregon Health & Science University Revenue
(Capital Appreciation Insured) Series A
5.00% 7/1/32 (MBIA) 2,000,000 2,092,360
^5.50% 7/1/21 (MBIA) 2,000,000 1,035,040
Oregon State Facilities Authority Revenue
(College Housing Northwest Project)
Series A 5.45% 10/1/32 1,000,000 1,031,460
(College Independent Student
Housing Project) Series A
5.25% 7/1/30 (XLCA) 630,000 678,371
(Linfield College Project) Series A
5.00% 10/1/30 600,000 620,538
(Willamette University Project) Series A
5.00% 10/1/34 (FGIC) 1,000,000 1,053,840
5.125% 10/1/25 (FGIC) 500,000 538,970
-------------
7,050,579
-------------
Hospital Revenue Bonds - 1.17%
Multnomah County Hospital
Facilities Authority Revenue
(Providence Health System)
5.25% 10/1/22 500,000 539,015
-------------
539,015
-------------
Investor Owned Utilities Revenue Bonds - 1.34%
oPort Morrow Pollution Control Revenue
(Portland General Electric Co.)
Series A 5.20% 5/1/33 600,000 618,756
-------------
618,756
-------------
Principal Market
Amount Value
- -------------------------------------------------------------------------------
Municipal Bonds (continued)
- -------------------------------------------------------------------------------
Multifamily Housing Revenue Bonds - 2.37%
Oregon Health, Housing, Educational &
Cultural Facilities Authority
(Pier Park Project) Series A
6.05% 4/1/18 (GNMA) (AMT) $ 1,095,000 $ 1,096,106
-------------
1,096,106
-------------
Municipal Lease Revenue Bonds - 8.82%
Oregon State Department of
Administrative Services
5.00% 9/1/13 (FSA) 800,000 866,816
Oregon State Department of Administrative
Services Certificates of
Participation Refunding
Series A 5.00% 5/1/30 (FSA) 500,000 526,855
Series B 5.00% 11/1/30 (FGIC) 500,000 528,040
Series C 5.25% 11/1/15 (MBIA) 1,000,000 1,081,090
oPuerto Rico Public Buildings
Authority Revenue
(Government Facilities)
Series J 5.00% 7/1/36 (AMBAC) 1,000,000 1,070,210
-------------
4,073,011
-------------
Political Subdivision General Obligation
Bonds - 5.12%
Deschutes County Refunding
5.00% 12/1/16 (FSA) 500,000 535,345
Southwestern Oregon Community
College District 5.00% 6/1/28 (MBIA) 1,100,000 1,169,883
Treasure Valley Community College District
5.00% 6/1/35 (AMBAC) 620,000 656,952
-------------
2,362,180
-------------
- -/-Pre-Refunded Bonds - 25.88%
Chemeketa County Community
College District 5.80% 6/1/12-06 (FGIC) 1,500,000 1,509,540
Deschutes County Administrative
School District #1 Series A
5.125% 6/15/21-11 (FSA) 1,000,000 1,074,740
Deschutes County Hospital Facilities
Authority Hospital Revenue
(Cascade Health Services)
5.60% 1/1/32-12 1,250,000 1,374,025
Jackson County School District #6
Central Point 5.25% 6/15/20-10 (FGIC) 1,175,000 1,255,687
Linn County Community School District #9
Lebanon 5.60% 6/15/30-13 (FGIC) 2,000,000 2,244,621
North Unit Irrigation District
5.75% 6/1/16-06 (MBIA) 1,000,000 1,006,330
Oregon State Department of Administrative
Services Certificates of Participation
Refunding Series A
5.80% 5/1/24-07 (AMBAC) 1,000,000 1,037,470
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue Series J 5.50% 7/1/22-14 400,000 447,748
Puerto Rico Commonwealth Public
Improvement 5.125% 7/1/30-11 (FSA) 920,000 991,061
Salem Water & Sewer Revenue
5.625% 6/1/16-06 (MBIA) 1,000,000 1,005,910
-------------
11,947,132
-------------
10
- -------------------------------------------------------------------------------
Delaware Tax-Free Oregon Insured Fund
Statements
- -------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
- -------------------------------------------------------------------------------
Municipal Bonds (continued)
- -------------------------------------------------------------------------------
School District General Obligation
Bonds - 11.21%
Benton & Linn Counties School District
#509J
(Corvallis) 5.00% 6/1/21(FSA) $ 1,000,000 $ 1,062,720
Clackamas County School District
#12 (North Clackamas)
5.00% 6/15/16 (FSA) 1,000,000 1,097,040
#86 (Canby) 5.00% 6/15/25 (FSA) 500,000 533,470
Jefferson County School District #509J
5.00% 6/15/22 (FGIC) 500,000 530,160
Lane County School District #19
(Springfield) Refunding
6.00% 10/15/14 (FGIC) 500,000 579,590
Lincoln County School District
5.25% 6/15/12 (FGIC) 700,000 736,841
Salem-Keizer School District #24J Refunding
5.00% 6/15/19 (FSA) 500,000 535,525
^Umatilla County School District #6 R
Umatilla Refunding 5.50% 12/15/22 (AMBAC) 200,000 97,554
-------------
5,172,900
-------------
Single Family Housing Revenue Bonds - 2.65%
Oregon State Housing & Community
Services Department Mortgage Revenue
Single Family Mortgage Program
Series R 5.375% 7/1/32 (AMT) 1,195,000 1,224,134
-------------
1,224,134
-------------
Tax Increment/Special Assessment Bonds - 2.70%
Portland River District Urban Renewal &
Redevelopment Interstate Corridor
Series A 5.00% 6/15/23 (AMBAC) 250,000 264,455
Portland Urban Renewal & Redevelopment
Interstate Corridor
Series A 5.25% 6/15/20 (FGIC) 890,000 981,065
-------------
1,245,520
-------------
Territorial General Obligation Bonds - 4.45%
Puerto Rico Commonwealth Public
Improvement (Unrefunded Balance)
5.125% 7/1/30 (FSA) 965,000 1,024,328
Series A 5.125% 7/1/31 1,000,000 1,028,840
-------------
2,053,168
-------------
Water & Sewer Revenue Bonds - 0.75%
Portland Sewer Systems Revenue
(Second Lien) Series A
5.00% 6/1/23 (FSA) 325,000 343,707
-------------
343,707
-------------
Total Municipal Bonds (cost $41,909,470) 44,330,723
-------------
Number Market
of Shares Value
- -------------------------------------------------------------------------------
Short-Term Investments - 3.04%
- -------------------------------------------------------------------------------
Money Market Instruments - 0.77%
Dreyfus Tax-Exempt Cash
Management Fund 355,933 $ 355,933
-------------
355,933
-------------
Principal
Amount
oVariable Rate Demand Notes- 2.27%
Portland Multi-Family Housing Revenue
(South Park Block Project)
3.07% 12/1/11 $ 1,050,000 1,050,000
-------------
1,050,000
-------------
Total Short-Term Investments
(cost $1,405,933) 1,405,933
=============
Total Market Value of Securities - 99.07%
(cost $43,315,403) 45,736,656
Receivables and Other Assets
Net of Liabilities - 0.93% 427,518
-------------
Net Assets Applicable to 4,385,483 Shares
Outstanding - 100.00% $ 46,164,174
=============
Net Asset Value - Delaware Tax-Free Oregon
Insured Fund Class A
($33,888,621 / 3,220,566 Shares) $ 10.52
-------------
Net Asset Value - Delaware Tax-Free Oregon
Insured Fund Class B
($6,213,347 / 590,164 Shares) $ 10.53
-------------
Net Asset Value - Delaware Tax-Free Oregon
Insured Fund Class C
($6,062,206 / 574,753 Shares) $ 10.55
-------------
11
- --------------------------------------------------------------------------------
Delaware Tax-Free Oregon Insured Fund
Statements
- --------------------------------------------------------------------------------
OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Components of Net Assets at February 28, 2006:
Shares of beneficial interest
(unlimited authorization - no par) $ 44,196,291
Accumulated net realized loss on investments (453,370)
Net unrealized appreciation of investments 2,421,253
-------------
Total net assets $ 46,164,174
=============
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.
- -/- 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."
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
ROLs - Residual Options Long
XLCA - Insured by XL Capital Assurance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Oregon Insured Fund
Net asset value Class A (A) $ 10.52
Sales charge (4.50% of offering price) (B) 0.50
------------
Offering price $ 11.02
============
(A) Net asset value per share, as illustrated, is the amount which would be
paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
12
- --------------------------------------------------------------------------------
Statements Six Months Ended February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
OF OPERATIONS
Delaware Delaware Delaware
Tax-Free Idaho Tax-Free Missouri Tax-Free Oregon
Fund Insured Fund Insured Fund
Investment Income:
Interest $ 2,084,367 $ 1,237,943 $ 1,094,373
-------------- ----------------- ---------------
Expenses:
Management fees 239,202 125,014 115,158
Distribution expenses -- Class A 77,506 57,473 41,828
Distribution expenses -- Class B 49,723 13,201 31,714
Distribution expenses -- Class C 74,808 6,857 31,280
Dividend disbursing and transfer agent fees and expenses 26,006 16,571 13,828
Accounting and administration expenses 17,396 10,001 9,212
Legal & professional fees 11,258 10,572 10,730
Reports and statements to shareholders 8,200 4,099 4,632
Custodian fees 3,257 1,539 1,804
Trustees' fees 2,500 1,428 1,318
Registration fees 2,450 2,000 779
Pricing fees 1,166 781 710
Insurance fees 1,601 566 556
Taxes (other than taxes on income) 452 134 99
Other 3,141 3,073 3,897
-------------- ----------------- ---------------
518,666 253,309 267,545
Less expenses absorbed or waived (55,530) (13,050) (24,428)
Less expenses paid indirectly (202) (239) (63)
-------------- ----------------- ---------------
Total expenses 462,934 240,020 243,054
-------------- ----------------- ---------------
Net Investment Income 1,621,433 997,923 851,319
-------------- ----------------- ---------------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments (55,861) 52,364 (280,227)
Net change in unrealized appreciation/depreciation of investments (1,024,607) (598,034) (296,643)
-------------- ----------------- ---------------
Net Realized and Unrealized Loss on Investments (1,080,468) (545,670) (576,870)
-------------- ----------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 540,965 $ 452,253 $ 274,449
============== ================= ===============
See accompanying notes
13
- --------------------------------------------------------------------------------
Statements
- --------------------------------------------------------------------------------
OF CHANGES IN NET ASSETS
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
2/28/06 Ended 2/28/06 Ended 2/28/06 Ended
(Unaudited) 8/31/05 (Unaudited) 8/31/05 (Unaudited) 8/31/05
Increase (Decrease) in Net Assets
from Operations:
Net investment income $ 1,621,433 $ 3,114,747 $ 997,923 $ 2,083,200 $ 851,319 $ 1,687,339
Net realized gain (loss) on
investments (55,861) 416,497 52,364 130,115 (280,227) 106,456
Net change in unrealized
appreciation/depreciation of
investments (1,024,607) 566,203 (598,034) 380,933 (296,643) 366,029
------------ ------------- ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 540,965 4,097,447 452,253 2,594,248 274,449 2,159,824
------------ ------------- ------------ ------------ ------------ ------------
Dividends and Distributions to
Shareholders from:
Net investment income:
Class A (1,222,334) (2,268,543) (927,407) (1,901,135) (651,340) (1,250,887)
Class B (158,977) (369,910) (43,451) (128,675) (99,587) (225,919)
Class C (238,931) (476,579) (22,489) (45,752) (97,987) (206,598)
------------ ------------- ------------ ------------ ------------ ------------
(1,620,242) (3,115,032) (993,347) (2,075,562) (848,914) (1,683,404)
------------ ------------- ------------ ------------ ------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
Class A 7,496,430 9,100,675 2,587,337 3,524,066 2,011,274 5,524,963
Class B 53,364 378,499 25,388 408 109,245 582,909
Class C 1,216,163 3,196,560 84,984 105,402 478,548 1,199,241
Net asset value of shares issued
upon reinvestment of dividends
and distributions:
Class A 807,539 1,470,126 565,025 1,017,242 384,639 718,106
Class B 98,437 211,390 34,188 96,955 65,198 137,290
Class C 150,946 286,213 20,719 39,754 59,888 126,671
------------ ------------- ------------ ------------ ------------ ------------
9,822,879 14,643,463 3,317,641 4,783,827 3,108,792 8,289,180
------------ ------------- ------------ ------------ ------------ ------------
Cost of shares repurchased:
Class A (4,294,328) (6,264,069) (1,334,752) (4,575,966) (2,124,246) (3,366,599)
Class B (1,211,632) (2,857,710) (781,340) (1,933,993) (768,006) (1,783,006)
Class C (2,014,881) (3,018,204) (184,874) (25,210) (1,052,281) (1,080,203)
------------ ------------- ------------ ------------ ------------ ------------
(7,520,841) (12,139,983) (2,300,966) (6,535,169) (3,944,533) (6,229,808)
------------ ------------- ------------ ------------ ------------ ------------
Increase (decrease) in net assets
derived from capital share
transactions 2,302,038 2,503,480 1,016,675 (1,751,342) (835,741) 2,059,372
------------ ------------- ------------ ------------ ------------ ------------
Net Increase (Decrease) in Net
Assets 1,222,761 3,485,895 475,581 (1,232,656) (1,410,206) 2,535,792
Net Assets:
Beginning of period 87,143,045 83,657,150 50,672,359 51,905,015 47,574,380 45,038,588
------------ ------------- ------------ ------------ ------------ ------------
End of period(1) $ 88,365,806 $ 87,143,045 $ 51,147,940 $ 50,672,359 $ 46,164,174 $ 47,574,380
============ ============= ============ ============ ============ ============
(1)Including distributions in
excess of net investment income $ (11,301) $ (11,301) $ -- $ -- $ -- $ --
============ ============= ============ ============ ============ ============
See accompanying notes
14
Financial
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Idaho 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 $ 11.630 $ 11.490 $ 11.140 $ 11.320 $ 11.260 $ 10.730
Income (loss) from investment operations:
Net investment income 0.224 0.452 0.478 0.497 0.522 0.541
Net realized and unrealized gain (loss) on investments (0.140) 0.140 0.353 (0.181) 0.059 0.530
--------- -------- -------- -------- --------- --------
Total from investment operations 0.084 0.592 0.831 0.316 0.581 1.071
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.224) (0.452) (0.481) (0.496) (0.521) (0.541)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.224) (0.452) (0.481) (0.496) (0.521) (0.541)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 11.490 $ 11.630 $ 11.490 $ 11.140 $ 11.320 $ 11.260
========= ======== ======== ======== ========= ========
Total return(3) 0.74% 5.25% 7.58% 2.81% 5.36% 10.24%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 63,820 $ 60,554 $ 55,572 $ 51,682 $ 45,108 $ 38,228
Ratio of expenses to average net assets 0.85% 0.87% 0.97% 0.93% 1.00% 1.00%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.98% 0.98% 0.97% 1.00% 1.03% 1.03%
Ratio of net investment income to average net assets 3.94% 3.92% 4.21% 4.36% 4.69% 4.94%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.81% 3.81% 4.21% 4.29% 4.66% 4.91%
Portfolio turnover 9% 27% 13% 18% 11% 14%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.001, a decrease in net realized
and unrealized gain (loss) per share of $0.001, and an increase in the
ratio of net investment income to average net assets of 0.01%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
15
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Idaho 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 $ 11.610 $ 11.480 $ 11.130 $ 11.310 $ 11.250 $ 10.720
Income (loss) from investment operations:
Net investment income 0.181 0.366 0.393 0.412 0.439 0.460
Net realized and unrealized gain (loss) on investments (0.130) 0.130 0.353 (0.181) 0.059 0.530
--------- -------- -------- -------- --------- --------
Total from investment operations 0.051 0.496 0.746 0.231 0.498 0.990
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.181) (0.366) (0.396) (0.411) (0.438) (0.460)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.181) (0.366) (0.396) (0.411) (0.438) (0.460)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 11.480 $ 11.610 $ 11.480 $ 11.130 $ 11.310 $ 11.250
========= ======== ======== ======== ========= ========
Total return(3) 0.46% 4.39% 6.79% 2.05% 4.58% 9.43%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 9,714 $ 10,911 $ 13,044 $ 16,801 $ 14,809 $ 12,366
Ratio of expenses to average net assets 1.60% 1.62% 1.72% 1.68% 1.75% 1.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.73% 1.73% 1.72% 1.75% 1.78% 1.78%
Ratio of net investment income to average net assets 3.19% 3.17% 3.46% 3.61% 3.94% 4.19%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.06% 3.06% 3.46% 3.54% 3.91% 4.16%
Portfolio turnover 9% 27% 13% 18% 11% 14%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.001, a decrease in net realized
and unrealized gain (loss) per share of $0.001, and an increase in the
ratio of net investment income to average net assets of 0.01%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
16
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Idaho 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 $ 11.630 $ 11.490 $ 11.130 $ 11.310 $ 11.250 $ 10.720
Income (loss) from investment operations:
Net investment income 0.181 0.366 0.393 0.413 0.439 0.460
Net realized and unrealized gain (loss) on investments (0.140) 0.140 0.362 (0.181) 0.059 0.530
--------- -------- -------- -------- --------- --------
Total from investment operations 0.041 0.506 0.755 0.232 0.498 0.990
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.181) (0.366) (0.395) (0.412) (0.438) (0.460)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.181) (0.366) (0.395) (0.412) (0.438) (0.460)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 11.490 $ 11.630 $ 11.490 $ 11.130 $ 11.310 $ 11.250
========= ======== ======== ======== ========= ========
Total return(3) 0.37% 4.47% 6.87% 2.05% 4.57% 9.43%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 14,832 $ 15,678 $ 15,041 $ 16,296 $ 9,829 $ 4,931
Ratio of expenses to average net assets 1.60% 1.62% 1.72% 1.68% 1.75% 1.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.73% 1.73% 1.72% 1.75% 1.78% 1.78%
Ratio of net investment income to average net assets 3.19% 3.17% 3.46% 3.61% 3.94% 4.19%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.06% 3.06% 3.46% 3.54% 3.91% 4.16%
Portfolio turnover 9% 27% 13% 18% 11% 14%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.001, a decrease in net realized
and unrealized gain (loss) per share of $0.001, and an increase in the
ratio of net investment income to average net assets of 0.01%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
17
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund Class A
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 10.810 $ 10.700 $ 10.640 $ 10.810 $ 10.740 $ 10.340
Income (loss) from investment operations:
Net investment income 0.214 0.442 0.464 0.469 0.489 0.497
Net realized and unrealized gain (loss) on investments (0.121) 0.110 0.065 (0.172) 0.068 0.400
--------- -------- -------- -------- --------- --------
Total from investment operations 0.093 0.552 0.529 0.297 0.557 0.897
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.213) (0.442) (0.469) (0.467) (0.487) (0.497)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.213) (0.442) (0.469) (0.467) (0.487) (0.497)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.690 $ 10.810 $ 10.700 $ 10.640 $ 10.810 $ 10.740
========= ======== ======== ======== ========= ========
Total return(3) 0.88% 5.27% 5.06% 2.75% 5.38% 8.89%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 47,512 $ 46,182 $ 45,745 $ 44,026 $ 42,610 $ 40,349
Ratio of expenses to average net assets 0.90% 0.93% 0.94% 0.98% 0.97% 0.95%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.95% 0.95% 0.94% 0.98% 0.97% 0.95%
Ratio of net investment income to average net assets 4.05% 4.14% 4.33% 4.31% 4.61% 4.74%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.00% 4.12% 4.33% 4.31% 4.61% 4.74%
Portfolio turnover 11% 21% 20% 31% 23% 14%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.002, a decrease in net realized
and unrealized gain (loss) per share of $0.002, and an increase in the
ratio of net investment income to average net assets of 0.02%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
18
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 10.800 $ 10.690 $ 10.640 $ 10.810 $ 10.730 $ 10.340
Income (loss) from investment operations:
Net investment income 0.175 0.363 0.385 0.387 0.410 0.418
Net realized and unrealized gain (loss) on investments (0.111) 0.110 0.054 (0.172) 0.078 0.390
--------- -------- -------- -------- --------- --------
Total from investment operations 0.064 0.473 0.439 0.215 0.488 0.808
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.174) (0.363) (0.389) (0.385) (0.408) (0.418)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.174) (0.363) (0.389) (0.385) (0.408) (0.418)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.690 $ 10.800 $ 10.690 $ 10.640 $ 10.810 $ 10.730
========= ======== ======== ======== ========= ========
Total return(3) 0.61% 4.50% 4.19% 1.99% 4.70% 7.98%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 2,339 $ 3,099 $ 4,903 $ 7,406 $ 9,264 $ 9,693
Ratio of expenses to average net assets 1.65% 1.68% 1.69% 1.73% 1.72% 1.70%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.70% 1.69% 1.73% 1.72% 1.70%
Ratio of net investment income to average net assets 3.30% 3.39% 3.58% 3.56% 3.86% 3.99%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.25% 3.37% 3.58% 3.56% 3.86% 3.99%
Portfolio turnover 11% 21% 20% 31% 23% 14%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.002, a decrease in net realized
and unrealized gain (loss) per share of $0.002, and an increase in the
ratio of net investment income to average net assets of 0.02%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
19
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Missouri Insured Fund Class C
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 10.820 $ 10.710 $ 10.660 $ 10.820 $ 10.740 $ 10.350
Income (loss) from investment operations:
Net investment income 0.174 0.361 0.384 0.387 0.410 0.418
Net realized and unrealized gain (loss) on investments (0.111) 0.110 0.054 (0.162) 0.078 0.390
--------- -------- -------- -------- --------- --------
Total from investment operations 0.063 0.471 0.438 0.225 0.488 0.808
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.173) (0.361) (0.388) (0.385) (0.408) (0.418)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.173) (0.361) (0.388) (0.385) (0.408) (0.418)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.710 $ 10.820 $ 10.710 $ 10.660 $ 10.820 $ 10.740
========= ======== ======== ======== ========= ========
Total return(3) 0.60% 4.48% 4.17% 2.08% 4.68% 7.97%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 1,297 $ 1,391 $ 1,257 $ 1,257 $ 1,241 $ 626
Ratio of expenses to average net assets 1.65% 1.68% 1.69% 1.73% 1.72% 1.70%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.70% 1.69% 1.73% 1.72% 1.70%
Ratio of net investment income to average net assets 3.30% 3.39% 3.58% 3.56% 3.86% 3.99%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.25% 3.37% 3.58% 3.56% 3.86% 3.99%
Portfolio turnover 11% 21% 20% 31% 23% 14%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.002, a decrease in net realized
and unrealized gain (loss) per share of $0.002, and an increase in the
ratio of net investment income to average net assets of 0.02%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager, as applicable. Performance would have been lower had the
expense limitation not been in effect.
See accompanying notes
20
Financial
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Oregon Insured Fund Class A
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/06(2) 8/31/05 8/31/04 8/31/03 8/31/02(1) 8/31/01
(Unaudited)
Net asset value, beginning of period $ 10.650 $ 10.540 $ 10.380 $ 10.530 $ 10.450 $ 9.910
Income (loss) from investment operations:
Net investment income 0.204 0.417 0.453 0.461 0.467 0.465
Net realized and unrealized gain (loss) on investments (0.131) 0.110 0.163 (0.151) 0.079 0.540
--------- -------- -------- -------- --------- --------
Total from investment operations 0.073 0.527 0.616 0.310 0.546 1.005
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.203) (0.417) (0.456) (0.460) (0.466) (0.465)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.203) (0.417) (0.456) (0.460) (0.466) (0.465)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.520 $ 10.650 $ 10.540 $ 10.380 $ 10.530 $ 10.450
========= ======== ======== ======== ========= ========
Total return(3) 0.70% 5.09% 6.04% 2.97% 5.41% 10.39%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 33,889 $ 34,029 $ 30,817 $ 29,410 $ 25,082 $ 22,973
Ratio of expenses to average net assets 0.85% 0.87% 0.85% 0.84% 0.85% 0.85%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.96% 0.96% 0.90% 0.96% 1.00% 0.99%
Ratio of net investment income to average net assets 3.89% 3.94% 4.30% 4.35% 4.52% 4.59%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.78% 3.85% 4.25% 4.23% 4.37% 4.45%
Portfolio turnover 7% 14% 16% 16% 20% 28%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.001, a decrease in net realized
and unrealized gain (loss) per share of $0.001, and an increase in the
ratio of net investment income to average net assets of 0.01%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. 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 Oregon 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 $ 10.660 $ 10.550 $ 10.390 $ 10.540 $ 10.450 $ 9.910
Income (loss) from investment operations:
Net investment income 0.165 0.338 0.374 0.382 0.390 0.389
Net realized and unrealized gain (loss) on investments (0.131) 0.110 0.163 (0.151) 0.089 0.540
--------- -------- -------- -------- --------- --------
Total from investment operations 0.034 0.448 0.537 0.231 0.479 0.929
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.164) (0.338) (0.377) (0.381) (0.389) (0.389)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.164) (0.338) (0.377) (0.381) (0.389) (0.389)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.530 $ 10.660 $ 10.550 $ 10.390 $ 10.540 $ 10.450
========= ======== ======== ======== ========= ========
Total return(3) 0.33% 4.31% 5.24% 2.20% 4.73% 9.57%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 6,213 $ 6,889 $ 7,878 $ 8,750 $ 8,489 $ 7,928
Ratio of expenses to average net assets 1.60% 1.62% 1.60% 1.59% 1.60% 1.60%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.71% 1.71% 1.65% 1.71% 1.75% 1.74%
Ratio of net investment income to average net assets 3.14% 3.19% 3.55% 3.60% 3.77% 3.84%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.03% 3.10% 3.50% 3.48% 3.62% 3.70%
Portfolio turnover 7% 14% 16% 16% 20% 28%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.001, a decrease in net realized
and unrealized gain (loss) per share of $0.001, and an increase in the
ratio of net investment income to average net assets of 0.01%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. 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 Oregon 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 $ 10.680 $ 10.570 $ 10.400 $ 10.550 $ 10.470 $ 9.920
Income (loss) from investment operations:
Net investment income 0.165 0.337 0.374 0.381 0.389 0.388
Net realized and unrealized gain (loss) on investments (0.131) 0.110 0.173 (0.151) 0.079 0.550
--------- -------- -------- -------- --------- --------
Total from investment operations 0.034 0.447 0.547 0.230 0.468 0.938
--------- -------- -------- -------- --------- --------
Less dividends and distributions from:
Net investment income (0.164) (0.337) (0.377) (0.380) (0.388) (0.388)
--------- -------- -------- -------- --------- --------
Total dividends and distributions (0.164) (0.337) (0.377) (0.380) (0.388) (0.388)
--------- -------- -------- -------- --------- --------
Net asset value, end of period $ 10.550 $ 10.680 $ 10.570 $ 10.400 $ 10.550 $ 10.470
========= ======== ======== ======== ========= ========
Total return(3) 0.33% 4.30% 5.33% 2.19% 4.62% 9.66%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 6,062 $ 6,656 $ 6,344 $ 5,395 $ 3,253 $ 1,820
Ratio of expenses to average net assets 1.60% 1.62% 1.60% 1.59% 1.60% 1.60%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.71% 1.71% 1.65% 1.71% 1.75% 1.74%
Ratio of net investment income to average net assets 3.14% 3.19% 3.55% 3.60% 3.77% 3.84%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.03% 3.10% 3.50% 3.48% 3.62% 3.70%
Portfolio turnover 7% 14% 16% 16% 20% 28%
(1) As required, effective September 1, 2001, the Fund adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies that
require amortization of all premiums and discounts on debt securities. The
effect of this change for the year ended August 31, 2002 was an increase
in net investment income per share of $0.001, a decrease in net realized
and unrealized gain (loss) per share of $0.001, and an increase in the
ratio of net investment income to average net assets of 0.01%. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has
not been annualized.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of dividends and
distributions at net asset value and does not reflect the impact of a
sales charge. Total investment return reflects waivers and payment of fees
by the manager. Performance would have been lower had the expense
limitation not been in effect.
See accompanying notes
23
- --------------------------------------------------------------------------------
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 Investment Trust (the "Trust") is organized as a Delaware statutory
trust and offers three series: Delaware Tax-Free Florida Insured Fund, Delaware
Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured Fund. These
financial statements and the related notes pertain to the Delaware Tax-Free
Idaho Fund, Delaware Tax-Free Missouri Insured Fund, and Delaware Tax-Free
Oregon Insured Fund (each referred to as a "Fund" or collectively as the
"Funds"). The 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%. Class B shares are sold with a contingent deferred
sales charge that declines from 4.00% to zero depending upon the period of time
the shares are held. Class B shares will automatically convert to Class A shares
on a quarterly basis approximately eight years after purchase. Class C shares
are sold with a contingent deferred sales charge of 1%, if redeemed during the
first 12 months.
The investment objective of Delaware Tax-Free Idaho Fund, Delaware Tax-Free
Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund is to seek as
high a level of current income exempt from federal income tax and personal
income tax in their respective states, as is consistent with preservation of
capital.
1. Significant Accounting Policies
The following accounting policies are in accordance with 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 each Fund on the basis of "settled shares" of each class in relation
to the net assets of each Fund. Realized and unrealized gain (loss) on
investments are allocated to the various classes of each Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates -- The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other -- Expenses common to all funds within the Delaware Investments(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 balances
are maintained, which are used to offset custody fees. The expenses paid under
the above arrangements are included in custodian fees on the Statements of
Operations with the corresponding expenses offset shown as "expenses paid
indirectly."
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 Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
On the first $500 million 0.550% 0.500% 0.500%
On the next $500 million 0.500% 0.475% 0.475%
On the next $1.5 billion 0.450% 0.450% 0.450%
In excess of $2.5 billion 0.425% 0.425% 0.425%
24
- --------------------------------------------------------------------------------
Notes February 28, 2006 (Unaudited)
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
2. Investment Management, Administration Agreements and Other Transactions
with Affiliates (continued)
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse each Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs and extraordinary expenses, do not
exceed specified percentages of average daily net assets, as shown below.
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
The operating expense limitation as a
percentage of average daily net
assets (per annum) 0.60% 0.65% 0.60%
Expiration date 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 the Funds' 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.
At February 28, 2006, each Fund had liabilities payable to affiliates as
follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
Investment management fees payable
to DMC $26,710 $17,284 $13,554
Dividend disbursing, transfer agent,
accounting and administration fees
and other expenses payable to DSC 15,476 10,485 9,245
Distribution fee payable to DDLP 29,968 10,159 15,588
Other expenses payable to DMC and
affiliates* 3,827 5,068 4,435
* DMC, as a 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, the Funds bear the cost of
certain legal services expenses, including internal legal services provided to
the Funds by DMC employees. For the six months ended February 28, 2006, Delaware
Tax-Free Idaho Fund, Delaware Tax-Free Missouri Insured Fund and Delaware
Tax-Free Oregon Insured Fund were charged $995, $2,509, and $2,913,
respectively, for internal legal services provided by DMC.
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 Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
$9,830 $2,983 $5,768
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. 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 Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
Class A $ -- $ -- $ 480
Class B 3,841 60 1,306
Class C 1,294 -- 308
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the
Trusts. These officers and/or trustees are paid no compensation by the Funds.
25
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
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 Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
Purchases $9,878,803 $2,721,510 $1,973,808
Sales 4,012,320 4,575,000 1,471,960
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 Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
Cost of investments $85,806,229 $48,117,917 $43,564,587
=========== =========== ===========
Aggregate unrealized appreciation 2,878,535 2,575,662 2,218,944
Aggregate unrealized depreciation (67,597) (17,217) (46,875)
----------- ----------- -----------
Net unrealized appreciation $ 2,810,938 $ 2,558,445 $ 2,172,069
=========== =========== ===========
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 the year ended August 31, 2005 was as
follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
---------------------- ---------------------- ----------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
2/28/06* 8/31/05 2/28/06* 8/31/05 2/28/06* 8/31/05
Tax-exempt income $1,620,242 $3,115,032 $993,347 $2,075,562 $848,914 $1,683,404
* Tax information for the six months ended February 28, 2006 is an estimate
and the tax character of dividends and distributions may be redesignated
at fiscal year end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of February 28, 2006, the
estimated components of net assets on a tax basis were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
Shares of beneficial interest $ 85,940,108 $ 48,571,559 $ 44,196,291
Distributions in excess of net
investment income (11,301) -- --
Six-month period gain (loss) (23,435) 50,409 (14,655)
Post-October loss (32,078) -- --
Capital loss carryforwards (318,426) (32,473) (189,531)
Net unrealized appreciation of
investments 2,810,938 2,558,445 2,172,069
------------ ------------ ------------
Net assets $ 88,365,806 $ 51,147,940 $ 46,164,174
============ ============ ============
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, the Funds have elected to defer and treat as having
arisen in the following fiscal year.
For financial reporting purposes, capital accounts are adjusted to reflect the
tax character of permanent book/tax differences. Reclassifications are primarily
due to tax treatment of market discount and premium on certain debt instruments.
Results of operations and net assets were not affected by these
reclassifications. For the six months ended February 28, 2006, the Funds
recorded an estimate of the differences since the final tax characteristics
cannot be determined until fiscal year end.
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
Undistributed (distribution in
excess of) net investment income $ (1,191) $(4,576) $(2,405)
Accumulated net realized gain (loss) 1,191 4,576 2,405
26
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
4. Dividend and Distribution Information (continued)
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Capital loss carryforward
amounts remaining at August 31, 2005 will expire as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
Year of expiration
2008 $ -- $ 32,473 $ --
2009 151,477 -- 110,608
2010 166,949 -- 78,923
--------- -------- ---------
Total $ 318,426 $ 32,473 $ 189,531
========= ======== =========
For the six months ended February 28, 2006, each Fund had net capital gains
(losses) which may be reduced (increased) by the capital loss carryforwards as
follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------- --------------------- -------------------
$(23,435) $50,409 $(14,655)
5. Capital Shares
Transactions in capital shares were as follows:
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Idaho Fund Missouri Insured Fund Oregon Insured Fund
----------------------- --------------------- ---------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
2/28/06 8/31/05 2/28/06 8/31/05 2/28/06 8/31/05
Shares sold:
Class A 651,810 787,185 243,229 329,028 191,438 521,536
Class B 4,707 32,777 2,353 62 10,426 54,948
Class C 106,118 276,422 7,946 9,871 45,587 112,925
Shares issued upon reinvestment of
dividends and distributions:
Class A 70,428 127,188 52,993 94,843 36,605 67,787
Class B 8,597 18,318 3,208 9,044 6,201 12,953
Class C 13,172 24,780 1,941 3,701 5,686 11,930
---------- ---------- ---------- -------- ---------- --------
854,832 1,266,670 311,670 446,549 295,943 782,079
---------- ---------- ---------- -------- ---------- --------
Shares repurchased:
Class A (375,231) (542,673) (125,609) (426,911) (201,974) (317,964)
Class B (106,143) (247,933) (73,476) (180,772) (72,892) (168,301)
Class C (176,546) (261,721) (17,359) (2,347) (99,910) (101,836)
---------- ---------- ---------- -------- ---------- --------
(657,920) (1,052,327) (216,444) (610,030) (374,776) (588,101)
----------------------- --------------------- ---------------------
Net increase (decrease) 196,912 214,343 95,226 (163,481) (78,833) 193,978
---------- ---------- ---------- -------- ---------- --------
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. The respective
amounts are included in Class B redemptions and Class A subscriptions in the
table above and the Statements of Changes in Net Assets.
Six Months Ended Year Ended
2/28/06 8/31/05
---------------------------- -----------------------------
Class B Class A Class B Class A
shares shares Value shares shares Value
------- ------- --------- ------- ------- -----------
Delaware Tax-Free Idaho Fund 20,827 20,809 $ 239,921 43,515 43,479 $ 501,442
Delaware Tax-Free Missouri Insured Fund 67,273 67,273 715,530 139,117 139,010 1,489,016
Delaware Tax-Free Oregon Insured Fund 40,916 40,916 431,899 70,235 70,293 742,841
27
- --------------------------------------------------------------------------------
Notes
- --------------------------------------------------------------------------------
TO FINANCIAL STATEMENTS (CONTINUED)
6. Line of Credit
Each Fund, along with certain other funds in the Delaware Investments(R) 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
Fund had no amounts outstanding as of February 28, 2006, or at any time during
the fiscal six-month period.
7. Credit and Market Risk
The Funds concentrate their investments in securities issued by each
corresponding state's municipalities. The value of these investments may be
adversely affected by new legislation within the states, regional or local
economic conditions, and differing levels of supply and demand for municipal
bonds. Many municipalities insure repayment for their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that market value may fluctuate for other reasons and
there is no assurance that the insurance company will meet its obligations.
These securities have been identified in the Statements of Net Assets.
The Funds may invest in inverse floating rate securities ("inverse floaters"), a
type of derivative tax-exempt obligation with floating or variable interest
rates that move in the opposite direction of short-term interest rates, usually
at an accelerated speed. Consequently, the market values of inverse floaters
will generally be more volatile than other tax-exempt investments. Such
securities are denoted on the Statements of Net Assets.
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 of the issuance of the refunding issue is known as a
"current refunding." "Advance refunded bonds" are bonds in which the refunded
bond issue remains outstanding for more than 90 days following the issuance of
the refunding issue. In an advance refunding, the issuer will use the proceeds
of a new bond issue to purchase high grade interest bearing debt securities
which are then deposited in an irrevocable escrow account held by an escrow
agent to secure all future payments of principal and interest and bond premium
of the advance refunded bond. Bonds are "escrowed to maturity" when the proceeds
of the refunding issue are deposited in an escrow account for investment
sufficient to pay all of the principal and interest on the original interest
payment and maturity dates. Bonds are considered "pre-refunded" when the
refunding issue's proceeds are escrowed only until a permitted call date or
dates on the refunded issue with the refunded issue being redeemed at the time,
including any required premium. Bonds become "defeased" when the rights and
interests of the bondholders and of their lien on the pledged revenues or other
security under the terms of the bond contract and are substituted with an
alternative source of revenues (the escrow securities) sufficient to meet
payments of principal and interest to maturity or to the first call dates.
Escrowed secured bonds will often receive a rating of AAA from Moody's Investor
Service, Inc., Standard & Poor's Ratings 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 Insured Funds 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 up to 15% 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, the Funds' Board of Trustees has delegated to DMC
the day-to-day functions of determining whether individual securities are liquid
for purposes of the Funds' limitation on investments in illiquid assets. At
February 28, 2006, there were no Rule 144A securities and no securities have
been determined to be illiquid under the Funds' Liquidity Procedures.
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 the Funds' existing
contracts and expects the risk of loss to be remote.
- --------------------------------------------------------------------------------
Other
- --------------------------------------------------------------------------------
FUND INFORMATION
* Effective as of the close of business on March 1, 2006, the Delaware
Tax-Free Missouri Insured Fund and the Delaware Tax-Free Oregon Insured
Fund will be closed to new investors. Shareholders of the Reorganizing
Funds will receive a proxy statement/prospectus providing them with
information about the Delaware Tax-Free USA Fund and requesting their
votes on the proposed reorganization of their Fund at a special meeting of
shareholders to be held in late June 2006. If approved, the reorganization
would be expected to take place in late August 2006. Additionally, the
Delaware Tax-Free Missouri Insured Fund and the Delaware Tax-Free Oregon
Insured Fund would continue to accept purchases from existing shareholders
(including reinvested dividends or capital gains) until the last business
day before the reorganization.
28
- --------------------------------------------------------------------------------
About
- --------------------------------------------------------------------------------
THE ORGANIZATION
This semiannual report is for the information of Delaware Tax-Free Idaho Fund,
Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured
Fund shareholders, but it may be used with prospective investors when preceded
or accompanied by a current prospectus for Delaware Tax-Free Idaho Fund,
Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured
Fund and the Delaware Investments(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 Funds. 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 each 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 each Fund's Web site at
http://www.delawareinvestments.com; and (iii) on the Commission's Web site at
http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC; information on the
operation of the Public Reference Room may be obtained by calling 800 SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through each Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
- --------------------------------------------------------------------------------
29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[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:
- - For fund information, literature, price, yield, and performance figures.
- - 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)
- - 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.
(329) Printed in the USA
SA-CORN [2/06] CGI 4/06 SEMI-0603 CORN PO10911
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.
DELAWARE INVESTMENTS MUNICIPAL TRUST
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