N-CSR 1 delavoyageurmutual_ncsr.htm CERTIFIED SHAREHOLDER REPORT

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: 811-07742
   
Exact name of registrant as specified in charter: Voyageur Mutual Funds 
 
Address of principal executive offices: 2005 Market Street
  Philadelphia, PA 19103
 
Name and address of agent for service: David F. Connor, Esq.
  2005 Market Street
  Philadelphia, PA 19103
 
Registrant’s telephone number, including area code: (800) 523-1918
 
Date of fiscal year end: August 31
 
Date of reporting period: February 29, 2008

Item 1. Reports to Stockholders

 
 
 
 
 
 
 
 
 
Semiannual report 
 
Delaware Tax-Free Minnesota Fund 
 
Delaware Tax-Free Minnesota Intermediate Fund 
 
Delaware Minnesota High-Yield Municipal 
 
Bond Fund 
 
February 29, 2008 
 
 
 
 
 
 
 
 
 
 
 
 
 

  
Fixed income mutual funds 
 
 

Table of contents

Disclosure of Fund expenses  1
 
Sector allocations and credit quality breakdowns  4
 
Statements of net assets  7
 
Statements of operations  36
 
Statements of changes in net assets  38
 
Financial highlights  44
 
Notes to financial statements  62
 
About the organization  74

 

 

 

 

 

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.
© 2008 Delaware Distributors, L.P.

Disclosure of Fund expenses
For the period September 1, 2007 to February 29, 2008

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, 2007 to February 29, 2008.

Actual expenses

The first section of the tables shown, “Actual Fund Return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by 1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The second section of the tables shown, “Hypothetical 5% Return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s 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 182/366 (to reflect the one-half year period).

1

Disclosure of Fund expenses

Delaware Tax-Free Minnesota Fund
Expense analysis of an investment of $1,000

   Beginning Ending   Expenses
  Account Value   Account Value Annualized Paid During Period
         9/1/07        2/29/08        Expense Ratio        9/1/07 to 2/29/08*
Actual Fund Return           
Class A   $1,000.00                     $992.90           1.19%           $5.90          
Class B 1,000.00   989.20 1.94%     9.59
Class C   1,000.00     990.00     1.94%     9.60  
Hypothetical 5% return (5% return before expenses)      
Class A $1,000.00           $1,018.95 1.19% $5.97
Class B 1,000.00 1,015.22 1.94%  9.72
Class C   1,000.00     1,015.22     1.94%    9.72  
 

The expenses in the table above includes interest and related expenses which include, but are not limited to interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floaters programs.

See Notes 1 and 7 in “Notes to financial statements.”

Delaware Tax-Free Minnesota Intermediate Fund
Expense analysis of an investment of $1,000

 
   Beginning Ending   Expenses
  Account Value   Account Value Annualized Paid During Period
         9/1/07        2/29/08        Expense Ratio        9/1/07 to 2/29/08*
Actual Fund Return         
Class A $1,000.00 $1,013.20 0.75% $3.75
Class B 1,000.00 1,008.90 1.60% 7.99
Class C   1,000.00     1,008.90     1.60%   7.99  
Hypothetical 5% return (5% return before expenses)    
Class A $1,000.00 $1,021.13 0.75% $3.77
Class B 1,000.00 1,016.91 1.60% 8.02
Class C   1,000.00     1,016.91     1.60%   8.02  

2

Delaware Minnesota High-Yield Municipal Bond Fund
Expense analysis of an investment of $1,000

   Beginning Ending   Expenses
  Account Value   Account Value Annualized Paid During Period
         9/1/07        2/29/08        Expense Ratio        9/1/07 to 2/29/08*
Actual Fund Return         
Class A $1,000.00   $970.50 0.89% $4.36  
Class B 1,000.00 966.90   1.64% 8.02
Class C   1,000.00     967.00     1.64%   8.02  
Hypothetical 5% return (5% return before expenses)    
Class A $1,000.00 $1,020.44 0.89% $4.47
Class B 1,000.00 1,016.71 1.64% 8.22
Class C   1,000.00     1,016.71     1.64%   8.22  

3


Sector allocations and credit quality breakdowns 
Delaware Minnesota Municipal Bond Funds    As of February 29, 2008


Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free Minnesota Fund

Sector  Percentage of net assets
Municipal Bonds        102.40 % 
Corporate-Backed Revenue Bonds  4.11 % 
Education Revenue Bonds  6.22 % 
Electric Revenue Bonds  7.84 % 
Escrowed to Maturity Bonds  6.20 % 
Health Care Revenue Bonds  15.93 % 
Housing Revenue Bonds  6.59 % 
Lease Revenue Bonds  3.40 % 
Local General Obligation Bonds  10.60 % 
Pre-Refunded Bonds  31.17 % 
Special Tax Revenue Bonds  1.80 % 
State General Obligation Bonds  5.70 % 
Transportation Revenue Bonds  1.12 % 
Water & Sewer Revenue Bond  1.72 % 
Short-Term Investments  1.35 % 
Money Market Instrument  0.97 % 
Variable Rate Demand Note  0.38 % 
Total Value of Securities  103.75 % 
Liabilities Net of Receivables and Other Assets  (3.75 %) 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)     
AAA  51.94 % 
AA  15.67 % 
A  14.69 % 
BBB  11.26 % 
BB  1.07 % 
Not Rated  5.37 % 
Total  100.00 % 

4

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free Minnesota Intermediate Fund

Sector  Percentage of net assets
Municipal Bonds           93.77 % 
Corporate-Backed Revenue Bonds  3.03 % 
Education Revenue Bonds  5.62 % 
Electric Revenue Bond  1.65 % 
Escrowed to Maturity Bond  1.95 % 
Health Care Revenue Bonds  12.74 % 
Housing Revenue Bonds  7.44 % 
Lease Revenue Bonds  3.19 % 
Local General Obligation Bonds  14.00 % 
Pre-Refunded Bonds  21.33 % 
Special Tax Revenue Bond  3.93 % 
State General Obligation Bonds  13.41 % 
Transportation Revenue Bonds  2.27 % 
Water & Sewer Revenue Bonds  3.21 % 
Short-Term Investments  8.28 % 
Money Market Instrument  3.97 % 
Variable Rate Demand Note  4.31 % 
Total Value of Securities  102.05 % 
Liabilities Net of Receivables and Other Assets  (2.05 %) 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)     
AAA  45.44 % 
AA  20.63 % 
A  12.32 % 
BBB  13.60 % 
Not Rated  8.01 % 
Total  100.00 % 

5

Sector allocations and credit quality breakdowns
Delaware Minnesota Municipal Bond Funds


Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Minnesota High-Yield Municipal Bond Fund

Sector  Percentage of net assets
Municipal Bonds       98.37 % 
Corporate-Backed Revenue Bonds  3.46 % 
Education Revenue Bonds  7.57 % 
Electric Revenue Bonds  6.46 % 
Health Care Revenue Bonds  29.42 % 
Housing Revenue Bonds  14.09 % 
Lease Revenue Bonds  1.88 % 
Local General Obligation Bonds  9.93 % 
Pre-Refunded Bonds  12.61 % 
Special Tax Revenue Bonds  3.69 % 
State General Obligation Bonds  4.25 % 
Transportation Revenue Bond  1.37 % 
Water & Sewer Revenue Bonds  3.64 % 
Short-Term Investments  1.86 % 
Money Market Instrument  0.39 % 
Variable Rate Demand Notes  1.47 % 
Total Value of Securities  100.23 % 
Liabilities Net of Receivables and Other Assets  (0.23 %) 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)     
AAA  27.06 % 
AA  14.31 % 
A  20.69 % 
BBB  16.30 % 
BB  1.19 % 
Not Rated  20.45 % 
Total  100.00 % 

6


Statements of net assets  
Delaware Tax-Free Minnesota Fund   February 29, 2008 (Unaudited)

       Principal amount         Value
Municipal Bonds – 102.40%       
Corporate-Backed Revenue Bonds – 4.11%      
     Cloquet Pollution Control Revenue Refunding      
          (Potlatch Corporation Project) 5.90% 10/1/26 $ 6,500,000 $ 6,197,360
     Laurentian Energy Authority I Cogeneration Revenue        
          Series A 5.00% 12/1/21 8,000,000   7,402,000
     Sartell Environmental Improvement Revenue Refunding      
          (International Paper) Series A 5.20% 6/1/27 7,265,000   6,323,747
     Seaway Port Authority of Duluth Industrial Development      
          Dock & Wharf Revenues Refunding      
          (Cargill Project) Series E 6.125% 11/1/14 4,500,000   4,522,995
        24,446,102
Education Revenue Bonds – 6.22%      
     Minnesota State Colleges & Universities      
          Revenue Fund Series A      
          5.00% 10/1/22 (FSA) 5,135,000   5,164,013
          5.00% 10/1/29 (MBIA) 5,665,000   5,497,316
     Minnesota Higher Education Facilities Authority Revenue      
          (Augsburg College)      
          Series 6-C 5.00% 5/1/20  1,250,000   1,197,650
          Series 6-J1 5.00% 5/1/36  2,225,000   1,924,113
     Minnesota State Higher Education Facilities Authority Revenue      
          (College of St. Benedict) Series 4-G 6.20% 3/1/16 1,000,000   1,000,960
          (St. Catherine College) Series 5-N1      
          5.00% 10/1/18 2,200,000   2,174,986
          5.25% 10/1/22 1,500,000   1,455,315
          5.375% 10/1/32 1,000,000   922,530
     St. Cloud Housing & Redevelopment Authority Revenue      
          (State University Foundation Project) 5.00% 5/1/23 2,000,000   1,993,540
     University of Minnesota      
          &15.50% 7/1/21 10,500,000   11,346,300
          &25.75% 7/1/18 3,840,000   4,339,949
      37,016,672
Electric Revenue Bonds – 7.84%      
     Chaska Electric Revenue Refunding (Generating Facilities)      
          Series A 5.00% 10/1/30 3,000,000   2,734,920
     Minnesota State Municipal Power Agency Electric Revenue      
          5.00% 10/1/35 3,000,000   2,780,160
          Series A 5.00% 10/1/34 6,250,000   5,807,563
          Series A 5.125% 10/1/29  3,000,000   2,902,860

7

Statements of net assets
Delaware Tax-Free Minnesota Fund

        Principal amount         Value
Municipal Bonds (continued)       
Electric Revenue Bonds (continued)      
     Northern Municipal Power Agency Electric System Revenue        
          &3Series 32 5.25% 1/1/13 (FSA) $ 9,170,000 $ 9,527,538
          ^Capital Appreciation Series A 5.85% 1/1/09 (AMBAC)   3,815,000   3,727,026
          Refunding Series B 4.75% 1/1/20 (AMBAC) 2,500,000   2,471,975
     Puerto Rico Electric Power Authority Power Revenue      
          Refunding Series GG 4.75% 7/1/21 (FSA) 1,000,000   986,340
     Southern Minnesota Municipal Power Agency Supply      
          System Revenue      
          &45.25% 1/1/14 (AMBAC) 4,000,000   4,262,140
          &55.25% 1/1/15 (AMBAC) 5,900,000   6,289,872
          Series A 5.25% 1/1/15 (AMBAC) 3,000,000   3,198,240
          ^Capital Appreciation 4.44% 1/1/25 (MBIA)  5,000,000   1,979,200
      46,667,834
Escrowed to Maturity Bonds – 6.20%      
     Dakota - Washington Counties Housing &      
          Redevelopment Authority Single Family Residential      
          Mortgage Revenue      
          8.15% 9/1/16 (MBIA) (GNMA) (AMT) 405,000   524,082
          (Anoka) 8.45% 9/1/19 (GNMA) (AMT) 9,000,000   12,148,110
          (Bloomington Mortgage) Refunding Series B       
          8.375% 9/1/21 (GNMA) (FHA) (VA) (AMT) 14,115,000   19,094,489
     Southern Minnesota Municipal Power Agency Supply      
          System Revenue Refunding Series B      
          5.50% 1/1/15 (AMBAC) 990,000   1,049,846
     University of Minnesota Series A 5.50% 7/1/21 2,000,000   2,161,220
     Western Minnesota Municipal Power Agency Supply      
          Revenue Series A      
          6.60% 1/1/10 900,000   940,752
          9.75% 1/1/16 (MBIA) 715,000   968,947
      36,887,446
Health Care Revenue Bonds – 15.93%      
     Aitkin Health Care Facilities Revenue Refunding      
          (Riverwood Health Care Center) 5.60% 2/1/32  1,500,000   1,325,460
     Apple Valley Economic Development Authority Health      
          Care Revenue (Augustana Home St. Paul Project)      
          Series A 6.00% 1/1/40 2,700,000   2,473,659

8


        Principal amount       Value
Municipal Bonds (continued)     
Health Care Revenue Bonds (continued)    
     Bemidji Health Care Facilities First Mortgage Revenue    
          (North Country Health Services)    
          5.00% 9/1/24 (RADIAN) $ 740,000   $ 699,433
     Bloomington Housing & Redevelopment Authority    
          Revenue (Senior Summerhouse Bloomington    
          Project - PHM) 6.125% 5/1/35 3,420,000 3,086,653
     Breckenridge Catholic Health Initiatives    
          Series A 5.00% 5/1/30 2,500,000 2,310,675
     Buffalo Health Care Revenue Refunding    
          (Central Minnesota Senior Housing Project)    
          Series A 5.50% 9/1/33   1,270,000 1,092,467
     Maple Grove Health Care Facilities Revenue    
          (North Memorial Health Care) 5.00% 9/1/29 1,000,000 914,440
     Maple Grove Health Care System Revenue    
          (Maple Grove Hospital) 5.25% 5/1/37 4,000,000 3,678,760
     Minneapolis Health Care Facilities Revenue    
          (Jones-Harrison Residence Project) 5.60% 10/1/30 1,550,000 1,379,020
     Minneapolis Health Care System Revenue    
          (Fairview Health Services) Series D    
          5.00% 11/15/30 (AMBAC) 2,500,000 2,348,050
          5.00% 11/15/34 (AMBAC) 10,750,000 10,101,344
     Minneapolis - St. Paul Housing & Redevelopment      
          Authority Health Care System Revenue    
          (Health Partners Obligation Group Project)    
          5.625% 12/1/22 650,000 638,762
          5.875% 12/1/29 1,000,000 981,240
     Minnesota Agricultural & Economic    
          Development Board Revenue     
          (Benedictine Health Systems) 5.75% 2/1/29 1,895,000 1,713,554
          (Fairview Health Care System) Un-refunded Balance    
          Series A 5.75% 11/15/26 (MBIA) 180,000 182,135
          6.375% 11/15/29 15,000 15,416
     Northfield Hospital Revenue 5.375% 11/1/26 3,785,000 3,469,445
     Northfield Housing & Redevelopment Authority Revenue    
          Refunding (Northfield Retirement Project)    
          Series A 5.375% 12/1/36  1,000,000 842,410
     Prior Lake Senior Housing Revenue    
          (Shepherds Path Senior Housing)    
          Series B 5.70% 8/1/36 2,000,000 1,826,140

9

Statements of net assets
Delaware Tax-Free Minnesota Fund

 

Principal amount       Value
Municipal Bonds (continued)     
Health Care Revenue Bonds (continued)    
     Rochester Health Care Facilities Revenue    
          (Mayo Foundation) Series B 5.50% 11/15/27 $ 700,000 $ 703,402
          &6Series A 5.50% 11/15/27 4,200,000 4,220,412
          &7Series B 5.50% 11/15/27 16,750,000 16,831,404
     Shakopee Health Care Facilities Revenue (St. Francis    
          Regional Medical Center)    
          5.10% 9/1/25 2,000,000 1,841,140
          5.25% 9/1/34 7,000,000 6,239,730
     Sherburne County Health Care Facilities Revenue     
          (Guardian Angels Health Services) 5.55% 10/1/36  1,500,000 1,302,330
     St. Paul Housing & Redevelopment Authority Health Care    
          Facilities Revenue    
          (Allina Health System) Series A 5.00% 11/15/18 (MBIA) 5,720,000 5,738,361
          (Health Partners Obligation Group Project)    
          5.25% 5/15/36 7,900,000 6,857,911
     St. Paul Housing & Redevelopment Authority Hospital    
          Revenue (Health East Project)    
          6.00% 11/15/35 4,340,000 4,033,553
          Series A 5.70% 11/1/15   1,300,000 1,310,075
     St. Paul Housing & Redevelopment Authority Multifamily        
          Housing Revenue Refunding (Marion Center Project)    
          Series A 5.30% 11/1/30 500,000 412,030
          Series A 5.375% 5/1/43 500,000 398,245
     Stillwater Health Care Revenue (Health System     
          Obligation Group) 5.00% 6/1/35 1,000,000 892,890
     Washington County Housing & Redevelopment Authority    
          Revenue (Health East Project)    
          5.50% 11/15/27 1,000,000 901,440
     Willmar (Rice Memorial Hospital Project)    
          5.00% 2/1/22 (FSA) 1,000,000 1,011,910
          5.00% 2/1/25 (FSA) 1,000,000 997,700
     Woodbury Economic Development Authority Housing     
          Revenue (Senior Summerhouse    
          Woodbury Project) Series B 5.75% 6/1/41 2,250,000 1,987,943
    94,759,539

10


  Principal amount   Value
Municipal Bonds (continued)       
Housing Revenue Bonds – 6.59%      
     Brooklyn Center Multifamily Housing Revenue Refunding      
         (Shingle Creek) 5.40% 5/20/43 (GNMA) (AMT) $ 1,000,000       $ 919,180
     Dakota County Housing & Redevelopment Authority      
         Single Family Mortgage Revenue      
         5.85% 10/1/30 (GNMA) (FNMA) (AMT) 158,000   155,848
     Hopkins Multifamily Housing Revenue (Hopkins      
         Renaissance Project) 6.375% 4/1/20 (HUD Section 8) 1,000,000   1,016,460
  @Hutchinson Multifamily Housing Revenue (Evergreen      
         Apartments Project)      
         5.75% 11/1/28 (HUD Section 8)   825,000   715,943
     Minneapolis Multifamily Housing Revenue      
         (Bottineau Commons Project)      
         5.45% 4/20/43 (GNMA) (AMT) 1,500,000   1,430,340
         (Grant Street Apartments Project)      
         Series A 7.25% 11/1/29 750,000   760,095
         (Seward Towers Project) 5.00% 5/20/36 (GNMA) 8,000,000   7,375,599
         (Sumner Field) Series A 5.50% 11/20/26 (GNMA) (AMT) 950,000   937,023
         (Trinity Apartments) Refunding Series A      
         6.75% 5/1/21 (HUD Section 8) 1,680,000   1,705,066
     Minnesota Housing Finance Agency Rental Housing       
         Revenue Series C-2 5.95% 2/1/15 (AMBAC) 1,642,000   1,643,938
     Minnesota Housing Finance Agency      
         (Residential Housing)      
         Series A 5.30% 7/1/19 495,000   503,801
         Series B 5.35% 1/1/33 (AMT) 2,955,000   2,766,146
       ·Series D 4.80% 7/1/38 (AMT)   2,500,000     2,132,250
         Series I 4.85% 7/1/38 (AMT) 2,000,000   1,735,180
         5.15% 7/1/38 (AMT) 5,550,000   5,008,153
         Series M 4.875% 7/1/37 (AMT) 4,500,000   3,904,740
         (Single Family Mortgage) Series J 5.90% 7/1/28 (AMT) 435,000   435,035
   @Park Rapids Multifamily Revenue (The Court Apartments      
         Project) 6.30% 2/1/20 (HUD Section 8) 2,735,000   2,597,594
     St. Cloud Housing & Redevelopment Authority      
         Multifamily Housing Revenue (Sterling      
         Heights Apartments Project) 7.55% 4/1/39 (AMT)  1,000,000   945,830

11

Statements of net assets
Delaware Tax-Free Minnesota Fund

 

    Principal amount   Value
Municipal Bonds (continued)         
Housing Revenue Bonds (continued)        
     St. Louis Park Residential Single Family Mortgage        
          Revenue Series A 7.25% 4/20/23 (GNMA) $ 13,000       $ 13,212
     Washington County Housing & Redevelopment Authority        
          Governmental Revenue Refunding (Briar Pond)        
          Series C 7.25% 8/20/34   940,000   817,424
     White Bear Lake Multifamily Revenue Refunding (Lake        
          Square) Series A 5.875% 2/1/15 (FHA)   905,000   915,055
     Willmar Housing & Redevelopment Authority Multifamily        
          Housing Revenue (Highland Apartments)        
          5.85% 6/1/19 (HUD Section 8)   860,000   804,367
        39,238,279
Lease Revenue Bonds – 3.40%        
     Minneapolis Special School District #001 Series A        
          5.00% 2/1/18 (FSA)   1,545,000   1,595,135
          5.00% 2/1/19 (FSA)   1,535,000   1,562,538
          5.00% 2/1/20 (FSA)   1,690,000     1,710,618
     Puerto Rico Public Buildings Authority Revenue        
          (Guaranteed Government Facilities) Un-refunded         
          Balance Series D 5.25% 7/1/36   1,070,000   984,347
     St. Paul Port Authority Lease Revenue        
          (Cedar Street Office Building Project)        
          5.00% 12/1/22   2,500,000   2,514,525
          5.25% 12/1/27   3,840,000   3,830,322
          Series 3-12 5.125% 12/1/27   3,000,000   2,939,880
          (Robert Street Office Building Project) Series 3-11        
          4.75% 12/1/23   2,000,000   1,922,580
          5.00% 12/1/27   2,500,000   2,444,550
          Series 9 5.25% 12/1/27   725,000   726,755
        20,231,250
Local General Obligation Bonds – 10.60%        
     Dakota County Community Development Agency        
          (Senior Housing Facilities) 5.00% 1/1/21   1,275,000   1,283,313
     Farmington Independent School District #192        
          Series B 5.00% 2/1/27 (FSA)   10,705,000   10,575,576
     Hennepin County Regional Railroad Authority        
          5.00% 12/1/31   4,030,000   3,883,227
     Lakeville Independent School District #194        
          Series A 4.75% 2/1/22 (FSA)   7,850,000   7,724,085

12


  Principal amount       Value
Municipal Bonds (continued)     
Local General Obligation Bonds (continued)    
    ^Mahtomedi Independent School District #832 Capital    
          Appreciation Series B 5.90% 2/1/14 (MBIA) $ 1,540,000 $ 1,206,621
     Metropolitan Council Minneapolis/St. Paul Metropolitan    
          Area Waste Water Treatment    
          Series B 5.00% 12/1/21 1,200,000 1,219,848
          Series C 5.00% 3/1/16 1,690,000 1,823,645
     Minneapolis Library 5.00% 12/1/25 1,500,000 1,485,960
     Minneapolis Tax Increment Revenue Refunding      
          (St. Anthony Falls Project) 5.75% 2/1/27 1,000,000 878,960
     Mounds View Independent School District #621 Series A    
          5.00% 2/1/20 (MBIA) 2,970,000   2,993,522
     New Brighton Tax Increment Series A    
          5.00% 2/1/26 (MBIA) 1,185,000 1,165,673
          5.00% 2/1/27 (MBIA) 1,000,000 980,780
          5.00% 2/1/28 (MBIA) 1,000,000 976,540
     Osseo Independent School District #279 Series A    
          5.00% 2/1/21 (FSA) 3,570,000 3,604,629
     Prior Lake Independent School District #719 Series B    
          5.00% 2/1/19 (FSA) 3,145,000 3,239,413
     Ramsey County State Aid Series C 5.00% 2/1/28 1,060,000 1,057,308
     Robbinsdale Independent School District #281      
          5.00% 2/1/21 (FSA) 1,310,000 1,322,707
    ^Rosemount Independent School District #196 Capital      
          Appreciation Series B    
          5.80% 4/1/09 (FSA) 1,860,000 1,809,185
          5.85% 4/1/10 (FSA) 2,240,000 2,110,125
          5.931% 4/1/11 (FSA) 2,600,000 2,352,142
          5.961% 4/1/12 (FSA) 1,850,000 1,600,158
          6.008% 4/1/13 (FSA) 1,915,000 1,577,596
    ^Sartell Independent School District #748    
          Capital Appreciation Series B    
          5.976% 2/1/13 (MBIA) 540,000 452,061
          6.100% 2/1/15 (MBIA) 1,075,000 816,452
          6.15% 2/1/16 (MBIA) 1,750,000 1,261,453
     St. Peter’s Hospital Series A 5.00% 9/1/24 (MBIA) 1,905,000 1,900,752

13

Statements of net assets
Delaware Tax-Free Minnesota Fund

 

  Principal amount   Value
Municipal Bonds (continued)       
Local General Obligation Bonds (continued)      
     Todd Morrison Cass & Wadena Counties United Hospital      
          District (Health Care Facilities-Lakewood)      
          5.00% 12/1/21 $ 2,000,000       $ 1,922,860
          5.00% 12/1/34 1,000,000   884,450
          5.125% 12/1/24 1,000,000   948,710
      63,057,751
§Pre-Refunded Bonds – 31.17%      
     Big Lake Independent School District #727 Series A      
          5.00% 2/1/17-10 (FSA) 1,040,000   1,077,419
          5.00% 2/1/20-10 (FSA) 1,000,000   1,035,980
     Bloomington Independent School District #271      
          Series B 5.00% 2/1/17-10 5,300,000   5,490,694
     Centennial Independent School District #012      
          Series A 5.00% 2/1/18-12 (FSA)  1,270,000   1,339,215
     Chaska Electric Revenue Series A 6.00% 10/1/25-10   1,000,000   1,071,450
     Dakota County Capital Improvement      
          Series A 4.75% 2/1/26-11 1,000,000   968,290
     Duluth Economic Development Authority Health      
          Care Facilities Revenue (Benedictine Health System)      
          (St. Mary’s Hospital)      
          5.25% 2/15/28-14 8,500,000   8,027,910
          5.25% 2/15/33-14 10,000,000   9,180,499
          5.50% 2/15/23-14 1,000,000   995,940
    ^Farmington Independent School District #192 Capital      
          Appreciation Series B      
          5.34% 2/1/21-12 (FSA) 1,650,000   929,462
          5.424% 2/1/20-12 (FSA) 1,500,000   801,120
     Hopkins Housing & Redevelopment Authority       
          (Public Works & Fire Station) Series A      
          5.00% 2/1/23-13 (MBIA) 1,210,000   1,297,604
     ^Lakeville Independent School District #194 Capital      
          Appreciation Series B 5.45% 2/1/19-10 (FSA) 8,000,000   4,609,200
     Marshall Medical Center Gross Revenue (Weiner       
          Memorial Medical Center Project) 6.00% 11/1/28-09 1,000,000   1,046,100
     Minneapolis Community Development Agency Series G-3      
          5.45% 12/1/31-11 2,000,000   2,158,320
     Minneapolis Health Care System Revenue      
          (Allina Health Systems) Series A 5.75% 11/15/32-12 17,300,000   18,974,466
          (Fairview Health Services) Series A 5.625% 5/15/32-12 16,925,000   18,474,145

14


    Principal amount   Value
Municipal Bonds (continued)         
§Pre-Refunded Bonds (continued)         
     Minneapolis - St. Paul Metropolitan Airports        
          Commission Revenue        
          Series A        
          5.125% 1/1/25-09 (FGIC) $ 100,000       $ 102,976
          5.25% 1/1/32-11 (FGIC)   5,000,000   5,294,650
          Series C        
          5.125% 1/1/20-11 (FGIC)   2,000,000   2,111,120
          5.25% 1/1/32-11 (FGIC)   8,845,000   9,366,236
          5.50% 1/1/17-11 (FGIC)   2,500,000   2,664,200
     Minneapolis Tax Increment Revenue        
          Series E 5.00% 3/1/13-09   6,265,000   6,405,837
     Minnesota Agricultural & Economic Development Board        
          Revenue (Fairview Health Care System)        
          Series A 6.375% 11/15/29-10   485,000   532,030
     Minnesota Public Facilities Authority Water        
          Pollution Control Revenue        
          Series A 5.00% 3/1/20-10   3,000,000   3,122,610
          Series B 4.75% 3/1/19-09   2,000,000   2,039,840
     Morris Independent School District #769 Building        
          5.00% 2/1/24-13 (MBIA)   4,875,000   5,180,224
     Mounds View Independent School District #621 Series A        
          5.375% 2/1/24-11 (FGIC)   6,170,000   6,533,043
     Puerto Rico Commonwealth        
          Series A 5.00% 7/1/34-14   2,830,000   3,055,127
          Series B 5.00% 7/1/35-16   925,000   997,816
     Puerto Rico Public Buildings Authority Guaranteed        
          Government Facilities Revenue        
          Series D 5.25% 7/1/36-12   2,930,000   3,129,123
     Rochester Electric Utilities Revenue 5.25% 12/1/30-10   4,915,000   5,211,571
     Rochester Multifamily Housing Revenue (Wedum        
          Shorewood Campus Project) 6.60% 6/1/36-09   3,890,000   4,136,859
     Rockford Independent School District # 883        
          5.60% 2/1/21-10 (FSA)   3,210,000   3,361,191
          5.625% 2/1/23-10 (FSA)   7,020,000   7,353,871
     ^Sauk Rapids Independent School District #047 Series B        
          5.982% 2/1/15-11 (FSA)   2,700,000   1,933,551
          6.083% 2/1/17-11 (FSA)   2,245,000   1,422,881

15

Statements of net assets
Delaware Tax-Free Minnesota Fund

 

    Principal amount       Value
Municipal Bonds (continued)     
§Pre-Refunded Bonds (continued)    
     Shakopee Public Utilities Commission Revenue    
          5.125% 2/1/26-09 (MBIA) $ 2,850,000   $  2,907,485
     South Washington County Independent School District    
          #833 Series A 5.60% 2/1/20-10 (MBIA) 6,880,000 7,230,398
     Southern Minnesota Municipal Power Agency Supply    
          Revenue Series A    
          5.75% 1/1/18-13 3,790,000 4,109,724
          5.75% 1/1/18-13 (AMBAC) 670,000 726,521
          5.75% 1/1/18-13 (MBIA) 1,000,000 1,084,360
     St. Louis Park Health Care Facilities Revenue    
          (Park Nicollet Health Services) Series B    
          5.25% 7/1/30-14 9,420,000 10,251,692
          5.50% 7/1/25-14 2,000,000 2,204,620
     St. Michael Independent School District #885    
          5.00% 2/1/20-12 (FSA) 1,970,000 2,077,365
          5.00% 2/1/27-12 (FSA) 3,435,000 3,436,065
      185,460,800
 Special Tax Revenue Bonds – 1.80%    
     ^Minneapolis Community Development Agency Tax    
          Increment Revenue Capital Appreciation Revenue    
          6.673% 9/1/09 (MBIA) 5,750,000 5,512,295
     Puerto Rico Commonwealth Infrastructure Financing    
          Authority Special Tax Revenue    
          Series B 5.00% 7/1/46  4,000,000 3,493,120
     Virgin Islands Public Finance Authority Revenue (Senior    
          Lien Matching Fund Loan) Series A 5.25% 10/1/22 1,785,000 1,710,316
      10,715,731
 State General Obligation Bonds – 5.70%    
     Minnesota State    
         5.00% 10/1/15 7,000,000 7,582,680
         5.00% 11/1/20 (FSA)  13,675,000 13,818,724
         5.00% 8/1/21 2,400,000 2,427,408
     Puerto Rico Commonwealth Public Improvement Series A    
         5.00% 7/1/34 1,670,000 1,505,154
         5.50% 7/1/17 4,070,000 4,218,555
         5.50% 7/1/18 1,240,000 1,277,374
         Refunding 5.50% 7/1/19 (MBIA) 1,500,000 1,558,935
         Series B 5.00% 7/1/35  575,000 516,603

16


  Principal amount         Value  
 Municipal Bonds (continued)       
 State General Obligation Bonds (continued)      
     Puerto Rico Government Development Bank Senior Notes      
          Series B 5.00% 12/1/14 $ 1,000,000  $ 1,025,210  
      33,930,643  
 Transportation Revenue Bonds – 1.12%      
     Minneapolis/St. Paul Metropolitan Airports Commission      
          Revenue Series A      
          5.00% 1/1/22 (MBIA) 2,000,000   1,943,440  
          5.00% 1/1/15 (AMT) 3,095,000   3,210,876  
          5.25% 1/1/16 (MBIA) 1,460,000   1,514,765  
      6,669,081  
 Water & Sewer Revenue Bond – 1.72%      
 &8Minnesota Public Facilities Authority II Water Pollution      
          Control Revenue 5.25% 3/1/18  10,000,000   10,248,500  
      10,248,500  
 Total Municipal Bonds (cost $610,763,132)     609,329,628  
 
  Number of shares    
 Short-Term Investments – 1.35%       
 Money Market Instrument – 0.97%      
     Federated Minnesota Municipal Cash Trust 5,774,911   5,774,911  
      5,774,911  
 
  Principal amount    
·Variable Rate Demand Note – 0.38%      
     University of Minnesota Series C 3.23% 12/1/36  $ 2,260,000   2,260,000  
      2,260,000  
 Total Short-Term Investments (cost $8,034,911)     8,034,911  
 
 Total Value of Securities – 103.75%       
     (cost $618,798,043)     617,364,539  
 Liabilities Net of Receivables and       
     Other Assets* – (3.75%)        (22,317,303 )
 Net Assets Applicable to 50,295,839       
     Shares Outstanding – 100.00%     $ 595,047,236  

17

Statements of net assets
Delaware Tax-Free Minnesota Fund

 

 
Net Asset Value – Delaware Tax-Free Minnesota Fund  $11.83
     Class A ($556,259,563 / 47,024,386 Shares)  
Net Asset Value – Delaware Tax-Free Minnesota Fund  
     Class B ($13,210,265 / 1,115,914 Shares)  $11.84
Net Asset Value – Delaware Tax-Free Minnesota Fund  
     Class C ($25,577,408 / 2,155,539 Shares)  $11.87
 
Components of Net Assets at February 29, 2008:   
Shares of beneficial interest (unlimited authorization – no par) $595,065,901
Distributions in excess of net investment income (22,417 )
Accumulated net realized gain on investments 1,437,256
Net unrealized depreciation of investments (1,433,504 )
Total net assets $595,047,236

^ Zero coupon security. The rate shown is the yield at the time of purchase.
· Variable rate security. The rate shown is the rate as of February 29, 2008.
§ 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 10 in “Notes to financial statements.”
@ Illiquid security. At February 29, 2008, the aggregate amount of illiquid securities was $3,313,537, which represented 0.56% of the Fund’s net assets. See Note 10 in “Notes to financial statements.”
* Includes $32,180,000 in liability for Inverse Floater programs. See Note 7 in “Notes to financial statements.”
&1 Security held in a trust in connection with the Inverse Floater security $5,250,000, 9.341%, 7/1/21.
&2 Security held in a trust in connection with the Inverse Floater security $1,920,000, 9.922%, 7/1/18.
&3 Security held in a trust in connection with the Inverse Floater security $4,585,000, 8.710%, 1/1/13.
&4 Security held in a trust in connection with the Inverse Floater security $2,000,000, 6.230%, 1/1/14.
&5 Security held in a trust in connection with the Inverse Floater security $2,950,000, 6.230%, 1/1/15.
&6 Security held in a trust in connection with the Inverse Floater security $2,100,000, 9.341%, 11/15/27.

18


 
&7 Security held in a trust in connection with the Inverse Floater security $8,375,000, 9.341%, 11/15/27.
&8 Security held in a trust in connection with the Inverse Floater security $5,000,000, 12.573%, 3/1/18.

For additional information on the Inverse Floater programs, 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 Authority
FNMA — Insured by Federal National Mortgage Association
FSA — Insured by Financial Security Assurance
GNMA — Insured by Government National Mortgage Association
HUD — Housing and Urban Development
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance
VA — Insured by the Veterans Administration

Net Asset Value and Offering Price Per Share –   
      Delaware Tax-Free Minnesota Fund   
Net asset value Class A (A)  $11.83
Sales charge (4.50% of offering price) (B)  0.56
Offering price  $12.39

(A)   Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
 
(B)   See the current prospectus for purchases of $100,000 or more.

See accompanying notes

19


Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund  February 29, 2008 (Unaudited)

 

  Principal amount Value
 Municipal Bonds – 93.77%     
 Corporate-Backed Revenue Bonds – 3.03%    
     Laurentian Energy Authority I Cogeneration Revenue    
          Series A 5.00% 12/1/21 $ 750,000       $ 693,938
     Minneapolis Community Development Agency    
          (Limited Tax Common Bond Fund)       
          Series 4 6.20% 6/1/17 (AMT) 1,055,000 1,059,293
    1,753,231
 Education Revenue Bonds – 5.62%    
     Minnesota Higher Education Facilities Authority Revenue    
          (Macalester College) Series 6-P 4.25% 3/1/27 750,000 653,625
          (University of St. Thomas) Series 5-Y 5.25% 10/1/19 1,590,000 1,603,579
     St. Cloud Housing & Redevelopment Authority Revenue    
          (State University Foundation Project) 5.00% 5/1/23 1,000,000 996,770
    3,253,974
 Electric Revenue Bond – 1.65%    
     Chaska Electric Revenue Refunding    
          (Generating Facilities) Series A 5.25% 10/1/25 1,000,000 955,720
      955,720
 Escrowed to Maturity Bond – 1.95%    
     University of Minnesota Series A 5.75% 7/1/16 1,000,000 1,131,700
    1,131,700
 Health Care Revenue Bonds – 12.74%    
     Minneapolis-St. Paul Housing & Redevelopment    
          Authority Health Care System (Health    
          Partners Obligation Group Project)    
          6.00% 12/1/17 1,125,000 1,164,083
     Moorhead Economic Development Authority    
          Multifamily Housing Revenue Refunding    
          (Eventide Lutheran Home Project) 4.70% 6/1/18 475,000 421,776
     Northfield Hospital Revenue 5.25% 11/1/21  1,000,000 941,280
     Oakdale Elderly Housing Revenue    
          (PHM/Oakdale Project) 5.75% 3/1/18 1,400,000 1,378,594
     Sherburne County Health Care Facilities Revenue    
          (Guardian Angel Health Services) 5.30% 10/1/26 250,000 220,165
     St. Paul Housing & Redevelopment Authority    
          Health Care Revenue (Health East Project)    
          Series B 5.85% 11/1/17 1,160,000 1,166,763

20


        Principal amount         Value
Municipal Bonds (continued)  
Health Care Revenue Bonds (continued)
       St. Paul Housing & Redevelopment Authority Hospital
              Revenue (Allina Health System)
              Series A 5.00% 11/15/14 (MBIA)   $ 2,000,000 $ 2,083,460
7,376,121
Housing Revenue Bonds – 7.44%
       Minneapolis Multifamily Housing Revenue Refunding
              (Trinity Apartments) (HUD Section 8)
              Series A 6.75% 5/1/21 1,750,000 1,776,110
       Minnesota Housing Finance Agency Residential Housing
              Series I 5.10% 7/1/20 (AMT) 785,000 773,994
              Series M 4.85% 7/1/31(AMT)  1,000,000 881,590
              Single Family Mortgage Series J 5.90% 7/1/28 (AMT) 395,000 395,032
   @Park Rapids Multifamily Housing Revenue
              (The Court Apartments Project) (HUD Section 8)
              6.05% 8/1/12 480,000 482,323
4,309,049
Lease Revenue Bonds – 3.19%
       Edina Housing & Redevelopment Authority
              Public Project Revenue
              (Appropriate Lease Obligation) 5.125% 2/1/19 1,000,000 1,021,770
       Virginia Housing & Redevelopment Authority
              Health Care Facilities Lease Revenue
              5.25% 10/1/25 880,000 824,270
1,846,040
Local General Obligation Bonds – 14.00%
       Big Lake Independent School District #727
              Series C Refunding
              5.00% 2/1/16 (FSA) 1,180,000 1,230,634
              5.00% 2/1/17 (FSA) 1,000,000 1,042,910
       Duluth County Independent School District #709
              Series A 4.25% 2/1/20 (FSA) 710,000 678,504
       Hennepin County Series B 4.75% 12/1/14 1,000,000 1,030,730
       Minneapolis-St. Paul Metropolitan
              Council Area Waste Water
              Series C 5.00% 3/1/16 560,000 604,285
       Minneapolis Tax Increment Revenue
              (Ivy Tower Project) 5.50% 2/1/22 415,000 370,172

21

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund

 

      Principal amount       Value
Municipal Bonds (continued)
Local General Obligation Bonds (continued)
       Osseo Independent School District #279
              Series A 5.00% 2/1/21 (FSA)   $ 1,500,000 $ 1,514,550
       South Washington County Independent School District #833
              Series B 5.00% 2/1/16 (FSA) 1,560,000 1,638,997
  8,110,782
§Pre-Refunded Bonds – 21.33%
       Centennial Independent School District #012
              Series A 5.00% 2/1/18-12 (FSA) 1,000,000 1,054,500
              5.00% 2/1/20-12 (FSA) 750,000 790,875
       Dakota County Capital Improvement
              Series A 4.75% 2/1/17-11 1,000,000 1,032,810
       Hopkins Independent School District #270
              5.125% 2/1/17-12 (FGIC) 2,000,000 2,118,079
       Minneapolis Health Care System Revenue Series A
              (Allina Health Systems) 5.75% 11/15/32-12 1,500,000 1,645,185
              (Fairview Health Services) 5.625% 5/15/32-12 1,750,000 1,910,178
       Minnesota Higher Education Facilities Authority Revenue
              (College of Art & Design)
              Series 5-D 6.625% 5/1/20-10 1,000,000 1,075,520
       Puerto Rico Commonwealth Highway &
              Transportation Authority Revenue
              Series D 5.25% 7/1/38-12 500,000 537,105
       Puerto Rico Commonwealth Public Improvement
              Series A 5.00% 7/1/33-13 500,000 538,355
       St. Louis Park Health Care Facilities Revenue
              (Park Nicollet Health Services)
              Series B 5.50% 7/1/25-14 1,500,000 1,653,465
12,356,072
Special Tax Revenue Bond – 3.93%
       Minneapolis Art Center Facilities Revenue
              (Walker Art Center Project) 5.125% 7/1/21 2,250,000 2,272,500
  2,272,500
State General Obligation Bonds – 13.41%
       Minnesota State
              5.00% 6/1/10 1,330,000 1,395,250
              5.00% 11/1/11 2,000,000 2,135,880
              5.00% 8/1/15 2,000,000 2,164,240
       Puerto Rico Commonwealth Public Improvement Refunding
              Series A 5.25% 7/1/15 1,000,000 1,032,800

22


      Principal amount       Value
Municipal Bonds (continued)
State General Obligation Bonds (continued)
     ·Puerto Rico Public Finance Commonwealth Appropriation
              (LOC Puerto Rico Government Bank)
              Series A 5.75% 8/1/27   $ 1,000,000 $ 1,040,440
7,768,610
Transportation Revenue Bonds – 2.27%
       Minneapolis/St. Paul Metropolitan Airports
              Commission Refunding
              Series A 5.00% 1/1/13 (AMT) 500,000 522,895
              Series 14 5.50% 1/1/11(AMT) 750,000 793,493
  1,316,388
Water & Sewer Revenue Bonds – 3.21%
       Minnesota Public Facilities Authority Water Pollution
              Control Revenue Refunding Series D 5.00% 3/1/14 500,000 539,180
       St. Paul Sewer Revenue Series D 5.00% 12/1/20 1,275,000 1,319,510
  1,858,690
Total Municipal Bonds (cost $53,973,145) 54,308,877
 
  Number of shares
Short-Term Investments – 8.28% 
Money Market Instrument – 3.97%
       Federated Minnesota Municipal Cash Trust 2,297,979 2,297,979
2,297,979
 
Principal amount
·Variable Rate Demand Note – 4.31%
       University of Minnesota Series A 3.23% 1/1/34 $ 2,500,000 2,500,000
  2,500,000
Total Short-Term Investments (cost $4,797,979) 4,797,979

23

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund

 

       
Total Value of Securities – 102.05%          
       (cost $58,771,124) $ 59,106,856
 
Liabilities Net of Receivables and
       Other Assets – (2.05%) (1,187,221 )
 
Net Assets Applicable to 5,493,930
       Shares Outstanding – 100.00% $ 57,919,635
 
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
       Class A ($51,156,296 / 4,853,547 Shares)   $10.54
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
       Class B ($1,342,484 / 127,042 Shares) $10.57
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
       Class C ($5,420,855 / 513,341 Shares) $10.56
 
Components of Net Assets at February 29, 2008:
Shares of beneficial interest (unlimited authorization – no par) $ 59,087,946
Accumulated net realized loss on investments (1,504,043 )
Net unrealized appreciation of investments   335,732
Total net assets $ 57,919,635

Summary of abbreviations:
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FSA — Insured by Financial Security Assurance
HUD — Housing and Urban Development
LOC — Letter of Credit
MBIA — Insured by the Municipal Bond Insurance Association

@ Illiquid security. At February 29, 2008, the aggregate amount of illiquid securities was $482,323, which represented 0.83% of the Fund’s net assets. See Note 10 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 10 in “Notes to financial statements.”
· Variable rate security. The rate shown is the rate as of February 29, 2008.

24


         
Net Asset Value and Offering Price per Share –
       Delaware Tax-Free Minnesota Intermediate Fund
Net asset value Class A (A) $10.54
Sales charge (2.75% of offering price) (B) 0.30
Offering price $10.84

(A)   Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
 
(B)   See the current prospectus for purchases of $100,000 or more.

See accompanying notes

25


Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund February 29, 2008 (Unaudited)

 

      Principal amount       Value
Municipal Bonds – 98.37%
Corporate-Backed Revenue Bonds – 3.46%
       Cloquet Pollution Control Revenue Refunding
              (Potlatch Corporation Project) 5.90% 10/1/26 $ 1,700,000 $ 1,620,848
       Laurentian Energy Authority I Cogeneration Revenue
              Series A 5.00% 12/1/21 1,750,000 1,619,188
       Sartell Environmental Improvement Revenue Refunding
              (International Paper) Series A 5.20% 6/1/27 1,750,000 1,523,270
  4,763,306
Education Revenue Bonds – 7.57%
       Minnesota Higher Education Facilities Authority Revenue
              (Augsburg College)
              Series 6-C 5.00% 5/1/23 700,000 646,940
              Series 6-J1 5.00% 5/1/36 1,000,000 864,770
              (Macalester College) Series 6-P 4.25% 3/1/32 1,500,000 1,261,275
              (St. Olaf)
              Series 6-O 4.50% 10/1/32 1,000,000 847,080
              Series 6-O 5.00% 10/1/22 1,000,000 969,740
              (University of St. Thomas) Series 6-I 5.00% 4/1/23 1,500,000 1,411,965
       Minnesota State Higher Education Facilities
              Authority Revenue (St. Catherine College)
              Series 5-N1 5.375% 10/1/32  2,000,000 1,845,060
       University of Minnesota Special Purpose Revenue
              (Supported Stadium Debt) 5.00% 8/1/29 2,660,000 2,584,961
  10,431,791
Electric Revenue Bonds – 6.46%
       Chaska Electric Revenue Refunding (Generating Facilities)
              Series A 5.25% 10/1/25 1,000,000 955,720
       Minnesota State Municipal Power Agency Electric Revenue
              5.00% 10/1/35 1,000,000 926,720
              Series A 5.00% 10/1/34 2,750,000 2,555,328
       Southern Minnesota Municipal Power Agency Supply System
              Revenue Series A 5.25% 1/1/16 (AMBAC) 1,000,000 1,062,590
       Western Minnesota Municipal Power Agency Revenue
              5.00% 1/1/36 (FSA) 2,250,000 2,152,170
              Series A 5.00% 1/1/30 (MBIA) 1,335,000 1,255,487
  8,908,015
Health Care Revenue Bonds – 29.42%
       Aitkin Health Care Facilities Revenue Refunding
              (Riverwood Health Care Center) 5.50% 2/1/24 700,000 649,152

26


      Principal amount       Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
       Apple Valley Economic Development Authority Health
              Care Revenue (Augustanna Home St. Paul Project)
              Series A 5.80% 1/1/30 $ 1,000,000 $ 912,020
       Bemidji Health Care Facilities First Mortgage Revenue
              (North Country Health Services)
              5.00% 9/1/31 (RADIAN) 2,500,000 2,262,924
              Refunding 5.00% 9/1/20 1,150,000 1,125,425
       Breckenridge Catholic Health Initiatives
              Series A 5.00% 5/1/30 2,000,000 1,848,540
       Detroit Lakes Housing & Health Facilities Revenue Refunding
              (Mankato Lutheran Homes) Series D 5.50% 8/1/21 500,000 467,315
       Glencoe Health Care Facilities Revenue
              (Glencoe Regional Health Services Project)
              5.00% 4/1/20 1,100,000 1,024,232
              5.00% 4/1/31 1,965,000 1,652,034
       Mahtomedi Senior Housing Revenue Refunding
              (St. Andrews Village Project) 5.75% 12/1/40 1,000,000 884,030
       Maple Grove Health Care Revenue Facilities
              (North Memorial Health Care) 5.00% 9/1/35 3,590,000 3,195,314
       Maple Grove Health Care System Revenue
              (Maple Grove Hospital) 5.25% 5/1/37 1,000,000 919,690
       Minneapolis Health Care Facilities Revenue
              (Augustana Chapel View Homes) Series D 5.75% 6/1/29 1,000,000 919,510
              (Jones-Harrison Residence Project) 5.60% 10/1/30 1,500,000 1,334,535
       Minneapolis Health Care System Revenue
              (Fairview Health Services) 
              Series D 5.00% 11/15/34 (AMBAC) 1,000,000 939,660
       Minneapolis-St. Paul Housing & Redevelopment
              Authority (Health Partners Obligation Group Project)
              6.00% 12/1/17 1,125,000 1,164,083
       Minnesota Agricultural & Economic Development Board
              Revenue (Benedictine Health Systems) 5.75% 2/1/29 1,000,000 904,250
       Moorhead Economic Development Authority Multifamily
              Housing Revenue Refunding (Eventide Project)
              Series A 5.15% 6/1/29 550,000 455,950
       North Oaks Senior Housing Revenue (Presbyterian Homes)
              6.25% 10/1/47 1,000,000 947,610
       Northfield Hospital Revenue 5.375% 11/1/31 1,000,000 885,780
       Northfield Housing & Redevelopment Authority (Northfield
              Retirement Center) Series B 5.125% 12/1/26 750,000 635,325

27

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund

 

      Principal amount       Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
       Oakdale Elderly Housing Revenue (PHM/Oakdale Project)
              6.00% 3/1/28 $ 1,800,000 $ 1,722,330
       Owatonna Senior Housing Revenue
              (Senior Living Project) Series A
              5.80% 10/1/29 400,000 368,028
              6.00% 4/1/41 1,250,000 1,151,875
       Shakopee Health Care Facilities Revenue
              (St. Francis Regional Medical Center) 5.25% 9/1/34 1,000,000 891,390
       Shoreview Elderly Housing Revenue
              (PHM/Shoreview Project) 6.15% 12/1/33 1,250,000 1,185,200
       St. Paul Housing & Redevelopment Authority Health Care
              Facilities Revenue (Health Partners
              Obligation Group Project) 5.25% 5/15/36 1,000,000 868,090
       St. Paul Housing & Redevelopment Authority Health
              Care Revenue (Allina Health System)
              Series A 5.00% 11/15/18 (MBIA) 1,900,000 1,906,099
       St. Paul Housing & Redevelopment Authority Hospital
              Revenue (Health East Project)
              6.00% 11/15/25 1,000,000 969,700
              Series A 5.70% 11/1/15 800,000 806,200
              Series B 5.85% 11/1/17 250,000 251,458
       St. Paul Housing and Redevelopment Authority
              Multifamily Housing Revenue Refunding
              (Marion Center Project) Series A 5.375% 5/1/43 1,000,000 796,490
       Stillwater Health Care Revenue
              (Health System Obligation Group)
              5.00% 6/1/25 2,000,000 1,866,060
              5.00% 6/1/35 1,000,000 892,890
       Twin Valley Congregate Housing Revenue
              (Living Options Project) 5.95% 11/1/28 1,825,000 1,512,177
       Winona Health Care Facilities Revenue Refunding
              (Winona Health Obligation Group) 5.15% 7/1/31 1,500,000 1,333,965
       Woodbury Economic Development Authority Housing
              Revenue Refunding 5.65% 6/1/33 1,000,000 881,200
  40,530,531
Housing Revenue Bonds – 14.09%
       Chanhassen Multifamily Housing Revenue Refunding
              (Heritage Park Apartments)
              6.20% 7/1/30 (FHA) (AMT) (HUD Section 8) 300,000 301,062

28


      Principal amount       Value
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
       Chaska Multifamily Housing Revenue (West Suburban
              Housing Partners Project) 5.875% 3/1/31 (AMT) $ 1,000,000 $ 863,630
   @Hutchinson Multifamily Housing Revenue
              (Evergreen Apartments Project) (HUD Section 8)
              5.75% 11/1/28 1,815,000 1,575,075
       Minneapolis Multifamily Housing Revenue
              (Grant Street Apartments Project) Series A 7.25% 11/1/29 2,085,000 2,113,064
              (Olson Townhomes Project) 6.00% 12/1/19 (AMT) 1,420,000 1,420,625
              (Trinity Apartments) Refunding
              Series A 6.75% 5/1/21 (HUD Section 8) 645,000 654,623
       Minneapolis-St. Paul Housing Finance Board Single
              Family Mortgage (City Living Project)
              Series A-2 5.00% 12/1/38 (GNMA) (FNMA) (AMT) 985,592 879,059
       Minnesota Housing Finance Agency
              (Rental Housing)
              Series A 4.875% 8/1/24 (AMT) 585,000 542,781
              Series A-1 5.00% 8/1/40 (AMT) 2,265,000 1,980,629
              (Residential Housing)
              Series G 5.00% 7/1/36 (AMT) 1,000,000 888,010
              Series I 4.85% 7/1/38 (AMT) 1,145,000 993,391
              Series M 4.875% 7/1/37 (AMT) 2,500,000 2,169,300
              (Single Family Mortgage) Series J 5.90% 7/1/28 (AMT) 610,000 610,049
       Minnesota State Housing Finance
              Agency Single Family Mortgage
              Series E 6.25% 1/1/23 (AMT) 5,000 5,002
              Series M 5.875% 1/1/17 10,000 10,306
       St. Cloud Housing & Redevelopment Authority Multifamily
              Housing Revenue (Sterling Heights Apartments Project)
              7.55% 4/1/39 (AMT) 530,000 501,290
       St. Paul Housing & Redevelopment Authority Multifamily
              Housing Revenue (Shelby Grotto Housing Project)
              5.50% 9/20/44 (GNMA) (FHA) (AMT) 750,000 710,550
       Stillwater Multifamily Housing Revenue
              (Orleans Homes LP Project) 5.50% 2/1/42 (AMT) 750,000 602,790
       Washington County Housing & Redevelopment
              Authority Revenue Refunding
              (Briar Pond Project) Series B 7.125% 8/20/34 825,000 738,210
              (Woodland Park Apartments Project) 4.70% 10/1/32 2,075,000 1,851,045
19,410,491

29

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund

 

      Principal amount       Value
Municipal Bonds (continued)
Lease Revenue Bonds – 1.88%
       Hibbing Economic Development Authority Revenue
              (Public Project - Hibbing Lease Obligation) 6.40% 2/1/12 $ 530,000 $ 530,530
       St. Paul Port Authority Lease Revenue
              (Regions Hospital Parking Ramp Project)
              Series 1 5.00% 8/1/36 1,375,000 1,084,724
              (Robert Street Office Building Project)
              Series 3-11 5.00% 12/1/27 1,000,000 977,820
  2,593,074
Local General Obligation Bonds – 9.93%
       Chaska Independent School District #112
              Series A 4.50% 2/1/28 (MBIA) 1,000,000 907,980
       Duluth Independent School District #709
              4.25% 2/1/20 (FSA) 1,000,000 955,640
       Farmington Independent School District #192
              Series B 5.00% 2/1/27 (FSA) 1,000,000 987,910
       Foley Independent School District #51 (School Building)
              Refunding Series A 5.00% 2/1/21 1,105,000 1,127,332
       Hopkins Independent School District #270 Facilities
              5.00% 2/1/26 (MBIA) 1,055,000 1,043,880
       Lakeville Independent School District #194
              Series A 4.75% 2/1/22 (FSA) 1,000,000 983,960
       Metropolitan Council Minneapolis - St. Paul Metropolitan
              Area Waste Water Treatment
              Series B 5.00% 12/1/21 500,000 508,270
              Series C 5.00% 3/1/16 750,000 809,310
       Minneapolis Tax Increment Revenue
              (Ivy Tower Project) 5.70% 2/1/29 785,000 678,264
              (St. Anthony Falls Project) 5.65% 2/1/27 500,000 433,865
       Moorhead Improvement Series B 5.00% 2/1/33 (MBIA) 750,000 722,055
       Perham Disposal System 6.00% 5/1/22 (AMT) 1,500,000 1,508,010
       St. Paul Independent School District #625
              Series B 5.00% 2/1/20 (FSA) 750,000 765,360
       Todd Morrison Cass & Wadena Counties United Hospital
              District (Health Care Facilities - Lakewood)
              5.00% 12/1/21 610,000 586,472
              5.125% 12/1/24 205,000 194,486
              5.25% 12/1/26 1,540,000 1,470,885
13,683,679

30


      Principal amount       Value
Municipal Bonds (continued)
§Pre-Refunded Bonds – 12.61%  
       Andover Economic Development Authority Public Facilities
              Lease Revenue (Andover Community Center)
              5.20% 2/1/34-14 $ 1,000,000 $ 998,540
       Duluth Economic Development Authority
              Health Care Facilities Revenue
              (Benedictine Health System - St. Mary’s Hospital)
              5.25% 2/15/28-14 1,000,000 944,460
              5.25% 2/15/33-14 2,250,000 2,065,613
       Minneapolis Community Development Agency
              (Supported Development Revenue)
              Series G-3 5.45% 12/1/31-11 1,000,000 1,079,160
       Minneapolis Health Care System Revenue
              (Allina Health Systems) Series A 5.75% 11/15/32-12 2,000,000 2,193,580
              (Fairview Health Services) Series A 5.625% 5/15/32-12 2,000,000 2,183,060
       Minnesota Higher Education Facilities Authority Revenue
              (College of Art & Design Project)
              Series 5-D 6.75% 5/1/26-10  500,000 539,065
       Minnesota State Refunding and Various Purpose
              5.00% 11/1/17-08 2,160,000 2,196,245
       Puerto Rico Commonwealth Highway & Transportation
              Authority Revenue Series D 5.25% 7/1/38-12 1,500,000 1,611,315
       Puerto Rico Commonwealth Public Improvement
              Series A 5.00% 7/1/34-14 315,000 340,058
       Puerto Rico Electric Power Authority Revenue
              Series II 5.25% 7/1/31-12 1,000,000 1,084,960
       Rochester Multifamily Housing Revenue
              (Wedum Shorewood Campus Project) 6.60% 6/1/36-09 990,000 1,052,825
       St. Louis Park Health Care Facilities Revenue
              (Park Nicollet Health Services) Series B 5.25% 7/1/30-14 1,000,000 1,088,290
  17,377,171
Special Tax Revenue Bonds – 3.69%
       Hennepin County Sales Tax Revenue
              (First Lien – Ballpark Project) Series A 5.00% 12/15/24 1,000,000 1,001,460
       Minneapolis Supported Development Revenue
              (Limited Tax Common Bond Fund)
              Series 2A 5.00% 6/1/28 (AMT) 1,170,000 1,033,145
       Puerto Rico Commonwealth Infrastructure Financing
              Authority Special Tax Revenue Series B 5.00% 7/1/46 800,000 698,624

31

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund

 

  Principal amount         Value
Municipal Bonds (continued)           
Special Tax Revenue Bonds (continued)      
     St. Paul Port Authority (Brownsfields Redevelopment Tax)        
          Series 2 5.00% 3/1/37 $ 1,500,000 $ 1,404,240
     Virgin Islands Public Finance Authority Revenue      
          (Senior Lien – Matching Fund Loan Note)      
          Series A 5.25% 10/1/24 1,000,000   944,390
      5,081,859
State General Obligation Bonds – 4.25%      
     Minnesota State      
          5.00% 6/1/10 2,500,000   2,622,650
          5.00% 6/1/14 1,000,000   1,081,520
     Puerto Rico Commonwealth Public Improvement Series A      
          5.00% 7/1/34 185,000   166,739
          5.25% 7/1/22 1,000,000   961,920
     Puerto Rico Government Development Bank Senior Notes      
          Series B 5.00% 12/1/14 1,000,000   1,025,210
      5,858,039
Transportation Revenue Bond – 1.37%      
     Minneapolis - St. Paul Metropolitan Airports Commission      
          Revenue Series A 5.00% 1/1/28 (MBIA) 2,000,000   1,884,600
      1,884,600
Water & Sewer Revenue Bonds – 3.64%      
     Minnesota Public Facilities Authority Water Pollution      
          Control Revenue Refunding Series D 5.00% 3/1/14  1,500,000   1,617,540
     Minnesota Public Facilities Authority Clean Water Revenue      
          Series B 5.00% 3/1/18 2,000,000   2,120,220
     St. Paul Sewer Revenue Series D 5.00% 12/1/19 1,220,000   1,276,937
      5,014,697
Total Municipal Bonds (cost $145,070,267)     135,537,253
 
 Number of shares      
Short-Term Investments – 1.86%           
Money Market Instrument – 0.39%      
     Federated Minnesota Municipal Cash Trust 531,707   531,707
      531,707

32


  Principal amount            Value
Short-Term Investments (continued)             
·Variable Rate Demand Notes – 1.47%       
     St. Paul Port Authority Industrial Development Revenue       
          (Camada Limited Partnership-711) 3.26% 12/1/22 (AMT)  $ 100,000   $ 100,000  
     University of Minnesota       
          Series A 3.23% 1/1/34  480,000   480,000  
          Series C 3.23% 12/1/36  1,445,000     1,445,000  
        2,025,000  
Total Short-Term Investments (cost $2,556,707)        2,556,707  
 
Total Value of Securities – 100.23%       
     (cost $147,626,974)      138,093,960  
Liabilities Net of Receivables and       
     Other Assets – (0.23%)        (313,019 ) 
Net Assets Applicable to 14,228,328       
     Shares Outstanding – 100.00%      $ 137,780,941  
 
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund     
     Class A ($104,955,730 / 10,843,296 Shares)        $9.68  
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund     
     Class B ($5,912,293 / 609,949 Shares)        $9.69  
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund     
     Class C ($26,912,918 / 2,775,083 Shares)        $9.70  
 
Components of Net Assets at February 29, 2008       
Shares of beneficial interest (unlimited authorization – no par)      $ 149,909,597  
Accumulated net realized loss on investments      (2,595,642 ) 
Net unrealized depreciation of investments        (9,533,014 ) 
Total net assets      $ 137,780,941  

33

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund

  
Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FHA — Insured by the Federal Housing Administration
FNMA — Insured by 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
HUD — Housing and Urban Development
RADIAN — Insured by Radian Asset Assurance

§ 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 10 in “Notes to financial statements.”
· Variable rate security. The rate shown is the rate as of February 29, 2008.
@ Illiquid security. At February 29, 2008 the aggregate amount of illiquid securities was $1,575,075, which represented 1.14% of the Fund’s net assets. See Note 10 in “Notes to financial statements.”

Net Asset Value and Offering Price per Share –   
     Delaware Minnesota High-Yield Municipal Bond Fund   
Net asset value Class A (A)  $ 9.68
Sales charge (4.50% of offering price) (B)    0.46
Offering price  $ 10.14

(A)       Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
 
(B) See the current prospectus for purchases of $100,000 or more.

See accompanying notes

34

Statements of operations

Six Months Ended February 29, 2008 (Unaudited)

              Delaware       Delaware
  Delaware Tax-Free Minnesota
  Tax-Free Minnesota High-Yield
  Minnesota Intermediate Municipal
  Fund Fund Bond Fund
Investment Income:       
     Interest  $ 16,327,794   $ 1,311,403   $ 3,612,314  
 
Expenses:       
     Management fees  1,673,235   138,858   398,535  
     Interest and related expenses  769,615   —   —  
     Distribution expenses – Class A  723,852   61,178   139,034  
     Distribution expenses – Class B  72,747   7,394   33,663  
     Distribution expenses – Class C  131,904   25,620   134,738  
     Dividend disbursing and transfer agent       
          fees and expenses  152,381   17,570   45,152  
     Accounting and administration expenses  123,865   11,106   28,977  
     Legal fees  63,642   14,497   21,123  
     Reports and statements to shareholders  27,098   1,829   7,354  
     Registration fees  22,492   6,677   8,232  
     Audit and tax  21,132   5,315   8,462  
     Trustees’ fees  15,039   1,346   3,511  
     Insurance fees  8,363   750   2,089  
     Custodian fees  7,665   4,166   7,789  
     Consulting fees  5,755   519   1,302  
     Pricing fees  4,745   1,635   3,011  
     Trustees’ expenses  2,691   240   631  
     Dues and services  1,169   51   219  
     Taxes (other than taxes on income)    354     32     12  
  3,827,744   298,782   843,833  
     Less expenses absorbed or waived  (459 )  (37,270 )  (70,660 ) 
     Less waived distribution expenses – Class A    —     (24,471 )    —  
     Total operating expenses    3,827,285     237,041     773,173  
Net Investment Income    12,500,509     1,074,362     2,839,141  

36


              Delaware       Delaware
  Delaware   Tax-Free  Minnesota
  Tax-Free Minnesota High-Yield
  Minnesota Intermediate  Municipal
  Fund Fund Bond Fund
Net Realized and Unrealized Gain             
     (Loss) on Investments:             
     Net realized gain on investments  $ 1,186,162   $ 41,977   $ 6,054  
     Net change in unrealized appreciation/             
          depreciation of investments    (17,553,030 )    (479,845 )    (7,266,735 ) 
Net Realized and Unrealized Loss             
     on Investments    (16,366,868 )    (437,868 )    (7,260,681 ) 
 
Net Increase (Decrease) in Net Assets             
     Resulting from Operations  $ (3,866,359 )  $ 636,494   $ (4,421,540 ) 

See accompanying notes

37

Statements of changes in net assets
Delaware Tax-Free Minnesota Fund

  Six Months       Year
  Ended Ended
  2/29/08 8/31/07
  (Unaudited)    
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $ 12,500,509   $ 20,063,656  
     Net realized gain on investments    1,186,162     33,546  
     Net change in unrealized         
          appreciation/depreciation of investments    (17,553,030 )    (15,848,509 ) 
     Net increase (decrease) in net assets resulting         
          from operations    (3,866,359 )    4,248,693  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (12,191,596 )    (18,683,231 ) 
          Class B    (251,580 )    (434,393 ) 
          Class C    (454,565 )    (671,635 ) 
 
     Net realized gain on investments:         
          Class A    (94,009 )    (332,881 ) 
          Class B    (2,390 )    (9,630 ) 
          Class C    (4,208 )    (13,628 ) 
    (12,998,348 )    (20,145,398 ) 
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    19,770,393     45,483,808  
          Class B    119,268     425,118  
          Class C    1,787,638     4,739,708  
 
     Net asset value of shares issued upon reinvestment         
          of dividends and distributions:         
          Class A    8,118,155     12,201,845  
          Class B    173,277     282,247  
          Class C    363,016     527,388  

38


  Six Months       Year
  Ended Ended
  2/29/08 8/31/07
  (Unaudited)    
Capital Share Transactions (continued):         
     Net assets from merger1:         
          Class A  $ —   $ 205,624,133  
          Class B    —     8,764,578  
          Class C    —     11,631,916  
    30,331,747     289,680,741  
 
     Cost of shares repurchased:         
          Class A    (34,037,459 )    (52,066,708 )
          Class B    (2,404,595 )    (4,727,364 )
          Class C    (2,675,908 )    (4,490,541 )
    (39,117,962 )    (61,284,613 )
Increase (decrease) in net assets derived from         
     capital share transactions    (8,786,215 )    228,396,128  
Net Increase (Decrease) in Net Assets    (25,650,922 )    212,499,423  
 
Net Assets:         
     Beginning of period    620,698,158     408,198,735  
     End of period  $ 595,047,236   $ 620,698,158  
 
     Distributions in excess of         
          net investment income  $ (22,417 )  $ (22,488 )

1See Note 8 in “Notes to financial statements.”

See accompanying notes

39

Statements of changes in net assets
Delaware Tax-Free Minnesota Intermediate Fund

  Six Months       Year
  Ended Ended
  2/29/08 8/31/07
  (Unaudited)    
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $ 1,074,362   $ 2,196,287  
     Net realized gain (loss) on investments    41,977     (89,813 ) 
     Net change in unrealized         
          appreciation/depreciation of investments    (479,845 )    (1,183,650 ) 
     Net increase in net assets resulting         
          from operations    636,494     922,824  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (971,613 )    (1,971,803 ) 
          Class B    (23,048 )    (60,183 ) 
          Class C    (79,701 )    (164,296 ) 
    (1,074,362 )    (2,196,282 ) 
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    5,324,290     6,159,265  
          Class B    131,720     13,368  
          Class C    876,498     709,963  
 
     Net asset value of shares issued upon reinvestment         
          of dividends and distributions:         
          Class A    687,488     1,387,160  
          Class B    17,551     46,325  
          Class C    60,978     120,231  
    7,098,525     8,436,312  

40


  Six Months       Year
  Ended Ended
  2/29/08 8/31/07
  (Unaudited)  
Capital Share Transactions (continued):     
     Cost of shares repurchased:     
          Class A  $ (2,944,571 )  $ (6,246,465 ) 
          Class B  (514,286 )  (300,624 ) 
          Class C    (408,055 )    (941,586 ) 
    (3,866,912 )    (7,488,675 ) 
Increase in net assets derived from     
     capital share transactions    3,231,613     947,637  
Net Increase (Decrease) in Net Assets  2,793,745   (325,821 ) 
 
Net Assets:     
     Beginning of period    55,125,890     55,451,711  
     End of period  $ 57,919,635   $ 55,125,890  

See accompanying notes

41

Statements of changes in net assets
Delaware Minnesota High-Yield Municipal Bond Fund

  Six Months       Year
  Ended Ended
  2/29/08 8/31/07
  (Unaudited)    
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $ 2,839,141   $ 5,320,666  
     Net realized gain (loss) on investments    6,054     (71,140 )
     Net change in unrealized         
          appreciation/depreciation of investments    (7,266,735 )   (5,199,371 )
     Net increase (decrease) in net assets resulting         
          from operations    (4,421,540 )   50,155  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (2,276,185 )   (4,206,568 )
          Class B    (112,421 )   (292,864 )
          Class C    (449,440 )   (801,099 )
    (2,838,046 )   (5,300,531 )
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    14,438,037     39,562,284  
          Class B    7,098     718,339  
          Class C    4,560,199     10,413,630  
 
     Net asset value of shares issued upon reinvestment         
          of dividends and distributions:         
          Class A    1,540,999     2,699,180  
          Class B    73,726     194,713  
          Class C    338,012     574,257  
    20,958,071     54,162,403  

42


  Six Months       Year
  Ended Ended
  2/29/08 8/31/07
  (Unaudited)    
Capital Share Transactions (continued):         
     Cost of shares repurchased:         
       Class A  $ (15,270,290 ) $ (15,928,387 )
       Class B    (1,210,646 )   (2,897,155 )
       Class C    (2,593,812 )   (4,527,479 )
    (19,074,748 )   (23,353,021 )
Increase in net assets derived from         
     capital share transactions    1,883,323     30,809,382  
Net Increase (Decrease) in Net Assets    (5,376,263 )   25,559,006  
 
Net Assets:         
     Beginning of period    143,157,204     117,598,198  
     End of period  $ 137,780,941   $ 143,157,204  
 
     Undistributed net investment income  $ —   $ 45  

See accompanying notes

43

Financial highlights
Delaware Tax-Free Minnesota Fund Class A
 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Net realized gain on investments 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
   rate notes issued 
Interest and fees on short-term floating rate notes issued 
Total expenses3 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
   rate notes issued prior to expense limitation and expenses paid indirectly 
Interest and fees on short-term floating rate notes issued 
Total expenses prior to expense limitation and expense paid indirectly3 
 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

44


Six Months Ended Year Ended  
  2/29/081    8/31/07 8/31/06  8/31/05   8/31/04   8/31/03 
  (Unaudited)                                  
$12.170   $12.490 $12.690 $12.620   $12.450 $12.610
 
 
0.251 0.511 0.511 0.527 0.590 0.622
(0.330 ) (0.313 ) (0.172 ) 0.222 0.348 (0.148 )
(0.079 ) 0.198 0.339 0.749 0.938 0.474
 
 
(0.259 ) (0.507 ) (0.513 ) (0.526 ) (0.600 ) (0.625 )
(0.002 ) (0.011 ) (0.026 ) (0.153 )   (0.168 ) (0.009 )
(0.261 ) (0.518 ) (0.539 ) (0.679 ) (0.768 ) (0.634 )
 
$11.830 $12.170 $12.490 $12.690 $12.620 $12.450
 
(0.71% ) 1.58% 2.78% 6.12% 7.72% 3.80%
 
 
$556,260 $578,194 $381,720 $364,491 $348,000   $340,029
 
0.94% 0.94% 0.93% 0.93% 0.94% 0.97%
0.25% 0.29% 0.26% 0.19% 0.14% 0.20%
1.19% 1.23% 1.19% 1.12% 1.08% 1.17%
 
0.94% 0.96% 0.94% 0.94% 0.94% 0.97%
0.25% 0.29% 0.26% 0.19% 0.14% 0.20%
1.19% 1.25% 1.20% 1.13% 1.08% 1.17%
 
4.09% 4.12% 4.11% 4.19% 4.68% 4.90%
 
4.09% 4.10% 4.10% 4.18% 4.68% 4.90%
  18%     7%     13%     10%     25%     27%   
3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.”

45

Financial highlights
Delaware Tax-Free Minnesota Fund Class B
 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Net realized gain on investments 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
   rate notes issued 
Interest and fees on short-term floating rate notes issued 
Total expenses3 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
   rate notes issued prior to expense limitation and expenses paid indirectly 
Interest and fees on short-term floating rate notes issued 
Total expenses prior to expense limitation and expense paid indirectly3 
 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

46


Six Months Ended Year Ended  
  2/29/081  8/31/07 8/31/06 8/31/05   8/31/04   8/31/03 
  (Unaudited)                                
$12.180 $12.500 $12.700 $12.630   $12.460 $12.620
 
 
0.205 0.419 0.418 0.433 0.496 0.529
(0.330 ) (0.314 ) (0.172 ) 0.222 0.348   (0.150 )
(0.125 ) 0.105 0.246 0.655 0.844 0.379
 
 
(0.213 ) (0.414 ) (0.420 ) (0.432 ) (0.506 ) (0.530 )
(0.002 ) (0.011 ) (0.026 ) (0.153 ) (0.168 ) (0.009 )
(0.215 ) (0.425 ) (0.446 ) (0.585 ) (0.674 ) (0.539 )
 
$11.840 $12.180 $12.500 $12.700 $12.630 $12.460
 
(1.08% ) 0.82% 2.01% 5.33% 6.91% 3.02%
 
 
$13,210 $15,674 $11,354 $12,810 $14,588 $16,394
 
1.69% 1.69% 1.68% 1.68% 1.69% 1.72%
0.25% 0.29% 0.26% 0.19% 0.14% 0.20%
1.94% 1.98% 1.94% 1.87% 1.83% 1.92%
 
1.69% 1.71% 1.69% 1.69% 1.69% 1.72%
0.25% 0.29% 0.26% 0.19% 0.14% 0.20%
1.94% 2.00% 1.95% 1.88% 1.83% 1.92%
 
3.34% 3.37% 3.36% 3.44% 3.93% 4.15%
 
3.34% 3.35% 3.35% 3.43% 3.93% 4.15%
  18%     7%     13%     10%     25%     27%  
3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.”

47

Financial highlights
Delaware Tax-Free Minnesota Fund Class C
 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Net realized gain on investments 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
   rate notes issued 
Interest and fees on short-term floating rate notes issued 
Total expenses3 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
   rate notes issued prior to expense limitation and expenses paid indirectly 
Interest and fees on short-term floating rate notes issued 
Total expenses prior to expense limitation and expense paid indirectly3 
 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

48


Six Months Ended Year Ended  
  2/29/081  8/31/07    8/31/06 8/31/05   8/31/04   8/31/03 
  (Unaudited)                                
$12.200 $12.530 $12.720 $12.650 $12.480 $12.640
 
 
0.205 0.418 0.418 0.433 0.495 0.529
(0.320 )  (0.323 )  (0.162 )  0.222 0.348 (0.151 ) 
(0.115 )  0.095 0.256 0.655 0.843 0.378
 
 
(0.213 )  (0.414 )  (0.420 )  (0.432 )  (0.505 )  (0.529 ) 
(0.002 )  (0.011 )  (0.026 )  (0.153 )  (0.168 )  (0.009 ) 
(0.215 )  (0.425 )  (0.446 )  (0.585 )  (0.673 )  (0.538 ) 
 
$11.870 $12.200 $12.530 $12.720 $12.650 $12.480
 
(1.00% )  0.73% 2.08% 5.32% 6.90% 3.01%
 
 
$25,577 $26,830 $15,125 $13,971 $10,811 $10,161
 
1.69% 1.69% 1.68% 1.68% 1.69% 1.72%
0.25% 0.29% 0.26% 0.19% 0.14% 0.20%
1.94% 1.98% 1.94% 1.87% 1.83% 1.92%
 
1.69% 1.71% 1.69% 1.69% 1.69% 1.72%
0.25% 0.29% 0.26% 0.19% 0.14% 0.20%
1.94% 2.00% 1.95% 1.88% 1.83% 1.92%
 
3.34% 3.37% 3.36% 3.44% 3.93% 4.15%
 
3.34% 3.35% 3.35% 3.43% 3.93% 4.15%
  18%     7%     13%     10%     25%     27%  
3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.”

49

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class A


Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets3 
Ratio of expenses to average net assets 
   prior to expense limitation and expenses paid indirectly3 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager and distributor, as applicable. Performance would have been lower had the waiver not been in effect.
3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly for the years ended August 31, 2004 and 2003, includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.”

See accompanying notes

50


Six Months Ended   Year Ended  
  2/29/081  8/31/07 8/31/06    8/31/05    8/31/04   8/31/03 
  (Unaudited)                                 
$10.610 $10.860 $11.010 $10.890 $10.630   $10.720
 
 
0.213   0.445 0.429 0.407 0.444 0.469
(0.070 )  (0.250 )  (0.150 )  0.120 0.260 (0.088 ) 
0.143 0.195 0.279 0.527 0.704 0.381
 
 
(0.213 )  (0.445 )  (0.429 )  (0.407 )  (0.444 )  (0.471 ) 
(0.213 )  (0.445 )  (0.429 )  (0.407 )  (0.444 )  (0.471 ) 
 
$10.540 $10.610 $10.860 $11.010 $10.890 $10.630
 
1.32% 1.80% 2.62% 4.93% 6.73% 3.59%
 
 
$51,156 $48,477 $48,297 $52,958 $57,012 $57,635
0.75% 0.76% 0.75% 0.79% 0.89% 0.96%
 
0.99% 1.00% 0.97% 0.95% 1.00% 1.06%
3.98% 4.11% 3.96% 3.72% 4.10% 4.32%
 
3.74% 3.87% 3.74% 3.56% 3.99% 4.22%
  38%     15%     11%     25%     30%     23%  

51

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class B


Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets3 
Ratio of expenses to average net assets 
   prior to expense limitation and expenses paid indirectly3 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.
3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly for the years ended August 31, 2004 and 2003, includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.”

See accompanying notes

52


Six Months Ended Year Ended  
  2/29/081  8/31/07 8/31/06   8/31/05   8/31/04   8/31/03 
  (Unaudited)                                 
$10.640 $10.890 $11.040 $10.920 $10.650 $10.740
 
 
0.168   0.353 0.337 0.314 0.352 0.377
(0.070 )  (0.250 )  (0.150 )  0.120 0.270 (0.088 ) 
0.098 0.103 0.187 0.434 0.622 0.289
 
 
(0.168 )  (0.353 )  (0.337 )  (0.314 )  (0.352 )  (0.379 ) 
(0.168 )  (0.353 )  (0.337 )  (0.314 )  (0.352 )  (0.379 ) 
 
$10.570 $10.640 $10.890 $11.040 $10.920 $10.650
 
0.89% 0.94% 1.75% 4.03% 5.91% 2.70%
 
 
$1,343 $1,713 $1,993 $2,811 $3,224 $4,002
1.60% 1.61% 1.60% 1.64% 1.74% 1.81%
 
1.74% 1.75% 1.72% 1.70% 1.75% 1.83%
3.13% 3.26% 3.11% 2.87% 3.25% 3.47%
 
2.99% 3.12% 2.99% 2.81% 3.24% 3.45%
  38%     15%     11%     25%     30%     23%  

53

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class C


Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets3 
Ratio of expenses to average net assets 
   prior to expense limitation and expenses paid indirectly3 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.
3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to expense limitation and expense paid indirectly for the years ended August 31, 2004 and 2003, includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements.”

 See accompanying notes

54


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                              
  $10.630     $10.880     $11.030     $10.910     $10.640     $10.730  
 
 
0.168     0.353   0.337   0.314   0.352   0.377  
(0.070 )  (0.250 )  (0.150 )  0.120     0.270   (0.088 ) 
0.098     0.103   0.187   0.434   0.622   0.289  
 
 
(0.168 )  (0.353 )  (0.337 )    (0.314 )  (0.352 )  (0.379 ) 
(0.168 )    (0.353 )  (0.337 )  (0.314 )    (0.352 )    (0.379 ) 
 
  $10.560     $10.630     $10.880     $11.030     $10.910     $10.640  
 
0.89%   0.94%   1.75%   4.04%   5.91%   2.71%  
 
 
  $5,421     $4,936     $5,162     $5,996     $7,188     $6,544  
1.60%   1.61%   1.60%   1.64%   1.74%   1.81%  
 
1.74%   1.75%   1.72%   1.70%   1.75%   1.83%  
3.13%   3.26%   3.11%   2.87%   3.25%   3.47%  
 
2.99%     3.12%   2.99%   2.81%   3.24%     3.45%  
  38%      15%     11%     25%     30%     23%  

55

Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class A

Selected data for each share of the Fund outstanding throughout each period were as follows:

 
Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to expense limitation and expenses paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

56


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                              
  $10.180     $10.530     $10.610     $10.240     $9.910     $9.950  
 
 
0.210   0.430   0.445   0.469   0.512   0.550  
(0.500 )  (0.350 )  (0.082 )  0.372   0.328   (0.030 ) 
(0.290 )  0.080   0.363   0.841   0.840   0.520  
 
 
(0.210 )  (0.430 )  (0.443 )  (0.471 )  (0.510 )  (0.560 ) 
(0.210 )  (0.430 )  (0.443 )  (0.471 )  (0.510 )  (0.560 ) 
 
  $9.680     $10.180     $10.530     $10.610     $10.240     $9.910  
 
(2.95% )  0.71%   3.54%   8.40%   8.65%   5.33%  
 
 
  $104,956     $109,807     $87,504     $63,802     $42,636     $36,644  
0.89%   0.90%   0.89%   0.89%   0.75%   0.75%  
 
0.99%   1.00%   1.00%   0.98%   1.00%   1.04%  
4.10%   4.09%   4.26%   4.50%   5.03%   5.48%  
 
4.00%   3.99%     4.15%   4.41%     4.78%   5.19%  
10%     10%   4%     3%   24%   32%  

57

Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class B

Selected data for each share of the Fund outstanding throughout each period were as follows:

 
Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to expense limitation and expenses paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

58


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                              
  $10.190     $10.550     $10.630     $10.250     $9.930     $9.970  
 
 
0.171   0.351   0.367   0.391   0.435   0.475  
(0.499 )  (0.360 )  (0.082 )  0.381   0.318   (0.030 ) 
(0.328 )  (0.009 )  0.285   0.772   0.753   0.445  
 
 
(0.172 )  (0.351 )  (0.365 )  (0.392 )  (0.433 )  (0.485 ) 
(0.172 )  (0.351 )  (0.365 )  (0.392 )  (0.433 )  (0.485 ) 
 
  $9.690     $10.190     $10.550     $10.630     $10.250     $9.930  
 
(3.31% )  (0.13% )  2.77%   7.68%   7.71%   4.55%  
 
 
  $5,912     $7,334     $9,578     $10,505     $12,463     $12,513  
1.64%   1.65%   1.64%   1.64%   1.50%   1.50%  
 
1.74%   1.75%   1.75%   1.73%   1.75%   1.79%  
3.35%   3.34%   3.51%   3.75%   4.28%   4.73%  
 
3.25%   3.24%     3.40%   3.66%   4.03%   4.44%  
10%     10%   4%     3%     24%     32%  

59

Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class C

Selected data for each share of the Fund outstanding throughout each period were as follows:

 
Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to expense limitation and expenses paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

60


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                              
  $10.200     $10.550     $10.630     $10.250     $9.930     $9.970  
 
 
0.171   0.351   0.367   0.391   0.435   0.475  
(0.500 )  (0.350 )  (0.082 )  0.381   0.318   (0.030 ) 
(0.329 )  0.001   0.285   0.772   0.753   0.445  
 
 
(0.171 )  (0.351 )  (0.365 )  (0.392 )  (0.433 )  (0.485 ) 
(0.171 )  (0.351 )  (0.365 )  (0.392 )  (0.433 )  (0.485 ) 
 
  $9.700     $10.200     $10.550     $10.630     $10.250     $9.930  
 
(3.30% )  (0.04% )  2.76%   7.68%   7.71%   4.54%  
 
 
  $26,913     $26,016     $20,516     $15,809     $11,435     $10,754  
1.64%   1.65%   1.64%   1.64%   1.50%   1.50%  
 
1.74%   1.75%   1.75%   1.73%   1.75%   1.79%  
3.35%   3.34%   3.51%   3.75%   4.28%   4.73%  
 
3.25%   3.24%   3.40%   3.66%   4.03%     4.44%  
10%     10%     4%     3%     24%   32%  

61


Notes to financial statements
Delaware Minnesota Municipal Bond Funds February 29, 2008 (unaudited)

Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund. Voyageur Tax-Free Funds is organized as a Delaware statutory trust and offers the Delaware Tax-Free Minnesota Fund. Voyageur Intermediate Tax-Free Funds is organized as a Delaware statutory trust and offers the Delaware Tax-Free Minnesota Intermediate Fund. Voyageur Mutual Funds, Voyageur Tax-Free Funds and Voyageur Intermediate Tax-Free Funds are individually referred to as Trust and collectively as Trusts. These financial statements and the related notes pertain to Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond Fund (each referred to as a Fund or collectively as the Funds). The above Trusts are open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended, and offer Class A, Class B, and Class C shares. Class A shares are sold with a front-end sales charge of up to 4.50% for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund and up to 2.75% for Delaware Tax-Free Minnesota Intermediate Fund. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Effective June 1, 2007, Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and that declined from 2% to zero for Delaware Tax-Free Minnesota Intermediate Fund depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase for Delaware Tax-Free Minnesota Fund and Delaware Minnesota High-Yield Municipal Bond Fund, and approximately five years after purchase for Delaware Tax-Free Minnesota Intermediate Fund. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months.

The investment objective of Delaware Tax-Free Minnesota Fund is to seek as high a level of current income exempt from federal income tax and from the Minnesota state personal income tax, as is consistent with preservation of capital.

The investment objective of Delaware Tax-Free Minnesota Intermediate Fund is to seek to provide investors with preservation of capital and, secondarily, current income exempt from federal income tax and from the Minnesota state personal income tax, by maintaining a dollar-weighted average effective portfolio maturity of 10 years or less.

The investment objective of Delaware Minnesota High-Yield Municipal Bond Fund is to seek as high a level of current income exempt from federal income tax and from the Minnesota state personal income tax, primarily through investment in medium- and lower-grade municipal obligations.

62

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 or broker 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. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Board of Trustees. 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).

In September 2006, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 157 “Fair Value Measurements” (Statement 157). Statement 157 establishes a framework for measuring fair value in U.S. generally accepted accounting principles, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements. Statement 157 is intended to increase consistency and comparability among fair value estimates used in financial reporting. Statement 157 is effective for fiscal years beginning after November 15, 2007. Management does not expect the adoption of Statement 157 to have a material impact on the amounts reported in the financial statements.

Federal Income Taxes — Each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements.

Effective February 29, 2008, the Funds adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The adoption of FIN 48 did not result in the recording of any tax benefit or expense in the current period.

Class Accounting — Investment income and common expenses are allocated to the various classes of the Funds on the basis of “settled shares” of each class in relation to the net assets of the Funds. Realized and unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.

63

Notes to financial statements
Delaware Minnesota Municipal Bond Funds

1. Significant Accounting Policies (continued)

Interest and Related Expenses — Interest and related expenses include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees from a Fund’s participation in inverse floater programs where the Fund has transferred its own bonds to a trust that issues floating rate securities with an aggregate principal amount equal to the principal of the transferred bonds. In conveyance of the bond, the Fund receives the inverse floating rate securities and cash from the trust. As a result of certain rights retained by the Fund, the transfer of the bond is not considered a sale, but rather a form of financing for accounting purposes whereby the cash received is recorded as a liability and interest expense is recorded based on the interest rate of the floating rate securities. Remarketing fees, liquidity fees, and trustees’ fees expenses are recorded on the accrual basis.

For the period ended February 29, 2008, Delaware Tax-Free Minnesota Fund had an average daily liability from the participation in inverse floater program of $37,293,973 and recorded interest expense at an average rate of 3.67%.

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 directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums are 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.

64

2. Investment Management, Administration Agreements and Other Transactions with Affiliates

In accordance with the terms of its respective investment management agreement, each Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee, which is calculated based on each Fund’s average daily net assets as follows:

    Delaware Tax-Free Delaware Minnesota
  Delaware Tax-Free Minnesota High-Yield Municipal
        Minnesota Fund       Intermediate Fund       Bond Fund
On the first $500 million  0.550%   0.500%     0.550%  
On the next $500 million      0.500%     0.475%     0.500%  
On the next $1.5 billion  0.450%   0.450%   0.450%  
In excess of $2.5 billion  0.425%   0.425%   0.425%  

DMC has 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 fees, inverse floater expenses, 12b-1 plan expenses, certain insurance costs and non-routine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations, do not exceed specified percentages of average daily net assets as shown below. For purposes of these waivers and reimbursements, non-routine expenses may also involve such additional costs and expenses, as may be agreed upon from time to time by the Funds’ Board of Trustees and DMC.

  Delaware Tax-Free Delaware Minnesota
  Delaware Tax-Free Minnesota High-Yield Municipal
        Minnesota Fund       Intermediate Fund       Bond Fund
Operating expense limitation           
     as a percentage of average             
     daily net assets (per annum)    0.68%     0.60%   0.64%  
Expiration date  12/31/08   12/31/08   12/31/08  

Effective October 1, 2007, Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, the Funds pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.005% of the first $30 billion; 0.0045% of the next $10 billion; 0.004% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. Prior to October 1, 2007, DSC provided fund accounting and administrative services to the Funds and received a fee at an annual rate of 0.04% of average daily net assets. For the six months ended February 29, 2008, each Fund was charged for these services as follows:

  Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
  $33,451    $2,977    $7,798   

65

Notes to financial statements
Delaware Minnesota Municipal Bond Funds

2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)

DSC also provides dividend disbursing and transfer agency services. Each Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.

Pursuant to a distribution agreement and distribution plan, each Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.25% of the average daily net assets of the Class A shares and 1.00% of the average daily net assets of the Class B and C shares. DDLP has contracted to waive distribution and services fees through December 31, 2008 in order to prevent 12b-1 fees of Class A shares from exceeding 0.15% of average daily net assets for Delaware Tax-Free Minnesota Intermediate Fund.

At February 29, 2008, the Funds had liabilities payable to affiliates as follows:

Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
Investment management fee
     payable to DMC		 $264,079 $17,874   $55,027
Dividend disbursing,
     transfer agent fees and other
     expenses payable to DSC		     27,493     3,082     8,138
Distribution fee payable to DDLP   146,394   11,323   49,304
Other expenses payable to
     DMC and affiliates*		     54,307     6,595   12,503

*DMC, as part of its administrative services, pays operating expenses on behalf of each Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees’ fees.

As provided in the investment management agreement, each Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Funds by DMC and/or its affiliates’ employees. For the six months ended February 29, 2008, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:

  Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
$22,007 $1,989 $5,132

For the six months ended February 29, 2008, DDLP earned commissions on sales of Class A shares for each Fund as follows:

  Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
$28,849 $3,264 $23,340

66

2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)

For the six months ended February 29, 2008, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B and Class C shares, respectively. These commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:

Delaware Minnesota
Delaware Tax-Free High-Yield Municipal
      Minnesota Fund       Bond Fund
Class A   $2,383   $10,556
Class B   9,300     4,822
Class C      839     2,978

Trustees’ fees include expenses accrued by the Funds for each Trustee’s retainer and per meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Funds.

3. Investments

For the six months ended February 29, 2008, the Funds made purchases and sales of investment securities other than short-term investments as follows:

Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
Purchases $53,228,114   $11,904,197   $11,219,834
Sales   62,110,588   10,181,148     6,936,998

At February 29, 2008, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At February 29, 2008 the cost of investments and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows:

Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
Cost of investments   $ 586,288,710       $ 58,771,124         $ 147,534,958    
Aggregate unrealized appreciation $ 20,187,369 $ 1,394,370 $ 1,478,103
Aggregate unrealized depreciation (21,291,540 ) (1,058,638 ) (10,919,101 )
Net unrealized appreciation
     (depreciation)		 $ (1,104,171 ) $ 335,732 $ (9,440,998 )

67

Notes to financial statements
Delaware Minnesota Municipal Bond Funds

4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. 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 29, 2008, and the year ended August 31, 2007 was as follows:

Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
Six months ended 2/29/08*                              
Ordinary Income $ 351,659 $ —   $ 7,104
Tax-exempt income 12,546,082 1,074,362 2,830,942
Long-term capital gain 100,607 — —
Total $ 12,998,348   $ 1,074,362 $ 2,838,046
Year ended 8/31/07
Ordinary Income $ 30,656 $ — $ —
Tax-exempt income 19,758,603 2,196,282 5,300,531
Long-term capital gain 356,139 — —
Total $ 20,145,398 $ 2,196,282 $ 5,300,531

*Tax information for the period ended February 29, 2008 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.

5. Components of Net Assets on a Tax Basis

The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 29, 2008, the estimated components of net assets on a tax basis was as follows:

Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
Shares of beneficial interest   $ 595,065,901   $ 59,087,946 $ 149,909,597
Distributions payable (417,105 ) (40,923 ) (107,565 )
Undistributed tax-exempt income 394,688 40,923 107,565
Realized gains (losses)
     9/1/07 – 2/29/08		 1,174,819 (37,423 ) (159,133 )
Capital loss carryforward
     as of 08/31/07		 (66,896 ) (1,466,620 ) (2,528,525 )
Unrealized appreciation (depreciation)
     of investments		 (1,104,171 ) 335,732 (9,440,998 )
Net assets $ 595,047,236 $ 57,919,635 $ 137,780,941

68

5. Components of Net Assets on a Tax Basis (continued)

The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of market discount on debt instruments.

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 29, 2008, the Funds recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end.

Delaware Minnesota
Delaware Tax-Free High-Yield Municipal
      Minnesota Fund       Bond Fund
Undistributed net investment income.     $ 397,303       $ (1,140 )  
Accumulated realized gain (loss) (397,303 ) 1,140

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at February 29, 2008 will expire as follows:

Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
Year of Expiration         Minnesota Fund       Intermediate Fund       Bond Fund
2008   $ —     $ —   $ 179,791  
2009   —   1,024,839 1,267,552
2010 — 4,037 57,521
2011   — 246,659 243,334
2012 — — 684,248
2014 66,896 81,340 —
2015 — 109,745 96,079
Total $ 66,896 $ 1,466,620   $ 2,528,525

For the six months ended February 29, 2008, the Funds had capital gains (losses) which may increase or decrease capital loss carryforwards.

  Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
      Minnesota Fund       Intermediate Fund       Bond Fund
$1,174,819 $(37,423) $(159,133)

69

Notes to financial statements
Delaware Minnesota Municipal Bond Funds

6. Capital Shares

Transactions in capital shares were as follows:

Delaware
Delaware Tax-Free Tax-Free Minnesota
Minnesota Fund Intermediate Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
      2/29/08       8/31/07       2/29/08       8/31/07
Shares sold:
     Class A 1,603,175 3,661,506 496,257 569,224
     Class B 9,706 33,935 12,219 1,226
     Class C 144,419 378,988 81,203 65,839
Shares issued upon reinvestment of dividends and distributions:
     Class A 658,301 983,425 63,740 128,379
     Class B 14,049 22,742 1,623 4,274
     Class C 29,371 42,393 5,642 11,105
Shares issued from merger:1
     Class A — 16,515,995 — —
     Class B — 703,417 — —
     Class C — 931,298 — —
2,459,021 23,273,699 660,684 780,047
Shares repurchased:
     Class A   (2,761,890 ) (4,188,406 ) (273,910 ) (576,943 )
     Class B (195,159 ) (380,797 ) (47,733 ) (27,619 )
     Class C (216,782 ) (361,460 ) (37,714 ) (87,115 )
(3,173,831 ) (4,930,663 ) (359,357 ) (691,677 )
Net increase (decrease) (714,810 ) 18,343,036 301,327 88,370

Delaware Minnesota High-Yield
Municipal Bond Fund
      Six Months       Year
Ended Ended
2/29/08 8/31/07
Shares sold:
   Class A 1,401,013 3,750,543
   Class B   681 67,763
   Class C 442,745 985,801
Shares issued upon reinvestment of dividends and distributions:
   Class A 149,901 257,132
   Class B 7,160   18,487
   Class C 32,819 54,628
  2,034,319 5,134,354
Shares repurchased:
   Class A (1,496,221 ) (1,528,071 )
   Class B (117,437 ) (274,769 )
   Class C (251,758 ) (433,788 )
(1,865,416 ) (2,236,628 )
Net increase 168,903 2,897,726

1See note 8 in “Notes to financial statements.”

70

6. Capital Shares (continued)

For the six months ended February 29, 2008 and the year ended August 31, 2007, the following shares and values were converted from Class B to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the tables on the previous page and the statements of changes in net assets.

Six month Ended Year Ended
2/29/08 8/31/07
Class B Class A Class B Class A
      Shares       Shares       Value       Shares       Shares       Value
Delaware Tax-Free Minnesota Fund 92,889 92,965 $1,143,050 205,359 205,523 $2,549,549
Delaware Tax-Free Minnesota
     Intermediate Fund		   44,760 44,884 482,209 15,124 15,160 164,797
Delaware Minnesota High-Yield
     Municipal Bond Fund		 50,751   50,843   524,328   157,023   157,243   1,656,744

7. Inverse Floaters

The Funds may participate in inverse floater programs where a Fund transfers its own bonds to a trust that issues floating rate securities and inverse floating rate securities (inverse floaters) with an aggregate principal amount equal to the principal of the transferred bonds. The inverse floaters received by the Funds are derivative tax-exempt obligations with floating or variable interest rates that move in the opposite direction of short-term interest rates, usually at an accelerated speed. Consequently, the market values of the inverse floaters will generally be more volatile than other tax-exempt investments. The Funds typically use inverse floaters to adjust the duration of their portfolio. Duration measures a portfolio’s sensitivity to changes in interest rates. By holding inverse floaters with a different duration than the underlying bonds that a Fund transferred to the trust, the Fund seeks to adjust its portfolio’s sensitivity to changes in interest rates. The Funds may also invest in inverse floaters to add additional income to the Funds or to adjust the Funds’ exposure to a specific segment of the yield curve. Securities held in trust relating to inverse floater programs are identified on the statements of net assets.

8. Fund Merger

Effective April 13, 2007, the Delaware Tax-Free Minnesota Fund (Acquiring Fund) acquired all of the assets and assumed all of the liabilities of Delaware Tax-Free Minnesota Insured Fund (Acquired Fund), an open end investments company, in exchange for shares of the Acquiring Fund pursuant to a Plan and Agreement of Reorganization (Reorganization). The shareholders of the Acquired Fund received shares of the respective class of the Acquiring Fund equal to the aggregate net asset of their share in the Acquired Fund prior to Reorganization.

71

Notes to financial statements
Delaware Minnesota Municipal Bond Funds

8. Fund Merger (continued)

The Reorganization was treated as a non-taxable event and, accordingly, Delaware Tax-Free Minnesota 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 realized gain (loss) of Delaware Tax-Free Minnesota Insured Fund as of the close of business on April 13, 2007, were as follows:

Accumulated Net
Net Realized Unrealized
      Net Assets       Gain       Appreciation
Delaware Tax-Free Minnesota
     Insured Fund		   $226,020,627   $286,856   $14,039,792

The net assets of the Delaware Tax-Free Minnesota Fund prior to the Reorganization were $407,952,332. The combined net assets of Delaware Tax-Free Minnesota after the merger were $633,972,959.

9. Line of Credit

Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (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 29, 2008 or at any time during the period then ended.

10. Credit and Market Risk

The Funds concentrate their investments in securities issued by municipalities, mainly in Minnesota. The value of these investments may be adversely affected by new legislation within the state, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that market value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the statements of net assets.

The Fund 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

72

10. Credit and Market Risk (continued)

bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.

Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract and are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s Investors Service, Inc., Standard & Poor’s Ratings Group, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Fund’s Board 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. As of February 29, 2008, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.

11. 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.

73

About the organization

This semiannual report is for the information of Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund and the Delaware Investments® Fund profiles for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

Board of trustees

       
 

Patrick P. Coyne
Chairman, President, and
Chief Executive Officer
Delaware Investments Family
of Funds Philadelphia, PA

Thomas L. Bennett
Private Investor
Rosemont, PA

John A. Fry
President
Franklin & Marshall College
Lancaster, PA

Anthony D. Knerr
Founder and Managing Director
Anthony Knerr & Associates
New York, NY

Lucinda S. Landreth
Former Chief Investment Officer
Assurant, Inc.
Philadelphia, PA

Ann R. Leven
Consultant
ARL Associates
New York, NY

Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN

Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN

J. Richard Zecher
Founder
Investor Analytics
Scottsdale, AZ

74


Affiliated officers

      Contact information
 

David F. Connor
Vice President, Deputy General Counsel, and
Secretary
Delaware Investments® Family of Funds
Philadelphia, PA

Daniel V. Geatens
Vice President and Treasurer
Delaware Investments Family of Funds
Philadelphia, PA

David P. O’Connor
Senior Vice President, General Counsel,
and Chief Legal Officer
Delaware Investments Family of Funds
Philadelphia, PA

Richard Salus
Senior Vice President and
Chief Financial Officer
Delaware Investments Family of Funds
Philadelphia, PA

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 of 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 are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the Commission’s Web site at www.sec.gov. In addition, a description of the policies and procedures that each Fund uses to determine how to vote proxies (if any) relating to portfolio securities and each Fund’s Schedule of Investments are available without charge on each Fund’s Web site at www.delawareinvestments.com. Each Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.

Information (if any) regarding how each Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through each Fund’s Web site at www.delawareinvestments.com; and (ii) on the Commission’s Web site at www.sec.gov.

75


 

 

 

 

 

 

 

 

 

SA-MNALL [2/08] DG3 4/08     MF-08-03-023     PO 12795     (2927)

 
 
 
 
 
 
 
 
 
Semiannual report 
 
Delaware Tax-Free USA Fund 
 
Delaware Tax-Free USA Intermediate Fund 
 
Delaware National High-Yield Municipal 
 
Bond Fund 
 
February 29, 2008 
 
 
 
 
 
 
 
 
 
 
 
 
 

  
Fixed income mutual funds 
 
 

Table of contents

Disclosure of Fund expenses 1
 
Sector allocations and credit quality breakdowns 4
 
Statements of net assets 7
 
Statements of operations 49
 
Statements of changes in net assets 52
 
Financial highlights 58
 
Notes to financial statements 76
 
About the organization 88

 

 

 

 

 

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.
© 2008 Delaware Distributors, L.P.

Disclosure of Fund expenses
For the period September 1, 2007 to February 29, 2008

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. These following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2007 to February 29, 2008.

Actual expenses

The first section of the tables shown, “Actual Fund Return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by 1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The second section of the tables shown, “Hypothetical 5% Return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the tables reflect fee waivers in effect. The expenses shown in each table assume reinvestment of all dividends and distributions.

In each case, “Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

1

Disclosure of Fund expenses

Delaware Tax-Free USA Fund
Expense analysis of an investment of $1,000

Beginning Ending   Expenses
  Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return
Class A   $1,000.00     $   981.40     0.85%   $4.19  
Class B 1,000.00 976.80 1.61% 7.91
Class C 1,000.00 976.80 1.61% 7.91
Hypothetical 5% return (5% return before expenses)
Class A $1,000.00 $1,020.64 0.85% $4.27
Class B 1,000.00 1,016.86 1.61% 8.07
Class C 1,000.00 1,016.86 1.61% 8.07

Delaware Tax-Free USA Intermediate Fund
Expense analysis of an investment of $1,000

Beginning Ending Expenses
Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return
Class A   $1,000.00     $   998.40     0.75%   $3.73  
Class B 1,000.00 994.30 1.60% 7.93
Class C 1,000.00 994.20 1.60% 7.93
Hypothetical 5% return (5% return before expenses)
Class A $1,000.00 $1,021.13 0.75% $3.77
Class B 1,000.00 1,016.91 1.60% 8.02
Class C 1,000.00 1,016.91 1.60% 8.02

2

Delaware National High-Yield Municipal Bond Fund
Expense analysis of an investment of $1,000

Beginning Ending Expenses
Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return
Class A   $1,000.00     $   965.40     0.90%   $4.40
Class B 1,000.00   961.80   1.65% 8.05
Class C 1,000.00 961.90 1.65% 8.05
Hypothetical 5% return (5% return before expenses)
Class A $1,000.00 $1,020.39 0.90% $4.52
Class B 1,000.00 1,016.66 1.65% 8.27
Class C 1,000.00 1,016.66 1.65% 8.27

3


Sector allocations and credit quality breakdowns

As of February 29, 2008

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free USA Fund

Sector     Percentage of net assets
Municipal Bonds 98.26 %
Corporate Revenue Bonds 10.95 %
Education Revenue Bonds 7.15 %
Electric Revenue Bonds 1.65 %
Escrowed to Maturity Bonds 6.00 %
Health Care Revenue Bonds 10.13 %
Housing Revenue Bonds 2.93 %
Lease Revenue Bonds 3.60 %
Local General Obligation Bonds 5.57 %
Pre-Refunded Bonds 19.93 %
Special Tax Bonds 5.92 %
State General Obligation Bonds 15.47 %
Transportation Revenue Bonds 4.91 %
Water & Sewer Revenue Bonds 4.05 %
Total Value of Securities 98.26 %
Receivables and Other Assets Net of Liabilities 1.74 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)
AAA 48.70 %
AA 17.74 %
A 7.19 %
BBB 17.79 %
BB 0.96 %
B 1.39 %
Not Rated 6.23 %
Total 100.00 %

4


Delaware Tax-Free USA Intermediate Fund

Sector     Percentage of net assets
Municipal Bonds 96.68 %
Corporate Revenue Bonds 6.95 %
Education Revenue Bonds 6.97 %
Electric Revenue Bonds 2.37 %
Escrowed to Maturity Bonds 0.05 %
Health Care Revenue Bonds 6.05 %
Housing Revenue Bonds 0.22 %
Lease Revenue Bonds 3.99 %
Local General Obligation Bonds 15.14 %
Pre-Refunded Bonds 10.61 %
Resource Recovery Bonds 0.37 %
Special Tax Bonds 5.32 %
State General Obligation Bonds 28.05 %
Transportation Revenue Bonds 5.66 %
Water & Sewer Revenue Bonds 4.93 %
Variable Rate Demand Notes 0.83 %
Total Value of Securities 97.51 %
Receivables and Other Assets Net of Liabilities 2.49 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)
AAA 41.04 %
AA 30.96 %
A 10.87 %
BBB 12.74 %
BB 0.58 %
B 0.46 %
Not Rated 3.35 %
Total 100.00 %

5

Sector allocations and credit quality breakdowns

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware National High-Yield Municipal Bond Fund

Sector     Percentage of net assets
Municipal Bonds   95.59 %
Corporate Revenue Bonds 17.09 %
Education Revenue Bonds 15.44 %
Health Care Revenue Bonds 23.96 %
Lease Revenue Bonds 3.51 %
Local General Obligation Bonds 9.02 %
Pre-Refunded Bonds 17.57 %
Special Tax Bonds 5.01 %
Transportation Revenue Bonds 3.99 %
Variable Rate Demand Notes 2.86 %
Total Value of Securities 98.45 %
Receivables and Other Assets Net of Liabilities 1.55 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)
AAA 12.96 %
A 5.18 %
BBB 33.70 %
BB 6.63 %
B 2.26 %
Not Rated 39.27 %
Total 100.00 %

6


Statements of net assets
Delaware Tax-Free USA Fund February 29, 2008 (Unaudited)

       Principal amount        Value
Municipal Bonds – 98.26%
Corporate Revenue Bonds – 10.95%
     Alliance Airport Authority, Texas Special Facilities Revenue
          (American Airlines Project)
          Series B 5.25% 12/1/29 (AMT) $ 7,500,000   $ 5,326,199
     Brazos, Texas River Authority Pollution Control Revenue
          (Texas Utilities) 5.40% 5/1/29 (AMT) 3,000,000 2,321,940
        Ÿ(TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) 3,500,000 2,980,915
     Buckeye, Ohio Tobacco Settlement Financing Authority
          Asset-Backed Senior Turbo
       ΩCapital Appreciation (Asset-Senior Convention) Series A-3
          6.25% 6/1/37 5,000,000 3,178,400
          Series A-2 6.50% 6/1/47 4,800,000 4,745,616
   ŸChesapeake, Virginia Economic Development
          Authority Pollution Control Revenue
          (Electric & Power Co. Project)
          Series A 3.60% 2/1/32 2,100,000 2,034,816
     Chicago, Illinois O’Hare International Airport Special
          Facilities Revenue (American Airlines Inc. Project)
          5.50% 12/1/30 2,500,000 1,879,975
     Cloquet, Minnesota Pollution Control Revenue
          (Potlatch Corp. Project) 5.90% 10/1/26 1,695,000 1,616,081
     Connecticut State Development Authority Pollution
          Control Revenue (Connecticut Light & Power)
          Series A 5.85% 9/1/28 4,000,000 4,028,800
     Denver, Colorado City & County Airport Special Facilities
          Revenue Refunding (United Air Lines Project)
          Series A 5.25% 10/1/32 (AMT) 5,000,000 3,878,600
     Golden State, California Tobacco Securitization
          Corporation Settlement Revenue Refunding
          Asset-Backed Senior
       ΩConvertible Series A-2 5.30% 6/1/37 5,000,000 2,986,250
          Series A-1 5.125% 6/1/47 1,500,000 1,208,295
     Indianapolis, Indiana Airport Authority Revenue
          Special Facilities (Federal Express Corp. Project)
          5.10% 1/15/17 (AMT) 2,750,000 2,709,190
          Series 1998 5.50% 5/1/29 (AMT) 2,000,000 1,821,740
     Mason County, West Virginia Pollution Control
          Revenue (Appalachian Power Co. Project)
          Series K 6.05% 12/1/24 (AMBAC) 3,000,000 3,122,730

7

Statements of net assets
Delaware Tax-Free USA Fund

       Principal amount        Value
Municipal Bonds (continued)
Corporate Revenue Bonds (continued)  
     Mississippi Business Finance Corporation Pollution
          Control Revenue (System Energy Resources, Inc. Project)
          5.90% 5/1/22   $ 3,000,000   $ 3,008,550
     Petersburg, Indiana Pollution Control Revenue
          (Indianapolis Power & Light Co. Project)
          6.375% 11/1/29 (AMT) 5,000,000 5,036,350
     Phenix City, Alabama Industrial Development
          Board Environmental Improvement Revenue
          (Mead Westvaco Corp. Project)
          Series A 6.35% 5/15/35 (AMT) 3,000,000 2,963,280
   ŸPort Morrow, Oregon Pollution Control Revenue (Portland
          General Electric Co.) Series A 5.20% 5/1/33 2,600,000 2,633,592
     Puerto Rico Industrial, Medical & Environmental Pollution
          Control Facilities Financing Authority Revenue (PepsiCo
          Inc. Project) 6.25% 11/15/13 1,250,000 1,311,938
     Richmond County, Georgia Development Authority
          Environmental Improvement Revenue
          (International Paper Co.)
          Series B 5.95% 11/15/25 (AMT) 5,000,000 4,605,650
     South Carolina Jobs Economic Development Authority
          Industrial Revenue
          (South Carolina Electric & Gas Co. Project)
          Series B 5.45% 11/1/32 (AMBAC) (AMT) 500,000 475,260
     Sugar Creek, Missouri Industrial Development Revenue
          (Lafarge North America Project)
          Series A 5.65% 6/1/37 (AMT) 500,000 436,020
     Sweetwater County, Wyoming Solid Waste Disposal
          Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) 5,000,000 4,382,250
     Tobacco Settlement Financing Corporation,
          Virginia Senior
       ΩConvertible Series B-2 5.20% 6/1/46 2,500,000 1,445,450
          Series B-1 5.00% 6/1/47 4,000,000 3,165,440
73,303,327
Education Revenue Bonds – 7.15%
     Amherst, New York Industrial Development Agency Civic
          Facilities Revenue (UBF Faculty Student Housing)
          Series A 5.75% 8/1/30 (AMBAC) 1,300,000 1,318,135
     Broward County, Florida Educational Facilities
          Authority Revenue (Nova Southeastern Project)
          5.25% 4/1/27 (RADIAN) 1,000,000 948,000

8


       Principal amount        Value
Municipal Bonds (continued)
Education Revenue Bonds (continued)
     California Statewide Communities Development Authority
          Revenue (California Baptist University Project)
          Series A 5.50% 11/1/38   $ 1,500,000   $ 1,279,635
     California Statewide Communities Development Authority
          Student Housing Revenue 
          (East Campus Apartments, LLC)
          Series A 5.625% 8/1/34 (ACA) 3,400,000 2,861,779
     Gainesville, Georgia Redevelopment Authority
          Educational Facilities Revenue
          (Riverside Military Academy Project)
          5.125% 3/1/37 4,000,000 3,279,479
     Illinois Financial Authority Revenue
          (Illinois Institute of Technology)
          Series A 5.00% 4/1/36 2,600,000 2,248,870
     Massachusetts State Health & Educational Facilities
          Authority Revenue (Nichols College Project) Series C
          6.00% 10/1/17 810,000 827,334
          6.125% 10/1/29 1,000,000 988,140
     New Hampshire Higher Educational & Health Facilities
          Authority Revenue (New Hampton School Issue)
          5.375% 10/1/28 3,070,000 2,730,182
     New York City, New York Industrial Development 
          Agency Civic Facilities Revenue
          (Vaughn College Aeronautics) Series B
          5.00% 12/1/31 1,510,000 1,212,092
          5.25% 12/1/36 1,420,000 1,156,420
     Oregon Health & Science University Revenue 
          (Capital Appreciation Insured) Series A
          5.00% 7/1/32 (MBIA) 2,000,000 1,848,920
        ^5.50% 7/1/21 (MBIA) 2,000,000 941,360
     Oregon State Facilities Authority Revenue
          (College Housing Northwest Project)
          Series A 5.45% 10/1/32 1,000,000 873,560
          (College Independent Student Housing Project)
          Series A 5.25% 7/1/30 (XLCA) 1,630,000 1,516,471
     Pennsylvania State Higher Educational
          Facilities Authority Revenue
          (Widener University) 5.375% 7/15/29 650,000 614,835

9

Statements of net assets
Delaware Tax-Free USA Fund

       Principal amount        Value
Municipal Bonds (continued)
Education Revenue Bonds (continued)
     Provo, Utah Charter School Revenue
          (Freedom Academy Foundation Project)
          5.50% 6/15/37   $ 1,750,000   $ 1,412,863
     Saint Louis, Missouri Industrial Development Authority
          Revenue (Confluence Academy Project) Series A
          5.25% 6/15/25 1,150,000 972,797
          5.35% 6/15/32 2,300,000 1,874,408
     San Leanna, Texas Higher Educational Facilities Revenue
          (Saint Edwards University Project) 4.75% 6/1/32 1,150,000 940,861
     Texas A & M University Revenue Financing System
          5.00% 5/15/17 9,060,000 9,652,524
          5.00% 5/15/20 7,700,000 7,945,630
     University of the Virgin Islands Series A 5.375% 6/1/34 500,000 446,510
47,890,805
Electric Revenue Bonds – 1.65%
     Chelan County, Washington Public Utilities District #001
          Consolidated Revenue (Chelan Hydro System)
          Series A 5.45% 7/1/37 (AMBAC) (AMT) 5,000,000 4,801,850
     Florida State Municipal Power Agency Revenue
          (Stanton II Project) 5.00% 10/1/26 (AMBAC) 2,000,000 1,931,800
     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 2,204,840
     Puerto Rico Electric Power Authority Power Revenue
          Series PP 5.00% 7/1/25 (FGIC) 1,000,000 965,080
     Sikeston, Missouri Electric Revenue Refunding 
          6.00% 6/1/13 (MBIA) 1,000,000 1,121,700
11,025,270
Escrowed to Maturity Bonds – 6.00%
     Cape Girardeau County, Missouri Industrial Development
          Authority Health Care Facilities Revenue
          (Southeast Missouri Hospital) 5.25% 6/1/16 (MBIA) 440,000 472,239
   ^Greene County, Missouri Single Family
          Mortgage Revenue Municipal Multiplier
          (Private Mortgage Insurance) 6.10% 3/1/16 1,225,000 876,745
     Louisiana Public Facilities Authority Hospital 
          Revenue (Southern Baptist Hospital, Inc. Project)
          8.00% 5/15/12 4,240,000 4,667,858

10


       Principal amount        Value
Municipal Bonds (continued)
Escrowed to Maturity Bonds (continued)
     Missouri State Health & Educational Facilities
          Authority Health Facilities Revenue Refunding
          (SSM Health Care) Series AA 6.40% 6/1/10 (MBIA)   $ 500,000   $ 537,405
     New Jersey State Highway Authority Garden State 
          Parkway General Revenue (Senior Parkway)
          5.50% 1/1/14 (FGIC) 5,000,000 5,491,850
          5.50% 1/1/15 (FGIC) 7,310,000 8,086,614
          5.50% 1/1/16 (FGIC) 1,000,000 1,108,900
     Oklahoma State Turnpike Authority Revenue
          (First Senior) 6.00% 1/1/22 13,535,000 15,272,488
     Umatilla County, Oregon Hospital Facility
          Authority Revenue (Catholic Health Initiatives)
          Series A 5.50% 3/1/32 1,000,000 1,006,060
     Virgin Islands Public Finance Authority Revenue 
          Series A 7.30% 10/1/18 2,200,000 2,647,810
40,167,969
Health Care Revenue Bonds – 10.13%
     Cape Girardeau County, Missouri Industrial
          Development Authority Health Care Facilities
          Revenue Unrefunded Balance 
          (Southeast Missouri Hospital) 5.25% 6/1/16 (MBIA) 560,000 587,748
          (St. Francis Medical Center) Series A 5.50% 6/1/32 1,000,000 966,780
     Chatham County, Georgia Hospital Authority Revenue
          (Memorial Health Medical Center) Series A
          6.125% 1/1/24 1,000,000 957,910
     Cleveland-Cuyahoga County, Ohio Port Authority 
          Revenue Senior Housing (St. Clarence - Geac)
          Series A 6.25% 5/1/38 1,500,000 1,374,120
     Colorado Health Facilities Authority Revenue
          (Evangelical Lutheran) Series A 5.25% 6/1/34 4,275,000 3,843,011
     Cumberland County, Pennsylvania Municipal Authority
          Revenue (Diakon Lutheran Ministries Project)
          5.00% 1/1/36 2,570,000 2,066,871
     Cuyahoga County, Ohio Revenue (Cleveland Clinic Health
          Systems) Series A 5.50% 1/1/29 7,500,000 7,362,600
     Escambia County, Florida Health Facilities Authority
          Health Care Facilities Loan (VHA Program)
          5.95% 7/1/20 (AMBAC) 560,000 584,198

11

Statements of net assets
Delaware Tax-Free USA Fund

       Principal amount        Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
     Gainesville & Hall County, Georgia Development
          Authority Revenue Senior Living Facilities
          (Lanier Village Estates Project) Series C  
          7.25% 11/15/29   $ 1,000,000   $ 1,057,960
     Illinois Health Facilities Authority Revenue (Elmhurst
          Memorial Healthcare Project) 5.625% 1/1/28 2,000,000 1,975,120
     Indian River County, Florida Hospital District Revenue
          Refunding 6.10% 10/1/18 (FSA) 3,000,000 3,036,360
     Johnson City, Tennessee Health and Educational
          Facilities Board Hospital Revenue First Mortgage
          (Mountain States Health) Series A 5.50% 7/1/36 3,000,000 2,655,720
     Joplin, Missouri Industrial Development Authority Health
          Facilities Revenue (Freeman Health System Project)
          5.75% 2/15/35 405,000 386,864
     Knox County, Tennessee Health Educational &
          Housing Facilities Board Hospital Revenue
          (East Tennessee Hospital Project)
          Series B 5.75% 7/1/33 1,000,000 966,290
     Lucas County, Ohio Health Care Facility Revenue
          (Sunset Retirement Communities)
          Series A 6.625% 8/15/30 2,000,000 2,035,980
     Michigan State Hospital Finance Authority Revenue
          (Ascension Health Credit Group)
          Series B 5.25% 11/15/26 3,500,000 3,386,355
          (Oakwood Obligation Group) Series A 5.75% 4/1/32 2,500,000 2,439,400
          (Trinity Health Credit) Series C 5.375% 12/1/30 6,000,000 5,804,520
     Missouri State Health & Educational Facilities
          Authority Health Facilities Revenue Refunding
          (Lake Regional Health System Project) 5.70% 2/15/34 500,000 475,335
     Montgomery County, Pennsylvania Industrial
          Development Authority Retirement Community
          Revenue (Acts Retirement Communities)
          Series A 4.50% 11/15/36 2,000,000 1,546,440
     Multnomah County, Oregon Hospital Facilities Authority
          Revenue (Providence Health System) 5.25% 10/1/22 3,500,000 3,447,290
     New York State Dormitory Authority Revenue
          (Catholic Health Services of Long Island -
          St. Francis Hospital Project) 5.10% 7/1/34 2,500,000 2,218,900

12


       Principal amount        Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
     North Carolina Medical Care Commission Health 
          Care Facilities Revenue 
          (First Mortgage - Presbyterian Homes)
          5.40% 10/1/27   $ 4,000,000   $ 3,716,280
          (Pennybryn at Mayfield Project)
          Series A 6.125% 10/1/35  5,580,000 5,005,260
     North Kansas City, Missouri Hospital Revenue Series A
          5.00% 11/15/28 (FSA) 500,000 481,845
     Palm Beach County, Florida Health Facilities Authority      
          Revenue (Boca Raton Community Hospital)      
          5.625% 12/1/31 2,000,000     1,818,600
     Prince William County, Virginia Industrial Development
          Authority Hospital Revenue (Potomac Hospital Corp.)
          5.35% 10/1/36 1,750,000 1,617,263
     Puerto Rico Industrial, Tourist, Educational, Medical
          & Environmental Control Facilities Revenue
          (Hospital Auxilio Mutuo Obligated Group)
          Series A 6.25% 7/1/24 (MBIA) 1,200,000 1,209,144
     Shelby County, Tennessee Health Educational & Housing
          Facilities Board Revenue (Trezevant Manor Project)
          Series A 5.625% 9/1/26 2,500,000 2,309,425
     Tallahassee, Florida Health Facilities Revenue (Tallahassee
          Memorial Regional Medical Center) Series B
          6.00% 12/1/15 (MBIA) 2,500,000 2,505,725
67,839,314
Housing Revenue Bonds – 2.93%
     Florida Housing Finance Agency
          (Landings at Sea Forest Apartments) Series T
          5.85% 12/1/18 (AMBAC) (FHA) (AMT) 350,000 351,162
          6.05% 12/1/36 (AMBAC) (FHA) (AMT) 700,000 700,077
          (Leigh Meadows Apartments Section 8 HUD) Series N
          6.20% 9/1/26 (AMBAC) (AMT)  2,765,000 2,770,418
          6.30% 9/1/36 (AMBAC) (AMT)  2,000,000 2,002,660
          (Spinnaker Cove Apartments)
          Series G 6.50% 7/1/36 (AMBAC) (FHA) (AMT) 500,000 500,625
     Franklin County, Ohio Multi Family Revenue
          (Alger Green) Series A 5.80% 5/20/44 (GNMA) (AMT) 1,150,000 1,098,124
     Illinois Development Finance Authority Revenue 
          (Section 8) Series A 5.80% 7/1/28 (MBIA) (FHA) 2,790,000 2,804,647

13

Statements of net assets
Delaware Tax-Free USA Fund

       Principal amount        Value
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
     Illinois Housing Development Authority Multi Family
          Revenue (Crystal Lake Preservation)
          Series A-1 5.80% 12/20/41 (GNMA)   $ 2,000,000   $ 1,978,740
     Milwaukee, Wisconsin Redevelopment Authority
          Multifamily Revenue (City Hall Square)
          6.30% 8/1/38 (FHA) (AMT) 1,455,000 1,469,681
     Missouri State Housing Development Commission
          Mortgage Revenue Single Family Homeowner
          Loan A 5.20% 9/1/33 (GNMA) (FNMA) (AMT) 235,000 215,178
          Loan A 7.20% 9/1/26 (GNMA) (FNMA) (AMT) 30,000 30,985
          Loan C 7.25% 9/1/26 (GNMA) (FNMA) (AMT) 20,000 20,338
          Loan C 7.45% 9/1/27 (GNMA) (FNMA) (AMT) 40,000 40,718
     Missouri State Housing Development Commission
          Multifamily Housing Revenue
          (Hyder) Series 3 5.60% 7/1/34 (FHA) (AMT) 1,435,000 1,390,716
          (San Remo) Series 5 5.45% 1/1/36 (FHA) (AMT) 500,000 471,655
     New Mexico Mortgage Finance Authority Revenue
          Series B Class III 6.75% 7/1/25 (GNMA) (FNMA) 160,000 165,371
          Series E 6.95% 1/1/26 (GNMA) (FNMA) 155,000 157,829
     Orange County, Florida Housing Finance Authority
          Homeowner Revenue Series B 5.25% 3/1/33
          (GNMA) (FNMA) (AMT) 175,000 161,081
     Oregon Health, Housing, Educational, & Cultural Facilities
          Authority Revenue (Pier Park Project)
          Series A 6.05% 4/1/18 (GNMA) (AMT) 1,030,000 1,031,411
     Oregon State Housing & Community Services Department
          Mortgage Revenue Single Family Mortgage Program
          Series R 5.375% 7/1/32 (AMT) 780,000 730,244
     Santa Fe, New Mexico Single Family Mortgage Revenue
          Series B-1 6.20% 11/1/16 (GNMA) (FNMA) (AMT) 145,000 146,737
     St. Louis County, Missouri Industrial Development
          Authority Housing Development Revenue Refunding
          (Southfield & Oak Forest Apartment-A)
          5.20% 1/20/36 (GNMA) 1,000,000 943,820
     Volusia County, Florida Multifamily Housing
          Finance Authority (San Marco Apartments)
          Series A 5.60% 1/1/44 (FSA) (AMT) 500,000 472,730
19,654,947

14


       Principal amount        Value
Municipal Bonds (continued)
Lease Revenue Bonds – 3.60%
     Loudoun County, Virginia Industrial Development 
          Authority Public Safety Facility Lease Revenue
          Series A 5.25% 12/15/23 (FSA)   $ 700,000   $ 709,296
     Missouri State Development Finance Board Infrastructure
          Facilities Revenue
          (Branson Landing Project) Series A
          5.25% 12/1/19 1,435,000 1,396,255
          5.50% 12/1/24 2,480,000 2,351,090
          5.625% 12/1/28 2,930,000 2,757,247
          (Sewer System Improvement Project)
          Series C 5.00% 3/1/25 605,000 584,164
          (Triumph Foods Project) Series A 5.25% 3/1/25 500,000 496,665
     Puerto Rico Commonwealth Industrial Development 
          Company General Purpose Revenue Series B
          5.375% 7/1/16 1,000,000 1,021,400
     Puerto Rico Public Buildings Authority Revenue 
          (Guaranteed Government Facilities)
          Series F 5.25% 7/1/25 930,000 868,676
          Series I 5.25% 7/1/33 11,825,000 10,966,032
     St. Augustine, Florida Capital Improvement Revenue
          5.00% 10/1/34 (AMBAC) 1,000,000 956,060
     St. Charles County, Missouri Public Water Supply 
          District #2 Revenue Certificates of Participation
          (Missouri Project) Series B 5.10% 12/1/25 (MBIA) 500,000 491,930
   ^St. Louis, Missouri Industrial Development Authority
          Leasehold Revenue (Convention Center Hotel)
          5.80% 7/15/20 (AMBAC) 3,035,000 1,520,990
24,119,805
Local General Obligation Bonds – 5.57%
     Belleville, Illinois Tax Increment Revenue (Frank Scott
          Parkway Redevelopment) Series A 5.70% 5/1/36 1,350,000 1,148,175
     Boerne, Texas Independent School District Building
          5.25% 2/1/27 (PSF) 4,000,000 4,008,400
          5.25% 2/1/29 (PSF) 2,960,000 2,961,125
     Florida Enterprise Community Development District
          Special Assessment 6.10% 5/1/16 (MBIA) 695,000 696,710
     Gwinnett County, Georgia School District 5.00% 2/1/11 8,000,000 8,461,039
     Henderson, Nevada Local Improvement Districts #T-18
          5.30% 9/1/35 3,475,000 2,519,757

15

Statements of net assets
Delaware Tax-Free USA Fund

       Principal amount        Value
Municipal Bonds (continued)
Local General Obligation Bonds (continued)
     Hollywood Community, Florida Redevelopment Agency
          5.625% 3/1/24   $ 1,200,000   $ 1,174,008
     Jefferson County, Oregon School District #509J
          5.00% 6/15/22 (FGIC) 500,000 502,265
     Lammersville, California School District Community
          Facilities District #2002 (Mountain House)
          5.125% 9/1/35 4,125,000 3,359,854
     Lewisville, Texas Independent School District
          6.15% 8/15/21 (PSF) 75,000 77,872
     Lincoln County, Oregon School District
          5.25% 6/15/12 (FGIC) 700,000 715,834
     Melrose Park, Illinois Tax Increment Series B
          6.00% 12/15/19 (FSA) 1,250,000 1,329,850
     Missouri State Development Finance Board Infrastructure
          Facilities Revenue (Crackerneck Creek Project)
          Series C 5.00% 3/1/26 500,000 470,025
     New York City, New York
          Series I 5.125% 3/1/23 5,875,000 5,811,374
          Series J 5.25% 6/1/28 2,055,000 2,032,107
     Powell, Ohio 5.50% 12/1/32 (FGIC) 2,000,000 2,018,960
37,287,355
§Pre-Refunded Bonds – 19.93%
     Alexandria, Virginia Industrial Development Authority
          Revenue (Institute for Defense Analyses) Series A
          5.90% 10/1/30-10 (AMBAC) 6,000,000 6,497,400
     California State 5.25% 2/1/30-12 (MBIA) 5,000 5,378
     Deschutes County, Oregon Administrative School District #1
          Series A 5.125% 6/15/21-11 (FSA) 1,000,000 1,061,590
     Deschutes County, Oregon Hospital Facilities Authority
          Hospital Revenue (Cascade Health Services)
          5.60% 1/1/32-12 1,250,000 1,349,763
     Duluth, Minnesota Economic Development Authority
          Health Care Facilities Revenue (Benedictine Health
          System - St. Mary’s Hospital) 5.25% 2/15/33-14 5,000,000 4,590,250
     Florida State Board of Education (Lottery Revenue)
          Series A 6.00% 7/1/14-10 (FGIC) 1,000,000 1,078,330

16


  Principal amount          Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds (continued)    
     Golden State, California Tobacco Securitization    
          Corporation Settlement Revenue Series B    
          5.50% 6/1/43-13 $ 9,000,000 $ 9,708,750
          5.625% 6/1/38-13 7,500,000 8,134,875
     Greene County, Missouri Reorganization School District    
          R8 (Direct Deposit Project) 5.10% 3/1/22-16 (FSA)  1,500,000 1,578,090
     Henrico County, Virginia Economic Development    
          Authority Revenue (Bon Secours Health System)    
          Series A 5.60% 11/15/30-12 130,000 142,453
     Highlands County, Florida Health Facilities    
          Authority (Adventist Health System/Sunbelt)    
          Series A 6.00% 11/15/31-11 1,500,000 1,651,635
     Illinois Educational Facilities Authority Student Housing    
          Revenue (Educational Advancement Fund -    
          University Center Project) 6.25% 5/1/30-12 5,000,000 5,601,800
     Jackson, Ohio Local School District (Stark & Summit    
          Counties) School Facilities Construction &    
          Improvement 5.625% 12/1/25-10 (FSA) 1,000,000 1,070,190
     Jackson, Oregon School District #6 Central Point    
          5.25% 6/15/20-10 (FGIC) 1,175,000 1,235,548
     Lee County, Florida Airport Revenue    
          Series B 5.75% 10/1/33-10 (FSA) 3,000,000 3,233,670
     Lewisville, Texas Independent School District    
          6.15% 8/15/21-09 (PSF) 2,085,000 2,185,351
     Liberty, Missouri Sewer System Revenue    
          6.15% 2/1/15-09 (MBIA) 1,500,000 1,547,040
     Linn County, Oregon Community School District #9    
          Lebanon 5.60% 6/15/30-13 (FGIC) 2,000,000 2,213,280
     Louisiana Public Facilities Authority Revenue    
          (Ochsner Clinic Foundation Project)    
          Series B 5.50% 5/15/32-26 1,500,000 1,595,340
     Maryland State Economic Development Corporation,    
          Student Housing Revenue (University of Maryland    
          College Park Project) 5.625% 6/1/35-13 1,125,000 1,245,049
     Massachusetts State Development Finance Agency    
          Revenue (Massachusetts College of Pharmacy Project)    
          Series C 5.75% 7/1/33-13 1,500,000 1,680,495

17

Statements of net assets
Delaware Tax-Free USA Fund 

  Principal amount         Value
Municipal Bonds (continued)           
§Pre-Refunded Bonds (continued)    
     Miami-Dade County, Florida Educational Facilities    
          Authority (University of Miami)    
          5.00% 4/1/34-14 (AMBAC) $ 7,000,000 $ 7,505,610
          Series A 5.75% 4/1/29-10 (AMBAC) 2,000,000 2,133,700
     Milledgeville-Baldwin County, Georgia Development    
          Authority Revenue (Georgia College & State University    
          Foundation Student Housing Project) 6.00% 9/1/33-14 1,000,000 1,143,210
     Mississippi Development Bank Special Obligation    
          (Madison County Hospital Project) 6.30% 7/1/22-09 2,070,000 2,203,349
     New Jersey State Educational Facilities Authority Revenue    
          (Stevens Institute of Technology)    
          Series B 5.25% 7/1/24-14 2,085,000 2,267,855
     New York City, New York Series J 5.25% 6/1/28-13 2,895,000 3,149,152
     North Carolina Medical Care Commission Hospital    
          Revenue (Northeast Medical Center Project)    
          5.125% 11/1/34-14 1,250,000 1,359,413
     Orange County, Florida Health Facilities    
          Authority Revenue (Adventist Health System)    
          5.625% 11/15/32-12 1,000,000 1,099,900
     Orlando, Florida Utilities Commission     
          Water & Electric Revenue    
          5.25% 10/1/20-11 1,575,000 1,699,047
     Osceola County, Florida School Board     
          Certificates of Participation Series A    
          5.25% 6/1/27-12 (AMBAC)  4,000,000 4,331,640
     Payne County, Oklahoma Economic Development    
          Authority Student Housing Revenue (Collegiate    
          Housing Foundation - Oklahoma State University)    
          Series A 6.375% 6/1/30-11  4,000,000 4,388,400
     Puerto Rico Commonwealth Highway & Transportation    
          Authority Revenue    
          Series D 5.25% 7/1/38-12 3,000,000 3,222,630
          Series G 5.00% 7/1/42-13 525,000 565,273
          Series K 5.00% 7/1/35-15 3,500,000 3,786,405
     Puerto Rico Commonwealth Public Improvement    
          5.125% 7/1/30-11 (FSA) 920,000 976,966
          Series A 5.125% 7/1/31-11 3,495,000 3,711,410
     Puerto Rico Electric Power Authority Revenue    
          Series II 5.25% 7/1/31-12 6,000,000 6,509,760
          Series NN 5.125% 7/1/29-13 1,400,000 1,515,878

18


    Principal amount         Value
Municipal Bonds (continued)           
§Pre-Refunded Bonds (continued)      
     Puerto Rico Public Buildings Authority Revenue       
          (Guaranteed Government Facilities)      
          Series I 5.25% 7/1/33-14  $ 175,000 $ 189,525
     Richmond, Virginia Public Utilities Revenue      
          5.00% 1/15/27-12 (FSA) 10,000,000   10,603,600
     South Broward, Florida Hospital District Revenue       
          (Memorial Health Care System) 5.625% 5/1/32 3,000,000   3,285,000
     South Miami, Florida Health Facilities Authority Hospital      
          Revenue (Baptist Health South Florida Group)      
          5.25% 11/15/33-13 4,000,000   4,323,280
     St. Louis, Missouri Airport Revenue      
          (Capital Improvement Project)      
          Series A 5.375% 7/1/21-12 (MBIA) 1,635,000   1,762,448
     Tampa, Florida Utilities Tax Revenue Series A       
          6.00% 10/1/17-09 (AMBAC)  1,000,000   1,059,490
          6.125% 10/1/18-09 (AMBAC)  1,000,000   1,061,420
     Vancouver, Washington Limited Tax      
          5.50% 12/1/25-10 (AMBAC)  1,250,000   1,332,613
     Wisconsin Housing & Economic Developing      
          Authority Revenue 6.10% 6/1/21-17 (FHA) 765,000   836,443
      133,429,694
Special Tax Bonds – 5.92%       
     Bi-State Development Agency Missouri - Illinois       
          Metropolitan District (Metrolink Cross County Project)      
          Series B 5.00% 10/1/32 (FSA) 2,000,000   1,931,300
     Jackson County, Missouri Special Obligation      
          5.00% 12/1/27 (MBIA) 1,000,000   958,730
     Jacksonville, Florida Excise Taxes Revenue Series B      
          5.00% 10/1/26 (AMBAC) 1,000,000   957,010
          5.125% 10/1/32 (FGIC) 1,000,000   962,760
     Michigan, Michigan Municipal Bond Authority Revenue      
          (State Clean Water Revolving Foundation)      
          5.00%10/1/14 7,000,000   7,567,980
          5.00% 10/1/15 3,000,000   3,236,340
     Middlesex County, New Jersey Improvement Authority      
          Senior Revenue (Heldrich Center      
          Hotel/Conference Project) Series A      
          5.00% 1/1/32 1,500,000   1,224,225
          5.125% 1/1/37 1,500,000   1,218,630

19

Statements of net assets
Delaware Tax-Free USA Fund 

  Principal amount         Value
Municipal Bonds (continued)           
Special Tax Bonds (continued)      
     New Jersey Economic Development Authority (Cigarette Tax)      
          5.50% 6/15/31 $ 1,000,000 $ 899,480
          5.75% 6/15/34 2,000,000   1,842,540
     New York City, New York Transitional Finance Authority      
          Series D 5.00% 2/1/31 5,000,000   4,866,750
     New York Sales Tax Asset Receivables Series A      
          5.25% 10/15/27 (AMBAC) 1,000,000   1,007,170
     Palm Beach County, Florida Criminal Justice Facilities      
          Revenue 5.75% 6/1/12 (FGIC) 10,000,000   10,925,300
     Tampa, Florida Sports Authority Revenue Sales Tax      
          (Tampa Bay Arena Project) 5.75% 10/1/20 (MBIA) 1,000,000   1,074,330
     Truth or Consequences, New Mexico Gross Receipts Tax      
          Revenue 6.30% 7/1/16 1,000,000   1,001,330
      39,673,875
State General Obligation Bonds – 15.47%      
     California State      
          5.00% 11/1/21 4,515,000   4,454,002
          5.00% 2/1/26 (AMBAC) 5,570,000   5,485,559
          5.25% 2/1/30 (MBIA) 3,490,000   3,492,303
     Georgia State Series E 5.00% 8/1/12 7,425,000   7,974,079
     Maryland State & Local Facilities Land      
          Capital Improvement      
          First Series 5.00% 8/1/11 5,000,000   5,328,350
          Second Series 5.00% 8/1/14 3,500,000   3,798,900
          Second Series 5.00% 8/1/16 4,000,000   4,330,200
          Series A 5.00% 3/1/12 8,000,000   8,550,960
     Minnesota State      
          5.00% 6/1/14 7,500,000   8,111,400
          5.00% 10/1/15 7,000,000   7,582,680
     Pennsylvania State First Series      
          5.00% 7/1/11 5,955,000   6,322,662
          5.00% 7/1/13 3,000,000   3,232,410
          5.25% 2/1/14 (MBIA) 6,455,000   7,034,465
     Puerto Rico Commonwealth Public Improvement      
          5.25% 7/1/27 (FSA) 705,000   702,406
          Series A 5.125% 7/1/31 7,880,000   7,194,361
          Series A 5.25% 7/1/23 500,000   475,195
          Series A 5.50% 7/1/19 (MBIA) 11,500,000   11,951,835

20


  Principal amount         Value
Municipal Bonds (continued)           
State General Obligation Bonds (continued)      
     Texas State Transportation Commission      
          (Mobility Foundation) 5.00% 4/1/19 $ 7,250,000 $ 7,567,985
      103,589,752
Transportation Revenue Bonds – 4.91%      
     Branson, Missouri Regional Airport Transportation      
          Development District Revenue (Branson Airport      
          Project) Series B 6.00% 7/1/37 (AMT) 1,500,000   1,269,240
     Capital Trust Agency Florida Revenue (Fort Lauderdale/      
          Cargo Acquisition Project) 5.75% 1/1/32 (AMT) 3,750,000   3,361,950
          (Orlando/Cargo Acquisition Project)      
          6.75% 1/1/32 (AMT) 2,395,000   2,357,087
     Dallas-Fort Worth, Texas International Airport Revenue      
          Series A 5.50% 11/1/31 (FGIC) (AMT) 1,500,000   1,422,015
     Grapevine, Texas Industrial Development Corporate      
          Revenue (Air Cargo) 6.50% 1/1/24 (AMT) 915,000   911,322
     Houston, Texas Industrial Development Corporate      
          Revenue (Air Cargo) 6.375% 1/1/23 (AMT) 2,000,000   1,968,740
     Miami-Dade County, Florida Aviation Revenue       
          Series A 5.00% 10/1/33 (FSA) (AMT) 500,000   457,540
     Metropolitan, New York Transportation Authority Revenue      
          Series A 5.00% 11/15/18 5,300,000   5,440,344
     New York State Thruway Authority General Revenue      
          Series H 5.00% 1/1/19 (MBIA) 6,240,000   6,510,691
     Orlando & Orange County, Florida Expressway Authority      
          Revenue Series A 5.00% 7/1/32 (FSA) 1,380,000   1,318,204
     Pennsylvania State Turnpike Commission Revenue      
          Series A 5.00% 12/1/34 (AMBAC) 500,000   472,500
     Puerto Rico Commonwealth Highway & Transportation      
          Authority Revenue Series G 5.00% 7/1/42 275,000   241,269
     South Carolina Transportation Infrastructure Revenue      
          Series A 5.00% 10/1/33 (AMBAC) 7,500,000   7,116,074
      32,846,976
Water & Sewer Revenue Bonds – 4.05%      
     Augusta, Georgia Water & Sewer Revenue       
          5.25% 10/1/34 (FSA) 4,375,000   4,349,931
     Florida Village Center Community Development District      
          Utility Revenue 5.00% 10/1/36 (MBIA) 500,000   469,630
     Fulton County, Georgia Water & Sewer Revenue      
          5.25% 1/1/35 (FGIC) 1,000,000   1,000,420

21

Statements of net assets
Delaware Tax-Free USA Fund  

  Principal amount       Value
Municipal Bonds (continued)           
Water & Sewer Revenue Bonds (continued)    
     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 $ 1,062,873
     New York City, New York Municipal Water Finance     
          Authority Water & Sewer System Revenue Series A    
          5.125% 6/15/34 12,125,000 11,960,343
          5.25% 6/15/34 3,705,000 3,673,396
     Tampa, Florida Water and Sewer Revenue    
          6.00% 10/1/16 (FSA) 1,000,000 1,139,840
     Virgin Islands Water & Power Authority Water System    
          Revenue 5.50% 7/1/17 510,000 512,453
     West Virginia State Water Development Authority     
          Revenue (Loan Program III) Series A    
          6.375% 7/1/39 (AMBAC) (AMT) 2,890,000   2,944,910
      27,113,796
Total Municipal Bonds (cost $667,410,931)     657,942,885
 
Total Value of Securities – 98.26% (cost $667,410,931)   657,942,885
Receivables and Other Assets     
     Net of Liabilities – 1.74%      11,628,160
Net Assets Applicable to 62,004,522     
     Shares Outstanding – 100.00%    $ 669,571,045
 
Net Asset Value – Delaware Tax-Free USA Fund    
     Class A ($639,779,624 / 59,245,582 Shares)       $10.80
Net Asset Value – Delaware Tax-Free USA Fund    
     Class B ($13,375,242 / 1,239,165 Shares)       $10.79
Net Asset Value – Delaware Tax-Free USA Fund    
     Class C ($16,416,179 / 1,519,775 Shares)       $10.80

22


       
Components of Net Assets at February 29, 2008:       
Shares of beneficial interest (unlimited authorization – no par)  $ 687,097,905  
Undistributed net investment income  1,790  
Accumulated net realized loss on investments  (8,060,604 )
Net unrealized depreciation of investments    (9,468,046 )
Total net assets  $ 669,571,045  

§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 9 in “ Notes to financial statements.”

·Variable rate security. The rate shown is the rate as of February 29, 2008.

^Zero coupon security. The rate shown is the yield at the time of purchase.

ΩStep coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.

23

Statements of net assets
Delaware Tax-Free USA Fund  

 
Summary of abbreviations:
ACA — Insured by American Capital Access
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 Financial Security Assurance
GNMA — Insured by Government National Mortgage Association
HUD — Housing and Urban Development
MBIA — Insured by the Municipal Bond Insurance Association
PSF — Insured by the Permanent School Fund
RADIAN — Insured by Radian Asset Assurance
VHA — Veterans Health Administration
XLCA — Insured by XL Capital Assurance

Net Asset Value and Offering Price Per Share –   
     Delaware Tax-Free USA Fund   
Net asset value Class A (A)  $ 10.80
Sales charge (4.50% of offering price) (B)    0.51
Offering price  $ 11.31

(A)       Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
 
(B) See the current prospectus for purchases of $100,000 or more.

See accompanying notes

24


Delaware Tax-Free USA Intermediate Fund

February 29, 2008 (Unaudited)


  Principal amount       Value
Municipal Bonds – 96.68%           
Corporate Revenue Bonds – 6.95%     
     Alliance Airport Authority, Texas Special Facilities    
          Revenue (Federal Express Corp. Project)    
          4.85% 4/1/21 (AMT) $ 2,000,000 $ 1,795,220
     Brazos, Texas River Authority Pollution    
          Control Revenue (Texas Utilities)    
          5.40% 5/1/29 (AMT) 1,000,000 773,980
     Buckeye, Ohio Tobacco Settlement Financing    
          Authority Asset-Backed Senior Turbo    
          Series A-2 6.50% 6/1/47 3,755,000 3,712,456
    ·Chesapeake, Virginia Economic Development    
          Authority Pollution Control Revenue    
           (Electric & Power Co. Project)    
           Series A 3.60% 2/1/32 1,150,000 1,114,304
     Connecticut State Development Authority Pollution    
          Control Revenue (Connecticut Light & Power) Series A    
         ·3.35% 5/1/31 (AMBAC) (AMT) 1,300,000 1,305,226
          5.85% 9/1/28 1,145,000 1,153,244
    ·Farmington, New Mexico Pollution Control    
          Revenue (El Paso Electric Co. Project)    
          Series A 4.00% 6/1/32 (FGIC) 1,000,000 1,000,910
    ·Forsyth, Montana Pollution Control Revenue (Portland    
          General Project) Series A 5.20% 5/1/33 1,005,000 1,019,372
    ΩGolden State, California Tobacco Securitization    
          Corporation Settlement Revenue Refunding    
          Asset-Backed Senior Convertible    
          Series A-2 5.30% 6/1/37 1,500,000 895,875
     Indianapolis, Indiana Airport Authority Revenue Special    
          Facilities (Federal Express Corp. Project)    
          5.10% 1/15/17 (AMT) 750,000 738,870
     Memphis-Shelby County, Tennessee Airport    
          Authority Special Facilities Revenue    
          (Federal Express Corp. Project)    
          5.05% 9/1/12 1,000,000 1,029,060
     Michigan State Strategic Funding Limited Obligation    
          Revenue (Detroit Edison Co. Project)    
          Series A 5.50% 6/1/30 (XLCA) (AMT) 1,000,000 951,880
     Ohio State Air Quality Development Authority Revenue    
          Environmental Improvement (USX Project)    
          5.00% 11/1/15 1,000,000 1,015,310

25

Statements of net assets
Delaware Tax-Free USA Intermediate Fund 

  Principal amount          Value
Municipal Bonds (continued)           
Corporate Revenue Bonds (continued)      
    ·Pennsylvania Economic Development Financing Authority      
          Exempt Facilities Revenue (PSEG Power LLC Project)      
          4.00% 1/15/42 (AMT) $ 5,500,000 $ 5,533,550
     Prattville, Alabama Industrial Development Board      
          Environmental Improvement Revenue      
          (International Paper Co. Project)      
          Series A 6.70% 3/1/24 (AMT) 1,000,000   1,013,790
    ·Sabine, Texas River Authority Pollution      
          Control Revenue (TXU Electric Co. Project)      
          Series A 5.50% 5/1/22 1,000,000   941,400
     South Carolina Jobs Economic Development Authority      
          Industrial Revenue (South Carolina Electric & Gas Co.      
          Project) Series B 5.45% 11/1/32 (AMBAC) (AMT) 500,000   475,260
     Sugar Creek, Missouri Industrial Development Revenue      
          (Lafarge North America Project)      
          Series A 5.65% 6/1/37 (AMT) 500,000   436,020
     Tobacco Settlement Financing Corporation, Virginia      
          Senior Series B-1 5.00% 6/1/47 1,375,000   1,088,120
     Toledo, Lucas County, Ohio Port Authority Development      
          Revenue (Northwest Ohio Bond Fund - Alex      
          Products Inc.)      
          Series B 6.125% 11/15/09 (AMT) 430,000   442,530
      26,436,377
Education Revenue Bonds – 6.97%      
     California Municipal Finance Authority Educational Revenue      
          (American Heritage Education Foundation Project)      
          Series A 5.25% 6/1/26 1,000,000   866,930
     Chattanooga, Tennessee Health Educational & Housing      
          Facilities Board Revenue (CDFI Phase I, LLC Project)      
          Series B 5.50% 10/1/20 1,160,000   1,053,338
     Fulton County, Georgia Development Authority Revenue      
          (Molecular Science Building Project)       
          5.25% 5/1/21 (MBIA) 1,000,000   1,016,780
     Grand Traverse, Michigan Public      
          School Academy Revenue      
          5.00% 11/1/36 900,000   697,167
     Illinois Finance Authority Revenue      
          (Illinois Institute of Technology)      
          Series A 5.00% 4/1/36 825,000   713,584

26


  Principal amount         Value
Municipal Bonds (continued)           
Education Revenue Bonds (continued)       
     Illinois Finance Authority Student Housing Revenue      
          Series B 5.00% 5/1/30 $ 3,250,000 $ 2,646,930
     Lubbock, Texas Educational Facilities Authority Revenue      
          (Lubbock Christian University)      
          5.25% 11/1/37 1,000,000   859,100
     Massachusetts State Health & Educational Facilities      
          Authority Revenue (Nichols College Project)       
          Series C 6.125% 10/1/29 1,000,000   988,140
     Michigan Higher Education Facilities Authority Revenue      
          (Kalamazoo College Project) 5.50% 12/1/19  500,000   510,465
     New York State Dormitory Authority Revenue      
          (Brooklyn Law School)      
          Series A 5.50% 7/1/18 (RADIAN) 1,000,000   1,019,820
          (Long Island University)      
          Series B 5.50% 9/1/20 (RADIAN) 1,000,000   1,010,860
     Ohio State Higher Educational Facility Revenue      
          (John Carroll University) 5.50% 11/15/18 335,000   346,906
         ·(Kenyon College Project) 4.70% 7/1/37 1,000,000   1,041,850
     Ohio State University General Receipts Revenue      
          Series B 5.25% 6/1/21 1,000,000   1,024,340
     Texas A & M University Revenue Financing System      
          5.00% 5/15/12 3,655,000   3,903,905
          5.00% 5/15/13 3,760,000   4,043,954
     Tulsa, Oklahoma Industrial Authority Student Housing      
          Revenue (University of Tulsa) 5.00% 10/1/37  1,000,000   905,700
     University of California Revenue      
          Series A 5.125% 5/15/20 (AMBAC) 250,000   253,978
     University of Oklahoma Research Facilities Revenue      
          5.00% 3/1/23 (AMBAC) 1,065,000   1,056,129
     University of Virginia General Revenue Series B      
          5.00% 6/1/20 1,250,000   1,273,313
          5.00% 6/1/21 1,250,000   1,269,225
      26,502,414
Electric Revenue Bonds – 2.37%      
     Metropolitan Government Nashville & Davidson County,      
          Tennessee Electric Revenue      
          Series B 5.50% 5/15/14 1,000,000   1,099,480

27

Statements of net assets
Delaware Tax-Free USA Intermediate Fund 

  Principal amount       Value
Municipal Bonds (continued)           
Electric Revenue Bonds (continued)    
     Oliver County North Dakota Pollution Control Revenue    
          (Square Butte Electric Coop)    
          Series A 5.30% 1/1/27 (AMBAC) $ 1,500,000 $ 1,482,285
     Orlando, Florida Utilities Commission    
          Water & Electric Revenue    
          5.25% 10/1/20 555,000 569,957
     Philadelphia, Pennsylvania Gas Works Revenue First    
          Series A 5.375% 7/1/15 (FSA) 2,000,000 2,014,880
     Rochester, Minnesota Electric Utilities Revenue     
          Series C 5.00% 12/1/18 (MBIA) 2,000,000 2,060,180
     South Carolina State Public Service    
          Authority Revenue Refunding    
          Series A 5.125% 1/1/21 (FSA) 1,000,000 1,018,380
     Texas Municipal Power Agency Revenue    
          4.00% 9/1/11 (AMBAC) 750,000   750,375
      8,995,537
Escrowed to Maturity Bonds – 0.05%    
     Southcentral, Pennsylvania General Authority Revenue    
          (Wellspan Health Obligated Project) 5.625% 5/15/26 180,000   186,545
      186,545
Health Care Revenue Bonds – 6.05%    
     Chatham County, Georgia Hospital Authority Revenue    
          (Memorial Health Medical Center)    
          Series A 6.125% 1/1/24 1,000,000 957,910
     Cleveland-Cuyahoga County, Ohio Port Authority     
          Revenue (Saint Clarence - Geac)    
          Series A 6.125% 5/1/26 715,000 669,240
     Cuyahoga County, Ohio Revenue    
          (Cleveland Clinic Health System)    
          Series A 6.00% 1/1/21 1,000,000 1,074,440
     Georgia Medical Center Hospital Authority Revenue    
          (Spring Harbor Green Island Project)    
          5.25% 7/1/37 2,300,000 1,714,029
    ·Highlands County, Florida Health Facilities Authority    
          Revenue (Adventist Health System)    
          Series I 5.00% 11/15/29 2,000,000 2,071,580
     Indiana Health Facility Financing Authority Hospital    
          Revenue (Deaconess Hospital Obligation)    
          Series A 5.375% 3/1/29 (AMBAC) 700,000 687,470

28


  Principal amount        Value
Municipal Bonds (continued)           
Health Care Revenue Bonds (continued)    
     Maryland State Health & Higher Education Facilities    
          Authority Revenue (Union Hospital of Cecil County)    
          5.625% 7/1/32 $ 500,000 $ 494,080
     Michigan State Hospital Finance Authority Revenue    
          (Henry Ford Health System)     
          Series A 5.25% 11/15/46  3,250,000 2,901,502
          (Oakwood Obligation Group)     
          5.50% 11/1/14 2,230,000 2,343,819
          (Trinity Health Credit)     
          Series C 5.375% 12/1/23  500,000 496,025
     Multnomah County, Oregon Hospital Facilities    
          Authority Revenue (Providence Health System)    
          5.25% 10/1/22 1,000,000 984,940
     New Hampshire Health & Education Facilities     
          Authority Revenue (Elliot Hospital)    
          Series B 5.60% 10/1/22 1,000,000 1,004,700
     North Carolina Medical Care Commission    
          Health Care Facilities Revenue    
          (First Mortgage - Presbyterian Homes)    
          5.40% 10/1/27 950,000 882,617
          (Pennybryn at Mayfield Project)    
          Series A 6.125% 10/1/35  1,650,000 1,480,050
     Shelby County, Tennessee Health Educational &    
          Housing Facilities Board Revenue    
          (Trezevant Manor Project)     
          Series A 5.75% 9/1/37 1,000,000 909,360
     St. Mary Hospital Authority Pennsylvania Health System    
          Revenue (Catholic Health East)    
          Series A 5.25% 11/15/16  1,200,000 1,232,316
     St. Paul, Minnesota Housing & Redevelopment Authority    
          Hospital Revenue (Health East Project)    
          6.00% 11/15/25 1,000,000 969,700
     Suffolk, Virginia Industrial Development Authority    
          Retirement Facilities Revenue    
          (First Management - Lake Prince)    
          5.15% 9/1/24 725,000 648,687

29

Statements of net assets
Delaware Tax-Free USA Intermediate Fund  

  Principal amount         Value
Municipal Bonds (continued)           
Health Care Revenue Bonds (continued)      
     Terrebonne Parish, Louisiana Hospital Service      
          District #1 Hospital Revenue (Terrebonne      
          General Medical Center Project)      
          5.50% 4/1/33 (AMBAC) $ 1,500,000 $ 1,501,455
      23,023,920
Housing Revenue Bonds – 0.22%      
     Maryland State Community Development       
          Administration Department Housing &       
          Community Development Residential      
          Series A 4.70% 9/1/37 (AMT) 1,000,000   837,080
      837,080
Lease Revenue Bonds – 3.99%      
     California State Public Works Board Lease Revenue      
          (Department of General Services - Butterfield Street)      
          Series A 5.25% 6/1/25 1,000,000   954,060
     Golden State, California Tobacco Securitization      
          Corporation Settlement Revenue Refunding      
          Asset-Backed Series A      
          5.00% 6/1/18 2,000,000   2,001,280
          5.00% 6/1/21 (AMBAC) 1,000,000   998,960
     Michigan State Building Authority Revenue Series I      
          5.00% 10/15/09 (FSA) 1,000,000   1,036,810
          5.00% 10/15/24 3,000,000   2,959,829
          5.50% 10/15/18 2,175,000   2,297,975
     Minnesota State Retirement System Building Revenue      
          5.875% 6/1/27 765,000   793,076
     Missouri State Development Finance Board Infrastructure      
          Facilities Revenue (Crackerneck Creek Project)      
          Series C 5.00% 3/1/28 1,600,000   1,487,168
     New York State Municipal Bond Bank      
          Agency Special School Purpose Revenue       
          Series C 5.25% 6/1/22 1,000,000   1,004,470
    ·Puerto Rico Public Buildings Authority Revenue      
          (Guaranteed Government Facilities)      
          Series J 5.00% 7/1/28 1,000,000   1,016,100
    ·Puerto Rico Public Finance Corporate Revenue      
          Series A 5.25% 8/1/29 (MBIA) 620,000   631,836
      15,181,564

30


  Principal amount       Value
Municipal Bonds (continued)           
Local General Obligation Bonds – 15.14%    
    ^Anaheim, California City School District Election 2002    
          4.58% 8/1/25 (MBIA) $ 2,500,000 $ 880,850
     Belton, Missouri School District #124    
          Series B 5.25% 3/1/23 1,000,000 1,019,950
     Boerne, Texas Independent School District Building    
          5.25% 2/1/26 (PSF) 4,495,000 4,514,149
          5.25% 2/1/29 (PSF) 1,500,000 1,500,570
     Chicago, Illinois Board of Education    
          Refunding Dedicated Revenue    
          Series B 5.00% 12/1/23 (AMBAC) 3,500,000 3,428,740
     Chicago, Illinois Modern Schools Across Chicago     
          Series J 5.00% 12/1/23 (AMBAC) 2,865,000 2,809,706
     Chicago, Illinois Project & Refunding    
          Series C 5.50% 1/1/40 (FGIC) 2,940,000 2,953,994
     Coralville, Iowa Urban Renewal Revenue Tax Increment    
          Series C    
          5.00% 6/1/47 850,000 691,025
          5.125% 6/1/39 500,000 424,605
     Dallas, Texas 5.125% 2/15/15 3,000,000 3,248,700
     Denver, Colorado City & County Justice System    
          5.25% 8/1/18 1,000,000 1,080,570
     East Homestead Community Development District Florida    
          Special Assessment Revenue     
          Series B 5.00% 5/1/11 365,000 343,972
     Fairfax County, Virginia Refunding & Public Improvement    
          5.25% 4/1/14 3,500,000 3,838,170
     Florida State Board Education Capital    
          Outlay Public Education     
          Series D 5.75% 6/1/22 2,000,000 2,094,240
     Gwinnett County, Georgia School District    
          5.00% 2/1/11 3,500,000 3,701,705
     Lansing, Michigan Community College    
          (College Building and Site)    
          5.00% 5/1/21 (MBIA) 1,325,000 1,341,457
     Licking County, Ohio Joint Vocational School District    
          School Facilities Construction and    
          Improvement 5.00% 12/1/19 (MBIA) 1,000,000 1,021,340
     Los Angeles, California Unified School District     
          Election 2004 Series G 5.00% 7/1/13 (AMBAC) 2,000,000 2,150,900
          Series A-2 4.25% 1/1/28 (FGIC) 355,000 302,790

31

Statements of net assets
Delaware Tax-Free USA Intermediate Fund  

  Principal amount         Value
Municipal Bonds (continued)           
Local General Obligation Bonds (continued)      
     Mecklenburg County, North Carolina Public Improvement      
          Series A 5.00% 2/1/11 $ 4,775,000 $ 5,050,182
     Middlesex County, New Jersey Improvement Authority      
          Revenue (County Guaranteed Open Space Trust)      
          5.25% 9/15/20 1,000,000   1,029,940
     Modesto, California Special Tax Community      
          Facilities District #04-1 Village 2 5.15% 9/1/36 1,500,000   1,189,335
     New York City, New York      
          Series A-1 5.00% 8/1/19 3,500,000   3,565,170
          Series G 5.25% 8/1/15 1,000,000   1,060,590
          Series I 5.00% 8/1/21 1,000,000   997,440
          Series J 5.50% 6/1/23 100,000   101,447
     North East Texas Independent School      
          District School Building      
          Series A 5.00% 8/1/20 (PSF) 3,500,000   3,577,455
     Powell, Ohio      
          5.50% 12/1/25 (FGIC) 1,500,000   1,524,930
     Richmond Heights, Missouri Tax Increment & Transaction      
          Sales Tax Revenue Refunding & Improvement      
          (Francis Place Redevelopment Project)      
          5.625% 11/1/25 1,200,000   1,047,768
     St. Joseph, Missouri Industrial Development      
          Authority Tax Increment Revenue       
          (Shoppes at North Village Project)      
          Series A 5.10% 11/1/19 250,000   226,965
          Series B 5.375% 11/1/23 1,000,000   885,400
      57,604,055
§Pre-Refunded Bonds – 10.61%       
     Arizona State Transportation Board Highway Revenue      
          6.25% 7/1/16-09 1,850,000   1,934,083
     Benton & Linn Counties, Oregon School District #509J      
          5.00% 6/1/21-13 (FSA) 1,000,000   1,076,360
     California State      
          5.00% 2/1/33-14 (MBIA) 1,800,000   1,933,470
          5.25% 2/1/30-12 (MBIA) 5,000   5,378
     Cook County, Illinois      
          Series A 5.375% 11/15/21-11 (FGIC) 2,160,000   2,305,930

32


  Principal amount         Value
Municipal Bonds (continued)           
§Pre-Refunded Bonds (continued)      
     Duluth, Minnesota Economic Development      
          Authority Health Care Facilities Revenue      
          (Benedictine Health System - St. Mary's Hospital)      
          5.25% 2/15/28-14 $ 1,000,000 $ 944,460
          5.50% 2/15/23-14 1,000,000   995,940
     Forest Grove, Oregon Revenue Campus      
          (Pacific University)      
          6.30% 5/1/25-10 (RADIAN)  1,000,000   1,071,140
     Golden State, California Tobacco Securitization      
          Settlement Revenue Enchanced Asset-Backed      
          Series B 5.75% 6/1/23-08  1,000,000   1,006,340
     Illinois Educational Facilities Authority Student      
          Housing Revenue (Educational Advancement -      
          University Center Project)       
          6.00% 5/1/22-12 750,000   833,033
     Lancaster County, Pennsylvania Hospital Authority      
          Revenue (Lancaster General Hospital Project)      
          5.75% 3/15/21-13 1,000,000   1,106,700
     Lunenburg County, Virginia       
          Series B 5.25% 2/1/29-13 (MBIA) 715,000   781,545
     Miami-Dade County, Florida Educational Facilities      
          Authority Revenue (University of Miami)      
          Series A 5.00% 4/1/34-14 (AMBAC) 3,500,000   3,752,805
     Minneapolis, Minnesota Health Care System Revenue      
          (Allina Health Systems)       
          Series A 5.75% 11/15/32-12  500,000   548,395
     New Jersey State Educational Facilities Authority      
          Revenue (Georgian Court College Project)      
          Series C 6.50% 7/1/33-13  500,000   573,095
     New York City, New York       
          Series J 5.50% 6/1/23-13  900,000   989,757
     North Texas Health Facilities Development      
          Corporation Hospital Revenue      
          (United Regional Health Care System, Inc. Project)      
          6.00% 9/1/23-13 1,000,000   1,125,380
     Ohio State Higher Education Capital Facilities      
          Series B 5.625% 5/1/14-10  5,780,000   6,108,361

33

Statements of net assets
Delaware Tax-Free USA Intermediate Fund  

  Principal amount         Value
Municipal Bonds (continued)           
§Pre-Refunded Bonds (continued)      
     Orlando, Florida Utilities Commission      
          Water & Electric Revenue      
          5.25% 10/1/20-11 $ 945,000 $ 1,019,428
     Pennsylvania State First Series      
          5.125% 1/15/19-11 3,515,000   3,743,967
     Pennsylvania State Higher Educational Facilities Authority      
          College & University Revenue (Geneva College Project)      
          6.125% 4/1/22-12 1,000,000   1,100,560
     Puerto Rico Commonwealth Highway & Transportation      
          Authority Revenue Series J 5.50% 7/1/21-14 1,000,000   1,105,290
     Puerto Rico Public Buildings Authority Revenue      
          (Guaranteed Government Facilities)      
          Series I 5.50% 7/1/23-14  2,000,000   2,193,960
     Southcentral, Pennsylvania General Authority Revenue      
          (Welllspan Health Obligated Project)      
          5.625% 5/15/26-11 820,000   888,503
     University of North Carolina Revenue (Chapel Hill)      
          Series A 5.375% 12/1/14-11  2,000,000   2,137,980
     Virginia State Resource Authority Clean      
          Water Revenue (State Revolving Fund)      
          6.00% 10/1/16-10 1,000,000   1,076,100
      40,357,960
Resource Recovery Bonds – 0.37%      
     Pennsylvania Economic Development Financing Authority      
          Resource Recovery Revenue (Subordinate Colver Project)      
          Series G 5.125% 12/1/15 (AMT) 1,500,000   1,406,580
      1,406,580
Special Tax Bonds – 5.32%      
     Baltimore, Maryland Convention Center      
          Hotel Revenue Subordinated       
          Series B 5.00% 9/1/16 1,200,000   1,114,536
     California State Economic Recovery      
          Series A 5.25% 7/1/14 1,000,000   1,093,320
         ·Series B 5.00% 7/1/23 3,365,000   3,550,310
     Casa Grande, Arizona Excise Tax Revenue      
          5.00% 4/1/22 (AMBAC) 1,600,000   1,595,120
     Dallas, Texas Civic Center Convention      
          Complex Revenue Refunding & Improvement      
          4.875% 8/15/23 (MBIA) 1,500,000   1,454,805

34


  Principal amount         Value
Municipal Bonds (continued)           
Special Tax Bonds (continued)      
     Gravois Bluffs, Missouri Transportation Development      
          District Sales Tax Revenue 4.75% 5/1/32 $ 750,000 $ 691,695
     Hampton, Virginia Convention Center Revenue 5.25%      
          1/15/23 (AMBAC) 1,000,000   1,005,490
     Metropolitan Pier and Exposition Authority Illinois      
          (McCormick Place Expansion Project)      
          Series A 5.50% 12/15/24 (FGIC) 2,000,000   2,024,360
     Middlesex County, New Jersey Improvement Authority      
          Senior Revenue (Heldrich Center      
          Hotel/Conference Project)       
          Series A 5.00% 1/1/32 1,000,000   816,150
     New Jersey Economic Development Authority      
          (Cigarette Tax)      
          5.50% 6/15/31 1,000,000   899,480
          5.625% 6/15/18 1,000,000   1,000,830
    ·New York City, New York Transitional Finance Authority      
          Revenue Refunding - Future Tax Secured      
          Series A 5.50% 11/1/26 1,000,000   1,064,760
     New York State Sales Tax Asset Receivables      
          Series A 5.25% 10/15/27 (AMBAC) 1,000,000   1,007,170
     Wyandotte County, Kansas City, Kansas Unified       
          Government Special Obligation Revenue      
          Refunding-Sales Tax-2nd Lien-Area B      
          5.00% 12/1/20 1,500,000   1,394,670
     Wyoming State Loan & Investment Board Facilities Revenue      
          5.00% 10/1/24 1,550,000   1,534,423
      20,247,119
State General Obligation Bonds – 28.05%      
     California State      
          5.00% 11/1/15 1,795,000   1,891,499
          5.00% 2/1/26 (AMBAC) 1,500,000   1,477,260
          5.25% 11/1/17 1,000,000   1,034,080
     California State Refunding      
          5.00% 8/1/14 1,025,000   1,085,311
          5.25% 2/1/25 3,000,000   2,979,930
     California State Various Purposes      
          5.00% 6/1/31 1,000,000   944,770

35

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

  Principal amount      Value
Municipal Bonds (continued)
State General Obligation Bonds (continued)    
     Florida State Board Education Capital Outlay    
          (Public Education)    
          Series B 5.00% 1/1/09 $ 2,500,000 $ 2,553,575
     Georgia State    
          5.00% 8/1/12 3,125,000 3,356,094
          Series D 5.00% 7/1/11 6,865,000 7,306,830
     Illinois State Refunding    
          Series B 5.00% 1/1/13 3,475,000 3,709,806
     Maryland State & Local Facilities Land Capital Improvement    
          5.00% 3/15/19 3,675,000 3,862,058
          Series A 5.00% 3/1/12 2,000,000 2,137,740
          Series A 5.25% 3/1/13 2,500,000 2,722,400
     Maryland State    
          Series A 5.50% 3/1/14 1,850,000 2,050,947
     Massachusetts State Consolidated Loan    
          Series A 5.25% 8/1/13 5,000,000 5,432,950
          Series C 5.00% 9/1/10 7,750,000 8,145,792
     Minnesota State    
          5.00% 11/1/11 2,775,000 2,963,534
          5.00% 6/1/14 900,000 973,368
     North Carolina State    
          5.00% 6/1/14 1,700,000 1,842,562
     North Carolina State Public Improvement Series A    
          5.00% 3/1/12 4,000,000 4,275,480
          5.00% 3/1/15 1,200,000 1,299,120
     Ohio State    
          Series A 5.00% 6/15/13 3,750,000 4,040,550
          Series D 5.00% 9/15/14 3,500,000 3,785,075
     Pennsylvania State    
          5.50% 2/1/13 3,200,000 3,504,704
          Second Series 5.00% 8/1/13 4,000,000 4,313,760
          Third Series 2004 5.00% 7/1/09 2,885,000 2,976,974
     Puerto Rico Commonwealth Public Improvement    
          Series A    
          5.25% 7/1/22 3,470,000 3,337,862
          5.25% 7/1/23 1,125,000 1,069,189
          5.50% 7/1/17 4,415,000 4,576,148
    •Puerto Rico Commonwealth    
          Series A 5.00% 7/1/30 1,000,000 1,022,020

36


  Principal amount        Value
Municipal Bonds (continued)       
State General Obligation Bonds (continued)        
    •Puerto Rico Public Finance Corporation Commonwealth      
          Appropriation (LOC Puerto Rico Government Bank)      
          Series A 5.75% 8/1/27 $ 1,000,000 $ 1,040,440
     Texas State Transportation Commission      
          (Mobility Foundation)      
          5.00% 4/1/13 1,000,000   1,074,160
          5.00% 4/1/19 3,750,000   3,914,475
     Texas State Water Financial Assistance      
          Series B 5.50% 8/1/35 3,800,000   3,811,134
     Washington State Variable Purpose      
          Series A 5.00% 7/1/16 3,455,000   3,692,704
          Series B 5.00% 1/1/20 2,500,000   2,506,850
      106,711,151
Transportation Revenue Bonds – 5.66%      
     Bay Area, California Toll Authority Revenue      
          Series F 5.00% 4/1/31 740,000   713,456
     Capital Trust Agency Florida Revenue      
          (Fort Lauderdale/Cargo Acquisition Project)      
          5.75% 1/1/32 (AMT) 1,750,000   1,568,910
     Chicago, Illinois O'Hare International Airport      
          Revenue General-Airport-Third Lien      
          Series A-2 5.75% 1/1/20 (FSA) (AMT) 1,000,000   1,033,920
     Dallas-Fort Worth, Texas International Airport Revenue      
          Series A 5.00% 11/1/15 (XLCA) (AMT) 2,000,000   2,010,780
     Georgia Federal Highway Road and      
          Tollway Authority Revenue Bonds      
          5.00% 6/1/10 (MBIA) 2,000,000   2,094,100
     Metropolitan, New York Transportation      
          Authority Revenue      
          Series A 5.00% 11/15/18 2,500,000   2,566,200
     Metropolitan, Washington D.C. Airport      
          Authority Systems Revenue      
          Series A 5.50% 10/1/19 (FGIC) (AMT) 1,000,000   1,020,410
     New York State Thruway Authority Revenue      
          (General Highway and Bridge Trust Fund)      
          Series B 5.25% 4/1/13 (AMBAC) 3,300,000   3,579,774
     North Texas Tollway Authority Dallas      
          North Tollway System Revenue      
          Series A 5.00% 1/1/20 (FGIC) 1,750,000   1,750,035

37

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

  Principal amount      Value
Municipal Bonds (continued)       
Transportation Revenue Bonds (continued)        
      Pennsylvania State Turnpike Commission Revenue      
            Series A 5.25% 12/1/20 (AMBAC) $ 1,230,000 $ 1,263,665
      South Carolina Transportation Infrastructure Bank Revenue      
            Series A 5.00% 10/1/33 (AMBAC) 1,700,000   1,612,977
      Texas State Transportation Commission      
            Highway Fund Revenue First Tier      
            5.00% 4/1/18 1,700,000   1,786,071
      Virginia Port Authority Commonwealth      
            Port Fund Revenue Resolution      
            5.00% 7/1/12 (AMT) 500,000   525,195
      21,525,493
Water & Sewer Revenue Bonds – 4.93%      
      Alabama Water Pollution Control Authority Revenue      
            5.50% 8/15/23 (AMBAC) 1,000,000   1,011,390
      Clovis, California Public Financing Authority      
            Wastewater Revenue      
            5.25% 8/1/30 (MBIA) 1,000,000   953,120
      Dallas, Texas Waterworks & Sewer System Revenue      
            5.00% 10/1/24 (FSA) 6,500,000   6,485,179
      Fulton County, Georgia Water & Sewer Revenue      
            5.25% 1/1/35 (FGIC) 1,500,000   1,500,630
      King County, Washington Sewer Revenue Refunding      
            Series B 5.00% 1/1/14 (MBIA) 3,500,000   3,750,075
      Massachusetts State Water Pollution Abatement Trust      
            5.00% 8/1/16 2,170,000   2,331,036
      New York City, New York Municipal Water Finance      
            Authority Water & Sewer System Revenue      
            Series A 5.125% 6/15/34 2,775,000   2,737,316
      18,768,746
Total Municipal Bonds (cost $376,359,158)     367,784,541
 
•Variable Rate Demand Notes – 0.83%       
      Allegheny County, Pennsylvania Industrial Development      
            Authority Revenue (United Jewish Federation Project)      
            Series A 3.07% 10/1/26 100,000   100,000
      California State Kindergarten (University Public Project)      
            Series A-8 3.00% 5/1/34 600,000   600,000

38


  Principal amount      Value  
·Variable Rate Demand Notes (continued)                 
     Pennsylvania State Turnpike Commission          
          Registration Fee Revenue    
          Series C 3.05% 7/15/41 (FSA) $ 1,700,000 $ 1,700,000  
     St. Paul, Minnesota Housing & Redevelopment Authority      
          Revenue (Pur-Cretin-Derham Hall Project)  
          3.18% 2/1/26 300,000 300,000  
     University of Minnesota    
          Series C 3.23% 12/1/36 450,000   450,000  
Total Variable Rate Demand Notes (cost $3,150,000)   3,150,000  
 
Total Value of Securities – 97.51% (cost $379,509,158) 370,934,541  
Receivables and Other Assets     
     Net of Liabilities – 2.49%      9,486,342  
Net Assets Applicable to 34,589,749     
     Shares Outstanding – 100.00%    $ 380,420,883  
 
Net Asset Value – Delaware Tax-Free USA Intermediate Fund  
     Class A ($353,500,669 / 32,140,862 Shares)   $11.00  
Net Asset Value – Delaware Tax-Free USA Intermediate Fund  
     Class B ($1,590,992 / 144,762 Shares)     $10.99  
Net Asset Value – Delaware Tax-Free USA Intermediate Fund  
     Class C ($25,329,222 / 2,304,125 Shares)   $10.99  
 
Components of Net Assets at February 29, 2008:   
Shares of beneficial interest (unlimited authorization - no par) $ 392,345,338  
Accumulated net realized loss on investments   (3,349,838 )
Net unrealized depreciation of investments     (8,574,617 )
Total net assets   $ 380,420,883  

§ 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 9 in “Notes to financial statements.”
^ Zero coupon security. The rate shown is the yield at the time of purchase.
· Variable rate security. The rate shown is the rate as of February 29, 2008.
Ω Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.

 39

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

 

Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
CDFI — Community Development Financial Institutions
FGIC — Insured by the Financial Guaranty Insurance Company
FSA — Insured by Financial Security Assurance
LOC — Letter of Credit
MBIA — Insured by the Municipal Bond Insurance Association
PSF — Insured by the Permanent School Fund
RADIAN — Insured by Radian Asset Assurance
XLCA — Insured by XL Capital Assurance


Net Asset Value and Offering Price Per Share –     
     Delaware Tax-Free USA Intermediate Fund   
Net asset value Class A (A) $ 11.00
Sales charge (2.75% of offering price) (B)   0.31
Offering price $ 11.31

(A)   Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
 
(B) See the current prospectus for purchases of $100,000 or more.

See accompanying notes

40


Delaware National High-Yield Municipal Bond Fund February 29, 2008 (Unaudited)

  Principal amount      Value
Municipal Bonds – 95.59%     
Corporate Revenue Bonds – 17.09%        
    ·Brazos, Texas River Authority Pollution Control Revenue    
          (TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) $ 1,000,000 $ 851,690
     Buckeye, Ohio Tobacco Settlement Financing Authority    
          Asset-Backed Senior Turbo Series A-2 6.50% 6/1/47 1,000,000 988,670
     Cloquet, Minnesota Pollution Control Revenue    
          (Potlatch Corp. Project) 5.90% 10/1/26 750,000 715,080
     De Soto Parish, Louisiana Environmental Improvement    
          Revenue (International Paper Co. Project)    
          Series A 6.35% 2/1/25 (AMT) 1,650,000 1,648,367
     Golden State, California Tobacco Securitization Corporation    
          Settlement Revenue Refunding Asset-Backed Senior    
          Series A-1 5.00% 6/1/33 1,000,000 827,880
     Gulf Coast, Texas Waste Disposal Authority Revenue    
          (Valero Energy Corp. Project) 6.65% 4/1/32 (AMT) 1,000,000 1,004,700
     Mississippi Business Finance Corporation Pollution    
          Control Revenue (System Energy Resource, Inc. Project)    
          5.90% 5/1/22 900,000 902,565
     New York City, New York Industrial Development Agency    
          Special Facilities Revenue (JetBlue Airways Corp. Project)    
          5.125% 5/15/30 (AMT) 1,000,000 744,500
     Petersburg, Indiana Pollution Control Revenue (Indianapolis    
          Power & Light Co. Project) 6.375% 11/1/29 (AMT) 1,000,000 1,007,270
     Phenix City, Alabama Industrial Development Board    
          Environmental Improvement Revenue (Mead Westvaco    
          Corp. Project) Series A 6.35% 5/15/35 (AMT) 500,000 493,880
     Sugar Creek, Missouri Industrial Development    
          Revenue (Lafarge North America Project)    
          Series A 5.65% 6/1/37 (AMT) 500,000 436,020
     Sweetwater County, Wyoming Solid Waste Disposal    
          Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) 1,000,000 876,450
     Tobacco Settlement Financing Corporation, New Jersey    
          Refunding Senior Series 1A 5.00% 6/1/41 1,000,000 800,040
     Toledo, Lucas County, Ohio Port Authority Development    
          Revenue (Toledo Express Airport Project)    
          Series C 6.375% 11/15/32 (AMT) 1,000,000   973,820
      12,270,932

41

Statements of net assets
Delaware National High-Yield Municipal Bond Fund

  Principal amount      Value
Municipal Bonds (continued)     
Education Revenue Bonds – 15.44%        
     California Statewide Communities Development Authority    
          Revenue (California Baptist University Project)    
          Series A 5.50% 11/1/38 $ 1,000,000 $ 853,090
     California Statewide Communities Development    
          Authority Student Housing Revenue    
          (East Campus Apartments, LLC)    
          Series A 5.625% 8/1/34 (ACA) 1,000,000 841,700
     Chattanooga, Tennessee Health Educational & Housing    
          Facilities Board Revenue (CDFI Phase I, LLC Project)    
          Subordinate Series B 6.00% 10/1/35 1,000,000 861,710
     Maine Finance Authority Education Revenue    
          (Waynflete School Project) 6.40% 8/1/19 1,000,000 1,021,970
     Maryland State Health & Higher Educational Facilities    
          Authority Revenue (Washington Christian Academy    
          Project) 5.50% 7/1/38 1,170,000 922,966
     Massachusetts State Health & Educational Facilities    
          Authority Revenue (Nichols College Project)    
          Series C 6.125% 10/1/29 1,000,000 988,140
     New Jersey State Educational Facilities Authority Revenue    
          (Fairleigh Dickinson Project) Series C 5.50% 7/1/23 750,000 705,870
     New Mexico Educational Assistance Foundation    
          Student Loan Revenue 1st Subordinate    
          Series A-2 6.65% 11/1/25 (AMT) 985,000 1,009,527
     Pennsylvania State Higher Educational Facilities    
          Authority Revenue (Edinboro University    
          Foundation Student Housing) 6.00% 7/1/42 1,000,000 908,140
     Philadelphia, Pennsylvania Authority for Industrial    
          Development Revenue (First Philadelphia    
          Charter Project) Series A 5.75% 8/15/32 745,000 660,003
     Provo, Utah Charter School Revenue (Freedom Academy    
          Foundation Project) 5.50% 6/15/37 1,000,000 807,350
     Scranton-Lackawanna, Pennsylvania Health &    
          Welfare Authority First Mortgage Revenue    
          (Lackawanna Junior College Project) 5.75% 11/1/20 1,510,000   1,506,496
      11,086,962
Health Care Revenue Bonds – 23.96%    
     Apple Valley, Minnesota Economic Development Authority    
          Health Care Revenue (Augustana Home St. Paul Project)    
          Series A 6.00% 1/1/40 1,000,000 916,170

42


  Principal amount      Value
Municipal Bonds (continued)     
Health Care Revenue Bonds (continued)        
     Cleveland-Cuyahoga County, Ohio Port Authority    
          Revenue Senior Housing (St. Clarence - Geac)    
          Series A 6.25% 5/1/38 $ 1,000,000 $ 916,080
     Colorado Health Facilities Authority Revenue    
          (Christian Living Community Project)    
          Series A 5.75% 1/1/37 500,000 429,775
     East Rochester, New York Housing Authority Revenue    
          Refunding (Senior Living - Woodland Village Project)    
          5.50% 8/1/33 500,000 425,305
     Gainesville & Hall County, Georgia Development    
          Authority Revenue Senior Living Facilities    
          (Lanier Village Estates Project) Series C 7.25% 11/15/29 1,000,000 1,057,960
     Illinois Health Facilities Authority Revenue    
          (Elmhurst Memorial Healthcare Project) 5.625% 1/1/28 1,000,000 987,560
          (Midwest Physician Group Limited Project) 5.50% 11/15/19 35,000 31,428
     Knox County, Tennessee Health Educational    
          & Housing Facilities Board Hospital Revenue    
          (East Tennessee Hospital Project) Series B 5.75% 7/1/33 1,300,000 1,256,176
     Lancaster County, Pennsylvania Hospital Authority Revenue    
          (Brethren Village Project) Series A 6.375% 7/1/30 725,000 679,920
     Lebanon County, Pennsylvania Health Facilities Authority    
          Center Revenue (Pleasant View Retirement)    
          Series A 5.30% 12/15/26 1,000,000 873,020
     Maryland State Health & Higher Educational Facilities    
          Authority Revenue (Washington County Hospital Project)    
          5.75% 7/1/38 1,000,000 900,420
     Massachusetts State Health & Educational Facilities    
          Authority Revenue (Jordan Hospital Project) Series E    
          6.75% 10/1/33 1,000,000 1,014,980
     North Carolina Medical Care Commission Health    
          Care Facilities Revenue    
          (First Mortgage - Presbyterian Homes) 5.60% 10/1/36 1,000,000 910,760
          (Pennybryn at Mayfield Project) Series A 6.125% 10/1/35 730,000 654,810
     North Oaks, Minnesota Senior Housing Revenue    
          (Presbyterian Homes) 6.25% 10/1/47 1,000,000 947,610
     Philadelphia, Pennsylvania Hospitals & Higher Education    
          Facilities Authority Revenue (The Philadelphia Protestant    
          Home Project) Series A 6.50% 7/1/27 1,100,000 1,069,838

43

Statements of net assets
Delaware National High-Yield Municipal Bond Fund

  Principal amount      Value
Municipal Bonds (continued)     
Health Care Revenue Bonds (continued)      
     Richland County, Ohio Hospital Facilities Revenue    
          (Medcentral Health System Project)    
          Series B 6.375% 11/15/30 $ 500,000 $ 510,620
     Shelby County, Tennessee Health Educational    
          & Housing Facilities Board Revenue    
          (Trezevant Manor Project) Series A 5.75% 9/1/37 700,000 636,552
     St. Joseph County, Indiana Industrial Economic Development    
          Revenue (Madison Center Project) 5.50% 2/15/21 1,150,000 1,134,268
     Winchester, Virginia Industrial Development    
          Authority Residential Care Facility Revenue    
          (Westminster - Canterbury Project)    
          Series A 5.30% 1/1/35 1,000,000 849,910
     Yavapai County, Arizona Industrial Development Authority    
          Hospital Revenue (Yavapai Medical Center Project)    
          Series A 6.00% 8/1/33 1,000,000   996,070
      17,199,232
Lease Revenue Bonds – 3.51%    
     Dauphin County, Pennsylvania General Authority Revenue    
          (Riverfront Office & Parking Project) 5.75% 1/1/10 1,875,000 1,837,519
     Missouri State Development Finance Board Infrastructure    
          Facilities Revenue (Branson Landing Project)    
          Series A 5.50% 12/1/24 720,000   682,574
      2,520,093
Local General Obligation Bonds – 9.02%    
     Chicago, Illinois Tax Increment Allocation    
          (Chatham Ridge Redevelopment Project) 5.95% 12/15/12 750,000 748,223
     Chicago, Illinois Tax Increment Subordinate (Central Loop    
          Redevelopment Project) Series A 6.50% 12/1/08 1,000,000 1,023,200
     Farms New Kent, Virginia Community Development    
          Authority Special Assessment Series C 5.80% 3/1/36 1,000,000 792,960
     Henderson, Nevada Local Improvement    
          Districts #T-18 5.30% 9/1/35 1,000,000 725,110
     Richmond Heights, Missouri Tax Increment & Transaction    
          Sales Tax Revenue Refunding & Improvement    
          (Francis Place Redevelopment Project) 5.625% 11/1/25 1,200,000 1,047,768

44


  Principal amount      Value
Municipal Bonds (continued)     
Local General Obligation Bonds (continued)        
     St. Joseph, Missouri Industrial Development    
          Authority Tax Increment Revenue    
          (Shoppes at North Village Project) Series A    
          5.375% 11/1/24 $ 1,000,000 $ 873,050
          5.50% 11/1/27 500,000 433,660
     Winter Garden Village at Fowler Groves Community    
          Development District, Florida Special Assessment    
          Revenue 5.65% 5/1/37 1,000,000   829,210
      6,473,181
§Pre-Refunded Bonds – 17.57%    
     Bexar County, Texas Health Facilities Development    
          Corporation Revenue (Army Retirement Residence    
          Project) 6.30% 7/1/32-12 1,000,000 1,124,870
     Illinois Educational Facilities Authority Student Housing    
          Revenue (Educational Advancement Fund - University    
          Center Project) 6.25% 5/1/30-12 1,000,000 1,120,360
     Louisiana Public Facilities Authority Revenue    
          (Ochsner Clinic Foundation Project)    
          Series B 5.50% 5/15/32-26 1,000,000 1,063,560
     Massachusetts State Development Finance Agency Revenue    
          (Massachusetts College of Pharmacy Project)    
          Series C 5.75% 7/1/33-13 1,000,000 1,120,330
     Milledgeville-Baldwin County, Georgia Development    
          Authority Revenue (Georgia College & State University    
          Foundation Student Housing Project) 6.00% 9/1/33-14 1,000,000 1,143,210
     Minnesota State Higher Education Facilities    
          Authority Revenue (College of Art & Design Project)    
          Series 5-D 6.75% 5/1/26-10 500,000 539,065
     Mississippi Development Bank Special Obligation    
          (Madison County Hospital Project) 6.40% 7/1/29-09 1,585,000 1,689,182
     Montgomery County, Pennsylvania Higher Education    
          & Health Authority Revenue (Foulkeways at    
          Gwynedd Project) 6.75% 11/15/30-09 1,000,000 1,074,850
     Puerto Rico Commonwealth Series B 5.00% 7/1/35-16 1,500,000 1,618,080
     Rochester, Minnesota Multifamily Housing Revenue    
          (Wedum Shorewood Campus Project) 6.60% 6/1/36-09 985,000 1,047,508
     Savannah, Georgia Economic Development Authority    
          Revenue (College of Art & Design Project)    
          6.50% 10/1/13-09 1,000,000   1,074,010
      12,615,025

45

Statements of net assets
Delaware National High-Yield Municipal Bond Fund

  Principal amount      Value
Municipal Bonds (continued)     
Special Tax Bonds – 5.01%        
     Baltimore, Maryland Convention Center Hotel Revenue    
          Subordinated Series B 5.875% 9/1/39 $ 1,000,000 $ 895,290
     Middlesex County, New Jersey Improvement    
          Authority Senior Revenue (Heldrich Center    
          Hotel/Conference Project) Series A 500,000 408,075
          5.00% 1/1/32    
          5.125% 1/1/37 870,000 706,805
     New Jersey Economic Development Authority    
          (Cigarette Tax) 5.75% 6/15/34 1,000,000 921,270
     Prescott Valley, Arizona Improvement District Special    
          Assessment (Sewer Collection System Roadway Repair    
          Project) 7.90% 1/1/12 216,000 223,338
     Southwestern Illinois Development Authority Revenue    
          (Local Government Program - Collinsville Limited Project)    
          5.35% 3/1/31 500,000   438,035
      3,592,813
Transportation Revenue Bonds – 3.99%    
     Branson, Missouri Regional Airport Transportation    
          Development District (Airport Project)    
          Series A 6.00% 7/1/37 500,000 431,120
     New York City, New York Industrial Development Agency    
          Special Airport Facilities (Airis JFK I LLC Project)    
          Series A 5.50% 7/1/28 (AMT) 905,000 791,604
     Oklahoma City, Oklahoma Industrial & Cultural Facilities    
          Subordinated (Air Cargo Obligated Group Project)    
          6.75% 1/1/23 (AMT) 1,160,000 1,137,008
     Onondaga County, New York Industrial Development    
          Authority Revenue Subordinated (Air Cargo Project)    
          7.25% 1/1/32 (AMT) 500,000   506,010
      2,865,742
Total Municipal Bonds (cost $71,943,887)     68,623,980
 
·Variable Rate Demand Notes – 2.86%     
     Lucas County, Ohio Hospital Revenue    
          (Promedia Healthcare)    
          Series A-1 8.00% 11/15/40 (AMBAC) 225,000 225,000
          Series A-2 8.00% 11/15/34 (AMBAC) 525,000 525,000

46


  Principal amount      Value  
•Variable Rate Demand Notes (continued)     
New Jersey Health Care Facilities Financing          
     Authority Revenue Compensation Program    
     Series A-1 3.01% 7/1/31 (AMBAC) $ 1,300,000 $ 1,300,000  
Total Variable Rate Demand Notes (cost $2,050,000)   2,050,000  
 
Total Value of Securities – 98.45% (cost $73,993,887) 70,673,980  
Receivables and Other Assets     
     Net of Liabilities – 1.55%      1,112,496  
Net Assets Applicable to 7,596,056     
     Shares Outstanding – 100.00%    $ 71,786,476  
 
Net Asset Value – Delaware National High-Yield Municipal Bond Fund  
     Class A ($62,303,201 / 6,595,514 Shares)     $9.45  
Net Asset Value – Delaware National High-Yield Municipal Bond Fund  
     Class B ($3,981,749 / 420,596 Shares)     $9.47  
Net Asset Value – Delaware National High-Yield Municipal Bond Fund  
     Class C ($5,501,526 / 579,946 Shares)     $9.49  
 
Components of Net Assets at February 29, 2008:   
Shares of beneficial interest (unlimited authorization – no par) $ 80,800,170  
Distributions in excess of net investment income (4,104 )
Accumulated net realized loss on investments   (5,689,683 )
Net unrealized depreciation of investments     (3,319,907 )
Total net assets   $ 71,786,476  

§ 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 9 in “Notes to financial statements.”
· Variable rate security. The rate shown is the rate as of February 29, 2008.

Summary of abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
CDFI — Community Development Financial Institutions

47

Statements of net assets
Delaware National High-Yield Municipal Bond Fund

     
Net Asset Value and Offering Price Per Share –   
     Delaware National High-Yield Municipal Bond Fund   
Net asset value Class A (A) $ 9.45
Sales charge (4.50% of offering price) (B)   0.45
Offering price $ 9.90

(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

48

Statements of operations

Six Months Ended February 29, 2008 (Unaudited)

  Delaware   Delaware   Delaware
  Tax-Free Tax-Free USA National High-Yield
  USA Fund      Intermediate Fund      Municipal Bond Fund
Investment Income:                   
     Interest $ 18,139,763   $ 7,773,685   $ 2,146,578  
 
Expenses:       
     Management fees 1,967,983   918,683   204,694  
     Distribution expenses – Class A 847,692   507,711   80,296  
     Distribution expenses – Class B 76,719   8,343   24,922  
     Distribution expenses – Class C 83,662   132,843   26,383  
     Dividend disbursing and transfer      
          agent fees and expenses 221,450   186,372   26,513  
     Accounting and administration      
          expenses 147,439   73,478   14,883  
     Legal fees 52,841   27,519   10,685  
     Registration fees 50,148   27,026   16,553  
     Reports and statements to      
          shareholders 45,021   15,688   5,324  
     Audit and tax 26,248   12,179   6,283  
     Trustees’ fees 17,863   8,956   1,804  
     Insurance fees 8,301   5,342   945  
     Consulting fees 7,828   3,508   731  
     Pricing fees 7,672   5,007   2,256  
     Custodian fees 5,895   1,998   362  
     Trustees’ expenses 3,289   1,544   329  
     Due and services 1,570   528   153  
     Taxes (other than taxes on income)   526     —     62  
  3,572,147   1,936,725   423,178  
     Less expenses absorbed or waived (315,318 ) (181,473 ) (48,491 )
     Less waived distribution expenses –      
          Class A   —   (253,856 ) —  
     Less expense paid indirectly   (654 )   (309 )   (70 )
     Total operating expenses   3,256,175     1,501,087     374,617  
Net Investment Income    14,883,588     6,272,598     1,771,961  

49

Statements of operations

Six Months Ended February 29, 2008 (Unaudited)

  Delaware      Delaware      Delaware
  Tax-Free Tax-Free USA National High-Yield
  USA Fund Intermediate Fund Municipal Bond Fund
Net Realized and Unrealized Gain                   
     (Loss) on Investments:       
     Net realized gain (loss)      
          on investments $ (2,300,915 ) $ (893,086 ) $ 489,448  
     Net change in unrealized      
          appreciation/depreciation      
          of investments   (24,222,782 )   (7,038,845 )   (4,887,685 )
Net Realized and Unrealized Loss       
     on Investments    (26,523,697 )   (7,931,931 )   (4,398,237 )
 
Net Decrease in Net Assets       
     Resulting from Operations  $ (11,640,109 ) $ (1,659,333 ) $ (2,626,276 )

See accompanying notes

50

Statements of changes in net assets
Delaware Tax-Free USA Fund

    Six Months          Year  
    Ended     Ended  
    2/29/08     8/31/07  
    (Unaudited)      
Increase (Decrease) in Net Assets from Operations:         
     Net investment income $ 14,883,588   $ 27,505,738  
     Net realized loss on investments   (2,300,915 )   (39,979 )
     Net change in unrealized        
          appreciation/depreciation of investments   (24,222,782 )   (21,159,119 )
     Net increase (decrease) in net assets resulting        
          from operations   (11,640,109 )   6,306,640  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:        
       Class A   (14,353,650 )   (26,524,390 )
       Class B   (253,665 )   (619,939 )
       Class C   (276,273 )   (488,756 )
    (14,883,588 )   (27,633,085 )
 
Capital Share Transactions:         
     Proceeds from shares sold:        
       Class A   14,362,344     129,162,376  
       Class B   123,143     308,131  
       Class C   3,103,502     2,181,275  
 
     Net asset value of shares issued upon reinvestment        
          of dividends and distributions:        
       Class A   6,753,170     12,569,102  
       Class B   135,715     365,941  
       Class C   206,657     349,774  
 
     Net assets from fund merger1:        
       Class A   —     81,923,316  
       Class B   —     2,926,236  
       Class C   —     3,460,376  
    24,684,531     233,246,527  

52


    Six Months          Year  
    Ended     Ended  
    2/29/08     8/31/07  
    (Unaudited)      
Capital Share Transactions (continued):         
     Cost of shares repurchased:        
          Class A $ (91,565,653 ) $ (124,502,775 )
          Class B   (3,661,676 )   (8,015,676 )
          Class C   (3,103,764 )   (3,772,191 )
    (98,331,093 )   (136,290,642 )
Increase (decrease) in net assets derived        
     from capital share transactions   (73,646,562 )   96,955,885  
Net Increase (Decrease) in Net Assets    (100,170,259 )   75,629,440  
 
Net Assets:         
     Beginning of period    769,741,304     694,111,864  
     End of period $ 669,571,045   $ 769,741,304  
     Undistributed (distribution in excess of)        
          net investment income $ 1,790   $ 1,790  

1See Note 7 in "Notes to financial statements."

See accompanying notes

53

Statements of changes in net assets
Delaware Tax-Free USA Intermediate Fund

    Six Months          Year  
    Ended     Ended  
    2/29/08     8/31/07  
    (Unaudited)      
Increase (Decrease) in Net Assets from Operations:             
     Net investment income $ 6,272,598   $ 10,100,454  
     Net realized loss on investments   (893,086 )   (1,830,442 )
     Net change in unrealized        
          appreciation/depreciation of investments   (7,038,845 )   (6,265,949 )
     Net increase (decrease) in net assets resulting        
          from operations   (1,659,333 )   2,004,063  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:        
          Class A   (5,899,750 )   (9,238,273 )
          Class B   (22,038 )   (63,002 )
          Class C   (350,810 )   (799,179 )
    (6,272,598 )   (10,100,454 )
 
Capital Share Transactions:         
     Proceeds from shares sold:        
          Class A   108,508,016     178,321,801  
          Class B   93,327     281,065  
          Class C   3,010,498     7,249,731  
 
     Net asset value of shares issued upon reinvestment        
          of dividends and distributions:        
          Class A   4,446,158     6,634,413  
          Class B   17,212     48,873  
          Class C   217,185     478,816  
    116,292,396     193,014,699  

54


    Six Months          Year  
  Ended   Ended  
  2/29/08   8/31/07  
  (Unaudited)    
Capital Share Transactions (continued):     
     Cost of shares repurchased:    
          Class A $ (58,231,151 ) $ (75,895,816 )
          Class B (276,230 ) (910,041 )
          Class C   (5,670,115 )   (6,816,607 )
    (64,177,496 )   (83,622,464 )
Increase in net assets derived    
     from capital share transactions   52,114,900     109,392,235  
Net Increase in Net Assets  44,182,969   101,295,844  
 
Net Assets:     
     Beginning of period   336,237,914     234,942,070  
     End of period (there was no undistributed    
          net investment income at either period end) $ 380,420,883   $ 336,237,914  

See accompanying notes

55

Statements of changes in net assets
Delaware National High-Yield Municipal Bond Fund

 

Six Months Year
Ended Ended
      2/29/08       8/31/07
(Unaudited)
Increase (Decrease) in Net Assets from Operations:    
       Net investment income $ 1,771,961 $ 3,672,422
       Net realized gain on investments 489,448 558,847
       Net change in unrealized
              appreciation/depreciation of investments (4,887,685 ) (2,772,801 )
       Net increase (decrease) in net assets resulting
              from operations (2,626,276 ) 1,458,468
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (1,561,863 ) (3,179,975 )
              Class B (102,036 ) (297,700 )
              Class C (108,064 ) (194,745 )
  (1,771,963 ) (3,672,420 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 9,232,644 11,615,685
              Class B 33,696 543,649
              Class C 1,322,206 527,708
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 910,525 1,884,760
              Class B 35,032 117,105
              Class C 77,307 139,342
11,611,410 14,828,249

56


Six Months Year
Ended Ended
      2/29/08       8/31/07
  (Unaudited)  
Capital Share Transactions (continued):  
       Cost of shares repurchased:  
              Class A $ (9,174,474 ) $ (15,104,909 )
              Class B (1,806,091 ) (4,046,166 )
              Class C (409,201 ) (1,014,423 )
(11,389,766 ) (20,165,498 )
Increase (decrease) in net assets derived
       from capital share transactions 221,644 (5,337,249 )
Net Decrease in Net Assets (4,176,595 ) (7,551,201 )
 
Net Assets:
       Beginning of period 75,963,071 83,514,272
       End of period $ 71,786,476 $ 75,963,071
       Distribution in excess of
              net investment income $ (4,104 ) $ (4,102 )

See accompanying notes

57

Financial highlights
Delaware Tax-Free USA Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager and distributor, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

58


Six Months Ended Year Ended
2/29/081   8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)      
$11.230   $11.570 $11.760 $11.460 $11.170 $11.280  
 
 
0.229 0.466 0.458 0.512 0.538 0.537
(0.430 ) (0.337 ) (0.186 ) 0.300 0.290 (0.110 )
(0.201 ) 0.129 0.272 0.812 0.828 0.427
 
 
(0.229 ) (0.469 ) (0.462 ) (0.512 ) (0.538 ) (0.537 )
(0.229 ) (0.469 ) (0.462 ) (0.512 ) (0.538 ) (0.537 )
 
$10.800 $11.230 $11.570 $11.760 $11.460 $11.170
 
(1.86% ) 1.08% 2.42% 7.23% 7.54% 3.84%
 
 
$639,780 $735,584 $656,813 $453,982 $456,192 $460,917
0.85% 0.87% 0.86% 0.86% 0.87% 0.87%
 
0.94% 0.95% 1.00% 0.98% 0.93% 0.97%
4.08% 4.03% 3.97% 4.43% 4.72% 4.74%

 

3.99% 3.95% 3.83% 4.31% 4.66% 4.64%
25% 36% 41% 47% 32% 96%

59

Financial highlights
Delaware Tax-Free USA Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

60


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)              
$11.230     $11.570 $11.760 $11.460   $11.170 $11.280
 
 
0.186 0.378 0.370 0.423 0.449 0.449
(0.440 ) (0.337 ) (0.186 ) 0.300 0.290 (0.110 )
(0.254 ) 0.041 0.184 0.723 0.739 0.339
 
 
(0.186 ) (0.381 ) (0.374 ) (0.423 ) (0.449 ) (0.449 )
(0.186 ) (0.381 ) (0.374 ) (0.423 ) (0.449 ) (0.449 )
 
$10.790 $11.230 $11.570 $11.760 $11.460 $11.170
 
(2.32% ) 0.32% 1.63% 6.42% 6.71% 3.03%
 
 
$13,375 $17,286 $22,189 $16,507 $22,396 $31,052
1.61% 1.63% 1.63% 1.63% 1.65% 1.65%
 
1.70% 1.71% 1.73% 1.71% 1.71% 1.75%
3.32% 3.27% 3.20% 3.66% 3.94% 3.96%
 
3.23% 3.19% 3.10% 3.58% 3.88% 3.86%
25% 36% 41% 47% 32% 96%

61

Financial highlights
Delaware Tax-Free USA Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

62


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)            
$11.230   $11.570 $11.760 $11.460 $11.170 $11.280
 
 
0.186 0.378 0.370 0.423 0.449 0.449
(0.430 ) (0.337 ) (0.186 ) 0.300 0.290 (0.110 )
(0.244 ) 0.041 0.184 0.723 0.739 0.339
 
 
(0.186 ) (0.381 ) (0.374 ) (0.423 ) (0.449 ) (0.449 )
(0.186 ) (0.381 ) (0.374 ) (0.423 ) (0.449 ) (0.449 )
 
$10.800 $11.230 $11.570 $11.760 $11.460 $11.170
 
(2.32% ) 0.41% 1.63% 6.42% 6.71% 3.03%
 
 
  $16,416 $16,871 $15,110 $5,963 $5,784 $5,508
1.61% 1.63% 1.63% 1.63% 1.65% 1.65%
 
1.70% 1.71% 1.73% 1.71% 1.71% 1.75%
3.32% 3.27% 3.20% 3.66% 3.94% 3.96%
 
3.23% 3.19% 3.10% 3.58% 3.88% 3.86%
25% 36% 41% 47% 32% 96%

63

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager and distributor. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2004, including fees paid indirectly in accordance with Securities and Exchange Commission rules was 0.82%.

See accompanying notes

64


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)            
$11.210   $11.470 $11.610 $11.390 $11.010 $11.020
 
 
0.197 0.414 0.408 0.410 0.419 0.435
(0.210 ) (0.260 ) (0.140 ) 0.220 0.380 (0.010 )
(0.013 ) 0.154 0.268 0.630 0.799 0.425
 
 
(0.197 ) (0.414 ) (0.408 ) (0.410 ) (0.419 ) (0.435 )
(0.197 ) (0.414 ) (0.408 ) (0.410 ) (0.419 ) (0.435 )
 
$11.000 $11.210 $11.470 $11.610 $11.390 $11.010
 
(0.16% ) 1.34% 2.38% 5.63% 7.36% 3.89%
 
 
$353,501 $306,215 $204,525 $120,273 $77,448 $51,479
0.75% 0.76% 0.75% 0.79% 0.80% 3 0.80%
 
1.00% 1.03% 1.07% 1.11% 1.09% 1.15%
3.49% 3.60% 3.56% 3.55% 3.70% 3.85%
 
3.24% 3.33% 3.24% 3.23% 3.41% 3.50%
23% 40% 37% 18% 27% 130%

65

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2004, including fees paid indirectly in accordance with Securities and Exchange Commission rules was 1.67%.

See accompanying notes

66


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)        
$11.200   $11.460 $11.610 $11.380 $11.010 $11.020
 
 
0.149 0.317 0.311 0.313 0.323 0.340
(0.210 ) (0.260 ) (0.150 ) 0.230 0.370 (0.010 )
(0.061 ) 0.057 0.161 0.543 0.693 0.330
 
 
(0.149 ) (0.317 ) (0.311 ) (0.313 ) (0.323 ) (0.340 )
(0.149 ) (0.317 ) (0.311 ) (0.313 ) (0.323 ) (0.340 )
 
$10.990 $11.200 $11.460 $11.610 $11.380 $11.010
 
(0.57% ) 0.48% 1.43% 4.83% 6.36% 3.02%
 
 
$1,591 $1,786 $2,413 $3,203 $3,743 $4,538
1.60% 1.61% 1.60% 1.64% 1.65% 3 1.65%
 
1.70% 1.73% 1.77% 1.81% 1.79% 1.87%
2.64% 2.75% 2.71% 2.70% 2.85% 3.00%
 
2.54% 2.63% 2.54% 2.53% 2.71% 2.78%
23% 40% 37% 18% 27% 130%

67

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2004, including fees paid indirectly in accordance with Securities and Exchange Commission rules was 1.67%.

See accompanying notes

68


Six Months Ended   Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)        
$11.200   $11.470 $11.610 $11.390 $11.010 $11.020
 
 
0.149 0.317 0.311 0.313 0.323 0.340
(0.210 ) (0.270 ) (0.140 ) 0.220 0.380 (0.010 )
(0.061 ) 0.047 0.171 0.533 0.703 0.330
 
 
(0.149 ) (0.317 ) (0.311 ) (0.313 ) (0.323 ) (0.340 )
(0.149 ) (0.317 ) (0.311 ) (0.313 ) (0.323 ) (0.340 )
 
$10.990 $11.200 $11.470 $11.610 $11.390 $11.010
 
(0.58% ) 0.39% 1.52% 4.74% 6.45% 3.02%
 
 
$25,329 $28,237 $28,004 $25,125 $19,201 $10,542
1.60% 1.61% 1.60% 1.64% 1.65% 3 1.65%
 
1.70% 1.73% 1.77% 1.81% 1.79% 1.87%
2.64% 2.75% 2.71% 2.70% 2.85% 3.00%
 
2.54% 2.63% 2.54% 2.53% 2.71% 2.78%
23% 40% 37% 18% 27% 130%

69

Financial highlights
Delaware National High-Yield Municipal Bond Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

70


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)      
$10.030 $10.320 $10.380 $10.010 $9.730 $9.950
 
 
0.242 0.482 0.477 0.503 0.496 0.522
(0.580 ) (0.290 ) (0.060 ) 0.371 0.280 (0.219 )
(0.338 ) 0.192 0.417 0.874 0.776 0.303
 
 
(0.242 ) (0.482 ) (0.477 ) (0.504 ) (0.496 ) (0.523 )
(0.242 ) (0.482 ) (0.477 ) (0.504 ) (0.496 ) (0.523 )
 
$9.450 $10.030 $10.320 $10.380 $10.010 $9.730
 
(3.46% ) 1.82% 4.15% 8.93% 8.13% 3.13%
 
 
$62,303 $65,143 $68,663 $66,451 $56,698 $59,829
0.90% 0.91% 0.90% 0.93% 1.00% 0.99%
 
1.03% 1.03% 1.02% 1.01% 1.02% 1.05%
4.87% 4.66% 4.66% 4.92% 5.00% 5.30%
 
4.74% 4.54% 4.54% 4.84% 4.98% 5.24%
18% 37% 73% 36% 46% 64%

71

Financial highlights
Delaware National High-Yield Municipal Bond Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

72


Six Months Ended   Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)      
$10.050   $10.350   $10.400 $10.030 $9.760 $9.980
 
 
0.205 0.404 0.400 0.426 0.421 0.448
(0.580 ) (0.300 ) (0.050 ) 0.371 0.270 (0.219 )
(0.375 ) 0.104 0.350 0.797 0.691 0.229
 
 
(0.205 ) (0.404 ) (0.400 ) (0.427 ) (0.421 ) (0.449 )
(0.205 ) (0.404 ) (0.400 ) (0.427 ) (0.421 ) (0.449 )
 
$9.470 $10.050 $10.350 $10.400 $10.030 $9.760
 
(3.82% ) 0.96% 3.47% 8.10% 7.20% 2.36%
 
 
$3,982 $5,972 $9,519 $13,046 $14,534 $16,499
1.65% 1.66% 1.65% 1.68% 1.75% 1.74%
 
1.78% 1.78% 1.77% 1.76% 1.77% 1.80%
4.12% 3.91% 3.91% 4.17% 4.25% 4.55%
 
3.99% 3.79% 3.79% 4.09% 4.23% 4.49%
18% 37% 73% 36% 46% 64%

73

Financial highlights
Delaware National High-Yield Municipal Bond Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

74


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                                  
$10.070 $10.360 $10.420 $10.040 $ 9.770 $ 9.990
 
 
0.205 0.404 0.400 0.426 0.421 0.448
(0.580 )  (0.290 )    (0.060 )  0.381 0.270 (0.219 ) 
(0.375 )  0.114 0.340 0.807 0.691 0.229
 
 
(0.205 )  (0.404 )  (0.400 )  (0.427 )  (0.421 )  (0.449 ) 
(0.205 )    (0.404 )  (0.400 )  (0.427 )  (0.421 )  (0.449 ) 
 
$ 9.490   $10.070   $10.360 $10.420   $10.040 $ 9.770
 
(3.81% )  1.06%   3.36% 8.19% 7.19% 2.35%
 
 
$5,501 $4,848   $5,332     $5,234 $4,798 $5,318
1.65% 1.66% 1.65% 1.68%   1.75% 1.74%  
 
1.78% 1.78%   1.77% 1.76% 1.77% 1.80%
4.12% 3.91% 3.91% 4.17%   4.25%   4.55%
 
3.99% 3.79% 3.79% 4.09% 4.23%   4.49%
  18%     37%     73%     36%     46%     64%  

75


Notes to financial statements   
Delaware National Tax-Free Funds    February 29, 2008 (Unaudited)

Delaware Group Tax-Free Fund is organized as a Delaware statutory trust and offers two series: Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund. Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund and Delaware Tax-Free New York Fund. Delaware Group Tax-Free Fund and Voyageur Mutual Funds are individually referred to as a “Trust” and collectively as the “Trusts”. These financial statements and the related notes pertain to Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund and Delaware National High-Yield Municipal Bond Fund (each referred to as a “Fund” or, collectively, as the “Funds”). The above Trusts are open-end investment companies. The Funds are considered non-diversified under the Investment Company Act of 1940, as amended. The Funds offer Class A, Class B, and Class C shares. Class A shares are sold with a front-end sales charge of up to 4.50% for Delaware Tax Free USA Fund and Delaware National High-Yield Municipal Bond Fund, and up to 2.75% for Delaware Tax-Free USA Intermediate Fund. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year for Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund; and of 0.75% for Delaware Tax-Free USA Intermediate Fund if redeemed within the first year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Effective June 1, 2007, Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares of the Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares of the Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class B shares of Delaware Tax-Free USA Intermediate Fund were sold with a CDSC that declines from 2% to zero depending upon the period of time the shares were held. Class B shares of the Tax-Free USA Intermediate Fund will automatically convert to Class A shares on a quarterly basis approximately five years after purchase. Class C shares of each Fund are sold with a CDSC of 1%, if redeemed during the first twelve months.

The investment objective of Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund is to seek as high a level of current interest income exempt from federal income tax as is available from municipal obligations and as is consistent with prudent investment management and preservation of capital.

The investment objective of Delaware National High-Yield Municipal Bond Fund is to seek a high level of current income exempt from federal income tax primarily through investment in medium- and lower-grade municipal obligations.

76

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 or broker 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. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Board of Trustees. 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).

In September 2006, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 157 “Fair Value Measurements” (Statement 157). Statement 157 establishes a framework for measuring fair value in U.S. generally accepted accounting principles, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements. Statement 157 is intended to increase consistency and comparability among fair value estimates used in financial reporting. Statement 157 is effective for fiscal years beginning after November 15, 2007. Management does not expect the adoption of Statement 157 to have a material impact on the amounts reported in the financial statements.

Federal Income Taxes — Each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements.

Effective February 29, 2008, the Funds adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The adoption of FIN 48 did not result in the recording of any tax benefit or expense in the current period.

Class Accounting — Investment income and common expenses are allocated to the various classes of each Fund on the basis of “settled shares” of each class in relation to the net assets of that 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.

77

Notes to financial statements
Delaware National Tax-Free Funds

1. Significant Accounting Policies (continued)

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 directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums are 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 this 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 Tax-Free Delaware Tax-Free Delaware National High-Yield
       USA Fund      USA Intermediate Fund      Municipal Bond Fund
On the first $500 million   0.550% 0.500% 0.550%
On the next $500 million 0.500% 0.475% 0.500%
On the next $1.5 billion 0.450% 0.450% 0.450%
In excess of $2.5 billion 0.425% 0.425% 0.425%

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 fees, 12b-1 plan expenses, inverse floater expenses, certain insurance costs and non-routine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations, do not exceed specified percentages of average daily net assets as shown on the next page. For purposes of these waivers and reimbursements, non-routine expenses may also involve such additional costs and expenses, as may be agreed upon from time to time by the Fund’s Board of Trustees and DMC.

78


2.  Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
 
  Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
       USA Fund      USA Intermediate Fund      Municipal Bond Fund
Operating expense limitation as a      
     percentage of average      
     daily net assets (per annum) 0.61% 0.60% 0.65%
Expiration date 12/31/07 12/31/07 12/31/07
 
Effective January 1, 2008,        
     operating expense limitation          
     as a percentage of average      
     daily net assets (per annum) 0.60% 0.60% 0.65%
Expiration date 12/31/08 12/31/08 12/31/08

Effective October 1, 2007, Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, each Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all funds in the Delaware Investments® Family of Funds on a relative net asset value basis. Prior to October 1, 2007, DSC provided fund accounting and administrative services to the Funds and received a fee at an annual rate of 0.04% of average daily net assets. For the six months ended February 29, 2008, each Fund was charged for these services as follows:

  Delaware Tax-Free Delaware Tax-Free   Delaware National High-Yield
     USA Fund      USA Intermediate Fund      Municipal Bond Fund
$40,590 $18,958 $4,046

DSC also provides dividend disbursing and transfer agency services. Each Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.

Pursuant to a distribution agreement and distribution plan, each Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.30% of the average daily net assets of the Class A shares for Delaware Tax-Free USA Intermediate Fund, 0.25% of the average daily net assets of the Class A shares for the Delaware National High-Yield Municipal Bond Fund and 1.00% of the average daily net assets of the Class B and C shares for all Funds. The Board of Trustees has adopted a formula for calculating 12b-1 plan fees for Delaware Tax-Free USA Fund’s Class A shares that went into effect on June 1, 1992. The total 12b-1 fees to be paid by Class A shareholders of the Fund will be the sum of 0.10% of the average daily net assets representing shares that were acquired prior to June 1, 1992 and 0.30% of the average daily net assets representing shares that were acquired on or after June 1, 1992. Effective April 21, 2006, the

79

Notes to financial statements
Delaware National Tax-Free Funds

2.  Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)

maximum amount of the Class A 12b-1 fees was reduced to 0.25% and the total 12b-1 fees to be paid to Class A shareholders of the Fund will be the sum of 0.10% of the average daily net assets representing shares that were acquired prior to June 1, 1992 and 0.25% of the average daily net assets representing shares that were acquired on or after June 1, 1992. All Class A shareholders will bear 12b-1 fees at the same rate, the blended rate based upon the allocation of the rates described above. DDLP has contracted to waive distribution and service fees through December 31, 2008 in order to prevent distribution and service fees of Class A from exceeding 0.15% of the average daily net assets for the Delaware Tax-Free USA Intermediate Fund.

At February 29, 2008, the Funds had liabilities payable to affiliates as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
      USA Fund       USA Intermediate Fund       Municipal Bond Fund
Investment management fees
     payable to DMC		 $240,580 $118,543   $23,945
Dividend disbursing,
     transfer agent fees and
     expenses payable to DSC		     38,538     34,503     4,634
Distribution fees payable
     to DDLP		   153,602     64,955   20,236
Other expenses payable to DMC
     and affiliates*		     54,181   122,428     7,771

*DMC, as part of its administrative services, pays operating expenses on behalf of each Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees' fees.

As provided in the investment management agreement, each Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to each Fund by DMC and/or its affiliates' employees. For the six months ended February 29, 2008, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates' employees as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
  USA Fund       USA Intermediate Fund       Municipal Bond Fund
$26,014 $13,191 $2,645

80


2. 

Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)

For the six months ended February 29, 2008, DDLP earned commissions on sales of Class A shares for each Fund as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
USA Fund       USA Intermediate Fund       Municipal Bond Fund
  $12,165 $3,851 $5,785

For the six months ended February 29, 2008, DDLP received gross CDSC commissions on redemption of each Fund's Class A, Class B and Class C shares, respectively. These commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:

  Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
      USA Fund       USA Intermediate Fund       Municipal Bond Fund
Class A $9,261   $ 21   $5,696
Class B   4,607 150      —
Class C   1,843 1,221       78

Trustees’ fees include expenses accrued by the Funds for each Trustee’s retainer, per meeting fees and retirement benefits. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Funds.

3. Investments

For the six months ended February 29, 2008, the Funds made purchases and sales of investment securities other than short-term investments as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
      USA Fund       USA Intermediate Fund       Municipal Bond Fund
Purchases   $ 89,345,937     $103,515,576     $6,364,938  
Sales 161,458,370 40,581,532 6,934,040

At February 29, 2008, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At February 29, 2008, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
      USA Fund       USA Intermediate Fund       Municipal Bond Fund
Cost of investments $ 667,410,931   $ 379,509,158             $ 74,033,787          
Aggregate unrealized
     appreciation		   $ 19,468,084 $ 3,302,177     $ 1,350,708
Aggregate unrealized
   depreciation.		   (28,936,130 )     (11,876,794 ) (4,710,515 )
Net unrealized depreciation   $ (9,468,046 ) $ (8,574,617 ) $ (3,359,807 )

81

Notes to financial statements
Delaware National Tax-Free Funds

4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. 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 29, 2008 and the year ended August 31, 2007 was as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
      USA Fund       USA Intermediate Fund       Municipal Bond Fund
Six months ended 2/29/08*  
Tax-exempt income     $ 14,878,647   $ 6,213,586     $1,771,963  
Ordinary income 4,941 59,012 —
Total $ 14,883,588     $ 6,272,598   $1,771,963  
 
Year ended 8/31/07
Tax-exempt income $ 27,624,675 $ 9,979,962   $3,672,422
Ordinary income 8,410 120,492 —
Total $ 27,633,085 $ 10,100,454 $3,672,422

*Tax information for the period ended February 29, 2008 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.

5. Components of Net Assets on a Tax Basis

As of February 29, 2008, the components of net assets on a tax basis were as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
      USA Fund       USA Intermediate Fund       Municipal Bond Fund
Shares of beneficial interest   $ 687,097,905   $ 392,345,338     $ 80,800,170  
Undistributed (distributions
     in excess of) tax-exempt
     income 1,790 — (4,104 )
Capital loss carryforwards
     as of 8/31/07 (4,894,533 ) (374,647 ) (6,139,231 )
Post-October losses (2,484,781 ) (847,808 ) —
Realized gains (losses)
     9/1/07 – 2/29/08 (681,290 ) (2,127,383 ) 489,448
Unrealized depreciation
     of investments (9,468,046 ) (8,574,617 ) (3,359,807 )
Net assets $ 669,571,045   $ 380,420,883   $ 71,786,476

82

5. Components of Net Assets on a Tax Basis (continued)

The differences between book basis and tax basis components of net assets are primarily attributable to tax treatment of market discount on debt instruments.

Post-October losses represent losses realized on investment transactions from November 1, 2007 through February 29, 2008 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 federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2008 will expire as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
Year of Expiration         USA Fund       USA Intermediate Fund       Municipal Bond Fund
2008     $ 4,822,387     $ —     $ 708,680  
2009 72,146 — 3,025,716
2010 — — 70,671
2011 — 249,429 997,721
2012 — 5,791 980,742
2014 — 119,427 —
2015 — — 355,701
Total $ 4,894,533 $ 374,647 $ 6,139,231

For the six months ended February 29, 2008, the Funds had capital gains (losses) which may reduce (increase) the capital loss carryforwards as follows:

  Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
  USA Fund       USA Intermediate Fund       Municipal Bond Fund
$(681,290) $(2,127,383) $489,448

83

Notes to financial statements
Delaware National Tax-Free Funds

6. Capital Shares

Transactions in capital shares were as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
USA Fund USA Intermediate Fund Municipal Bond Fund
Six Months Six Months Six Months
      Ended       Year Ended       Ended       Year Ended Ended Year Ended
2/29/08 8/31/07   2/29/08 8/31/07       2/29/08       8/31/07
Shares sold:
   Class A     1,273,854   11,325,904 9,565,024 15,563,672 927,444 1,120,423  
   Class B 11,167 26,454 8,204 24,525 3,394 52,256
   Class C 274,279 188,431 265,144 633,232 131,991 50,895
Shares issued upon reinvestment of dividends and distributions:
   Class A 597,299 1,089,918 392,007 581,213 91,251 182,301
   Class B 12,006 31,697 1,519 4,273 3,500 11,291
   Class C 18,269 30,353 19,158 41,910   7,722 13,424
Shares issued from fund merger*:
   Class A — 7,205,217 —   — — —
   Class B — 257,365 — — — —
   Class C — 304,075 — — — —
2,186,874 20,459,414 10,251,056 16,848,825 1,165,302 1,430,590
Shares repurchased:
   Class A (8,114,329 ) (10,887,838 ) (5,135,003 ) (6,656,420 ) (918,001 ) (1,459,034 )
   Class B (323,419 ) (694,147 ) (24,375 ) (79,838 ) (180,393 ) (389,448 )
   Class C (274,548 ) (326,572 ) (500,434 ) (596,931 ) (41,146 ) (97,429 )
(8,712,296 ) (11,908,557 ) (5,659,812 ) (7,333,189 ) (1,139,540 ) (1,945,911 )
Net increase (decrease) (6,525,422 ) 8,550,857 4,591,244 9,515,636 25,762 (515,321 )

*See note 7.

For the six months ended February 29, 2008 and the year ended August 31, 2007, the following shares and values were converted from Class B shares to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the tables above and the statements of changes in net assets.

Six month Ended Year Ended
2/29/08 8/31/07
      Class B       Class A             Class B       Class A      
Shares Shares Value Shares Shares Value
Delaware Tax-Free USA Fund   149,171   149,117 $ 1,687,319   313,870 313,802 $ 3,623,804
Delaware Tax-Free USA
     Intermediate Fund 9,370 9,362 105,857 31,830   31,812 364,785
Delaware National High-Yield
     Municipal Bond Fund 73,174 73,358 734,802 161,352 161,820 1,677,884

84

7. Fund Merger

Effective July 13, 2007, Delaware Tax-Free USA Fund (Acquiring Fund) acquired all of the assets and assumed all of the liabilities of Delaware Tax-Free Florida Insured Fund (Acquired Fund), an open-end investment company, in exchange for shares of the Acquiring Fund pursuant to a Plan and Agreement of Reorganization (Reorganization). The shareholders of the Acquired Fund received shares of the respective class of the Acquiring Fund equal to the aggregate net asset value of their share in the Acquired Fund prior to the Reorganization.

The Reorganization was treated as non-taxable events and, accordingly, Delaware Tax-Free USA 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 gain (loss) of Delaware Tax-Free Florida Insured Fund as of the close of business on July 13, 2007, were as follows:

Net Unrealized Accumulated Net
      Net Assets       Appreciation       Realized Gain/Loss
Delaware Tax-Free Florida Insured Fund $88,309,928 $2,426,693   $—

The net assets of Delaware Tax-Free USA Fund prior to the Reorganization were $707,230,768. The combined net assets of Delaware Tax-Free USA Fund after merger were $795,540,696.

8. Line of Credit

Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (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 Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The Funds had no amounts outstanding as of February 29, 2008, or at any time during the period then ended.

9. Credit and Market Risk

The Funds concentrates their investments in securities issued by municipalities. The value of these investments may be adversely affected by new legislation within the states, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified on the statements of net assets.

Delaware National High-Yield Municipal Bond Fund invests a portion of its assets in high yield fixed income securities, which carry ratings of BB or lower by Standard & Poor's Ratings Group and/or Ba or lower by Moody’s Investors Service, Inc. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.

85

Notes to financial statements
Delaware National Tax-Free Funds

9. Credit and Market Risk (continued)

The Funds may invest in advanced refunded bonds, escrow secured bonds or defeased bonds. Under current federal tax laws and regulations, state and local government borrowers are permitted to refinance outstanding bonds by issuing new bonds. The issuer refinances the outstanding debt to either reduce interest costs or to remove or alter restrictive covenants imposed by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding”. “Advance refunded bonds” are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.

Bonds are considered “pre-refunded” when the refunding issue's proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract and are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s Investors Service, Inc., Standard & Poor’s Ratings Group, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

Each Fund may invest up to 15% of net 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. As of February 29, 2008, there were no Rule 144A securities and no securities have been determined to be illiquid under each Fund’s Liquidity Procedures.

10. Contractual Obligations

The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed each Fund’s existing contracts and expects the risk of loss to be remote.

86

About the organization

This semiannual report is for the information of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund and the Delaware Investments® Fund profiles for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

Board of trustees

       
 

Patrick P. Coyne
Chairman, President, and
Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA

Thomas L. Bennett
Private Investor
Rosemont, PA

John A. Fry
President
Franklin & Marshall College
Lancaster, PA

Anthony D. Knerr
Founder and Managing Director
Anthony Knerr & Associates
New York, NY

Lucinda S. Landreth
Former Chief Investment Officer
Assurant, Inc.
Philadelphia, PA

Ann R. Leven
Consultant
ARL Associates
New York, NY

Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN

Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN

J. Richard Zecher
Founder
Investor Analytics
Scottsdale, AZ


88


Affiliated officers

      Contact information
 

David F. Connor
Vice President, Deputy General Counsel, and
Secretary
Delaware Investments® Family of Funds
Philadelphia, PA

Daniel V. Geatens
Vice President and Treasurer
Delaware Investments Family of Funds
Philadelphia, PA

David P. O’Connor
Senior Vice President, General Counsel,
and Chief Legal Officer
Delaware Investments Family of Funds
Philadelphia, PA

Richard Salus
Senior Vice President and
Chief Financial Officer
Delaware Investments Family of Funds
Philadelphia, PA

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 of 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 are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the Commission’s Web site at www.sec.gov. In addition, a description of the policies and procedures that each Fund uses to determine how to vote proxies (if any) relating to portfolio securities and each Fund’s Schedule of Investments are available without charge on each Fund’s Web site at www.delawareinvestments.com. Each Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.

Information (if any) regarding how each Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through each Fund’s Web site at www.delawareinvestments.com; and (ii) on the Commission’s Web site at www.sec.gov.


89


 

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SA-011 [2/08] DG3 4/08     MF-08-03-025     PO 12797     (2926)


 
 
 
 
 
 
 
 
 
Semiannual report 
 
Delaware Tax-Free Arizona Fund 
 
Delaware Tax-Free California Fund 
 
Delaware Tax-Free Colorado Fund 
 
Delaware Tax-Free Idaho Fund 
 
Delaware Tax-Free New York Fund 
 
February 29, 2008 
 
 
 
 
 
 
 
 
 
 
 
 
 

  
Fixed income mutual funds 
 
 

Table of contents

Disclosure of Fund expenses  1
 
Sector allocations and credit quality breakdowns  5
 
Statements of net assets  10
 
Statements of operations  45
 
Statements of changes in net assets  48
 
Financial highlights  58
 
Notes to financial statements  88
 
About the organization  100

 

 

 

 

 

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.
© 2008 Delaware Distributors, L.P.

Disclosure of Fund expenses
For the period September 1, 2007 to February 29, 2008

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. These following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2007 to February 29, 2008.

Actual expenses

The first section of the tables shown, “Actual Fund Return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by 1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The second section of the tables shown, “Hypothetical 5% Return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s 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 ratios, multiplied by the average account value over the period, multiplied by the 182/366 (to reflect the one-half year period).

1

Disclosure of Fund expenses

Delaware Tax-Free Arizona Fund
Expense analysis of an investment of $1,000

  Beginning Ending   Expenses
  Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return       
Class A $1,000.00 $979.20 0.75% $3.69
Class B 1,000.00 976.40 1.50% 7.37
Class C 1,000.00 976.50 1.50% 7.37
Hypothetical 5% return (5% return before expenses)
Class A $1,000.00 $1,021.13 0.75% $3.77
Class B 1,000.00 1,017.40 1.50% 7.52
Class C 1,000.00 1,017.40 1.50% 7.52
 
Delaware Tax-Free California Fund
Expense analysis of an investment of $1,000
     
Beginning Ending   Expenses
  Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return       
Class A $1,000.00 $968.10 0.88% $4.31
Class B 1,000.00   963.70   1.63% 7.96
Class C 1,000.00 964.50 1.63% 7.96
Hypothetical 5% return (5% return before expenses)      
Class A $1,000.00 $1,020.49 0.88% $4.42
Class B 1,000.00 1,016.76 1.63% 8.17
Class C 1,000.00 1,016.76 1.63% 8.17


2

Delaware Tax-Free Colorado Fund
Expense analysis of an investment of $1,000

Beginning Ending   Expenses
  Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return       
Class A $1,000.00 $990.60 0.93% $4.60
Class B 1,000.00 987.00 1.68% 8.30
Class C 1,000.00 986.90 1.68% 8.30
Hypothetical 5% return (5% return before expenses)    
Class A $1,000.00 $1,020.24 0.93% $4.67
Class B 1,000.00 1,016.51 1.68% 8.42
Class C 1,000.00 1,016.51 1.68% 8.42
 
Delaware Tax-Free Idaho Fund       
Expense analysis of an investment of $1,000     
 
Beginning Ending   Expenses
  Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return       
Class A $1,000.00 $990.40 0.85% $4.21
Class B 1,000.00 986.70 1.60% 7.90  
Class C 1,000.00 987.60 1.60% 7.91
Hypothetical 5% return (5% return before expenses)    
Class A $1,000.00 $1,020.64   0.85% $4.27
Class B 1,000.00   1,016.91 1.60% 8.02
Class C 1,000.00 1,016.91 1.60% 8.02

3

Disclosure of Fund expenses

Delaware Tax-Free New York Fund
Expense analysis of an investment of $1,000

Beginning Ending   Expenses
  Account Value Account Value Annualized Paid During Period
    9/1/07     2/29/08     Expense Ratio     9/1/07 to 2/29/08
Actual Fund return         
Class A $1,000.00 $997.20 0.85% $4.22
Class B 1,000.00   992.50 1.60% 7.93
Class C 1,000.00 992.50 1.60% 7.93
Hypothetical 5% return (5% return before expenses)      
Class A $1,000.00 $1,020.64 0.85% $4.27
Class B 1,000.00 1,016.91 1.60% 8.02  
Class C 1,000.00 1,016.91 1.60% 8.02

4


Sector allocations and credit quality breakdowns 
    As of February 29, 2008

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free Arizona Fund

Sector      Percentage of net assets
Municipal Bonds  97.13 % 
Corporate Revenue Bonds  2.03 % 
Education Revenue Bonds  5.82 % 
Electric Revenue Bonds  2.59 % 
Escrowed to Maturity Bonds  0.26 % 
Health Care Revenue Bonds  4.83 % 
Housing Revenue Bonds  1.87 % 
Lease Revenue Bonds  12.61 % 
Local General Obligation Bonds  7.43 % 
Pre-Refunded Bonds  32.06 % 
Special Tax Revenue Bonds  6.16 % 
State General Obligation Bonds  5.58 % 
Transportation Revenue Bonds  7.31 % 
Water & Sewer Revenue Bonds    8.58 % 
Short-Term Investment  1.61 % 
Total Value of Securities  98.74 % 
Receivables and Other Assets Net of Liabilities  1.26 % 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)   
AAA  67.85 % 
AA  15.87 % 
A  4.55 % 
BBB  11.73 % 
Total  100.00 % 

5


Sector allocations and credit quality breakdowns 
    As of February 29, 2008

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free California Fund

Sector      Percentage of net assets
Municipal Bonds  96.54 % 
Education Revenue Bonds  11.23 % 
Electric Revenue Bond  0.91 % 
Health Care Revenue Bonds  6.46 % 
Housing Revenue Bonds  6.34 % 
Lease Revenue Bonds  7.23 % 
Local General Obligation Bonds  14.63 % 
Pre-Refunded Bonds  25.12 % 
Resource Recovery Revenue Bonds  4.28 % 
Special Tax Revenue Bonds  3.26 % 
State General Obligation Bonds  8.31 % 
Transportation Revenue Bonds  5.42 % 
Water & Sewer Revenue Bonds  3.35 % 
Short-Term Investments  0.62 % 
Money Market Instrument  0.51 % 
Variable Rate Demand Note  0.11 % 
Total Value of Securities  97.16 % 
Receivables and Other Assets Net of Liabilities  2.84 % 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)   
AAA  47.17 % 
AA  9.55 % 
A    19.37 % 
BBB  14.17 % 
Non Rated  9.74 % 
Total  100.00 % 

6

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free Colorado Fund

Sector      Percentage of net assets
Municipal Bonds  96.66 % 
Education Revenue Bonds  13.99 % 
Electric Revenue Bonds  1.93 % 
Escrowed to Maturity Bonds  2.24 % 
Health Care Revenue Bonds  12.80 % 
Housing Revenue Bonds  1.49 % 
Lease Revenue Bonds  3.95 % 
Local General Obligation Bonds    15.98 % 
Pre-Refunded Bonds  32.95 % 
Special Tax Revenue Bonds  2.96 % 
State General Obligation Bonds  4.45 % 
Transportation Revenue Bonds  2.28 % 
Water & Sewer Revenue Bonds  1.64 % 
Short-Term Investment  0.29 % 
Total Value of Securities  96.95 % 
Receivables and Other Assets Net of Liabilities  3.05 % 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)   
AAA  39.80 % 
AA  20.61 % 
A  10.87 % 
BBB  17.43 % 
B  0.74 % 
Non Rated  10.55 % 
Total  100.00 % 

7


Sector allocations and credit quality breakdowns 
    As of February 29, 2008

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free Idaho Fund

Sector      Percentage of net assets
Municipal Bonds  96.92 % 
Corporate Revenue Bonds  7.22 % 
Education Revenue Bonds  11.91 % 
Escrowed to Maturity Bonds  2.16 % 
Health Care Revenue Bonds  4.04 % 
Housing Revenue Bonds    6.80 % 
Lease Revenue Bonds  7.35 % 
Local General Obligation Bonds  28.76 % 
Pre-Refunded Bonds  14.39 % 
Special Tax Revenue Bonds  4.93 % 
State General Obligation Bonds  3.66 % 
Transportation Revenue Bonds  3.10 % 
Water & Sewer Revenue Bonds  2.60 % 
Short-Term Investment  0.25 % 
Total Value of Securities  97.17 % 
Receivables and Other Assets Net of Liabilities  2.83 % 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)   
AAA  51.40 % 
AA  22.18 % 
A  4.00 % 
BBB  17.84 % 
BB  2.85 % 
Non Rated  1.73 % 
Total  100.00 % 

8

Sector designations may be different than the sector designations presented in other Fund materials.

Delaware Tax-Free New York Fund

Sector Percentage of net assets
Municipal Bonds    96.70 % 
Corporate Revenue Bonds 6.21 %
Education Revenue Bonds 13.17 %
Health Care Revenue Bonds 8.67 %
Housing Revenue Bonds 1.21 %
Lease Revenue Bonds 7.40 %
Local General Obligation Bonds 3.43 %
Pre-Refunded Bonds 23.46 %
Special Tax Revenue Bonds 17.18 %
State General Obligation Bonds 0.48 %
Transportation Revenue Bonds 12.79 %
Water & Sewer Revenue Bonds   2.70 %
Short-Term Investment    1.64 % 
Total Value of Securities    98.34 % 
Receivables and Other Assets Net of Liabilities    1.66 % 
Total Net Assets    100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)    
AAA 36.89 %
AA 29.53 %
A 15.31 %
BBB 13.86 %
BB 0.68 %
Non Rated   3.73 %
Total    100.00 % 

9


Statements of net assets

Delaware Tax-Free Arizona Fund February 29, 2008 (Unaudited)

  Principal amount      Value
Municipal Bonds – 97.13%     
Corporate Revenue Bonds – 2.03%        
     Maricopa County Pollution Control    
          (Palo Verde Project) Series A 5.05% 5/1/29 (AMBAC) $ 3,000,000 $ 2,763,120
      2,763,120
Education Revenue Bonds – 5.82%    
     Arizona State Board of Regents    
          (University of Arizona) 5.00% 6/1/21 1,255,000 1,266,546
     Arizona State University Certificates of    
          Participation (Research Infrastructure Project)    
          5.00% 9/1/30 (AMBAC) 3,000,000 2,844,750
     Glendale Industrial Development Authority Revenue    
          (Midwestern University) 5.00% 5/15/31 1,050,000 971,198
     Pima County Industrial Development    
          Authority Educational Revenue    
          (Tucson Country Day School Project) 5.00% 6/1/37 1,000,000 776,250
     South Campus Group Student Housing Revenue    
          (University of Arizona - South Campus Project)    
          5.625% 9/1/35 (MBIA) 1,000,000 1,000,700
     Tucson Industrial Development Authority    
          (University of Arizona - Marshall Foundation)    
          Series B 5.00% 7/15/27 (AMBAC) 1,000,000 959,200
     University of Arizona Certificates of Participation    
          (University of Arizona Project) Series A    
          5.125% 6/1/21 (AMBAC) 85,000   85,899
      7,904,543
Electric Revenue Bonds – 2.59%    
     Energy Management Services (University of Arizona -    
          Main Campus) 5.25% 7/1/17 (MBIA) 1,500,000 1,582,980
     Salt River Project Agricultural Improvement &    
          Power District Electric System Revenue Series B    
          5.00% 1/1/31 (MBIA) 2,000,000   1,933,780
      3,516,760
Escrowed to Maturity Bonds – 0.26%    
     Phoenix Street & Highway User Revenue (Senior Lien)    
          6.50% 7/1/09 (AMBAC) 350,000   355,086
      355,086

10


  Principal amount      Value
Municipal Bonds (continued)     
Health Care Revenue Bonds – 4.83%        
     Glendale Industrial Development Authority Hospital    
          Revenue (John C. Lincoln Health)    
          5.00% 12/1/42 $ 2,500,000 $ 2,049,925
     Maricopa County Industrial Development Authority    
          Health Facilities Revenue (Catholic Healthcare West)    
          Series A 5.50% 7/1/26 1,000,000 990,240
     University Medical Center Hospital Revenue    
          5.00% 7/1/24 800,000 722,760
          5.00% 7/1/35 1,000,000 845,140
     Yavapai County Industrial Development Authority    
          Revenue (Yavapai Regional Medical Center)    
          Series A 5.25% 8/1/21 (RADIAN) 2,000,000   1,952,880
      6,560,945
Housing Revenue Bonds – 1.87%    
     Pima County Industrial Development Authority Single    
          Family Housing Revenue    
          Series A-1 6.125% 11/1/33    
          (GNMA) (FNMA) (FHLMC) (AMT) 20,000 20,249
          Series B-1 6.10% 5/1/31 (GNMA) (AMT) 50,000 50,612
     Yuma Industrial Development Authority Multifamily    
          Housing Revenue    
          Series A 6.10% 9/20/19 (GNMA) (AMT) 2,340,000   2,469,074
      2,539,935
Lease Revenue Bonds – 12.61%    
     Arizona Game & Fish Department & Community    
          Beneficial Interest Certificates    
          (Administration Building Project)    
          5.00% 7/1/32 1,300,000 1,169,870
     Marana Municipal Property Facilities Revenue    
          5.00% 7/1/28 (AMBAC) 575,000 555,726
     Maricopa County Industrial Development Authority    
          Correctional Contract Revenue (Phoenix West Prison)    
          Series B 5.375% 7/1/22 (ACA) 1,000,000 913,850
     Phoenix Industrial Development Authority Lease    
          Revenue (Capitol Mall II, LLC Project)    
          5.00% 9/15/28 (AMBAC) 4,000,000 3,758,799
     Pinal County Certificates of Participation    
          5.00% 12/1/29 1,300,000 1,218,009
          5.125% 6/1/21 (AMBAC) 4,675,000 4,705,667

11

Statements of net assets
Delaware Tax-Free Arizona Fund

  Principal amount      Value
Municipal Bonds (continued)     
Lease Revenue Bonds (continued)        
     Puerto Rico Public Buildings Authority Revenue    
          (Guaranteed Government Facilities)    
          Series D 5.25% 7/1/27 $ 470,000 $ 436,536
          Series D 5.25% 7/1/36 270,000 248,387
          Series I 5.25% 7/1/33 495,000 459,043
     Salt River Project Arizona Agricultural Improvement    
          & Power District Certificates of Participation    
          5.00% 12/1/18 (MBIA) 1,500,000 1,533,960
     University of Arizona Certificates of Participation    
          Series B 5.00% 6/1/31 (AMBAC) 2,250,000   2,125,733
      17,125,580
Local General Obligation Bonds – 7.43%    
     Chandler 5.00% 7/1/17 1,935,000 2,052,687
     Cochise County Unified School District #68 Sierra Vista    
          7.50% 7/1/10 (FGIC) 1,000,000 1,102,880
     Coconino & Yavapai Counties Joint Unified School    
          District #9 (Sedona Oak Creek Project of 2007)    
          Series A 4.50% 7/1/18 (FSA) 1,520,000 1,546,357
     DC Ranch Community Facilities    
          5.00% 7/15/27 (AMBAC) 1,000,000 968,580
     Flagstaff Aspen Place Sawmill Improvement District    
          5.00% 1/1/32 1,350,000 1,237,383
   fGila County Unified School District #10    
          (Payson Step Coupon Project of 2006)    
          Series A 1.00% 7/1/27 (AMBAC) 1,000,000 892,280
     Marana Tangerine Farm Road Improvement District    
          Revenue 4.60% 1/1/26 1,000,000 865,640
     Maricopa County Unified School District #41 (Gilbert    
          School Improvement Projects of 2005 & 2007)    
          3.25% 7/1/15 1,500,000   1,421,670
      10,087,477
§Pre-Refunded Bonds – 32.06%    
     Arizona State Board of Regents Certificates of    
          Participation (University of Arizona - Main Campus)    
          Series 2000 A-1 5.125% 6/1/25-11 (AMBAC) 1,250,000 1,325,038
     Glendale Industrial Development Authority Revenue    
          (Midwestern University) Series A 5.875% 5/15/31-11 1,000,000 1,089,830

12


  Principal amount      Value
Municipal Bonds (continued)     
§Pre-Refunded Bonds (continued)        
     Mesa Industrial Development Authority    
          Revenue (Discovery Health Systems) Series A    
          5.625% 1/1/29-10 (MBIA) $ 9,000,000 $ 9,498,599
     Mohave County Community College District Revenue    
          (State Board of Directors) 6.00% 3/1/20-10 (MBIA) 1,000,000 1,060,220
     Phoenix Industrial Development Authority    
          Lease Revenue (Capitol Mall, LLC Project)    
          5.50% 9/15/27-10 (AMBAC) 5,000,000 5,311,249
     Phoenix Industrial Development Authority Multifamily    
          Housing Revenue (Ventana Palms Apartments Project)    
          Series A    
          6.15% 10/1/29-09 (MBIA) 510,000 546,154
          6.20% 10/1/34-09 (MBIA) 940,000 1,007,370
     Phoenix Variable Purpose Series B 5.00% 7/1/27-12 2,435,000 2,399,230
     Puerto Rico Commonwealth Highway & Transportation    
          Authority Revenue Series K 5.00% 7/1/35-15 750,000 811,373
     Puerto Rico Commonwealth Public Improvement Revenue    
          5.125% 7/1/30-11 (FSA) 770,000 817,678
          Series A 5.00% 7/1/27-12 1,000,000 1,066,280
          Series A 5.125% 7/1/31-11 1,705,000 1,810,574
     Puerto Rico Electric Power Authority Revenue    
          Series NN 5.00% 7/1/32-13 (MBIA) 1,750,000 1,878,940
          Series RR 5.00% 7/1/35-15 (FGIC) 1,545,000 1,671,427
     Puerto Rico Public Buildings Authority Revenue    
          (Guaranteed Government Facilities)    
          Series D 5.25% 7/1/27-12 1,280,000 1,366,989
          Series I 5.25% 7/1/33-14 5,000 5,415
     Scottsdale Municipal Property Corporation Excise Tax    
          Revenue 5.00% 7/1/21-16 1,505,000 1,623,474
     Scottsdale Industrial Development Authority Hospital    
          Revenue (Scottsdale Healthcare) 5.70% 12/1/21-11 500,000 547,105
     Southern Arizona Capital Facilities Finance Revenue    
          (University of Arizona Project)    
          5.10% 9/1/33-12 (MBIA) 3,250,000 3,486,307
     Surprise Municipal Property Excise Tax Revenue    
          5.70% 7/1/20-09 (FGIC) 3,000,000 3,140,909

13

Statements of net assets
Delaware Tax-Free Arizona Fund

  Principal amount      Value
Municipal Bonds (continued)       
§Pre-Refunded Bonds (continued)        
     University of Arizona Certificates of Participation      
          (University of Arizona Parking & Student Housing)      
          5.75% 6/1/19-09 (AMBAC) $ 1,000,000 $ 1,035,370
          (University of Arizona Project)      
          Series A 5.125% 6/1/21-12 (AMBAC) 915,000   976,177
          Series B 5.125% 6/1/22-12 (AMBAC) 1,000,000   1,069,310
      43,545,018
Special Tax Revenue Bonds – 6.16%      
     Arizona Tourism & Sports Authority Tax Revenue      
          (Multipurpose Stadium Facilities)      
          Series A 5.00% 7/1/28 (MBIA) 2,500,000   2,395,150
     Arizona State Transportation Board Excise Tax Revenue      
          (Maricopa County Regional Area Road Foundation)      
          5.00% 7/1/19 1,500,000   1,551,960
     Peoria Municipal Development Authority Transition      
          Sales Tax (Excise Tax & State Shared Revenue Senior      
          Lien and Sub Lien) 4.50% 1/1/16 (FGIC) 1,000,000   1,029,240
     Phoenix Civic Improvement Transition Excise Tax      
         Revenue (Light Rail Project) 5.00% 7/1/20 (AMBAC) 2,270,000   2,298,126
  ΩPhoenix Civic Improvement Distribution Revenue      
          (Civic Plaza) Series B 5.50% 7/1/31 (FGIC) 1,500,000    1,089,630
       8,364,106
State General Obligation Bonds – 5.58%      
     Puerto Rico Commonwealth Public      
          Improvement Refunding Series A      
          5.50% 7/1/17 1,765,000   1,829,423
          5.50% 7/1/19 1,300,000   1,320,735
          Unrefunded Balance Series A      
          5.125% 7/1/30 (FSA) 480,000   465,984
          5.125% 7/1/31 3,370,000   3,076,776
     Virgin Islands Public Finance Authority      
          (Gross Receipts Taxes) 5.00% 10/1/31 (ACA) 1,000,000    891,930
       7,584,848

14


  Principal amount      Value
Municipal Bonds (continued)      
Transportation Revenue Bonds – 7.31%        
     Arizona State Transportation Board Highway Revenue      
          Series A 5.00% 7/1/23 $ 1,000,000 $ 1,003,170
     Arizona State Transportation Board Grant Anticipation      
          Notes 5.00% 7/1/14 500,000   538,745
     Phoenix Civic Improvement Airport Revenue Series B      
          5.25% 7/1/27 (FGIC) (AMT) 1,000,000   941,460
          5.25% 7/1/32 (FGIC) (AMT) 3,000,000   2,786,010
     Tucson Airport Authority Revenue (Senior Lien)      
          Series 2001 5.35% 6/1/31 (AMBAC) (AMT) 5,000,000   4,654,000
      9,923,385
Water & Sewer Revenue Bonds – 8.58%      
     Glendale Water & Sewer Revenue (Senior Lien)      
          5.00% 7/1/28 (AMBAC) 2,000,000   1,923,320
     Phoenix Civic Improvement Corporation      
          Wastewater Systems Revenue      
          5.00% 7/1/19 2,750,000   2,836,790
          (Junior Lien)      
          5.00% 7/1/24 (FGIC) 1,000,000   988,930
          5.00% 7/1/26 (FGIC) 3,750,000   3,648,788
     Scottsdale Water & Sewer Revenue      
          4.00% 7/1/14 175,000   179,428
          4.00% 7/1/15 500,000   508,580
          4.00% 7/1/16 375,000   377,366
          5.25% 7/1/22 1,150,000   1,197,058
      11,660,260
Total Municipal Bonds (cost $134,303,874)     131,931,063
 
  Number of shares    
Short-Term Investment – 1.61%      
Money Market Instrument – 1.61%      
     Federated Arizona Municipal Cash Trust 2,181,543   2,181,543
Total Short-Term Investment (cost $2,181,543)     2,181,543

15

Statements of net assets
Delaware Tax-Free Arizona Fund

   
Total Value of Securities – 98.74% (cost $136,485,417) $ 134,112,606  
Receivables and Other Assets   
     Net of Liabilities – 1.26%    1,718,431  
Net Assets Applicable to 12,783,763   
     Shares Outstanding – 100.00%  $ 135,831,037  
 
Net Asset Value – Delaware Tax-Free Arizona Fund    
     Class A ($117,640,712 / 11,073,934 Shares)   $10.62  
Net Asset Value – Delaware Tax-Free Arizona Fund    
     Class B ($10,462,309 / 984,159 Shares) $10.63  
Net Asset Value – Delaware Tax-Free Arizona Fund    
     Class C ($7,728,016 / 725,670 Shares)   $10.65  
 
Components of Net Assets at February 29, 2008:   
Shares of beneficial interest  
     (unlimited authorization – no par) $ 140,397,883  
Accumulated net realized loss on investments (2,194,035 )
Net unrealized depreciation of investments   (2,372,811 )
Total net assets $ 135,831,037  

f Step coupon bond. Coupon increases periodically based on a predetermined schedule. Stated rate in effect at February 29, 2008.
§ Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”
Ω Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.

16


 

Summary of abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHLMC — Insured by the Federal Home Loan Mortgage Corporation
FNMA — Insured by 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
RADIAN — Insured by Radian Asset Assurance


Net Asset Value and Offering Price Per Share –   
     Delaware Tax-Free Arizona Fund   
Net asset value Class A (A) $ 10.62
Sales charge (4.50% of offering price) (B)   0.50
Offering price $ 11.12

(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

17


Statements of net assets
Delaware Tax-Free California Fund February 29, 2008 (unaudited)

  Principal amount      Value
Municipal Bonds – 96.54%     
Education Revenue Bonds – 11.23%        
     California Educational Facilities Authority Revenue    
          (University of the Pacific) 5.25% 5/1/34 $ 1,000,000 $ 957,440
          (Un-Refunded Balance) 5.75% 11/1/30 (MBIA) 310,000 313,329
          (Woodbury University) 5.00% 1/1/36 1,000,000 811,860
     California Municipal Finance Authority Educational Revenue    
          (American Heritage Foundation Project)    
          Series A 5.25% 6/1/36 1,000,000 820,890
          (University Students Co-op Association) 5.00% 4/1/37 1,000,000 808,940
     California Statewide Communities Development    
          Authority Revenue    
          (California Baptist University Project)    
          Series A 5.50% 11/1/38 1,000,000 853,090
          (Viewpoint School Project) 5.75% 10/1/33 (ACA) 1,000,000 912,210
          (Windrush School Project) 5.50% 7/1/37 1,000,000 839,460
     California Statewide Communities Development    
          Authority Student Housing Revenue    
          (East Campus Apartments, LLC)    
          Series A 5.625% 8/1/34 (ACA) 1,000,000 841,700
          (Irvine, LLC-UCI East) 5.00% 5/15/38 1,000,000 836,360
     San Diego County Certificates of Participation    
          (University of San Diego) 5.375% 10/1/41 1,000,000 957,320
     University of California Revenue Series L    
          5.00% 5/15/16 225,000 241,776
          5.00% 5/15/19 850,000   887,307
      10,081,682
Electric Revenue Bonds – 0.91%    
     Chino Basin Regional Financing Authority Revenue    
          Series A 5.00% 11/1/24 (AMBAC) 845,000   819,836
      819,836
Health Care Revenue Bonds – 6.46%    
     Association Bay Area Governments Finance Authority    
          for California Nonprofit Corporations (San Diego    
          Hospital Association) Series A 6.125% 8/15/20 1,250,000 1,276,325
     California Health Facilities Financing Authority Revenue    
          (Catholic Healthcare West) Series G 5.25% 7/1/23 1,000,000 977,790
          (The Episcopal Home) Series A 5.30% 2/1/32 (RADIAN) 1,000,000 939,390
     California Infrastructure & Economic Development Bank    
          Revenue (Kaiser Hospital Associates I, LLC) Series A    
          5.55% 8/1/31 1,000,000 981,320

18


  Principal amount      Value
Municipal Bonds (continued)       
Health Care Revenue Bonds (continued)        
     California Statewide Communities Development      
          Authority Revenue Series A      
          (Presbyterian Homes) 4.875% 11/15/36 $ 1,000,000 $ 807,340
          (Valleycare Health Systems) 5.125% 7/15/31 1,000,000   820,800
      5,802,965
Housing Revenue Bonds – 6.34%      
     California Statewide Communities Development      
          Authority Multifamily Housing Revenue      
          (Citrus Gardens Apartments) Series D-1 5.375% 7/1/32 1,800,000   1,708,614
          (Silver Ridge Apartments) Series H 5.80% 8/1/33      
          (FNMA) (AMT) 1,000,000   1,017,690
     Palm Springs Mobile Home Park Revenue (Sahara      
          Mobile Home Park) Series A 5.75% 5/15/37 1,000,000   935,050
     Santa Clara County Multifamily Housing Authority      
          Revenue (Rivertown Apartments Project)      
          Series A 5.85% 8/1/31 (AMT) 1,000,000   1,004,180
     Ventura County Area Multifamily Housing Authority      
          Revenue (Glen Oaks Apartments)      
          Series A 6.35% 7/20/34 (GNMA) 976,000   1,021,413
      5,686,947
Lease Revenue Bonds – 7.23%      
     California Public Works Board Lease Revenue      
          (Department of Corrections)      
          Series A 5.00% 3/1/27 (AMBAC) 1,000,000   953,970
          Series C 5.25% 6/1/28 1,500,000   1,429,755
     Franklin-McKinley School District Certificates of      
          Participation (Financing Project)      
          Series B 5.00% 9/1/27 (AMBAC) 1,060,000   998,287
     Puerto Rico Public Buildings Authority Revenue      
          (Government Facilities)      
          Series B 5.50% 7/1/35 (AMBAC) 700,000   731,388
     San Diego County Certificates of Participation      
          5.75% 7/1/31 (MBIA) 1,000,000   1,012,910
     San Juan Basin Authority (Ground Water Recovery      
          Project) 5.00% 12/1/34 (AMBAC) 1,000,000   950,840
    ^San Mateo Union High School District Certificates of      
          Participation Capital Appreciation (Partnership      
          Phase I Projects) Series B 5.00% 12/15/43 (AMBAC) 1,000,000   411,220
      6,488,370

19

Statements of net assets
Delaware Tax-Free California Fund

  Principal amount      Value
Municipal Bonds (continued)     
Local General Obligation Bonds – 14.63%        
    ^Anaheim School District Election 2002 Capital    
          Appreciation 4.58% 8/1/25 (MBIA) $ 1,250,000 $ 440,425
     Commerce Joint Powers Financing Authority Revenue    
          Un-Refunded Balance Series A (Redevelopment    
          Projects) 5.00% 8/1/28 (RADIAN) 940,000 866,473
     Culver City Redevelopment Agency Refunding    
          (Tax Allocation Redevelopment Project)    
          Series A 5.00% 11/1/25 (AMBAC) 1,000,000 947,330
     Fairfield-Suisun Unified School District Election 2002    
          5.50% 8/1/28 (MBIA) 500,000 501,850
     Fremont Community Facilities District #1    
          (Special Tax Pacific Commons) 5.375% 9/1/36 1,000,000 837,420
     Grossmont Union High School District Election 2004    
          5.00% 8/1/23 (MBIA) 1,000,000 1,001,800
     Lake Elsinore Public Financing Authority    
          (Tax Allocation) Series A 5.50% 9/1/30 1,000,000 956,510
     Lammersville School District Community    
          Facilities District #2002 (Mountain House)    
          5.125% 9/1/35 500,000 407,255
     Lawndale Elementary School District    
          Series B 5.00% 8/1/32 (FSA) 1,000,000 966,840
     Los Angeles Unified School District Refunding    
          Series B 4.75% 7/1/19 (FSA) 1,000,000 1,019,610
     Modesto Special Tax Community Facilities District #04-1    
          Village 2 5.15% 9/1/36 (MBIA) 1,000,000 792,890
     Monterey Peninsula Community College District    
          Election 2002 Series C 4.50% 8/1/19 (FSA) 1,000,000 1,000,280
     Poway Redevelopment Agency Tax Allocation    
          Refunding 5.75% 6/15/33 (MBIA) 270,000 275,519
     Poway Unified School District Special Tax Community    
          Facilities District #6 5.60% 9/1/33 1,000,000 926,620
     Roseville Westpark Special Tax Public Community    
          Facilities District #1 5.25% 9/1/37 500,000 393,730
     San Bernardino County Special Tax Community    
          Facilities District #2002-1 5.90% 9/1/33 2,000,000   1,793,340
      13,127,892

20


  Principal amount      Value
Municipal Bonds (continued)       
§Pre-Refunded Bonds – 25.12%        
     California Educational Facilities Authority Revenue      
          (Pepperdine University) Series A 5.50% 8/1/32-09 $ 1,000,000 $ 1,037,720
          (University of the Pacific) 5.75% 11/1/30-10 (MBIA) 690,000   740,405
     California Department of Water Resources Power Supply      
          Revenue Series A 5.375% 5/1/21-12 2,000,000   2,185,900
     California State      
          5.00% 2/1/33-14 1,000,000   1,074,150
          5.00% 2/1/33-14 (MBIA) 1,000,000   1,074,150
     Commerce Joint Powers Financing Authority Revenue      
          (Redevelopment Projects) Series A      
          5.00% 8/1/28-13 (RADIAN) 60,000   64,479
     Golden State Tobacco Securitization Settlement      
          Revenue (Asset-Backed Senior Notes)      
          5.50% 6/1/43-13 (RADIAN) 1,000,000   1,078,750
          5.625% 6/1/33-13 1,000,000   1,084,650
     Oakland Industrial Revenue (1800 Harrison Foundation)      
          Series B 6.00% 1/1/29-10 (AMBAC) 1,300,000   1,376,999
     Poway Redevelopment Agency Tax Allocation      
          5.75% 6/15/33-10 (MBIA) 1,130,000   1,236,875
     Puerto Rico Commonwealth Highway & Transportation      
          Authority Revenue Series K 5.00% 7/1/45-15 1,500,000   1,622,745
     Puerto Rico Commonwealth Series B 5.00% 7/1/35-16 1,000,000   1,078,720
     Puerto Rico Public Buildings Authority Revenue      
          (Guaranteed Government Facilities)      
          Series I 5.50% 7/1/23-14 1,000,000   1,096,980
     Riverside County Redevelopment Agency Tax Allocation      
          (Jurupa Valley Project)      
          5.25% 10/1/35-11 (AMBAC) 1,590,000   1,732,846
     San Diego County Certificates of Participation (The      
          Burnham Institute) 6.25% 9/1/29-09 1,000,000   1,059,420
     San Diego Unified School District Series E      
          5.00% 7/1/28-13 (FSA) 2,000,000   2,000,140
     San Francisco Bay Area Transit Financing Authority Sales      
          Tax Revenue 5.125% 7/1/36-11 (AMBAC) 740,000   787,271
     Sequoia Union High School District Election 2001      
          5.125% 7/1/31-11 (FSA) 1,000,000   1,081,930
     Southern California Logistics Airport Authority Tax      
          Allocation 6.50% 12/1/31-11 1,000,000   1,130,730
      22,544,860

21

Statements of net assets
Delaware Tax-Free California Fund

  Principal amount      Value
Municipal Bonds (continued)     
Resource Recovery Revenue Bonds – 4.28%        
     Salinas Valley Solid Waste Authority Revenue    
          5.25% 8/1/27 (AMBAC) (AMT) $ 2,000,000 $ 1,922,240
          5.25% 8/1/31 (AMBAC) (AMT) 2,000,000 1,916,740
    3,838,980
Special Tax Revenue Bonds – 3.26%    
     Palm Drive Health Care District Parcel Tax Revenue    
          5.25% 4/1/30 2,000,000 1,657,000
     Puerto Rico Commonwealth Government Development    
          Bank Senior Notes Series B 5.00% 12/1/15 1,000,000 1,015,270
     San Francisco Bay Area Rapid Transit Financing    
          Authority Tax Revenue Un-Refunded Balance    
          5.125% 7/1/36 (AMBAC) 260,000 250,029
    2,922,299
State General Obligation Bonds – 8.31%    
     California State    
          Refunding 5.00% 8/1/18 1,500,000 1,533,195
          Refunding 5.00% 11/1/21 1,500,000 1,479,735
          Variable Purposes 5.50% 11/1/33 2,000,000 2,007,560
   ŸCalifornia State Veterans Series BJ 5.70% 12/1/32 (AMT) 640,000 628,115
     Puerto Rico Commonwealth Public Improvement    
          Refunding Series A 5.25% 7/1/15 1,750,000 1,807,400
    7,456,005
Transportation Revenue Bonds – 5.42%    
     Bay Area Toll Authority Bridge Revenue Series F    
          5.00% 4/1/22 1,000,000 1,007,950
     Port of Oakland Revenue Series L 5.375% 11/1/27    
          (FGIC) (AMT) 1,000,000 941,490
     Sacramento County Airport System Revenue Series A    
          5.00% 7/1/32 (FSA) 1,000,000 963,140
     San Diego Redevelopment Agency (Centre City    
          Redevelopment Project) Series A 6.40% 9/1/25 1,000,000 1,003,310
     San Jose Airport Revenue Series A 5.00% 3/1/31 (FGIC) 1,000,000 948,930
    4,864,820
Water & Sewer Revenue Bonds – 3.35%    
     California Department of Water Resources Systems    
          Revenue (Central Valley Project)    
          Series X 5.00% 12/1/29 (FGIC) 1,000,000 958,960
     Glendale Water Revenue 4.00% 2/1/18 (FSA) 1,120,000 1,088,382

22


  Principal amount      Value
Municipal Bonds (continued)       
Water & Sewer Revenue Bonds (continued)          
     Metropolitan Water District of Southern California      
          Waterworks Authority Revenue Series B-1      
          5.00% 10/1/36 (FGIC) $ 1,000,000 $ 957,450
        3,004,792
Total Municipal Bonds (cost $90,194,181)       86,639,448
 
  Number of shares    
Short-Term Investments – 0.62%           
Money Market Instrument – 0.51%      
     Federated California Municipal Cash Trust 456,185     456,185
        456,185
 
  Principal amount    
ŸVariable Rate Demand Note – 0.11%      
     California State Kindergarten (University Public Project)      
          Series A 3.00% 5/1/34 $ 100,000     100,000
        100,000
Total Short-Term Investments (cost $556,185)       556,185
 
Total Value of Securities – 97.16% (cost $90,750,366)     87,195,633
Receivables and Other Assets       
     Net of Liabilities – 2.84%        2,547,772
Net Assets Applicable to 8,591,656       
     Shares Outstanding – 100.00%    $ 89,743,405
 
Net Asset Value – Delaware Tax-Free California Fund      
     Class A ($68,777,431 / 6,588,237 Shares)         $10.44
Net Asset Value – Delaware Tax-Free California Fund      
     Class B ($7,647,006 / 729,553 Shares)       $10.48
Net Asset Value – Delaware Tax-Free California Fund      
     Class C ($13,318,968 / 1,273,866 Shares)       $10.46

23

Statements of net assets
Delaware Tax-Free California Fund

 
Components of Net Assets at February 29, 2008:     
Shares of beneficial interest    
     (unlimited authorization – no par) $ 94,575,736  
Undistributed net investment income 1,300  
Accumulated net realized loss on investments (1,278,898 )
Net unrealized depreciation of investments   (3,554,733 )
Total net assets $ 89,743,405  

^ Zero coupon security. The 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 8 in “Notes to financial statements.”
Ÿ Variable rate security. The rate shown is the rate as of February 29, 2008.

Summary of abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FNMA — Insured by 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
RADIAN — Insured by Radian Asset Assurance

Net Asset Value and Offering Price Per Share –     
     Delaware Tax-Free California Fund   
Net asset value Class A (A) $ 10.44
Sales charge (4.50% of offering price) (B)   0.49
Offering price $ 10.93

(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

24


Delaware Tax-Free Colorado Fund February 29, 2008 (unaudited)

  Principal amount      Value
Municipal Bonds – 96.66%       
Education Revenue Bonds – 13.99%        
     Boulder County Development Revenue      
          (University Corp. for Atmospheric Research)      
          5.00% 9/1/33 (MBIA) $ 1,000,000 $ 948,930
          5.00% 9/1/35 (AMBAC) 2,000,000   1,894,280
     Colorado Educational & Cultural Facilities      
          Authority Revenue      
          (Charter School Project) 5.50% 5/1/36 (XLCA) 2,280,000   2,250,862
          (Johnson & Wales University Project) Series A      
          5.00% 4/1/28 (XLCA) 1,000,000   931,780
          (Liberty Common Charter School Project)      
          5.125% 12/1/33 (XLCA) 2,740,000   2,577,600
          (Montessori Districts Charter School Projects)      
          6.125% 7/15/32 5,590,000   5,273,047
          (Pinnacle Charter School Project) 5.00% 6/1/33 (XLCA) 2,170,000   2,014,281
          (Renaissance Charter School Project) 6.75% 6/1/29 2,000,000   1,786,220
          (University of Northern Colorado Student      
          Housing Project) 5.125% 7/1/37 (MBIA) 7,500,000   7,186,874
          (Woodrow Wilson Charter School Project)      
          5.25% 12/1/34 (XLCA) 1,960,000   1,870,487
     Colorado School Mines Auxiliary Facilities Revenue      
          5.00% 12/1/37 (AMBAC) 425,000   401,132
     University of Colorado Enterprise System Revenue Series A      
          5.00% 6/1/30 (AMBAC) 3,155,000   3,035,899
          5.375% 6/1/26 1,000,000   1,003,610
     University of Puerto Rico Revenue Series Q 5.00% 6/1/36 3,750,000   3,359,100
      34,534,102
Electric Revenue Bonds – 1.93%      
     Colorado Springs Utilities Revenue Series A      
          5.00% 11/15/29 5,000,000   4,764,100
      4,764,100
Escrowed to Maturity Bonds – 2.24%      
     Colorado Health Facilities Authority Revenue      
          (Catholic Health Initiatives) Series A 5.50% 3/1/32 5,000,000   5,071,600
     Galleria Metropolitan District 7.25% 12/1/09 445,000   463,761
      5,535,361
Health Care Revenue Bonds – 12.80%      
     Colorado Health Facilities Authority Revenue      
        Ÿ(Adventist Health Project) Series D 5.25% 11/15/35 2,000,000   1,842,600
          (Catholic Health Initiatives) Series A 4.75% 9/1/40 1,000,000   866,480

25

Statements of net assets
Delaware Tax-Free Colorado Fund

  Principal amount      Value
Municipal Bonds (continued)       
Health Care Revenue Bonds (continued)      
     Colorado Health Facilities Authority Revenue      
          (Christian Living Community Project) Series A      
          5.75% 1/1/37 $ 1,500,000 $ 1,289,325
          (Covenant Retirement Communities) Series A      
          5.50% 12/1/33 (RADIAN) 5,000,000   4,717,400
          (Evangelical Lutheran)      
          5.00% 6/1/35 2,000,000   1,725,840
          Series A 5.25% 6/1/34 2,750,000   2,472,113
          (Parkview Medical Center) 5.00% 9/1/25 1,000,000   926,230
          (Porter Place) Series A 6.00% 1/20/36 (GNMA) 5,000,000   5,099,049
          (Vail Valley Medical Center Project) 5.80% 1/15/27 3,475,000   3,382,322
     Delta County Memorial Hospital District Enterprise      
          Revenue 5.35% 9/1/17 4,000,000   3,967,680
     Denver Health & Hospital Authority Health Care Revenue      
          Series A 4.75% 12/1/36 2,500,000   1,966,000
     Mesa County Residential Care Facilities Mortgage      
          Revenue (Hilltop Community Resources)      
          Series A 5.375% 12/1/28 (RADIAN) 2,000,000   1,909,600
     University of Colorado Hospital Authority Revenue      
          Series A 5.00% 11/15/37 1,690,000    1,426,073
      31,590,712
Housing Revenue Bonds – 1.49%      
     Colorado Housing & Finance Authority      
          (Multifamily Housing Insured Mortgage)      
          Series A-3 6.25% 10/1/26 (FHA) 140,000   142,649
          Series C-3 6.15% 10/1/41 1,590,000   1,603,674
     Denver City & County Multifamily Federal Housing      
          Authority Revenue (Insured Mortgage Loan - Garden      
          Court) 5.40% 7/1/39 (FHA) 2,000,000   1,932,480
      3,678,803
Lease Revenue Bonds – 3.95%      
     Colorado Educational & Cultural National Conference of      
          State Legislatures Office Building Facilities      
          Authority Revenue 5.25% 6/1/21 2,000,000   2,001,020
    @Conejos & Alamosa Counties School District #11J      
          Certificates of Participation 6.50% 4/1/11 820,000   821,099

26


  Principal amount      Value
Municipal Bonds (continued)       
Lease Revenue Bonds (continued)      
     El Paso County Certificates of Participation      
          (Detention Facilities Project) Series B      
          5.00% 12/1/27 (AMBAC) $ 1,500,000 $ 1,445,175
     Fremont County Certificates of Participation Refunding &      
          Improvement Series A 5.25% 12/15/24 (MBIA) 3,045,000   3,067,411
     Puerto Rico Public Buildings Authority Revenue      
          (Guaranteed Government Facilities)      
          Series I 5.25% 7/1/33 1,475,000   1,367,856
          Series M-2 5.50% 7/1/35 (AMBAC) 1,000,000    1,044,840
      9,747,401
Local General Obligation Bonds – 15.98%      
     Arapahoe County Water & Wastewater Public      
          Improvement District Revenue Series A      
          5.125% 12/1/32 (MBIA) 4,500,000   4,373,595
     Denver City & County Justice System      
          5.50% 8/1/16 5,000,000   5,556,200
          (Facilities & Zoo) 5.00% 8/1/19 1,020,000   1,054,445
     Denver West Metropolitan District      
          5.00% 12/1/33 (RADIAN) 1,400,000   1,247,638
     Douglas County School District #1 (Douglas & Elbert      
          Counties) Series B 5.125% 12/15/25 (FSA) 2,000,000   2,003,640
     El Paso County School District #2 (Harrison)      
          5.00% 12/1/27 (MBIA) 2,115,000   2,047,764
     Garfield County School District #2 5.00% 12/1/25 (FSA) 3,280,000   3,257,211
     Grand County School District #2 (East Grand)      
          5.25% 12/1/25 (FSA) 2,485,000   2,516,982
     La Plata County School District #9-R (Durango)      
          5.125% 11/1/24 (MBIA) 1,000,000   1,005,060
     Loveland Special Improvements District #1 7.50% 7/1/29 5,540,000   6,142,587
     Meridian Metropolitan District Series A      
          5.00% 12/1/31 (RADIAN) 5,750,000   5,133,140
     North Range Metropolitan      
          District #1 4.50% 12/15/31 (ACA) 1,500,000   1,069,035
          District #2 5.50% 12/15/37 1,200,000   962,640
     Saddle Rock Metropolitan District      
          5.35% 12/1/31 (RADIAN) 1,580,000   1,475,293

27

Statements of net assets
Delaware Tax-Free Colorado Fund

  Principal amount      Value
Municipal Bonds (continued)     
Local General Obligation Bonds (continued)        
     Sand Creek Metropolitan District Refunding &    
          Improvement 5.00% 12/1/31 (XLCA) $ 500,000 $ 452,300
     Weld County School District #4 5.00% 12/1/19 (FSA) 1,085,000 1,132,783
    39,430,313
§Pre-Refunded Bonds – 32.95%    
     Aurora Certificates of Participation    
          5.50% 12/1/30-10 (AMBAC) 8,000,000 8,528,720
     Boulder County Hospital Revenue (Development    
          Longmont United Hospital Project)    
          6.00% 12/1/30-10 (RADIAN) 5,000,000 5,390,600
     Burlingame Multifamily Housing Revenue Series A    
          6.00% 11/1/29-09 (MBIA) 1,250,000 1,326,675
     Colorado Educational & Cultural Facilities    
          Authority Revenue    
          (Core Knowledge Charter School Project)    
          7.00% 11/1/29-09 1,000,000 1,067,160
          (Littleton Academy Charter School Project)    
          6.125% 1/15/31-12 2,000,000 2,198,100
          (Pinnacle Charter School Project) 6.00% 12/1/21-11 1,750,000 1,919,715
          (Stargate Charter School Project) 6.125% 5/1/33-13 2,000,000 2,236,760
          (University of Denver Project)    
          5.375% 3/1/23-11 (AMBAC) 2,000,000 2,128,960
          Series A 5.00% 3/1/27-12 (MBIA) 5,000,000 5,310,300
     Colorado School Mines Auxiliary Facilities    
          5.00% 12/1/37-12 (AMBAC) 2,705,000 2,899,192
     Colorado Springs Revenue (Colorado College Project)    
          5.375% 6/1/32-09 2,570,000 2,677,143
     Denver Health & Hospital Authority Health Care Revenue    
          Series A 5.375% 12/1/28-08 (ACA) 2,770,000 2,855,510
     E-470 Public Highway Authority Revenue Series A    
          5.75% 9/1/35-10 (MBIA) 3,100,000 3,354,138
     El Paso County Certificates of Participation    
          (Judicial Building Project) Series A    
          5.00% 12/1/27-12 (AMBAC) 2,000,000 2,130,000
     El Paso County School District #49 (Falcon) 5.50%    
          12/1/21-11 (FGIC) 3,580,000 3,872,307
     Fremont County School District #1 (Canon City)    
          5.00% 12/1/24-13 (MBIA) 1,735,000 1,876,750

28


       Principal amount        Value
Municipal Bonds (continued)
§Pre-Refunded Bonds (continued)  
     Garfield Pitkin & Eagle County School District #1
          (Roaring Fork) Series A 5.00% 12/15/27-14 (FSA) $ 1,500,000   $ 1,621,560
     Lincoln Park Metropolitan District 7.75% 12/1/26-11 2,500,000 2,551,075
     North Range Metropolitan District #1 7.25% 12/15/31-11 3,390,000 3,829,920
     Northwest Parkway Public Highway Authority Revenue
          Series A 5.25% 6/15/41-11 (FSA) 11,100,000 11,947,041
     Pueblo County Certificates of Participation
          6.50% 12/1/24-10 5,460,000 5,958,170
     Puerto Rico Commonwealth
          Series A 5.25% 7/1/30-16  1,235,000 1,352,189
          Series B 5.00% 7/1/35-16  310,000 334,403
     Puerto Rico Public Buildings Authority Revenue 
          (Guaranteed Government Facilities) Series I
          5.25% 7/1/33-14 25,000 27,075
     University of Colorado Hospital Authority Revenue
          Series A 5.60% 11/15/31-11  3,650,000 3,936,124
81,329,587
Special Tax Revenue Bonds – 2.96%
     Baptist Road Rural Transportation Authority Sales &
          Use Tax Revenue 5.00% 12/1/26 2,000,000 1,584,700
     Park Meadows Business Improvement District Shared
          Sales Tax Revenue  
          5.30% 12/1/27 950,000 867,911
          5.35% 12/1/31 720,000 646,416
     Puerto Rico Commonwealth Government
          Development Bank (Senior Notes) Series B
          5.00% 12/1/15 1,000,000 1,015,270
     Puerto Rico Commonwealth Infrastructure Financing
          Authority Revenue Series B 5.00% 7/1/46   1,200,000 1,047,936
     Regional Transportation District Sales Tax Revenue
          Series A 5.25% 11/1/18 2,000,000 2,142,540
7,304,773
State General Obligation Bonds – 4.45%
     Puerto Rico Commonwealth
          Series A 5.25% 7/1/30 765,000 709,912
          Series B 5.00% 7/1/35 190,000 170,704

29

Statements of net assets
Delaware Tax-Free Colorado Fund

       Principal amount        Value
Municipal Bonds (continued)
State General Obligation Bonds (continued)
     Puerto Rico Commonwealth Public Improvement Series A
          5.25% 7/1/15 $ 1,650,000   $ 1,704,120
          5.25% 7/1/21 4,000,000 3,887,640
          5.50% 7/1/18 1,650,000 1,699,731
     Puerto Rico Government Development Bank (Senior
          Notes) Series B 5.00% 12/1/14 1,000,000 1,025,210
     Virgin Islands Public Finance Authority Revenue
          (Gross Receipts Taxes) 5.00% 10/1/31 (ACA) 2,000,000 1,783,860
    10,981,177
Transportation Revenue Bonds – 2.28%
     Denver City & County Airport Revenue
          Series A 5.00% 11/15/25 (FGIC) 2,000,000 1,894,280
          Series B 5.00% 11/15/33 (XLCA)   4,000,000 3,741,800
5,636,080
Water & Sewer Revenue Bonds – 1.64%
     Pueblo Board of Waterworks Revenue 5.00% 11/1/21 (FSA) 1,000,000 1,015,210
     Ute Utility Water Conservancy District Revenue
          5.75% 6/15/20 (MBIA) 2,900,000 3,040,070
4,055,280
Total Municipal Bonds (cost $239,153,765) 238,587,689
 
Short-Term Investment – 0.29%
ŸVariable Rate Demand Note – 0.29%
     Colorado Housing & Finance Authority Single Family
          Mortgage Class I-B-2 3.25% 5/1/34 700,000 700,000
Total Short-Term Investment (cost $700,000) 700,000
 
Total Value of Securities – 96.95% (cost $239,853,765) 239,287,689
Receivables and Other Assets
     Net of Liabilities – 3.05% 7,534,525
Net Assets Applicable to 23,715,958
     Shares Outstanding – 100.00% $ 246,822,214

30


 
Net Asset Value – Delaware Tax-Free Colorado Fund       
     Class A ($232,850,853 / 22,375,733 Shares) $10.41  
Net Asset Value – Delaware Tax-Free Colorado Fund  
     Class B ($4,479,337 / 430,152 Shares) $10.41
Net Asset Value – Delaware Tax-Free Colorado Fund
     Class C ($9,492,024 / 910,073 Shares) $10.43
 
Components of Net Assets at February 29, 2008:
Shares of beneficial interest (unlimited authorization - no par) $ 255,312,421
Undistributed net investment income 1,649
Accumulated net realized loss on investments (7,925,780 )
Net unrealized depreciation of investments (566,076 )
Total net assets $ 246,822,214

Ÿ

Variable rate security. The rate shown is the rate as of February 29, 2008.

 
@

Illiquid security. At February 29, 2008, the aggregate amount of illiquid securities was $821,099, which represented 0.33% of the Fund's net assets. See Note 8 in “Notes to financial statements.”

 
§ Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”

Summary of abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
FSA — Insured by Financial Security Assurance
GNMA — Insured by Government National Mortgage Association
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance
XLCA — Insured by XL Capital Assurance

31

Statements of net assets
Delaware Tax-Free Colorado Fund

 
Net Asset Value and Offering Price Per Share –
     Delaware Tax-Free Colorado Fund
Net asset value Class A (A) $ 10.41
Sales charge (4.50% of offering price) (B) 0.49
Offering price $ 10.90

(A)  Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
 
(B)  See the current prospectus for purchases of $100,000 or more.

See accompanying notes

32


Delaware Tax-Free Idaho Fund February 29, 2008 (unaudited)

       Principal amount        Value
Municipal Bonds – 96.92%
Corporate Revenue Bonds – 7.22%
     Meridian Economic Industrial Development Revenue 
          (Hi-Micro Project) 5.85% 8/15/11 (AMT)   $ 1,250,000   $ 1,252,063
     Nez Perce County Pollution Control Revenue
          (Potlatch Project) 6.00% 10/1/24 2,535,000 2,343,937
     Power County Pollution Control Revenue
          (FMC Project) 5.625% 10/1/14 2,475,000 2,470,817
6,066,817
Education Revenue Bonds – 11.91%
     Boise State University Revenue
          5.00% 4/1/17 (AMBAC) 500,000 518,370
          5.375% 4/1/22 (FGIC) 15,000 15,161
          Series A 4.25% 4/1/32 (MBIA) 1,500,000 1,289,250
          Series A 5.00% 4/1/18 (FGIC) 1,500,000 1,536,285
     Idaho State University Revenue Refunding & Improvement
          5.00% 4/1/20 (FSA) 1,130,000 1,147,436
          5.00% 4/1/23 (FSA) 2,115,000 2,120,562
     North Idaho College Dormitory Housing
          Certificates of Participation 6.45% 10/1/16 1,000,000 1,001,180
     University of Idaho
          (General Refunding) Series A 5.00% 4/1/21 (AMBAC) 1,150,000 1,154,715
          Series B 4.50% 4/1/41 (FSA) 1,000,000 1,001,980
     University of Puerto Rico Series Q 5.00% 6/1/36  250,000 223,940
10,008,879
Escrowed to Maturity Bonds – 2.16%
     Puerto Rico Commonwealth Infrastructure Financing
          Authority Revenue Series A 5.375% 10/1/24 1,750,000 1,811,880
1,811,880
Health Care Revenue Bonds – 4.04%
     Idaho Health Facilities Authority Hospital Revenue
          (Idaho Elks Rehabilitation Hospital Project)
          5.30% 7/15/18 625,000 616,144
          5.45% 7/15/23 2,000,000 1,910,860
     Idaho Health Facilities Authority Revenue
          (Portneuf Medical Center Project)
          Series A 5.00% 9/1/35 (RADIAN) 1,000,000 866,110
3,393,114

33

Statements of net assets
Delaware Tax-Free Idaho Fund

       Principal amount        Value
Municipal Bonds (continued)
Housing Revenue Bonds – 6.80%
     Idaho Housing Agency Single Family Mortgage Revenue
          Series A 6.05% 7/1/13 (AMBAC) (FHA) (VA) (AMT)   $ 35,000   $ 35,784
          Series A 6.10% 7/1/16 (FHA) (VA) (AMT) 45,000 46,053
          Series A-1 6.85% 7/1/12 (AMT) 5,000 5,085
          Series B 6.45% 7/1/15 (AMT) 15,000 15,197
          Series C-2 6.35% 7/1/15 (AMT) 15,000 15,013
          Series E 6.35% 7/1/15 (FHA) (AMT) 40,000 40,038
          Series E-1 6.60% 7/1/11  5,000 5,079
          Series G-2 6.15% 7/1/15 (FHA) (VA) (AMT) 145,000 146,775
     Idaho Housing & Finance Association Single Family
          Mortgage Revenue
          Series B Class I 5.00% 7/1/37 (AMT) 1,000,000 889,050
          Series C Class III 5.35% 1/1/25 (AMT) 300,000 283,278
          Series D Class III 5.45% 7/1/23 (AMT) 1,075,000 1,037,031
          Series E Class III 4.875% 1/1/26 (AMT) 1,445,000 1,309,474
          Series E Class III 5.00% 1/1/28 (AMT) 1,000,000 945,190
          Series I Class I 5.45% 1/1/39 (MBIA) (AMT) 1,000,000 938,350
5,711,397
Lease Revenue Bonds – 7.35%
     Blaine School District #61 Certificate of Participation
          5.00% 7/30/10 (AMBAC) 750,000 777,698
     Boise City Certificate of Participation
          5.375% 9/1/20 (FGIC) (AMT)  2,100,000 2,092,818
     Boise City Revenue Series A 5.375% 12/1/31 (MBIA) 500,000 497,630
     Idaho State Building Authority Revenue
          Series A 5.00% 9/1/21 (MBIA) 1,150,000 1,150,874
          Series A 5.00% 9/1/43 (XLCA) 1,000,000 898,060
          Series B 5.00% 9/1/21 (MBIA) 750,000 753,705
6,170,785
Local General Obligation Bonds – 28.76%
     Ada & Canyon Counties Joint School District #2 Meridian
          (School Board Guaranteed Program)
          4.75% 2/15/20 1,000,000 1,012,340
          5.00% 7/30/20 2,155,000 2,184,307
          5.125% 7/30/19 1,005,000 1,035,321
          5.50% 7/30/16 1,305,000 1,449,137
     Bannock County School District #025
          (Pocatello Idaho School Board Guaranteed Program)
          5.00% 8/15/15 1,040,000 1,116,128
          5.00% 8/15/16 1,100,000 1,170,114

34


       Principal amount        Value
Municipal Bonds (continued)
Local General Obligation Bonds (continued)
     Boise City Independent School District 5.00% 8/1/24 (FSA) $ 1,500,000 $ 1,503,300
     Boise Urban Renewal Agency Parking Revenue
          (Tax Increment)
          Series A 6.125% 9/1/15 1,460,000 1,470,921
          Series B 6.125% 9/1/15 1,195,000 1,203,939
     Bonner County Local Improvement District #93-1 
          6.50% 4/30/08 110,000 110,485
          6.50% 4/30/10 60,000 60,216
     Canyon County School District #132 (Caldwell) 
          5.00% 7/30/15 (FGIC) 2,000,000 2,137,560
          Series A 5.00% 9/15/22 (FSA) 1,725,000 1,753,583
          Series A 5.00% 9/15/23 (FSA) 1,810,000 1,827,032
     Coeur D’Alene Local Improvement District #6
          Series 1995 6.00% 7/1/09  85,000 85,813
          Series 1996 6.05% 7/1/10  90,000 90,787
          Series 1997 6.10% 7/1/12  40,000 40,294
          Series 1998 6.10% 7/1/14  45,000 45,281
     Lemhi County 5.20% 8/1/27 (FSA) 2,145,000 2,139,701
     Nampa Idaho 5.00% 8/1/21 (FGIC) 2,475,000     2,508,585
     Power & Cassia Counties Joint School District #381
          (American Falls) 5.00% 8/1/17 1,155,000 1,211,410
24,156,254
§Pre-Refunded Bonds – 14.39%
     Boise State University Revenue Refunding & Improvement    
          5.125% 4/1/31-12 (FGIC)    1,000,000 1,067,860
          5.375% 4/1/22-12 (FGIC)  985,000 1,061,180
     Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue
          Series D 5.25% 7/1/38-12  1,000,000 1,074,210
          Series G 5.00% 7/1/33-13  1,310,000 1,410,490
          Series Y 5.00% 7/1/36-16  1,250,000 1,348,400
     Puerto Rico Commonwealth Public Improvement Revenue
          Series A 5.125% 7/1/31-11  1,010,000 1,072,539
     Puerto Rico Electric Power Authority Revenue
          Series II 5.25% 7/1/31-12  1,000,000 1,084,960
          Series NN 5.125% 7/1/29-13  500,000 541,385
     Puerto Rico Public Buildings Authority Revenue 
          (Government Facilities) Series I 5.50% 7/1/23-14 1,000,000 1,096,980

35

Statements of net assets
Delaware Tax-Free Idaho Fund

       Principal amount        Value
Municipal Bonds (continued)
§Pre-Refunded Bonds (continued)
     University of Idaho Revenue (Student Fee Housing
          Improvements Project) 5.25% 4/1/31-11 (FGIC)   $ 2,195,000   $ 2,330,607
12,088,611
Special Tax Revenue Bonds – 4.93%
     Idaho Board Bank Authority Revenue Series B
          4.125% 9/15/36 (MBIA) 755,000 611,731
          5.00% 9/15/30 (MBIA) 725,000 711,522
     Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series W 5.50% 7/1/15 175,000 186,184
     Puerto Rico Sales Tax Financing Revenue
          Series A 5.25% 8/1/57 1,000,000 901,851
     Virgin Islands Public Finance Authority Revenue
          (Senior Lien-Matching Fund Loan Note) Series A
          5.25% 10/1/20 500,000 489,835
          5.25% 10/1/21 500,000 483,710
          5.25% 10/1/24 800,000 755,512
4,140,345
State General Obligation Bonds – 3.66%
     Puerto Rico Commonwealth Public Improvement
          (Unrefunded Balance) Series A 5.125% 7/1/31 2,315,000 2,113,572
          Series A 5.25% 7/1/22 1,000,000 961,920
3,075,492
Transportation Revenue Bonds – 3.10%
     Idaho Housing & Finance Association Highway Trust
          5.00% 7/15/24 (MBIA) 2,000,000 1,982,240
     Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series G 5.00% 7/1/33 690,000 618,813
2,601,053
Water & Sewer Revenue Bonds – 2.60%
     Moscow Sewer Revenue 5.00% 11/1/22 (FSA) 2,175,000 2,187,441
2,187,441
Total Municipal Bonds (cost $82,870,398) 81,412,068

36


       Number of shares        Value
Short-Term Investment – 0.25%
Money Market Instrument – 0.25%
     Dreyfus Cash Management Fund   214,410 $ 214,410  
Total Short-Term Investment (cost $214,410) 214,410
 
Total Value of Securities – 97.17% (cost $83,084,808) 81,626,478
Receivables and Other Assets
     Net of Liabilities – 2.83% 2,373,704
Net Assets Applicable to 7,676,270
     Shares Outstanding – 100.00%     $ 84,000,182
 
Net Asset Value – Delaware Tax-Free Idaho Fund
     Class A ($67,741,016 / 6,189,206 Shares) $10.95
Net Asset Value – Delaware Tax-Free Idaho Fund
     Class B ($5,323,193 / 487,214 Shares)  $10.93
Net Asset Value – Delaware Tax-Free Idaho Fund
     Class C ($10,935,973 / 999,850 Shares)  $10.94
 
Components of Net Assets at February 29, 2008:
Shares of beneficial interest (unlimited authorization – no par) $ 85,773,213
Distributions in excess of net investment income (11,301 )
Accumulated net realized loss on investments (303,400 )
Net unrealized depreciation of investments (1,458,330 )
Total net assets $ 84,000,182

§ 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.”

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

37

Statements of net assets
Delaware Tax-Free Idaho Fund

 
Net Asset Value and Offering Price Per Share –
     Delaware Tax-Free Idaho Fund
Net asset value Class A (A) $ 10.95
Sales charge (4.50% of offering price) (B) 0.52
Offering price $ 11.47

(A)  Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
 
(B)  See current prospectus for purchases of $100,000 or more.

See accompanying notes

38


Delaware Tax-Free New York Fund February 29, 2008 (unaudited)

    Principal amount         Value
Municipal Bonds – 96.70%           
Corporate Revenue Bonds – 6.21%      
     New York City Industrial Development Agency Revenue      
          (Brooklyn Navy Yard Cogen Partners)      
          5.75% 10/1/36 (AMT) $ 450,000 $ 402,125
     New York Energy Research & Development Authority      
          Pollution Control Revenue (Central Hudson Gas)      
          Series A 5.45% 8/1/27 (AMBAC) 500,000   501,210
     Suffolk County Industrial Development Agency Revenue      
          (Keyspan-Port Jefferson Energy Center)      
          5.25% 6/1/27 (AMT) 250,000   231,830
      1,135,165
Education Revenue Bonds – 13.17%      
     Albany Industrial Development Agency Civic Facilities      
          Revenue (Brighter Choice Charter School)      
          Series A 5.00% 4/1/37 250,000   195,485
     Amherst Industrial Development Agency Civic Facilities      
          Revenue (UBF Faculty Student Housing)      
          Series A 5.75% 8/1/30 (AMBAC) 200,000   202,790
     Dutchess County Industrial Development      
          Agency (Marist College) 5.00% 7/1/20 500,000   501,125
     New York City Industrial Development Agency Civic      
          Facilities Revenue (Vaughn College Aeronautics)      
          Series B 5.25% 12/1/36 150,000   122,157
     New York State Dormitory Authority Revenue      
          (Columbia University) Series A 5.00% 7/1/23 500,000   501,360
        DNon-State Supported Debt (University of Rochester)      
          Series A 4.375% 7/1/20 250,000   205,505
          (Pratt Institute) 6.00% 7/1/20 (RADIAN) 500,000   509,134
          Series B 7.50% 5/15/11 155,000   169,466
      2,407,022
Health Care Revenue Bonds – 8.67%      
     East Rochester Housing Authority Revenue      
          (Senior Living-Woodland Village Project)      
          5.50% 8/1/33 200,000   170,122

39

Statements of net assets
Delaware Tax-Free New York Fund

    Principal amount         Value
Municipal Bonds (continued)           
Health Care Revenue Bonds (continued)      
     New York Dormitory Authority Revenue      
          (Chapel Oaks) 5.45% 7/1/26 (LOC, Allied Irish Bank) $ 450,000 $ 450,455
          (Mental Health) Series D 5.90% 2/15/12 25,000   25,308
          (Millard Fillmore Hospital) 5.375% 2/1/32 (AMBAC) (FHA) 450,000   447,881
          (Winthrop South Nassau Hospital) Series B 5.50% 7/1/23 500,000   490,324
      1,584,090
Housing Revenue Bonds – 1.21%      
     New York City Multifamily Housing      
          Development Housing Revenue      
          Series G-1 4.875% 11/1/39 (AMT)  250,000   220,560
      220,560
Lease Revenue Bonds – 7.40%      
     Battery Park City Authority Revenue      
          Series A 5.00% 11/1/26 250,000   250,473
     Nassau County Tobacco Settlement (Asset-Backed)       
          Series A-3 5.125% 6/1/46 125,000   110,430
     New York Urban Development Correctional & Youth      
          Facilities Services Contract Revenue      
          Series A 5.50% 1/1/17 250,000   263,630
     Tobacco Settlement Financing Authority Revenue       
          (Asset-Backed) Series B-1C      
          5.50% 6/1/20 200,00   208,114
          5.50% 6/1/21 500,000   519,105
      1,351,752
Local General Obligation Bonds – 3.43%      
     New York City      
          Series D 5.00% 11/1/34 125,000   118,355
          Subordinated series C-1 5.00% 10/1/19 500,000   509,325
      627,680
§Pre-Refunded Bonds – 23.46%       
     Albany Parking Authority Revenue      
          Series A 5.625% 7/15/25-11 280,000   304,475
     Metropolitan Transportation Authority      
          Revenue (Dedicated Tax)      
          Series A 6.125% 4/1/17-10 (FGIC) 1,000,000   1,064,979
     New York City Series J 5.25% 6/1/28-13 310,000   337,215
     New York Dormitory Authority Revenue      
          (North Shore Long Island Jewish Group Project)      
          5.50% 5/1/33-13 500,000   548,770
          Series B 7.50% 5/15/11-09 130,000   139,876

40


  Principal amount         Value
Municipal Bonds (continued)           
§Pre-Refunded Bonds (continued)      
     Puerto Rico Commonwealth Highway &      
          Transportation Authority Revenue      
          Series Y 5.50% 7/1/36-16 $ 475,000 $ 529,169
     Puerto Rico Commonwealth      
          Series B 5.25% 7/1/32-16 155,000   169,708
     Puerto Rico Electric Power Authority Revenue      
          Series II 5.25% 7/1/31-12 500,000   542,480
          Series NN 5.125% 7/1/29-13 600,000   649,662
      4,286,334
Special Tax Revenue Bonds – 17.18%      
     New York City Transitional Finance Authority Revenue      
          (Subordinate Future Tax Secured)      
          Series B 5.00% 11/1/18 500,000   526,150
     New York Dormitory Authority State      
          Personal Income Tax Revenue      
          Series C 5.00% 3/15/15 250,000   268,768
     New York Dormitory Authority State Supported Debt      
          Revenue (Consolidated Services Contract)      
          5.00% 7/1/17 (FSA) 500,000   533,994
     New York Sales Tax Asset Receivables      
          Series A 5.25% 10/15/27 (AMBAC) 500,000   503,585
     New York Urban Development State      
          Personal Income Tax      
          Series A-1 5.00% 12/15/22 250,000   252,685
     Puerto Rico Commonwealth Infrastructure      
          Financing Authority Revenue      
          Series B 5.00% 7/1/15 250,000   256,860
     Puerto Rico Sales Tax Financing Revenue      
          Series A 5.25% 8/1/57 325,000   293,101
     Schenectady Metroplex Development Authority Revenue      
          Series A 5.375% 12/15/21 500,000   504,050
      3,139,193
State General Obligation Bonds – 0.48%      
     Puerto Rico Commonwealth      
          Series B 5.25% 7/1/32 95,000   88,341
      88,341

41

Statements of net assets
Delaware Tax-Free New York Fund

 Principal amount         Value
Municipal Bonds (continued)           
Transportation Revenue Bonds – 12.79%       
     Albany Parking Authority Revenue      
          Series A 5.625% 7/15/25  $ 220,000 $ 219,864
     Metropolitan Transportation Authority Revenue      
          Series A 5.00% 11/15/27  200,000   210,140
          Series F 5.00% 11/15/15  150,000   158,565
     New York City Industrial Development Agency Special      
          Airport Facilities (JFK Airis Project)       
          Series A 5.50% 7/1/28 (AMT) 500,000   437,350
     New York State Thruway Authority General Revenue        
          Series H 5.00% 1/1/14 (MBIA) 500,000   537,090
          5.00% 1/1/15 (MBIA) 250,000   268,530
     Onondaga County Industrial Development Authority      
          Revenue (Subordinated Air Cargo Project)      
          7.25% 1/1/32 (AMT) 500,000   506,010
      2,337,549
Water & Sewer Revenue Bonds – 2.70%       
     New York City Municipal Finance Authority      
          Water & Sewer System Revenue      
          Series A 5.125% 6/15/34  500,000   493,210
      493,210
Total Municipal Bonds (cost $17,668,126)     17,670,896
 
Short-Term Investment – 1.64%           
ŸVariable Rate Demand Notes – 1.64%      
     New York City Municipal Finance Authority      
          Water & Sewer System Revenue      
          Series F-1 3.05% 2/1/18  300,000   300,000
Total Short-Term Investment (cost $300,000)     300,000
 
Total Value of Securities – 98.34% (cost $17,968,126)     17,970,896
Receivables and Other Assets       
     Net of Liabilities – 1.66%      302,983
Net Assets Applicable to 1,816,202       
     Shares Outstanding – 100.00%    $ 18,273,879

42


 
Net Asset Value – Delaware Tax-Free New York Fund     
     Class A ($14,459,011 / 1,436,375 Shares)  $10.07  
Net Asset Value – Delaware Tax-Free New York Fund   
     Class B ($1,664,909 / 165,762 Shares)  $10.04  
Net Asset Value – Delaware Tax-Free New York Fund    
     Class C ($2,149,959 / 214,065 Shares)  $10.04  
 
Components of Net Assets at February 29, 2008:     
Shares of beneficial interest (unlimited authorization – no par)  $18,470,970  
Distributions in excess of net investment income  (1,752 )
Accumulated net realized loss on investments  (198,109 )
Net unrealized appreciation of investments  2,770  
Total net assets  $18,273,879  

D Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
§ Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”
· Variable rate security. The rate shown is the rate as of February 29, 2008.

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
LOC — Letter of Credit
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance

43

Statements of net assets
Delaware Tax-Free New York Fund

 
Net Asset Value and Offering Price Per Share –     
     Delaware Tax-Free New York Fund   
Net asset value Class A (A)    $10.07
Sales charge (4.50% of offering price) (B)  0.47
Offering price    $10.54

(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

44

Statements of operations

Six Months Ended February 29, 2008 (Unaudited)

        Delaware Tax-Free       Delaware Tax-Free       Delaware Tax-Free
  Arizona Fund California Fund Colorado Fund
Investment Income:               
     Interest  $ 3,472,014   $ 2,436,100   $ 6,660,010  
 
Expenses:       
     Management fees  357,330   266,529   717,847  
     Distribution expenses – Class A  154,358   93,418   308,014  
     Distribution expenses – Class B  58,734   43,577   24,499  
     Distribution expenses – Class C  39,235   67,897   50,563  
     Dividend disbursing and transfer agent       
          fees and expenses  30,815   21,268   66,287  
     Accounting and administration expenses  28,579   19,379   52,194  
     Legal fees  18,208   15,132   26,249  
     Registration fees  9,938   10,263   4,080  
     Audit and tax  8,379   6,751   12,171  
     Reports and statements to shareholders  6,507   2,656   12,531  
     Trustees’ fees  3,466   2,353   6,330  
     Pricing fees  2,109   2,273   2,612  
     Custodian fees  2,082   2,231   3,313  
     Insurance fees  1,911   1,246   3,554  
     Consulting fees  1,344   941   2,409  
     Trustees’ expenses  607   417   1,140  
     Dues and services  286   209   581  
     Taxes (other than taxes on income)    69     77     202  
  723,957   556,617   1,294,576  
     Less expenses absorbed or waived    (112,280 )   (44,819 )    (20,040 ) 
     Total operating expenses    611,677     511,798     1,274,536  
Net Investment Income    2,860,337     1,924,302     5,385,474  
 
Net Realized and Unrealized Gain       
     (Loss) on Investments:       
     Net realized gain (loss) on investments  61,078   (411,624 )  (49,962 ) 
     Net change in unrealized appreciation/       
          depreciation of investments    (5,688,825 )   (4,570,549 )    (7,390,517 ) 
Net Realized and Unrealized Loss       
     on Investments    (5,627,747 )   (4,982,173 )    (7,440,479 ) 
 
Net Decrease in Net Assets       
     Resulting from Operations  $ (2,767,410 ) $ (3,057,871 )  $ (2,055,005 ) 

See accompanying notes

45

Statements of operations
Six Months Ended February 29, 2008 (Unaudited)

        Delaware Tax-Free       Delaware Tax-Free
  Idaho Fund New York Fund
Investment Income:               
     Interest  $ 2,053,585   $ 456,321  
 
Expenses:       
     Management fees  240,308     52,129  
     Distribution expenses – Class A  88,233     18,486  
     Distribution expenses – Class B  28,392     10,082  
     Distribution expenses – Class C  56,108     10,887  
     Dividend disbursing and transfer agent       
          fees and expenses  21,066     7,141  
     Accounting and administration expenses  17,473     3,790  
     Legal fees  12,648     3,269  
     Audit and tax  6,222     5,423  
     Reports and statements to shareholders  4,055     1,078  
     Pricing fees  2,738     2,472  
     Trustees’ fees  2,120     460  
     Registration fees  1,835     4,330  
     Insurance fees  1,222     262  
     Custodian fees  1,177     70  
     Consulting fees  893     177  
     Trustees’ expenses  378     82  
     Dues and services  233     35  
     Taxes (other than taxes on income)    —     4  
  485,101     120,177  
     Less expenses absorbed or waived  (48,916 )    (23,557 ) 
     Less expense paid indirectly    (63 )    (27 ) 
     Total operating expenses    436,122     96,593  
Net Investment Income    1,617,463      359,728  
 
Net Realized and Unrealized Gain       
     (Loss) on Investments:       
     Net realized gain (loss) on investments  83,789     (32,681 ) 
     Net change in unrealized appreciation/depreciation of       
          investments    (2,508,186 )    (382,406 ) 
Net Realized and Unrealized Loss       
     on Investments    (2,424,397 )     (415,087 ) 
 
Net Decrease in Net Assets       
     Resulting from Operations  $ (806,934 )  $ (55,359 ) 

See accompanying notes

46

Statements of changes in net assets
Delaware Tax-Free Arizona Fund

    Six Months           Year  
    Ended     Ended  
    2/29/08     8/31/07  
    (Unaudited)      
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $ 2,860,337   $ 6,056,280  
     Net realized gain on investments    61,078     490,852  
     Net change in unrealized         
          appreciation/depreciation of investments    (5,688,825 )   (4,262,046 )
     Net increase (decrease) in net assets resulting         
          from operations    (2,767,410 )   2,285,086  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (2,532,489 )   (5,301,244 )
          Class B    (196,740 )   (493,503 )
          Class C    (131,083 )   (261,558 )
    (2,860,312 )   (6,056,305 )
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    6,218,048     14,817,310  
          Class B    112     42,624  
          Class C    984,662     1,326,619  
 
Net asset value of shares issued upon reinvestment         
     of dividends and distributions:         
          Class A    1,254,297     2,683,432  
          Class B    103,021     254,872  
          Class C    81,883     151,832  
    8,642,023     19,276,689  

48


    Six Months           Year  
    Ended     Ended  
    2/29/08     8/31/07  
    (Unaudited)      
Capital Share Transactions (continued):         
     Cost of shares repurchased:         
          Class A  $ (10,589,487 ) $ (20,096,086 )
          Class B    (1,623,946 )   (3,954,487 )
          Class C    (622,033 )   (1,800,542 )
    (12,835,466 )   (25,851,115 )
Decrease in net assets derived from         
     capital share transactions    (4,193,443 )   (6,574,426 )
Net Decrease in Net Assets    (9,821,165 )   (10,345,645 )
 
Net Assets:         
     Beginning of period    145,652,202     155,997,847  
     End of period1  $ 135,831,037   $ 145,652,202  
 
   1Including distributions in excess of         
          net investment income  $ —   $ (25 )

See accompanying notes

49

Statements of changes in net assets
Delaware Tax-Free California Fund

  Six Months  Year 
  Ended  Ended 
        2/29/08        8/31/07 
  (Unaudited)         
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $  1,924,302   $  4,052,743  
     Net realized loss on investments    (411,624 )    (115,067 ) 
     Net change in unrealized         
          appreciation/depreciation of investments    (4,570,549 )    (3,513,338 ) 
     Net increase (decrease) in net assets resulting         
          from operations    (3,057,871 )    424,338  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (1,547,489 )    (3,215,450 ) 
          Class B    (147,030 )    (394,961 ) 
          Class C    (229,783 )    (442,332 ) 
    (1,924,302 )    (4,052,743 ) 
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    7,593,071     22,710,407  
          Class B    39,768     156,402  
          Class C    2,275,359     3,562,422  
 
Net asset value of shares issued upon reinvestment         
     of dividends and distributions:         
          Class A    903,819     1,801,612  
          Class B    103,301       248,614  
          Class C      173,469     301,848  
    11,088,787     28,781,305  

50


  Six Months Year
  Ended Ended
        2/29/08       8/31/07
  (Unaudited)    
Capital Share Transactions (continued):         
     Cost of shares repurchased:         
          Class A  $  (12,436,203 )  $  (21,163,745 ) 
          Class B    (1,466,114 )    (5,609,946 ) 
          Class C    (1,834,683 )    (2,686,047 ) 
    (15,737,000 )    (29,459,738 ) 
Decrease in net assets derived from         
     capital share transactions    (4,648,213 )    (678,433 ) 
Net Decrease in Net Assets    (9,630,386 )    (4,306,838 ) 
 
Net Assets:         
     Beginning of period    99,373,791     103,680,629  
     End of period1  $  89,743,405   $  99,373,791  
 
    1Including undistributed         
          net investment income    $  1,300     $  1,300  

See accompanying notes

51

Statements of changes in net assets
Delaware Tax-Free Colorado Fund

  Six Months  Year 
  Ended  Ended 
  2/29/08        8/31/07 
        (Unaudited)     
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $  5,385,474   $  11,447,349  
     Net realized gain (loss) on investments    (49,962 )    1,009,130  
     Net change in unrealized         
          appreciation/depreciation of investments    (7,390,517 )    (8,914,311 ) 
     Net increase (decrease) in net assets resulting         
          from operations    (2,055,005 )    3,542,168  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (5,157,193 )    (10,862,047 ) 
          Class B    (84,156 )    (226,901 ) 
          Class C    (173,272 )    (350,030 ) 
    (5,414,621 )    (11,438,978 ) 
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    5,415,270     12,562,366  
          Class B    —     21,748  
          Class C    227,248     1,895,269  
 
Net asset value of shares issued upon reinvestment         
     of dividends and distributions:         
          Class A    3,276,693     6,872,419  
          Class B    40,822     123,164  
          Class C    120,857       249,264  
      9,080,890     21,724,230  

52


  Six Months Year
  Ended Ended
  2/29/08       8/31/07
        (Unaudited)    
Capital Share Transactions (continued):         
     Cost of shares repurchased:         
          Class A  $  (15,480,077 )  $  (24,077,528 ) 
          Class B    (759,130 )    (2,883,605 ) 
          Class C    (722,648 )    (1,658,066 ) 
    (16,961,855 )    (28,619,199 ) 
Decrease in net assets derived from         
     capital share transactions    (7,880,965 )    (6,894,969 ) 
Net Decrease in Net Assets    (15,350,591 )    (14,791,779 ) 
 
Net Assets:         
     Beginning of period    262,172,805     276,964,584  
     End of period1  $  246,822,214   $  262,172,805  
 
    1Including undistributed (distributions in excess of)         
          net investment income    $  1,649     $  (46 ) 

See accompanying notes

53

Statements of changes in net assets
Delaware Tax-Free Idaho Fund

  Six Months  Year 
  Ended  Ended 
  2/29/08        8/31/07 
        (Unaudited)     
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $  1,617,463   $  3,152,236  
     Net realized gain on investments    83,789     16,031  
     Net change in unrealized         
          appreciation/depreciation of investments    (2,508,186 )    (1,398,888 ) 
     Net increase (decrease) in net assets resulting         
          from operations    (806,934 )    1,769,379  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (1,354,731 )    (2,530,731 ) 
          Class B    (87,914 )    (228,879 ) 
          Class C    (173,475 )    (389,967 ) 
    (1,616,120 )    (3,149,577 ) 
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    2,804,455     14,990,872  
          Class B    —     572,489  
          Class C    743,074     887,588  
 
Net asset value of shares issued upon reinvestment         
     of dividends and distributions:         
          Class A    883,046     1,630,892  
          Class B    59,734     138,424  
          Class C      106,957     241,640  
    4,597,266       18,461,905  

54


  Six Months Year
  Ended Ended
  2/29/08       8/31/07
        (Unaudited)    
Capital Share Transactions (continued):         
     Cost of shares repurchased:         
          Class A  $  (3,924,856 )  $  (8,413,693 ) 
          Class B    (591,444 )    (2,488,934 ) 
          Class C    (1,126,359 )    (2,840,485 ) 
    (5,642,659 )    (13,743,112 ) 
Increase (decrease) in net assets derived from         
     capital share transactions    (1,045,393 )    4,718,793  
Net Increase (Decrease) in Net Assets    (3,468,447 )    3,338,595  
 
Net Assets:         
     Beginning of period    87,468,629     84,130,034  
     End of period1  $  84,000,182   $  87,468,629  
 
    1Including distributions in excess of           
          net investment income  $  (11,301 )    $  (11,253 ) 

See accompanying notes

55

Statements of changes in net assets
Delaware Tax-Free New York Fund

  Six Months  Year 
  Ended  Ended 
  2/29/08        8/31/07 
        (Unaudited)     
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $  359,728   $  743,181  
     Net realized gain (loss) on investments    (32,681 )    62,452  
     Net change in unrealized         
          appreciation/depreciation of investments    (382,406 )    (521,401 ) 
     Net increase (decrease) in net assets resulting         
          from operations    (55,359 )    284,232  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (293,200 )    (590,536 ) 
          Class B    (32,537 )    (85,737 ) 
          Class C    (35,088 )    (66,908 ) 
    (360,825 )    (743,181 ) 
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    655,974     2,521,809  
          Class B    15,685     33,616  
          Class C    397,848     494,335  
 
Net asset value of shares issued upon reinvestment         
     of dividends and distributions:         
          Class A    172,246     415,794  
          Class B      17,347     35,753  
          Class C    14,422       26,806  
    1,273,522     3,528,113  

56


  Six Months Year
  Ended Ended
  2/29/08       8/31/07
        (Unaudited)    
Capital Share Transactions (continued):       
     Cost of shares repurchased:       
          Class A  $ (847,423 )  $  (1,282,643 ) 
          Class B  (504,121 )    (712,045 ) 
          Class C    (343,958 )    (407,314 ) 
    (1,695,502 )    (2,402,002 ) 
Increase (decrease) in net assets derived from       
     capital share transactions    (421,980 )    1,126,111  
Net Increase (Decrease) in Net Assets  (838,164 )    667,162  
 
Net Assets:       
     Beginning of period    19,112,043     18,444,881  
     End of period1  $ 18,273,879   $  19,112,043  
 
    1Including distributions in excess of             
          net investment income  $ (1,752 )  $  (655 ) 

See accompanying notes

57

Financial highlights
Delaware Tax-Free Arizona Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Net realized gain on investments 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
       prior to expense limitation and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
       prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

58


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                              
  $11.070     $11.350     $11.560     $11.410     $11.160     $11.530  
  
 
0.228   0.465   0.467   0.468   0.469   0.502  
(0.450 )  (0.280 )  (0.210 )  0.174   0.308   (0.253 ) 
(0.222 )  0.185   0.257   0.642   0.777   0.249  
 
 
(0.228 )  (0.465 )  (0.467 )  (0.468 )  (0.469 )  (0.502 ) 
—   —   —   (0.024 )  (0.058 )  (0.117 ) 
(0.228 )  (0.465 )  (0.467 )  (0.492 )  (0.527 )  (0.619 ) 
 
  $10.620     $11.070     $11.350     $11.560     $11.410     $11.160  
 
(2.08% )  1.63%   2.31%   5.74%   7.09%   2.17%  
 
 
  $117,641     $125,636     $131,468     $134,874     $122,436     $129,683  
0.75%   0.76%   0.76%   0.80%   0.90%   0.86%  
 
0.91%   0.91%   0.91%   0.91%   0.90%   0.91%  
4.11%   4.11%   4.12%   4.07%   4.14%   4.37%  
 
3.95%     3.96%     3.97%     3.96%   4.14%   4.32%  
  35%      9%      8%     3%      19%     29%   

59

Financial highlights
Delaware Tax-Free Arizona Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

60


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06 8/31/05 8/31/04   8/31/03
(Unaudited)    
$11.070 $11.360   $11.570   $11.420   $11.170   $11.540
 
 
0.187 0.380 0.382 0.382 0.384 0.416
(0.440 ) (0.290 ) (0.210 ) 0.174 0.308 (0.253 )
(0.253 ) 0.090 0.172 0.556 0.692 0.163
 
 
(0.187 ) (0.380 ) (0.382 ) (0.382 ) (0.384 ) (0.416 )
— — — (0.024 ) (0.058 ) (0.117 )
(0.187 ) (0.380 ) (0.382 ) (0.406 ) (0.442 ) (0.533 )
 
$10.630 $11.070 $11.360 $11.570 $11.420 $11.170
 
(2.36% ) 0.78% 1.54% 4.95% 6.28% 1.41%
 
 
$10,462 $12,407 $16,413 $19,005 $13,355 $14,666
1.50% 1.51% 1.51% 1.55% 1.65% 1.61%
 
1.66% 1.66% 1.66% 1.66% 1.65% 1.66%
3.36% 3.36% 3.37% 3.32% 3.39% 3.62%
 
3.20% 3.21% 3.22% 3.21% 3.39% 3.57%
35% 9% 8% 3% 19% 29%

61

Financial highlights
Delaware Tax-Free Arizona Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

62


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)        
$11.090 $11.380 $11.580 $11.430 $11.180 $11.550
 
 
0.186 0.380 0.381 0.382 0.384 0.415
(0.440 ) (0.290 ) (0.200 ) 0.174 0.308 (0.253 )
(0.254 ) 0.090 0.181 0.556 0.692 0.162
 
 
(0.186 ) (0.380 ) (0.381 ) (0.382 ) (0.384 ) (0.415 )
— — — (0.024 ) (0.058 ) (0.117 )
(0.186 ) (0.380 ) (0.381 ) (0.406 ) (0.442 ) (0.532 )
 
$10.650 $11.090 $11.380 $11.580 $11.430 $11.180
 
(2.35% ) 0.77% 1.63% 4.94% 6.27% 1.40%
 
 
$7,728 $7,609 $8,117 $8,591 $6,651 $8,544
1.50% 1.51% 1.51% 1.55% 1.65% 1.61%
 
1.66% 1.66% 1.66% 1.66% 1.65% 1.66%
3.36% 3.36% 3.37% 3.32% 3.39% 3.62%
 
3.20% 3.21% 3.22% 3.21% 3.39% 3.57%
35% 9% 8% 3% 19% 29%

63

Financial highlights
Delaware Tax-Free California Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

64


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)          
$11.010 $11.400 $11.490 $11.110 $10.750 $11.010
 
 
0.229 0.454 0.450 0.462 0.518 0.537
(0.570 ) (0.390 ) (0.090 ) 0.380 0.360 (0.260 )
(0.341 ) 0.064 0.360 0.842 0.878 0.277
 
 
(0.229 ) (0.454 ) (0.450 ) (0.462 ) (0.518 ) (0.537 )
(0.229 ) (0.454 ) (0.450 ) (0.462 ) (0.518 ) (0.537 )
 
$10.440 $11.010 $11.400 $11.490 $11.110 $10.750
 
(3.19% ) 0.51% 3.24% 7.72% 8.34% 2.51%
 
 
$68,777 $76,537 $75,995 $60,744 $24,797 $22,169
0.88% 0.89% 0.88% 0.84% 0.50% 0.50%
 
0.98% 0.97% 0.97% 1.06% 0.96% 0.93%
4.16% 3.98% 3.97% 4.03% 4.72% 4.84%
 
4.06% 3.90% 3.88% 3.81% 4.26% 4.41%
42% 21% 14% 11% 48% 56%

65

Financial highlights
Delaware Tax-Free California Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

66


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)        
$11.060 $11.440 $11.530 $11.160 $10.790 $11.050
 
 
0.187 0.368 0.365 0.377 0.436 0.453
(0.580 ) (0.380 ) (0.090 ) 0.370 0.370 (0.260 )
(0.393 ) (0.012 ) 0.275 0.747 0.806 0.193
 
 
(0.187 ) (0.368 ) (0.365 ) (0.377 ) (0.436 ) (0.453 )
(0.187 ) (0.368 ) (0.365 ) (0.377 ) (0.436 ) (0.453 )
 
$10.480 $11.060 $11.440 $11.530 $11.160 $10.790
 
(3.63% ) (0.15% ) 2.46% 6.80% 7.60% 1.73%
 
 
$7,647 $9,384 $14,918 $18,254 $14,530 $16,165
1.63% 1.64% 1.63% 1.59% 1.25% 1.25%
 
1.73% 1.72% 1.72% 1.81% 1.71% 1.68%
3.41% 3.23% 3.22% 3.28% 3.97% 4.09%
 
3.31% 3.15% 3.13% 3.06% 3.51% 3.66%
42% 21% 14% 11% 48% 56%

67

Financial highlights
Delaware Tax-Free California Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

68


Six Months Ended Year Ended
2/29/081 8/31/07   8/31/06   8/31/05   8/31/04   8/31/03
(Unaudited)          
$11.030 $11.420 $11.500 $11.130 $10.760 $11.020
 
 
0.187 0.368 0.365 0.377 0.436 0.454
(0.570 ) (0.390 ) (0.080 ) 0.370 0.370 (0.260 )
(0.383 ) (0.022 ) 0.285 0.747 0.806 0.194
 
 
(0.187 ) (0.368 ) (0.365 ) (0.377 ) (0.436 ) (0.454 )
(0.187 ) (0.368 ) (0.365 ) (0.377 ) (0.436 ) (0.454 )
 
$10.460 $11.030 $11.420 $11.500 $11.130 $10.760
 
(3.55% ) (0.24% ) 2.56% 6.81% 7.62% 1.74%
 
 
$13,319 $13,453 $12,768 $9,756 $5,595 $7,013
1.63% 1.64% 1.63% 1.59% 1.25% 1.25%
 
1.73% 1.72% 1.72% 1.81% 1.71% 1.68%
3.41% 3.23% 3.22% 3.28% 3.97% 4.09%
 
3.31% 3.15% 3.13% 3.06% 3.51% 3.66%
42% 21% 14% 11% 48% 56%

69

Financial highlights
Delaware Tax-Free Colorado Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

70


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
(Unaudited)  
  $10.730     $11.040   $11.200   $11.070   $10.830   $11.080
 
 
0.227 0.464 0.488 0.495 0.510 0.527
(0.319 ) (0.310 ) (0.160 ) 0.130 0.240 (0.250 )
(0.092 ) 0.154 0.328 0.625 0.750 0.277
 
 
(0.228 ) (0.464 ) (0.488 ) (0.495 ) (0.510 ) (0.527 )
(0.228 ) (0.464 ) (0.488 ) (0.495 ) (0.510 ) (0.527 )
 
  $10.410   $10.730   $11.040   $11.200   $11.070   $10.830
 
(0.94% ) 1.38% 3.03% 5.78% 7.04% 2.52%
 
 
  $232,851   $246,695   $258,773   $270,149   $276,534   $299,528  
0.93% 0.94% 0.93% 0.94% 0.95%   0.99%
 
0.95% 0.96% 0.94% 0.94% 0.95% 0.99%
4.18% 4.22% 4.43% 4.46% 4.63% 4.76%
 
4.16% 4.20% 4.42% 4.46% 4.63% 4.76%
16% 12% 8% 8% 13% 30%

71

Financial highlights
Delaware Tax-Free Colorado Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
     prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
     prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

72


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06   8/31/05 8/31/04 8/31/03
(Unaudited)  
$10.730 $11.050 $11.200 $11.080 $10.830 $11.090
   
   
0.186 0.382 0.405 0.412 0.427 0.444
(0.319 ) (0.320 ) (0.150 ) 0.120 0.250 (0.260 )
(0.133 ) 0.062 0.255 0.532 0.677 0.184
 
 
(0.187 )   (0.382 )   (0.405 )   (0.412 )   (0.427 )   (0.444 )
(0.187 ) (0.382 ) (0.405 ) (0.412 ) (0.427 ) (0.444 )
 
$10.410 $10.730 $11.050 $11.200   $11.080 $10.830
 
(1.30% ) 0.53% 2.35% 4.89% 6.34%   1.66%
 
 
$4,479 $5,326 $8,221 $10,370 $12,411 $13,108
1.68% 1.69% 1.68% 1.69% 1.70% 1.74%
 
1.70% 1.71% 1.69% 1.69% 1.70% 1.74%
3.43% 3.47% 3.68% 3.71% 3.88% 4.01%
 
3.41% 3.45% 3.67% 3.71% 3.88% 4.01%
16% 12% 8% 8% 13% 30%

73

Financial highlights
Delaware Tax-Free Colorado Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
     prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
     prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

74


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
(Unaudited)
$10.750   $11.070 $11.220 $11.090 $10.850 $11.100
 
 
0.186 0.382 0.405 0.413 0.427 0.444
(0.319 ) (0.320 ) (0.150 ) 0.130 0.240 (0.250 )
(0.133 ) 0.062 0.255 0.543 0.667 0.194
 
 
(0.187 ) (0.382 ) (0.405 ) (0.413 ) (0.427 ) (0.444 )
(0.187 ) (0.382 ) (0.405 )   (0.413 ) (0.427 ) (0.444 )
 
$10.430 $10.750 $11.070 $11.220 $11.090 $10.850
 
(1.31% ) 0.53% 2.34% 4.99%   6.23% 1.74%
 
 
$9,492 $10,152 $9,971 $9,170 $9,579 $8,606
1.68% 1.69% 1.68% 1.69% 1.70%   1.74%  
 
1.70% 1.71% 1.69% 1.69% 1.70% 1.74%
3.43% 3.47% 3.68% 3.71% 3.88% 4.01%
 
3.41% 3.45% 3.67% 3.71% 3.88% 4.01%
16% 12% 8% 8% 13% 30%

75

Financial highlights
Delaware Tax-Free Idaho Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
     prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
     prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

76


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
(Unaudited)
$11.260 $11.450 $11.630 $11.490 $11.140 $11.320
 
 
0.218 0.448 0.449 0.452 0.478 0.497
(0.310 ) (0.190 ) (0.180 ) 0.140 0.353 (0.181 )
(0.092 ) 0.258 0.269 0.592 0.831 0.316
 
 
(0.218 )   (0.448 )   (0.449 ) (0.452 ) (0.481 ) (0.496 )
(0.218 )  (0.448 ) (0.449 )   (0.452 ) (0.481 ) (0.496 )
 
$10.950 $11.260 $11.450   $11.630   $11.490   $11.140
 
(0.96% ) 2.27% 2.40% 5.25% 7.58% 2.81%
 
 
$67,741 $69,931 $62,808 $60,554 $55,572 $51,682
0.85% 0.86% 0.85% 0.87% 0.97% 0.93%
 
0.96% 0.98% 0.98% 0.98% 0.97% 1.00%
3.86% 3.92% 3.95% 3.92% 4.21% 4.36%
 
3.75% 3.80% 3.82% 3.81% 4.21% 4.29%
16% 8% 15% 27% 13% 18%

77

Financial highlights
Delaware Tax-Free Idaho Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations: 
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from: 
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
     prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
     prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

78


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
(Unaudited)
$11.240 $11.430 $11.610 $11.480 $11.130 $11.310
 
 
0.176 0.363 0.364 0.366 0.393 0.412
(0.310 ) (0.190 ) (0.180 ) 0.130 0.353 (0.181 )
(0.134 )   0.173 0.184   0.496 0.746 0.231
 
 
(0.176 ) (0.363 ) (0.364 ) (0.366 ) (0.396 ) (0.411 )
(0.176 ) (0.363 ) (0.364 ) (0.366 ) (0.396 ) (0.411 )
 
$10.930 $11.240   $11.430 $11.610   $11.480 $11.130
 
(1.33% ) 1.51% 1.64% 4.39% 6.79% 2.05%
 
 
$5,323 $6,003 $7,892 $10,911 $13,044 $16,801
1.60% 1.61% 1.60% 1.62% 1.72% 1.68%
 
1.71% 1.73% 1.73% 1.73% 1.72% 1.75%
3.11% 3.17% 3.20% 3.17% 3.46% 3.61%
 
3.00% 3.05% 3.07% 3.06% 3.46% 3.54%
16% 8% 15% 27% 13% 18%

79

Financial highlights
Delaware Tax-Free Idaho Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
     prior to expense limitation and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
     prior to expense limitation and expense paid indirectly
Portfolio turnover
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

80


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
(Unaudited)
$11.250 $11.440 $11.630 $11.490 $11.130   $11.310
 
 
0.176   0.363 0.364 0.366 0.393 0.413
(0.310 ) (0.190 )   (0.190 ) 0.140 0.362 (0.181 )
(0.134 ) 0.173 0.174 0.506 0.755 0.232
 
(0.176 ) (0.363 ) (0.364 ) (0.366 )   (0.395 ) (0.412 )
(0.176 ) (0.363 ) (0.364 ) (0.366 ) (0.395 ) (0.412 )
 
$10.940 $11.250 $11.440 $11.630 $11.490 $11.130
 
(1.24% ) 1.51% 1.56%   4.47% 6.87% 2.05%
 
 
$10,936 $11,535 $13,430 $15,678 $15,041 $16,296
1.60% 1.61% 1.60% 1.62% 1.72% 1.68%
 
1.71% 1.73% 1.73% 1.73% 1.72% 1.75%
3.11% 3.17% 3.20% 3.17% 3.46% 3.61%
 
3.00% 3.05% 3.07% 3.06% 3.46% 3.54%
16% 8% 15% 27% 13% 18%

81

Financial highlights
Delaware Tax-Free New York Fund Class A

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to expense limitation and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2003, including fees paid indirectly in accordance with the Securities and Exchange Commission rules were 0.51%.

See accompanying notes

82


Six Months Ended Year Ended
  2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                              
$10.300   $10.550   $10.700   $10.470   $10.220   $10.340  
 
 
0.205   0.435   0.449   0.453   0.479   0.484  
(0.229 )   (0.250 )   (0.150 )   0.230   0.250     (0.120 )
(0.024 ) 0.185   0.299   0.683     0.729   0.364
 
 
(0.206 ) (0.435 ) (0.449 )  (0.453 ) (0.479 ) (0.484 )
(0.206 ) (0.435 ) (0.449 )  (0.453 ) (0.479 ) (0.484 )
 
$10.070   $10.300   $10.550   $10.700   $10.470   $10.220  
 
(0.28% ) 1.75% 2.90% 6.65%   7.26%   3.56%  
 
 
$14,459   $14,817   $13,519   $13,153   $11,523   $11,436  
0.85%   0.79%   0.65%   0.66% 0.50% 0.50% 3
 
1.10%   1.10%   1.09%   1.12% 1.02%   1.05%
3.97% 4.13%   4.28% 4.29% 4.60% 4.65%
 
3.72% 3.82%   3.84% 3.83% 4.08%   4.10%
  46%     14%     20%     13%     26%     64%  

83

Financial highlights
Delaware Tax-Free New York Fund Class B

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
   prior to expense limitation and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2003, including fees paid indirectly in accordance with the Securities and Exchange Commission rules were 1.26%.

See accompanying notes

84


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
  (Unaudited)                              
$10.280   $10.530   $10.670   $10.450   $10.200   $10.330  
 
 
0.166   0.357   0.370   0.374     0.401   0.406  
(0.239 ) (0.250 )   (0.140 )   0.220   0.250     (0.130 )
(0.073 ) 0.107   0.230   0.594   0.651   0.276  
 
 
(0.167 )   (0.357 ) (0.370 ) (0.374 ) (0.401 ) (0.406 )
  (0.167 ) (0.357 ) (0.370 ) (0.374 ) (0.401 ) (0.406 )
 
$10.040   $10.280   $10.530   $10.670   $10.450   $10.200  
 
(0.75% ) 0.99% 2.23%   5.77%   6.47% 2.69%
 
 
$1,665   $2,164   $2,858   $3,023   $2,858   $3,238  
1.60% 1.54% 1.40%   1.41%   1.25%   1.25% 3
 
1.85%   1.85%   1.84%   1.87%   1.77%   1.80%  
3.22%   3.38% 3.53%   3.54%   3.85%   3.90%  
 
2.97% 3.07% 3.09% 3.08% 3.33%   3.35%
  46%     14%     20%     13%     26%     64%  

85

Financial highlights
Delaware Tax-Free New York Fund Class C

 

Selected data for each share of the Fund outstanding throughout each period were as follows:

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
   prior to expense limitation and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
   prior to expense limitation and expense paid indirectly 
Portfolio turnover 
1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2003, including fees paid indirectly in accordance with the Securities and Exchange Commission rules were 1.26%.

See accompanying notes

86


Six Months Ended Year Ended
2/29/081 8/31/07 8/31/06 8/31/05 8/31/04 8/31/03
(Unaudited)          
$10.280   $10.530   $10.670   $10.450   $10.200   $10.320  
 
 
  0.166     0.357     0.370     0.376   0.401     0.406  
(0.239 ) (0.250 ) (0.140 )   0.220     0.250   (0.120 )
(0.073 ) 0.107   0.230   0.596   0.651   0.286  
 
 
(0.167 ) (0.357 ) (0.370 ) (0.376 ) (0.401 ) (0.406 )
(0.167 ) (0.357 ) (0.370 ) (0.376 ) (0.401 ) (0.406 )
 
$10.040   $10.280   $10.530   $10.670   $10.450   $10.200  
 
(0.75% ) 0.99% 2.23% 5.80% 6.47% 2.79%  
 
 
$2,150   $2,131   $2,068   $886   $2,329   $2,828  
1.60% 1.54% 1.40%   1.41% 1.25% 1.25% 3
 
1.85%   1.85%   1.84% 1.87% 1.77%   1.80%
3.22%   3.38%   3.53% 3.54% 3.85% 3.90%
 
2.97% 3.07% 3.09% 3.08% 3.33% 3.35%
  46%     14%     20%     13%     26%     64%  

87


Notes to financial statements
Delaware Multi-state Funds February 29, 2008 (Unaudited)

Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund. Voyageur Mutual Funds II is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Colorado Fund. Voyageur Insured Funds is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Arizona Fund. Voyageur Mutual Funds, Voyageur Mutual Funds II, and Voyageur Insured Funds are individually referred to as a Trust and collectively as the Trusts. These financial statements and related notes pertain to Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund (each, a Fund, or, collectively, the Funds). The above Trusts are open-end investment companies. The Funds are considered 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 A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Effective June 1, 2007, Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first 12 months.

The investment objective of the Funds 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).

In September 2006, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 157 “Fair Value Measurements” (Statement 157). Statement 157 establishes a framework for measuring fair value in U.S. generally accepted accounting principles, clarifies the definition

88

1. Significant Accounting Policies (continued)

of fair value within that framework, and expands disclosures about the use of fair value measurements. Statement 157 is intended to increase consistency and comparability among fair value estimates used in financial reporting. Statement 157 is effective for fiscal years beginning after November 15, 2007. Management does not expect the adoption of Statement 157 to have a material impact on the amounts reported in the financial statements.

Federal Income Taxes — Each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements.

Effective February 29, 2008, each Fund adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The adoption of FIN 48 did not result in the recording of any tax benefit or expense in the current period.

Class Accounting — Investment income and common expenses are allocated to the various classes of each Fund on the basis of “settled shares” of each class in relation to the net assets of each Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of each Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.

Use of Estimates — The preparation of financial statements in conformity with U.S. 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 directly attributable to the Funds are charged directly to the Funds. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums are amortized to interest income over the lives of the respective securities. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually.

89

Notes to financial statements
Delaware Multi-state Funds

1. Significant Accounting Policies (continued)

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 this 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, which is calculated based on each Fund’s average daily net assets as follows:

        Delaware       Delaware       Delaware       Delaware       Delaware
  Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
    Arizona Fund California Fund Colorado Fund Idaho Fund New York Fund
On the first $500 million  0.500%   0.550%   0.550%   0.550%       0.550%
On the next $500 million  0.475%     0.500%     0.500% 0.500% 0.500%  
On the next $1.5 billion    0.450%     0.450%     0.450%       0.450%   0.450%
In excess of $2.5 billion  0.425% 0.425%   0.425% 0.425% 0.425%

DMC has 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 any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and non-routine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, certain Trustee retirement plan expenses, conducting shareholder meetings, and liquidations (collectively, “non-routine expenses”), do not exceed specified percentages of average daily net assets as shown below. For purposes of these waivers and reimbursements, non-routine expenses may also involve such additional costs and expenses, as may be agreed upon from time to time by each Fund’s Board of Trustees and DMC.

        Delaware       Delaware       Delaware       Delaware       Delaware
  Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
    Arizona Fund California Fund Colorado Fund Idaho Fund New York Fund
Operating expense             
     limitation as a           
     percentage of average                   
     daily net assets   
     (per annum)  0.50% 0.63% 0.68% 0.60% 0.60%
Expiration date  12/31/08 12/31/08 12/31/08 12/31/08 12/31/08

Effective October 1, 2007, Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these services, each Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments®

90

2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)

Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. Prior to October 1, 2007, DSC provided fund accounting and administrative services to each Fund and received a fee at an annual rate of 0.04% of average daily net assets. For the six months ended February 29, 2008, each Fund was charged for these services as follows:


Delaware             Delaware             Delaware             Delaware             Delaware 
Tax-Free  Tax-Free    Tax-Free  Tax-Free  Tax-Free 
Arizona Fund    California Fund  Colorado Fund    Idaho Fund    New York Fund 
$7,774  $5,300  $14,133  $4,716  $1,027 

DSC also provides dividend disbursing and transfer agency services. Each Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.

Pursuant to a distribution agreement and distribution plan, each Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.25% of the average daily net assets of the Class A shares and 1.00% of the average daily net assets of the Class B and C shares.

At February 29, 2008, each Fund had liabilities payable to affiliates as follows:

Delaware        Delaware        Delaware        Delaware        Delaware 
Tax-Free  Tax-Free  Tax-Free  Tax-Free  Tax-Free 
      Arizona Fund  California Fund  Colorado Fund  Idaho Fund  New York Fund 
Investment management   
     fee payable to DMC    $37,419   $35,754   $109,867   $30,694   $4,504
Dividend disbursing,               
     transfer agent fees                   
     and other expenses           
     payable to DSC    5,562   3,896 11,782 3,675   1,264
Distribution fees             
     payable to DDLP  39,285   31,929 59,587 27,311 6,086
Other expenses payable               
     to DMC and affiliates*  13,318 8,301 22,435 7,705 2,121

*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.

91

Notes to financial statements
Delaware Multi-state Funds

2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)

As provided in the investment management agreement, each Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to each Fund by DMC and/or its affiliates’ employees. For the six months ended February 29, 2008, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:

        Delaware        Delaware        Delaware        Delaware        Delaware 
  Tax-Free  Tax-Free  Tax-Free  Tax-Free  Tax-Free 
  Arizona Fund  California Fund  Colorado Fund  Idaho Fund  New York Fund 
    $5,065   $3,428   $9,256   $3,101       $673  
 
For the six months ended February 29, 2008, DDLP earned commissions on sales of Class A shares for each Fund as follows:
 
  Delaware  Delaware  Delaware  Delaware  Delaware 
  Tax-Free  Tax-Free  Tax-Free  Tax-Free  Tax-Free 
  Arizona Fund  California Fund  Colorado Fund  Idaho Fund  New York Fund 
    $8,181   $5,232   $13,719   $5,997   $1,063  
 
For the six months ended February 29, 2008, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B and Class C shares, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:
     
  Delaware  Delaware  Delaware  Delaware  Delaware 
  Tax-Free  Tax-Free  Tax-Free  Tax-Free  Tax-Free 
  Arizona Fund  California Fund  Colorado Fund    Idaho Fund  New York Fund 
Class A    $   563     $17,262     $   —     $  — $  —
Class B  6,632 3,904   735 504 19
Class C  999 — — 500 —

Trustees’ fees include expenses accrued by each Fund for each Trustee’s retainer and per meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by each Fund.

3. Investments

For the six months ended February 29, 2008, the Funds made purchases and sales of investment securities other than short-term investments as follows:

           Delaware           Delaware           Delaware           Delaware           Delaware 
  Tax-Free  Tax-Free  Tax-Free    Tax-Free    Tax-Free 
    Arizona Fund    California Fund    Colorado Fund  Idaho Fund  New York Fund 
Purchases  $23,942,932  $19,346,030  $19,953,822  $6,953,444  $4,322,113 
Sales    29,325,590    24,093,237    31,598,630     6,690,255    4,204,410 

92

3. Investments (continued)

At February 29, 2008, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At February 29, 2008, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:

Delaware Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
      Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
Cost of                  
    investments $ 136,485,417   $ 90,750,366   $ 239,861,838   $ 83,053,623   $ 17,968,126  
Aggregate
   unrealized
   appeciation $ 2,830,569 $ 1,595,912 $ 8,632,713 $ 1,340,505 $ 458,846
Aggregate
   unrealized
   depreciation (5,203,380 ) (5,150,645 ) (9,206,862 ) (2,767,650 ) (456,076 )
Net unrealized
   appreciation
   (depreciation) $ (2,372,811 ) $ (3,554,733 )  $ (574,149 ) $ (1,427,145 ) $ 2,770

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 29, 2008 and the year ended August 31, 2007 was as follows:

Delaware Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
      Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
Six Months Ended 2/29/08*        
Tax-exempt        
   income     $2,860,312 $1,924,302     $ 5,387,477       $1,616,120     $360,825  
Ordinary income — —   27,144 —   —
Total $2,860,312 $1,924,302 $ 5,414,621 $1,616,120 $360,825
 
Year Ended 8/31/07
Tax-exempt
   income $6,056,305 $4,052,743 $ 11,438,978 $3,149,577 $743,181

*Tax information for the period ended February 29, 2008 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.

93

Notes to financial statements
Delaware Multi-state Funds

5. Components of Net Assets on a Tax Basis

The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 29, 2008, the estimated components of net assets on a tax basis were as follows:

Delaware Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
      Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
Shares of beneficial          
   interest $ 140,397,883   $ 94,575,736 $ 255,312,421 $ 85,773,213   $ 18,470,970
Distributions      
   payable (106,273 ) (72,054 ) (204,099 ) (62,734 ) (13,953 )
Undistributed
   tax-exempt
   income 106,273 73,354 205,748 51,433 12,201
Realized gains
   (losses) (9/1/07 –      
   2/29/08) 193,914 (221,655 ) (40,554 ) 73,639 (14,929 )
Post-October
   losses (132,836 ) (388,963 ) — (9,487 ) (17,752 )
Capital loss
   carryforwards as
   of 8/31/07 (2,255,113 )* (668,280 ) (7,877,153 ) (398,737 ) (165,428 )
Unrealized appreciation      
   (depreciation) of      
   investments (2,372,811 ) (3,554,733 ) (574,149 ) (1,427,145 ) 2,770
Net assets $ 135,831,037 $ 89,743,405 $ 246,822,214 $ 84,000,182 $ 18,273,879

*The amount of this loss which can be utilized in subsequent years is subject to an annual limitation in accordance with the Internal Revenue Code due to a Fund merger in 2005.

The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales and tax treatment of market discount and premium on debt instruments.

Post-October losses represent losses realized on investment transactions from November 1, 2007 through February 29, 2008 that, in accordance with federal income tax regulations, each Fund has elected to defer and treat as having arisen in the following fiscal year.

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 29, 2008, the Funds recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end.

94

5. Components of Net Assets on a Tax Basis (continued)

  Delaware Delaware
  Tax-Free Tax-Free
      Colorado Fund       Idaho Fund
Undistributed (distributions in excess of) net
    investment income $ 30,842 $ (1,391 )
Accumulated net realized gain (loss) (30,842 ) 1,391

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, 2007 will expire as follows:

Delaware Delaware Delaware Delaware Delaware
Year of Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Expiration         Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
2008    $ 494,969         $ —          $ —     $ —          $ —     
2009 — 662,241 1,044,895 151,477 165,428
2010 — — — 166,949 —
2011 78,759 6,039 — — —
2012 1,681,385 — 4,571,043 — —
2013 — — 57,695 — —
2014 — — 2,203,520 23,435 —
2015   —   —   —   56,876   —
Total $ 2,255,113 $ 668,280 $ 7,877,153 $ 398,737 $ 165,428

For the six months ended February 29, 2008, the Funds had capital gains (losses) which may reduce (increase) the capital loss carryforwards as follows:

  Delaware Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
$193,914 $(221,655) $(40,554) $73,639 $(14,929)

95

Notes to financial statements
Delaware Multi-state Funds

6. Capital Shares

Transactions in capital shares were as follows:

Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Arizona Fund California Fund Colorado Fund
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
      2/29/08       8/31/07       2/29/08       8/31/07       2/29/08       8/31/07
Shares sold:  
   Class A 556,771 1,310,222 684,868 1,994,358 498,435 1,137,342
   Class B 10 3,752 3,593 13,600 — 1,966
   Class C 88,175 117,465 204,468 311,172 20,940 171,332
 
Shares issued upon reinvestment of dividends and distributions:
   Class A 112,390 237,386 81,671 158,530 301,558 624,637
   Class B 9,224 22,522 9,298 21,767 3,755 11,169
   Class C 7,318 13,407 15,662 26,532 11,097 22,616
773,888 1,704,754 999,560 2,525,959 835,785 1,969,062
 
Shares repurchased:
   Class A (948,318 ) (1,775,471 ) (1,127,237 ) (1,870,154 ) (1,425,462 ) (2,190,306 )
   Class B (145,466 ) (350,624 ) (131,904 ) (490,356 ) (69,867 ) (260,676 )
   Class C (55,720 ) (158,370 ) (165,901 ) (236,524 ) (66,360 ) (150,438 )
(1,149,504 ) (2,284,465 ) (1,425,042 ) (2,597,034 ) (1,561,689 ) (2,601,420 )
Net decrease (375,616 ) (579,711 ) (425,482 ) (71,075 ) (725,904 ) (632,358 )

Delaware Tax-Free Delaware Tax-Free
Idaho Fund New York Fund
Six Months Year Six Months Year
      Ended       Ended       Ended       Ended
2/29/08 8/31/07 2/29/08 8/31/07
Shares sold:
   Class A 246,483 1,316,463 62,689 239,258
   Class B — 49,968   1,495   3,253
   Class C 64,653 78,260 38,396 47,036
 
Shares issued upon reinvestment of dividends and distributions:
   Class A 77,469 142,848 16,520 39,485
   Class B 5,250 12,137 1,667 3,399
   Class C 9,389 21,162 1,386 2,551
403,244     1,620,838   122,153 334,982
 
Shares repurchased:
   Class A (344,088 ) (736,545 ) (81,276 ) (121,595 )
   Class B (51,972 ) (218,716 ) (47,933 ) (67,503 )
   Class C (99,042 ) (248,413 ) (33,088 ) (38,590 )
(495,102 ) (1,203,674 ) (162,297 ) (227,688 )
Net increase (decrease) (91,858 ) 417,164 (40,144 ) 107,294

96

6. Capital Shares (continued)

For the six months ended February 29, 2008 and the year ended August 31, 2007, the following shares and value were converted from Class B to Class A shares. The amounts are included in Class B redemptions and Class A subscriptions in the tables on the previous page and the statements of changes in net assets.

Six Months Ended Year Ended
2/29/08 8/31/07
Class B Class A Class B Class A
      Shares       Shares       Value       Shares       Shares       Value
Delaware Tax-Free
   Arizona Fund   23,509   23,509   $ 262,598   90,057     90,103   $ 1,014,108
Delaware Tax-Free
   California Fund 69,832 70,083 776,571   190,729 191,399 2,178,747
Delaware Tax-Free
   Colorado Fund 55,515 55,565 603,024 100,172 100,189 1,109,632
Delaware Tax-Free
   Idaho Fund 35,308 35,245 401,090   96,877   96,752 1,103,521
Delaware Tax-Free
   New York Fund   9,667   9,640 100,392   16,346   16,311 172,008

7. Line of Credit

Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (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 Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The Funds had no amounts outstanding as of February 29, 2008, or at any time during the period the ended.

8. Credit and Market Risk

The Funds concentrate their investments in securities issued by municipalities. The value of these investments may be adversely affected by new legislation within the states, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been 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

97

Notes to financial statements
Delaware Multi-state Funds

8. Credit and Market Risk (continued)

by the bonds being refinanced. A refunding transaction where the municipal securities are being refunded within 90 days from the issuance of the refunding issue is known as a “current refunding”. Advance refunded bonds are bonds in which the refunded bond issue remains outstanding for more than 90 days following the issuance of the refunding issue. In an advance refunding, the issuer will use the proceeds of a new bond issue to purchase high grade interest bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.

Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract and are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s Investors Service, Inc., Standard & Poor’s Ratings Group, and/or Fitch Ratings due to the strong credit quality of the escrow securities and the irrevocable nature of the escrow deposit agreement.

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Fund’s Board 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. As of February 29, 2008, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.

9. Contractual Obligations

The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds’ existing contracts and expects the risk of loss to be remote.

98

About the organization

This semiannual report is for the information of Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund and the Delaware Investments® Fund Profiles for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.

Board of trustees

       
 

Patrick P. Coyne
Chairman, President, and
Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA

Thomas L. Bennett
Private Investor
Rosemont, PA

John A. Fry
President
Franklin & Marshall College
Lancaster, PA

Anthony D. Knerr
Founder and Managing Director
Anthony Knerr & Associates
New York, NY

Lucinda S. Landreth
Former Chief Investment Officer
Assurant, Inc.
Philadelphia, PA

Ann R. Leven
Consultant
ARL Associates
New York, NY

Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN

Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN

J. Richard Zecher
Founder
Investor Analytics
Scottsdale, AZ

100


Affiliated officers

      Contact information
 

David F. Connor
Vice President, Deputy General Counsel, and
Secretary
Delaware Investments® Family of Funds
Philadelphia, PA

Daniel V. Geatens
Vice President and Treasurer
Delaware Investments Family of Funds
Philadelphia, PA

David P. O’Connor
Senior Vice President, General Counsel,
and Chief Legal Officer
Delaware Investments Family of Funds
Philadelphia, PA

Richard Salus
Senior Vice President and
Chief Financial Officer
Delaware Investments Family of Funds
Philadelphia, PA

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 of 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 are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the Commission’s Web site at www.sec.gov. In addition, a description of the policies and procedures that each Fund uses to determine how to vote proxies (if any) relating to portfolio securities and each Fund’s Schedule of Investments are available without charge on each Fund’s Web site at www.delawareinvestments.com. Each Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.

Information (if any) regarding how each Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through each Fund’s Web site at www.delawareinvestments.com; and (ii) on the Commission’s Web site at www.sec.gov.

101


 

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SA-WEST [2/08] DG3 4/08     MF-08-03-024     PO 12796     (2928)

Item 2. Code of Ethics

     Not applicable.

Item 3. Audit Committee Financial Expert

     Not applicable.

Item 4. Principal Accountant Fees and Services

     Not applicable.

Item 5. Audit Committee of Listed Registrants

     Not applicable.

Item 6. Investments

     (a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.

     (b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.

     Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

     Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

     Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers

     Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders

     Not applicable.

Item 11. Controls and Procedures

     The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

     There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

(a) (1) Code of Ethics

     Not applicable.

(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.

(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.

     Not applicable.

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.

Name of Registrant: VOYAGEUR MUTUAL FUNDS 

PATRICK P. COYNE 
By:  Patrick P. Coyne 
Title:  Chief Executive Officer 
Date:  May 5, 2008 

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

PATRICK P. COYNE 
By:  Patrick P. Coyne 
Title:  Chief Executive Officer 
Date:  May 5, 2008 
 
 
RICHARD SALUS 
By:  Richard Salus 
Title:  Chief Financial Officer 
Date:  May 5, 2008