<DOCUMENT>
<TYPE>N-CSR
<SEQUENCE>1
<FILENAME>n-csr.txt
<DESCRIPTION>N-CSR.TXT
<TEXT>
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
<TABLE>
<CAPTION>
<S> <C>
Investment Company Act file number: 811-6411
Exact name of registrant as specified in charter: Voyageur Investment Trust
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service: Richelle S. Maestro, Esq.
2005 Market Street
Philadelphia, PA 19103
Registrant's telephone number, including area code: (800) 523-1918
Date of fiscal year end: August 31
Date of reporting period: February 28, 2005
</TABLE>
<PAGE>
Item 1. Reports to Stockholders
The Registrant's shareholder reports are combined with the shareholder
reports of other investment company registrants. This Form N-CSR pertains to the
Delaware Tax-Free California Insured Fund, Delaware Tax-Free Florida Fund,
Delaware Tax-Free Florida Insured Fund, Delaware Missouri Insured Fund and
Delaware Tax-Free Oregon Insured Fund of the Registrant, information on which is
included in the following shareholder reports.
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
FIXED INCOME
SEMIANNUAL REPORT FEBRUARY 28, 2005
--------------------------------------------------------------------------------
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
[LOGO]
POWERED BY RESEARCH.(SM)
<PAGE>
TABLE
OF CONTENTS
-----------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES 1
-----------------------------------------------------------------
SECTOR ALLOCATION 4
-----------------------------------------------------------------
FINANCIAL STATEMENTS:
Statements of Net Assets 7
Statements of Operations 19
Statements of Changes in Net Assets 20
Financial Highlights 23
Notes to Financial Statements 38
-----------------------------------------------------------------
Funds are not FDIC insured and are not guaranteed. It is possible to lose
the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a
series of Delaware Management Business Trust, which is a registered
investment advisor.
(C) 2005 Delaware Distributors, L.P.
<PAGE>
DISCLOSURE For the Period September 1, 2004 to February 28, 2005
OF FUND EXPENSES
As a shareholder of a fund, you incur two types of costs:
(1) transaction costs, including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; redemption fees; and exchange
fees; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other fund expenses. The following examples are
intended to help you understand your ongoing costs (in dollars) of investing in
a fund and to compare these costs with the ongoing costs of investing in other
mutual funds.
The Examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire period September 1, 2004 to February 28,
2005.
ACTUAL EXPENSES
The first section of the tables shown, "Actual Fund Return," provides
information about actual account values and actual expenses. You may use the
information in this section of the table, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first section under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the tables shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The Fund's actual expenses shown in the table reflect fee waivers in
effect. The expenses shown in the table assume reinvestment of all dividends and
distributions. In each case, "Expenses Paid During Period" are equal to the
Fund's annualized expense ratio, multiplied by the average account value over
the period, multiplied by 181/365 (to reflect the one-half year period).
DELAWARE TAX-FREE CALIFORNIA INSURED FUND(1)
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
<TABLE>
<CAPTION>
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/04 to
9/1/04 2/28/05 Ratio 2/28/05
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACTUAL FUND RETURN
Class A $1,000.00 $1,033.60 0.94% $4.74
Class B 1,000.00 1,030.70 1.69% 8.51
Class C 1,000.00 1,030.00 1.69% 8.51
-----------------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,020.13 0.94% $4.71
Class B 1,000.00 1,016.41 1.69% 8.45
Class C 1,000.00 1,016.41 1.69% 8.45
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Effective November 1, 2004, The Fund's manager increased contractual expense
waivers in effect for the Fund, causing the expenses paid by the Fund to
decrease. Had the new expense waiver been in effect during the period, the
Fund's expense analysis would be as follows:
<TABLE>
<CAPTION>
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/04 to
9/1/04 2/28/05 Ratio 2/28/05
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACTUAL FUND RETURN
Class A $1,000.00 $1,033.60 0.87% $4.39
Class B 1,000.00 1,030.70 1.62% 8.16
Class C 1,000.00 1,030.00 1.62% 8.15
-----------------------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,020.48 0.87% $4.36
Class B 1,000.00 1,016.76 1.62% 8.10
Class C 1,000.00 1,016.76 1.62% 8.10
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
SECTOR ALLOCATION As of February 28, 2005
The SEC adopted a requirement that all funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following charts list each Fund's categories of portfolio holdings
as a percentage of total net assets and is provided in compliance with such
requirement.
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
-------------------------------------------------------------------------
PERCENTAGE
SECTOR OF NET ASSETS
-------------------------------------------------------------------------
MUNICIPAL BONDS 97.61%
-------------------------------------------------------------------------
Airport Revenue Bonds 3.19%
-------------------------------------------------------------------------
Continuing Care/Retirement Revenue Bonds 3.22%
-------------------------------------------------------------------------
Dedicated Tax & Fees Revenue Bonds 6.35%
-------------------------------------------------------------------------
Higher Education Revenue Bonds 6.75%
-------------------------------------------------------------------------
Hospital Revenue Bonds 1.60%
-------------------------------------------------------------------------
Miscellaneous Revenue Bonds 3.47%
-------------------------------------------------------------------------
Multifamily Housing Revenue Bonds 15.52%
-------------------------------------------------------------------------
Municipal Lease Revenue Bonds 6.63%
-------------------------------------------------------------------------
Ports & Harbors Revenue Bonds 3.38%
-------------------------------------------------------------------------
Pre-Refunded Bonds 4.58%
-------------------------------------------------------------------------
Public Power Revenue Bonds 3.36%
-------------------------------------------------------------------------
School District General Obligation Bonds 9.68%
-------------------------------------------------------------------------
State General Obligation Bonds 3.37%
-------------------------------------------------------------------------
Tax Increment/Special Assessment Bonds 13.37%
-------------------------------------------------------------------------
Territorial Revenue Bonds 3.42%
-------------------------------------------------------------------------
Waste Disposal Revenue Bonds 6.50%
-------------------------------------------------------------------------
Water & Sewer Revenue Bonds 3.22%
-------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 97.61%
-------------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 2.39%
-------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
-------------------------------------------------------------------------
2
<PAGE>
STATEMENTS DELAWARE TAX-FREE CALIFORNIA INSURED FUND
OF NET ASSETS February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS - 97.61%
Airport Revenue Bonds - 3.19%
Sacramento County Airport System Revenue
Series A 5.00% 7/1/32 (FSA) $1,000,000 $1,030,590
----------
1,030,590
----------
Continuing Care/Retirement Revenue Bonds - 3.22%
California Health Facilities Financing
(The Episcopal Home)
5.30% 2/1/32 (RADIAN) 1,000,000 1,039,210
----------
1,039,210
----------
Dedicated Tax & Fees Revenue Bonds - 6.35%
San Bernardino County Special Tax
Community Facilities 5.90% 9/1/33 1,000,000 1,011,230
San Francisco Bay Area Rapid Transit
District Sales Tax Revenue
5.125% 7/1/36 (AMBAC) 1,000,000 1,037,720
----------
2,048,950
----------
Higher Education Revenue Bonds - 6.75%
California Educational Facilities Authority
Revenue (University of The Pacific)
5.75% 11/1/30 (MBIA) 1,000,000 1,114,300
California Statewide Communities
Development Authority Revenue
(Bentley School) 6.75% 7/1/32 1,000,000 1,063,660
----------
2,177,960
----------
Hospital Revenue Bonds - 1.60%
California Health Facilities Financing
Authority (Catholic Healthcare West)
Series G 5.25% 7/1/23 500,000 516,365
----------
516,365
----------
Miscellaneous Revenue Bonds - 3.47%
San Diego County Certificates
of Participation 5.75% 7/1/31 (MBIA) 1,000,000 1,119,590
----------
1,119,590
----------
Multifamily Housing Revenue Bonds - 15.52%
California Statewide Communities
Development Authority Multifamily
Housing Revenue
(Citrus Gardens Apartments Project)
Series D1 5.375% 7/1/32 800,000 811,968
(East Tabor Apartments) Series C
6.85% 8/20/36 (GNMA) (AMT) 1,500,000 1,594,590
Los Angeles Multifamily Housing Revenue
(Park Plaza) Series B 5.50% 1/20/43
(GNMA) (AMT) 1,430,000 1,486,900
Ventura County Area Housing Authority
Multifamily Housing Revenue
(Glen Oaks Apartments) Series A
6.35% 7/20/34 (GNMA) 1,013,000 1,120,378
----------
5,013,836
----------
Municipal Lease Revenue Bonds - 6.63%
California State Public Works Board Lease
Revenue 5.00% 3/1/27 (AMBAC) 1,000,000 1,036,150
Franklin-McKinley School District
Certificates of Participation
(Financing Project) Series B
5.00% 9/1/27 (AMBAC) 1,060,000 1,103,587
----------
2,139,737
----------
<PAGE>
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Ports & Harbors Revenue Bonds - 3.38%
Port of Oakland Series K
5.75% 11/1/29 (FGIC) (AMT) $ 1,000,000 $ 1,090,520
-----------
1,090,520
-----------
*Pre-Refunded Bonds - 4.58%
Oakland Industrial Revenue
(Harrison Foundation) Series B
6.00% 1/1/29-10 (AMBAC) 1,300,000 1,479,192
-----------
1,479,192
-----------
Public Power Revenue Bonds - 3.36%
California State Department Water
Reserve Power Supply Revenue
Series A 5.375% 5/1/21 1,000,000 1,085,970
-----------
1,085,970
-----------
School District General Obligation Bonds - 9.68%
Lawndale Elementary School District
5.00% 8/1/32 (FSA) 1,000,000 1,034,100
San Diego Unified School District
5.00% 7/1/28 (FSA) 1,000,000 1,042,520
Sequoia Unified High School District
5.125% 7/1/31 (FSA) 1,000,000 1,047,610
-----------
3,124,230
-----------
State General Obligation Bonds - 3.37%
California State 5.50% 11/1/33 1,000,000 1,087,190
-----------
1,087,190
-----------
Tax Increment/Special Assessment Bonds - 13.37%
La Quinta Redevelopment Agency
Tax Allocation
(Redevelopment Project Area #1)
Series A 5.10% 9/1/31 (AMBAC) 1,000,000 1,042,810
Poway Redevelopment Agency
Certificates of Participation
5.75% 6/15/33 (MBIA) 1,400,000 1,582,616
Riverside County Redevelopment Agency
(Jurupa Valley Project)
5.25% 10/1/35 (AMBAC) 1,590,000 1,691,029
-----------
4,316,455
-----------
Territorial Revenue Bonds - 3.42%
Puerto Rico Electric Power Authority
Power Revenue Series OO
5.00% 7/1/13 (CIFG) 1,000,000 1,102,710
-----------
1,102,710
-----------
Waste Disposal Revenue Bonds - 6.50%
Salinas Valley Solid Waste Authority
Revenue 5.25% 8/1/27 (AMBAC) (AMT) 2,000,000 2,096,940
-----------
2,096,940
-----------
Water & Sewer Revenue Bonds - 3.22%
California State Department of Water
Resources Water Systems Revenue
(Central Valley Project) Series X
5.00% 12/1/29 (FGIC) 1,000,000 1,038,010
-----------
1,038,010
-----------
TOTAL MUNICIPAL BONDS
(cost $29,476,222) 31,507,455
-----------
3
<PAGE>
STATEMENTS DELAWARE TAX-FREE CALIFORNIA INSURED FUND
OF NET ASSETS (CONTINUED)
TOTAL MARKET VALUE OF SECURITIES - 97.61%
(cost $29,476,222) $31,507,455
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 2.39% 771,504
-----------
NET ASSETS APPLICABLE TO 2,899,718 SHARES
OUTSTANDING - 100.00% $32,278,959
-----------
Net Asset Value - Delaware Tax-Free
California Insured Fund Class A
($24,664,143 / 2,215,488 Shares) $11.13
------
Net Asset Value - Delaware Tax-Free
California Insured Fund Class B
($6,274,548 / 563,489 Shares) $11.14
------
Net Asset Value - Delaware Tax-Free
California Insured Fund Class C
($1,340,268 / 120,741 Shares) $11.10
------
COMPONENTS OF NET ASSETS AT FEBRUARY 28, 2005:
Shares of beneficial interest
(unlimited authorization -- no par) $30,215,489
Accumulated net realized gain on investments 32,237
Net unrealized appreciation of investments 2,031,233
-----------
Total net assets $32,278,959
===========
*Pre-Refunded Bonds are municipals that are generally backed or secured by
U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by
the year in which the bond is pre-refunded.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
CIFG - Insured by CDC IXIS Financial Guaranty
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
Net asset value Class A (A) $11.13
Sales charge (4.50% of offering price) (B) 0.52
------
Offering price $11.65
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
4
<PAGE>
STATEMENTS Six Months Ended February 28, 2005 (Unaudited)
OF OPERATIONS
Delaware
Tax-Free California
Insured Fund
INVESTMENT INCOME:
Interest $ 827,481
----------
EXPENSES:
Management fees 82,664
Distribution expenses -- Class A 31,584
Distribution expenses -- Class B 32,575
Distribution expenses -- Class C 6,839
Legal and professional fees 2,893
Reports and statements to shareholders 9,279
Registration fees 111
Dividend disbursement and transfer agent fees and expenses 7,884
Accounting and administration expenses 5,500
Custodian fees 1,600
Trustees' fees 951
Other 4,749
----------
186,629
Less expenses absorbed or waived (1,293)
Less expenses paid indirectly (78)
----------
Total expenses 185,258
----------
NET INVESTMENT INCOME 642,223
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 32,953
Net change in unrealized appreciation/depreciation
of investments 428,058
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 461,011
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,103,234
==========
See accompanying notes
5
<PAGE>
STATEMENTS
OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Delaware Tax-Free
California Insured Fund
Six Months Year
Ended Ended
2/28/05 8/31/04
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 642,223 $ 1,562,244
Net realized gain (loss) on investments 32,953 187,797
Net change in unrealized appreciation/depreciation of investments 428,058 889,503
----------- -----------
Net increase in net assets resulting from operations 1,103,234 2,639,544
----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (511,988) (1,208,781)
Class B (107,559) (259,578)
Class C (22,676) (93,885)
Net realized gain on investments:
Class A (55,312) (70,273)
Class B (14,476) (18,623)
Class C (2,996) (6,971)
----------- -----------
(715,007) (1,658,111)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 1,914,607 3,866,935
Class B -- 370,983
Class C -- 525,389
Net asset value of shares issued upon reinvestment of dividends and distributions:
Class A 234,131 606,478
Class B 73,543 158,794
Class C 14,341 44,658
----------- -----------
2,236,622 5,573,237
----------- -----------
Cost of shares repurchased:
Class A (2,530,759) (9,237,607)
Class B (768,116) (2,522,736)
Class C (56,084) (2,177,814)
----------- -----------
(3,354,959) (13,938,157)
----------- -----------
Increase (decrease) in net assets derived from capital share transactions (1,118,337) (8,364,920)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (730,110) (7,383,487)
NET ASSETS:
Beginning of period 33,009,069 40,392,556
----------- -----------
End of period(1) $32,278,959 $33,009,069
----------- -----------
(1) Including undistributed (distributions in excess of) net investment income $ -- $ --
=========== ===========
</TABLE>
See accompanying notes
6
<PAGE>
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
DELAWARE TAX-FREE CALIFORNIA INSURED FUND CLASS A
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(1) 8/31/04 8/31/03 8/31/02(3) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.010 $10.670 $10.930 $11.130 $10.640 $10.430
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.223 0.458 0.463 0.470 0.496 0.500
Net realized and unrealized gain (loss) on investments 0.144 0.365 (0.260) (0.027) 0.490 0.210
------- ------- ------- ------- ------- -------
Total from investment operations 0.367 0.823 0.203 0.443 0.986 0.710
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.223) (0.458) (0.463) (0.470) (0.496) (0.500)
Net realized gain on investments (0.024) (0.025) -- (0.173) -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.247) (0.483) (0.463) (0.643) (0.496) (0.500)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.130 $11.010 $10.670 $10.930 $11.130 $10.640
======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 3.36% 7.85% 1.84% 4.23% 9.51% 7.10%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $24,664 $24,748 $28,822 $28,630 $28,045 $23,877
Ratio of expenses to average net assets 0.94% 0.91% 0.93% 0.92% 0.87% 1.00%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.95% 0.91% 0.93% 0.92% 0.87% 1.09%
Ratio of net investment income to average net assets 4.06% 4.20% 4.21% 4.36% 4.59% 4.87%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.05% 4.20% 4.21% 4.36% 4.59% 4.78%
Portfolio turnover -- 20% 44% 111% 162% 91%
</TABLE>
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
(3) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. This change
in accounting had no impact for the year ended August 31, 2002. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
See accompanying notes
7
<PAGE>
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
DELAWARE TAX-FREE CALIFORNIA INSURED FUND CLASS B
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(1) 8/31/04 8/31/03 8/31/02(3) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.010 $10.670 $10.930 $11.130 $10.640 $10.430
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.182 0.377 0.381 0.389 0.415 0.423
Net realized and unrealized gain (loss) on investments 0.154 0.365 (0.260) (0.027) 0.490 0.210
------- ------- ------- ------- ------- -------
Total from investment operations 0.336 0.742 0.121 0.362 0.905 0.633
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.182) (0.377) (0.381) (0.389) (0.415) (0.423)
Net realized gain on investments (0.024) (0.025) -- (0.173) -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.206) (0.402) (0.381) (0.562) (0.415) (0.423)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.140 $11.010 $10.670 $10.930 $11.130 $10.640
======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 3.07% 7.04% 1.07% 3.44% 8.70% 6.30%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $6,275 $6,895 $8,628 $9,714 $7,628 $6,440
Ratio of expenses to average net assets 1.69% 1.66% 1.68% 1.67% 1.62% 1.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.66% 1.68% 1.67% 1.62% 1.84%
Ratio of net investment income to average net assets 3.31% 3.45% 3.46% 3.61% 3.84% 4.12%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.30% 3.45% 3.46% 3.61% 3.84% 4.03%
Portfolio turnover -- 20% 44% 111% 162% 91%
</TABLE>
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
(3) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. This change
in accounting had no impact for the year ended August 31, 2002. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
See accompanying notes
8
<PAGE>
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
DELAWARE TAX-FREE CALIFORNIA INSURED FUND CLASS C
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(1) 8/31/04 8/31/03 8/31/02(3) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.980 $10.640 $10.890 $11.090 $10.600 $10.390
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.183 0.377 0.380 0.392 0.417 0.423
Net realized and unrealized gain (loss) on investments 0.144 0.365 (0.250) (0.027) 0.490 0.210
------- ------- ------- ------- ------- -------
Total from investment operations 0.327 0.742 0.130 0.365 0.907 0.633
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.183) (0.377) (0.380) (0.392) (0.417) (0.423)
Net realized gain on investments (0.024) (0.025) -- (0.173) -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.207) (0.402) (0.380) (0.565) (0.417) (0.423)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.100 $10.980 $10.640 $10.890 $11.090 $10.600
======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 3.00% 7.07% 1.17% 3.45% 8.75% 6.32%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $1,340 $1,366 $2,942 $1,374 $200 $439
Ratio of expenses to average net assets 1.69% 1.66% 1.68% 1.67% 1.62% 1.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.66% 1.68% 1.67% 1.62% 1.84%
Ratio of net investment income to average net assets 3.31% 3.45% 3.46% 3.61% 3.84% 4.12%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.30% 3.45% 3.46% 3.61% 3.84% 4.03%
Portfolio turnover -- 20% 44% 111% 162% 91%
</TABLE>
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
(3) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. This change
in accounting had no impact for the year ended August 31, 2002. Per share
data and ratios for periods prior to September 1, 2001 have not been
restated to reflect this change in accounting.
See accompanying notes
9
<PAGE>
NOTES February 28, 2005 (Unaudited)
TO FINANCIAL STATEMENTS
Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust
and offers six series: Delaware Tax-Free Arizona Fund, Delaware Tax-Free
California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield
Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund and
Delaware Tax-Free New York Fund. Voyageur Insured Funds (the "Trust") is
organized as a Delaware statutory trust and offers two series: Delaware Tax-Free
Arizona Insured Fund and Delaware Tax-Free Minnesota Insured Fund. Voyageur
Investment Trust (the "Trust") is organized as a Massachusetts statutory trust
and offers five series: Delaware Tax-Free California Insured Fund, Delaware
Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund, Delaware Tax-Free
Missouri Insured Fund and Delaware Tax-Free Oregon Insured Fund. Voyageur Mutual
Funds II (the "Trust") is organized as a Delaware statutory trust and offers one
series: Delaware Tax-Free Colorado Fund. These financial statements and related
footnotes pertain to Delaware Tax-Free Arizona Fund, Delaware Tax-Free Arizona
Insured Fund, Delaware Tax-Free California Fund, Delaware Tax-Free California
Insured Fund and Delaware Tax-Free Colorado Fund (each a "Fund" and,
collectively, the "Funds"). The above Trusts are open-end investment companies.
The Funds are considered non-diversified under the Investment Company Act of
1940, as amended. The Funds offer Class A, Class B, and Class C shares. Class A
shares are sold with a front-end sales charge of up to 4.50%. Class B shares are
sold with a contingent deferred sales charge that declines from 4% to zero
depending upon the period of time the shares are held. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately eight
years after purchase. Class C shares are sold with a contingent deferred sales
charge of 1%, if redeemed during the first 12 months.
The investment objective of Delaware Tax-Free Arizona Fund, Delaware Tax-Free
Arizona Insured Fund, Delaware Tax-Free California Fund, Delaware Tax-Free
California Insured Fund and Delaware Tax-Free Colorado Fund is to seek as high a
level of current income exempt from federal income tax and personal income tax
in their respective states, as is consistent with preservation of capital.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation -- Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of each Fund's Board of
Trustees.
Federal Income Taxes -- Each Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting -- Investment income and common expenses are allocated to the
classes of each Fund on the basis of "settled shares" of each class in relation
to the net assets of each Fund. Realized and unrealized gain (loss) on
investments are allocated to the various classes of each Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
<PAGE>
Use of Estimates -- The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other -- Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. Security transactions
are recorded on the date the securities are purchased or sold (trade date).
Costs used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities. Each Fund declares dividends
daily from net investment income and pays such dividends monthly and declares
and pays distributions from net realized gain on investments, if any, annually.
The Funds receive earnings credits from their custodian when positive cash
balances are maintained, which are used to offset custody fees. The expense paid
under the above arrangement is included custodian fees on the Statements of
Operations with the corresponding expense offset shown as "expense paid
indirectly". The amount of this expense for the six months ended February 28,
2005 was as follows:
Delaware
Tax-Free California
Insured Fund
-------------------
Earnings credits $78
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its respective investment management agreement,
each Fund pays Delaware Management Company (DMC), a series of Delaware
Management Business Trust and the investment manager, an annual fee based on
each Fund's average daily net assets as follows:
Delaware
Tax-Free California
Insured Fund
-------------------
On the first $500 million 0.500%
On the next $500 million 0.475%
On the next $1.5 billion 0.450%
In excess of $2.5 billion 0.425%
10
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS
WITH AFFILIATES (CONTINUED)
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse each Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs, and extraordinary expenses do not
exceed specified percentages of average daily net assets, as shown below.
Delaware
Tax-Free California
Insured Fund
-------------------
Operating expense limitation as a percentage
of average daily net assets (per annum) 0.75%
Expiration date 10/31/04
Effective November 1, 2004 operating
expense limitation as a percentage of
average daily net assets (per annum) 0.62%
Expiration date 3/31/06
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. The Funds pay
DSC a monthly fee based on average net assets subject to certain minimums for
accounting and administration services. Each Fund pays DSC a monthly fee based
on the number of shareholder accounts for dividend disbursing and transfer agent
services.
Pursuant to a distribution agreement and distribution plan, each Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.25% of the average daily net
assets of the Class A shares and 1.00% of the average daily net assets of the
Class B and C shares.
At February 28, 2005, each Fund had liabilities payable to affiliates as
follows:
Delaware
Tax-Free California
Insured Fund
-------------------
Investment management fees payable
to (receivable from) DMC $11,962
Dividend disbursing, transfer agent,
accounting, and administration fees,
and other expenses payable to DSC 2,311
Other expenses payable to DMC
and affiliates* 14,472
* DMC, as a part of its administrative services, pays operating expenses on
behalf of the Funds and is reimbursed on a periodic basis. Such expenses
include items such as printing of shareholder reports, fees for audit, legal
and tax services, registration fees and trustees' fees.
As provided in the investment management agreement, the Funds bear the cost of
certain legal services expenses, including internal legal services provided to
the Funds by DMC employees. For the six months ended February 28, 2005, the
Delaware Tax-Free Arizona Fund and Delaware Tax-Free California Insured Fund was
charged $548 and $822, respectively, for internal legal services provided by
DMC.
For the six months ended February 28, 2005, DDLP earned commissions on sales of
Class A shares for each Fund as follows:
Delaware
Tax-Free California
Insured Fund
-------------------
$2,221
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the
Trusts. These officers and/or trustees are paid no compensation by the Funds.
3. INVESTMENTS
For the six months ended February 28, 2005, the Funds made purchases
and sales of investment securities as follows:
Delaware
Tax-Free California
Insured Fund
-------------------
Purchases other than short-term investments $ --
Sales other than short-term investments 1,034,010
11
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
At February 28, 2005, the cost of investments for federal income tax purposes
has been estimated since the final tax characteristics cannot be determined
until fiscal year end. At February 28, 2005, the cost of investments and
unrealized appreciation (depreciation) for each Fund were as follows:
Delaware
Tax-Free California
Insured Fund
-------------------
Cost of investments $29,476,222
===========
Aggregate unrealized appreciation $ 2,062,054
Aggregate unrealized depreciation (30,821)
-----------
Net unrealized appreciation $ 2,031,233
===========
4. DIVIDEND AND DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. The tax character of dividends and distributions
paid during the six months ended February 28, 2005 and the year ended August 31,
2004 was as follows:
Delaware Tax-Free
California Insured Fund
Six Months Year
Ended Ended
2/28/05* 8/31/04
-------- ----------
Tax-exempt income $642,223 $1,562,244
Long-term capital gain 72,784 95,867
-------- ----------
Total $715,007 $1,658,111
======== ==========
*Tax information for the period ended February 28, 2005, is an estimate and the
tax character of dividends and distributions may be redesignated at the fiscal
year end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of February 28, 2005, the
estimated components of net assets on a tax basis were as follows:
Delaware
Tax-Free California
Insured Fund
-------------------
Shares of beneficial interest $30,215,489
Undistributed ordinary income --
Undistributed tax-exempt income --
Undistributed long-term capital gains (losses) 32,237
Capital loss carryforwards --
Unrealized appreciation of investments 2,031,233
-----------
Net assets $32,278,959
===========
12
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL SHARES
Delaware Tax-Free
California Insured Fund
-------------------------
Six Months Year
Ended Ended
2/28/05 8/31/04
Shares sold:
Class A 173,974 354,340
Class B -- 33,989
Class C -- 48,899
Shares issued upon reinvestments of
dividends and distributions:
Class A 21,096 55,519
Class B 6,629 14,541
Class C 1,295 4,096
-------- --------
202,994 511,384
-------- --------
Shares repurchased:
Class A (228,138) (862,920)
Class B (69,415) (230,808)
Class C (5,038) (204,997)
-------- --------
(302,591) (1,298,725)
-------- --------
Net increase (decrease) (99,597) (787,341)
======== ========
For the six months ended February 28, 2005 and the year ended August 31, 2004,
the following shares and value were converted from Class B to Class A. The
respective amounts are included in Class B redemptions and Class A subscriptions
in the table above and the Statement of Changes in Net Assets.
<TABLE>
<CAPTION>
Six Months Ended Year Ended
2/28/05 8/31/04
-------------------------------- --------------------------------
Class B Class A Class B Class A
shares shares Amount shares shares Amount
<S> <C> <C> <C> <C> <C> <C>
Delaware Tax-Free California Insured Fund 23,562 23,584 260,773 87,591 87,607 956,483
</TABLE>
6. PROXY RESULTS
The shareholders of Voyageur Mutual Funds, Voyageur Insured Funds, Voyageur
Investment Trust and Voyageur Mutual Funds II (each, a "Trust") voted on the
following proposals (as applicable) at the special meeting of shareholders on
March 23, 2005 or as adjourned. The description of each proposal and number of
shares voted are as follows:
1. To elect a Board of Trustees for each of the Trusts.
Voyageur Investment Trust
-------------------------------------------
Shares Voted
Shares Voted For Withheld Authority
-------------------------------------------------------------------------------
Thomas L. Bennett 14,252,335.197 431,663.104
-------------------------------------------------------------------------------
Jude T. Driscoll 14,251,143.991 432,854.310
-------------------------------------------------------------------------------
John A. Fry 14,258,738.991 425,259.310
-------------------------------------------------------------------------------
Anthony D. Knerr 14,258,994.991 425,003.310
-------------------------------------------------------------------------------
Lucinda S. Landreth 14,254,091.179 429,907.104
-------------------------------------------------------------------------------
Ann R. Leven 14,252,611.991 431,386.310
-------------------------------------------------------------------------------
Thomas F. Madison 14,259,138.991 424,859.310
-------------------------------------------------------------------------------
Janet L. Yeomans 14,251,014.197 432,984.104
-------------------------------------------------------------------------------
J. Richard Zecher 14,248,580.991 432,417.310
-------------------------------------------------------------------------------
13
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
6. PROXY RESULTS (CONTINUED)
2. To approve the use of a "manager of managers" structure whereby the
investment manager of the funds of each Trust will be able to hire and
replace subadvisers without shareholder approval.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Delaware Tax-Free California Insured Fund 1,402,986.417 204,851.480 117,811.607
</TABLE>
3. To approve the Plan of Reorganization between Voyageur Investment Trust and
Voyageur Mutual Funds to merge Delaware Tax-Free California Insured Fund into
Delaware Tax-Free California Fund.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Delaware Tax-Free California Insured Fund 1,497,592.882 172,770.986 55,285.636
</TABLE>
5. To approve the restructuring of Voyageur Investment Trust from a
Massachusetts business trust to a Delaware statutory trust.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Delaware Tax-Free California Insured Fund 1,519,110.655 149,997.986 56,540.863
</TABLE>
7. FUND MERGERS
Effective April 11, 2005, Delaware Tax-Free Arizona Insured Fund and Delaware
Tax-Free California Fund acquired all of the assets and assumed all of the
liabilities of Delaware Tax-Free Arizona Fund and Delaware Tax-Free California
Insured Fund, respectively, each an open-end investment company, pursuant to
Plans and Agreements of Reorganization (the "Reorganizations"). The shareholders
of Delaware Tax-Free Arizona Fund and Delaware Tax-Free California Insured Fund
received shares of the respective class of Delaware Tax-Free Arizona Insured
Fund and Delaware Tax-Free California Fund equal to the aggregate net asset
value of their shares prior to the Reorganizations based on the net asset value
per share of the respective classes of Delaware Tax-Free Arizona Insured Fund
and Delaware Tax-Free California Fund.
The Reorganizations were treated as non-taxable events and, accordingly, each of
Delaware Tax-Free Arizona Insured Fund's and Delaware Tax-Free California Fund's
basis in the securities acquired reflected the historical cost basis as of the
date of transfer. The net assets, net unrealized appreciation and accumulated
net realized loss of Delaware Tax-Free Arizona Fund and Delaware Tax-Free
California Insured Fund as of the close of business on April 8, 2005 were as
follows:
<TABLE>
<CAPTION>
Net Unrealized Accumulated Net
Net Assets Appreciation Realized Gain/Loss
<S> <C> <C> <C>
Delaware Tax-Free California Insured Fund $31,492,746 $1,782,779 $0
</TABLE>
*Includes prior year capital loss carry forwards
The net assets of Delaware Tax-Free Arizona Insured Fund and Delaware Tax-Free
California Fund prior to the Reorganizations were $134,516,467.57 and
$46,891,286.79, respectively.
14
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
8. LINE OF CREDIT
The Funds, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $183,100,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each Funds' allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Funds had no amounts outstanding as of February 28, 2005, or at any time during
the period.
9. CREDIT AND MARKET RISK
The Funds concentrate their investments in securities issued by municipalities.
The value of these investments may be adversely affected by new legislation
within the states, regional or local economic conditions, and differing levels
of supply and demand for municipal bonds. Many municipalities insure repayment
for their obligations. Although bond insurance reduces the risk of loss due to
default by an issuer, such bonds remain subject to the risk that market value
may fluctuate for other reasons and there is no assurance that the insurance
company will meet its obligations. These securities have been identified in the
Statements of Net Assets.
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 the Funds' existing
contracts and expects the risk of loss to be remote.
15
<PAGE>
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
This semiannual report is for the information of Delaware Tax-Free Arizona Fund,
Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund,
Tax-Free California Insured Fund, and Delaware Tax-Free Colorado Fund, but may
be used with a prospective investors when preceded or accompanied by a current
prospectus for Delaware Tax-Free Arizona Fund, Delaware Tax-Free Arizona Insured
Fund, Delaware Tax-Free California Fund, Tax-Free California Insured Fund, and
Delaware Tax-Free Colorado Fund and the Delaware Investments Performance Update
for the most recently completed calendar quarter. The prospectus sets forth
details about charges, expenses, investment objectives, and operating policies
of each Fund. You should read carefully before you invest. The figures in this
report represent past results which are not a guarantee of future results. The
return and principal value of an investment in each Fund will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
<TABLE>
<CAPTION>
BOARD OF TRUSTEES AFFILIATED OFFICERS CONTACT INFORMATION
<S> <C> <C>
JUDE T. DRISCOLL MICHAEL P. BISHOF INVESTMENT MANAGER
Chairman Senior Vice President and Delaware Management Company
Delaware Investments Family of Funds Chief Financial Officer Philadelphia, PA
Philadelphia, PA Delaware Investments Family of Funds
Philadelphia, PA NATIONAL DISTRIBUTOR
THOMAS L. BENNETT Delaware Distributors, L.P.
Private Investor RICHELLE S. MAESTRO Philadelphia, PA
Rosemont, PA Executive Vice President,
Chief Legal Officer and Secretary SHAREHOLDER SERVICING, DIVIDEND
JOHN A. FRY Delaware Investments Family of Funds DISBURSING AND TRANSFER AGENT
President Philadelphia, PA Delaware Service Company, Inc.
Franklin & Marshall College 2005 Market Street
Lancaster, PA JOHN J. O'CONNOR Philadelphia, PA 19103-7094
Senior Vice President and Treasurer
ANTHONY D. KNERR Delaware Investments Family of Funds FOR SHAREHOLDERS
Managing Director Philadelphia, PA 800 523-1918
Anthony Knerr & Associates
New York, NY FOR SECURITIES DEALERS AND FINANCIAL
INSTITUTIONS REPRESENTATIVES ONLY
LUCINDA S. LANDRETH 800 362-7500
Former Chief Investment Officer
Assurant, Inc. WEB SITE
Philadelphia, PA www.delawareinvestments.com
ANN R. LEVEN
Former Treasurer/Chief Fiscal Officer --------------------------------------------------------------------------------
Each Fund files its complete schedule of portfolio holdings with the Securities
National Gallery of Art and Exchange Commission for the first and third quarters of each fiscal year on
Washington, DC 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)
THOMAS F. MADISON relating to portfolio securities is available without charge (i) upon request,
President and Chief Executive Officer by calling 800 523-1918; (ii) on each Fund's Web site at
MLM Partners, Inc. http://www.delawareinvestments.com; and (iii) on the Commission's Web site at
Minneapolis, MN http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC; information on the
JANET L. YEOMANS operation of the Public Reference Room may be obtained by calling
Vice President/Mergers & Acquisitions 1-800-SEC-0330.
3M Corporation
St. Paul, MN 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
J. RICHARD ZECHER available without charge (i) through each Fund's Web site at
Founder http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
Investor Analytics http://www.sec.gov.
Scottsdale, AZ --------------------------------------------------------------------------------
(9269) Printed in the USA
SA-WEST [2/05] IVES 4/05 J10087
</TABLE>
<PAGE>
Delaware
Investments(SM)
--------------------------------------
FIXED INCOME A member of Lincoln Financial Group(R)
SEMIANNUAL REPORT FEBRUARY 28, 2005
--------------------------------------------------------------------------------
DELAWARE TAX-FREE FLORIDA FUND
DELAWARE TAX-FREE FLORIDA INSURED FUND
[Graphic Omitted:Logo] POWERED BY RESEARCH.(SM)
<PAGE>
TABLE
OF CONTENTS
-----------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES 1
-----------------------------------------------------------------
SECTOR ALLOCATIONS 3
-----------------------------------------------------------------
FINANCIAL STATEMENTS:
Statements of Net Assets 4
Statements of Operations 10
Statements of Changes in Net Assets 11
Financial Highlights 12
Notes to Financial Statements 21
-----------------------------------------------------------------
Funds are not FDIC insured and are not guaranteed. It is possible to lose
the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a
series of Delaware Management Business Trust, which is a registered
investment advisor.
(C) 2005 Delaware Distributors, L.P.
<PAGE>
DISCLOSURE For the Period Sepember 1, 2004 - April 29, 2005
OF EXPENSE CALCULATION
As a shareholder of a fund, you incur two types of costs:
(1) transaction costs, including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; redemption fees; and exchange
fees; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other fund expenses. The following examples are
intended to help you understand your ongoing costs (in dollars) of investing in
a fund and to compare these costs with the ongoing costs of investing in other
mutual funds.
The Examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire period September 1, 2004 to February 28,
2005.
ACTUAL EXPENSES
The first section of the tables shown, "Actual Fund Return," provides
information about actual account values and actual expenses. You may use the
information in this section of the table, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first section under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the tables shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The Fund's actual expenses shown in the table reflect fee waivers in
effect. The expenses shown in the table assume reinvestment of all dividends and
distributions. "Expenses Paid During Period" are equal to the Fund's annualized
expense ratio, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
DELAWARE TAX-FREE FLORIDA FUND(1)
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/04 to
9/1/04 2/28/05 Ratio 2/28/05
-------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000.00 $1,022.40 0.87% $4.40
Class B 1,000.00 1,018.60 1.62% 8.17
Class C 1,000.00 1,018.50 1.62% 8.17
-------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,020.65 0.63% $4.39
Class B 1,000.00 1,016.90 1.38% 8.17
Class C 1,000.00 1,016.90 1.38% 8.17
-------------------------------------------------------------------------------
(1) Effective November 1, 2004, the Fund's manager decreased contractual expense
waivers in effect for the Fund, causing the expense paid by the Fund to
increase. Had the new expense waivers been in effect during the period the
Fund's expense analysis would be as follows:
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/04 to
9/1/04 2/28/05 Ratio 2/28/05
-------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000.00 $1,022.40 0.90% $5.01
Class B 1,000.00 1,018.60 1.65% 8.78
Class C 1,000.00 1,018.50 1.65% 8.78
-------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,020.05 0.90% $5.00
Class B 1,000.00 1,016.30 1.65% 8.77
Class C 1,000.00 1,016.30 1.65% 8.77
-------------------------------------------------------------------------------
1
<PAGE>
DISCLOSURE For the Period Sepember 1, 2004 - April 29, 2005
OF EXPENSE CALCULATION (continued)
DELAWARE TAX-FREE FLORIDA INSURED FUND(1)
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/04 to
9/1/04 2/28/05 Ratio 2/28/05
-------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000.00 $941.10 0.90% $ 4.33
Class B 1,000.00 937.90 1.65% 7.93
Class C 1,000.00 937.70 1.65% 7.93
-------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
A Class $1,000.00 $1,020.33 0.90% $ 7.31
B Class 1,000.00 1,016.61 1.65% 10.83
C Class 1,000.00 1,016.61 1.65% 10.83
-------------------------------------------------------------------------------
(1) Effective November 1, 2004, the Fund's manager decreased contractual expense
waivers in effect for the Fund, causing the expenses paid by the Fund to
increase. Had the new expenses been in effect during the period, the Fund's
expense analysis would be as follows:
Expenses
Beginning Ending Paid During
Account Account Annualized Period
Value Value Expense 9/1/04 to
9/1/04 2/28/05 Ratio 2/28/05
-------------------------------------------------------------------------------
ACTUAL FUND RETURN
A Class $1,000.00 $941.10 0.87% $4.19
B Class 1,000.00 937.90 1.62% 7.78
C Class 1,000.00 937.70 1.62% 7.78
-------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
A Class $1,000.00 $1,020.48 0.87% $4.36
B Class 1,000.00 1,016.76 1.62% 8.10
C Class 1,000.00 1,016.76 1.62% 8.10
-------------------------------------------------------------------------------
2
<PAGE>
SECTOR ALLOCATIONS As of February 28, 2005
The SEC adopted a requirement that all funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following chart lists the Fund's categories of portfolio holdings
as a percentage of total net assets and is provided in compliance with such
requirement.
DELAWARE TAX-FREE FLORIDA FUND
------------------------------------------------------------------------
PERCENTAGE
SECTOR OF NET ASSETS
------------------------------------------------------------------------
MUNICIPAL BONDS 96.50%
------------------------------------------------------------------------
Airport Revenue Bonds 5.58%
Continuing Care/Retirement Revenue Bonds 1.63%
Corporate-Backed Revenue Bonds 0.96%
Dedicated Tax & Fees Revenue Bonds 2.21%
Hospital Revenue Bonds 12.60%
Miscellaneous Revenue Bonds 13.53%
Multifamily Housing Revenue Bonds 11.33%
Ports & Harbors Revenue Bonds 1.98%
Pre-Refunded Bonds 27.38%
Single Family Housing Revenue Bonds 3.10%
Tax Increment/Special Assessment Bonds 6.95%
Territorial Revenue Bonds 6.66%
Water & Sewer Revenue Bonds 2.59%
------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 96.50%
------------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 3.50%
------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
------------------------------------------------------------------------
DELAWARE TAX-FREE FLORIDA INSURED FUND
------------------------------------------------------------------------
PERCENTAGE
SECTOR OF NET ASSETS
------------------------------------------------------------------------
MUNICIPAL BONDS 97.79%
------------------------------------------------------------------------
Airport Revenue Bonds 3.55%
Dedicated Tax & Fees Revenue Bonds 14.59%
Higher Education Revenue Bonds 5.75%
Hospital Revenue Bonds 18.31%
Multifamily Housing Revenue Bonds 29.03%
Municipal Lease Revenue Bonds 6.00%
Public Power Revenue Bonds 2.22%
Public Utility District Revenue Bonds 1.31%
Tax Increment/Special Assessment Bonds 3.08%
Territorial General Obligation Bonds 3.11%
Territorial Revenue Bonds 9.01%
Water & Sewer Revenue Bonds 1.83%
------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 97.79%
------------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 2.21%
------------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
------------------------------------------------------------------------
3
<PAGE>
STATEMENTS DELAWARE TAX-FREE FLORIDA FUND
OF NET ASSETS February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS - 96.50%
Airport Revenue Bonds - 5.58%
Capital Trust Agency Revenue
(Orlando/Cargo Project)
6.75% 1/1/32 (AMT) $ 395,000 $ 390,276
Miami-Dade County Aviation
Revenue Series A 5.00%
10/1/33 (FSA) (AMT) 500,000 510,265
-----------
900,541
-----------
Continuing Care/Retirement Revenue Bonds - 1.63%
Volusia County Health Facilities Authority
(John Knox Village) Series A
6.00% 6/1/17 (RADIAN) 250,000 263,308
-----------
263,308
-----------
Corporate Backed Revenue Bonds - 0.96%
Jacksonville Sewer & Solid Waste Disposal
Facilities Authority (Anheuser Busch Project)
5.875% 2/1/36 (AMT) 150,000 155,420
-----------
155,420
-----------
Dedicated Tax & Fees Revenue Bonds - 2.21%
Dade County Special Obligation Series B
5.00% 10/1/35 (AMBAC) 350,000 356,857
-----------
356,857
-----------
Hospital Revenue Bonds - 12.60%
Escambia County Health Facilities
Authority (Florida Health Care Facilities -
VHA Program) 5.95% 7/1/20 (AMBAC) 425,000 431,469
Highlands County Health Facilities Authority
(Adventist Health System/Sunbelt) Series A
6.00% 11/15/31 500,000 541,755
North Miami Health Facilities Authority
(Catholic Health Services) LOC Suntrust
Bank-Miami 6.00% 8/15/16 500,000 522,160
South Broward Hospital District Revenue
(Memorial Healthcare System)
5.625% 5/1/32 500,000 538,560
-----------
2,033,944
-----------
Miscellaneous Revenue Bonds - 13.53%
Florida State Board of Education
(Lottery Revenue) Series A
6.00% 7/1/14 (FGIC) 1,000,000 1,145,140
Florida State Municipal Loan
(Council Revenue) Series A
5.00% 2/1/35 (MBIA) 1,000,000 1,038,420
-----------
2,183,560
-----------
Multifamily Housing Revenue Bonds - 11.33%
Dade County Housing Finance Authority
(Lincoln Fields Apartments Section 8)
6.25% 7/1/24 (MBIA) (FHA) 485,000 485,640
Duval Housing Finance Authority
(St. Augustine Apartments)
6.00% 3/1/21 300,000 309,462
Florida Housing Finance Agency
(The Vineyards Project) Series H
6.40% 11/1/15 500,000 518,830
Volusia County Multifamily Housing Finance
Authority (San Marco Apartments) Series A
5.60% 1/1/44 (FSA) (AMT) 500,000 514,710
-----------
1,828,642
-----------
<PAGE>
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Ports & Harbors Revenue Bonds - 1.98%
Jacksonville Port Authority Seaport Revenue
5.70% 11/1/30 (MBIA) (AMT) $ 295,000 $ 320,110
-----------
320,110
-----------
*Pre-Refunded Bonds - 27.38%
Jacksonville Electric Authority Revenue
Electric System Series 3-C
5.50% 10/1/30-05 1,000,000 1,018,940
Jacksonville Port Authority Seaport Revenue
5.70% 11/1/30-10 (MBIA) (AMT) 205,000 228,891
Northern Palm Beach County Improvement
District Special Assessment
(Abacoa Water Control) 7.20% 8/1/16-06 300,000 324,549
Pinellas County Educational Facilities Authority
(Clearwater Christian College)
Private Placement 8.00% 2/1/11-06 205,000 215,338
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue Series B 6.00% 7/1/26-05 150,000 153,471
Tampa Utilities Tax Revenue Series A
6.00% 10/1/17-09 (AMBAC) 1,000,000 1,139,020
6.125% 10/1/18-09 (AMBAC) 1,000,000 1,144,349
Volusia County Industrial Development
Authority Mortgage Revenue (Bishops
Glen Retirement Health Facilities Project)
7.50% 11/1/16-06 180,000 195,154
-----------
4,419,712
-----------
Single Family Housing Revenue Bonds - 3.10%
Florida Housing Finance Agency
Homeowner Mortgage Series 1B
6.00% 7/1/17 (FHA) (VA) 85,000 87,888
Orange County Housing Finance Authority
Homeowner Revenue Series B
5.25% 3/1/33 (GNMA) (FNMA) (AMT) 405,000 411,399
-----------
499,287
-----------
Tax Increment/Special Assessment Bonds - 6.95%
Hollywood Community Redevelopment
Agency 5.625% 3/1/24 300,000 318,153
Julington Creek Plantation Community
Development District Special
Assessment 5.00% 5/1/29 (MBIA) 200,000 207,666
Lake Bernadette Community Development
District Special Assessment Series A
8.00% 5/1/17 140,000 142,043
Midtown Miami Community Development
District Special Assessment Series B
6.50% 5/1/37 250,000 260,575
Tampa Palms Open Space & Transportation
Community Development District
(Richmond Place Project) 7.50% 5/1/18 185,000 192,572
-----------
1,121,009
-----------
Territorial Revenue Bonds - 6.66%
Puerto Rico Commonwealth Highway &
Transportation Authority
Transportation Revenue
Series G 5.00% 7/1/42 300,000 306,714
Series J 5.50% 7/1/22 350,000 385,976
4
<PAGE>
STATEMENTS DELAWARE TAX-FREE FLORIDA FUND
OF NET ASSETS (continued) February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Territorial Revenue Bonds (continued)
Puerto Rico Public Buildings Authority
Revenue (Government Facilities)
Series I 5.25% 7/1/33 $ 360,000 $ 382,360
-----------
1,075,050
-----------
Water & Sewer Revenue Bonds - 2.59%
Riviera Beach Utilities Special District
Water & Sewer Revenue
5.00% 10/1/34 (FGIC) 400,000 417,168
-----------
417,168
-----------
TOTAL MUNICIPAL BONDS
(cost $14,740,603) 15,574,608
-----------
TOTAL MARKET VALUE OF SECURITIES - 96.50%
(cost $14,740,603) 15,574,608
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 3.50% 565,166
-----------
NET ASSETS APPLICABLE TO 1,462,264
SHARES OUTSTANDING - 100.00% $16,139,774
===========
Net Asset Value - Delaware Tax-Free Florida Fund
Class A ($10,767,588 / 976,119 Shares) $11.03
------
Net Asset Value - Delaware Tax-Free Florida Fund
Class B ($3,118,959 / 282,254 Shares) $11.05
------
Net Asset Value - Delaware Tax-Free Florida Fund
Class C ($2,253,227 / 203,891 Shares) $11.05
------
COMPONENTS OF NET ASSETS AT FEBRUARY 28, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $15,896,754
Distributions in excess of net investment income (181)
Accumulated net realized loss on investments (590,804)
Net unrealized appreciation of investments 834,005
-----------
Total net assets $16,139,774
===========
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
LOC - Letter of Credit
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
VA - Insured by the Veterans Administration
*Pre-Refunded Bonds are municipals that are generally backed or secured by U.S.
Treasury Bonds. For Pre-Refunded Bonds, the stated maturity is followed by the
year in which the bond is pre-refunded.
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE TAX-FREE FLORIDA FUND
Net asset value Class A (A) $11.03
Sales charge (4.50% of offering price) (B) 0.52
------
Offering price $11.55
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
5
<PAGE>
STATEMENTS DELAWARE TAX-FREE FLORIDA INSURED FUND
OF NET ASSETS (continued) February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS - 97.79%
Airport Revenue Bonds - 3.55%
Lee County Florida Airport Revenue
Series B 5.75% 10/1/33 (FSA) $ 3,000,000 $ 3,343,350
-----------
3,343,350
-----------
Dedicated Tax & Fees Revenue Bonds - 14.59%
Florida Department of Transportation
5.00% 7/1/31 (FGIC) 1,875,000 1,948,088
Jacksonville Excise Taxes Revenue Series B
5.00% 10/1/26 (AMBAC) 1,000,000 1,041,930
5.125% 10/1/32 (FGIC) 1,000,000 1,045,530
+Palm Beach County Florida Criminal
Justice Facilities Revenue Inverse
Floater 9.47% 6/1/12 (FGIC) 7,500,000 9,700,725
-----------
13,736,273
-----------
Higher Education Revenue Bonds - 5.75%
Broward County Educational Facilities
Authority Revenue (Nova Southeastern
University) 5.25% 4/1/27 (RADIAN) 1,000,000 1,045,060
Dade County Educational Facilities
Authority (University of Miami)
Series A 5.75% 4/1/29 (AMBAC) 2,000,000 2,225,880
University of Central Florida Athletics
Association Certificates of Participation
Series A 5.25% 10/1/34 (FGIC) 2,000,000 2,140,660
-----------
5,411,600
-----------
Hospital Revenue Bonds - 18.31%
Escambia County Health Facilities
Authority (Florida Health Care
Facilities - VHA Program)
5.95% 7/1/20 (AMBAC) 4,500,000 4,568,490
Highlands County Health Facilities
Authority (Adventist Health System/
Sunbelt) Series A 6.00% 11/15/31 1,000,000 1,083,510
Indian River County Hospital District
(Indian River Memorial Hospital)
6.10% 10/1/18 (FSA) 3,000,000 3,212,100
Orange County Health Facilities
Authority Revenue (Adventist
Health System) 5.625%11/15/32 1,000,000 1,067,520
Palm Beach County Health Facilities
Authority Revenue Refunding
Hospital (Boca Raton Community
Hospital) 5.625% 12/1/31 2,000,000 2,106,340
South Broward Hospital District Revenue
(Memorial Healthcare System)
5.625% 5/1/32 2,500,000 2,692,800
Tallahassee Health Facilities
(Tallahassee Memorial Regional
Medical Center) Series B
6.00% 12/1/15 (MBIA) 2,500,000 2,507,175
-----------
17,237,935
-----------
Multifamily Housing Revenue Bonds - 29.03%
Florida Housing Finance Agency
(Crossings Indian Run Apartments HUD)
Series V 6.10% 12/1/26 (AMBAC) (AMT) 750,000 777,390
(Landings at Sea Forest Apartments) Series T
5.85% 12/1/18 (AMBAC) (FHA) (AMT) 410,000 426,572
6.05% 12/1/36 (AMBAC) (FHA) (AMT) 700,000 721,210
<PAGE>
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Multifamily Housing Revenue Bonds (continued)
(Leigh Meadows Apartments HUD) Series N
6.20% 9/1/26 (AMBAC) (AMT) $ 2,765,000 $ 2,863,240
6.30% 9/1/36 (AMBAC) (AMT) 2,000,000 2,068,860
(Mariner Club Apartments) Series K-1
6.25% 9/1/26 (AMBAC) (AMT) 2,000,000 2,072,260
6.375% 9/1/36 (AMBAC) (AMT) 3,500,000 3,623,165
(Riverfront Apartments Section 8 HUD)
Series A 6.25% 4/1/37 (AMBAC) (AMT) 1,000,000 1,040,990
(Spinnaker Cove Apartments)
Series G 6.50% 7/1/36
(AMBAC) (FHA) (AMT) 500,000 517,345
(Sterling Palms Apartments) Series D-1
6.30% 12/1/16 (AMBAC) (AMT) 975,000 1,011,972
6.40% 12/1/26 (AMBAC) (AMT) 1,500,000 1,552,095
6.50% 6/1/36 (AMBAC) (AMT) 6,540,000 6,761,118
(Woodbridge Apartments Project) Series L
6.15% 12/1/26 (AMBAC) (AMT) 1,750,000 1,815,135
6.25% 6/1/36 (AMBAC) (AMT) 2,000,000 2,072,300
-----------
27,323,652
-----------
Municipal Lease Revenue Bonds - 6.00%
Osceola County School Board Series A
5.25% 6/1/27 (AMBAC) 4,000,000 4,293,640
Palm Beach County School Board
Certificates of Participation
Series D 5.00% 8/1/28 (FSA) 300,000 311,190
State Augustine Capital Improvement
Revenue 5.00% 10/1/34 (AMBAC) 1,000,000 1,042,920
-----------
5,647,750
-----------
Public Power Revenue Bonds - 2.22%
Florida State Municipal Power Agency
Revenue (Stanton II Project)
5.00% 10/1/26 (AMBAC) 2,000,000 2,087,800
-----------
2,087,800
-----------
Public Utility District Revenue Bonds - 1.31%
Ocala Utility System Revenue Series B
5.25% 10/1/25 (FGIC) 1,125,000 1,229,648
-----------
1,229,648
-----------
Tax Increment/Special Assessment Bonds - 3.08%
Hollywood Community Redevelopment Agency
5.625% 3/1/24 900,000 954,459
Midtown Miami Community Development
District Special Assessment Series B
6.50% 5/1/37 750,000 781,725
Osceola County Celebration Community
Development District Special Assessment
6.10% 5/1/16 (MBIA) 460,000 462,811
Osceola County Enterprise Community
Development District Special
Assessment 6.10% 5/1/16 (MBIA) 695,000 699,246
-----------
2,898,241
-----------
Territorial General Obligation Bonds - 3.11%
Puerto Rico Commonwealth Public
Improvement Series A
5.50% 7/1/19 (MBIA) 2,500,000 2,931,550
-----------
2,931,550
-----------
6
<PAGE>
STATEMENTS DELAWARE TAX-FREE FLORIDA INSURED FUND
OF NET ASSETS (continued) February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Territorial Revenue Bonds - 9.01%
Puerto Rico Commonwealth Highway &
Transportation Authority
Transportation Revenue
Series D 5.25% 7/1/38 $5,000,000 $ 5,257,448
Series J 5.50% 7/1/22 1,250,000 1,378,488
Puerto Rico Electric Power Authority Power
Revenue Series OO 5.00% 7/1/13 (CIFG) 750,000 827,033
Puerto Rico Public Buildings Authority
Revenue (Government facilities)
Series F 5.25% 7/1/25 930,000 1,018,982
-----------
8,481,951
-----------
Water & Sewer Revenue Bonds - 1.83%
Tampa Water and Sewer Revenue
6.00% 10/1/16 (FSA) 1,000,000 1,201,030
Village Center Community Development
District Utility Revenue
5.00% 10/1/36 (MBIA) 500,000 519,520
-----------
1,720,550
-----------
TOTAL MUNICIPAL BONDS
(cost $86,359,498) 92,050,300
-----------
TOTAL MARKET VALUE OF SECURITIES - 97.79%
(cost $86,359,498) 92,050,300
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 2.21% 2,075,616
-----------
NET ASSETS APPLICABLE TO 8,343,711
SHARES OUTSTANDING - 100.00% $94,125,916
===========
Net Asset Value - Delaware Tax-Free Florida
Insured Fund Class A
($88,632,904 / 7,857,055 Shares) $11.28
------
Net Asset Value - Delaware Tax-Free Florida
Insured Fund Class B
($4,537,701 / 402,012 Shares) $11.29
------
Net Asset Value - Delaware Tax-Free Insured
Florida Fund Class C
($955,311 / 84,644 Shares) $11.29
------
COMPONENTS OF NET ASSETS AT FEBRUARY 28, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $88,782,533
Accumulated net realized loss on investments (347,419)
Net unrealized appreciation of investments 5,690,802
-----------
Total net assets $94,125,916
===========
+An inverse floater is a type of bond with variable or floating interest rates
that move in the opposite direction of short-term rates. Interest rate
disclosed is in effect as of February 28, 2005.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
CIFG - Insured by the CDC IXIS Financial Guaranty
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FSA - Insured by the Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by Radian Asset Assurance
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE TAX-FREE FLORIDA INSURED FUND
Net asset value Class A $11.28
Sales charge (4.50% of offering price) (B) 0.53
------
Offering price $11.81
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
7
<PAGE>
STATEMENTS Six Months Ended February 28, 2005 (Unaudited)
OF OPERATIONS
<TABLE>
<CAPTION>
Delaware Delaware
Tax-Free Tax-Free
Florida Fund Florida Insured Fund
INVESTMENT INCOME:
<S> <C> <C>
Interest $427,170 $2,512,220
-------- ----------
EXPENSES:
Management fees 44,000 232,366
Dividend disbursing and transfer agent fees and expenses 4,757 34,361
Distribution expenses -- Class A 13,153 109,380
Distribution expenses -- Class B 16,566 23,464
Distribution expenses -- Class C 10,906 4,422
Accounting and administration expenses 2,660 15,455
Registration fees 1,617 6,000
Reports and statements to shareholders 1,829 17,226
Legal and professional fees 2,523 20,946
Custodian fees 746 2,374
Trustees' fees 408 2,521
Pricing fees 719 863
Other 273 1,161
-------- ----------
100,157 470,539
Less expenses absorbed or waived (9,490) (31,880)
Less expenses paid indirectly (622) (1,390)
-------- ----------
Total expenses 90,045 437,269
-------- ----------
Net Investment Income 337,125 2,074,951
-------- ----------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments 104,924 160,275
Net change in unrealized appreciation/depreciation of investments (106,473) 56,258
-------- ----------
Net Realized and Unrealized Gain (Loss) on Investments (1,549) 216,533
-------- ----------
Net Increase in Net Assets Resulting from Operations $335,576 $2,291,484
======== ==========
</TABLE>
See accompanying notes
8
<PAGE>
STATEMENTS
OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/05 8/31/04 2/28/05 8/31/04
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 337,125 $ 723,935 $ 2,074,951 $ 4,650,828
Net realized gain on investments 104,924 32,818 160,275 177,786
Net change in unrealized
appreciation/depreciation of investments (106,473) 127,476 56,258 1,004,732
----------- ----------- ----------- ------------
Net increase in net assets resulting from operations 335,576 884,229 2,291,484 5,833,346
----------- ----------- ----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (235,071) (462,334) (1,970,373) (4,392,087)
Class B (61,576) (187,329) (87,981) (220,713)
Class C (40,478) (74,272) (16,597) (38,028)
----------- ----------- ----------- ------------
(337,125) (723,935) (2,074,951) (4,650,828)
----------- ----------- ----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 1,541,537 933,040 4,435,652 4,069,521
Class B 50,560 162,847 310,832 591,446
Class C 159,003 649,420 136,911 524,409
Net asset value of shares issued upon
reinvestment of dividends and distributions:
Class A 106,492 197,490 708,182 1,422,253
Class B 9,958 47,821 23,475 86,919
Class C 17,975 34,530 9,914 24,843
----------- ----------- ----------- ------------
1,885,525 2,025,148 5,624,966 6,719,391
----------- ----------- ----------- ------------
Cost of shares repurchased:
Class A (704,083) (1,087,726) (4,305,901) (14,966,660)
Class B (697,735) (1,815,553) (809,865) (1,533,316)
Class C (80,411) (379,454) (280,706) (317,623)
----------- ----------- ----------- ------------
(1,482,229) (3,282,733) (5,396,472) (16,817,599)
----------- ----------- ----------- ------------
Increase (decrease) in net assets derived
from capital share transactions 403,296 (1,257,585) 228,494 (10,098,208)
----------- ----------- ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS 401,747 (1,097,291) 445,027 (8,915,690)
NET ASSETS:
Beginning of period 15,738,027 16,835,318 93,680,889 102,596,579
----------- ----------- ----------- ------------
End of period $16,139,774 $15,738,027 $94,125,916 $ 93,680,889
----------- ----------- ----------- ------------
(Distributions in excess of net investment income) $ (181) $ (181) $ - $ -
=========== =========== =========== ============
</TABLE>
See accompanying notes
9
<PAGE>
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Fund Class A
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.030 $10.920 $11.030 $10.870 $10.420 $10.530
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.245 0.505 0.510 0.514 0.513 0.518
Net realized and unrealized gain (loss) on investments - 0.110 (0.110) 0.160 0.450 (0.110)
------- ------- ------- ------- ------- -------
Total from investment operations 0.245 0.615 0.400 0.674 0.963 0.408
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.245) (0.505) (0.510) (0.514) (0.513) (0.518)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.245) (0.505) (0.510) (0.514) (0.513) (0.518)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.030 $11.030 $10.920 $11.030 $10.870 $10.420
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 2.24% 5.72% 3.67% 6.42% 9.48% 4.11%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $10,768 $9,824 $9,694 $10,464 $10,747 $8,711
Ratio of expenses to average net assets(4) 0.87% 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.99% 0.99% 0.98% 1.06% 0.97% 1.10%
Ratio of net investment income to average net assets 4.45% 4.55% 4.59% 4.78% 4.84% 5.11%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.33% 4.31% 4.36% 4.47% 4.62% 4.76%
Portfolio turnover 25% 13% 31% 57% 40% 64%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted provisions of the
AICPA Audit & Accounting Guide for Investment Companies that requires
amortization of all premium and discounts on debt securities. This change
had no impact for the year ended August 31, 2002. Per share data and ratios
for periods prior to September 1, 2001 have not been restated to reflect
this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
(4) Ratio for the year ended August 31, 2002, including fees paid indirectly in
accordance with Securities and Exchange Commission rules, was 0.76%.
See accompanying notes
10
<PAGE>
FINANCIAL
HIGHLIGHTS (continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Fund Class B
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.050 $10.940 $11.040 $10.890 $10.430 $10.540
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.204 0.422 0.426 0.433 0.434 0.443
Net realized and unrealized gain (loss) on investments - 0.110 (0.100) 0.150 0.460 (0.110)
------- ------- ------- ------- ------- -------
Total from investment operations 0.204 0.532 0.326 0.583 0.894 0.333
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.204) (0.422) (0.426) (0.433) (0.434) (0.443)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.204) (0.422) (0.426) (0.433) (0.434) (0.443)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.050 $11.050 $10.940 $11.040 $10.890 $10.430
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 1.86% 4.92% 2.98% 5.52% 8.76% 3.34%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $3,119 $3,757 $5,313 $5,110 $4,655 $4,045
Ratio of expenses to average net assets(4) 1.62% 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.74% 1.74% 1.73% 1.81% 1.72% 1.85%
Ratio of net investment income to average net assets 3.70% 3.80% 3.84% 4.03% 4.09% 4.36%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.58% 3.56% 3.61% 3.72% 3.87% 4.01%
Portfolio turnover 25% 13% 31% 57% 40% 64%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted provisions of the
AICPA Audit & Accounting Guide for Investment Companies that requires
amortization of all premium and discounts on debt securities. This change
had no impact for the year ended August 31, 2002. Per share data and ratios
for periods prior to September 1, 2001 have not been restated to reflect
this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
(4) Ratio for the year ended August 31, 2002, including fees paid indirectly in
accordance with Securities and Exchange Commission rules, was 1.51%.
See accompanying notes
11
<PAGE>
FINANCIAL
HIGHLIGHTS (continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Fund Class C
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.050 $10.930 $11.040 $10.880 $10.420 $10.530
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.204 0.421 0.426 0.433 0.434 0.446
Net realized and unrealized gain (loss) on investments - 0.120 (0.110) 0.160 0.460 (0.110)
------- ------- ------- ------- ------- -------
Total from investment operations 0.204 0.541 0.316 0.593 0.894 0.336
------- ------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income (0.204) (0.421) (0.426) (0.433) (0.434) (0.446)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.204) (0.421) (0.426) (0.433) (0.434) (0.446)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.050 $11.050 $10.930 $11.040 $10.880 $10.420
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 1.85% 5.02% 2.89% 5.63% 8.79% 3.38%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $2,253 $2,157 $1,828 $732 $516 $433
Ratio of expenses to average net assets(4) 1.62% 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.74% 1.74% 1.73% 1.81% 1.72% 1.85%
Ratio of net investment income to average net assets 3.70% 3.80% 3.84% 4.03% 4.09% 4.36%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.58% 3.56% 3.61% 3.72% 3.87% 4.01%
Portfolio turnover 25% 13% 31% 57% 40% 64%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted provisions of the
AICPA Audit & Accounting Guide for Investment Companies that requires
amortization of all premium and discounts on debt securities. This change
had no impact for the year ended August 31, 2002. Per share data and ratios
for periods prior to September 1, 2001 have not been restated to reflect
this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
(4) Ratio for the year ended August 31, 2002, including fees paid indirectly in
accordance with Securities and Exchange Commission rules, was 1.51%.
See accompanying notes
12
<PAGE>
FINANCIAL
HIGHLIGHTS (continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund Class A
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.250 $11.110 $11.330 $11.230 $10.770 $10.750
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.252 0.533 0.523 0.532 0.527 0.525
Net realized and unrealized gain (loss) on investments 0.030 0.140 (0.220) 0.100 0.460 0.020
------- ------- ------- ------- ------- -------
Total from investment operations 0.282 0.673 0.303 0.632 0.987 0.545
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.252) (0.533) (0.523) (0.532) (0.527) (0.525)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.252) (0.533) (0.523) (0.532) (0.527) (0.525)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.280 $11.250 $11.110 $11.330 $11.230 $10.770
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 2.52% 6.15% 2.68% 5.83% 9.39% 5.29%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $88,633 $87,591 $95,951 $105,773 $107,365 $110,708
Ratio of expenses to average net assets 0.90% 0.90% 0.90% 0.90% 0.90% 0.91%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.97% 0.94% 0.94% 0.99% 0.97% 1.01%
Ratio of net investment income to average net assets 4.50% 4.72% 4.60% 4.80% 4.81% 4.98%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.43% 4.68% 4.56% 4.71% 4.74% 4.88%
Portfolio turnover 15% 3% 26% 46% 12% 56%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted provisions of the
AICPA Audit & Accounting Guide for Investment Companies that requires
amortization of all premium and discounts on debt securities. This change
had no impact for the year ended August 31, 2002. Per share data and ratios
for periods prior to September 1, 2001 have not been restated to reflect
this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
13
<PAGE>
FINANCIAL
HIGHLIGHTS (continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund Class B
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.260 $11.120 $11.330 $11.230 $10.770 $10.750
Income (loss) from investment operations:
Net investment income 0.210 0.448 0.437 0.445 0.443 0.448
Net realized and unrealized gain (loss) on investments 0.030 0.140 (0.210) 0.100 0.460 0.016
------- ------- ------- ------- ------- -------
Total from investment operations 0.240 0.588 0.227 0.545 0.903 0.464
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.210) (0.448) (0.437) (0.445) (0.443) (0.444)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.210) (0.448) (0.437) (0.445) (0.443) (0.444)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.290 $11.260 $11.120 $11.330 $11.230 $10.770
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 2.14% 5.36% 2.00% 5.01% 8.56% 4.50%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $4,538 $5,002 $5,800 $5,223 $5,014 $5,272
Ratio of expenses to average net assets 1.65% 1.65% 1.65% 1.65% 1.65% 1.66%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.72% 1.69% 1.69% 1.74% 1.72% 1.76%
Ratio of net investment income to average net assets 3.75% 3.97% 3.85% 4.05% 4.06% 4.23%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.68% 3.93% 3.81% 3.96% 3.99% 4.13%
Portfolio turnover 15% 3% 26% 46% 12% 56%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted provisions of the
AICPA Audit & Accounting Guide for Investment Companies that requires
amortization of all premium and discounts on debt securities. This change
had no impact for the year ended August 31, 2002. Per share data and ratios
for periods prior to September 1, 2001 have not been restated to reflect
this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
14
<PAGE>
FINANCIAL
HIGHLIGHTS (continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Delaware Tax-Free Florida Insured Fund Class C
-----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.260 $11.120 $11.330 $11.240 $10.780 $10.760
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.210 0.448 0.437 0.447 0.443 0.454
Net realized and unrealized gain (loss) on investments 0.030 0.140 (0.210) 0.090 0.460 0.010
------- ------- ------- ------- ------- -------
Total from investment operations 0.240 0.588 0.227 0.537 0.903 0.464
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.210) (0.448) (0.437) (0.447) (0.443) (0.444)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.210) (0.448) (0.437) (0.447) (0.443) (0.444)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $11.290 $11.260 $11.120 $11.330 $11.240 $10.780
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 2.14% 5.36% 2.00% 4.93% 8.45% 4.49%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $955 $1,088 $846 $560 $53 $51
Ratio of expenses to average net assets 1.65% 1.65% 1.65% 1.65% 1.65% 1.66%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.72% 1.69% 1.69% 1.74% 1.72% 1.76%
Ratio of net investment income to average net assets 3.75% 3.97% 3.85% 4.05% 4.06% 4.23%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.68% 3.93% 3.81% 3.96% 3.99% 4.13%
Portfolio turnover 15% 3% 26% 46% 12% 56%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted provisions of the
AICPA Audit & Accounting Guide for Investment Companies that requires
amortization of all premium and discounts on debt securities. This change
had no impact for the year ended August 31, 2002. Per share data and ratios
for periods prior to September 1, 2001 have not been restated to reflect
this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the manager.
Performance would have been lower had the expense limitation not been in
effect.
See accompanying notes
15
<PAGE>
NOTES February 28, 2005 (Unaudited)
TO FINANCIAL STATEMENTS
Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust
and offers six series: Delaware Tax-Free Arizona Fund, Delaware Tax-Free
California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield
Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, and
Delaware Tax-Free New York Fund. Voyageur Investment Trust (the "Trust") is
organized as a Massachusetts business trust and offers five series: Delaware
Tax-Free California Insured Fund, Delaware Tax-Free Florida Fund, Delaware
Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund, and
Delaware Tax-Free Oregon Insured Fund. These financial statements and the
related notes pertain to Delaware Tax-Free Florida Fund, Delaware Tax-Free
Florida Insured Fund, and Delaware Tax-Free New York Fund (each a"Fund" or,
collectively, the "Funds"). The Trusts are open-end investment companies. The
Funds are considered non-diversified under the Investment Company Act of 1940,
as amended. The Funds offer Class A, Class B, and Class C shares. Class A shares
are sold with a front-end sales charge of up to 4.50%. Class B shares are sold
with a contingent deferred sales charge that declines from 4% to zero depending
upon the period of time the shares are held. Class B shares will automatically
convert to Class A shares on a quarterly basis approximately eight years after
purchase. Class C shares are sold with a contingent deferred sales charge of 1%,
if redeemed during the first twelve months. The investment objective of Delaware
Tax-Free Florida Fund, Delaware Tax-Free Florida Insured Fund and Delaware
Tax-Free New York Fund is to seek as high a level of current income exempt from
federal income tax and the state personal income tax in their respective states,
as is consistent with preservation of capital.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation -- Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of each Funds' Board of
Trustees.
Federal Income Taxes -- Each Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting -- Investment income and common expenses are allocated to the
classes of the Funds on the basis of "settled shares" of each class in relation
to the net assets of the Funds. Realized and unrealized gain (loss) on
investments are allocated to the various classes of the Funds on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other -- Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. Security transactions
are recorded on the date the securities are purchased or sold (trade date).
Costs used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. 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 may receive earnings credits from their custodian when positive cash
balances are maintained, which are used to offset custody fees. The expenses
paid under the above arrangements is included in custodian fees on the
Statements of Operations with the corresponding expense offset shown as
"expenses paid indirectly". The amount of these expenses for the period ended
February 28, 2005 were as follows:
Delaware Delaware
Tax-Free Tax-Free
Florida Florida Insured
Fund Fund
-------- ---------------
Earnings credits $622 $1,390
16
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (continued)
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its respective investment management agreement,
each Fund pays Delaware Management Company (DMC), a series of Delaware
Management Business Trust and the investment manager, an annual fee based on
each Fund's average daily net assets as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
On the first $500 million 0.55% 0.50%
On the next $500 million 0.50% 0.475%
On the next $1.5 billion 0.45% 0.45%
In excess of $2.5 billion 0.425% 0.425%
</TABLE>
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse each Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs and extraordinary expenses, do not
exceed specified percentages of average daily net assets through March 31, 2006
for the Delaware Tax-Free Florida Fund and Tax-Free Florida Insured Fund and
through December 29, 2005 for the Delaware Tax-Free New York Fund, as shown
below:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
The operating expense limitation
as a percentage of average daily
net assets (per annum) 0.50% 0.65%
Expiration date 10/31/04 10/31/04
Effective November 1, 2004, operating expense
limitation as a percentage of average daily
net assets (per annum) 0.65% 0.62%
Expiration date 3/31/06 3/31/06
</TABLE>
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing, and transfer agent services. The Funds pay
DSC a monthly fee based on average net assets subject to certain minimums for
accounting and administration services. Each Fund pays DSC a monthly fee based
on the number of shareholder accounts for dividend disbursing and transfer agent
services.
Pursuant to a distribution agreement, each Fund pays Delaware Distributors, L.P.
(DDLP), the distributor and an affiliate of DMC, an annual fee not to exceed
0.25% of the average daily net assets of the Class A shares and 1.00% of the
average daily net assets of the Class B and C shares.
<PAGE>
At February 28, 2005, the Funds had receivables from or liabilities payable to
affiliates as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
Receivable from DMC under expense
limitation agreement $-- $--
Investment management fee payable to DMC (6,468) (21,012)
Dividend disbursing, transfer agent fees,
accounting and administration fees
and other expenses payable to DSC (1,313) (8,570)
Other expenses payable to DMC and affiliates* (2,769) (4,355)
</TABLE>
*DMC, as part of its administrative services, pays operating expenses on behalf
of the Funds and is reimbursed on a periodic basis. Such expenses include items
such as printing of shareholder reports, fees for audit, legal and tax services,
registration fees and trustees' fees.
As provided in the investment management agreement, the Funds bear the cost of
certain legal services expenses, including internal legal services provided to
the Funds by DMC employees. For the period ended February 28, 2005, the Funds'
costs were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
$447 $2,974
</TABLE>
For the six months ended February 28, 2005, DDLP earned commissions on sales of
Class A shares for each Fund as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
$4,341 $3,130
</TABLE>
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.
17
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (continued)
3. INVESTMENTS
For the six months ended February 28, 2005, the Funds made purchases and sales
of investment securities other than short-term investments as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
Purchases $2,137,840 $7,033,678
Sales 1,991,340 7,494,250
</TABLE>
At February 28, 2005 the cost of investments for federal income tax purposes has
been estimated since the final tax characteristics cannot be determined until
fiscal year end. At February 28, 2005, the cost of investments and unrealized
appreciation (depreciation) for each Fund were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
Cost of investments $14,740,603 $86,359,498
=========== ===========
Aggregate unrealized appreciation $849,114 $5,693,985
Aggregate unrealized depreciation (15,109) (3,183)
----------- -----------
Net unrealized appreciation $834,005 $5,690,802
=========== ===========
</TABLE>
4. DIVIDEND AND DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. The tax character of dividends and distributions
paid during the six months ended February 28, 2005 and the year ended August 31,
2004 was as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/05* 8/31/04 2/28/05* 8/31/04
<S> <C> <C> <C> <C>
Tax-exempt income $337,125 $723,935 $2,074,951 $4,650,828
</TABLE>
*Tax information for the six months ended February 28, 2005 is an estimate and
the tax character of dividends and distributions may be redesignated at fiscal
year end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of February 28, 2005, the
estimated components of net assets on a tax basis were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
Shares of beneficial interest $15,896,754 $88,782,533
Distributions in excess of net investment income (181) --
Capital loss carryforwards (590,804) (347,419)
Unrealized appreciation of investments 834,005 5,690,802
----------- -----------
Net Assets $16,139,774 $94,125,916
=========== ===========
</TABLE>
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Capital loss carryforward
amounts remaining at February 28, 2005 will expire as follows:
<TABLE>
<CAPTION>
Year of Delaware Tax-Free Delaware Tax-Free
Expiration Florida Fund Florida Insured Fund
---------- ----------------- --------------------
<S> <C> <C>
2008 $52,610 $507,694
2009 643,118 --
-------- --------
Total $695,728 $507,694
======== ========
</TABLE>
For the six months ended February 28, 2005, each Fund had net capital gains,
which may be offset to the capital loss carryforwards:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
<S> <C> <C>
$104,924 $160,275
</TABLE>
18
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (continued)
5. CAPITAL SHARES
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Florida Fund Florida Insured Fund
----------------- --------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/05 8/31/04 2/28/05 8/31/04
<S> <C> <C> <C> <C>
Shares sold:
Class A 139,582 84,436 392,747 361,036
Class B 4,567 14,638 27,526 52,775
Class C 14,351 58,853 12,106 46,726
Shares issued upon reinvestment of
dividends and distributions:
Class A 9,640 17,890 62,670 126,274
Class B 900 4,318 2,076 7,699
Class C 1,624 3,122 877 2,205
-------- -------- -------- ----------
170,664 183,257 498,002 596,715
-------- -------- -------- ----------
Shares repurchased:
Class A (63,632) (99,881) (381,482) (1,339,780)
Class B (63,140) (164,848) (71,841) (137,961)
Class C (7,269) (33,967) (24,971) (28,419)
-------- -------- -------- ----------
(134,041) (298,696) (478,294) (1,506,160)
-------- -------- -------- ----------
Net increase (decrease) 36,623 (115,439) 19,708 (909,445)
-------- -------- -------- ----------
</TABLE>
For the six months ended February 28, 2005 and the year ended August 31, 2004,
the following shares and value were converted from Class B to Class A shares.
The respective amounts are included in Class B redemptions and Class A
subscriptions in the table above and the Statements of Changes in Net Assets.
<TABLE>
<CAPTION>
Six Months Ended Year Ended
2/28/05 8/31/04
---------------------------------------- -----------------------------------------
Class B Shares Class A Shares Amount Class B Shares Class A Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Delaware Tax-Free Florida Fund 8,912 8,927 $ 98,647 3,312 3,317 $ 36,842
Delaware Tax-Free Florida Insured Fund 22,768 22,770 256,675 16,704 16,705 189,023
</TABLE>
6. PROXY RESULTS
The shareholders of Voyageur Mutual Funds and Voyageur Investment Trust (each, a
"Trust") voted on the following proposals (as applicable) at the special meeting
of shareholders on March 23, 2005 or as adjourned. The description of each
proposal and number of shares voted are as follows:
1. To elect a Board of Trustees for each of the Trusts.
Voyageur Investment Trust
-------------------------------------
Shares Voted
Shares Voted For Withheld Authority
---------------- ------------------
Thomas L. Bennett 14,252,335.197 431,663.104
Jude T. Driscoll 14,251,143.991 432,854.310
John A. Fry 14,258,738.991 425,259.310
Anthony D. Knerr 14,258,994.991 425,003.310
Lucinda S. Landreth 14,254,091.179 429,907.104
Ann R. Leven 14,252,611.991 431,386.310
Thomas F. Madison 14,259,138.991 424,859.310
Janet L. Yeomans 14,251,014.197 432,984.104
J. Richard Zecher 14,248,580.991 432,417.310
19
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (continued)
2. To approve the use of a "manager of managers" structure whereby the
investment manager of the funds of each Trust will be able to hire and replace
subadvisers without shareholder approval.
<TABLE>
<CAPTION>
For Against Abstain
------------- ----------- -----------
<S> <C> <C> <C>
Delaware Tax-Free Florida Fund 736,344.037 34,697.000 98,905.272
Delaware Tax-Free Florida Insured Fund 3,582,081.061 375,237.993 199,180.980
</TABLE>
3. To approve the Plan of Reorganization for Voyageur Investment Trust to merge
Delaware Tax-Free Florida Fund into Delaware Tax-Free Florida Insured Fund.
<TABLE>
<CAPTION>
For Against Abstain
------------- ----------- -----------
<S> <C> <C> <C>
Delaware Tax-Free Florida Fund 771,340.129 13,994.000 84,609.180
</TABLE>
4. To approve the restructuring of Voyageur Investment Trust from a
Massachusetts business trust to a Delaware statutory trust.
<TABLE>
<CAPTION>
For Against Abstain
------------- ----------- -----------
<S> <C> <C> <C>
Delaware Tax-Free Florida Fund 771,340.129 8,378.000 90,225.180
Delaware Tax-Free Florida Insured Fund 3,851,059.434 150,530.005 154,910.595
</TABLE>
7. FUND MERGER
Effective April 11, 2005, Delaware Tax-Free Florida Insured Fund (the "Fund")
acquired all of the assets and assumed all of the liabilities of Delaware
Tax-Free Florida Fund, an open-end investment company, pursuant to a Plan and
Agreement of Reorganization (the "Reorganization"). The shareholders of Delaware
Tax-Free Florida Fund received shares of the respective class of the Fund equal
to the aggregate net asset value of their shares prior to the Reorganization
based on the net asset value per share of the respective classes of the Fund.
The Reorganization was treated as a non-taxable event and, accordingly, the
Fund's basis in the securities acquired reflected the historical cost basis as
of the date of transfer. The net assets, net unrealized appreciation and
accumulated net realized loss of Delaware Tax-Free Florida Fund as of the close
of business on April 8, 2005 were as follows:
<TABLE>
<CAPTION>
Accumulated
Net Unrealized Net Realized
Net Assets Appreciation Losses
----------- -------------- ------------
<S> <C> <C> <C>
Delaware Tax-Free Florida Fund $15,521,298 $648,070 $515,360*
</TABLE>
*Includes prior capital loss carry forwards.
The net assets of the Fund prior to the Reorganization were $92,098,392.46.
8. LINE OF CREDIT
The Funds, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $183,100,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each funds' allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Funds had no amounts outstanding as of February 28, 2005, or at any time during
the period.
9. CREDIT AND MARKET RISK
The Funds concentrate their investments in securities issued by each
corresponding state's municipalities. The value of these investments may be
adversely affected by new legislation within the states, regional or local
economic conditions, and differing levels of supply and demand for municipal
bonds. Many municipalities insure repayment for their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that market value may fluctuate for other reasons and
there is no assurance that the insurance company will meet its obligations.
These securities have been identified in the Statements of Net Assets.
10. CONTRACTUAL OBLIGATIONS
The Funds enter into contracts 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.
20
<PAGE>
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
This semiannual report is for the information of Delaware Tax-Free Florida,
Delaware Tax-Free Florida Insured, and Delaware Tax-Free New York Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current prospectus for Delaware Tax-Free Florida, Delaware
Tax-Free Florida Insured, and Delaware Tax-Free New York Fund and the Delaware
Investments Performance Update for the most recently completed calendar quarter.
The prospectus sets forth details about charges, expenses, investment
objectives, and operating policies of the Fund. You should read the prospectus
carefully before you invest. The figures in this report represent past results
that are not a guarantee of future results. The return and principal value of an
investment in the Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
<TABLE>
<CAPTION>
BOARD OF TRUSTEES AFFILIATED OFFICERS CONTACT INFORMATION
<S> <C> <C>
JUDE T. DRISCOLL MICHAEL P. BISHOF INVESTMENT MANAGER
Chairman Senior Vice President and Delaware Management Company
Delaware Investments Family of Funds Chief Financial Officer Philadelphia, PA
Philadelphia, PA Delaware Investments Family of Funds
Philadelphia, PA NATIONAL DISTRIBUTOR
THOMAS L. BENNETT Delaware Distributors, L.P.
Private Investor RICHELLE S. MAESTRO Philadelphia, PA
Rosemont, PA Executive Vice President,
Chief Legal Officer and Secretary SHAREHOLDER SERVICING, DIVIDEND
JOHN A. FRY Delaware Investments Family of Funds DISBURSING AND TRANSFER AGENT
President Philadelphia, PA Delaware Service Company, Inc.
Franklin & Marshall College 2005 Market Street
Lancaster, PA JOHN J. O'CONNOR Philadelphia, PA 19103-7094
Senior Vice President and Treasurer
ANTHONY D. KNERR Delaware Investments Family of Funds FOR SHAREHOLDERS
Managing Director Philadelphia, PA 800 523-1918
Anthony Knerr & Associates
New York, NY FOR SECURITIES DEALERS AND FINANCIAL
INSTITUTIONS REPRESENTATIVES ONLY
LUCINDA S. LANDRETH 800 362-7500
Former Chief Investment Officer
Assurant, Inc. WEB SITE
Philadelphia, PA www.delawareinvestments.com
ANN R. LEVEN
Former Treasurer/Chief Fiscal Officer
National Gallery of Art
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
JANET L. YEOMANS
Vice President/Mergers & Acquisitions
3M Corporation
St. Paul, MN
J. RICHARD ZECHER
Founder
Investor Analytics
Scottsdale, AZ
</TABLE>
--------------------------------------------------------------------------------
Each Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. Each Fund's Forms N-Q, as well as a description of the policies and
procedures that each Fund uses to determine how to vote proxies (if any)
relating to portfolio securities is available without charge (i) upon request,
by calling 800 523-1918; (ii) on each Fund's Web site at
http://www.delawareinvestments.com; and (iii) on the Commission's Web site at
http://www.sec.gov. Each Fund's Forms N-Q may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC; information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Information (if any) regarding how each Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through each Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
--------------------------------------------------------------------------------
(9271) Printed in the USA
SA-FLNY [2/05] IVES 4/05 J10083
<PAGE>
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
FIXED INCOME
SEMIANNUAL REPORT FEBRUARY 28, 2005
--------------------------------------------------------------------------------
DELAWARE TAX-FREE MISSOURI INSURED FUND
DELAWARE TAX-FREE OREGON INSURED FUND
[LOGO] POWERED BY RESEARCH.(SM)
<PAGE>
TABLE
OF CONTENTS
----------------------------------------------------
DISCLOSURE OF FUND EXPENSES 1
----------------------------------------------------
SECTOR ALLOCATIONS 2
----------------------------------------------------
FINANCIAL STATEMENTS:
Statement of Net Assets 4
Statement of Operations 12
Statements of Changes in Net Assets 13
Financial Highlights 14
Notes to Financial Statements 23
----------------------------------------------------
Funds are not FDIC insured and are not guaranteed. It is possible to lose
the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a
series of Delaware Management Business Trust, which is a registered
investment advisor.
(C) 2005 Delaware Distributors, L.P.
<PAGE>
DISCLOSURE For the Period September 1, 2004 to February 28, 2005
OF FUND EXPENSES
As a shareholder of a fund, you incur two types of costs:
(1) transaction costs, including sales charges (loads) on purchase payments,
reinvested dividends, or other distributions; redemption fees; and exchange
fees; and (2) ongoing costs, including management fees; distribution and/or
service (12b-1) fees; and other fund expenses. The following examples are
intended to help you understand your ongoing costs (in dollars) of investing in
a fund and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from September 1, 2004 to February 28,
2005.
ACTUAL EXPENSES
The first section of the tables shown, "Actual Fund Return," provides
information about actual account values and actual expenses. You may use the
information in this section of the table, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number in the first section under the
heading entitled "Expenses Paid During Period" to estimate the expenses you paid
on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the tables shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The Fund's actual expenses shown in the table reflect fee waivers in
effect. The expenses shown in the table assume reinvestment of all dividends and
distributions.
<PAGE>
"Expenses Paid During Period" are equal to the Fund's annualized expense ratio,
multiplied by the average account value over the period, multiplied by 181/365
(to reflect the one-half year period).
DELAWARE TAX-FREE MISSOURI INSURED FUND
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
<TABLE>
<CAPTION>
Beginning Ending Annualized Expense
Account Account Expense Paid During
Value Value Ratio Period
9/1/04 2/28/05 9/1/04 to
2/28/05
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ACTUAL FUND RETURN
Class A $1,000.00 $1,021.70 0.94% $4.71
Class B 1,000.00 1,018.90 1.69% 8.46
Class C 1,000.00 1,017.90 1.69% 8.46
--------------------------------------------------------------------------------------------------------------
HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,020.13 0.94% $4.71
Class B 1,000.00 1,016.41 1.69% 8.45
Class C 1,000.00 1,016.41 1.69% 8.45
--------------------------------------------------------------------------------------------------------------
</TABLE>
DELAWARE TAX-FREE OREGON INSURED FUND
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
<TABLE>
<CAPTION>
Beginning Ending Annualized Expense
Account Account Expense Paid During
Value Value Ratio Period
9/1/04 2/28/05 9/1/04 to
2/28/05
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actual Fund Return
Class A $1,000.00 $1,023.80 0.85% $4.27
Class B 1,000.00 1,020.00 1.60% 8.01
Class C 1,000.00 1,019.90 1.60% 8.01
HYPOTHETICAL 5% RETURN (5% return before expenses)
--------------------------------------------------------------------------------------------------------------
Class A $1,000.00 $1,020.58 0.85% $4.26
Class B 1,000.00 1,016.86 1.60% 8.00
Class C 1,000.00 1,016.86 1.60% 8.00
--------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
SECTOR ALLOCATIONS As of February 28, 2005
The SEC adopted a requirement that all funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following chart lists the Funds' categories of portfolio holdings
as a percent of total net assets and is provided in compliance with such
requirement.
DELAWARE TAX-FREE MISSOURI INSURED FUND
------------------------------------------------------------------------
PERCENTAGE
SECTOR OF NET ASSETS
------------------------------------------------------------------------
MUNICIPAL BONDS 98.65%
------------------------------------------------------------------------
Airport Revenue Bonds 3.46%
City General Obligation Bonds 2.17%
Corporate-Backed Revenue Bonds 1.99%
Dedicated Tax & Fees Revenue Bonds 4.03%
Escrowed to Maturity Bonds 2.44%
Higher Education Revenue Bonds 1.99%
Hospital Revenue Bonds 11.75%
Investor Owned Utilities Revenue Bonds 4.36%
Miscellaneous Revenue Bonds 2.10%
Multifamily Housing Revenue Bonds 5.84%
Municipal Lease Revenue Bonds 13.59%
Political Subdivision General Obligation Bonds 2.05%
Pre-Refunded Bonds 10.77%
Public Power Revenue Bonds 2.27%
School District General Obligation Bonds 9.06%
Single Family Housing Revenue Bonds 2.27%
Tax Increment/Special Assessment Bonds 0.95%
Territorial General Obligation Bonds 1.02%
Territorial Revenue Bonds 8.83%
Water & Sewer Revenue Bonds 7.71%
-----------------------------------------------------------------------
SHORT-TERM INVESTMENTS 1.18%
-----------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 99.83%
-----------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 0.17%
-----------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
-----------------------------------------------------------------------
2
<PAGE>
SECTOR ALLOCATION As of February 28, 2005
The SEC adopted a requirement that all funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following chart lists the Fund's categories of portfolio holdings
as a percent of total net assets and is provided in compliance with such
requirement.
DELAWARE TAX-FREE OREGON INSURED FUND
-----------------------------------------------------------------------
PERCENTAGE
SECTOR OF NET ASSETS
-----------------------------------------------------------------------
MUNICIPAL BONDS 96.66%
-----------------------------------------------------------------------
Airport Revenue Bonds 3.48%
Escrowed to Maturity Bonds 2.48%
Higher Education Revenue Bonds 11.34%
Hospital Revenue Bonds 4.14%
Investor Owned Utilities Revenue Bonds 1.40%
Miscellaneous Revenue Bonds 3.16%
Multifamily Housing Revenue Bonds 2.46%
Municipal Lease Revenue Bonds 2.43%
Political Subdivision General Obligation Bonds 6.15%
Pre-Refunded Bonds 21.23%
Public Utility District Revenue Bonds 1.81%
School District General Obligation Bonds 16.49%
Single Family Housing Revenue Bonds 3.65%
Tax Increment/Special Assessment Bonds 2.77%
Territorial Revenue Bonds 12.91%
Water & Sewer Revenue Bonds 0.76%
-----------------------------------------------------------------------
SHORT-TERM INVESTMENTS 2.32%
-----------------------------------------------------------------------
Money Market 0.10%
Variable Rate Demand Notes 2.22%
-----------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES 98.98%
-----------------------------------------------------------------------
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 1.02%
-----------------------------------------------------------------------
TOTAL NET ASSETS 100.00%
-----------------------------------------------------------------------
3
<PAGE>
STATEMENT DELAWARE TAX-FREE MISSOURI INSURED FUND
OF NET ASSETS February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS - 98.65%
Airport Revenue Bonds - 3.46%
St. Louis Airport (Capital Improvement
Project) Series A 5.375% 7/1/21 (MBIA) $1,635,000 $1,789,442
----------
1,789,442
----------
City General Obligation Bonds - 2.17%
Des Peres Refunding
5.375% 2/1/20 (AMBAC) 1,000,000 1,120,830
----------
1,120,830
----------
Corporate-Backed Revenue Bonds - 1.99%
Missouri State Development Finance
Board Infrastructure Facilities
(Triumph Foods Project) Series A
5.25% 3/1/25 500,000 513,105
Sugar Creek Industrial Development
Revenue (Lafarge North America) Series A
5.65% 6/1/37 (AMT) 500,000 514,840
----------
1,027,945
----------
Dedicated Tax & Fees Revenue Bonds - 4.03%
Bi-State Development Agency Illinois
Metropolitan District (Metrolink Cross
County Project) Series B
5.00% 10/1/32 (FSA) 1,000,000 1,039,960
Jackson County Special Obligation
5.00% 12/1/27 (MBIA) 1,000,000 1,042,010
----------
2,081,970
----------
Escrowed to Maturity Bonds - 2.44 %
Cape Girardeau County Industrial
Development Authority Health
Care Facilities Revenue
(Southeast Missouri Hospital)
5.25% 6/1/16 (MBIA) 440,000 492,404
+Greene County Single Family Mortgage
Revenue Municipal Multiplier
(Private Mortgage Insurance)
6.10% 3/1/16 1,225,000 770,047
----------
1,262,451
----------
Higher Education Revenue Bonds - 1.99%
Missouri State Health & Educational
Facilities Authority Educational
Facilities Revenue (University of
Health Sciences) 5.00% 6/1/31 (MBIA) 1,000,000 1,027,760
----------
1,027,760
----------
Hospital Revenue Bonds - 11.75%
Cape Girardeau County Industrial
Development Authority Health
Care Facilities Revenue Unrefunded
Balance (Southeast Missouri Hospital)
5.25% 6/1/16 (MBIA) 560,000 615,871
(St. Francis Medical Center) Series A
5.50% 6/1/32 1,000,000 1,052,130
Hannibal Industrial Development
Authority Health Facilities Revenue
Refunding (Hannibal Regional Hospital)
Series A
5.625% 3/1/12 (FSA) 1,000,000 1,049,040
5.75% 3/1/22 (FSA) 1,000,000 1,047,030
<PAGE>
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Hospital Revenue Bonds (continued)
Joplin Industrial Development Authority
Health Facilities Revenue
(Freeman Health System Project)
5.375% 2/15/35 $ 255,000 $ 258,116
5.75% 2/15/35 405,000 427,198
Missouri State Health & Educational
Facilities Authority Health Facilities
Revenue Refunding (Lake Regional
Health System Project) 5.70% 5/15/34 500,000 523,040
(SSM Health Care) Series AA
6.40% 6/1/10 (MBIA) 500,000 575,350
North Kansas City Hospital Revenue Series A
5.00% 11/15/28 (FSA) 500,000 522,040
----------
6,069,815
----------
Investor Owned Utilities Revenue Bonds - 4.36%
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 2,255,022
----------
2,255,022
----------
Miscellaneous Revenue Bonds - 2.10%
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 1,084,348
----------
1,084,348
----------
Multifamily Housing Revenue Bonds - 5.84%
Missouri State Housing Development
Commission Multifamily Housing
Hyder Series 3
5.60% 7/1/34 (AMT) (FHA) 1,435,000 1,487,779
San Remo Series 5
5.45% 1/1/36 (AMT) (FHA) 500,000 512,505
St. Louis County Industrial Development
Authority Housing Development Revenue
Refunding Sub (Southfield & Oak Forest
Apartment-A) 5.20% 1/20/36 (GNMA) 1,000,000 1,017,900
----------
3,018,184
----------
Municipal Lease Revenue Bonds - 13.59%
Chesterfield Certificates of Participation
5.00% 12/1/24 (FGIC) 1,000,000 1,064,600
Kansas City Land Clearance Redevelopment
Authority Lease Revenue (Muehlebach
Hotel) Series A 5.90% 12/1/18 (FSA) 1,000,000 1,043,490
Missouri State Development Finance Board
Infrastructure Facilities Revenue (Branson
Landing Project) Series A 5.25% 12/1/19 435,000 456,424
(Branson Landing Project) Series A
5.50% 12/1/24 500,000 525,875
(Crackerneck Creek Project) Series C
5.00% 3/1/26 500,000 495,505
(Hartman Heritage Center Phase II)
5.00% 4/1/21 (AMBAC) 335,000 356,028
4
<PAGE>
STATEMENT DELAWARE TAX-FREE MISSOURI INSURED FUND
OF NET ASSETS (CONTINUED) February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Municipal Lease Revenue Bonds (continued)
St. Charles County Public Water
Supply District #2 Certificate of
Participation (Missouri Project)
Series A 5.25% 12/1/28 (MBIA) $1,000,000 $1,058,620
Series B 5.10% 12/1/25 (MBIA) 500,000 524,690
+St. Louis Industrial Development Authority
Leasehold Revenue (Convention
Center Hotel) 5.80% 7/15/20 (AMBAC) 3,035,000 1,494,373
----------
7,019,605
----------
Political Subdivision General Obligation Bonds - 2.05%
Taney County Reorganization School District
R-V Hollister School District
5.00% 3/1/22 (FSA) 1,000,000 1,059,160
----------
1,059,160
----------
*Pre-Refunded Bonds - 10.77%
Kansas City Municipal Assistance
Corporation Revenue Refunding
Leasehold (Bartle Convention Center)
Series A 5.60% 4/15/16-05 (MBIA) 940,000 953,630
Missouri State Health & Educational
Facilities Authority Educational Facilities
Revenue (Central Missouri State
University Project)
5.75% 10/1/25-05 (AMBAC) 1,000,000 1,020,400
St. Charles School District
6.50% 2/1/14-06 (FGIC) 1,250,000 1,297,088
St. Louis Municipal Finance Corporation
Leasehold Revenue Improvement
(City Justice Center) Series A
5.95% 2/15/16-06 (AMBAC) 1,000,000 1,053,010
Troy Reorganization School District #3
Lincoln County 6.10% 3/1/14-05 (MBIA) 1,235,000 1,239,347
----------
5,563,475
----------
Public Power Revenue Bonds - 2.27%
Sikeston Electric Revenue Refunding
6.00% 6/1/13 (MBIA) 1,000,000 1,171,790
----------
1,171,790
----------
School District General Obligation Bonds - 9.06%
Camdenton Reorganized School District R-III
Camden County Refunding & Improvement
5.25% 3/1/24 (FSA) 1,000,000 1,094,060
Greene County Reorganization School
District R8 (Direct Deposit Project)
5.10% 3/1/22 (FSA) 1,500,000 1,604,415
+St. Charles County Francis Howell School
District (Capital Appreciation Direct
Deposit Project) Series A
5.15% 3/1/17 (FGIC) 1,500,000 885,255
St. Louis County Pattonville R-3 School
District 5.25% 3/1/20 (FSA) 1,000,000 1,098,130
----------
4,681,860
----------
Single Family Housing Revenue Bonds - 2.27%
Missouri State Housing Development
Commission Mortgage Revenue Series C
7.45% 9/1/27 (AMT) (GNMA) (FNMA) 220,000 220,365
Missouri State Housing Development
Commission Mortgage Revenue Single
Family Homeowner Loan A
7.20% 9/1/26 (AMT) (GNMA) (FNMA) 190,000 193,544
<PAGE>
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Single Family Housing Revenue Bonds (continued)
Homeowner Loan B
7.55% 9/1/27 (AMT)(GNMA)(FNMA) $ 115,000 $ 115,179
Homeowner Loan C
7.25% 9/1/26 (AMT)(GNMA)(FNMA) 195,000 195,279
Mortgage Series A
5.20% 9/1/33 (AMT)(GNMA)(FNMA) 385,000 390,178
7.20% 12/1/17 (AMT)(GNMA) 15,000 15,196
7.25% 12/1/20 (AMT)(GNMA) 45,000 45,587
----------
1,175,328
----------
Tax Increment/Special Assessment Bonds - 0.95%
St. Joseph Industrial Development
Authority Tax Increment Revenues
Shoppes at North Village Project Series A
5.50% 11/1/27 500,000 492,005
----------
492,005
----------
Territorial General Obligation Bonds - 1.02%
University Virgin Islands Series A
5.375% 6/1/34 500,000 526,575
----------
526,575
----------
Territorial Revenue Bonds - 8.83%
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue Series A 4.75% 7/1/38 (MBIA) 1,000,000 1,031,410
Puerto Rico Electric Power Authority
Power Revenue
Series N 5.125% 7/1/29 400,000 419,188
Series PP 5.00% 7/1/25 (FGIC) 1,000,000 1,064,020
^Puerto Rico Electric Power Authority
Power Revenue, Inverse Floater ROLs
6.975% 7/1/19 1,925,000 2,045,544
----------
4,560,162
----------
Water & Sewer Revenue Bonds - 7.71%
Liberty Sewer System Revenue
6.00% 2/1/08 (MBIA) 380,000 396,522
6.15% 2/1/15 (MBIA) 1,500,000 1,668,691
Metropolitan St. Louis Sewer District
Wastewater Revenue
5.00% 5/1/34 (MBIA)) 1,250,000 1,301,725
Missouri State Development Finance
Board Infrastructure Facilities Revenue
(Sewer System Improvement Project)
Series C 5.00% 3/1/25 605,000 614,371
----------
3,981,309
----------
TOTAL MUNICIPAL BONDS
(cost $48,273,538) 50,969,036
----------
5
<PAGE>
STATEMENT DELAWARE TAX-FREE MISSOURI INSURED FUND
OF NET ASSETS (CONTINUED) February 28, 2005 (Unaudited)
Number of Market
Shares Value
SHORT-TERM INVESTMENTS - 1.18%
Dreyfus Tax-Exempt Cash
Management Fund 608,807 $ 608,807
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $608,807) 608,807
-----------
TOTAL MARKET VALUE OF SECURITIES - 99.83%
(cost $48,882,345) 51,577,843
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 0.17% 89,304
-----------
NET ASSETS APPLICABLE TO 4,824,531
SHARES OUTSTANDING - 100.00% $51,667,147
===========
Net Asset Value - Delaware Tax-Free Missouri
Insured Fund Class A
($46,320,868 / 4,325,365 Shares) $10.71
------
Net Asset Value - Delaware Tax-Free Missouri
Insured Fund Class B
($3,966,805 / 370,534 Shares) $10.71
------
Net Asset Value - Delaware Tax-Free Missouri
Insured Fund Class C
($1,379,474 / 128,632 Shares) $10.72
------
<PAGE>
COMPONENTS OF NET ASSETS AT FEBRUARY 28, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $49,010,707
Accumulated net realized loss on investments (39,058)
Net unrealized appreciation of investments 2,695,498
-----------
Total net assets $51,667,147
===========
*Pre-Refunded Bonds are municipals that are generally backed or secured by U.S.
Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the
year in which the bond is pre-refunded.
^An inverse floater bond is a type of bond with variable or floating interest
rates that move in the opposite direction of short-term interest rates.
Interest rate disclosed is in effect as of February 28, 2005.
+Zero coupon bond. The rate shown is the yield at time of purchase.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FNMA - Insured by Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
ROLs - Residual Options Long
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE TAX-FREE MISSOURI INSURED FUND
Net asset value Class A (A) $10.71
Sales charge (4.50% of offering price) (B) 0.50
------
Offering price $11.21
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
6
<PAGE>
STATEMENT DELAWARE TAX-FREE OREGON INSURED FUND
OF NET ASSETS (CONTINUED) February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS - 96.66%
Airport Revenue Bonds - 3.48%
Portland Airport Revenue (Portland
International Airport) Series 11
5.625% 7/1/26 (FGIC) (AMT) $1,500,000 $1,572,105
----------
1,572,105
----------
Escrowed to Maturity Bonds - 2.48%
Umatilla County Hospital Facility
Authority Revenue (Catholic
Health Initiatives) Series A
5.50% 3/1/32 1,000,000 1,116,980
----------
1,116,980
----------
Higher Education Revenue Bonds - 11.34%
+Oregon Health Sciences University
Revenue (Capital Appreciation Insured)
Series A 5.50% 7/1/21 (MBIA) 2,000,000 949,660
Series A 5.00% 7/1/32 (MBIA) 2,000,000 2,076,720
Oregon State Facilities Authority
Revenue (College Housing Northwest
Project) Series A 5.45% 10/1/32 1,000,000 1,044,490
(Willamette University Project)
Series A 5.00% 10/1/34 (FGIC) 1,000,000 1,044,510
----------
5,115,380
----------
Hospital Revenue Bonds - 4.14%
Deschutes County Hospital Facilities
Authority Hospital Revenue
(Cascade Health Services)
5.60% 1/1/32 1,250,000 1,326,563
Multnomah County Hospital Facilities
Authority Revenue (Providence Health
System) 5.25% 10/1/22 500,000 540,260
----------
1,866,823
----------
Investor Owned Utilities Revenue Bonds - 1.40%
**Port Morrow Pollution Control Revenue
(Portland General Electric Co.) Series A
5.20% 5/1/33 600,000 633,990
----------
633,990
----------
Miscellaneous Revenue Bonds - 3.16%
Oregon State Department Administrative
Services 5.00% 9/1/13 (FSA) 800,000 882,752
Oregon State Department Administrative
Services Lottery Revenue Refunding
Series A 5.00% 4/1/18 (FSA) 500,000 540,750
----------
1,423,502
----------
Multifamily Housing Revenue Bonds - 2.46%
Oregon Health, Housing, Educational &
Cultural Facilities Authority
(Pier Park Project) Series A
6.05% 4/1/18 (GNMA) (AMT) 1,095,000 1,110,210
----------
1,110,210
----------
Municipal Lease Revenue Bonds - 2.43%
Oregon State Department Administration
Services Certificate of Participation
Refunding Series C
5.25% 11/1/15 (MBIA) 1,000,000 1,096,510
----------
1,096,510
----------
Political Subdivision General Obligation Bonds - 6.15%
Deschutes County Administrative
School District #1 Series A
5.125% 6/15/21 (FSA) 1,000,000 1,074,110
<PAGE>
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Political Subdivision General Obligation Bonds (continued)
Deschutes County Refunding
5.00% 12/1/16 (FSA) $ 500,000 $ 541,185
Southwestern Community College
District 5.00% 6/1/28 (MBIA) 1,100,000 1,157,365
----------
2,772,660
----------
*Pre-Refunded Bonds - 21.23%
Chemeketa County Community College
District 5.80% 6/1/12-06 (FGIC) 1,500,000 1,561,739
Jackson County School District #6
Central Point 5.25% 6/15/20-10 (FGIC) 1,175,000 1,297,599
Malheur County (Jail Buildings)
6.30% 12/1/12-05 (MBIA) 500,000 515,060
Multnomah County School District #3
Park Rose 5.50% 12/1/11-05 (FGIC) 500,000 511,980
North Unit Irrigation District
5.75% 6/1/16-06 (MBIA) 1,000,000 1,040,790
Oregon State Department Administrative
Services Certificate of Participation
Series A 5.80% 5/1/24-07 (AMBAC) 1,000,000 1,076,830
Portland Series A
5.75% 6/1/15-05 (MBIA) 500,000 504,645
Puerto Rico Commonwealth Public
Improvement 5.125% 7/1/30-11 (FSA) 920,000 1,018,937
Salem Water & Sewer Revenue
5.625% 6/1/16-06 (MBIA) 1,000,000 1,039,000
Washington County Education Services
District Certificate of Participation
7.10% 6/1/25-05 (MBIA) 700,000 708,953
Washington County School District #088J
Sherwood
6.10% 6/1/12-05 (FSA) 65,000 65,664
6.10% 6/1/12-05 (FSA) 235,000 237,399
----------
9,578,596
----------
Public Utility District Revenue Bonds - 1.81%
Emerald Peoples Utilities District
Series A 5.25% 11/1/22 (FSA) 750,000 816,270
----------
816,270
----------
School District General Obligation Bonds - 16.49%
Benton & Linn Counties School District #509J
Corvallis 5.00% 6/1/21 (FSA) 1,000,000 1,064,540
Clackamas County School District #12
(North Clackamas) 5.00% 6/15/16 (FSA) 1,000,000 1,106,910
Clackamas County School District #86
5.00% 6/15/25 (FSA) 500,000 530,765
Jefferson County School District #509J
5.00% 6/15/22 (FGIC) 500,000 529,205
Lane County School District #019
Springfield Refunding
6.00% 10/15/14 (FGIC) 500,000 593,460
Lincoln County School District
5.25% 6/15/12 (FGIC) 700,000 759,262
Linn County Community School District #9
Lebanon 5.60% 6/15/30 (FGIC) 2,000,000 2,226,320
Salem-Keizer School District #24J
Refunding 5.00% 6/15/19 (FSA) 500,000 537,870
+Umatilla County School District #6 R
Umatilla Refunding
5.50% 12/15/22 (AMBAC) 200,000 88,254
----------
7,436,586
----------
7
<PAGE>
STATEMENT DELAWARE TAX-FREE OREGON INSURED FUND
OF NET ASSETS (CONTINUED) February 28, 2005 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Single Family Housing Revenue Bonds - 3.65%
Oregon State Housing & Community
Services Department Mortgage
Revenue Single Family Mortgage Program
Series R 5.375% 7/1/32 (AMT) $1,610,000 $ 1,644,985
-----------
1,644,985
-----------
Tax Increment/Special Assessment Bonds - 2.77%
Portland River District Urban Renewal &
Redevelopment Interstate Corridor Series A
5.00% 6/15/23 (AMBAC) 250,000 264,540
Portland Urban Renewal & Redevelopment
Interstate Corridor Series A
5.25% 6/15/20 (FGIC) 890,000 984,278
-----------
1,248,818
-----------
Territorial Revenue Bonds - 12.91%
Puerto Rico Commonwealth Highway &
Transportation Authority Transportation
Revenue
Series D 5.25% 7/1/38 500,000 525,745
Series G 5.00% 7/1/42 500,000 511,190
Series J 5.50% 7/1/22 400,000 441,116
Puerto Rico Commonwealth Public
Improvement (Unrefunded Balance)
5.125% 7/1/30 (FSA) 580,000 612,474
Puerto Rico Electric Power Authority
Power Revenue Series NN
5.125% 7/1/29 1,000,000 1,047,970
^Puerto Rico Electric Power Authority
Power Revenue, Inverse Floater ROLs
6.975% 7/1/19 (FSA) 1,500,000 1,593,930
**Puerto Rico Public Buildings Authority
Revenue (Government Facilities)
Series J 5.00% 7/1/36 (AMBAC) 1,000,000 1,091,260
-----------
5,823,685
-----------
Water & Sewer Revenue Bonds - 0.76%
Portland Sewer Systems Revenue
Second Lien) Series A
5.00% 6/1/23 (FSA) 325,000 343,873
-----------
343,873
-----------
TOTAL MUNICIPAL BONDS
(cost $41,136,236) 43,600,973
===========
Number of/Principal
Shares / Amount
SHORT-TERM INVESTMENTS - 2.32%
Money Market - 0.10%
Dreyfus Tax-Exempt Cash Management Fund 45,653 45,653
-----------
45,653
-----------
**Variable Rate Demand Notes - 2.22%
Portland Multi-Family Housing South Park
Block 1.85% 12/1/11 1,000,000 1,000,000
-----------
1,000,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $1,045,653) 1,045,653
-----------
<PAGE>
TOTAL MARKET VALUE OF SECURITIES - 98.98%
(cost $42,181,889) $44,646,626
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.02% 460,491
-----------
NET ASSETS APPLICABLE TO 4,261,011
SHARES OUTSTANDING - 100.00% $45,107,117
===========
Net Asset Value - Delaware Tax-Free Oregon
Insured Fund Class A
($31,706,899 / 2,996,418 Shares) $10.58
------
Net Asset Value - Delaware Tax-Free Oregon
Insured Fund Class B
($6,785,315 / 640,920 Shares) $10.59
------
Net Asset Value - Delaware Tax-Free Oregon
Insured Fund Class C
($6,614,903 / 623,673 Shares) $10.61
------
COMPONENTS OF NET ASSETS AT FEBRUARY 28, 2005:
Shares of beneficial interest
(unlimited authorization - no par) $42,873,991
Accumulated net realized loss on investments (231,611)
Net unrealized appreciation of investments 2,464,737
-----------
Total net assets $45,107,117
===========
^An inverse floater bond is a type of bond with variable or floating interest
rates that move in the opposite direction of short-term rates. Interest rate
disclosed is in effect as of February 28, 2005.
*Pre-Refunded bonds are municipals that are generally backed or secured by U.S.
Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the
year in which the bond is pre-refunded.
**Variable Rate Notes. The interest rate shown is the rate as of February 28,
2005.
+Zero coupon bond. The interest rate shown is the yield at the time of
purchase.
SUMMARY OF ABBREVIATIONS:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by the Financial Security Assurance
GNMA - Insured by Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
ROLs - Residual Options Long
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE TAX-FREE OREGON INSURED FUND
Net asset value Class A (A) $10.58
Sales charge (4.50% of offering price) (B) 0.50
------
Offering price $11.08
======
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
8
<PAGE>
STATEMENT Six Months Ended February 28, 2005 (Unaudited)
OF OPERATIONS
<TABLE>
<CAPTION>
Delaware Delaware
Tax-Free Tax-Free
Missouri Insured Fund Oregon Insured Fund
<S> <C> <C>
INVESTMENT INCOME:
Interest $1,314,648 $1,083,590
---------- ----------
EXPENSES:
Management fees 128,172 111,605
Distribution expenses -- Class A 57,296 38,799
Distribution expenses -- Class B 21,056 36,519
Distribution expenses -- Class C 6,603 31,883
Dividend disbursing and transfer agent fees and expenses 17,015 13,428
Legal and professional fees 10,132 9,273
Accounting and administration expenses 8,506 7,420
Reports and statements to shareholders 2,822 7,294
Custodian fees 1,645 1,802
Trustees' fees 1,151 1,076
Registration fees 2,375 872
Pricing fees 2,480 2,256
Other 6,284 2,052
---------- ----------
265,537 264,279
Less expenses absorbed or waived (1,799) (22,862)
Less expenses paid indirectly (36) (41)
---------- ----------
Total expenses 263,702 241,376
---------- ----------
NET INVESTMENT INCOME 1,050,946 842,214
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 101,495 52,520
Net change in unrealized appreciation/depreciation of investments (47,373) 112,870
---------- ----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 54,122 165,390
---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,105,068 $1,007,604
========== ==========
</TABLE>
See accompanying notes
9
<PAGE>
STATEMENTS
OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/05 8/31/04 2/28/05 8/31/04
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONs:
Net investment income $ 1,050,946 $ 2,222,786 $ 842,214 $ 1,836,635
Net realized gain on investments 101,495 303,361 52,520 115,703
Net change in unrealized
appreciation/depreciation of investments (47,373) (15,128) 112,870 540,255
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations 1,105,068 2,511,019 1,007,604 2,492,593
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (953,171) (1,979,157) (619,171) (1,347,305)
Class B (71,771) (216,405) (118,269) (292,412)
Class C (22,475) (48,786) (102,966) (209,645)
----------- ----------- ----------- -----------
(1,047,417) (2,244,348) (840,406) (1,849,362)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 1,428,642 4,941,535 2,344,064 5,392,754
Class B (599) 352,151 245,258 741,742
Class C 105,295 314,340 788,959 1,644,889
Net asset value of shares issued upon
reinvestment of dividends and distributions:
Class A 498,196 964,654 357,457 765,710
Class B 53,492 144,771 69,498 165,234
Class C 19,516 42,892 64,219 134,610
----------- ----------- ----------- -----------
2,104,542 6,760,343 3,869,455 8,844,939
----------- ----------- ----------- -----------
Cost of shares repurchased:
Class A (1,400,744) (4,404,290) (1,924,959) (5,169,155)
Class B (995,069) (3,044,211) (1,437,795) (1,909,275)
Class C (4,248) (362,148) (605,370) (926,472)
----------- ----------- ----------- -----------
(2,400,061) (7,810,649) (3,968,124) (8,004,902)
----------- ----------- ----------- -----------
Increase (decrease) in net assets derived
from capital share transactions (295,519) (1,050,306) (98,669) 840,037
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (237,868) (783,635) 68,529 1,483,268
NET ASSETS:
Beginning of period 51,905,015 52,688,650 45,038,588 43,555,320
----------- ----------- ----------- -----------
End of period(1) $51,667,147 $51,905,015 $45,107,117 $45,038,588
=========== =========== =========== ===========
(1)Including distribution in excess of net
investment income $ - $ - $ - $ -
=========== =========== =========== ===========
</TABLE>
See accompanying notes
10
<PAGE>
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Missouri Insured Fund Class A
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.700 $10.640 $10.810 $10.740 $10.340 $10.340
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.221 0.464 0.469 0.489 0.497 0.494
Net realized and unrealized gain (loss) on investments 0.010 0.065 (0.172) 0.068 0.400 -
------- ------- ------- ------- ------- -------
Total from investment operations 0.231 0.529 0.297 0.557 0.897 0.494
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.221) (0.469) (0.467) (0.487) (0.497) (0.494)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.221) (0.469) (0.467) (0.487) (0.497) (0.494)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $10.710 $10.700 $10.640 $10.810 $10.740 $10.340
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 2.17% 5.06% 2.75% 5.38% 8.89% 4.99%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $46,321 $45,745 $44,026 $42,610 $40,349 $38,314
Ratio of expenses to average net assets 0.94% 0.94% 0.98% 0.97% 0.95% 1.03%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.95% 0.94% 0.98% 0.97% 0.95% 1.03%
Ratio of net investment income to average net assets 4.17% 4.33% 4.31% 4.61% 4.74% 4.88%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.16% 4.33% 4.31% 4.61% 4.74% 4.88%
Portfolio turnover 36% 20% 31% 23% 14% 1%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of $0.002, a decrease in net realized and
unrealized gain (loss) per share of $0.002, and an increase in the ratio of
net investment income to average net assets of 0.02%. Per share data and
ratios for periods prior to September 1, 2001 have not been restated to
reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
11
<PAGE>
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Missouri Insured Fund Class B
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.690 $10.640 $10.810 $10.730 $10.340 $10.340
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.181 0.385 0.387 0.410 0.418 0.418
Net realized and unrealized gain (loss) on investments 0.020 0.054 (0.172) 0.078 0.390 -
------- ------- ------- ------- ------- -------
Total from investment operations 0.201 0.439 0.215 0.488 0.808 0.418
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.181) (0.389) (0.385) (0.408) (0.418) (0.418)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.181) (0.389) (0.385) (0.408) (0.418) (0.418)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $10.710 $10.690 $10.640 $10.810 $10.730 $10.340
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 1.89% 4.19% 1.99% 4.70% 7.98% 4.21%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $3,967 $4,903 $7,406 $9,264 $9,693 $10,053
Ratio of expenses to average net assets 1.69% 1.69% 1.73% 1.72% 1.70% 1.78%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.69% 1.73% 1.72% 1.70% 1.78%
Ratio of net investment income to average net assets 3.42% 3.58% 3.56% 3.86% 3.99% 4.13%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.41% 3.58% 3.56% 3.86% 3.99% 4.13%
Portfolio turnover 36% 20% 31% 23% 14% 1%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of $0.002, a decrease in net realized and
unrealized gain (loss) per share of $0.002, and an increase in the ratio of
net investment income to average net assets of 0.02%. Per share data and
ratios for periods prior to September 1, 2001 have not been restated to
reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
12
<PAGE>
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Missouri Insured Fund Class C
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.710 $10.660 $10.820 $10.740 $10.350 $10.350
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.181 0.384 0.387 0.410 0.418 0.418
Net realized and unrealized gain (loss) on investments 0.010 0.054 (0.162) 0.078 0.390 -
------- ------- ------- ------- ------- -------
Total from investment operations 0.191 0.438 0.225 0.488 0.808 0.418
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.181) (0.388) (0.385) (0.408) (0.418) (0.418)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.181) (0.388) (0.385) (0.408) (0.418) (0.418)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $10.720 $10.710 $10.660 $10.820 $10.740 $10.350
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 1.79% 4.17% 2.08% 4.68% 7.97% 4.20%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $1,379 $1,257 $1,257 $1,241 $626 $343
Ratio of expenses to average net assets 1.69% 1.69% 1.73% 1.72% 1.70% 1.78%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.69% 1.73% 1.72% 1.70% 1.78%
Ratio of net investment income to average net assets 3.42% 3.58% 3.56% 3.86% 3.99% 4.13%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.41% 3.58% 3.56% 3.86% 3.99% 4.13%
Portfolio turnover 36% 20% 31% 23% 14% 1%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of $0.002, a decrease in net realized and
unrealized gain (loss) per share of $0.002, and an increase in the ratio of
net investment income to average net assets of 0.02%. Per share data and
ratios for periods prior to September 1, 2001 have not been restated to
reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
13
<PAGE>
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Oregon Insured Fund Class A
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.540 $10.380 $10.530 $10.450 $ 9.910 $9.810
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.209 0.453 0.461 0.467 0.465 0.467
Net realized and unrealized gain (loss) on investments 0.040 0.163 (0.151) 0.079 0.540 0.100
------- ------- ------- ------- ------- ------
Total from investment operations 0.249 0.616 0.310 0.546 1.005 0.567
------- ------- ------- ------- ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.209) (0.456) (0.460) (0.466) (0.465) (0.467)
------- ------- ------- ------- ------- ------
Total dividends and distributions (0.209) (0.456) (0.460) (0.466) (0.465) (0.467)
------- ------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD $10.580 $10.540 $10.380 $10.530 $10.450 $9.910
======= ======= ======= ======= ======= ======
TOTAL RETURN(3) 2.38% 6.04% 2.97% 5.41% 10.39% 6.04%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $31,707 $30,817 $29,410 $25,082 $22,973 $22,712
Ratio of expenses to average net assets 0.85% 0.85% 0.84% 0.85% 0.85% 0.85%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.95% 0.90% 0.96% 1.00% 0.99% 1.01%
Ratio of net investment income to average net assets 3.99% 4.30% 4.35% 4.52% 4.59% 4.85%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.89% 4.25% 4.23% 4.37% 4.45% 4.69%
Portfolio turnover 20% 16% 16% 20% 28% 0%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of $0.001, a decrease in net realized and
unrealized gain (loss) per share of $0.001, and an increase in the ratio of
net investment income to average net assets of 0.01%. Per share data and
ratios for periods prior to September 1, 2001 have not been restated to
reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
14
<PAGE>
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Oregon Insured Fund Class B
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.550 $10.390 $10.540 $10.450 $ 9.910 $ 9.810
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.170 0.374 0.382 0.390 0.389 0.394
Net realized and unrealized gain (loss) on investments 0.040 0.163 (0.151) 0.089 0.540 0.100
------- ------- ------- ------- ------- -------
Total from investment operations 0.210 0.537 0.231 0.479 0.929 0.494
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.170) (0.377) (0.381) (0.389) (0.389) (0.394)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.170) (0.377) (0.381) (0.389) (0.389) (0.394)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $10.590 $10.550 $10.390 $10.540 $10.450 $ 9.910
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 2.00% 5.24% 2.20% 4.73% 9.57% 5.24%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $6,785 $7,878 $8,750 $8,489 $7,928 $7,484
Ratio of expenses to average net assets 1.60% 1.60% 1.59% 1.60% 1.60% 1.60%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.65% 1.71% 1.75% 1.74% 1.76%
Ratio of net investment income to average net assets 3.24% 3.55% 3.60% 3.77% 3.84% 4.10%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.14% 3.50% 3.48% 3.62% 3.70% 3.94%
Portfolio turnover 20% 16% 16% 20% 28% 0%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of $0.001, a decrease in net realized and
unrealized gain (loss) per share of $0.001, and an increase in the ratio of
net investment income to average net assets of 0.01%. Per share data and
ratios for periods prior to September 1, 2001 have not been restated to
reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
15
<PAGE>
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Oregon Insured Fund Class C
Six Months
Ended Year Ended
2/28/05(2) 8/31/04 8/31/03 8/31/02(1) 8/31/01 8/31/00
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.570 $10.400 $10.550 $10.470 $ 9.920 $9.820
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.170 0.374 0.381 0.389 0.388 0.394
Net realized and unrealized gain (loss) on investments 0.040 0.173 (0.151) 0.079 0.550 0.100
------- ------- ------- ------- ------- -------
Total from investment operations 0.210 0.547 0.230 0.468 0.938 0.494
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.170) (0.377) (0.380) (0.388) (0.388) (0.394)
------- ------- ------- ------- ------- -------
Total dividends and distributions (0.170) (0.377) (0.380) (0.388) (0.388) (0.394)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $10.610 $10.570 $10.400 $10.550 $10.470 $9.920
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) 1.99% 5.33% 2.19% 4.62% 9.66% 5.24%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $6,615 $6,344 $5,395 $3,253 $1,820 $1,609
Ratio of expenses to average net assets 1.60% 1.60% 1.59% 1.60% 1.60% 1.60%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 1.70% 1.65% 1.71% 1.75% 1.74% 1.76%
Ratio of net investment income to average net assets 3.24% 3.55% 3.60% 3.77% 3.84% 4.10%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 3.14% 3.50% 3.48% 3.62% 3.70% 3.94%
Portfolio turnover 20% 16% 16% 20% 28% 0%
</TABLE>
(1) As required, effective September 1, 2001, the Fund adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies that require
amortization of all premiums and discounts on debt securities. The effect of
this change for the year ended August 31, 2002 was an increase in net
investment income per share of $0.001, a decrease in net realized and
unrealized gain (loss) per share of $0.001, and an increase in the ratio of
net investment income to average net assets of 0.01%. Per share data and
ratios for periods prior to September 1, 2001 have not been restated to
reflect this change in accounting.
(2) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects waivers and payment of fees by the manager, as
applicable. Performance would have been lower had the expense limitation not
been in effect.
See accompanying notes
16
<PAGE>
NOTES February 28, 2005 (Unaudited)
TO FINANCIAL STATEMENTS
Voyageur Mutual Funds (the "Trust") is organized as a Delaware statutory trust
and offers six series: Delaware Minnesota High-Yield Municipal Bond Fund,
Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free Arizona
Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, and
Delaware Tax-Free New York Fund. Voyageur Investment Trust (the "Trust") is
organized as a Massachusetts business trust and offers five series: Delaware
Tax-Free California Insured Fund, Delaware Tax-Free Florida Fund, Delaware
Tax-Free Florida Insured Fund, Delaware Tax-Free Missouri Insured Fund and
Delaware Tax-Free Oregon Insured Fund. These financial statements and the
related notes pertain to the Delaware Tax-Free Idaho Fund, Delaware Tax-Free
Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund (each a "Fund"
or collectively as the "Funds"). The Trusts are open-end investment companies.
The Funds are considered non-diversified under the Investment Company Act of
1940, as amended. The Funds offer Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge of up to 4.50%. Class B shares are
sold with a contingent deferred sales charge that declines from 4.00% to zero
depending upon the period of time the shares are held. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately eight
years after purchase. Class C shares are sold with a contingent deferred sales
charge of 1%, if redeemed during the first 12 months.
The investment objective of Delaware Tax-Free Idaho Fund, Delaware Tax-Free
Missouri Insured Fund, and Delaware Tax-Free Oregon Insured Fund is to seek as
high a level of current income exempt from federal income tax and personal
income tax in their respective states, as is consistent with preservation of
capital.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation -- Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of the Funds' Board of
Trustees.
Federal Income Taxes -- Each Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
<PAGE>
Class Accounting -- Investment income and common expenses are allocated to the
classes of the Funds on the basis of "settled shares" of each class in relation
to the net assets of the Funds. Realized and unrealized gain (loss) on
investments are allocated to the various classes of the Funds on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates -- The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other -- Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. Security transactions
are recorded on the date the securities are purchased or sold (trade date).
Costs used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities. Each Fund declares dividends
daily from net investment income and pays such dividends monthly and declares
and pays distributions from net realized gain on investments, if any, annually.
The Funds may receive earnings credits from their custodian when positive cash
balances are maintained, which are used to offset custody fees. The expense paid
under the above arrangement is included in custodian fees on the Statements of
Operations with the corresponding expense offset shown as "expense paid
indirectly." The amount of these expenses for the six months ended February 28,
2005 were as follows:
Delaware Delaware
Tax-Free Tax-Free
Missouri Oregon
Insured Insured
Fund Fund
-------- --------
Earnings credits $36 $41
17
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its respective investment management agreement,
each Fund pays Delaware Management Company (DMC), a series of Delaware
Management Business Trust and the investment manager, an annual fee based on
each Fund's average daily net assets as follows:
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
On the first $500 million 0.50% 0.55%
On the next $500 million 0.475% 0.475%
On the next $1.5 billion 0.45% 0.45%
In excess of $2.5 billion 0.425% 0.425%
DMC has contractually agreed to waive that portion, if any, of its management
fee and reimburse each Fund to the extent necessary to ensure that annual
operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution fees, certain insurance costs, and extraordinary expenses, do not
exceed specified percentages of average daily net assets through December 29,
2005, as shown below.
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
The operating expense limitation
as a percentage of average daily
net assets (per annum) N/A 0.60%
Expiration date 10/31/04 10/31/04
Effective November 1, 2004, operating
expense limitation as a percentage
of average daily net assets (per annum) 0.65% 0.60%
Expiration date 12/29/05 12/29/05
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. The Funds pay
DSC a monthly fee based on average net assets subject to certain minimums for
accounting and administration services. Each Fund pays DSC a monthly fee based
on the number of shareholder accounts for dividend disbursing and transfer agent
services.
Pursuant to a distribution agreement and distribution plan, each Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.25% of the average daily net
assets of the Class A shares and 1.00% of the average daily net assets of the
Class B and C shares.
At February 28, 2005, the Funds had liabilities payable to affiliates as
follows:
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
Investment management fee payable to DMC $19,971 $17,411
Dividend disbursing, transfer agent,
accounting and administration fees
and other expenses payable to DSC 4,333 3,662
Other expenses payable to DMC and
affiliates* 15,921 19,486
*DMC, as part of its administrative services, pays operating expenses on behalf
of the Funds and is reimbursed on a periodic basis. Such expenses include items
such as printing of shareholder reports, fees for audit, legal and tax services,
registration fees and trustees' fees.
As provided in the investment management agreement, the Funds bear the cost of
certain legal services expenses, including in-house legal services provided to
the Funds by DMC employees. For the six months ended February 28, 2005, the
Funds' costs were as follows:
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
$1,418 $1,238
For the six months ended February 28,2005, DDLP earned commissions on sales of
Class A shares for each Fund as follows:
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
$1,177 $8,157
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.
18
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
For the six months ended February 28, 2005, the Funds made purchases and sales
of investment securities other than short-term investments as follows:
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
Purchases $9,003,239 $5,354,950
Sales 9,154,783 4,224,800
At February 28, 2005, the cost of investments for federal income tax purposes
has been estimated since the final tax characteristics cannot be determined
until fiscal year end. At February 28, 2005, the cost of investments and
unrealized appreciation (depreciation) for each Fund were as follows:
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
Cost of investments $48,859,515 $42,170,034
Aggregate unrealized appreciation $2,760,316 $2,514,923
Aggregate unrealized depreciation (41,988) (38,331)
Net unrealized appreciation $2,718,328 $2,476,592
4. DIVIDEND AND DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. The tax character of dividends and distributions
paid during the six months ended February 28, 2005 and the year ended August 31,
2004 was as follows:
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- --------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/05 8/31/04 2/28/05 8/31/04
Tax-exempt income $1,047,417 $2,244,348 $840,406 $1,849,362
*Tax information for the six months ended February 28, 2005 is an estimate and
the tax character of dividends and distributions may be redesignated at fiscal
year end.
The components of net assets are estimated since final tax characteristics
cannot be determined until fiscal year end. As of February 28, 2005, the
estimated components of net assets on a tax basis were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
<S> <C> <C>
Shares of beneficial interest $49,010,707 $42,873,991
Distributions in excess of net investment income -- --
Capital loss carryforwards (61,888) (243,466)
Net unrealized appreciation of investments 2,718,328 2,476,592
----------- -----------
Net assets $51,667,147 $45,107,117
=========== ===========
</TABLE>
For financial reporting purposes, capital accounts are adjusted to reflect the
tax character of permanent book/tax differences. For the six months ended
February 28, 2005, the Funds recorded an estimate of these differences since the
final tax characteristics cannot be determined until fiscal year end.
Reclassifications are primarily due to tax treatment of market discount and
premium on certain debt instruments. Results of operations and net assets were
not affected by these reclassifications.
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
Undistributed net investment income $(3,529) $(1,808)
Accumulated realized gain (loss) 3,529 1,808
For federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains. Such Capital loss carryforward
amounts remaining at February 28, 2005 will expire as follows:
Delaware Tax-Free Delaware Tax-Free
Year of expiration Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
2008 $163,168 $ --
2009 -- 217,063
2010 -- 78,923
-------- --------
Total $163,168 $295,986
======== ========
For the six months ended February 28, 2005, each Fund had net capital gains
which may be offset by the capital loss carryforwards.
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
$101,280 $52,520
19
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL SHARES
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
Missouri Insured Fund Oregon Insured Fund
--------------------- -------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/05 8/31/04 2/28/05 8/31/04
<S> <C> <C> <C> <C>
Shares sold:
Class A 133,333 460,103 221,291 511,034
Class B (59) 33,006 23,218 70,440
Class C 9,862 29,155 74,371 157,187
Shares issued upon reinvestment of
dividends and distributions:
Class A 46,454 90,070 33,748 72,920
Class B 4,989 13,510 6,557 15,727
Class C 1,817 4,001 6,048 12,786
-------- -------- -------- --------
196,396 629,845 365,233 840,094
-------- -------- -------- --------
Shares repurchased:
Class A (130,987) (410,533) (181,759) (493,915)
Class B (92,891) (284,201) (135,684) (181,823)
Class C (395) (33,776) (57,117) (88,193)
-------- -------- -------- --------
(526,995) (224,273) (728,510) (374,560) (763,931)
-------- -------- -------- --------
Net increase (decrease) (27,877) (98,665) (9,327) 76,163
======== ======== ======== ========
</TABLE>
For the six months ended February 28, 2005 and the year ended August 31, 2004,
the following shares and value were converted from Class B to Class A. The
respective amounts are included in Class B redemptions and Class A subscriptions
in the table above and the Statements of Changes in Net Assets.
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
2/28/05 8/31/04
Class B Shares Class A Shares Value Class B Shares Class A Shares Value
-------------- -------------- ------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Delaware Tax-Free Missouri Insured Fund 75,306 75,259 806,536 197,551 197,405 2,118,117
Delaware Tax-Free Oregon Insured Fund 53,613 53,664 567,226 63,867 63,896 676,263
</TABLE>
20
<PAGE>
NOTES
TO FINANCIAL STATEMENTS (CONTINUED)
6. PROXY RESULTS (UNAUDITED)
The shareholders of Voyageur Mutual Funds and Voyageur Investment Trust (each, a
"Trust") voted on the following proposals (as applicable) at the special meeting
of shareholders on March 23, 2005 or as adjourned. The description of each
proposal and number of shares voted are as follows:
1. To elect a Board of Trustees for each of the Trusts.
VOYAGEUR INVESTMENT TRUST
-------------------------------------------
SHARES VOTED
SHARES VOTED FOR WITHHELD AUTHORITY
----------------------------------------------------------------------
Thomas L. Bennett 14,252,335.197 431,663.104
----------------------------------------------------------------------
Jude T. Driscoll 14,251,143.991 432,854.310
----------------------------------------------------------------------
John A. Fry 14,258,738.991 425,259.310
----------------------------------------------------------------------
Anthony D. Knerr 14,258,994.991 425,003.310
----------------------------------------------------------------------
Lucinda S. Landreth 14,254,091.179 429,907.104
----------------------------------------------------------------------
Ann R. Leven 14,252,611.991 431,386.310
----------------------------------------------------------------------
Thomas F. Madison 14,259,138.991 424,859.310
----------------------------------------------------------------------
Janet L. Yeomans 14,251,014.197 432,984.104
----------------------------------------------------------------------
J. Richard Zecher 14,248,580.991 432,417.310
----------------------------------------------------------------------
2. To approve the use of a "manager of managers" structure whereby the
investment manager of the funds of each Trust will be able to hire
and replace subadvisers without shareholder approval.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---- -------- --------
<S> <C> <C> <C>
Delaware Tax-Free Missouri Insured Fund 2,547,568.583 127,364.617 50,056.412
Delaware Tax-Free Oregon Insured Fund 2,275,818.354 163,301.607 165,753.881
</TABLE>
3. To approve the restructuring of Voyageur Investment Trust from a
Massachusetts business trust to a Delaware statutory trust.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---- -------- --------
<S> <C> <C> <C>
Delaware Tax-Free Missouri Insured Fund 2,604,153.347 4,240.404 56,595.861
Delaware Tax-Free Oregon Insured Fund 2,345,020.965 143,072.177 116,780.700
</TABLE>
7. LINE OF CREDIT
The Funds, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participates in a $183,100,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each funds' allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Funds had no amounts outstanding as of February 28, 2005 or at any time during
the period.
8. CREDIT AND MARKET RISK
The Funds concentrate their investments in securities issued by municipalities.
The value of these investments may be adversely affected by new legislation
within the states, regional or local economic conditions, and differing levels
of supply and demand for municipal bonds. Many municipalities insure repayment
for their obligations. Although bond insurance reduces the risk of loss due to
default by an issuer, such bonds remain subject to the risk that market value
may fluctuate for other reasons and there is no assurance that the insurance
company will meet its obligations. These securities have been identified in the
Statements of Net Assets.
The Funds may invest in inverse floating rate securities ("inverse floaters"), a
type of derivative tax-exempt obligation with floating or variable interest
rates that move in the opposite direction of short-term interest rates, usually
at an accelerated speed. Consequently, the market values of inverse floaters
will generally be more volatile than other tax-exempt investments. Such
securities are denoted on the Statements of Net Assets.
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 are 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.
21
<PAGE>
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
This semiannual report is for the information of Delaware Tax-Free Idaho Fund,
Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured
Fund shareholders, but it may be used with prospective investors when preceded
or accompanied by a current prospectus for Delaware Tax-Free Idaho Fund,
Delaware Tax-Free Missouri Insured Fund and Delaware Tax-Free Oregon Insured
Fund and the Delaware Investments Performance Update for the most recently
completed calendar quarter. The prospectus sets forth details about charges,
expenses, investment objectives, and operating policies of the Fund. You should
read the prospectus carefully before you invest. The figures in this report
represent past results that are not a guarantee of future results. The return
and principal value of an investment in the Fund will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost.
<TABLE>
<CAPTION>
Board of Trustees Affiliated Officers Contact Information
<S> <C> <C>
JUDE T. DRISCOLL MICHAEL P. BISHOF INVESTMENT MANAGER
Chairman Senior Vice President and Delaware Management Company
Delaware Investments Family of Funds Chief Financial Officer Philadelphia, PA
Philadelphia, PA Delaware Investments Family of Funds
Philadelphia, PA NATIONAL DISTRIBUTOR
THOMAS L. BENNETT Delaware Distributors, L.P.
Private Investor RICHELLE S. MAESTRO Philadelphia, PA
Rosemont, PA Executive Vice President,
Chief Legal Officer and Secretary SHAREHOLDER SERVICING, DIVIDEND
JOHN A. FRY Delaware Investments Family of Funds DISBURSING AND TRANSFER AGENT
President Philadelphia, PA Delaware Service Company, Inc.
Franklin & Marshall College 2005 Market Street
Lancaster, PA JOHN J. O'CONNOR Philadelphia, PA 19103-7094
Senior Vice President and Treasurer
ANTHONY D. KNERR Delaware Investments Family of Funds FOR SHAREHOLDERS
Managing Director Philadelphia, PA 800 523-1918
Anthony Knerr & Associates
New York, NY FOR SECURITIES DEALERS AND FINANCIAL
INSTITUTIONS REPRESENTATIVES ONLY
LUCINDA S. LANDRETH 800 362-7500
Former Chief Investment Officer
Assurant, Inc. WEB SITE
Philadelphia, PA www.delawareinvestments.com
ANN R. LEVEN
Former Treasurer/Chief Fiscal Officer
National Gallery of Art
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
JANET L. YEOMANS
Vice President/Mergers & Acquisitions
3M Corporation
St. Paul, MN
J. RICHARD ZECHER
Founder
Investor Analytics
Scottsdale, AZ
------------------------------------------------------------------------------------
Each Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. Each Fund's Forms N-Q, as well as a description of the policies and
procedures that each Fund uses to determine how to vote proxies (if any) relating
to portfolio securities is available without charge (i) upon request, by calling
800 523-1918; (ii) on each Fund's Web site at http://www.delawareinvestments.com;
and (iii) on the Commission's Web site at http://www.sec.gov. Each Fund's Forms
N-Q may be reviewed and copied at the Commission's Public Reference Room in
Washington, DC; information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Information (if any) regarding how each Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through each Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
------------------------------------------------------------------------------------
(9276) Printed in the USA
SA-CORN [2/05] IVES 4/05 J10078
</TABLE>
<PAGE>
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Included as part of report to shareholders filed under Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrant's principal executive officer and principal financial
officer have evaluated the registrant's disclosure controls and procedures
within 90 days of the filing of this report and have concluded that they are
effective in providing reasonable assurance that the information required to be
disclosed by the registrant in its reports or statements filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission.
<PAGE>
There were no significant changes in the registrant's internal control
over financial reporting that occurred during the second fiscal quarter of the
period covered by the report to stockholders included herein (i.e., the
registrant's second fiscal quarter) that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
Item 12. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are
attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1
under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are
furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf, by the undersigned, thereunto duly authorized.
VOYAGEUR INVESTMENT TRUST
Jude T. Driscoll
-----------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: May 2, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Jude T. Driscoll
-----------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: May 2, 2005
Michael P. Bishof
-----------------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: May 2, 2005
</TEXT>
</DOCUMENT>