N-CSR 1 delvoyageurmutualfunds_ncsr.htm CERTIFIED SHAREHOLDER REPORT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number: 811-07742
 
Exact name of registrant as specified in charter: Voyageur Mutual Funds
 
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
 
Name and address of agent for service: David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
 
Registrant’s telephone number, including area code: (800) 523-1918
 
Date of fiscal year end: August 31
 
Date of reporting period: February 28, 2009

Item 1. Reports to Stockholders

 
 
 
 
 
 
 
 
 
Semiannual report 
 

Delaware Tax-Free Minnesota Fund

 

Delaware Tax-Free Minnesota Intermediate Fund

 

Delaware Minnesota High-Yield Municipal Bond Fund

 
February 28, 2009   
 
 
 
 
 
 
 
 
 
 
 
 
 

  
Fixed income mutual funds 
 
 

Table of contents

Disclosure of Fund expenses        1
 
Sector allocations and credit quality breakdowns  4
 
Statements of net assets  7
 
Statements of operations  34
 
Statements of changes in net assets  36
 
Financial highlights  42
 
Notes to financial statements  60
 
About the organization  73

 

 

 

 

 


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.

© 2009 Delaware Distributors, L.P.

All third-party trademarks cited are the property of their respective owners.

Disclosure of Fund expenses
For the period September 1, 2008 to February 28, 2009

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

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2008 to February 28, 2009.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

1

Disclosure of Fund expenses

 

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

            Beginning             Ending                         Expenses
Account Value Account Value Annualized Paid During Period
9/1/08 2/28/09 Expense Ratio 9/1/08 to 2/28/09*
Actual Fund return  
Class A   $ 1,000.00   $ 993.40 0.95%   $4.70
Class B   1,000.00 989.70   1.70% 8.39
Class C 1,000.00 989.80 1.70%   8.39  
Hypothetical 5% return (5% return before expenses)      
Class A $ 1,000.00   $ 1,020.08 0.95%   $4.76
Class B   1,000.00 1,016.36 1.70% 8.50
Class C 1,000.00 1,016.36 1.70% 8.50

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

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

 

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

             Beginning             Ending                         Expenses
Account Value Account Value Annualized Paid During Period 
9/1/08 2/28/09 Expense Ratio 9/1/08 to 2/28/09* 
Actual Fund return    
Class A $1,000.00 $1,005.60   0.75% $3.73
Class B 1,000.00 1,001.40 1.60% 7.94  
Class C 1,000.00 1,001.40 1.60%   7.94
Hypothetical 5% return (5% return before expenses)  
Class A   $1,000.00   $1,021.08 0.75% $3.76
Class B   1,000.00     1,016.86   1.60%   8.00
Class C 1,000.00 1,016.86 1.60% 8.00

2

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

            Beginning             Ending                         Expenses
Account Value Account Value Annualized Paid During Period
9/1/08 2/28/09 Expense Ratio 9/1/08 to 2/28/09*
Actual Fund return
Class A   $1,000.00 $ 957.70 0.89% $4.32
Class B 1,000.00   955.20 1.64%   7.95
Class C 1,000.00   954.20   1.64%   7.95
Hypothetical 5% return (5% return before expenses)      
Class A   $1,000.00 $ 1,020.38 0.89% $4.46
Class B 1,000.00   1,016.66   1.64%   8.20
Class C 1,000.00 1,016.66 1.64% 8.20

*“Expenses Paid During Period” are equal to the Funds’ annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

3


Sector allocations and credit quality breakdowns
Delaware Tax-Free Minnesota Fund As of February 28, 2009

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

Sector       Percentage of net assets
Municipal Bonds 96.87 %
Corporate-Backed Revenue Bonds 3.39 %  
Education Revenue Bonds 4.73 %
Electric Revenue Bonds 6.62 %
Escrowed to Maturity Bonds 9.16 %  
Health Care Revenue Bonds 9.89 %
Housing Revenue Bonds 5.76 %
Lease Revenue Bonds 3.53 %  
Local General Obligation Bonds 22.58 %
Pre-Refunded Bonds 20.93 %
Special Tax Revenue Bonds 2.46 %
State General Obligation Bonds   6.19 %
Transportation Revenue Bonds 1.15 %
Water & Sewer Revenue Bonds   0.48 %
Short-Term Investments 1.69 %
Total Value of Securities 98.56 %
Receivables and Other Assets Net of Liabilities 1.44 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 40.01 %
AA   24.22 %
A 21.19 %
BBB 8.41 %
BB 0.76 %
Not Rated 5.41 %
Total 100.00 %

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.


4


Delaware Tax-Free Minnesota Intermediate Fund As of February 28, 2009

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

Sector       Percentage of net assets
Municipal Bonds 97.49 %
Corporate-Backed Revenue Bonds 2.11 %
Education Revenue Bonds 10.69 %
Electric Revenue Bonds 5.24 %
Escrowed to Maturity Bond 1.62 %
Health Care Revenue Bonds 8.00 %
Housing Revenue Bonds 5.00 %  
Lease Revenue Bonds 2.38 %
Local General Obligation Bonds 29.36 %
Pre-Refunded Bonds 9.46 %
Special Tax Revenue Bonds 7.16 %
State General Obligation Bonds 9.08 %
Transportation Revenue Bonds 1.74 %
Water & Sewer Revenue Bonds 5.65 %
Short-Term Investments     1.26 %
Total Value of Securities 98.75 %
Receivables and Other Assets Net of Liabilities 1.25 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA  50.13 %
AA  24.93 %
A  10.75 %
BBB    8.85 %
Not Rated 5.34 %
Total 100.00 %
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

5


Sector allocations and credit quality breakdowns
Delaware Minnesota High-Yield Municipal Bond Fund As of February 28, 2009

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

Sector       Percentage of net assets
Municipal Bonds 96.94 %
Corporate-Backed Revenue Bonds 2.81 %
Education Revenue Bonds 8.87 %
Electric Revenue Bonds   6.47 %
Health Care Revenue Bonds 24.29 %
Housing Revenue Bonds 12.29 %
Lease Revenue Bonds 1.10 %
Local General Obligation Bonds 11.22 %
Pre-Refunded Bonds 12.59 %
Special Tax Revenue Bonds 7.32 %
State General Obligation Bonds 3.45 %
Transportation Revenue Bonds 1.51 %
Water & Sewer Revenue Bonds 5.02 %
Short-Term Investments 1.83 %
Total Value of Securities 98.77 %
Receivables and Other Assets Net of Liabilities 1.23 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*  
AAA 22.90 %
AA 22.26 %
A   22.81 %
BBB 16.62 %
BB 0.90 %
Not Rated 14.51 %
Total 100.00 %

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.


6


Statements of net assets
Delaware Tax-Free Minnesota Fund February 28, 2009 (Unaudited)

     Principal amount      Value
Municipal Bonds – 96.87%     
Corporate-Backed Revenue Bonds – 3.39%  
          Cloquet Pollution Control Revenue Refunding
                    (Potlatch Project) 5.90% 10/1/26 $ 6,500,000 $ 4,299,230
          Laurentian Energy Authority I Cogeneration Revenue
                    Series A 5.00% 12/1/21 8,000,000 6,542,960
          Sartell Environmental Improvement Revenue Refunding
                    (International Paper) Series A 5.20% 6/1/27 7,265,000 4,531,907
          Seaway Port Authority of Duluth Industrial  
                    Development Dock & Wharf Revenues
                    (Cargill Project) Series E 6.125% 11/1/14   4,500,000 4,516,875
19,890,972
Education Revenue Bonds – 4.73%
          Minnesota Colleges & Universities  
                    Revenue Fund Series A
                    5.00% 10/1/22 (FSA) 5,135,000 5,243,040
                    5.00% 10/1/28 8,900,000 9,097,047
                    5.00% 10/1/29 (MBIA) 5,665,000 5,740,911
          Minnesota Higher Education Facilities Authority Revenue
                    (Augsburg College)
                    Series 6-C 5.00% 5/1/20  1,250,000 1,119,500
                    Series 6-J1 5.00% 5/1/36  2,225,000   1,664,411
                    (Bethel University) Refunding
                    Series 6-R 5.50% 5/1/37    2,500,000 1,876,075
                    (Carleton College)  
                    Series 6-T 5.00% 1/1/28  1,000,000 1,009,900
          St. Cloud Housing & Redevelopment Authority Revenue
                    (State University Foundation Project) 5.00% 5/1/23 2,000,000 2,039,260
27,790,144
Electric Revenue Bonds – 6.62%
          Chaska Electric Revenue Refunding
                    (Generating Facilities) Series A 5.00% 10/1/30 3,000,000 2,888,640
          Minnesota State Municipal Power Agency Electric 
                    Revenue 5.00% 10/1/35 3,000,000 2,884,680
                    Series A 5.00% 10/1/34 6,250,000 6,014,063
                    Series A 5.125% 10/1/29  3,000,000 2,919,870
          Northern Municipal Power Agency Electric System 
                    Revenue Refunding
                    Series A 5.00% 1/1/14 (ASSURED GTY) 1,000,000 1,070,870
                    Series A 5.00% 1/1/16 (ASSURED GTY) 3,000,000 3,230,010
                    Series B 4.75% 1/1/20 (AMBAC) 2,500,000 2,515,225

7

Statements of net assets
Delaware Tax-Free Minnesota Fund

Principal amount      Value
Municipal Bonds (continued)     
Electric Revenue Bonds (continued)
          Puerto Rico Electric Power Authority Revenue
                    Refunding Series GG 4.75% 7/1/21 (FSA)   $ 1,000,000 $  944,930
          Southern Minnesota Municipal Power Agency Supply   
                    System Revenue Series A 
                    5.25% 1/1/14 (AMBAC)   4,000,000 4,353,880
                    5.25% 1/1/15 (AMBAC) 8,900,000 9,750,840
                  ^Capital Appreciation 4.44% 1/1/25 (MBIA) 5,000,000 2,300,550
38,873,558
Escrowed to Maturity Bonds – 9.16%
          Dakota - Washington Counties Housing &
                    Redevelopment Authority Single Family  
                    Residential Mortgage Revenue  
                    8.15% 9/1/16 (GNMA) (MBIA) (AMT) 405,000 543,170
                    (Anoka) 8.45% 9/1/19 (GNMA) (AMT) 9,000,000 12,584,430
                    (Bloomington Mortgage) Refunding Series B
                    8.375% 9/1/21 (GNMA) (FHA) (VA) (AMT) 14,115,000 19,425,911
          Southern Minnesota Municipal Power Agency Supply
                    System Revenue Refunding Series B
                    5.50% 1/1/15 (AMBAC) 990,000 1,047,499
          University of Minnesota
                    5.75% 7/1/18 3,840,000 4,707,110
                    Series A 5.50% 7/1/21 12,500,000 14,013,625
          Western Minnesota Municipal Power Agency Supply 
                    Revenue Series A
                    6.60% 1/1/10 440,000 462,101
                    9.75% 1/1/16 (MBIA) 715,000 1,004,639
53,788,485
Health Care Revenue Bonds – 9.89%
          Aitkin Health Care Facilities Revenue Refunding 
                    (Riverwood Health Care Center) 5.60% 2/1/32 1,500,000 998,475
          Apple Valley Economic Development Authority Health
                    Care Revenue (Augustana Home St. Paul Project)
                    Series A 6.00% 1/1/40 2,700,000 1,802,493
          Bemidji Health Care Facilities First Mortgage Revenue
                    (North Country Health Services)
                    5.00% 9/1/24 (RADIAN) 740,000 672,216
          Breckenridge Catholic Health Initiatives
                    Series A 5.00% 5/1/30 2,500,000 2,337,150

8


Principal amount Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          Maple Grove Health Care System Revenue
                    (Maple Grove Hospital) 5.25% 5/1/37 $ 2,950,000 $ 2,435,019
          Minneapolis Health Care Facility Revenue
                    (Jones-Harrison Residence Project) 5.60% 10/1/30 1,050,000 734,853
          Minneapolis Health Care System Revenue 
                    (Fairview Health Services)
                    Series B 6.50% 11/15/38 (ASSURED GTY)  1,140,000 1,221,259
                    Series D
                    5.00% 11/15/30 (AMBAC) 2,500,000   2,178,000
                    5.00% 11/15/34 (AMBAC) 10,750,000 9,058,702
          Minneapolis - St. Paul Housing & Redevelopment
                    Authority Health Care System Revenue 
                    (Health Partners Obligation Group Project)
                    5.625% 12/1/22 650,000 595,667
                    5.875% 12/1/29 1,000,000 865,440
          Minnesota Agricultural & Economic
                    Development Board Revenue  
                    (Benedictine Health Systems) 5.75% 2/1/29 1,895,000 1,309,748
                    (Fairview Health Care System)
                    Un-Refunded Balance Series A
                    5.75% 11/15/26 (MBIA) 180,000 163,089
                    6.375% 11/15/29 15,000 14,947
          Northfield Hospital Revenue 5.375% 11/1/26   3,785,000   2,904,571
          Shakopee Health Care Facilities Revenue 
                    (St. Francis Regional Medical Center) 
                    5.10% 9/1/25 2,000,000 1,693,000
                    5.25% 9/1/34 7,000,000 5,542,040
          Sherburne County Health Care Facilities Revenue
                    (Guardian Angels Health Services) 5.55% 10/1/36 1,500,000 948,825
          St. Louis Park Health Care Facilities Revenue Refunding
                    (Park Nicollet Health Services)
                    Series C 5.50% 7/1/23 3,000,000 2,958,810
          St. Paul Housing & Redevelopment Authority
                    Health Care Facilities Revenue
                    (Allina Health System)
                    Series A 5.00% 11/15/18 (MBIA) 5,720,000 5,533,585
                    (Health Partners Obligation Group Project)
                    5.25% 5/15/36 7,900,000 5,881,155

9

Statements of net assets
Delaware Tax-Free Minnesota Fund

Principal amount Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          St. Paul Housing & Redevelopment Authority Hospital
                    Revenue (Health East Project)  
                    6.00% 11/15/35 $ 4,340,000 $  3,048,373
                    Series A 5.70% 11/1/15 1,150,000 1,037,346
          St. Paul Housing & Redevelopment Authority
                    Multifamily Housing Revenue Refunding
                    (Marion Center Project) Series A
                    5.30% 11/1/30 500,000 314,950
                    5.375% 5/1/43 500,000 295,330
          Stillwater Health Care Revenue (Health System 
                    Obligation Group) 5.00% 6/1/35 1,000,000 788,550
          Washington County Housing & Redevelopment 
                    Authority Revenue (Health East Project)
                    5.50% 11/15/27 1,000,000 736,440
          Willmar (Rice Memorial Hospital Project)
                    5.00% 2/1/22 (FSA) 1,000,000   1,029,750
                    5.00% 2/1/25 (FSA) 1,000,000 1,009,150
  58,108,933
Housing Revenue Bonds – 5.76%
          Brooklyn Center Multifamily Housing Revenue Refunding
                    (Shingle Creek) 5.40% 5/20/43 (GNMA) (AMT)     1,000,000 921,250
          Dakota County Housing & Redevelopment Authority
                    Single Family Mortgage Revenue
                    5.85% 10/1/30 (GNMA) (FNMA) (AMT) 128,000 128,022
      @Hutchinson Multifamily Housing Revenue  
                    (Evergreen Apartments Project)
                    5.75% 11/1/28 (HUD Section 8) 785,000 545,245
          Minneapolis Multifamily Housing Revenue
                    (Bottineau Commons Project)
                    5.45% 4/20/43 (GNMA) (AMT) 1,500,000 1,392,900
                    (Grant Street Apartments Project)
                    Series A 7.25% 11/1/29 750,000 656,025
                    (Seward Towers Project)
                    5.00% 5/20/36 (GNMA) 8,000,000 7,364,079
                    (Sumner Field) Series A 
                    5.50% 11/20/26 (GNMA) (AMT) 920,000 917,847
                    (Trinity Apartments) Refunding Series A
                    6.75% 5/1/21 (HUD Section 8) 1,610,000 1,452,655

10


Principal amount Value
Municipal Bonds (continued)          
Housing Revenue Bonds (continued)
          Minnesota Housing Finance Agency Rental Housing
                    Revenue Series C-2 5.95% 2/1/15 (AMBAC) $ 1,495,000 $ 1,497,631
          Minnesota Housing Finance Agency
                    Residential Housing
                    Series A 5.30% 7/1/19 490,000 500,403
                    Series B-1 5.35% 1/1/33 (AMT)   2,795,000 2,575,872
                    Series D 4.80% 7/1/38 (AMT) 2,500,000 2,088,025
                    Series I 4.85% 7/1/38 (AMT) 2,000,000 1,684,140
                    Series I 5.15% 7/1/38 (AMT) 5,540,000 4,921,016
                    Series M 4.875% 7/1/37 (AMT) 4,500,000 3,819,240
                    Single Family Mortgage Series J 5.90% 7/1/28 (AMT) 350,000 350,340
      @St. Cloud Housing & Redevelopment Authority  
                    Multifamily Housing Revenue (Sterling Heights  
                    Apartments Project) 7.55% 4/1/39 (AMT) 1,000,000 803,080
      @Washington County Housing & Redevelopment
                    Authority Governmental Revenue Refunding
                    (Briar Pond Project) Series C 7.25% 8/20/34 930,000 705,675
          White Bear Lake Multifamily Revenue Refunding 
                    (Lake Square) Series A 5.875% 2/1/15 (FHA) 795,000 796,336
          Willmar Housing & Redevelopment Authority 
                    Multifamily Housing Revenue (Highland Apartments)
                    5.85% 6/1/19 (HUD Section 8)   810,000   688,775
33,808,556
Lease Revenue Bonds – 3.53%
          Minneapolis Special School District #001 Series A
                    5.00% 2/1/18 (FSA) 1,545,000 1,628,739
                    5.00% 2/1/19 (FSA) 1,535,000 1,618,197
                    5.00% 2/1/20 (FSA) 1,690,000 1,781,598
          Puerto Rico Public Buildings Authority Revenue 
                    (Guaranteed Government Facilities)
                    Un-Refunded Balance Series D 5.25% 7/1/36 1,070,000 879,979
          St. Paul Port Authority Lease Revenue
                    (Cedar Street Office Building Project)
                    5.00% 12/1/22 2,500,000 2,570,850
                    5.25% 12/1/27 3,840,000 3,905,126
                    Series 3-12 5.125% 12/1/27  3,000,000 3,047,220

11

Statements of net assets
Delaware Tax-Free Minnesota Fund

Principal amount Value
Municipal Bonds (continued)          
Lease Revenue Bonds (continued)
St. Paul Port Authority Lease Revenue (continued)
                    (Robert Street Office Building Project)
                    Series 3-11 4.75% 12/1/23 $ 2,000,000 $ 2,027,240
                    Series 3-11 5.00% 12/1/27 2,500,000 2,525,100
                    Series 9 5.25% 12/1/27 725,000 737,296
20,721,345
Local General Obligation Bonds – 22.58%
          Anoka County Capital Improvement Series A
                    5.00% 2/1/19 1,270,000 1,448,130
                    5.00% 2/1/22 500,000 544,730
          Big Lake Independent School District #727 Series A
                    5.00% 2/1/17 (FSA) 1,040,000 1,069,422
                    5.00% 2/1/20 (FSA) 1,000,000 1,028,290
          Bloomington Independent School District #271
                    Series B 5.00% 2/1/17 5,300,000 5,449,937
          Centennial Independent School District #012
                    Series A 5.00% 2/1/18 (FSA) 1,270,000 1,349,566
          Dakota County Capital Improvement
                    Series A 4.75% 2/1/26 1,000,000 1,008,950
          Dakota County Community Development Agency
                    (Senior Housing Facilities) 5.00% 1/1/21 1,275,000 1,310,279
          Farmington Independent School District #192 Series B
                    5.00% 2/1/27 (FSA) 10,705,000 10,946,933
                  ^Capital Appreciation 5.34% 2/1/21 (FSA) 1,500,000 844,770
                  ^Capital Appreciation 5.424% 2/1/20 (FSA) 1,650,000 980,100
          Hennepin County Regional Railroad Authority
                    5.00% 12/1/31 4,030,000 4,053,979
          Lakeville Independent School District #194
                  ^Capital Appreciation Series B 5.45% 2/1/19 (FSA) 8,000,000 4,812,400
                    Series A 4.75% 2/1/22 (FSA)   6,850,000 7,071,529
        ^Mahtomedi Independent School District #832 Capital
                    Appreciation Series B 5.90% 2/1/14 (MBIA)   1,540,000 1,345,421
          Metropolitan Council Minneapolis - St. Paul  
                    Metropolitan Area Waste Water Treatment  
                    Series B 5.00% 12/1/21 1,200,000 1,273,812
                    Series C
                    5.00% 3/1/16 2,440,000   2,818,859
                    5.00% 3/1/28 5,000,000 5,154,950

12


Principal amount      Value
Municipal Bonds (continued)     
Local General Obligation Bonds (continued)
          Minneapolis Library 5.00% 12/1/25 $ 1,500,000 $ 1,541,250
          Morris Independent School District #769 Building 
                    5.00% 2/1/24 (MBIA) 4,875,000 5,229,851
          Mounds View Independent School District #621 Series A
                    5.00% 2/1/20 (MBIA) 2,970,000 3,029,816
                    5.375% 2/1/24 (FGIC) 6,170,000 6,525,886
          New Brighton Tax Increment
                    Series A 5.00% 2/1/27 (MBIA) 1,000,000 1,024,950
          Osseo Independent School District #279
                    Series A 5.00% 2/1/21 (FSA) 3,570,000 3,696,271
          Prior Lake Independent School District #719
                    Series B 5.00% 2/1/19 (FSA) 3,145,000 3,389,712
          Ramsey County State Aid
                    Series C 5.00% 2/1/28 1,060,000 1,080,765
          Robbinsdale Independent School District #281
                    5.00% 2/1/21 (FSA) 1,310,000 1,368,544
          Rockford Independent School District #833
                    5.60% 2/1/21 (FSA) 3,210,000 3,318,434
                    5.625% 2/1/23 (FSA) 7,020,000 7,258,680
        ^Rosemount Independent School District #196
                    Capital Appreciation Series B
                    5.80% 4/1/09 (FSA) 1,860,000 1,834,136
                    5.85% 4/1/10 (FSA) 2,240,000 2,207,251
                    5.931% 4/1/11 (FSA) 2,600,000 2,499,562
                    5.961% 4/1/12 (FSA) 1,850,000 1,731,545
                    6.008% 4/1/13 (FSA) 1,915,000 1,735,028
        ^Sartell Independent School District #748 Capital
                    Appreciation Refunding Series B
                    5.976% 2/1/13 (MBIA) 540,000 484,898
                    6.100% 2/1/15 (MBIA) 1,075,000 880,726
                    6.15% 2/1/16 (MBIA) 1,750,000 1,366,838
        ^Sauk Rapids Independent School District #047 Series B
                    5.983% 2/1/15 (FSA) 2,700,000   2,033,883
                    6.083% 2/1/17 (FSA)   2,245,000 1,496,719
          South Washington County Independent School
                    District #833 Series A    
                    4.75% 2/1/25 2,500,000 2,576,800
                    4.75% 2/1/26   3,600,000 3,681,144
                    4.75% 2/1/27 2,300,000 2,328,313
                    5.60% 2/1/20 (MBIA) 6,880,000 7,125,341

13

Statements of net assets
Delaware Tax-Free Minnesota Fund

Principal amount Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
          St. Michael Independent School District #885
                    5.00% 2/1/20 (FSA) $ 1,970,000 $ 2,093,421
                    5.00% 2/1/27 (FSA) 3,435,000 3,650,203
          St. Peter’s Hospital Series A 5.00% 9/1/24 (MBIA) 1,905,000 1,919,592
          Todd Morrison Cass & Wadena Counties United
                    Hospital District (Health Care Facilities-Lakewood)
                    5.00% 12/1/21 2,000,000 2,012,380
                    5.125% 12/1/24 1,000,000 984,000
  132,617,996
§Pre-Refunded Bonds – 20.93%
          Chaska Electric Revenue Series A 6.00% 10/1/25-10 1,000,000 1,074,490
          Duluth Economic Development Authority  
                    Health Care Facilities Revenue
                    (Benedictine Health System - St. Mary’s Hospital)
                    5.25% 2/15/28-14 8,500,000 9,695,355
                    5.25% 2/15/33-14     10,000,000 11,406,299
                    5.50% 2/15/23-14 1,000,000 1,152,310
          Hopkins Housing & Redevelopment Authority
                    (Public Works & Fire Station) Series A
                    5.00% 2/1/23-13 (MBIA) 1,210,000 1,357,898
          Marshall Medical Center Gross Revenue
                    (Weiner Memorial Medical Center Project)
                    6.00% 11/1/28-09 1,000,000 1,034,680
          Minneapolis Community Development Agency
                    Series G-3 5.45% 12/1/31-11 2,000,000 2,204,140
          Minneapolis Health Care System Revenue
                    (Fairview Health Services)
                    Series A 5.625% 5/15/32-12 16,925,000 19,178,563
          Minneapolis - St. Paul Metropolitan Airports
                    Commission Revenue
                    Series A 5.25% 1/1/32-11 (FGIC) 5,000,000 5,364,900
                    Series C
                    5.125% 1/1/20-11 (FGIC) 2,000,000 2,140,280
                    5.25% 1/1/32-11 (FGIC) 8,845,000 9,485,466
                    5.50% 1/1/17-11 (FGIC) 2,500,000 2,692,375
          Minneapolis Health Care System Revenue
                    (Allina Health Systems) Series A 5.75% 11/15/32-12 17,300,000 19,816,111

14


Principal amount Value
Municipal Bonds (continued)              
§Pre-Refunded Bonds (continued)
          Minnesota Agricultural & Economic Development
          Revenue (Fairview Health Care System)
          Series A 6.375% 11/15/29-10 $ 485,000   $ 530,246
Minnesota Public Facilities Authority Water Pollution
          Control Revenue Series A 5.00% 3/1/20-10 3,000,000 3,130,020
Puerto Rico Commonwealth Series B 5.00% 7/1/35-16 925,000 1,084,331
Puerto Rico Public Buildings Authority Guaranteed
          Government Facilities Revenue Series D
          5.25% 7/1/36-12 2,930,000 3,210,079
Rochester Electric Utilities Revenue 5.25% 12/1/30-10 4,915,000 5,268,880
Rochester Multifamily Housing Revenue
          (Wedum Shorewood Campus Project)
          6.60% 6/1/36-09 3,890,000 4,025,139
Southern Minnesota Municipal Power Agency
          Supply Revenue Series A
          5.75% 1/1/18-13 (MBIA) 1,000,000 1,070,510
          5.75% 1/1/18-13 3,790,000 4,057,233
          5.75% 1/1/18-13 (AMBAC)   670,000 717,242
St. Louis Park Health Care Facilities Revenue
          (Park Nicollet Health Services) Series B
          5.25% 7/1/30-14 9,420,000 10,873,788
          5.50% 7/1/25-14 2,000,000 2,333,760
  122,904,095
Special Tax Revenue Bonds – 2.46%
Hennepin County Sales Revenue
          (Second Lien - Ballpark Project) Series B
          5.00% 12/15/19 2,100,000 2,340,744
          5.00% 12/15/24 1,150,000 1,207,615
^ Minneapolis Community Development Agency Tax
          Increment Revenue Capital Appreciation
          6.674% 9/1/09 (MBIA) 5,750,000 5,689,970
Minneapolis Tax Increment Revenue Refunding
          (St. Anthony Falls Project) 5.75% 2/1/27 1,000,000 642,540
Puerto Rico Commonwealth Infrastructure Financing
          Authority Special Tax Revenue Series B
          5.00% 7/1/46 4,000,000 3,053,880

15

Statements of net assets
Delaware Tax-Free Minnesota Fund

Principal amount Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds (continued)
          Virgin Islands Public Finance Authority Revenue
                    (Senior Lien Matching Fund Loan) Series A
                    5.25% 10/1/22 $ 1,785,000 $ 1,538,384
14,473,133
State General Obligation Bonds – 6.19%
          Minnesota State
                    5.00% 10/1/15 5,000,000 5,781,800
                    5.00% 11/1/20 (FSA) 13,675,000 14,313,622
                    5.00% 8/1/21 2,400,000 2,505,720
                    5.00% 12/1/21 5,000,000 5,598,850
          Puerto Rico Commonwealth Public Improvement
                    Refunding Series A  
                    5.50% 7/1/17 4,070,000 3,950,546
                    5.50% 7/1/19 (MBIA) 1,500,000 1,426,050
                    Un-Refunded Balance Series A 5.00% 7/1/34 1,670,000 1,332,710
                    Un-Refunded Balance Series B 5.00% 7/1/35 575,000 457,142
          Puerto Rico Government Development Bank Senior
                    Notes Series B 5.00% 12/1/14 1,000,000 963,520
36,329,960
Transportation Revenue Bonds – 1.15%
          Minneapolis - St. Paul Metropolitan Airports
                    Commission Revenue Series A  
                    5.00% 1/1/15 (AMT) 3,095,000 3,162,409
                    5.00% 1/1/22 (MBIA)   2,000,000 2,034,120
                    5.25% 1/1/16 (MBIA) 1,460,000 1,554,331
6,750,860
Water & Sewer Revenue Bonds – 0.48%
          Minnesota Public Facilities Authority Drinking Water  
                    Revenue Series B 5.25% 3/1/13 1,500,000 1,695,480
          Minnesota Public Facilities Authority Water Pollution
                    Control Revenue Refunding Series B
                    5.00% 3/1/19 1,000,000 1,154,540
2,850,020
Total Municipal Bonds (cost $572,130,023) 568,908,057

16


Number of shares Value  
Short-Term Investments – 1.69%          
Money Market Instrument – 1.44%  
          Federated Minnesota Municipal Cash Trust 8,436,988 $ 8,436,988
  8,436,988
 
  Principal amount
·Variable Rate Demand Notes – 0.25%
          Minneapolis Health Care (Fairview Health Services)  
                    Series E 0.37% 11/15/47 $ 1,000,000 1,000,000
          St. Paul Port Authority Industrial Development Revenue
                    (Camada Limited Partnership-711)
                    0.73% 12/1/22 (AMT) 100,000 100,000
          University of Minnesota Series C 0.35% 12/1/36 355,000 355,000
  1,455,000
Total Short-Term Investments (cost $9,891,988) 9,891,988
 
Total Value of Securities – 98.56%
          (cost $582,022,011) 578,800,045
Receivables and Other Assets
          Net of Liabilities – 1.44% 8,464,724
Net Assets Applicable to 49,969,436
          Shares Outstanding – 100.00%   $ 587,264,769
 
Net Asset Value – Delaware Tax-Free Minnesota Fund
          Class A ($547,172,131 / 46,566,164 Shares) $11.75
Net Asset Value – Delaware Tax-Free Minnesota Fund
          Class B ($10,488,970 / 891,971 Shares) $11.76
Net Asset Value – Delaware Tax-Free Minnesota Fund
          Class C ($29,603,668 / 2,511,301 Shares)   $11.79
 
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 592,086,159
Distributions in excess of net investment income (141,003 )
Accumulated net realized loss on investments (1,458,421 )
Net unrealized depreciation of investments (3,221,966 )
Total net assets $ 587,264,769

17

Statements of net assets
Delaware Tax-Free Minnesota Fund

   
^ Zero coupon security. The rate shown is the yield at the time of purchase.
· Variable rate security. The rate shown is the rate as of February 28, 2009. 
§ Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 10 in “Notes to financial statements.”
@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $2,054,000, which represented 0.35% of the Fund’s net assets. See Note 10 in “Notes to financial statements.”

Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Authority
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association Collateral
HUD — Housing and Urban Development
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance
VA — Insured by the Veterans Administration

Net Asset Value and Offering Price Per Share –
       Delaware Tax-Free Minnesota Fund
Net asset value Class A (A) $ 11.75
Sales charge (4.50% of offering price) (B) 0.55
Offering price $ 12.30

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

See accompanying notes

18


Delaware Tax-Free Minnesota Intermediate Fund February 28, 2009 (Unaudited)

Principal amount Value
Municipal Bonds – 97.49%          
Corporate-Backed Revenue Bonds – 2.11%
          Laurentian Energy Authority I Cogeneration Revenue
                    Series A 5.00% 12/1/21 $ 750,000 $ 613,403
          Minneapolis Community Development Agency
                    (Limited Tax Common Bond Fund)
                    Series 4 6.20% 6/1/17 (AMT) 960,000 961,593
1,574,996
Education Revenue Bonds – 10.69%
          Minnesota Colleges & Universities Revenue Fund
                    Series A 5.00% 10/1/28 1,000,000   1,022,140
          Minnesota Higher Education Facilities Authority Revenue
                    (Carleton College) Series 6-T 4.75% 1/1/23 1,000,000 1,025,360
                    (Macalester College) Series 6-P 4.25% 3/1/27 750,000 692,280
                    (St. Johns University) Series 6-U
                    4.40% 10/1/21   325,000 314,509
                    4.50% 10/1/23   265,000 250,065
                    (University of St. Thomas) Series 5-Y 5.25% 10/1/19 1,590,000 1,652,551
          St. Cloud Housing & Redevelopment Authority Revenue
                    (State University Foundation Project) 5.00% 5/1/23 1,000,000 1,019,630
          University of Minnesota Series A 4.00% 4/1/15 310,000 336,037
          University of Minnesota Special Purpose Revenue
                    (State Supported Stadium Debt) 5.00% 8/1/18 1,500,000   1,675,109
  7,987,681
Electric Revenue Bonds – 5.24%
          Chaska Electric Revenue Refunding  
                    (Generating Facilities) Series A 5.25% 10/1/25 1,000,000 1,004,930
          Northern Municipal Power Agency
                    5.00% 1/1/13 (ASSURED GTY) 1,200,000 1,290,096
                    Series A
                    5.00% 1/1/14 (ASSURED GTY) 510,000 546,144
                    5.00% 1/1/15 (ASSURED GTY) 1,000,000 1,075,880
  3,917,050
Escrowed to Maturity Bond – 1.62%
          University of Minnesota Series A 5.75% 7/1/16 1,000,000 1,210,450
  1,210,450
Health Care Revenue Bonds – 8.00%
          Minneapolis-St. Paul Housing & Redevelopment Authority
                    (Health Partners Obligation Group Project)
                    6.00% 12/1/17 1,125,000 1,135,283

19

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund

Principal amount Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          Moorhead Economic Development Authority Multifamily
                    Housing Revenue Refunding (Eventide
                    Lutheran Home Project) 4.70% 6/1/18 $ 475,000 $ 366,938
          St. Louis Park Health Care Facilities Revenue Refunding
                    (Park Nicollet Health Services)
                    Series C 5.625% 7/1/26 1,500,000 1,453,875
          St. Paul Housing & Redevelopment Authority Health Care
                    Revenue (Allina Health System)
                    Series A 5.00% 11/15/14 (MBIA) 2,000,000 2,010,999
          St. Paul Housing & Redevelopment Authority Hospital
                    Revenue (Health East Project)
                    Series B 5.85% 11/1/17 1,160,000 1,014,826
    5,981,921
Housing Revenue Bonds – 5.00%
          Minneapolis Multifamily Housing Revenue Refunding
                    (Trinity Apartments)
                    Series A 6.75% 5/1/21 (HUD Section 8) 1,675,000 1,511,302
          Minnesota Housing Finance Agency Residential Housing  
                  ·Series D 4.75% 7/1/32 (AMT) 750,000 661,688
                    Series I 5.10% 7/1/20 (AMT) 705,000 704,951
                    Series M 4.85% 7/1/31 (AMT) 1,000,000 861,610
    3,739,551
Lease Revenue Bonds – 2.38%
          Edina Housing & Redevelopment Authority Public Project
                    Revenue (Appropriate Lease Obligation) 5.125% 2/1/19   1,000,000 1,043,690
          Virginia Housing & Redevelopment Authority Health Care
                    Facility Lease Revenue 5.25% 10/1/25 880,000 732,063
  1,775,753
Local General Obligation Bonds – 29.36%
          Anoka County Capital Improvements
                    Series A 4.00% 2/1/17 1,175,000 1,267,484
                    Series C 5.00% 2/1/27 500,000 513,755
          Anoka-Hennepin Independent School District #11
                    Refunding 5.00% 2/1/17 1,000,000 1,148,370
          Big Lake Independent School District #727
                    Series C Refunding
                    5.00% 2/1/16 (FSA) 1,180,000 1,237,525
                    5.00% 2/1/17 (FSA) 1,000,000 1,048,750

20


Principal amount Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
          Centennial Independent School District #012 Series A
                    5.00% 2/1/18 (FSA) $ 1,000,000 $ 1,062,650
                    5.00% 2/1/20 (FSA) 750,000 796,988
          Dakota County Capital Improvement
                    Series A 4.75% 2/1/17 1,000,000 1,046,580
          Duluth Independent School District #709 Revenue
                    Certificates of Participation  
                    Series A 4.25% 2/1/20 (FSA) 1,710,000 1,798,458
          Hennepin County Series B 4.75% 12/1/14 1,000,000 1,043,040
          Hopkins Independent School District #270  
                    5.125% 2/1/17 (FGIC) 2,000,000 2,132,299
          Mankato Independent School District #77 (Formerly Blue
                    Earth County Independent School District #10)
                    Series A 4.125% 2/1/22 1,000,000 1,015,550
          Minneapolis-St. Paul Metropolitan Council Area Waste
                    Water Series C  
                    5.00% 3/1/16   560,000 646,951
                    5.00% 3/1/28 1,000,000 1,030,990
          Osseo Independent School District #279
                    Series A 5.00% 2/1/21 (FSA) 1,500,000 1,553,055
          South Washington County Independent
                    School District #833
                    Series A 4.00% 2/1/22 750,000 753,675
                    Series B 5.00% 2/1/16 (FSA) 1,560,000 1,673,568
          St. Paul Independent School District #625
                    (School Building) Series A 4.00% 2/1/15 1,020,000 1,104,436
          White Bear Lake Independent School District #624
                    (Formerly Joint Independent Consolidated Ramsey
                    County School District #39 & Washington & Anoka
                    Counties School District #103) Series B 4.75% 2/1/22 1,000,000 1,066,170
  21,940,294
§Pre-Refunded Bonds – 9.46%
          Minneapolis Health Care System Revenue Series A
                    (Allina Health Systems) 5.75% 11/15/32-12 1,500,000 1,718,160
                    (Fairview Health Services) 5.625% 5/15/32-12 1,750,000 1,983,013
          Minnesota Higher Education Facilities Authority Revenue
                    (College of Art & Design)
                    Series 5-D 6.625% 5/1/20-10 1,000,000 1,065,060

21

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund

Principal amount Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds (continued)
          Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series D 5.25% 7/1/38-12 $ 500,000 $ 554,100
St. Louis Park Health Care Facilities Revenue  
          (Park Nicollet Health Services)
          Series B 5.50% 7/1/25-14 1,500,000 1,750,320
  7,070,653
Special Tax Revenue Bonds – 7.16%
Minneapolis Art Center Facilities Revenue
          (Walker Art Center Project) 5.125% 7/1/21 2,250,000 2,305,688
Minnesota 911 Revenue (Public Safety Radio
            Communication System Project)
          4.00% 6/1/14 (ASSURED GTY) 1,370,000 1,472,421
          4.25% 6/1/18 (ASSURED GTY) 1,170,000 1,256,089
@ Minneapolis Tax Increment Revenue  
          (Ivy Tower Project) 5.50% 2/1/22 415,000 313,221
  5,347,419
State General Obligation Bonds – 9.08%
Minnesota State  
          5.00% 6/1/10 1,330,000 1,400,450
          Refunding 5.00% 8/1/15 2,000,000 2,308,000
          Various Purposes Series A 5.00% 12/1/21 1,000,000 1,119,770
Puerto Rico Commonwealth Public Improvement
          Refunding Series A 5.25% 7/1/15 1,000,000 971,070
· Puerto Rico Public Finance (Commonwealth Appropriation)  
          (LOC - Puerto Rico Government Bank)
          Series A 5.75% 8/1/27 1,000,000 986,050
  6,785,340
Transportation Revenue Bonds – 1.74%
Minneapolis-St. Paul Metropolitan Airports
          Commission Refunding
          Series A 5.00% 1/1/13 (AMT) 500,000 516,190
          Series 14 5.50% 1/1/11 (AMT) 750,000 787,230
  1,303,420
Water & Sewer Revenue Bonds – 5.65%
Minnesota Public Facilities Authority Drinking Water
          Revenue 5.25% 3/1/13 1,000,000 1,130,320

22


Principal amount Value
Municipal Bonds (continued)          
Water & Sewer Revenue Bonds (continued)
          Minnesota Public Facilities Authority Water Pollution
                    Control Revenue Refunding
                    Series C 5.00% 3/1/18 $ 1,000,000 $ 1,111,700
                    Series D 5.00% 3/1/14 500,000 566,335
          St. Paul Sewer Revenue Series D 5.00% 12/1/20 1,275,000 1,414,128
  4,222,483
Total Municipal Bonds (cost $71,658,436) 72,857,011
 
  Number of shares
Short-Term Investments – 1.26%
Money Market Instrument – 0.86%
          Federated Minnesota Municipal Cash Trust 645,160 645,160
  645,160
 
  Principal amount
·Variable Rate Demand Note – 0.40%
          St. Paul Housing & Redevelopment Authority Revenue
                    (Pur-Cretin-Derham Hall Project) 1.03% 2/1/26 $ 300,000 300,000
  300,000
Total Short-Term Investments (cost $945,160) 945,160
 
Total Value of Securities – 98.75%
          (cost $72,603,596) 73,802,171
Receivables and Other Assets
          Net of Liabilities – 1.25% 931,342
Net Assets Applicable to 7,060,150
          Shares Outstanding – 100.00% $ 74,733,513
 
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
          Class A ($64,756,766 / 6,119,243 Shares)   $10.58
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
          Class B ($544,113 / 51,285 Shares)       $10.61
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
          Class C ($9,432,634 / 889,622 Shares) $10.60

23

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund

 
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 75,605,659
Undistributed net investment income 933
Accumulated net realized loss on investments   (2,071,654 )
Net unrealized appreciation of investments 1,198,575
Total net assets $ 74,733,513

@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $313,221, which represented 0.42% of the Fund’s net assets. See Note 10 in “Notes to financial statements.”
§ Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 10 in “Notes to financial statements.”
· Variable rate security. The rate shown is the rate as of February 28, 2009.

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

Net Asset Value and Offering Price Per Share –
       Delaware Tax-Free Minnesota Intermediate Fund
Net asset value Class A (A)      $ 10.58
Sales charge (2.75% of offering price) (B) 0.30
Offering price $ 10.88

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

See accompanying notes

24


Delaware Minnesota High-Yield Municipal Bond Fund February 28, 2009 (Unaudited)

Principal amount Value
Municipal Bonds – 96.94%          
Corporate-Backed Revenue Bonds – 2.81%
          Cloquet Pollution Control Revenue Refunding
                    (Potlatch Project) 5.90% 10/1/26 $ 1,700,000 $ 1,124,414
          Laurentian Energy Authority I Cogeneration Revenue
                    Series A 5.00% 12/1/21 1,750,000 1,431,273
          Sartell Environmental Improvement Revenue Refunding
                    (International Paper) Series A 5.20% 6/1/27 1,750,000 1,091,650
  3,647,337
Education Revenue Bonds – 8.87%
          Baytown Township Lease Revenue (St. Croix
                    Preparatory Academy) Series A 7.00% 8/1/38 500,000 391,115
          Minnesota Higher Education Facilities Authority Revenue
                    (Augsburg College)
                    Series 6-C 5.00% 5/1/23 700,000   598,108
                    Series 6-J1 5.00% 5/1/36 1,000,000 748,050
                    (Bethel University) Refunding
                    Series 6-R 5.50% 5/1/37 1,500,000 1,125,645
                    (Macalester College) Series 6-P 4.25% 3/1/32 1,000,000 872,030
                    (St. John’s University) Series 6-U 4.75% 10/1/33 825,000 708,353
                    (St. Olaf) Series 6-O  
                    4.50% 10/1/32   1,000,000 812,890
                    5.00% 10/1/22   1,000,000 1,015,290
                    (University of St. Thomas) Series 6-I 5.00% 4/1/23 1,500,000 1,510,890
          University of Minnesota Series A 5.125% 4/1/34 1,000,000 1,019,380
          University of Minnesota Special Purpose Revenue
                    (Supported Stadium Debt) 5.00% 8/1/29 2,660,000 2,699,448
  11,501,199
Electric Revenue Bonds – 6.47%
          Chaska Electric Revenue Refunding
                    (Generating Facilities) Series A 5.25% 10/1/25 1,000,000 1,004,930
          Minnesota Municipal Power Agency Electric Revenue
                    Series A 5.00% 10/1/34 2,750,000 2,646,187
          Northern Municipal Power Agency Electric System Revenue
                    5.00% 1/1/16 (ASSURED GTY) 1,200,000 1,292,004
                    Series A 5.00% 1/1/18 (ASSURED GTY) 1,000,000 1,069,210
          Southern Minnesota Municipal Power Agency Supply
                    System Revenue Series A 5.25% 1/1/16 (AMBAC) 1,000,000 1,090,390
          Western Minnesota Municipal Power Agency Supply
                    Revenue Series A 5.00% 1/1/30 (MBIA) 1,335,000 1,286,366
8,389,087

25

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

Principal amount Value
Municipal Bonds (continued)          
Health Care Revenue Bonds – 24.29%
          Aitkin Health Care Facilities Revenue Refunding
                    (Riverwood Health Care Center) 5.50% 2/1/24 $ 700,000 $ 520,128
          Apple Valley Economic Development Authority Health
                    Care Revenue (Augustanna Home St. Paul Project)
                    Series A 5.80% 1/1/30 1,000,000   687,320
          Bemidji Health Care Facilities First Mortgage Revenue
                    (North Country Health Services)
                    5.00% 9/1/31 (RADIAN) 2,500,000 2,093,374
                    Refunding 5.00% 9/1/20 1,150,000 1,116,213
          Breckenridge Catholic Health Initiatives
                    Series A 5.00% 5/1/30 2,000,000 1,869,720
          Detroit Lakes Housing & Health Facilities Revenue
                    Refunding (Mankato Lutheran Homes)  
                    Series D 5.50% 8/1/21 500,000   376,915
          Glencoe Health Care Facilities Revenue  
                    (Glencoe Regional Health Services Project)
                    5.00% 4/1/20   1,100,000 970,530
                    5.00% 4/1/31 1,965,000 1,411,322
          Mahtomedi Senior Housing Revenue Refunding
                    (St. Andrews Village Project) 5.75% 12/1/40 1,000,000 640,430
          Maple Grove Health Care Facilities Revenue
                    (North Memorial Health Care) 5.00% 9/1/35 1,880,000 1,527,744
          Maple Grove Health Care System Revenue
                    (Maple Grove Hospital)
                    5.25% 5/1/28 2,200,000 1,934,723
                    5.25% 5/1/37 1,000,000 825,430
          Minneapolis Health Care System Revenue
                    (Fairview Health Services)
                    Series A 6.625% 11/15/28 800,000 845,064
                    Series B 6.50% 11/15/38 (ASSURED GTY) 250,000 267,820
                    Series D 5.00% 11/15/34 (AMBAC) 1,000,000 842,670
          Minneapolis-St. Paul Housing & Redevelopment Authority
                    (Health Partners Obligation Group Project)
                    6.00% 12/1/17 1,125,000 1,135,283
          Minnesota Agricultural & Economic Development
                    Board Revenue (Benedictine Health Systems)
                    5.75% 2/1/29 1,000,000 691,160

26


Principal amount Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          Moorhead Economic Development Authority
          Multifamily Housing Revenue Refunding
          (Eventide Project) Series A 5.15% 6/1/29 $ 550,000 $ 352,127
Northfield Hospital Revenue 5.375% 11/1/31 1,000,000 721,050
Owatonna Senior Housing Revenue
          (Senior Living Project) Series A
          5.80% 10/1/29 400,000 279,948
          6.00% 4/1/41 1,250,000 827,188
Shakopee Health Care Facilities Revenue
          (St. Francis Regional Medical Center) 5.25% 9/1/34 1,000,000 791,720
St. Louis Park Health Care Facilities Revenue Refunding  
          (Park Nicollet Health Services) Series C 5.50% 7/1/23 1,000,000 986,270
St. Paul Housing & Redevelopment Authority
          Health Care Facilities Revenue (Health Partners  
          Obligation Group Project) 5.25% 5/15/36 1,000,000 744,450
St. Paul Housing & Redevelopment Authority
          Health Care Revenue (Allina Health System)
            Series A 5.00% 11/15/18 (MBIA)   1,900,000 1,838,079
St. Paul Housing & Redevelopment Authority
          Hospital Revenue (Health East Project)  
          6.00% 11/15/25 1,000,000 801,960
          Series A 5.70% 11/1/15 705,000 635,938
          Series B 5.85% 11/1/17 250,000 218,713
St. Paul Housing and Development Authority
          Multifamily Housing Revenue Refunding
          (Marion Center Project) Series A 5.375% 5/1/43 1,000,000 590,660
Stillwater Health Care Revenue
          (Health System Obligation Group)
          5.00% 6/1/25 2,000,000 1,760,800
          5.00% 6/1/35 1,000,000 788,550
@ Twin Valley Congregate Housing Revenue
          (Living Options Project) 5.95% 11/1/28 1,825,000 1,264,415
Winona Health Care Facilities Revenue Refunding
          (Winona Health Obligation Group) 5.15% 7/1/31 1,500,000 1,130,655
31,488,369

27

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

Principal amount Value
Municipal Bonds (continued)          
Housing Revenue Bonds – 12.29%
          Chanhassen Multifamily Housing Revenue Refunding
          (Heritage Park Apartments Project)
          6.20% 7/1/30 (FHA) (AMT) (HUD Section 8) $ 300,000 $ 300,033
  Chaska Multifamily Housing Revenue (West Suburban
          Housing Partners Project) 5.875% 3/1/31 (AMT) 1,000,000 692,370
@ Hutchinson Multifamily Housing Revenue (Evergreen
          Apartments Project) 5.75% 11/1/28 (HUD Section 8) 1,710,000   1,187,732
Minneapolis Multifamily Housing Revenue
          (Grant Street Apartments Project) Refunding
          Series A 7.25% 11/1/29 2,085,000 1,823,750
          (Olson Townhomes Project) 6.00% 12/1/19 (AMT) 1,345,000 1,346,022
          (Trinity Apartments) Refunding
          Series A 6.75% 5/1/21 (HUD Section 8) 620,000 559,407
Minneapolis-St. Paul Housing Finance Board Single  
          Family Mortgage (City Living Project)  
          Series A-2 5.00% 12/1/38 (GNMA) (FNMA) (AMT) 948,396 828,822
Minnesota Housing Finance Agency (Rental Housing)
          Series A 4.875% 8/1/24 (AMT) 585,000 546,185
          Series A-1 5.00% 8/1/40 (AMT) 2,265,000 1,943,461
          (Residential Housing)
          Series G 5.00% 7/1/36 (AMT) 1,000,000 868,760
          Series I 4.85% 7/1/38 (AMT) 1,145,000 964,170
          Series M 4.875% 7/1/37 (AMT) 2,500,000 2,121,801
          (Single Family Mortgage)
          Series E 6.25% 1/1/23 (AMT) 5,000 5,003
          Series J 5.90% 7/1/28 (AMT) 490,000 490,475
          Series M 5.875% 1/1/17 10,000 10,015
@ St. Cloud Housing & Redevelopment Authority
          Multifamily Housing Revenue (Sterling Heights
          Apartments Project) 7.55% 4/1/39 (AMT) 530,000 425,632
St. Paul Housing & Redevelopment Authority
          Multifamily Housing Revenue (Shelby Grotto Housing
          Project) 5.50% 9/20/44 (GNMA) (FHA) (AMT) 750,000 701,340
Stillwater Multifamily Housing Revenue (Orleans Homes
          Project) 5.50% 2/1/42 (AMT) 750,000 477,285
@ Washington County Housing & Redevelopment
          Authority Revenue Refunding (Briar Pond Project)
          Series B 7.125% 8/20/34 815,000 633,532
15,925,795

28


          Principal amount       Value
Municipal Bonds (continued)
Lease Revenue Bonds – 1.10%      
Hibbing Economic Development Authority Revenue
          (Public Project - Hibbing Lease Obligation)
          6.40% 2/1/12 $ 410,000 $ 408,413
St. Paul Port Authority Lease Revenue (Robert Street
          Office Building Project) Series 3-11 5.00% 12/1/27 1,000,000 1,010,040
1,418,453
Local General Obligation Bonds – 11.22%
Chaska Independent School District #112
          Series A 4.50% 2/1/28 (MBIA) 1,000,000 976,300
Farmington Independent School District #192
          Series B 5.00% 2/1/27 (FSA) 1,000,000 1,022,600
Foley Independent School District #51 (School Building)
          Refunding Series A 5.00% 2/1/21 1,105,000 1,191,776
Hopkins Independent School District #270 Facilities
          5.00% 2/1/26 (MBIA) 1,055,000 1,078,843
Lakeville Independent School District #194
          Series A 4.75% 2/1/22 (FSA) 1,000,000 1,032,340
Metropolitan Council Minneapolis-St. Paul
          Metropolitan Area Waste Water Treatment
          Series B 5.00% 12/1/21   500,000 530,755
          Series C 5.00% 3/1/28 1,000,000 1,030,990
Moorhead Improvement Series B 5.00% 2/1/33 (MBIA) 750,000 741,713
Perham Disposal System 6.00% 5/1/22 (AMT) 1,500,000 1,496,340
  South Washington County Independent
          School District #833 Series A 4.75% 2/1/27 1,500,000 1,518,465
Todd Morrison Cass & Wadena Counties United
          Hospital District (Health Care Facilities-Lakewood)
          5.00% 12/1/21 610,000 613,776
          5.125% 12/1/24 205,000 201,720
          5.25% 12/1/26 1,540,000 1,511,110
White Bear Lake Independent School District #624
          (Formerly Joint Independent Consolidated
          Ramsey County School District #39 & Washington &
          Anoka Counties School District #103)
          Series B 4.75% 2/1/22 1,500,000 1,599,254
  14,545,982

29

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

          Principal amount       Value
Municipal Bonds (continued)
§Pre-Refunded Bonds – 12.59%      
Andover Economic Development Authority Public
          Facilities Lease Revenue (Andover Community Center)
          5.20% 2/1/34-14 $ 1,000,000 $ 1,081,620
Duluth Economic Development Authority
          Health Care Facilities Revenue
            (Benedictine Health System - St. Mary’s Hospital)
          5.25% 2/15/28-14 1,000,000 1,140,630
          5.25% 2/15/33-14 2,250,000 2,566,417
Minneapolis Community Development Agency
          (Supported Development Revenue)
          Series G-3 5.45% 12/1/31-11 1,000,000 1,102,070
Minneapolis Health Care System Revenue
          (Allina Health Systems) Series A 5.75% 11/15/32-12 2,000,000 2,290,880
          (Fairview Health Services) Series A 5.625% 5/15/32-12 2,000,000 2,266,300
Minnesota Higher Education Facilities Authority Revenue
          (College of Art & Design Project)
          Series 5-D 6.75% 5/1/26-10 500,000 533,255
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series D 5.25% 7/1/38-12 1,500,000 1,662,300
Puerto Rico Commonwealth Public Improvement
          Series A 5.00% 7/1/34-14 315,000 362,234
Puerto Rico Electric Power Authority Revenue
          Series II 5.25% 7/1/31-12 1,000,000 1,131,190
Rochester Multifamily Housing Revenue (Wedum
          Shorewood Campus Project) 6.60% 6/1/36-09 990,000 1,024,393
St. Louis Park Health Care Facilities Revenue (Park
          Nicollet Health Services) Series B 5.25% 7/1/30-14 1,000,000 1,154,330
16,315,619
Special Tax Revenue Bonds – 7.32%
Hennepin County Sales Tax Revenue
          (First Lien - Ballpark Project) Series A 5.00% 12/15/24 1,000,000 1,058,360
          (Second Lien - Ballpark Project) Series B
          5.00% 12/15/20 1,500,000 1,643,355
          5.00% 12/15/24   1,000,000   1,050,100
Minneapolis Supported Development Revenue
          (Limited Tax-Common Bond Fund)
          Series 2A 5.00% 6/1/28 (AMT) 1,170,000 911,512

30


          Principal amount       Value
Municipal Bonds (continued)
Special Tax Revenue Bonds (continued)      
Minneapolis Tax Increment Revenue
        @(Ivy Tower Project) 5.70% 2/1/29 $ 785,000 $  527,834
          (St. Anthony Falls Project) 5.65% 2/1/27 500,000 317,170
Minnesota 911 Revenue (Public Safety Radio Commission
          System Project) 5.00% 6/1/24 (ASSURED GTY) 1,000,000 1,041,460
Puerto Rico Commonwealth Infrastructure Financing
          Authority Special Tax Revenue Series B 5.00% 7/1/46 800,000 610,776
St. Paul Port Authority (Brownsfields Redevelopment Tax)
          Series 2 5.00% 3/1/37 1,500,000 1,486,590
Virgin Islands Public Finance Authority Revenue
          (Senior-Lien-Matching Fund Loan Note) 
          Series A 5.25% 10/1/24 1,000,000 842,560
9,489,717
State General Obligation Bonds – 3.45%
Minnesota State
          5.00% 6/1/14 1,000,000 1,139,150
          5.00% 8/1/21 (FSA) 1,250,000 1,319,900
Puerto Rico Commonwealth Public Improvement
          Series A 5.25% 7/1/22 1,000,000 901,070
          Un-Refunded Balance 5.00% 7/1/34 185,000 147,636
Puerto Rico Government Development Bank Senior Notes
          Series B 5.00% 12/1/14 1,000,000 963,520
4,471,276
Transportation Revenue Bonds – 1.51%
Minneapolis - St. Paul Metropolitan Airports
          Commission Revenue Series A 5.00% 1/1/28 (MBIA) 2,000,000 1,961,600
1,961,600
Water & Sewer Revenue Bonds – 5.02%
Minnesota Public Facilities Authority Clean Water
          Revenue Series B 5.00% 3/1/18 2,000,000 2,312,240
Minnesota Public Facilities Authority Water Pollution
          Control Revenue Refunding
          Series C 5.00% 3/1/18 1,000,000 1,111,700
          Series D 5.00% 3/1/14   1,500,000 1,699,005
St. Paul Sewer Revenue Series D 5.00% 12/1/19 1,220,000 1,377,844
6,500,789
Total Municipal Bonds (cost $137,558,068)   125,655,223

31

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

          Number of shares       Value
Short-Term Investments – 1.83%
Money Market Instrument – 0.21%
Federated Minnesota Municipal Cash Trust 276,665 $ 276,665
276,665
 
Principal amount
ŸVariable Rate Demand Note – 1.62%
  Minneapolis Health Care System Revenue
(Fairview Health Services) Series E 0.37% 11/15/47   $2,100,000 2,100,000
2,100,000
Total Short-Term Investments (cost $2,376,665) 2,376,665
 
Total Value of Securities – 98.77%
(cost $139,934,733) 128,031,888
Receivables and Other Assets
Net of Liabilities – 1.23% 1,590,496
Net Assets Applicable to 13,838,831
Shares Outstanding – 100.00% $ 129,622,384
 
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund
Class A ($101,118,417 / 10,800,057 Shares)   $9.36
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund
Class B ($5,202,011 / 554,825 Shares) $9.38
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund
Class C ($23,301,956 / 2,483,949 Shares) $9.38
 
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 147,678,641
Distributions in excess of net investment income (135 )
Accumulated net realized loss on investments (6,153,277 )
Net unrealized depreciation of investments (11,902,845 )
Total net assets $ 129,622,384

32


    
§

Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 10 in “Notes to financial statements.”

·

Variable rate security. The rate shown is the rate as of February 28, 2009.

@

Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $4,039,145, which represented 3.12% of the Fund’s net assets. See Note 10 in “Notes to financial statements.”

Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Assured Guaranty
FHA — Insured by the Federal Housing Administration
FNMA — Federal National Mortgage Association Collateral
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association Collateral
MBIA — Insured by the Municipal Bond Insurance Association
HUD — Housing and Urban Development
RADIAN — Insured by Radian Asset Assurance

Net Asset Value and Offering Price Per Share –
     Delaware Minnesota High-Yield Municipal Bond Fund
Net asset value Class A (A) $ 9.36
Sales charge (4.50% of offering price) (B) 0.44
Offering price $ 9.80

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

See accompanying notes

33


Statements of operations

Six Months Ended February 28, 2009 (Unaudited)


Delaware Delaware
Delaware Tax-Free Minnesota
Tax-Free Minnesota High-Yield
Minnesota Intermediate Municipal
Fund       Fund       Bond Fund
Investment Income:
       Interest $ 14,486,021 $ 1,526,228 $ 3,607,979
 
Expenses:
       Management fees 1,560,710 168,223 360,078
       Distribution expenses – Class A 672,960 73,437 126,909
       Distribution expenses – Class B 52,416 3,648 25,952
       Distribution expenses – Class C 135,870 38,902 123,015
       Dividend disbursing and transfer agent
              fees and expenses 141,315 18,145 43,312
       Accounting and administration expenses 114,957 13,458 26,187
       Interest and related expenses 46,310 — —
       Legal fees 38,218 6,978   13,091
       Reports and statements to shareholders 35,145 2,923 7,623
       Audit and tax 21,331 7,047 9,372
       Trustees’ fees 18,743 2,160 4,325
       Registration fees 17,187 7,744 1,479
       Insurance fees 8,801 927 2,119
       Pricing fees 7,803   3,213 5,511
       Custodian fees 6,015 691 2,736
       Consulting fees 3,839 420 913
       Taxes (other than taxes on income) 2,132   72 372
       Trustees’ expenses   1,702 192 400
       Dues and services 1,407 118 289
2,886,861 348,298 753,683
       Less fees waived (24,608 ) (29,781 ) (56,269 )
       Less waived distribution expenses – Class A — (29,375 ) —
       Less expense paid indirectly (29 ) — —
       Total operating expenses 2,862,224 289,142 697,414
Net Investment Income 11,623,797 1,237,086 2,910,565  

34


Delaware Delaware
Delaware Tax-Free Minnesota
Tax-Free Minnesota High-Yield
Minnesota Intermediate Municipal
Fund       Fund       Bond Fund
Net Realized and Unrealized Gain
     (Loss) on Investments:
     Net realized gain (loss) on:
          Investments $ (1,098,650 ) $ (574,029 ) $ (3,617,019 )
          Swap contracts — — 25,000
          Net realized loss (1,098,650 ) (574,029 ) (3,592,019 )
     Net change in unrealized appreciation/
          depreciation of investments (15,795,910 ) (166,367 ) (6,917,291 )
Net Realized and Unrealized Loss
     on Investments (16,894,560 ) (740,396 ) (10,509,310 )
 
Net Increase (Decrease) in Net Assets
     Resulting from Operations $ (5,270,763 ) $ 496,690   $ (7,598,745 )

See accompanying notes

35

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

Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)      
Increase (Decrease) in Net Assets from Operations:
     Net investment income $ 11,623,797   $ 24,693,217
     Net realized gain (loss) on investments (1,098,650 ) 1,644,874
     Net change in unrealized
          appreciation/depreciation of investments (15,795,910 ) (3,545,582 )
     Net increase (decrease) in net assets resulting
          from operations (5,270,763 ) 22,792,509
 
Dividends and Distributions to Shareholders from:
     Net Investment Income:
          Class A (10,980,567 )   (23,717,797 )
          Class B (175,661 ) (452,818 )
          Class C (451,707 ) (894,686 )
 
     Net realized gain on investments:
          Class A (2,257,247 ) (94,009 )
          Class B (43,630 ) (2,390 )
          Class C (114,458 ) (4,208 )
(14,023,270 ) (25,165,908 )
 
Capital Share Transactions:
     Proceeds from shares sold:
          Class A 27,172,174 43,057,506
          Class B 137,139 119,269
          Class C 5,390,701 5,336,417
 
     Net asset value of shares issued upon reinvestment
          of dividends and distributions:
          Class A 8,927,376 15,526,838
          Class B 154,959 307,575
          Class C 437,713 698,797
42,220,062 65,046,402

36


Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)      
Capital Share Transactions (continued):
     Cost of shares repurchased:
          Class A $ (45,694,654 ) $ (59,622,788 )
          Class B (1,032,257 ) (4,483,911 )
          Class C (3,026,046 ) (5,172,765 )
(49,752,957 ) (69,279,464 )
Decrease in net assets derived from
     capital share transactions (7,532,895 ) (4,233,062 )
Net Decrease in Net Assets (26,826,928 ) (6,606,461 )
 
Net Assets:
     Beginning of period 614,091,697   620,698,158
     End of period $ 587,264,769 $ 614,091,697
 
     Distributions in excess of net investment income $ (141,003 ) $ (22,417 )

See accompanying notes

37

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

Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)      
Increase (Decrease) in Net Assets from Operations:
     Net investment income $ 1,237,086 $ 2,195,553
     Net realized gain (loss) on investments (574,029 ) 48,395
     Net change in unrealized
          appreciation/depreciation of investments (166,367 ) 549,365
     Net increase in net assets resulting from operations 496,690 2,793,313
 
Dividends and Distributions to Shareholders from:
     Net Investment Income:
          Class A (1,109,945 ) (1,992,475 )
          Class B (10,768 ) (39,255 )
          Class C (113,574 ) (165,689 )
(1,234,287 ) (2,197,419 )
 
Capital Share Transactions:
     Proceeds from shares sold:
          Class A 10,775,745 14,394,866
          Class B 2,297 229,426
          Class C   2,763,681 2,683,011
 
     Net asset value of shares issued upon reinvestment
          of dividends and distributions:
          Class A 704,835   1,376,198
          Class B 8,056 29,283
          Class C 79,675 128,094
14,334,289 18,840,878

38


Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)      
Capital Share Transactions (continued):
     Cost of shares repurchased:
          Class A $ (4,525,067 ) $ (6,309,982 )
          Class B (348,713 ) (1,078,787 )
          Class C (487,917 ) (675,375 )
  (5,361,697 ) (8,064,144 )
Increase in net assets derived from
     capital share transactions 8,972,592 10,776,734
Net Increase in Net Assets 8,234,995 11,372,628
 
Net Assets:
     Beginning of period 66,498,518 55,125,890
     End of period $ 74,733,513   $ 66,498,518
 
     Undistributed (Distributions in excess of)
          net investment income $ 933 $ (1,866 )

See accompanying notes

39

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

Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)      
Increase (Decrease) in Net Assets from Operations:
     Net investment income $ 2,910,565 $ 5,761,135
     Net realized loss on investments (3,592,019 ) (153,335 )
     Net change in unrealized
          appreciation/depreciation of investments (6,917,291 ) (2,719,275 )
     Net increase (decrease) in net assets resulting 
          from operations (7,598,745 ) 2,888,525
 
Dividends and Distributions to Shareholders from:
     Net Investment Income:
          Class A (2,333,315 ) (4,613,123 )
          Class B (99,869 ) (215,135 )
          Class C (473,469 ) (921,847 )
    (2,906,653 ) (5,750,105 )
 
Capital Share Transactions:
     Proceeds from shares sold:
          Class A 9,181,800   29,618,345
          Class B 73,676 52,811
          Class C 1,420,801 7,621,141
 
     Net asset value of shares issued upon reinvestment
          of dividends and distributions:
          Class A 1,535,716 3,092,127
          Class B 62,769 138,356
          Class C 341,632 692,751
12,616,394 41,215,531

40


Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)      
Capital Share Transactions (continued):
     Cost of shares repurchased:
          Class A $ (18,520,552 ) $ (23,292,776 )
          Class B (443,974 ) (1,519,206 )
          Class C (5,279,472 ) (4,943,787 )
  (24,243,998 )   (29,755,769 )
Increase (decrease) in net assets derived from
     capital share transactions (11,627,604 ) 11,459,762
Net Increase (Decrease) in Net Assets (22,133,002 ) 8,598,182
 
Net Assets:
     Beginning of period 151,755,386 143,157,204
     End of period $ 129,622,384 $ 151,755,386
 
     Distributions in excess of net investment income  $ (135 ) $ —

See accompanying notes

41

Financial highlights
Delaware Tax-Free Minnesota Fund Class A

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

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Net realized gain on investments 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
     rate notes issued 
Interest and fees on short-term floating rate notes issued 
Total expenses3 
Ratio of expenses to average net assets excluding interest and fees on short-term floating 
     rate notes issued prior to fees waived and expense paid indirectly 
Interest and fees on short-term floating rate notes issued 
Total expenses prior to fees waived and expense paid indirectly3 
 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to fees waived and expense paid indirectly 
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

42


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)  
  $12.120 $12.170 $12.490 $12.690 $12.620 $12.450
 
 
0.235 0.495 0.511 0.511 0.527 0.590
(0.323 ) (0.041 ) (0.313 ) (0.172 ) 0.222 0.348  
(0.088 ) 0.454 0.198 0.339 0.749 0.938  
 
 
(0.234 ) (0.502 ) (0.507 ) (0.513 ) (0.526 ) (0.600 )
(0.048 ) (0.002 ) (0.011 ) (0.026 ) (0.153 ) (0.168 )
(0.282 ) (0.504 ) (0.518 ) (0.539 ) (0.679 ) (0.768 )
 
$11.750 $12.120 $12.170 $12.490 $12.690   $12.620
 
(0.66% ) 3.77% 1.58% 2.78% 6.12% 7.72%
 
 
$547,172     $574,914     $578,194     $381,720   $364,491 $348,000
 
0.93% 0.93% 0.94% 0.93% 0.93% 0.94%
0.02% 0.18% 0.29% 0.26% 0.19% 0.14%
0.95% 1.11% 1.23% 1.19% 1.12% 1.08%
 
0.94% 0.93% 0.96% 0.94% 0.94% 0.94%
0.02% 0.18% 0.29% 0.26% 0.19% 0.14%
0.96% 1.11% 1.25% 1.20% 1.13% 1.08%
 
4.09% 4.05% 4.12% 4.11% 4.19% 4.68%
 
4.08% 4.05% 4.10% 4.10% 4.18% 4.68%
21% 17% 7% 13% 10% 25%

3 Total expenses and total expenses prior to fees waived and expense paid indirectly includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements”.

43

Financial highlights
Delaware Tax-Free Minnesota Fund Class B

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued
Interest and fees on short-term floating rate notes issued
Total expenses3
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued prior to fees waived and expense paid indirectly 
Interest and fees on short-term floating rate notes issued
Total expenses prior to fees waived and expense paid indirectly3
 
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.


See accompanying notes

44


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)  
    $12.130     $12.180     $12.500     $12.700   $12.630     $12.460  
 
 
  0.191 0.403 0.419 0.418 0.433 0.496
  (0.322 ) (0.041 ) (0.314 ) (0.172 ) 0.222 0.348
  (0.131 ) 0.362 0.105 0.246 0.655 0.844
 
 
  (0.191 ) (0.410 ) (0.414 ) (0.420 ) (0.432 ) (0.506 )
  (0.048 ) (0.002 ) (0.011 ) (0.026 ) (0.153 ) (0.168 )
  (0.239 ) (0.412 ) (0.425 ) (0.446 ) (0.585 ) (0.674 )
 
  $11.760 $12.130 $12.180 $12.500 $12.700 $12.630
 
  (1.03% ) 2.99% 0.82% 2.01% 5.33% 6.91%
 
 
  $10,489 $11,593 $15,674 $11,354 $12,810 $14,588
 
  1.68% 1.68% 1.69% 1.68% 1.68% 1.69%
  0.02% 0.18% 0.29% 0.26% 0.19% 0.14%
  1.70% 1.86% 1.98% 1.94% 1.87% 1.83%
 
  1.69% 1.68% 1.71% 1.69% 1.69% 1.69%
  0.02% 0.18% 0.29% 0.26% 0.19% 0.14%
  1.71% 1.86% 2.00% 1.95% 1.88% 1.83%
 
  3.34% 3.30% 3.37% 3.36% 3.44% 3.93%
 
  3.33% 3.30% 3.35% 3.35% 3.43% 3.93%
  21% 17% 7% 13% 10% 25%

3 Total expenses and total expenses prior to fees waived and expense paid indirectly includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements”.


45

Financial highlights
Delaware Tax-Free Minnesota Fund Class C

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued
Interest and fees on short-term floating rate notes issued
Total expenses3
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued prior to fees waived and expense paid indirectly 
Interest and fees on short-term floating rate notes issued
Total expenses prior to fees waived and expense paid indirectly3
 
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

46


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)      
    $12.160   $12.200     $12.530   $12.720     $12.650 $12.480
 
 
  0.191 0.403 0.418 0.418 0.433 0.495
  (0.322 ) (0.031 ) (0.323 ) (0.162 ) 0.222 0.348
  (0.131 ) 0.372 0.095 0.256 0.655 0.843
 
 
  (0.191 ) (0.410 ) (0.414 ) (0.420 ) (0.432 ) (0.505 )
  (0.048 ) (0.002 ) (0.011 ) (0.026 ) (0.153 ) (0.168 )
  (0.239 ) (0.412 ) (0.425 ) (0.446 ) (0.585 ) (0.673 )
 
  $11.790 $12.160 $12.200 $12.530 $12.720 $12.650
 
  (1.02% ) 3.06% 0.73% 2.08% 5.32% 6.90%
 
 
  $29,604 $27,585 $26,830 $15,125 $13,971 $10,811
 
  1.68% 1.68% 1.69% 1.68% 1.68% 1.69%
  0.02% 0.18% 0.29% 0.26% 0.19% 0.14%
  1.70% 1.86% 1.98% 1.94% 1.87% 1.83%
 
  1.69% 1.68% 1.71% 1.69% 1.69% 1.69%
  0.02% 0.18% 0.29% 0.26% 0.19% 0.14%
  1.71% 1.86% 2.00% 1.95% 1.88% 1.83%
 
  3.34% 3.30% 3.37% 3.36% 3.44% 3.93%
 
  3.33% 3.30% 3.35% 3.35% 3.43% 3.93%
  21% 17% 7% 13% 10% 25%

3 Total expenses and total expenses prior to fees waived and expense paid indirectly includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements”.


47

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class A

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets3
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly3
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers by the manager and distributor, as applicable. Performance would have been lower had the waivers not been in effect.

3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to fees waived and expense paid indirectly for the year ended August 31, 2004 includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements”.


See accompanying notes

48


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)  
    $10.720   $10.610 $10.860 $11.010 $10.890 $10.630
 
 
  0.195 0.414 0.445 0.429 0.407 0.444
  (0.140 ) 0.110 (0.250 ) (0.150 ) 0.120 0.260
  0.055 0.524 0.195 0.279 0.527 0.704
 
 
  (0.195 ) (0.414 ) (0.445 ) (0.429 ) (0.407 ) (0.444 )
  (0.195 ) (0.414 ) (0.445 ) (0.429 ) (0.407 ) (0.444 )
 
  $10.580 $10.720 $10.610 $10.860 $11.010 $10.890
 
  0.56% 5.00% 1.80% 2.62% 4.93% 6.73%
 
 
  $64,757 $58,465 $48,477 $48,297 $52,958 $57,012
  0.75% 0.75% 0.76% 0.75% 0.79% 0.89%
 
  0.94% 0.95% 1.00% 0.97% 0.95% 1.00%
  3.78% 3.83% 4.11% 3.96% 3.72% 4.10%
 
  3.59% 3.63% 3.87% 3.74% 3.56% 3.99%
  16% 27% 15% 11% 25% 30%

49

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class B

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets3
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly3
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to fees waived and expense paid indirectly for the year ended August 31, 2004 includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements”.


See accompanying notes

50


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)  
    $10.750   $10.640 $10.890 $11.040 $10.920 $10.650
 
 
  0.151 0.322 0.353 0.337 0.314 0.352
  (0.140 ) 0.110 (0.250 ) (0.150 ) 0.120 0.270
  0.011 0.432 0.103 0.187 0.434 0.622
 
 
  (0.151 ) (0.322 ) (0.353 ) (0.337 ) (0.314 ) (0.352 )
  (0.151 ) (0.322 ) (0.353 ) (0.337 ) (0.314 ) (0.352 )
 
  $10.610 $10.750 $10.640 $10.890 $11.040 $10.920
 
  0.14% 4.10% 0.94% 1.75% 4.03% 5.91%
 
 
  $544 $908 $1,713 $1,993 $2,811 $3,224
  1.60% 1.60% 1.61% 1.60% 1.64% 1.74%
 
  1.69% 1.70% 1.75% 1.72% 1.70% 1.75%
  2.93% 2.98% 3.26% 3.11% 2.87% 3.25%
 
  2.84% 2.88% 3.12% 2.99% 2.81% 3.24%
  16% 27% 15% 11% 25% 30%

51

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class C

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets3
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly3
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

3 The ratio of expenses to average net assets and ratio of expenses to average net assets prior to fees waived and expense paid indirectly for the year ended August 31, 2004 includes interest and related expenses which include, but are not limited to, interest expense, remarketing fees, liquidity fees, and trustees’ fees in connection with the Fund’s participation in inverse floater programs. See Notes 1 and 7 in “Notes to financial statements”.


See accompanying notes

52


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)  
  $10.740 $10.630 $10.880 $11.030 $10.910 $10.640
 
 
  0.151 0.322 0.353 0.337 0.314 0.352
  (0.140 ) 0.110 (0.250 ) (0.150 ) 0.120 0.270
  0.011 0.432 0.103 0.187 0.434 0.622
 
 
  (0.151 ) (0.322 ) (0.353 ) (0.337 ) (0.314 ) (0.352 )
  (0.151 ) (0.322 ) (0.353 ) (0.337 ) (0.314 ) (0.352 )
 
  $10.600 $10.740 $10.630 $10.880 $11.030 $10.910
 
  0.14% 4.10% 0.94% 1.75% 4.04% 5.91%
 
 
  $9,433 $7,126 $4,936 $5,162 $5,996 $7,188
  1.60% 1.60% 1.61% 1.60% 1.64% 1.74%
 
  1.69% 1.70% 1.75% 1.72% 1.70% 1.75%
  2.93% 2.98% 3.26% 3.11% 2.87% 3.25%
 
  2.84% 2.88% 3.12% 2.99% 2.81% 3.24%
  16% 27% 15% 11% 25% 30%

53

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

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.


See accompanying notes

54


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)  
  $10.000   $10.180 $10.530 $10.610 $10.240 $9.910
 
 
  0.210 0.418 0.430 0.445 0.469 0.512
  (0.640 ) (0.180 ) (0.350 ) (0.082 ) 0.372 0.328
  (0.430 ) 0.238 0.080 0.363 0.841 0.840
 
 
  (0.210 ) (0.418 ) (0.430 ) (0.443 ) (0.471 ) (0.510 )
  (0.210 ) (0.418 ) (0.430 ) (0.443 ) (0.471 ) (0.510 )
 
  $9.360 $10.000 $10.180 $10.530 $10.610 $10.240
 
  (4.23% ) 2.35% 0.71% 3.54% 8.40% 8.65%
 
 
  $101,118 $116,999 $109,807 $87,504 $63,802 $42,636
  0.89% 0.89% 0.90% 0.89% 0.89% 0.75%
 
  0.98% 0.97% 1.00% 1.00% 0.98% 1.00%
  4.61% 4.11% 4.09% 4.26% 4.50% 5.03%
 
  4.52% 4.03% 3.99% 4.15% 4.41% 4.78%
  12% 10% 10% 4% 3% 24%

55

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

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.


See accompanying notes

56


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)  
    $10.010   $10.190 $10.550 $10.630 $10.250 $9.930
 
 
  0.176 0.341 0.351 0.367 0.391 0.435
  (0.630 ) (0.179 ) (0.360 ) (0.082 ) 0.381 0.318
  (0.454 ) 0.162 (0.009 ) 0.285 0.772 0.753
 
 
  (0.176 ) (0.342 ) (0.351 ) (0.365 ) (0.392 ) (0.433 )
  (0.176 ) (0.342 ) (0.351 ) (0.365 ) (0.392 ) (0.433 )
 
  $9.380   $10.010 $10.190 $10.550 $10.630 $10.250
 
  (4.48% ) 1.58% (0.13% ) 2.77% 7.68% 7.71%
 
 
  $5,202 $5,907 $7,334 $9,578 $10,505 $12,463
  1.64% 1.64% 1.65% 1.64% 1.64% 1.50%
 
  1.73% 1.72% 1.75% 1.75% 1.73% 1.75%
  3.86% 3.36% 3.34% 3.51% 3.75% 4.28%
 
  3.77% 3.28% 3.24% 3.40% 3.66% 4.03%
  12% 10% 10% 4% 3% 24%

57

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

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.


See accompanying notes

58


Six Months Ended  Year Ended      
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04  
(Unaudited)
  $10.020 $10.200 $10.550 $10.630 $10.250 $9.930
 
 
0.176 0.342 0.351 0.367 0.391 0.435
(0.641 ) (0.181 ) (0.350 ) (0.082 ) 0.381   0.318
(0.465 ) 0.161 0.001 0.285 0.772   0.753
 
 
(0.175 ) (0.341 ) (0.351 ) (0.365 ) (0.392 ) (0.433 )
  (0.175 ) (0.341 ) (0.351 ) (0.365 )   (0.392 ) (0.433 )  
   
$9.380 $10.020 $10.200   $10.550 $10.630 $10.250
 
(4.58% ) 1.58%   (0.04% ) 2.76% 7.68% 7.71%
 
   
$23,302 $28,849   $26,016 $20,516   $15,809 $11,435  
1.64% 1.64% 1.65% 1.64% 1.64% 1.50%  
 
1.73% 1.72% 1.75%   1.75%   1.73% 1.75%
3.86%     3.36% 3.34% 3.51% 3.75% 4.28%
 
3.77% 3.28% 3.24% 3.40% 3.66% 4.03%
12% 10% 10%   4% 3% 24%

59


Notes to financial statements

Delaware Minnesota Municipal Bond Funds  February 28, 2009 (Unaudited) 

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

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

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

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

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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 and interest rate swap contracts are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Open-end investment companies are valued at their published net asset value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Boards of Trustees (each, a “Board” and collectively, the “Boards”). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Funds may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before each Fund values its securities at 4:00 p.m. Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading or new events, may have occurred in the interim. To account for this, the Funds may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).

Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax benefit or expense in the current period.

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

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Notes to financial statements
Delaware Minnesota Municipal Bond Funds

1. Significant Accounting Policies (continued)

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

Delaware Tax-Free Minnesota Fund sold out of its inverse floater position on September 29, 2008. For the six months ended February 28, 2009, Delaware Tax-Free Minnesota Fund had an average daily liability from the participation in inverse floater program of $2,742,983 and recorded interest expense at an average rate of 3.47%.

Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

The Funds receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under this arrangement is included in custodian fees on the statements of operations with the corresponding expense offset shown as “expense paid indirectly.”

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

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

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

DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs and non-routine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, “non-routine expenses”)) do not exceed specified percentages of average daily net assets as shown below. For purposes of these waivers and reimbursements, non-routine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by each Fund’s Board and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Funds.

            Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
Minnesota Fund Intermediate Fund Bond Fund
Operating expense limitation  
       as a percentage of average      
       daily net assets (per annum) 0.67% 0.60%   0.64%
Expiration date 12/31/09 12/31/09 12/31/09

Prior to January 1, 2009, DMC had contractually agreed to waive that portion, if any, of Delaware Tax-Free Minnesota Fund’s management fees and reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs and non-routine expenses) did not exceed 0.68% of average daily net assets.

Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, the Funds pay DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion.

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Notes to financial statements
Delaware Minnesota Municipal Bond Funds

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

The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the six months ended February 28, 2009, each Fund was charged for these services as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
$14,370 $1,682 $3,273

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

Pursuant to a distribution agreement and distribution plan, each Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.25% of the average daily net assets of the Class A shares and 1.00% of the average daily net assets of the Class B and C shares. DDLP has contracted to limit Delaware Tax-Free Minnesota Intermediate Fund’s Class A Shares 12b-1 fees through December 31, 2009 to no more than 0.15% of average daily net assets.

At February 28, 2009, the Funds had liabilities payable to affiliates as follows:

            Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
Minnesota Fund Intermediate Fund Bond Fund
Investment management fee    
       payable to DMC   $240,849   $23,298 $48,445  
Dividend disbursing, transfer agent          
       and fund accounting oversight fees      
       and other expenses payable to DSC 25,531 3,469   7,576
Distribution fee payable to DDLP 135,906   14,939   41,348
Other expenses payable to
       DMC and affiliates* 42,821   7,030 8,526

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

As provided in the investment management agreement, each Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Funds by DMC and/or its affiliates’ employees. For the six months ended February 28, 2009, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
$22,484 $2,691 $5,030

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For the six months ended February 28, 2009, DDLP earned commissions on sales of Class A shares for each Fund as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
$32,304 $6,150 $7,576

For the six months ended February 28, 2009, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B, and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
Class A $ 204   $157   $ 42  
Class B 1,203 — 3,193
Class C 1,445 391 2,046

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

3. Investments

For the six months ended February 28, 2009, the Funds made purchases and sales of investment securities other than short-term investments as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
Purchases   $ 58,413,848     $ 14,875,947 $ 7,987,911
Sales 77,784,320 5,224,452 17,382,597

At February 28, 2009, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At February 28, 2009 the cost of investments and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
Cost of investments   $ 581,615,997       $ 72,603,596        $ 139,829,961  
Aggregate unrealized appreciation $ 26,965,723   $ 2,631,053   $ 2,792,464
Aggregate unrealized depreciation   (29,781,675 )   (1,432,478 )  (14,590,537 ) 
Net unrealized appreciation        
       (depreciation) $ (2,815,952 ) $ 1,198,575   $ (11,798,073 )

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Notes to financial statements
Delaware Minnesota Municipal Bond Funds

3. Investments (continued)

Effective September 1, 2008, the Funds adopted Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value as the price that each Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value and a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

Level 1 – inputs are quoted prices in active markets

Level 2 – inputs are observable, directly or indirectly

Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity

The following table summarizes the valuation of the Funds’ investments by the FAS 157 fair value hierarchy levels as of February 28, 2009:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
Level 1   $ 8,436,988       $ 645,160        $ 276,665     
Level 2 570,363,057   73,157,011   127,755,223
Level 3   —   —   —  
Total $ 578,800,045 $ 73,802,171   $ 128,031,888

There were no Level 3 securities at the beginning or end of the period.

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4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2009, and the year ended August 31, 2008 was as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
Six Months Ended 2/28/09*                                            
Ordinary income $ 57,092 $ —   $ 5,972  
Tax-exempt income   11,550,843   1,234,287   2,900,681
Long-term capital gain   2,415,335   —   —
Total $ 14,023,270 $ 1,234,287 $ 2,906,653
 
Year Ended 8/31/08            
Ordinary income $ 351,958 $ — $ 7,114
Tax-exempt income   24,713,343   2,197,419   5,742,991
Long-term capital gain   100,607   —   —
Total $ 25,165,908 $ 2,197,419 $ 5,750,105

*Tax information for the period ended February 28, 2009 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.

5. Components of Net Assets on a Tax Basis

The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 28, 2009, the estimated components of net assets on a tax basis were as follows:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund Bond Fund
Shares of beneficial interest     $ 592,086,159         $ 75,605,659         $ 147,678,641    
Undistributed tax-exempt income 244,528   44,120   91,449  
Distributions payable (385,531 ) (43,187 ) (91,584 )
Realized losses 9/1/08 – 2/28/09 — (333,988 ) (129,724 )
Capital loss carryforward      
       as of 8/31/08 — (1,465,576 ) (2,547,560 )
Post-October losses (1,864,435 ) (272,090 ) (3,580,765 )
Unrealized appreciation (depreciation)      
       of investments (2,815,952 ) 1,198,575 (11,798,073 )
Net assets $ 587,264,769 $ 74,733,513   $ 129,622,384  

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Notes to financial statements
Delaware Minnesota Municipal Bond Funds

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

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

Post-October losses represent losses realized on investment transactions from November 1, 2008 through February 28, 2009 that, in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following year.

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2009, the Funds recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end.

      Delaware Minnesota
Delaware Tax-Free   High-Yield Municipal
Minnesota Fund Bond Fund
Undistributed net investment income     $ (134,448 )               $ (4,047 )      
Accumulated realized loss 134,448   4,047  

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2008 will expire as follows:

      Delaware Tax-Free       Delaware Minnesota
Minnesota   High-Yield Municipal
Year of Expiration     Intermediate Fund Bond Fund
2009     $ 1,023,795           $ 1,267,552      
2010   4,037 57,521
2011   246,659 243,334
2012   — 684,248
2014   81,340 —
2015   109,745 96,079
2016   — 198,826
Total   $ 1,465,576 $ 2,547,560

For the six months ended February 28, 2009, the Funds had capital losses which may increase capital loss carryforwards as follows:

      Delaware Tax-Free       Delaware Minnesota
Minnesota   High-Yield Municipal
    Intermediate Fund Bond Fund
    $ 333,988           $129,724      

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6. Capital Shares

Transactions in capital shares were as follows:

      Delaware   Delaware Minnesota
  Delaware Tax-Free   Tax-Free Minnesota   High-Yield Municipal
  Minnesota Fund   Intermediate Fund   Bond Fund
  Six Months       Year       Six Months       Year       Six Months       Year  
  Ended   Ended   Ended   Ended   Ended   Ended  
  2/28/09   8/31/08   2/28/09   8/31/08   2/28/09   8/31/08  
Shares sold:            
       Class A 2,360,569   3,515,951   1,037,588   1,344,904   1,000,061   2,904,516  
       Class B 11,946   9,707   214   21,281   7,861   5,135  
       Class C 465,666   434,456   265,889   249,737   152,698   746,020  
 
Shares issued upon reinvestment of dividends and distributions:        
       Class A 773,166   1,268,411   67,897   128,039   167,366   304,335  
       Class B 13,412   25,099   775   2,715   6,836   13,584  
       Class C 37,837   56,937   7,660   11,896   37,179   68,076  
  3,662,596   5,310,561   1,380,023   1,758,572   1,372,001   4,041,666  
Shares repurchased:            
       Class A (4,008,449 ) (4,868,284 ) (439,000 ) (587,645 ) (2,070,865 ) (2,293,959 )
       Class B (89,330 ) (366,181 ) (34,131 ) (100,502 ) (49,916 ) (148,220 )
       Class C (261,133 ) (420,993 ) (47,235 ) (62,535 ) (586,137 ) (485,164 )
  (4,358,912 ) (5,655,458 ) (520,366 ) (750,682 ) (2,706,918 ) (2,927,343 )
Net increase (decrease) (696,316 ) (344,897 ) 859,657   1,007,890   (1,334,917 ) 1,114,323  

For the six months ended February 28, 2009 and the year ended August 31, 2008, the following shares and values were converted from Class B shares to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the statements of changes in net assets.

        Six Months                              
    Ended       Year Ended  
    2/28/09     8/31/08    
  Class B Class A   Class B Class A  
  Shares Shares Value   Shares Shares Value
Delaware Tax-Free            
       Minnesota Fund 20,876   20,894 $ 240,726 154,023 154,149 $ 1,885,460
Delaware Tax-Free Minnesota            
       Intermediate Fund 25,965 26,019 264,644 92,028 92,254 987,599
Delaware Minnesota High-Yield            
       Municipal Bond Fund 10,300 10,321 92,311 56,661 56,758 583,786

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Notes to financial statements
Delaware Minnesota Municipal Bond Funds

7. Inverse Floaters

The Funds may participate in inverse floater programs where a Fund transfers its own bonds to a trust that issues floating rate securities and inverse floating rate securities (inverse floaters) with an aggregate principal amount equal to the principal of the transferred bonds. The inverse floaters received by the Funds are derivative tax-exempt obligations with floating or variable interest rates that move in the opposite direction of short-term interest rates, usually at an accelerated speed. Consequently, the market values of the inverse floaters will generally be more volatile than other tax-exempt investments. The Funds typically use inverse floaters to adjust the duration of its portfolio. Duration measures a portfolio’s sensitivity to changes in interest rates. By holding inverse floaters with a different duration than the underlying bonds that a Fund transferred to the trust, the Fund seeks to adjust its portfolio’s sensitivity to changes in interest rates. The Funds may also invest in inverse floaters to add additional income to the Funds or to adjust the Funds’ exposure to a specific segment of the yield curve. At February 28, 2009, the Funds held no investments in inverse floaters.

8. Line of Credit

Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $225,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement expired on November 18, 2008.

Effective November 18, 2008, the Funds, along with the other Participants, entered into an amendment to the agreement with BNY Mellon for a $35,000,000 revolving line of credit. The agreement, as amended, is to be used as described above and operates in substantially the same manner as the original agreement. The agreement, as amended, expires on November 17, 2009. The Funds had no amounts outstanding as of February 28, 2009 or at any time during the period then ended.

9. Swap Contracts

Each Fund may enter into interest rate swap contracts, index swap contracts and CDS contracts in accordance with their investment objectives. The Funds may use interest rate swaps to adjust the Funds’ sensitivity to interest rates or to hedge against changes in interest rates. Index swaps may be used to gain exposure to markets that each Fund invests in, such as the corporate bond market. The Funds may also use index swaps as a substitute for futures or options contracts if such contracts are not directly available to the Funds on favorable terms. The Funds may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets.

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An interest rate swap involves payments received by the Funds from another party based on a variable or floating interest rate, in return for making payments based on a fixed interest rate. An interest rate swap can also work in reverse with the Funds receiving payments based on a fixed interest rate and making payments based on a variable or floating interest rate. Interest rate swaps may be used to adjust the Funds’ sensitivity to interest rates or to hedge against changes in interest rates. Periodic payments on such contracts are accrued daily and recorded as unrealized appreciation/depreciation on swap contracts. Upon periodic payment/receipt or termination of the contract, such amounts are recorded as realized gains or losses on swap contracts.

Because there is no organized market for swap contracts, the value of open swaps may differ from that which would be realized in the event each Fund terminated its position in the agreement. Risks of entering into these agreements include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movements in the value of the underlying security, instrument, or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts.

The Funds did not hold any swap contracts at the end of the period.

10. Credit and Market Risk

The Funds concentrate their investments in securities issued by municipalities, mainly in Minnesota. The value of these investments may be adversely affected by new legislation within the state, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that market value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in each Fund. At February 28, 2009, the percentage of each Fund’s net assets insured by insurers are listed below:

      Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free   Minnesota   High-Yield Municipal
Minnesota Fund   Intermediate Fund   Bond Fund
31%   25%   15%

These securities have been identified in the statements of net assets.

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

71

Notes to financial statements
Delaware Minnesota Municipal Bond Funds 

10. Credit and Market Risk (continued)

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

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

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of each Fund’s limitation on investments in illiquid assets. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Funds’ 15% limit on investments in illiquid securities. As of February 28, 2009, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.

11. Contractual Obligations

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

72

About the organization

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

Board of trustees   
 
Patrick P. Coyne  Ann R. Leven 
Chairman, President, and  Consultant 
Chief Executive Officer  ARL Associates 
Delaware Investments Family of Funds  New York, NY 
Philadelphia, PA   
  Thomas F. Madison 
Thomas L. Bennett  President and Chief Executive Officer 
Private Investor  MLM Partners, Inc. 
Rosemont, PA  Minneapolis, MN 
 
John A. Fry  Janet L. Yeomans 
President  Vice President and Treasurer 
Franklin & Marshall College  3M Corporation 
Lancaster, PA  St. Paul, MN 
 
Anthony D. Knerr  J. Richard Zecher 
Founder and Managing Director  Founder 
Anthony Knerr & Associates  Investor Analytics 
New York, NY  Scottsdale, AZ 
 
Lucinda S. Landreth   
Former Chief Investment Officer   
Assurant, Inc.   
Philadelphia, PA   

73


Affiliated officers Contact information
 
David F. Connor Investment manager
Vice President, Deputy General Counsel, and Delaware Management Company, a series of
Secretary Delaware Management Business Trust
Delaware Investments® Family of Funds Philadelphia, PA
Philadelphia, PA
National distributor
Daniel V. Geatens Delaware Distributors, L.P.
Vice President and Treasurer Philadelphia, PA
Delaware Investments Family of Funds
Philadelphia, PA Shareholder servicing, dividend disbursing,
and transfer agent
David P. O’Connor Delaware Service Company, Inc.
Senior Vice President, General Counsel, 2005 Market Street
and Chief Legal Officer Philadelphia, PA 19103-7094
Delaware Investments Family of Funds
Philadelphia, PA For shareholders
800 523-1918
Richard Salus
Senior Vice President and For securities dealers and financial
Chief Financial Officer institutions representatives only
Delaware Investments Family of Funds 800 362-7500
Philadelphia, PA
Web site
www.delawareinvestments.com

Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries.

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

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

74


 
 
 
 
 
 
 
 
 
 
Semiannual report 
 

Delaware Tax-Free USA Fund

 

Delaware Tax-Free USA Intermediate Fund

 

Delaware National High-Yield Municipal Bond Fund

 
February 28, 2009   
 
 
 
 
 
 
 
 
 
 
 
 
 

  
Fixed income mutual funds 
 
 

Table of contents

Disclosure of Fund expenses  1
 
Sector allocations and credit quality breakdown  4
 
Statements of net assets  7
 
Statements of operations  46
 
Statements of changes in net assets  48
 
Financial highlights  54
 
Notes to financial statements  77
 
About the organization  89

 

 

 

 

 



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.

© 2009 Delaware Distributors, L.P.

All third-party trademarks cited are the property of their respective owners.

Disclosure of Fund expenses
For the period September 1, 2008 to February 28, 2009

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

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2008 to February 28, 2009.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

1

Disclosure of Fund expenses

 

Delaware Tax-Free USA Fund 
Expense analysis of an investment of $1,000 
  
  Beginning Ending   Expenses
  Account Value Account Value Annualized   Paid During Period
       9/1/08      2/28/09      Expense Ratio      9/1/08 to 2/28/09*
Actual Fund return         
Class A $ 1,000.00 $ 966.00 0.84%   $ 4.09
Class B 1,000.00 963.20 1.60%   7.79
Class C 1,000.00 963.30 1.60%   7.79
Institutional Class** 1,000.00 1,039.60 0.60%   1.01
Hypothetical 5% return (5% return before expenses)    
Class A $ 1,000.00 $ 1,020.63 0.84%   $ 4.21
Class B 1,000.00 1,016.86 1.60%   8.00
Class C 1,000.00 1,016.86 1.60%   8.00
Institutional Class** 1,000.00 1,021.82 0.60%   3.01
 
Delaware Tax-Free USA Intermediate Fund
Expense analysis of an investment of $1,000
 
  Beginning Ending   Expenses
  Account Value Account Value Annualized   Paid During Period
    9/1/08 2/28/09 Expense Ratio   9/1/08 to 2/28/09*
Actual Fund return             
Class A $ 1,000.00   $ 1,001.90 0.75%   $ 3.72
Class B   1,000.00     997.70 1.60%     7.93
Class C 1,000.00 998.60   1.60%   7.93
Institutional Class** 1,000.00 1,030.80 0.60%   1.00
Hypothetical 5% return (5% return before expenses)     
Class A $ 1,000.00 $ 1,021.08 0.75%   $ 3.76
Class B 1,000.00 1,016.86 1.60%   8.00
Class C 1,000.00 1,016.86 1.60%   8.00
Institutional Class** 1,000.00 1,021.82 0.60%   3.01

2

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

     Beginning Ending   Expenses
  Account Value Account Value Annualized   Paid During Period
       9/1/08      2/28/09      Expense Ratio      9/1/08 to 2/28/09*
Actual Fund return           
Class A $ 1,000.00 $ 870.00 0.90%   $ 4.17
Class B 1,000.00 865.90 1.65%   7.63
Class C 1,000.00 866.20 1.65%   7.63
Institutional Class** 1,000.00 1,069.10 0.65%   1.11
Hypothetical 5% return (5% return before expenses)        
Class A $ 1,000.00 $ 1,020.33   0.90%   $ 4.51
Class B     1,000.00 1,016.61 1.65%   8.25
Class C 1,000.00     1,016.61 1.65%     8.25
Institutional Class** 1,000.00 1,021.57 0.65%   3.26

* “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).
 
** The Institutional Class shares commenced operations on December 31, 2008. The actual ending account value and the expenses paid during period reflect the shorter period, 60 days. The hypothetical example assumes the entire half year period.

3


Sector allocations and credit quality breakdown
Delaware Tax-Free USA Fund      As of February 28, 2009

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

Sector  Percentage of net assets
Municipal Bonds  97.72 % 
Corporate Revenue Bonds  7.95 % 
Education Revenue Bonds  7.16 % 
Electric Revenue Bonds  2.17 % 
Escrowed to Maturity Bonds  7.43 % 
Health Care Revenue Bonds  10.72 % 
Housing Revenue Bonds  2.15 % 
Lease Revenue Bonds  1.65 % 
Local General Obligation Bonds  7.62 % 
Pre-Refunded Bonds  23.99 % 
Special Tax Bonds  7.66 % 
State General Obligation Bonds  9.20 % 
Transportation Revenue Bonds  7.13 % 
Water & Sewer Revenue Bonds  2.89 % 
Short-Term Investment  0.74 % 
Total Value of Securities  98.46 % 
Receivables and Other Assets Net of Liabilities  1.54 % 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)*
AAA  40.19 % 
AA  22.05 % 
A  18.79 % 
BBB  12.01 % 
BB  1.28 % 
B  1.08 % 
Not Rated  4.60 % 
Total  100.00 % 
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

4


Delaware Tax-Free USA Intermediate Fund  As of February 28, 2009

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

Sector  Percentage of net assets
Municipal Bonds  97.80 % 
Corporate Revenue Bonds  3.30 % 
Education Revenue Bonds  6.50 % 
Electric Revenue Bonds  2.56 % 
Escrowed to Maturity Bonds  0.05 % 
Health Care Revenue Bonds  8.13 % 
Housing Revenue Bonds  1.63 % 
Lease Revenue Bonds  3.27 % 
Local General Obligation Bonds  11.46 % 
Pre-Refunded Bonds  9.32 % 
Resource Recovery Bonds  0.25 % 
Special Tax Bonds  8.57 % 
State General Obligation Bonds  23.94 % 
Transportation Revenue Bonds  11.64 % 
Water & Sewer Revenue Bonds  7.18 % 
Short-Term Investments  2.76 % 
Total Value of Securities  100.56 % 
Liabilities Net of Receivables and Other Assets  (0.56 %) 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)*
AAA  29.66 % 
AA  42.30 % 
A  17.23 % 
BBB  7.28 % 
BB  1.03 % 
B  0.38 % 
Not Rated  2.12 % 
Total  100.00 % 
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

5


Sector allocations and credit quality breakdown
Delaware National High-Yield Municipal Bond Fund  As of February 28, 2009

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

Sector  Percentage of net assets
Municipal Bonds  98.19 % 
Corporate Revenue Bonds  13.56 % 
Education Revenue Bonds  19.85 % 
Health Care Revenue Bonds  21.99 % 
Housing Revenue Bonds  1.44 % 
Lease Revenue Bonds  2.36 % 
Local General Obligation Bonds  1.46 % 
Pre-Refunded Bonds  18.34 % 
Special Tax Bonds  14.05 % 
State General Obligation Bonds  1.76 % 
Transportation Revenue Bonds  3.38 % 
Total Value of Securities  98.19 % 
Receivables and Other Assets Net of Liabilities  1.81 % 
Total Net Assets  100.00 % 
 
Credit quality breakdown (as a % of fixed income investments)*   
AAA  14.56 % 
AA  6.10 % 
A  9.96 % 
BBB  31.01 % 
BB  6.97 % 
B  3.70 % 
Not Rated  27.70 % 
Total  100.00 % 
*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

6


Statements of net assets
Delaware Tax-Free USA Fund February 28, 2009 (Unaudited)

          Principal amount        Value
Municipal Bonds – 97.72%
Corporate Revenue Bonds – 7.95%
Alliance Airport Authority, Texas Special
          Facilities Revenue (American Airlines Project)
          Series B 5.25% 12/1/29 (AMT) $ 2,250,000 $ 888,885
· Brazos, Texas Harbor Industrial Development
          Environmental Facilities Revenue
          (Dow Chemical Co. Project) 5.90% 5/1/38 (AMT) 1,940,000 1,299,412
Brazos, Texas River Authority Pollution Control Revenue
          (Texas Utilities) 5.40% 5/1/29 (AMT) 3,000,000 1,297,740
            (TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) 3,500,000 1,619,030
· Chesapeake, Virginia Economic Development Authority
          Pollution Control Revenue (Electric & Power Co. Project)
          Series A 3.60% 2/1/32 2,100,000 2,075,409
Cloquet, Minnesota Pollution Control Revenue
          (Potlatch Corp. Project) 5.90% 10/1/26 1,695,000 1,121,107
Indianapolis, Indiana Airport Authority Revenue
          Special Facilities (Federal Express Corp. Project)  
          5.10% 1/15/17 (AMT)   2,750,000 2,320,753
          Series 1998 5.50% 5/1/29 (AMT) 2,000,000 1,325,680
Iowa Finance Authority Pollution Control Facility Revenue
          (Interstate Power) 5.00% 7/1/14 (FGIC) 3,640,000 3,701,188
Mason County, West Virginia Pollution Control Revenue
          (Appalachian Power Co. Project)
          Series K 6.05% 12/1/24 (AMBAC) 3,000,000 2,870,280
Mississippi Business Finance Corporation Pollution
          Control Revenue (System Energy Resources, Inc.
          Project) 5.90% 5/1/22 3,000,000 2,474,130
· Mobile, Alabama Industrial Development Board
          Pollution Control Revenue (Alabama Power Co.)
          Series B 4.875% 6/1/34 4,750,000 4,928,789
New Jersey Economic Development Authority Special
          Facility Revenue (Continental Airlines, Inc. Project)
          6.25% 9/15/29 (AMT) 2,000,000 1,298,120
Petersburg, Indiana Pollution Control Revenue (Indianapolis
          Power & Light Co. Project) 6.375% 11/2/29 (AMT) 5,000,000 3,962,650
Phenix City, Alabama Industrial Development Board
          Environmental Improvement Revenue (Mead Westvaco
          Corp. Project) Series A 6.35% 5/15/35 (AMT) 3,000,000 1,883,040
· Port Morrow, Oregon Pollution Control Revenue
          (Portland General Electric Co.) Series A 5.20% 5/1/33 2,600,000 2,606,266

7

Statements of net assets
Delaware Tax-Free USA Fund

          Principal amount        Value
Municipal Bonds (continued)
Corporate Revenue Bonds (continued)
Richmond County, Georgia Development Authority
          Environmental Improvement Revenue (International
          Paper Co.) Series B 5.95% 11/15/25 (AMT) $ 5,000,000 $ 3,427,000
South Carolina Jobs Economic Development Authority  
          Industrial Revenue (South Carolina Electric & Gas Co.
            Project) Series B 5.45% 11/1/32 (AMBAC) (AMT) 500,000 427,310
Sugar Creek, Missouri Industrial Development Revenue
          (Lafarge North America Project)
          Series A 5.65% 6/1/37 (AMT) 500,000 317,865
Sweetwater County, Wyoming Solid Waste Disposal
          Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) 3,250,000 2,318,908
W Tobacco Settlement Financing Corporation, Virginia  
          Senior Convertible Series B-2 5.20% 6/1/46 2,500,000   1,003,550
  43,167,112
Education Revenue Bonds – 7.16%
Amherst, New York Industrial Development Agency Civic
          Facilities Revenue (UBF Faculty Student Housing)
          Series A 5.75% 8/1/30 (AMBAC) 1,300,000 1,305,538
Broward County, Florida Educational Facilities
          Authority Revenue (Nova Southeastern University Project)
          5.25% 4/1/27 (RADIAN) 1,000,000 843,180
California Educational Facilities Authority Revenue
          (University of Southern California)
          Series A 5.00% 10/1/39 6,750,000 6,749,663
California Statewide Communities Development
          Authority Student Housing Revenue (East Campus
          Apartments, LLC) Series A 5.625% 8/1/34 (ACA) 3,400,000 2,750,634
Gainesville, Georgia Redevelopment Authority
          Educational Facilities Revenue (Riverside Military
          Academy Project) 5.125% 3/1/37 3,735,000 1,896,670
Marietta, Georgia Development Authority Revenue
          (Life University Income Project) 7.00% 6/15/39 2,300,000 1,589,300
Massachusetts State Health & Educational Facilities
          Authority Revenue
          (Harvard University) Series A 5.50% 11/15/36 4,515,000 4,790,189
          (Nichols College Project) Series C
          6.00% 10/1/17 810,000 751,129
          6.125% 10/1/29 1,000,000 782,460

8


          Principal amount        Value
Municipal Bonds (continued)
Education Revenue Bonds (continued)
Missouri State Health & Educational Facilities Authority
          Educational Facilities Revenue (Washington University)
          Series A 5.375% 3/15/39 $ 5,000,000 $ 5,216,350
New Hampshire Higher Educational & Health Facilities
          Authority Revenue (New Hampton School Issue)
          5.375% 10/1/28 3,070,000 2,125,269
^ Oregon Health & Science University Revenue (Capital
          Appreciation Insured) Series A 5.50% 7/1/21 (MBIA) 2,000,000 1,022,420
Provo, Utah Charter School Revenue (Freedom Academy
          Foundation Project) 5.50% 6/15/37   1,750,000 1,069,023
Saint Louis, Missouri Industrial Development Authority    
          Revenue (Confluence Academy Project) Series A
          5.25% 6/15/25 1,150,000   783,656
            5.35% 6/15/32 2,300,000 1,438,006
San Leanna, Texas Higher Educational Facilities Revenue
          (Saint Edwards University Project) 4.75% 6/1/32 1,150,000 752,307
Texas A & M University Revenue Financing System
          5.00% 5/15/17 4,060,000 4,625,680
University of the Virgin Islands Series A 5.375% 6/1/34 500,000 391,785
38,883,259
Electric Revenue Bonds – 2.17%
Chelan County, Washington Public Utilities District #001
          Consolidated Revenue (Chelan Hydro System)
          Series A 5.45% 7/1/37 (AMBAC) (AMT) 5,000,000 4,216,300
Florida State Municipal Power Agency Revenue
          (Stanton II Project) 5.00% 10/1/26 (AMBAC) 2,000,000 2,008,380
Long Island Power Authority, New York Electric System
          Revenue Series A 5.75% 4/1/39 1,355,000 1,399,227
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 2,201,408
Puerto Rico Electric Power Authority Power Revenue
          Series PP 5.00% 7/1/25 (FGIC) 1,000,000 906,350
Sikeston, Missouri Electric Revenue Refunding
          6.00% 6/1/13 (MBIA) 1,000,000 1,039,260
11,770,925

9

Statements of net assets
Delaware Tax-Free USA Fund 

          Principal amount        Value
Municipal Bonds (continued)
Escrowed to Maturity Bonds – 7.43%
Cape Girardeau County, Missouri Industrial Development
          Authority Health Care Facilities Revenue (Southeast
          Missouri Hospital) 5.25% 6/1/16 (MBIA) $ 440,000 $ 497,490
^ Greene County, Missouri Single Family Mortgage
          Revenue Municipal Multiplier (Private Mortgage
            Insurance) 6.10% 3/1/16 1,225,000 984,753
Louisiana Public Facilities Authority Hospital Revenue  
          (Southern Baptist Hospital, Inc. Project)  
          8.00% 5/15/12 3,490,000 3,871,841
Missouri State Health & Educational Facilities Authority  
          Health Facilities Revenue Refunding (SSM Health Care)  
          Series AA 6.40% 6/1/10 (MBIA) 500,000 534,800
New Jersey State Highway Authority Garden State
          Parkway General Revenue (Senior Parkway)
          5.50% 1/1/14 (FGIC) 5,000,000 5,777,750
          5.50% 1/1/15 (FGIC) 7,310,000 8,575,580
          5.50% 1/1/16 (FGIC) 1,000,000 1,189,350
Oklahoma State Turnpike Authority Revenue
          (First Senior) 6.00% 1/1/22 13,535,000 16,179,740
Virgin Islands Public Finance Authority Revenue
          Series A 7.30% 10/1/18 2,200,000 2,778,270
40,389,574
Health Care Revenue Bonds – 10.72%
Allegheny County, Pennsylvania Hospital Development
          Authority Revenue (University of Pittsburgh Medical
          Center) Series A 5.00% 9/1/14 5,575,000 5,875,046
Arizona Health Facilities Authority Revenue
          (Banner Health) Series D 5.375% 1/1/32 2,500,000 2,352,675
Cape Girardeau County, Missouri Industrial
          Development Authority Health Care Facilities
          Revenue Unrefunded Balance
          (Southeast Missouri Hospital) 5.25% 6/1/16 (MBIA) 560,000 615,580
          (St. Francis Medical Center) Series A 5.50% 6/1/32 1,000,000 868,430
Chatham County, Georgia Hospital Authority Revenue
          (Memorial Health Medical Center)
          Series A 6.125% 1/1/24 1,805,000 1,465,931
@ Cleveland-Cuyahoga County, Ohio Port Authority
          Revenue Senior Housing (St. Clarence - Geac)
          Series A 6.25% 5/1/38 1,500,000 857,640

10


          Principal amount        Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
Colorado Health Facilities Authority Revenue
          (Evangelical Lutheran) Series A 5.25% 6/1/34 $ 4,275,000 $ 3,220,785
Cuyahoga County, Ohio Revenue (Cleveland Clinic
          Health Systems) Series A 5.50% 1/1/29 4,000,000 3,879,920
Escambia County, Florida Health Facilities Authority
          Health Care Facilities Loan (VHA Program)
          5.95% 7/1/20 (AMBAC) 515,000 537,686
  Gainesville & Hall County, Georgia Development Authority
          Revenue Senior Living Facilities (Lanier Village Estates
          Project) Series C 7.25% 11/15/29 1,000,000 960,090
Illinois Health Facilities Authority Revenue  
          (Elmhurst Memorial Healthcare Project) 5.625% 1/1/28 2,000,000 1,658,820
Indian River County, Florida Hospital District Revenue  
          Refunding 6.10% 10/1/18 (FSA)   3,000,000 3,002,820
Joplin, Missouri Industrial Development Authority Health
          Facilities Revenue (Freeman Health System Project)
          5.75% 2/15/35 245,000 194,528
Lucas County, Ohio Health Care Facility Revenue (Sunset
          Retirement Communities) Series A 6.625% 8/15/30 2,000,000 1,811,680
Michigan State Hospital Finance Authority Revenue
          (Ascension Health Credit Group)
          Series B 5.25% 11/15/26 3,500,000 3,501,890
          (Oakwood Obligation Group) Series A 5.75% 4/1/32 2,500,000 2,052,375
          (Trinity Health Credit) Series C 5.375% 12/1/30 6,000,000 5,725,680
Minneapolis, Minnesota Health Care System Revenue
          (Fairview Health) Series A 6.625% 11/15/28 4,000,000 4,225,320
Montgomery County, Pennsylvania Industrial Development
          Authority Retirement Community Revenue
          (Acts Retirement Communities) Series A 4.50% 11/15/36 2,000,000 1,175,260
New York State Dormitory Authority Revenue (Non State
          Supported Debt - Orange Regional Medical Center)
          6.50% 12/1/21 2,745,000 2,351,449
North Carolina Medical Care Commission Health Care
          Facilities Revenue (First Mortgage - Presbyterian Homes)
          5.40% 10/1/27 3,260,000 2,463,321
North Kansas City, Missouri Hospital Revenue
          Series A 5.00% 11/15/28 (FSA) 500,000 469,525

11

Statements of net assets
Delaware Tax-Free USA Fund

          Principal amount        Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
Ohio State Higher Educational Facilities Community
          Revenue (Cleveland Clinic Health System Obligation
          Group) Series A 5.25% 1/1/33 $ 2,000,000 $ 1,933,860
Palm Beach County, Florida Health Facilities Authority
          Revenue (Boca Raton Community Hospital)  
          5.625% 12/1/31 2,000,000 1,457,180
Prince William County, Virginia Industrial Development
            Authority Hospital Revenue (Potomac Hospital Corp.)
          5.35% 10/1/36 250,000 183,950
Puerto Rico Industrial, Tourist, Educational,  
          Medical & Environmental Control Facilities Revenue  
          (Hospital Auxilio Mutuo Obligated Group)
          Series A 6.25% 7/1/24 (MBIA) 1,200,000 1,167,048
Shelby County, Tennessee Health Educational & Housing
          Facilities Board Revenue (Trezevant Manor Project)
            Series A 5.625% 9/1/26 2,500,000 1,719,375
Tallahassee, Florida Health Facilities Revenue
          (Tallahassee Memorial Regional Medical Center)
          Series B 6.00% 12/1/15 (MBIA) 2,500,000 2,501,275
58,229,139
Housing Revenue Bonds – 2.15%
Florida Housing Finance Agency
          (Landings at Sea Forest Apartments) Series T
          5.85% 12/1/18 (AMBAC) (FHA) (AMT) 325,000 325,159
          6.05% 12/1/36 (AMBAC) (FHA) (AMT) 700,000 677,992
          (Leigh Meadows Apartments Section 8 HUD) Series N
          6.20% 9/1/26 (AMBAC) (AMT) 2,765,000 2,765,001
          6.30% 9/1/36 (AMBAC) (AMT) 2,000,000 1,984,480
          (Spinnaker Cove Apartments) Series G
          6.50% 7/1/36 (AMBAC) (FHA) (AMT) 500,000 500,140
Milwaukee, Wisconsin Redevelopment Authority
          Multifamily Revenue (City Hall Square)
          6.30% 8/1/38 (FHA) (AMT) 1,455,000 1,456,906
Missouri State Housing Development Commission
          Mortgage Revenue Single Family Homeowner Loan A
          5.20% 9/1/33 (GNMA) (FNMA) (AMT) 215,000 196,400

12


          Principal amount        Value
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Missouri State Housing Development Commission
          Multifamily Housing Revenue
          (Hyder) Series 3 5.60% 7/1/34 (FHA) (AMT) $ 1,435,000 $ 1,365,962
          (San Remo) Series 5 5.45% 1/1/36 (FHA) (AMT) 500,000 464,755
New Mexico Mortgage Finance Authority Revenue
          Series B Class III 6.75% 7/1/25 (GNMA) (FNMA) 120,000 123,602
            Series E 6.95% 1/1/26 (GNMA) (FNMA) 120,000   122,927
Orange County, Florida Housing Finance Authority
          Homeowner Revenue Series B
          5.25% 3/1/33 (GNMA) (FNMA) (AMT) 140,000 128,730
Oregon Health, Housing, Educational, & Cultural Facilities
          Authority Revenue (Pier Park Project) Series A  
          6.05% 4/1/18 (GNMA) (AMT) 960,000 961,114
Santa Fe, New Mexico Single Family Mortgage Revenue
          Series B-1 6.20% 11/1/16 (GNMA) (FNMA) (AMT) 140,000 140,147
Volusia County, Florida Multifamily Housing Finance
          Authority (San Marco Apartments) Series A
          5.60% 1/1/44 (FSA) (AMT) 500,000 468,110
11,681,425
Lease Revenue Bonds – 1.65%
Loudoun County, Virginia Industrial Development
          Authority Public Safety Facility Lease Revenue
          Series A 5.25% 12/15/23 (FSA) 700,000 735,574
Missouri State Development Finance Board
          Infrastructure Facilities Revenue
          (Branson Landing Project) Series A
          5.25% 12/1/19 1,435,000 1,300,110
          5.625% 12/1/28 2,430,000 2,046,375
          (Sewer System Improvement Project) Series C
          5.00% 3/1/25 605,000 566,643
          (Triumph Foods Project) Series A 5.25% 3/1/25 500,000 481,395
Puerto Rico Commonwealth Industrial Development
          Company General Purpose Revenue Series B
          5.375% 7/1/16 1,000,000 968,120
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities) Series F
          5.25% 7/1/25 930,000 819,907

13

Statements of net assets
Delaware Tax-Free USA Fund

          Principal amount        Value
Municipal Bonds (continued)
Lease Revenue Bonds (continued)
St. Charles County, Missouri Public Water Supply
          District #2 Certificates of Participation (Missouri Project)
          Series B 5.10% 12/1/25 (MBIA) $ 500,000 $  438,855
^ St. Louis, Missouri Industrial Development Authority  
            Leasehold Revenue (Convention Center Hotel)
          5.80% 7/15/20 (AMBAC) 3,035,000 1,599,263
8,956,242
Local General Obligation Bonds – 7.62%  
Boerne, Texas Independent School District Building
          5.25% 2/1/27 (PSF) 4,000,000 4,096,640
Chandler, Arizona 5.00% 7/1/21 4,250,000 4,663,568
Desert, California Community College
          District Election 2004 Series C 5.00% 8/1/37 (FSA) 4,785,000 4,615,994
Greene County, Missouri Reorganization School
          District R8 (Direct Deposit Project) 5.10% 3/1/22 (FSA)   1,500,000 1,593,915
Gwinnett County, Georgia School District 5.00% 2/1/11 8,000,000 8,576,399
Jefferson County, Oregon School District #509J
          5.00% 6/15/22 (FGIC) 500,000 516,380
Lewisville, Texas Independent School District
          6.15% 8/15/21 (PSF) 75,000 75,833
Los Angeles, California Unified School
          District Election of 2005 Series F 5.00% 1/1/34 6,180,000 5,958,200
Melrose Park, Illinois Tax Increment Series B
          6.00% 12/15/19 (FSA) 1,250,000 1,338,663
New York City, New York
          Series I 5.125% 3/1/23 5,875,000 5,885,516
          Series J 5.25% 6/1/28 2,055,000 2,040,060
Powell, Ohio 5.50% 12/1/32 (FGIC) 2,000,000 2,031,680
41,392,848
§Pre-Refunded Bonds – 23.99%
Alexandria, Virginia Industrial Development Authority
          Revenue (Institute for Defense Analyses)
          Series A 5.90% 10/1/30-10 (AMBAC) 6,000,000 6,520,380
California State 5.25% 2/1/30-12 (MBIA) 5,000 5,546
Deschutes County, Oregon Administrative School
          District #1 Series A 5.125% 6/15/21-11 (FSA) 1,000,000 1,086,470
Deschutes County, Oregon Hospital Facilities Authority
          Hospital Revenue (Cascade Health Services)
          5.60% 1/1/32-12 1,250,000 1,387,913

14


          Principal amount        Value
Municipal Bonds (continued)
§Pre-Refunded Bonds (continued)
Duluth, Minnesota Economic Development Authority
          Health Care Facilities Revenue (Benedictine Health
          System - St. Mary’s Hospital) 5.25% 2/15/33-14 $ 5,000,000 $ 5,703,150
Florida State Board of Education (Lottery Revenue)  
          Series A 6.00% 7/1/14-10 (FGIC) 1,000,000 1,077,510
Golden State, California Tobacco Securitization
          Corporation Settlement Revenue Series B
          5.50% 6/1/43-13 9,000,000 10,149,749
            5.625% 6/1/38-13 7,500,000 8,495,999
Henrico County, Virginia Economic Development  
          Authority Revenue (Bon Secours Health System)
          Series A 5.60% 11/15/30-11 130,000 148,308
Highlands County, Florida Health Facilities Authority
          (Adventist Health System/Sunbelt) Series A  
          6.00% 11/15/31-11 1,500,000 1,661,955
Illinois Educational Facilities Authority Student Housing
          Revenue (Educational Advancement Fund - University
          Center Project) 6.25% 5/1/30-12 5,000,000 5,755,700
Jackson, Ohio Local School District (Stark & Summit
          Counties) School Facilities Construction &
          Improvement 5.625% 12/1/25-10 (FSA) 1,000,000 1,078,890
Jackson, Oregon School District #6 Central Point  
          5.25% 6/15/20-10 (FGIC) 1,175,000 1,241,059
Lee County, Florida Airport Revenue Series B
          5.75% 10/1/33-10 (FSA) 3,000,000 3,249,090
Linn County, Oregon Community School District #9
          Lebanon 5.60% 6/15/30-13 (FGIC) 2,000,000 2,314,580
Louisiana Public Facilities Authority Revenue (Ochsner
          Clinic Foundation Project) Series B 5.50% 5/15/32-26 1,500,000 1,669,680
Maryland State Economic Development Corporation,
          Student Housing Revenue (University of Maryland
          College Park Project) 5.625% 6/1/35-13 1,125,000 1,302,109
Massachusetts State Development Finance Agency
          Revenue (Massachusetts College of Pharmacy Project)
          Series C 5.75% 7/1/33-13 1,500,000 1,762,095
Miami-Dade County, Florida Educational Facilities
          Authority (University of Miami) Series A
          5.00% 4/1/34-14 (AMBAC) 7,000,000 7,961,309
          5.75% 4/1/29-10 (AMBAC) 2,000,000 2,129,180

15

Statements of net assets
Delaware Tax-Free USA Fund

Principal amount      Value
Municipal Bonds (continued)     
§Pre-Refunded Bonds (continued)
          Milledgeville-Baldwin County, Georgia Development
                    Authority Revenue (Georgia College & State University
                    Foundation Student Housing Project) 6.00% 9/1/33-14 $ 1,000,000 $ 1,209,190
          Mississippi Development Bank Special Obligation
                    (Madison County Hospital Project) 6.30% 7/1/22-09 2,070,000 2,152,158
          New Jersey State Educational Facilities Authority Revenue
                    (Stevens Institute of Technology) Series B
                    5.25% 7/1/24-14 2,085,000 2,406,778
          New York City, New York Series J 5.25% 6/1/28-13 2,895,000 3,323,084
          North Carolina Medical Care Commission Hospital
                    Revenue (Northeast Medical Center Project)  
                    5.125% 11/1/34-14 1,250,000 1,445,413
          Orange County, Florida Health Facilities Authority Revenue
                    (Adventist Health System) 5.625% 11/15/32-12 1,000,000   1,121,800
          Orlando, Florida Utilities Commission Water & Electric  
                    Revenue 5.25% 10/1/20-11 1,575,000 1,738,800
          Osceola County, Florida School Board Certificates of  
                    Participation Series A 5.25% 6/1/27-12 (AMBAC) 4,000,000 4,455,880
          Payne County, Oklahoma Economic Development
                    Authority Student Housing Revenue (Collegiate
                    Housing Foundation - Oklahoma State University)
                    Series A 6.375% 6/1/30-11 4,000,000 4,442,320
          Puerto Rico Commonwealth Highway &
                    Transportation Authority Revenue
                    Series D 5.25% 7/1/38-12 3,000,000 3,324,600
                    Series G 5.00% 7/1/42-13 525,000 595,481
                    Series K 5.00% 7/1/35-15 3,500,000 4,064,900
          Puerto Rico Commonwealth Public Improvement
                    Revenue Series A 5.125% 7/1/31-11 3,495,000 3,809,865
          Puerto Rico Electric Power Authority Revenue
                    Series II 5.25% 7/1/31-12 6,000,000 6,787,140
                    Series NN 5.125% 7/1/29-13 1,400,000 1,596,191
          Puerto Rico Public Buildings Authority Revenue
                    (Guaranteed Government Facilities) Series I
                    5.25% 7/1/33-14 175,000 197,204
          Richmond, Virginia Public Utilities Revenue
                    5.00% 1/15/27-12 (FSA) 10,000,000 10,969,899
          South Broward, Florida Hospital District Revenue
                    (Memorial Health Care System) 5.625% 5/1/32-12 3,000,000 3,402,630

16


Principal amount      Value
Municipal Bonds (continued)     
§Pre-Refunded Bonds (continued)
          South Miami, Florida Health Facilities Authority Hospital
                    Revenue (Baptist Health South Florida Group)
                    5.25% 11/15/33-13 $ 4,000,000 $ 4,484,640
          St. Louis, Missouri Airport Revenue (Capital Improvement
                    Project) Series A 5.375% 7/1/21-12 (MBIA) 1,635,000 1,833,767
          Vancouver, Washington Limited Tax
                    5.50% 12/1/25-10 (AMBAC) 1,250,000 1,345,438
          Wisconsin Housing & Economic Developing Authority  
                    Revenue 6.10% 6/1/21-17 (FHA) 730,000 875,453
130,283,303
Special Tax Bonds – 7.66%
          Belleville, Illinois Tax Increment Revenue
                    (Frank Scott Parkway) Series A 5.70% 5/1/36 1,350,000 871,857
          Dallas, Texas Area Rapid Transition Sales Tax Revenue
                    Senior Lien 5.25% 12/1/38 4,000,000 4,066,880
          Florida Enterprise Community Development District
                    Special Assessment 6.10% 5/1/16 (MBIA) 695,000 697,252
          Henderson, Nevada Local Improvement Districts #T-18
                    5.30% 9/1/35 2,315,000 834,789
          Hollywood, Florida Community Redevelopment Agency
                    Revenue (Beach CRA) 5.625% 3/1/24 1,200,000 975,576
          Jackson County, Missouri Special Obligation
                    5.00% 12/1/27 (MBIA) 1,000,000 1,007,080
          Jacksonville, Florida Excise Taxes Revenue
                    Series B 5.00% 10/1/26 (AMBAC) 1,000,000   947,270
          Lammersville, California School District Community    
                    Facilities District #2002 (Mountain House)  
                    5.125% 9/1/35 4,125,000   2,659,676
          Michigan Municipal Bond Authority Revenue (State Clean
                    Water Revolving Foundation) 5.00% 10/1/14 3,000,000 3,393,420
          Middlesex County, New Jersey Improvement
                    Authority Senior Revenue (Heldrich Center Hotel/
                    Conference Project) Series A
                    5.00% 1/1/32 1,500,000 765,990
                    5.125% 1/1/37 1,500,000 748,980
          Missouri State Development Finance Board Infrastructure
                    Facilities Revenue (Crackerneck Creek Project)
                    Series C 5.00% 3/1/26 500,000 461,430

17

Statements of net assets
Delaware Tax-Free USA Fund

Principal amount      Value
Municipal Bonds (continued)     
Special Tax Bonds (continued)
          New Jersey Economic Development Authority (Cigarette Tax)  
                    5.50% 6/15/31 $ 1,000,000 $ 719,110
                    5.75% 6/15/34 1,935,000 1,411,428
          New York City, New York Transitional Finance Authority
                    Series D 5.00% 2/1/31 5,000,000 4,960,350
          New York Sales Tax Asset Receivables Series A
                    5.25% 10/15/27 (AMBAC) 1,000,000 1,035,890
          New York State Dormitory Authority State Personal
                    Income Tax Revenue
                    Series A 5.00% 3/15/38 4,545,000 4,429,330
                    Series B 5.25% 3/15/38 6,000,000 6,088,800
          New York State Urban Development Corporation Revenue
                    State Personal Income Tax Series B-1 5.00% 3/15/36 4,500,000 4,408,380
          Tampa, Florida Sports Authority Revenue Sales Tax
                    (Tampa Bay Arena Project) 5.75% 10/1/20 (MBIA) 1,000,000   1,108,290
41,591,778
State General Obligation Bonds – 9.20%
          California State
                    5.00% 11/1/21 2,250,000 2,259,743
                    5.00% 2/1/26 (AMBAC) 5,570,000 5,420,947
          Connecticut State Series B 5.00% 4/15/20 7,000,000 7,840,070
          Maryland State & Local Facilities Land Capital Improvement
                    Second Series 5.00% 8/1/16 4,000,000 4,657,200
                    Series A 5.00% 3/1/12   3,000,000   3,309,600
          Massachusetts State Series A 5.00% 9/1/32 8,500,000 8,538,250
          Puerto Rico Commonwealth Public Improvement Series A  
                    5.125% 7/1/31 7,880,000 6,546,940
                    5.25% 7/1/23 500,000 446,505
                    5.50% 7/1/19 (MBIA) 11,500,000 10,933,050
49,952,305
Transportation Revenue Bonds – 7.13%
          Branson, Missouri Regional Airport Transportation
                    Development District Revenue (Branson Airport
                    Project) Series B 6.00% 7/1/37 (AMT) 1,500,000 922,605
          Capital Trust Agency Florida Revenue
                    (Fort Lauderdale/Cargo Acquisition Project)
                    5.75% 1/1/32 (AMT) 3,750,000 2,461,838
                    (Orlando/Cargo Acquisition Project)
                    6.75% 1/1/32 (AMT) 2,395,000 1,753,643

18


Principal amount      Value
Municipal Bonds (continued)     
Transportation Revenue Bonds (continued)
          Dallas-Fort Worth, Texas International Airport Revenue
                    Series A 5.50% 11/1/31 (FGIC) (AMT) $ 1,500,000 $ 1,376,325
          Grapevine, Texas Industrial Development Corporate
                    Revenue (Air Cargo) 6.50% 1/1/24 (AMT) 910,000 713,677
          Houston, Texas Industrial Development Corporate
                    Revenue (Air Cargo) 6.375% 1/1/23 (AMT) 1,995,000 1,559,751
          Metropolitan, New York Transportation Authority Revenue
                    Series A 5.00% 11/15/18 5,300,000 5,593,514
          Missouri State Highways & Transportation Commission
                    State Refunded Revenue (First Lien)
                    Series B 5.00% 5/1/24 9,000,000 9,460,439
          New York State Thruway Authority General Revenue
                    Series H 5.00% 1/1/19 (MBIA) 6,240,000 6,763,536
          North Texas Tollway Authority Revenue (First Tier)
                    Series A 6.00% 1/1/24 3,345,000 3,482,011
                  ·Series E-3 5.75% 1/1/38 4,320,000 4,452,538
          Puerto Rico Commonwealth Highway & Transportation
                    Authority Revenue Series G 5.00% 7/1/42 275,000 212,209
38,752,086
Water & Sewer Revenue Bonds – 2.89%  
          Florida Village Center Community Development District
                    Utility Revenue 5.00% 10/1/36 (MBIA) 265,000 223,822
          Florida Water Pollution Control Financing Corporation
                    Revenue (Water Pollution Control)
                    Series A 5.00% 1/15/29   2,000,000     1,994,900
          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 1,063,816
          New York City, New York Municipal Water Finance
                    Authority Water & Sewer System Revenue
                    Fiscal 2009 Series A 5.75% 6/15/40 4,000,000 4,271,239
                    Series A 5.25% 6/15/34 3,705,000 3,720,265
          Tampa, Florida Water and Sewer Revenue
                    6.00% 10/1/16 (FSA) 1,000,000 1,181,280
          Virgin Islands Water & Power Authority Water System
                    Revenue 5.50% 7/1/17 510,000 469,628

19

Statements of net assets
Delaware Tax-Free USA Fund

Principal amount       Value
Municipal Bonds (continued)      
Water & Sewer Revenue Bonds (continued)
          West Virginia State Water Development Authority Revenue
                    (Loan Program III) Series A 6.375% 7/1/39 (AMBAC) (AMT) $ 2,890,000 $ 2,786,596
15,711,546
Total Municipal Bonds (cost $544,248,120) 530,761,542
 
Short-Term Investment – 0.74%
·Variable Rate Demand Note – 0.74%
          Trimble County, Kentucky Association of Counties Leasing
                    Trust Lease Program Revenue Series A 0.60% 12/1/38 4,000,000 4,000,000
Total Short-Term Investment (cost $4,000,000) 4,000,000
 
Total Value of Securities – 98.46%
          (cost $548,248,120) 534,761,542
Receivables and Other Assets
          Net of Liabilities – 1.54% 8,369,626
Net Assets Applicable to 52,411,481
          Shares Outstanding – 100.00%   $ 543,131,168
 
Net Asset Value – Delaware Tax-Free USA Fund
          Class A ($515,449,586 / 49,740,235 Shares) $10.36
Net Asset Value – Delaware Tax-Free USA Fund    
          Class B ($9,523,108 / 919,425 Shares)   $10.36
Net Asset Value – Delaware Tax-Free USA Fund
          Class C ($18,157,410 / 1,751,718 Shares)           $10.37
Net Asset Value – Delaware Tax-Free USA Fund
          Institutional Class ($1,064 / 102.7 Shares)     $10.36
 
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 573,655,709
Undistributed net investment income 2,110
Accumulated net realized loss on investments   (17,040,073 )
Net unrealized depreciation of investments (13,486,578 )
Total net assets $ 543,131,168  

20


 
  W Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
§ Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”
· Variable rate security. The rate shown is the rate as of February 28, 2009. 
@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $857,640, which represented 0.16% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”
^ Zero coupon security. The rate shown is the yield at the time of purchase.

Summary of abbreviations:
ACA — Insured by the American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
FNMA — Federal National Mortgage Association collateral
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association collateral
HUD — Housing and Urban Development
MBIA — Insured by the Municipal Bond Insurance Association
PSF — Insured by the Permanent School Fund
RADIAN — Insured by Radian Asset Assurance
VHA — Veterans Health Administration

Net Asset Value and Offering Price Per Share –
       Delaware Tax-Free USA Fund
Net asset value Class A (A) $ 10.36
Sales charge (4.50% of offering price) (B) 0.49
Offering price $ 10.85

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

See accompanying notes

21


Statements of net assets

  
Delaware Tax-Free USA Intermediate Fund February 28, 2009 (Unaudited)

Principal amount       Value
Municipal Bonds – 97.80%      
Corporate Revenue Bonds – 3.30%
          Alliance Airport Authority, Texas Special Facilities Revenue
                    (Federal Express Corp. Project) 4.85% 4/1/21 (AMT) $ 2,000,000 $ 1,516,660
        ·Brazos, Texas Harbor Industrial Development Environmental
                    Facilities Revenue (Dow Chemical Co. Project)
                    5.90% 5/1/38 (AMT) 1,010,000 676,498
          Brazos, Texas River Authority Pollution Control Revenue
                    (Texas Utilities) 5.40% 5/1/29 (AMT) 1,000,000 432,580
        ·Chesapeake, Virginia Economic Development Authority
                    Pollution Control Revenue (Electric & Power Co. Project)
                    Series A 3.60% 2/1/32 1,150,000 1,136,534
        ·Forsyth, Montana Pollution Control Revenue
                    (Portland General Project) Series A 5.20% 5/1/33 1,005,000 1,005,201
          Indianapolis, Indiana Airport Authority Revenue Special
                    Facilities (Federal Express Corp. Project)
                    5.10% 1/15/17 (AMT) 750,000 632,933
          Iowa Finance Authority Pollution Control Facilities
                    Revenue (Interstate Power) 5.00% 7/1/14 (FGIC) 2,000,000 2,033,619
          Memphis-Shelby County, Tennessee Airport Authority
                    Special Facilities Revenue (Federal Express Corp.
                    Project) 5.05% 9/1/12 1,000,000 999,580
        ·Mobile, Alabama Industrial Development Board Pollution
                    Control Revenue (Alabama Power Co.)    
                    Series B 4.875% 6/1/34   2,840,000 2,946,897
          Ohio State Air Quality Development Authority Revenue    
                    Environmental Improvement (USX Project)
                    5.00% 11/1/15 1,000,000 970,650
          Prattville, Alabama Industrial Development Board
                    Environmental Improvement Revenue (International
                    Paper Co. Project) Series A 6.70% 3/1/24 (AMT) 1,000,000 764,610
        ·Sabine, Texas River Authority Pollution Control Revenue
                    (TXU Electric Co. Project) Series A 5.50% 5/1/22 1,000,000 682,580
          Sugar Creek, Missouri Industrial Development
                    Revenue (Lafarge North America Project)
                    Series A 5.65% 6/1/37 (AMT) 500,000 317,865
          Toledo, Lucas County, Ohio Port Authority
                    Development Revenue (Northwest Ohio Bond Fund -
                    Alex Products Inc.) Series B 6.125% 11/15/09 (AMT) 290,000 291,694
14,407,901

22


Principal amount       Value
Municipal Bonds (continued)      
Education Revenue Bonds – 6.50%
          California Municipal Finance Authority Educational Revenue
                    (American Heritage Education Foundation Project)
                    Series A 5.25% 6/1/26 $ 1,000,000 $  712,270
          California Statewide Communities Development
                    Authority Student Housing Revenue
                    (Irvine, LLC - UCI East Campus) 6.00% 5/15/23 3,150,000 2,837,363
          Chattanooga, Tennessee Health Educational & Housing
                    Facilities Board Revenue (CDFI Phase I, LLC Project)
                    Series B 5.50% 10/1/20 1,095,000 869,036
          Fulton County, Georgia Development Authority Revenue  
                    (Molecular Science Building Project)
                    5.25% 5/1/21 (MBIA) 1,000,000 1,054,770
          Grand Traverse, Michigan Public School Academy
                    Revenue 5.00% 11/1/36 900,000 525,708
          Marietta, Georgia Development Authority Revenue
                    (Life University Income Project) 6.25% 6/15/20 1,180,000 911,078
          Massachusetts State Health & Educational Facilities
                    Authority Revenue (Nichols College Project)
                    Series C 6.125% 10/1/29 1,000,000 782,460
          Michigan Higher Education Facilities Authority Revenue
                    (Kalamazoo College Project) 5.50% 12/1/19 500,000 514,765
          New York State Dormitory Authority Revenue
                    (Brooklyn Law School) Series A 5.50% 7/1/18 (RADIAN) 1,000,000 960,750
          Ohio State Higher Educational Facility Revenue  
                    (John Carroll University) 5.50% 11/15/18 335,000 352,192
                  ·(Kenyon College Project) 4.70% 7/1/37  1,000,000 1,034,870
          Ohio State University General Receipts Revenue  
                    Series B 5.25% 6/1/21 1,000,000 1,056,090
          Pennsylvania State Higher Educational Facilities Authority  
                    Revenue (University of Pennsylvania)
                    Series A 5.00% 9/1/19 4,120,000   4,580,903
          Texas A & M University Revenue Financing System
                    5.00% 5/15/12 3,655,000 4,016,187
                    5.00% 5/15/13 3,760,000 4,189,655
          University of California Revenue
                    Series A 5.125% 5/15/20 (AMBAC) 250,000 261,233
          University of Oklahoma Research Facilities Revenue
                    5.00% 3/1/23 (AMBAC) 1,065,000 1,073,648

23

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

Principal amount       Value
Municipal Bonds (continued)      
Education Revenue Bonds (continued)
          University of Virginia General Revenue Series B
                    5.00% 6/1/20 $ 1,250,000 $ 1,329,313
                    5.00% 6/1/21 1,250,000 1,319,550
28,381,841
Electric Revenue Bonds – 2.56%
        ·Burke County, Georgia Development Authority Pollution
                    Control Revenue (Oglethorpe Power)
                    Series C-2 4.625% 1/1/37 (AMBAC) 3,320,000 3,373,817
          Metropolitan Government Nashville & Davidson County,
                    Tennessee Electric Revenue Series B 5.50% 5/15/14 1,000,000 1,144,670
          Orlando, Florida Utilities Commission Water &
                    Electric Revenue 5.25% 10/1/20 555,000 587,534
          Platte River, Colorado Power Authority Revenue
                    Series HH 5.00% 6/1/26 2,000,000 2,060,740
          Rochester, Minnesota Electric Utilities Revenue
                    Series C 5.00% 12/1/18 (MBIA) 2,000,000 2,217,880
          South Carolina State Public Service Authority Revenue
                    Refunding Series A 5.125% 1/1/21 (FSA) 1,000,000 1,039,150
          Texas Municipal Power Agency Revenue
                    4.00% 9/1/11 (AMBAC) 750,000   751,080
11,174,871
Escrowed to Maturity Bonds – 0.05%
          Southcentral, Pennsylvania General Authority Revenue
                    (Wellspan Health Obligated Project) 5.625% 5/15/26 180,000 196,909
    196,909
Health Care Revenue Bonds – 8.13%
          Allegheny County, Pennsylvania Hospital Development
                    Authority Revenue (University of Pittsburgh Medical
                    Center) Series A 5.00% 9/1/14 4,000,000 4,215,280
          Chatham County, Georgia Hospital Authority Revenue
                    (Memorial Health Medical Center)
                    Series A 6.125% 1/1/24 905,000 734,996
      @Cleveland-Cuyahoga County, Ohio Port Authority
                    Revenue (Saint Clarence - Geac) Series A
                    6.125% 5/1/26 715,000 462,798
          Cuyahoga County, Ohio Revenue (Cleveland Clinic Health
                    System) Series A 6.00% 1/1/21 1,000,000 1,028,330
          Georgia Medical Center Hospital Authority Revenue
                    (Spring Harbor Green Island Project) 5.25% 7/1/37 2,300,000 1,312,380

24


          Principal amount        Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
· Highlands County, Florida Health Facilities Authority
            Revenue (Adventist Health) Series I 5.00% 11/15/29 $ 2,000,000 $ 2,051,980
Maryland State Health & Higher Education Facilities  
          Authority Revenue
        ·(John Hopkins Health Systems) 5.00% 5/15/46 790,000 847,607
          (Union Hospital of Cecil County) 5.625% 7/1/32 500,000 454,160
Massachusetts State Health & Educational Facilities
          Authority Revenue (Caregroup)
          Series E-2 5.375% 7/1/21 1,970,000 1,836,690
Michigan State Hospital Finance Authority Revenue    
          (Oakwood Obligation Group) 5.50% 11/1/14 2,230,000 2,241,217
Minneapolis, Minnesota Health Care System Revenue
          (Fairview Health Services) Series A 6.375% 11/15/23 3,710,000 3,981,795
New Hampshire Health & Education Facilities Authority
          Revenue (Elliot Hospital) Series B 5.60% 10/1/22 1,000,000 994,770
New York State Dormitory Authority Revenue
          (Non State Supported Debt - Orange Regional
          Medical Center) 6.50% 12/1/21 2,000,000 1,713,260
North Carolina Medical Care Commission Health
          Care Facilities Revenue (First Mortgage -
          Presbyterian Homes) 5.40% 10/1/27 780,000 589,384
Ohio State Higher Educational Facilities Commission
          Revenue (Cleveland Clinic Health System
          Obligation Group) Series A
          5.00% 1/1/17 2,000,000 2,144,560
          5.00% 1/1/18 1,000,000 1,065,390
Scottsdale, Arizona Industrial Development Authority
          Hospital Revenue (Scottsdale Healthcare)
          Series A 5.00% 9/1/19 3,065,000 2,961,648
Shelby County, Tennessee Health Educational & Housing
          Facilities Board Revenue (Trezevant Manor Project)
          Series A 5.75% 9/1/37 560,000 350,722
St. Louis Park, Minnesota Health Care Facilities Revenue
          Refunding (Nicollet Health Services)
          Series C 5.50% 7/1/18 4,240,000 4,467,645
St. Mary Hospital Authority Pennsylvania Health
          System Revenue (Catholic Health East) Series A
          5.25% 11/15/16 1,200,000 1,226,928

25

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

          Principal amount        Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
St. Paul, Minnesota Housing & Redevelopment
          Authority Hospital Revenue (Health East Project)
          6.00% 11/15/25 $ 1,000,000 $ 801,960
35,483,500
Housing Revenue Bonds – 1.63%
California Housing Finance Agency Revenue (Home
          Mortgage) Series M 5.95% 8/1/25 (AMT) 2,700,000 2,572,182
Puerto Rico Housing Finance Authority Subordinate  
          (Capital Fund Modernization) 5.50% 12/1/16 4,120,000 4,554,042
  7,126,224
Lease Revenue Bonds – 3.27%  
Golden State, California Tobacco Securitization Corporation
          Settlement Revenue Refunding Asset-Backed Series A  
          5.00% 6/1/18 1,170,000 1,121,340
          5.00% 6/1/21 (AMBAC) 1,000,000 927,920
Michigan State Building Authority Revenue Series I
          5.00% 10/15/09 (FSA) 1,000,000 1,023,210
          5.00% 10/15/24 3,000,000 2,974,140
          5.50% 10/15/18 2,175,000 2,321,573
New York State Municipal Bond Bank Agency Special
          School Purpose Revenue Series C 5.25% 6/1/22 1,000,000 1,011,130
· Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series J 5.00% 7/1/28 1,000,000 969,580
· Puerto Rico Public Finance Corporate Revenue
          Series A 5.25% 8/1/29 (MBIA) 620,000 603,179
Tobacco Settlement Financing New York Revenue
          (Asset-Backed) Series B 5.00% 6/1/12 2,060,000 2,173,465
Virginia College Building Authority, Virginia Educational
          Facilities Revenue (Public Financing Higher Education
          Program) Series A 5.00% 9/1/13 1,000,000 1,130,170
14,255,707
Local General Obligation Bonds – 11.46%
Chandler, Arizona 5.00% 7/1/21 4,000,000 4,389,240
Chicago, Illinois Board of Education Refunding Dedicated
          Revenue Series B 5.00% 12/1/23 (AMBAC) 3,500,000 3,536,855
Chicago, Illinois Modern Schools Across Chicago
          Series J 5.00% 12/1/23 (AMBAC) 2,865,000 2,924,248

26


          Principal amount        Value
Municipal Bonds (continued)
Local General Obligation Bonds (continued)
Chicago, Illinois Project & Refunding
          Series C 5.50% 1/1/40 (FGIC) $ 2,940,000 $ 2,944,880
Dallas, Texas 5.125% 2/15/15 3,000,000 3,431,640
Fairfax County, Virginia Refunding &
          Public Improvement 5.25% 4/1/14 3,500,000 4,021,745
Gwinnett County, Georgia School District  
          5.00% 2/1/11 3,000,000 3,216,150
          5.00% 2/1/21 2,175,000 2,413,380
Idaho Bond Bank Authority Revenue
          Series A 5.25% 9/15/26 690,000 721,395
  Lansing, Michigan Community College  
          (College Building and Site) 5.00% 5/1/21 (MBIA)   1,325,000 1,374,409
Licking County, Ohio Joint Vocational School District
          School Facilities Construction and Improvement
          5.00% 12/1/19 (MBIA) 1,000,000 1,068,020
Los Angeles, California Unified School District
          Election 2004 Series G
          5.00% 7/1/13 (AMBAC) 2,000,000 2,219,360
          5.00% 7/1/31 (AMBAC) 3,955,000 3,840,740
Mecklenburg County, North Carolina Refunding
          Series A 5.00% 8/1/17 6,000,000 7,004,341
Middlesex County, New Jersey Improvement Authority
          Revenue (County Guaranteed Open Space Trust)
          5.25% 9/15/20 1,000,000 1,094,700
New York City, New York
          Series A-1 5.00% 8/1/19 3,500,000 3,629,465
          Series G 5.25% 8/1/15 1,000,000 1,065,640
          Series I 5.00% 8/1/21 1,000,000 1,007,660
          Series J 5.50% 6/1/23 100,000 101,690
50,005,558
§Pre-Refunded Bonds – 9.32%
Arizona State Transportation Board Highway Revenue
          6.25% 7/1/16-09 1,850,000 1,886,260
Benton & Linn Counties, Oregon School District #509J
          5.00% 6/1/21-13 (FSA) 1,000,000 1,131,020
California State
          5.00% 2/1/33-14 (MBIA) 1,800,000 2,061,558
          5.25% 2/1/30-12 (MBIA) 5,000 5,546

27

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

          Principal amount        Value
Municipal Bonds (continued)
§Pre-Refunded Bonds (continued)
Cook County, Illinois Series A 5.375% 11/15/21-11 (FGIC) $ 2,160,000 $ 2,349,734
Duluth, Minnesota Economic Development
          Authority Health Care Facilities Revenue
          (Benedictine Health System - St. Mary’s Hospital)
          5.25% 2/15/28-14 1,000,000 1,140,630
          5.50% 2/15/23-14 1,000,000 1,152,310
Forest Grove, Oregon Revenue Campus
          (Pacific University) 6.30% 5/1/25-10 (RADIAN) 1,000,000 1,064,440
Illinois Educational Facilities Authority Student  
          Housing Revenue (Educational Advancement -
          University Center Project) 6.00% 5/1/22-12 750,000 857,573
Lancaster County, Pennsylvania Hospital Authority
          Revenue (Lancaster General Hospital Project)    
          5.75% 3/15/21-13 1,000,000 1,155,610
  Lunenburg County, Virginia Series B 5.25% 2/1/29-13 (MBIA) 715,000 816,408
Miami-Dade County, Florida Educational Facilities
          Authority Revenue (University of Miami)
          Series A 5.00% 4/1/34-14 (AMBAC) 3,500,000 3,980,655
Minneapolis, Minnesota Health Care System Revenue
          (Allina Health Systems) Series A 5.75% 11/15/32-12 500,000 572,720
New Jersey State Educational Facilities Authority
          Revenue (Georgian Court College Project)
          Series C 6.50% 7/1/33-13 500,000 597,880
New York City, New York Series J 5.50% 6/1/23-13 900,000 1,042,308
North Texas Health Facilities Development Corporation
          Hospital Revenue (United Regional Health Care
          System, Inc. Project) 6.00% 9/1/23-13 1,000,000 1,162,430
Ohio State Higher Education Capital Facilities
          Series B 5.625% 5/1/14-10 5,780,000 6,108,246
Orlando, Florida Utilities Commission Water & Electric
          Revenue 5.25% 10/1/20-11 945,000 1,043,280
Pennsylvania State First Series 5.125% 1/15/19-11 3,515,000 3,802,527
Pennsylvania State Higher Educational Facilities Authority
          College & University Revenue (Geneva College Project)
          6.125% 4/1/22-12 1,000,000 1,133,310
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series J 5.50% 7/1/21-14 1,000,000 1,150,530

28


          Principal amount        Value
Municipal Bonds (continued)
§Pre-Refunded Bonds (continued)
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.50% 7/1/23-14 $ 2,000,000 $ 2,278,480
Southcentral, Pennsylvania General Authority
          Revenue (Welllspan Health Obligated Project)
          5.625% 5/15/26-11 820,000 902,927
University of North Carolina Revenue (Chapel Hill)  
          Series A 5.375% 12/1/14-11 2,000,000 2,180,080
Virginia State Resource Authority Clean Water Revenue    
          (State Revolving Fund) 6.00% 10/1/16-10 1,000,000 1,077,970
40,654,432
Resource Recovery Bonds – 0.25%
  Pennsylvania Economic Development Financing  
          Authority Resource Recovery Revenue
          (Subordinate Colver Project)
          Series G 5.125% 12/1/15 (AMT) 1,400,000 1,112,734
1,112,734
Special Tax Bonds – 8.57%
Baltimore, Maryland Convention Center Hotel Revenue
          Subordinated Series B 5.00% 9/1/16 1,200,000 919,224
California State Economic Recovery
          Series A 5.25% 7/1/14 1,000,000 1,087,630
        ·Series B 5.00% 7/1/23 3,365,000 3,539,576
Casa Grande, Arizona Excise Tax Revenue
          5.00% 4/1/22 (AMBAC) 1,600,000 1,643,328
Columbia County, Georgia Sales Tax
          4.00% 4/1/14 1,000,000 1,075,780
          5.00% 4/1/15 1,250,000 1,416,163
          5.00% 4/1/16 1,265,000 1,438,988
          5.00% 4/1/17 315,000 359,361
Dallas, Texas Civic Center Convention Complex Revenue
          Refunding & Improvement 4.875% 8/15/23 (MBIA) 1,500,000 1,520,010
East Homestead Community Development District, Florida
          Special Assessment Revenue Series B 5.00% 5/1/11 365,000 264,672
Hampton, Virginia Convention Center Revenue
          5.25% 1/15/23 (AMBAC) 1,000,000 1,022,470
Metropolitan Pier and Exposition Authority, Illinois
          Dedicate State Tax Revenue (McCormick Place
          Expansion Project) Series A 5.50% 12/15/24 (FGIC) 2,000,000 2,057,540

29

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

          Principal amount        Value
Municipal Bonds (continued)
Special Tax Bonds (continued)
Middlesex County, New Jersey Improvement Authority
          Senior Revenue (Heldrich Center Hotel/Conference
          Project) Series A 5.00% 1/1/32 $ 1,000,000 $ 510,660
Modesto, California Special Tax Community Facilities  
          District #04-1 (Village 2) 5.15% 9/1/36 1,500,000 955,935
New Jersey Economic Development Authority
          (Cigarette Tax)
          5.50% 6/15/31 1,000,000 719,110
          5.625% 6/15/18 1,000,000 878,370
· New York City, New York Transitional Finance Authority  
            Revenue Refunding - Future Tax Secured  
          Series A 5.50% 11/1/26 1,000,000 1,058,260
New York State Dormitory Authority State Personal
          Income Tax Revenue Series A 5.00% 3/15/23 2,220,000 2,333,464
New York State Thruway Authority Income Tax Revenue
          (Transportation) Series A 5.00% 3/15/20 1,000,000 1,097,860
New York State Urban Development Corporation
          Revenue State Personal Income Tax
          Series A-1 5.00% 12/15/28 4,000,000 4,046,080
Richmond Heights, Missouri Tax Increment & Transaction
          Sales Tax Revenue Refunding & Improvement
          (Francis Place Redevelopment Project) 5.625% 11/1/25 1,000,000 734,280
St. Joseph, Missouri Industrial Development Authority Tax
          Increment Revenue (Shoppes at North Village Project)
          Series A 5.10% 11/1/19 250,000 201,333
          Series B 5.375% 11/1/23 1,000,000 748,410
Washington State Motor Vehicle Fuel Tax
          Series B 5.00% 7/1/16 4,250,000 4,860,597
Wyandotte County, Kansas City, Kansas Unified
          Government Special Obligation Revenue Refunding-
          Sales Tax-2nd Lien-Area B 5.00% 12/1/20 1,500,000 1,305,090
Wyoming State Loan & Investment Board Facilities
          Revenue 5.00% 10/1/24 1,550,000 1,590,595
37,384,786
State General Obligation Bonds – 23.94%
California State 5.25% 11/1/17 1,000,000 1,054,970
California State Refunding
          5.00% 8/1/14 1,025,000 1,098,810
          5.00% 11/1/15 1,795,000 1,923,414

30


          Principal amount           Value
Municipal Bonds (continued)
State General Obligation Bonds (continued)
Connecticut State Series C 5.00% 11/1/24 $ 2,000,000 $ 2,139,180
Florida State Board Education Capital Outlay Public
          Education Series D 5.75% 6/1/22 2,000,000 2,082,660
Georgia State
          5.00% 7/1/11 6,865,000 7,457,861
          Series B 5.00% 7/1/17 4,810,000 5,607,979
          Series E 5.00% 8/1/12 3,125,000 3,485,969
Illinois State Refunding Series B 5.00% 1/1/13 3,475,000 3,834,419
Maryland State 5.00% 8/1/17 1,500,000 1,725,315
  Maryland State & Local Facilities Loan Capital  
          Improvement 5.00% 3/15/19 3,675,000 4,163,996
Massachusetts State Consolidated Loan
          Series A 5.25% 8/1/13 5,000,000   5,678,400
          Series C 5.00% 9/1/10 7,750,000 8,214,381
Minnesota State 5.00% 6/1/14 900,000 1,025,235
Mississippi State Series A 5.00% 10/1/17 4,860,000 5,585,501
North Carolina State Public Improvement Series A  
          5.00% 3/1/12 4,000,000 4,412,800
          5.00% 3/1/15 1,200,000 1,379,256
North Carolina State Refunding Series B 5.00% 4/1/15 4,000,000 4,603,440
Ohio State
          Series A 5.00% 6/15/13 3,750,000 4,203,638
          Series D 5.00% 9/15/14 3,500,000 3,969,980
Pennsylvania State 5.50% 2/1/13 3,200,000 3,622,688
Pennsylvania State Second Series A 5.00% 8/1/13 4,000,000 4,504,200
Puerto Rico Commonwealth Public Improvement Series A
          5.00% 7/1/16 (ASSURED GTY) 2,110,000 2,111,139
          5.25% 7/1/22 3,470,000 3,126,713
          5.25% 7/1/23 1,125,000 1,004,636
          5.50% 7/1/17 4,415,000 4,285,420
· Puerto Rico Commonwealth Series A 5.00% 7/1/30 1,000,000 960,240
· Puerto Rico Public Finance Corporation Commonwealth
          Appropriation (LOC Puerto Rico Government Bank)
          Series A 5.75% 8/1/27 1,000,000 986,050
Texas State Transportation Commission
          (Mobility Foundation) 5.00% 4/1/13 1,000,000 1,115,690
Texas State Water Financial Assistance
          Series B 5.50% 8/1/35 3,300,000 3,307,326

31

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

          Principal amount        Value
Municipal Bonds (continued)
State General Obligation Bonds (continued)
Virginia State Series B 5.00% 6/1/23 $ 2,000,000 $ 2,164,340
Washington State Variable Purpose
          Series A 5.00% 7/1/16 1,000,000 1,143,670
          Series B 5.00% 1/1/20 2,500,000 2,506,675
104,485,991
Transportation Revenue Bonds – 11.64%
Capital Trust Agency Florida Revenue (Fort Lauderdale/  
          Cargo Acquisition Project) 5.75% 1/1/32 (AMT) 1,750,000 1,148,858
Chicago, Illinois O’Hare International Airport
          Revenue General-Airport-Third Lien
          Series A-2 5.75% 1/1/20 (FSA) (AMT) 1,000,000 1,012,540
  Dallas-Fort Worth, Texas International Airport Revenue    
          Series A 5.00% 11/1/15 (XLCA) (AMT) 2,000,000 2,009,160
Georgia Federal Highway Road and Tollway Authority
          Revenue Bonds 5.00% 6/1/10 (MBIA) 2,000,000 2,103,420
Idaho Housing & Finance Association Grant Revenue
          (Antic Federal Highway Transportation)
          Series A 5.25% 7/15/21 (ASSURED GTY) 2,760,000 3,055,596
Maryland State Transportation Authority Grant & Revenue
          5.25% 3/1/16 1,850,000 2,153,863
          5.25% 3/1/18   4,105,000 4,812,208
Metropolitan, New York Transportation Authority Revenue
          Series A 5.00% 11/15/18 2,500,000 2,638,450
          Series C 6.50% 11/15/28 2,860,000 3,160,043
Metropolitan, Washington D.C. Airport Authority Systems
          Revenue Series A 5.50% 10/1/19 (FGIC) (AMT) 1,000,000 1,019,510
Missouri State Highways & Transportation Commission
          State Road Revenue Second Lien 5.25% 5/1/19 2,935,000 3,343,728
New York State Thruway Authority Revenue
          (General Highway and Bridge Trust Fund)
          Series B 5.25% 4/1/13 (AMBAC) 3,300,000 3,665,277
North Texas Tollway Authority Dallas North Tollway
          System Revenue Series A 5.00% 1/1/20 (FGIC) 1,750,000 1,749,913
North Texas Tollway Authority Revenue System (First Tier)
          Series A 6.00% 1/1/20 4,000,000 4,297,600
        ·Series E-3 5.75% 1/1/38 2,470,000 2,545,780
Pennsylvania State Turnpike Commission Revenue
          Series A 5.25% 12/1/20 (AMBAC) 1,230,000 1,331,819

32


          Principal amount        Value
Municipal Bonds (continued)
Transportation Revenue Bonds (continued)
Texas State Transportation Commission Highway Fund
          Revenue (First Tier) 5.00% 4/1/18 $ 1,700,000 $ 1,919,232
Triborough, New York Bridge & Tunnel Authority Revenue
          Series A 5.00% 11/15/17  1,720,000 1,955,760
        ·Series B-1 5.00% 11/15/25 4,000,000 4,384,280
        ·Series B-3 5.00% 11/15/38 1,800,000 1,983,258
Virginia Port Authority Commonwealth Port Fund   
          Revenue Resolution 5.00% 7/1/12 (AMT) 500,000 519,130
50,809,425
Water & Sewer Revenue Bonds – 7.18%
Alabama Water Pollution Control Authority Revenue  
          5.50% 8/15/23 (AMBAC) 1,000,000 1,006,260
Arizona Water Infrastructure Finance Authority Revenue    
          (Water Quality) Series A 5.00% 10/1/21 2,430,000 2,679,585
Dallas, Texas Waterworks & Sewer System Revenue
          5.00% 10/1/24 (FSA) 6,500,000 6,521,775
  Florida Water Pollution Control Financing Corporation
          Revenue Series A 5.00% 1/15/25 5,000,000 5,117,250
King County, Washington Sewer Revenue Refunding
          Series B 5.00% 1/1/14 (MBIA) 3,500,000 3,901,870
Massachusetts State Water Pollution Abatement Trust
          5.00% 8/1/16 2,170,000 2,494,849
New York State Environmental Facilities Corporation
          Revenue (State Clean Water & Drinking Water
          Revolving Foundation)
          Series A 5.00% 6/15/22 1,405,000 1,507,158
          Series D 5.00% 9/15/23 3,360,000 3,541,205
Portland, Oregon Sewer System Revenue (First Lien)
          Series A 5.00% 6/15/18 4,000,000 4,584,040
  31,353,992
Total Municipal Bonds (cost $427,651,769) 426,833,871

33

Statements of net assets
Delaware Tax-Free USA Intermediate Fund

          Principal amount      Value
Short-Term Investments – 2.76%
·Variable Rate Demand Notes – 2.76%
California Statewide Communities Development
          Authority Multifamily Revenue (Housing IAC Project)
          Series W-2 1.30% 9/15/29 (AMT) $ 400,000 $ 400,000
Colorado Educational & Cultural Facilities Authority
          Revenue (National Jewish Federation Program)
          Series A-8 0.65% 9/1/35 1,200,000 1,200,000
          Series D-5 0.65% 10/1/38 1,000,000 1,000,000
Illinois Finance Authority Revenue (Northwestern
          Memorial Hospital) Series A-1 0.60% 8/15/38 1,650,000 1,650,000
Minneapolis, Minnesota Health Care System Revenue
          (Fairview Health Services) Series E 0.37% 11/15/47 1,500,000 1,500,000
New York City, New York Series E5
          0.55% 8/1/10 700,000 700,000
          0.55% 8/1/17 700,000 700,000
          0.55% 8/1/18 400,000 400,000
Trimble County, Kentucky Association of Counties Leasing
          Trust Lease Program Revenue Series A 0.60% 12/1/38 500,000 500,000
University of Minnesota Series C 0.35% 12/1/36 4,000,000 4,000,000
Total Short-Term Investments (cost $12,050,000) 12,050,000
 
Total Value of Securities – 100.56%
(cost $439,701,769) 438,883,871
Liabilities Net of Receivables and
Other Assets – (0.56%) (2,443,903 )
Net Assets Applicable to 39,377,366
Shares Outstanding – 100.00% $ 436,439,968
 
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Class A ($404,897,160 / 36,529,934 Shares) $11.08
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Class B ($933,613 / 84,317 Shares) $11.07
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Class C ($30,608,141 / 2,763,020 Shares) $11.08
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Institutional Class ($1,054 / 95.1 Shares) $11.08

34


   
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 446,324,608
Distributions in excess of net investment income (3,435 )
Accumulated net realized loss on investments (9,063,307 )
Net unrealized depreciation of investments (817,898 )
Total net assets $ 436,439,968

§

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

·

Variable rate security. The rate shown is the rate as of February 28, 2009.

@

Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $462,798, which represented 0.11% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”


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

Net Asset Value and Offering Price Per Share –
     Delaware Tax-Free USA Intermediate Fund
Net asset value Class A (A)      $ 11.08
Sales charge (2.75% of offering price) (B) 0.31
Offering price $ 11.39

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

See accompanying notes

35


Statements of net assets
Delaware National High-Yield Municipal Bond Fund February 28, 2009 (Unaudited)

          Principal amount      Value
Municipal Bonds – 98.19%
Corporate Revenue Bonds – 13.56%
· Beaver County, Pennsylvania Industrial Development  
          Authority Pollution Control Revenue (Firstenergy
          General Corp. Project) Series C 7.125% 6/1/28 (AMT) $ 1,000,000 $ 995,740
· Brazos, Texas Harbor Industrial Development
          Environmental Facilities Revenue (Dow Chemical
          Co. Project) 5.90% 5/1/38 (AMT) 190,000 127,262
· Brazos, Texas River Authority Pollution Control Revenue
          (TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) 1,000,000 462,580
Cloquet, Minnesota Pollution Control Revenue
          (Potlatch Corp. Project) 5.90% 10/1/26   750,000 496,065
De Soto Parish, Louisiana Environmental Improvement
          Revenue (International Paper Co. Project)
          Series A 6.35% 2/1/25 (AMT) 1,650,000 1,195,211
Gulf Coast, Texas Waste Disposal Authority Revenue
          (Valero Energy Corp. Project) 6.65% 4/1/32 (AMT) 1,000,000 841,770
Mississippi Business Finance Corporation Pollution
          Control Revenue (System Energy Resources, Inc.
          Project) 5.90% 5/1/22 900,000 742,239
New Jersey Economic Development Authority Special
          Facilities Revenue (Continental Airlines, Inc. Project)
          6.40% 9/15/23 (AMT) 1,000,000 707,640
New York City, New York Industrial Development Agency
          Special Facilities Revenue (JetBlue Airways Corp.
          Project) 5.125% 5/15/30 (AMT) 1,000,000 524,510
Petersburg, Indiana Pollution Control Revenue
          (Indianapolis Power & Light Co. Project)
          6.375% 11/1/29 (AMT) 1,000,000 792,530
Phenix City, Alabama Industrial Development Board
          Environmental Improvement Revenue (Mead Westvaco
          Corp. Project) Series A 6.35% 5/15/35 (AMT) 500,000 313,840
Sugar Creek, Missouri Industrial Development Revenue
          (Lafarge North America Project)
          Series A 5.65% 6/1/37 (AMT) 500,000 317,865
Sweetwater County, Wyoming Solid Waste Disposal
          Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) 1,000,000 713,510
Toledo, Lucas County, Ohio Port Authority Development
          Revenue (Toledo Express Airport Project)
          Series C 6.375% 11/15/32 (AMT) 1,000,000 738,180
8,968,942

36


          Principal amount      Value
Municipal Bonds (continued)
Education Revenue Bonds – 19.85%
California Educational Facilities Authority Revenue
          (University of Southern California)
          Series A 5.00% 10/1/39 $ 1,000,000 $ 999,950
California Statewide Communities Development
          Authority Revenue (California Baptist University Project)
            Series A 5.50% 11/1/38 1,000,000 587,640
California Statewide Communities Development
          Authority Student Housing Revenue (East Campus
          Apartments, LLC) Series A 5.625% 8/1/34 (ACA) 1,000,000 809,010
Chattanooga, Tennessee Health Educational & Housing
          Facilities Board Revenue (CDFI Phase I, LLC Project)    
          Subordinate Series B 6.00% 10/1/35 1,000,000   684,240
Louisville & Jefferson County, Kentucky Metropolitan
          Government College Revenue (Bellarmine University)
          Series A 6.00% 5/1/33 1,000,000 850,760
Marietta, Georgia Development Authority Revenue
          (Life University Income Project) 7.00% 6/15/39 1,000,000 691,000
Maryland State Economic Development Corporation
          Student Housing Revenue (University of Maryland
          College Park Projects) 5.75% 6/1/33 930,000 707,711
Maryland State Health & Higher Educational Facilities  
          Authority Revenue (Washington Christian
          Academy Project) Series A 5.50% 7/1/38   1,170,000 602,913
Massachusetts State Health & Educational Facilities
          Authority Revenue (Nichols College Project)
          Series C 6.125% 10/1/29 1,000,000 782,460
Minnesota State Higher Education Facilities
          Authority Revenue (Bethel University)
          Series 6R 5.50% 5/1/37 1,000,000 750,430
New Jersey State Educational Facilities Authority
          Revenue (Fairleigh Dickinson Project)
          Series C 5.50% 7/1/23 750,000 643,335
New Mexico Educational Assistance Foundation Student
          Loan Revenue 1st Subordinate
          Series A-2 6.65% 11/1/25 (AMT) 985,000 985,138
Ohio State Higher Educational Facilities Revenue
          (Otterbein College Project) Series A 5.50% 12/1/28 950,000 909,112

37

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

          Principal amount      Value
Municipal Bonds (continued)
Education Revenue Bonds (continued)
Oregon State Facilities Authority Revenue
          (College Housing Northwest Project)
          Series A 5.45% 10/1/32 $ 1,000,000 $ 697,960
Pennsylvania State Higher Educational Facilities
          Authority Revenue  
          (Edinboro University Foundation Student Housing)
            6.00% 7/1/42   1,000,000 772,350
          (Widener University) 5.375% 7/15/29 650,000 525,044
Philadelphia, Pennsylvania Authority for Industrial
          Development Revenue (First Philadelphia Charter
          Project) Series A 5.75% 8/15/32 745,000 520,152
Provo, Utah Charter School Revenue (Freedom Academy
          Foundation Project) 5.50% 6/15/37 1,000,000 610,870
13,130,075
Health Care Revenue Bonds – 21.99%
Apple Valley, Minnesota Economic Development
          Authority Health Care Revenue (Augustana Home
          St. Paul Project) Series A 6.00% 1/1/40 1,000,000 667,590
Chatham County, Georgia Hospital Authority
          Revenue (Memorial Health Medical Center)
          Series A 6.125% 1/1/24 750,000 609,113
@ Cleveland-Cuyahoga County, Ohio Port Authority
          Revenue Senior Housing (St. Clarence - Geac)
          Series A 6.25% 5/1/38 1,000,000 571,760
Colorado Health Facilities Authority Revenue
          (Christian Living Community Project)
          Series A 5.75% 1/1/37 500,000 321,675
East Rochester, New York Housing Authority Revenue
          Refunding (Senior Living - Woodland Village Project)
          5.50% 8/1/33 500,000 308,830
Gainesville & Hall County, Georgia Development
          Authority Revenue Senior Living Facilities
          (Lanier Village Estates Project)
          Series C 7.25% 11/15/29 1,000,000 960,090
Illinois Health Facilities Authority Revenue
          (Elmhurst Memorial Healthcare Project) 5.625% 1/1/28 1,000,000 829,410
          (Midwest Physician Group Limited Project) 5.50% 11/15/19 35,000 27,631
Lancaster County, Pennsylvania Hospital Authority Revenue
          (Brethren Village Project) Series A 6.375% 7/1/30 725,000 589,780

38


          Principal amount      Value
Municipal Bonds (continued)
Health Care Revenue Bonds (continued)
Lebanon County, Pennsylvania Health Facilities Authority
          Center Revenue (Pleasant View Retirement)  
          Series A 5.30% 12/15/26 $ 1,000,000 $ 652,680
Maryland State Health & Higher Educational Facilities
          Authority Revenue (Washington County Hospital
          Project) 5.75% 1/1/38 1,000,000 769,210
Minneapolis, Minnesota Health Care System Revenue
          (Fairview Health) Series A 6.625% 11/15/28 800,000 845,064
New Jersey Health Care Facilities Financing Authority
          Revenue (St. Josephs Healthcare System)
          6.625% 7/1/38 1,000,000 728,730
  New York State Dormitory Authority Revenue (Non State
          Supported Debt - Orange Regional Medical Center)
          6.25% 12/1/37 1,000,000   717,400
  North Carolina Medical Care Commission Health Care
          Facilities Revenue (First Mortgage - Presbyterian
          Homes) 5.60% 10/1/36 1,000,000 691,080
Orange County, Florida Health Facilities Authority
          Revenue (Orlando Regional Healthcare)
          Series C 5.25% 10/1/35 1,000,000 762,240
Richland County, Ohio Hospital Facilities Revenue
          (Medcentral Health System Project)  
          Series B 6.375% 11/15/30 500,000 482,310
Shelby County, Tennessee Health Educational & Housing
          Facilities Board Revenue (Trezevant Manor Project)
          Series A 5.75% 9/1/37 390,000 244,253
St. Joseph County, Indiana Industrial Economic
          Development Revenue (Madison Center Project)
          5.50% 2/15/21 1,150,000 1,083,127
Washington State Health Care Facilities Authority Revenue
          (Multicare Health System)
          Series B 6.00% 8/15/39 (ASSURED GTY) 1,250,000 1,233,437
Winchester, Virginia Industrial Development Authority
          Residential Care Facility Revenue (Westminster -
          Canterbury Project) Series A 5.30% 1/1/35 1,000,000 679,650
Yavapai County, Arizona Industrial Development Authority
          Hospital Revenue (Yavapai Medical Center Project)
          Series A 6.00% 8/1/33 1,000,000 772,310
14,547,370

39

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

          Principal amount      Value
Municipal Bonds (continued)
Housing Revenue Bonds – 1.44%
North Carolina Housing Finance Agency Homeownership
          Revenue Series 27-A 5.55% 7/1/38 (AMT) $ 1,000,000   $ 951,360
951,360
Lease Revenue Bonds – 2.36%
Dauphin County, Pennsylvania General Authority
          Revenue (Riverfront Office & Parking Project)
          5.75% 1/1/10 970,000 941,298
  Missouri State Development Finance Board Infrastructure
          Facilities Revenue (Branson Landing Project) Series A
          5.50% 12/1/24 720,000 621,187
1,562,485
Local General Obligation Bonds – 1.46%  
Los Angeles, California Unified School District Election
          2002 Series D 5.00% 1/1/34 1,000,000 964,110
964,110
§Pre-Refunded Bonds – 18.34%  
Bexar County, Texas Health Facilities Development
          Corporation Revenue (Army Retirement Residence
          Project) 6.30% 7/1/32-12 1,000,000 1,144,430
Illinois Educational Facilities Authority Student Housing
          Revenue (Educational Advancement Fund - University
          Center Project) 6.25% 5/1/30-12 1,000,000 1,151,140
Louisiana Public Facilities Authority Revenue
          (Ochsner Clinic Foundation Project)
          Series B 5.50% 5/15/32-26 1,000,000 1,113,120
Maine Finance Authority Education Revenue
          (Waynflete School Issue) 6.40% 8/1/19-09 1,000,000 1,034,730
Massachusetts State Development Finance Agency
          Revenue (Massachusetts College of Pharmacy Project)
          Series C 5.75% 7/1/33-13 1,000,000 1,174,730
Milledgeville-Baldwin County, Georgia Development
          Authority Revenue (Georgia College & State University
          Foundation Student Housing Project)
          6.00% 9/1/33-14 1,000,000 1,209,190
Minnesota State Higher Education Facilities Authority
          Revenue (College of Art & Design Project)
          Series 5-D 6.75% 5/1/26-10 500,000 533,255
Mississippi Development Bank Special Obligation
          (Madison County Hospital Project) 6.40% 7/1/29-09 1,585,000 1,648,463

40


          Principal amount      Value
Municipal Bonds (continued)
§Pre-Refunded Bonds (continued)
Montgomery County, Pennsylvania Higher Education &  
          Health Authority Revenue (Foulkeways at
          Gwynedd Project) 6.75% 11/15/30-09 $ 1,000,000   $ 1,051,950
Rochester, Minnesota Multifamily Housing Revenue
          (Wedum Shorewood Campus Project)
            6.60% 6/1/36-09 985,000 1,019,219
Savannah, Georgia Economic Development Authority
          Revenue (College of Art & Design Project)
          6.50% 10/1/13-09 1,000,000 1,054,540
    12,134,767
Special Tax Bonds – 14.05%
Baltimore, Maryland Convention Center Hotel Revenue
          Suborinated Series B 5.875% 9/1/39 1,000,000 556,270
Chicago, Illinois Tax Increment Allocation
          (Chatham Ridge Redevelopment Project)
          5.95% 12/15/12 750,000 735,113
Farms New Kent, Virginia Community Development
          Authority Special Assessment Series C 5.80% 3/1/36 1,000,000 576,360
Henderson, Nevada Local Improvement Districts #T-18
          5.30% 9/1/35 665,000 239,799
Hennepin County, Minnesota Sales Tax Revenue Second
          Lien (Ballpark Project) Series B 5.00% 12/15/20 1,000,000 1,095,571
Middlesex County, New Jersey Improvement Authority
          Senior Revenue (Heldrich Center Hotel/Conference
          Project) Series A
          5.00% 1/1/32 500,000 255,330
          5.125% 1/1/37 870,000 434,408
New Jersey Economic Development Authority
          (Cigarette Tax) 5.75% 6/15/34 965,000 703,890
New York State Dormitory Authority State Personal
          Income Tax Revenue Series B 5.25% 3/15/38 500,000 507,400
New York State Urban Development Corporation Revenue
          State Personal Income Tax Series A-1 5.00% 12/15/28 1,000,000 1,011,520
Prescott Valley, Arizona Improvement District Special
          Assessment (Sewer Collection System Roadway Repair
          Project) 7.90% 1/1/12 168,000 174,466

41

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

          Principal amount      Value
Municipal Bonds (continued)
Special Tax Bonds (continued)
Richmond Heights, Missouri Tax Increment & Transaction
          Sales Tax Revenue Refunding & Improvement (Francis
          Place Redevelopment Project) 5.625% 11/1/25 $ 1,200,000 $ 881,136
Southwestern Illinois Development Authority Revenue
          (Local Government Program - Collinsville Limited Project)
          5.35% 3/1/31 500,000 329,370
  St. Joseph, Missouri Industrial Development Authority Tax
          Increment Revenue (Shoppes at North Village Project)
          Series A    
          5.375% 11/1/24 1,000,000 732,260
          5.50% 11/1/27 500,000 351,555
Winter Garden Village at Fowler Groves Community  
          Development District, Florida Special Assessment
          Revenue 5.65% 5/1/37 985,000 709,968
9,294,416
State General Obligation Bonds – 1.76%
Virginia State Series B 5.00% 6/1/18 1,000,000 1,167,140
1,167,140
Transportation Revenue Bonds – 3.38%
Branson, Missouri Regional Airport Transportation
          Development District (Airport Project)
          Series A 6.00% 7/1/37 500,000 315,365
New York City, New York Industrial Development Agency
          Special Airport Facilities (Airis JFK I LLC Project) Series A
          5.50% 7/1/28 (AMT) 905,000 599,409
Oklahoma City, Oklahoma Industrial & Cultural Facilities
          Subordinated (Air Cargo Obligated Group Project)
          6.75% 1/1/23 (AMT) 1,160,000 921,434
Onondaga County, New York Industrial Development
          Authority Revenue Subordinated (Air Cargo Project)
          7.25% 1/1/32 (AMT) 500,000 397,050
2,233,258
Total Municipal Bonds (cost $78,270,840) 64,953,923

42


    Value  
   
 Total Value of Securities – 98.19%   
      (cost $78,270,840)  $ 64,953,923  
 Receivables and Other Assets   
      Net of Liabilities – 1.81%    1,194,534  
 Net Assets Applicable to 8,233,118   
      Shares Outstanding – 100.00%  $ 66,148,457  
 
 Net Asset Value – Delaware National High-Yield Municipal Bond Fund   
      Class A ($58,240,401 / 7,252,154 Shares)      $8.03  
 Net Asset Value – Delaware National High-Yield Municipal Bond Fund   
      Class B ($2,029,271 / 252,149 Shares)      $8.05  
 Net Asset Value – Delaware National High-Yield Municipal Bond Fund   
      Class C ($5,877,700 / 728,680 Shares)      $8.07  
 Net Asset Value – Delaware National High-Yield Municipal Bond Fund       
      Institutional Class ($1,085 / 135.1 Shares)      $8.03  
 
Components of Net Assets at February 28, 2009:   
Shares of beneficial interest (unlimited authorization – no par)  $ 86,538,634  
Distributions in excess of net investment income  (3,409 )
Accumulated net realized loss on investments  (7,069,851 )
Net unrealized depreciation of investments    (13,316,917 )
Total net assets  $ 66,148,457  

§ Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”
· Variable rate security. The rate shown is the rate as of February 28, 2009.
@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $571,760, which represented 0.86% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

43

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

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

Net Asset Value and Offering Price Per Share –   
     Delaware National High-Yield Municipal Bond Fund   
Net asset value Class A (A)  $8.03
Sales charge (4.50% of offering price) (B)  0.38
Offering price  $8.41

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

See accompanying notes

44


Statements of operations

Six Months Ended February 28, 2009 (Unaudited)


  Delaware Delaware Delaware
  Tax-Free Tax-Free USA National High-Yield
        USA Fund       Intermediate Fund       Municipal Bond Fund
Investment Income:         
     Interest     $14,126,790     $8,706,730     $2,308,265  
      
Expenses:         
     Management fees    1,430,567   1,030,029   185,116  
     Distribution expenses – Class A    601,869   577,336   73,707  
     Distribution expenses – Class B    50,122   5,048   12,650  
     Distribution expenses – Class C    81,982   129,149   29,996  
     Dividend disbursing and transfer             
          agent fees and expenses    197,017   236,387     24,966  
     Accounting and administration expenses    104,546   82,402   13,463  
     Registration fees    47,432   34,444   22,903  
     Legal and professional fees    32,807   22,142   6,243  
     Reports and statements to shareholders    29,454   25,447     3,992  
     Audit and tax    20,838   16,062   7,399  
     Trustees’ fees    16,910   13,329   2,216  
     Insurance fees    9,371   7,063   1,012  
     Pricing fees    8,853   8,885   4,611  
     Custodian fees    4,691   3,661   699  
     Consulting fees      3,408   1,973   472  
     Trustees’ expenses    1,528   1,197   205  
     Due and services    1,503   882   137  
     Taxes (other than taxes on income)    1,300     539     189  
     2,644,198   2,195,975   389,976  
     Less expenses absorbed or waived    (332,283 ) (240,858 ) (53,338 )
     Less waived distribution expenses – Class A    —   (288,668 ) —  
     Less expense paid indirectly    (1,825 )   (1,433 )   (247 )
     Total operating expenses    2,310,090     1,665,016     336,391  
Net Investment Income    11,816,700     7,041,714     1,971,874  

46


  Delaware Delaware Delaware
  Tax-Free Tax-Free USA National High-Yield
        USA Fund       Intermediate Fund       Municipal Bond Fund
Net Realized and Unrealized Loss       
     on Investments:       
     Net realized loss on investments  $ (7,095,439 )   $(2,611,288 )     $  (1,599,400 )
     Net change in unrealized appreciation/       
          depreciation of investments    (21,852,346 )     (4,180,021 )   (10,635,312 )
Net Realized and Unrealized Loss           
     on Investments    (28,947,785 )   (6,791,309 )   (12,234,712 )
 
Net Increase (Decrease) in Net Assets       
     Resulting from Operations  $ (17,131,085 )   $    250,405     $(10,262,838 )

See accompanying notes

47

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

       Six Months      Year
  Ended Ended
       2/28/09      8/31/08
  (Unaudited)    
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $ 11,816,700   $ 27,617,892  
     Net realized loss on investments    (7,095,439 )   (9,007,332 )
     Net change in unrealized appreciation/depreciation         
          of investments    (21,852,346 )   (6,388,968 )
     Net increase (decrease) in net assets resulting         
          from operations    (17,131,085 )   12,221,592  
  
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (11,315,258 )   (26,581,925 )
          Class B    (190,174 )   (470,633 )
          Class C    (310,941 )   (565,334 )
          Institutional Class    (7 )   —  
     (11,816,380 )   (27,617,892 )
   
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    95,208,285     37,572,215  
          Class B    62,137     293,560  
          Class C    3,915,067     4,557,451  
          Institutional Class    1,022     —  
 
     Net asset value of shares issued upon reinvestment         
          of dividends and distributions:         
          Class A    6,250,502     13,138,217  
          Class B    99,169     251,193  
          Class C    220,384     410,918  
          Institutional Class    7     —  
    105,756,573     56,223,554  

48


  Six Months Year
  Ended Ended
  2/28/09 8/31/08
       (Unaudited)         
Capital Share Transactions (continued):         
     Cost of shares repurchased:         
          Class A  $ (69,412,600 ) $ (260,772,109 )
          Class B    (1,795,363 )   (5,722,909 )
          Class C      (1,744,921 )     (4,798,596 )
    (72,952,884 )   (271,293,614 )
Increase (decrease) in net assets derived from           
     capital share transactions    32,803,689     (215,070,060 )
Net Increase (Decrease) in Net Assets    3,856,224     (230,466,360 )
  
Net Assets:         
     Beginning of period    539,274,944     769,741,304  
     End of period  $ 543,131,168   $ 539,274,944  
   
     Undistributed net investment income  $ 2,110   $ 1,790  

See accompanying notes

49

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

  Six Months Year
  Ended Ended
  2/28/09 8/31/08
       (Unaudited)         
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $ 7,041,714   $ 12,913,451  
     Net realized loss on investments    (2,611,288 )   (3,995,267 )
     Net change in unrealized appreciation/depreciation           
          of investments    (4,180,021 )   4,897,895  
     Net increase in net assets resulting           
          from operations    250,405     13,816,079  
 
Dividends and Distributions to Shareholders from:         
     Net investment income:         
          Class A    (6,663,432 )   (12,238,496 )
          Class B    (13,206 )   (39,714 )
          Class C    (336,729 )   (667,017 )
          Institutional Class    (6 )   —  
     (7,013,373 )   (12,945,227 )
  
Capital Share Transactions:         
     Proceeds from shares sold:           
          Class A    123,336,857     206,786,111  
          Class B    92,295     131,370  
          Class C    8,913,065     7,290,130  
          Institutional Class    1,022     —  
 
     Net asset value of shares issued upon reinvestment         
          of dividends and distributions:         
          Class A    4,623,260     9,108,623  
          Class B    9,701     31,547  
          Class C    242,464     429,923  
          Institutional Class    5     —  
     137,218,669     223,777,704  

50


  Six Months Year
  Ended Ended
       2/28/09      8/31/08
  (Unaudited)    
Capital Share Transactions (continued):         
     Cost of shares repurchased:         
          Class A  $ (124,389,183 ) $ (115,146,849 )
          Class B    (414,425 )   (680,553 )
          Class C    (3,092,765 )   (11,178,428 )
    (127,896,373 )     (127,005,830 )
Increase in net assets derived from             
     capital share transactions    9,322,296     96,771,874  
Net Increase in Net Assets    2,559,328     97,642,726  
 
Net Assets:         
     Beginning of period    433,880,640     336,237,914  
     End of period  $ 436,439,968   $ 433,880,640  
 
     Distributions in excess of net investment income  $ (3,435 ) $ (31,776 )

See accompanying notes

51

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

  Six Months Year
  Ended Ended
       2/28/09      8/31/08
  (Unaudited)    
Increase (Decrease) in Net Assets from Operations:         
     Net investment income  $ 1,971,874   $ 3,633,791  
     Net realized gain (loss) on investments    (1,599,400 )   245,645  
     Net change in unrealized appreciation/depreciation         
          of investments    (10,635,312 )   (4,249,383 )
     Net decrease in net assets resulting         
          from operations    (10,262,838 )   (369,947 )
 
Dividends and Distributions to Shareholders from:         
     Net investment income:           
          Class A    (1,750,261 )   (3,214,246 )
          Class B    (65,539 )   (176,575 )
          Class C      (155,369 )   (242,971 )
          Institutional Class    (11 )   —  
    (1,971,180 )   (3,633,792 )
 
Capital Share Transactions:         
     Proceeds from shares sold:         
          Class A    5,943,251     17,354,089  
          Class B    241,772     54,983  
          Class C    1,025,596     3,638,033  
          Institutional Class    1,016     —  
 
     Net asset value of shares issued upon reinvestment         
          of dividends and distributions:         
          Class A    1,094,000     1,920,956  
          Class B    28,874     62,814  
          Class C    105,415     164,618  
          Institutional Class    10     —  
     8,439,934     23,195,493  

52


Six Months       Year
Ended Ended
2/28/09 8/31/08
(Unaudited)
Capital Share Transactions (continued):
     Cost of shares repurchased:
          Class A $ (5,884,915 ) $ (13,185,106 )
          Class B (926,861 ) (2,736,136 )
          Class C (1,141,153 ) (1,338,113 )
  (7,952,929 ) (17,259,355 )
Increase in net assets derived from
     capital share transactions 487,005 5,936,138
Net Increase (Decrease) in Net Assets (11,747,013 ) 1,932,399
 
Net Assets:  
     Beginning of period 77,895,470     75,963,071
     End of period $ 66,148,457 $ 77,895,470
 
     Distributions in excess of net investment income $ (3,409 ) $ (4,103 )

See accompanying notes

53

Financial highlights
Delaware Tax-Free USA Fund Class A

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

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to fees waived and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to fees waived and expense paid indirectly 
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers by the manager and distributor, as applicable. Performance would have been lower had the waivers not been in effect.

See accompanying notes

54


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
  $10.970 $11.230 $11.570 $11.760 $11.460 $11.170
 
 
0.233 0.462 0.466 0.458 0.512 0.538
(0.610 ) (0.260 ) (0.337 ) (0.186 ) 0.300 0.290
(0.377 ) 0.202 0.129 0.272 0.812 0.828
 
 
(0.233 ) (0.462 ) (0.469 ) (0.462 ) (0.512 ) (0.538 )
(0.233 ) (0.462 ) (0.469 ) (0.462 ) (0.512 ) (0.538 )
 
$10.360 $10.970 $11.230 $11.570 $11.760 $11.460
 
(3.40% ) 1.82% 1.08% 2.42% 7.23% 7.54%  
 
 
$515,450 $510,822 $735,584 $656,813 $453,982 $456,192
0.84% 0.85% 0.87% 0.86% 0.86% 0.87%
 
0.97% 0.94% 0.95% 1.00% 0.98% 0.93%
4.55% 4.13% 4.03% 3.97% 4.43% 4.72%
 
  4.42%   4.04%     3.95%     3.83%     4.31%     4.66%  
37% 28%   36%   41% 47%   32%

55

Financial highlights
Delaware Tax-Free USA Fund Class B

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

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to fees waived and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to fees waived and expense paid indirectly 
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

56


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
  $10.960 $11.230 $11.570 $11.760 $11.460 $11.170
 
 
0.194 0.378 0.378 0.370 0.423 0.449
(0.600 ) (0.270 ) (0.337 ) (0.186 ) 0.300 0.290
(0.406 ) 0.108 0.041 0.184 0.723 0.739
 
 
(0.194 ) (0.378 ) (0.381 ) (0.374 ) (0.423 ) (0.449 )
(0.194 ) (0.378 ) (0.381 ) (0.374 ) (0.423 ) (0.449 )
 
$10.360 $10.960 $11.230 $11.570 $11.760 $11.460
 
(3.68% ) 0.96% 0.32% 1.63% 6.42% 6.71%
   
 
$9,523 $11,812 $17,286 $22,189 $16,507 $22,396
1.60% 1.61% 1.63% 1.63% 1.63% 1.65%
 
1.73% 1.70% 1.71% 1.73% 1.71% 1.71%
3.79% 3.37% 3.27% 3.20% 3.66% 3.94%
 
  3.66%     3.28%     3.19%   3.10% 3.58%   3.88%  
37%     28% 36%   41%   47%   32%  

57

Financial highlights
Delaware Tax-Free USA Fund Class C

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

Net asset value, beginning of period 
  
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
  
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to fees waived and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to fees waived and expense paid indirectly 
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

58


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)
  $10.970 $11.230 $11.570 $11.760 $11.460 $11.170
 
 
0.194 0.377 0.378 0.370 0.423 0.449
(0.600 ) (0.260 ) (0.337 ) (0.186 ) 0.300 0.290
(0.406 ) 0.117 0.041 0.184 0.723 0.739
 
 
(0.194 ) (0.377 ) (0.381 ) (0.374 ) (0.423 ) (0.449 )
(0.194 ) (0.377 ) (0.381 ) (0.374 ) (0.423 ) (0.449 )
 
$10.370 $10.970 $11.230 $11.570 $11.760 $11.460
 
(3.67% ) 0.96% 0.41% 1.63% 6.42% 6.71%
 
 
$18,157 $16,641 $16,871 $15,110 $5,963 $5,784
1.60% 1.61% 1.63% 1.63% 1.63% 1.65%
 
1.73% 1.70% 1.71% 1.73% 1.71% 1.71%
3.79% 3.37% 3.27% 3.20% 3.66% 3.94%
 
3.66%     3.28%     3.19%     3.10%     3.58%     3.88%
  37% 28% 36%   41%     47%   32%    

59

Financial highlights
Delaware Tax-Free USA Fund Institutional Class

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

12/31/081
to 2/28/09
(Unaudited)
Net asset value, beginning of period   $10.020
 
Income from investment operations:
Net investment income 0.079
Net realized and unrealized gain on investments 0.340
Total from investment operations 0.419
 
Less dividends and distributions from:
Net investment income (0.079 )
Total dividends and distributions (0.079 )
 
Net asset value, end of period   $10.360
 
Total return2 3.96%
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)   $1
Ratio of expenses to average net assets 0.60%  
Ratio of expenses to average net assets
     prior to fees waived and expense paid indirectly 0.73%  
Ratio of net investment income to average net assets   4.74%  
Ratio of net investment income to average net assets
     prior to fees waived and expense paid indirectly 4.61%  
Portfolio turnover 37% 3      

1 Date of commencement of operations; ratios 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. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Portfolio turnover is representative of the Fund for the six months ended February 28, 2009.

See accompanying notes

60

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class A

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

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to fees waived and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to fees waived and expense paid indirectly      
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.
3 Ratio for the year ended August 31, 2004, including fees paid indirectly in accordance with Securities and Exchange Commission rules was 0.82%.

See accompanying notes

62


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)
  $11.250   $11.210   $11.470   $11.610   $11.390   $11.010
 
 
0.188 0.383 0.414 0.408 0.410 0.419
(0.170 ) 0.041 (0.260 ) (0.140 ) 0.220 0.380
0.018 0.424 0.154 0.268 0.630 0.799
 
 
(0.188 ) (0.384 ) (0.414 ) (0.408 ) (0.410 ) (0.419 )
(0.188 ) (0.384 ) (0.414 ) (0.408 ) (0.410 ) (0.419 )
 
  $11.080   $11.250   $11.210   $11.470   $11.610   $11.390
 
0.19% 3.83% 1.34% 2.38% 5.63% 7.36%  
 
 
  $404,897   $407,729   $306,215   $204,525   $120,273   $77,448
  0.75% 0.75% 0.76% 0.75% 0.79% 0.80% 3
 
1.02% 1.03% 1.03% 1.07% 1.11% 1.09%
3.47% 3.38% 3.60% 3.56% 3.55% 3.70%  
 
3.20%     3.10%   3.33%   3.24%   3.23%   3.41%
39% 28%   40%   37%     18% 27%  

63

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class B

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2004, including fees paid indirectly in accordance with Securities and Exchange Commission rules was 1.67%.

See accompanying notes

64


  Six Months Ended Year Ended
2/28/081 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
  $11.240   $11.200   $11.460   $11.610   $11.380   $11.010
 
 
0.142 0.287 0.317 0.311 0.313 0.323
(0.170 ) 0.041 (0.260 ) (0.150 ) 0.230 0.370
  (0.028 ) 0.328 0.057 0.161 0.543 0.693
 
 
(0.142 ) (0.288 ) (0.317 ) (0.311 ) (0.313 ) (0.323 )
(0.142 ) (0.288 ) (0.317 ) (0.311 ) (0.313 ) (0.323 )
 
  $11.070   $11.240   $11.200   $11.460   $11.610   $11.380
 
(0.23% ) 2.95% 0.48% 1.43% 4.83% 6.36%
 
 
  $934   $1,272   $1,786   $2,413   $3,203   $3,743
1.60% 1.60% 1.61% 1.60% 1.64% 1.65% 3 
 
1.72% 1.73% 1.73% 1.77% 1.81% 1.79%
2.62% 2.53% 2.75% 2.71% 2.70% 2.85%
 
2.50%   2.40%     2.63%   2.54%   2.53% 2.71%    
39%   28% 40%   37%   18%   27%    

65

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class C

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Ratio for the year ended August 31, 2004, including fees paid indirectly in accordance with Securities and Exchange Commission rules was 1.67%.

See accompanying notes

66


Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
    $11.240   $11.200   $11.470   $11.610   $11.390   $11.010
 
 
0.142 0.287 0.317 0.311 0.313 0.323
(0.160 ) 0.041 (0.270 ) (0.140 ) 0.220 0.380
(0.018 ) 0.328 0.047 0.171 0.533 0.703
 
 
(0.142 ) (0.288 ) (0.317 ) (0.311 ) (0.313 ) (0.323 )
(0.142 ) (0.288 ) (0.317 ) (0.311 ) (0.313 ) (0.323 )
 
  $11.080   $11.240   $11.200   $11.470   $11.610   $11.390
 
(0.14% ) 2.95%   0.39%   1.52%   4.74%   6.45%  
 
 
  $30,608   $24,880   $28,237   $28,004   $25,125   $19,201
1.60%   1.60%   1.61%   1.60%   1.64%   1.65% 3
 
1.72%   1.73%   1.73%   1.77%   1.81%   1.79%
2.62%   2.53%   2.75%   2.71%   2.70%   2.85%
 
2.50%     2.40%     2.63%   2.54%   2.53%   2.71%  
39%   28%   40%     37%   18%   27%    

67

Financial highlights
Delaware Tax-Free USA Intermediate Fund Institutional Class

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

12/31/081
to 2/28/09
(Unaudited)
Net asset value, beginning of period $10.800
 
Income from investment operations:
Net investment income 0.064
Net realized and unrealized gain on investments 0.280
Total from investment operations 0.344
 
Less dividends and distributions from:
Net investment income (0.064 )
Total dividends and distributions (0.064 )
 
Net asset value, end of period $11.080
 
Total return2 3.08%
 
Ratios and supplemental data:
Net assets, end of period (000 omitted) $1
Ratio of expenses to average net assets 0.60%
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly		 0.72%
Ratio of net investment income to average net assets 3.49%
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly		 3.37%
Portfolio turnover 39% 3

1 Date of commencement of operations; ratios 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. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
3 Portfolio turnover is representative of the Fund for the six months ended February 28, 2009.

See accompanying notes

68

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

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

70


Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
    $9.510     $10.030     $10.320     $10.380     $10.010     $9.730  
 
 
0.244 0.484 0.482 0.477 0.503 0.496
(1.480 ) (0.520 ) (0.290 ) (0.060 ) 0.371 0.280
(1.236 ) (0.036 ) 0.192 0.417 0.874 0.776
 
 
(0.244 ) (0.484 ) (0.482 ) (0.477 ) (0.504 ) (0.496 )
(0.244 ) (0.484 ) (0.482 ) (0.477 ) (0.504 ) (0.496 )
 
  $8.030     $9.510     $10.030     $10.320     $10.380     $10.010
 
(13.00% ) (0.37% ) 1.82% 4.15% 8.93% 8.13%
 
 
  $58,240   $67,762   $65,143   $68,663   $66,451   $56,698
0.90% 0.90% 0.91% 0.90% 0.93% 1.00%
 
1.06%   1.04%   1.03%   1.02%   1.01%   1.02%  
5.94% 4.94% 4.66% 4.66% 4.92% 5.00%
 
  5.78%   4.80%   4.54%   4.54%   4.84%   4.98%  
43%   24%   37%   73%   36%     46%    

71

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

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

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to fees waived and expense paid indirectly 
Ratio of net investment income to average net assets  
Ratio of net investment income to average net assets 
     prior to fees waived and expense paid indirectly 
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

72


Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
$9.530 $10.050 $10.350 $10.400 $10.030 $9.760
 
   
  0.213 0.410 0.404 0.400 0.426 0.421
  (1.480 ) (0.520 ) (0.300 ) (0.050 ) 0.371 0.270
  (1.267 ) (0.110 ) 0.104 0.350 0.797 0.691
 
 
  (0.213 ) (0.410 ) (0.404 ) (0.400 ) (0.427 ) (0.421 )
  (0.213 ) (0.410 ) (0.404 ) (0.400 ) (0.427 ) (0.421 )
 
  $8.050 $9.530 $10.050 $10.350 $10.400 $10.030
 
  (13.41% ) (1.12% ) 0.96% 3.47% 8.10% 7.20%
 
 
    $2,029 $3,135 $5,972 $9,519 $13,046 $14,534
  1.65% 1.65% 1.66% 1.65% 1.68% 1.75%
 
  1.81% 1.79% 1.78% 1.77% 1.76% 1.77%
  5.19% 4.19% 3.91% 3.91% 4.17% 4.25%
 
  5.03% 4.05% 3.79% 3.79% 4.09% 4.23%
  43% 24% 37% 73% 36% 46%

73

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

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

Net asset value, beginning of period 
 
Income (loss) from investment operations: 
Net investment income 
Net realized and unrealized gain (loss) on investments 
Total from investment operations 
 
Less dividends and distributions from: 
Net investment income 
Total dividends and distributions 
 
Net asset value, end of period 
 
Total return2 
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted) 
Ratio of expenses to average net assets 
Ratio of expenses to average net assets 
     prior to fees waived and expense paid indirectly 
Ratio of net investment income to average net assets 
Ratio of net investment income to average net assets 
     prior to fees waived and expense paid indirectly
Portfolio turnover 

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

74


Six Months Ended Year Ended
  2/28/081 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
    $9.550     $10.070     $10.360     $10.420     $10.040     $9.770    
         
 
    0.213     0.410     0.404     0.400     0.426     0.421    
    (1.480 )   (0.520 )   (0.290 )   (0.060 )   0.381     0.270    
    (1.267 )   (0.110 )   0.114     0.340     0.807     0.691    
         
 
    (0.213 )   (0.410 )   (0.404 )   (0.400 )   (0.427 )   (0.421 )  
    (0.213 )   (0.410 )   (0.404 )   (0.400 )   (0.427 )   (0.421 )  
         
    $8.070     $9.550     $10.070     $10.360     $10.420     $10.040    
         
    (13.38% )   (1.12% )   1.06%     3.36%     8.19%     7.19%    
         
 
    $5,878     $6,998     $4,848     $5,332     $5,234     $4,798    
    1.65%     1.65%     1.66%     1.65%     1.68%     1.75%    
         
    1.81%     1.79%     1.78%     1.77%     1.76%     1.77%    
    5.19%     4.19%     3.91%     3.91%     4.17%     4.25%    
         
    5.03%     4.05%     3.79%     3.79%     4.09%     4.23%    
    43%     24%     37%     73%     36%     46%    

75

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

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

  12/31/081  
  to 2/28/09  
  (Unaudited)      
Net asset value, beginning of period $7.590    
   
Income from investment operations:      
Net investment income 0.085    
Net realized and unrealized gain on investments 0.440    
Total from investment operations 0.525    
   
Less dividends and distributions from:      
Net investment income (0.085 )  
Total dividends and distributions (0.085 )  
   
Net asset value, end of period $8.030    
   
Total return2 6.91%    
   
Ratios and supplemental data:      
Net assets, end of period (000 omitted) $1    
Ratio of expenses to average net assets 0.65%    
Ratio of expenses to average net assets      
     prior to fees waived and expense paid indirectly 0.81%    
Ratio of net investment income to average net assets 6.42%    
Ratio of net investment income to average net assets      
     prior to fees waived and expense paid indirectly 6.26%    
Portfolio turnover 43% 3  

1 Date of commencement of operations; ratios 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. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

3 Portfolio turnover is representative of the Fund for the six months ended February 28, 2009.

See accompanying notes

76


Notes to financial statements

Delaware National Tax-Free Funds

February 28, 2009 (Unaudited)

Delaware Group® Tax-Free Fund is organized as a Delaware statutory trust and offers two series: Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund. Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund and Delaware Tax-Free New York Fund. Delaware Group Tax-Free Fund and Voyageur Mutual Funds are individually referred to as a “Trust” and collectively as the “Trusts”. These financial statements and the related notes pertain to Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund and Delaware National High-Yield Municipal Bond Fund (each referred to as a “Fund” or, collectively, as the “Funds”). The above Trusts are open-end investment companies. The Funds are considered diversified under the Investment Company Act of 1940, as amended. The Funds offer Class A, Class B, Class C and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of up to 4.50% for Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund, and up to 2.75% for Delaware Tax-Free USA Intermediate Fund. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year for Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund; and of 0.75% for Delaware Tax-Free USA Intermediate Fund if redeemed within the first year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares of Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares of Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class B shares of Delaware Tax-Free USA Intermediate Fund were sold with a CDSC that declines from 2% to zero depending upon the period of time the shares were held. Class B shares of Delaware Tax-Free USA Intermediate Fund will automatically convert to Class A shares on a quarterly basis approximately five years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.

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

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

77

Notes to financial statements
Delaware National Tax-Free Funds

1. Significant Accounting Policies

The following accounting policies are in accordance with U.S. generally accepted accounting principles and are consistently followed by the Funds.

Security Valuation — Long-term debt securities are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Boards of Trustees (each a Board and collectively the Boards). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Funds may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before each Fund values its securities at 4:00 p.m. Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading or news events, may have occurred in the interim. To account for this, the Funds may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).

Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax benefit or expense in the current period.

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

Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

78

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

The Funds receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under this arrangement is included in custodian fees on the statements of operations with the corresponding expense offset shown as “expense paid indirectly.”

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

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

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

DMC as contractually agreed to waive that portion, if any, of its management fee and reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs and non-routine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, “non-routine expenses”)) do not exceed 0.60%, 0.60%, and 0.65% of average daily net assets of Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund, respectively, through December 31, 2009. For purposes of these waivers and reimbursements, non-routine expenses may also include such additional costs and expenses, as may be agreed upon time to time by the Funds’ Boards and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Funds.

79

Notes to financial statements
Delaware National Tax-Free Funds

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

Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these services, each Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments Family of Funds on a relative net asset value basis. For the six months ended February 28, 2009, each Fund was charged for these services as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
USA Fund       USA Intermediate Fund       Municipal Bond Fund
$13,068 $10,300 $1,683

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

Pursuant to a distribution agreement and distribution plan, each Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.30% of the average daily net assets of the Class A shares for Delaware Tax-Fee USA Intermediate Fund, 0.25% of the average daily net assets of the Class A shares for Delaware National High-Yield Municipal Bond Fund and 1.00% of the average daily net assets of the Class B and C shares for all the Funds. The Board for Delaware Tax-Free USA Fund has adopted a formula for calculating 12b-1 plan fees for the Fund’s Class A shares that went into effect on June 1, 1992. The total 12b-1 fees to be paid by Class A shareholders of the Fund will be the sum of 0.10% of the average daily net assets representing shares that were acquired prior to June 1, 1992 and 0.30% of the average daily net assets representing shares that were acquired on or after June 1, 1992. Effective April 21, 2006, the maximum amount of the Class A 12b-1 fees was reduced to 0.25% and the total 12b-1 fees to be paid to Class A shareholders of the Fund will be the sum of 0.10% of the average daily net assets representing shares that were acquired prior to June 1, 1992 and 0.25% of the average daily net assets representing shares that were acquired on or after June 1, 1992. All Class A shareholders will bear 12b-1 fees at the same rate, the blended rate based upon the allocation of the rates described above. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to waive distribution and service fees through December 31, 2009 in order to prevent distribution and service fees of Class A shares from exceeding 0.15% of average daily net assets for Delaware Tax-Free USA Intermediate Fund.

80

At February 28, 2009, each Fund had liabilities payable to affiliates as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
USA Fund       USA Intermediate Fund       Municipal Bond Fund
Investment management fees
     payable to DMC $177,342        $131,615            $20,011             
Dividend disbursing,
     transfer agent and fund
     accounting oversight fees
     and other expenses
     payable to DSC 35,145      42,467          4,419             
Distribution fees payable
     to DDLP 117,756      70,707          17,418             
Other expenses payable to DMC
     and affiliates* 45,095      35,331          6,484             

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

As provided in the investment management agreement, each Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to each Fund by DMC and/or its affiliates’ employees. For the six months ended February 28, 2009, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:

Delaware Tax-Free Delaware Tax-Free   Delaware National High-Yield
USA Fund       USA Intermediate Fund       Municipal Bond Fund
$19,244 $16,222 $2,582

For the six months ended February 28, 2009, DDLP earned commissions on sales of Class A shares for each Fund as follows:

Delaware Tax-Free Delaware Tax-Free   Delaware National High-Yield
USA Fund       USA Intermediate Fund       Municipal Bond Fund
$13,792 $13,374 $6,236

For the six months ended February 28, 2009, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B and Class C shares, respectively. These commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:

Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
USA Fund       USA Intermediate Fund       Municipal Bond Fund
Class A $ —     $ —     $ —  
Class B 3,175   —   2,421  
Class C 1,264 2,122 1,399

81

Notes to financial statements
Delaware National Tax-Free Funds

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

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

3. Investments

For the six months ended February 28, 2009, the Funds made purchases and sales of investment securities other than short-term investments as follows:

Delaware Tax-Free       Delaware Tax-Free       Delaware National High-Yield
USA Fund USA Intermediate Fund Municipal Bond Fund
Purchases $118,621,007   $85,517,605   $14,258,424
Sales     93,730,289  78,684,404     14,118,627

At February 28, 2009, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At February 28, 2009, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:

Delaware Tax-Free       Delaware Tax-Free       Delaware National High-Yield
USA Fund USA Intermediate Fund Municipal Bond Fund
Cost of investments   $548,248,120 $439,701,769   $ 78,310,740
Aggregate unrealized
     appreciation   $  28,275,110   $  12,498,742   $   1,396,296
Aggregate unrealized    
     depreciation   (41,761,688 )   (13,316,640 )   (14,753,113 )
Net unrealized    
     depreciation   $ (13,486,578 )   $      (817,898 )   $(13,356,817 )

Effective September 1, 2008, the Funds adopted Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value as the price that the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value and a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity.

82

Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

Level 1 – inputs are quoted prices in active markets

Level 2 – inputs are observable, directly or indirectly

Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity

The following table summarizes the valuation of each Fund’s investments by the FAS 157 fair value hierarchy levels as of February 28, 2009:

      Delaware Tax-Free       Delaware Tax-Free       Delaware National High-Yield
USA Fund USA Intermediate Fund Municipal Bond Fund
Level 1    $                —   $                —   $              —
Level 2    534,761,542   438,883,871   64,953,923  
Level 3      —     —   —
Total   $534,761,542   $438,883,871   $64,953,923

There were no Level 3 securities at the beginning or end of the period.

4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2009 and the year ended August 31, 2008 was as follows:

Delaware Tax-Free       Delaware Tax-Free       Delaware National High-Yield
USA Fund USA Intermediate Fund Municipal Bond Fund
Six months ended 2/28/09*
Tax-exempt income   $11,806,144     $  7,013,373   $1,970,925
Ordinary income 10,236 — 255
Total   $11,816,380   $  7,013,373   $1,971,180
 
Year ended 8/31/08  
Tax-exempt income   $27,608,512   $12,780,404   $3,633,792  
Ordinary income   9,380       164,823     —
Total   $27,617,892   $12,945,227     $3,633,792  

*Tax information for the period ended February 28, 2009 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.

83

Notes to financial statements
Delaware National Tax-Free Funds

5. Components of Net Assets on a Tax Basis

The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 28, 2009, the estimated components of net assets on a tax basis were as follows:

Delaware Tax-Free       Delaware Tax-Free       Delaware National High-Yield
USA Fund USA Intermediate Fund Municipal Bond Fund
Shares of beneficial interest   $573,655,709   $446,324,608   $ 86,538,634
Distributions payable (406,088 ) (235,252 ) (67,436 )
Undistributed tax-exempt
     income 408,198 231,817 64,027
Realized losses
     9/1/08 – 2/28/09 (10,519,082 ) (5,773,119 ) (374,735 )
Post-October losses (5,767,554 ) (788,157 )   (1,224,665 )
Capital loss carryforward    
     as of 8/31/08 (753,437 )   (2,502,031 )   (5,430,551 )
Unrealized depreciation      
     of investments   (13,486,578 ) (817,898 ) (13,356,817 )
Net assets    $543,131,168   $436,439,968   $ 66,148,457  

The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales.

Post-October losses represent losses realized on investment transactions from November 1, 2008 through February 28, 2009 that, in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2008 will expire as follows:

      Delaware Tax-Free       Delaware Tax-Free       Delaware National High-Yield
Year of Expiration   USA Fund USA Intermediate Fund Municipal Bond Fund
2009   $  72,146       $            —   $3,025,716
2010 — — 70,671
2011 — 249,429   997,721
2012   — 5,791     980,742
2014 —     119,427   —
2015   —   —   355,701  
2016 681,291 2,127,384 —
Total   $753,437 $2,502,031   $5,430,551

84

For the six months ended February 28, 2009, the Funds had capital losses which may increase capital loss carryforwards.

Delaware Tax-Free       Delaware Tax-Free       Delaware National High-Yield
USA Fund   USA Intermediate Fund   Municipal Bond Fund
$(10,519,082)   $(5,773,119)   $(374,735)

6. Capital Shares

Transactions in capital shares were as follows:

Delaware Tax-Free       Delaware Tax-Free Delaware National High-Yield
USA Fund USA Intermediate Fund Municipal Bond Fund
Six Months       Year Six Months       Year       Six Months       Year
Ended Ended Ended Ended Ended Ended
2/28/09 8/31/08 2/28/09 8/31/08 2/28/09 8/31/08
Shares sold: 
     Class A 9,389,645 3,388,412 11,293,290 18,324,376 711,256 1,773,356
     Class B 6,259 26,584 8,486 11,589 30,773 5,607
     Class C 382,911 406,318 814,657 646,630 120,045 372,132
     Institutional Class 102 — 95 — 134 —
 
Shares issued upon reinvestment of dividends and distributions:
     Class A 606,574 1,177,951 423,294 807,682 133,617 196,831
     Class B 9,628 22,514 891 2,797 3,525 6,395
     Class C 21,386 36,841 22,199 38,135 12,816 16,806
     Institutional Class 1 — — — 1 —
10,416,506 5,058,620 12,562,912 19,831,209 1,012,167 2,371,127
 
Shares repurchased:
     Class A (6,824,544 ) (23,486,561 ) (11,427,816 ) (10,209,726 ) (720,989 ) (1,336,737 )
     Class B (173,857 ) (511,114 ) (38,220 ) (60,640 ) (111,205 ) (277,041 )
     Class C (169,194 ) (428,319 ) (286,563 ) (992,295 ) (137,185 ) (137,313 )
(7,167,595 ) (24,425,994 ) (11,752,599 ) (11,262,661 ) (969,379 ) (1,751,091 )
 
Net increase (decrease)  3,248,911     (19,367,374 )   810,313     8,568,548     42,788     620,036  

For the six months ended February 28, 2009 and the year ended August 31, 2008, the following shares and values were converted from Class B to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the tables above and the statements of changes in net assets.

85

Notes to financial statements
Delaware National Tax-Free Funds

6. Capital Shares (continued)

      Six Months                        
Ended Year Ended
2/28/09 8/31/08
Class B Class A Class B Class A
Shares Shares Value Shares Shares Value
Delaware Tax-Free
     USA Fund 32,499   32,478   $340,398 227,491 227,437   $2,547,827
Delaware Tax-Free      
     USA Intermediate Fund 15,718 15,715 172,321   30,904 30,876 346,313
Delaware National High-Yield    
     Municipal Bond Fund 11,367 11,382 87,771 101,537 101,780 1,007,808

7. Line of Credit

Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $225,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement expired on November 18, 2008.

Effective November 18, 2008, the Funds, along with the other Participants, entered into an amendment to the agreement with BNY Mellon for a $35,000,000 revolving line of credit. The agreement, as amended, is to be used as described above and operates in substantially the same manner as the original agreement. The agreement, as amended, expires on November 17, 2009. The Funds had no amounts outstanding as of February 28, 2009, or at any time during the period then ended.

8. Credit and Market Risk

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

86

the value of insured bonds held in a Fund. At February 28, 2009, 27% of Delaware Tax-Free USA Fund’s net assets, 18% of the Delaware Tax-Free USA Intermediate Fund’s net assets, and 3% of Delaware National High-Yield Municipal Bond Fund’s net assets were insured by bond insurers. These securities have been identified on the statements of net assets.

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

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

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

87

Notes to financial statements
Delaware National Tax-Free Funds

8. Credit and Market Risk (continued)

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of each Fund’s limitation on investments in illiquid assets. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. As of February 28, 2009, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.

9. Contractual Obligations

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

88

About the organization

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

Board of trustees   
 
Patrick P. Coyne  Ann R. Leven 
Chairman, President, and  Consultant 
Chief Executive Officer  ARL Associates 
Delaware Investments Family of Funds  New York, NY 
Philadelphia, PA   
  Thomas F. Madison 
Thomas L. Bennett  President and Chief Executive Officer 
Private Investor  MLM Partners, Inc. 
Rosemont, PA  Minneapolis, MN 
 
John A. Fry  Janet L. Yeomans 
President  Vice President and Treasurer 
Franklin & Marshall College  3M Corporation 
Lancaster, PA  St. Paul, MN 
 
Anthony D. Knerr  J. Richard Zecher 
Founder and Managing Director  Founder 
Anthony Knerr & Associates  Investor Analytics 
New York, NY  Scottsdale, AZ 
 
Lucinda S. Landreth   
Former Chief Investment Officer   
Assurant, Inc.   
Philadelphia, PA   

89


Affiliated officers Contact information
 
David F. Connor Investment manager
Vice President, Deputy General Counsel, and Delaware Management Company, a series of
Secretary Delaware Management Business Trust
Delaware Investments® Family of Funds Philadelphia, PA
Philadelphia, PA
National distributor
Daniel V. Geatens Delaware Distributors, L.P.
Vice President and Treasurer Philadelphia, PA
Delaware Investments Family of Funds
Philadelphia, PA Shareholder servicing, dividend disbursing,
and transfer agent
David P. O’Connor Delaware Service Company, Inc.
Senior Vice President, General Counsel, 2005 Market Street
and Chief Legal Officer Philadelphia, PA 19103-7094
Delaware Investments Family of Funds
Philadelphia, PA For shareholders
800 523-1918
Richard Salus
Senior Vice President and For securities dealers and financial
Chief Financial Officer institutions representatives only
Delaware Investments Family of Funds 800 362-7500
Philadelphia, PA
Web site
www.delawareinvestments.com

Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries.

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

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

90


 
 
 
 
 
 
 
 
 
Semiannual report 
 

Delaware Tax-Free Arizona Fund

 

Delaware Tax-Free California Fund

 

Delaware Tax-Free Colorado Fund

 

Delaware Tax-Free Idaho Fund

 

Delaware Tax-Free New York Fund

 
February 28, 2009   
 
 
 
 
 
 
 
 
 
 
 
 
 

  
Fixed income mutual funds 
 
 

Table of contents

Disclosure of Fund expenses        1
 
Sector allocations and credit quality breakdowns   4
 
Statements of net assets   9
 
Statements of operations   44
 
Statements of changes in net assets   46
 
Financial highlights   56
 
Notes to financial statements   86
 
About the organization   99

 

 

 

 

 


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.

© 2009 Delaware Distributors, L.P.

All third-party trademarks cited are the property of their respective owners.

Disclosure of Fund expenses
For the period September 1, 2008 to February 28, 2009

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

The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period September 1, 2008 to February 28, 2009.

Actual expenses

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

Hypothetical example for comparison purposes

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

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

1

Disclosure of Fund expenses

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

Beginning Ending Expenses
Account Value Account Value Annualized Paid During Period
              9/1/08               2/28/09               Expense Ratio               9/1/08 to 2/28/09*
Actual Fund return
Class A   $ 1,000.00 $ 992.60 0.75%   $3.71
Class B 1,000.00 988.00 1.50%   7.39
Class C 1,000.00 988.00   1.50%   7.39
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,021.08 0.75% $3.76
Class B 1,000.00 1,017.36 1.50%   7.50
Class C 1,000.00 1,017.36 1.50%   7.50

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

Beginning Ending Expenses
Account Value Account Value Annualized Paid During Period
              9/1/08               2/28/09               Expense Ratio               9/1/08 to 2/28/09*
Actual Fund return
Class A $ 1,000.00 $ 954.60 0.88% $4.26
Class B 1,000.00 952.20 1.63%   7.89
Class C 1,000.00 952.00 1.63%   7.89
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.43 0.88% $4.41
Class B 1,000.00 1,016.71 1.63%   8.15
Class C 1,000.00 1,016.71 1.63%   8.15

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

Beginning Ending Expenses
Account Value Account Value Annualized Paid During Period
              9/1/08               2/28/09               Expense Ratio               9/1/08 to 2/28/09*
Actual Fund return
Class A $ 1,000.00 $ 972.40 0.92% $4.50
Class B 1,000.00 969.70 1.67%   8.16
Class C 1,000.00 968.80 1.67%   8.15
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.23 0.92% $4.61
Class B 1,000.00 1,016.51 1.67%   8.35
Class C 1,000.00 1,016.51 1.67%   8.35

2

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

Beginning Ending Expenses
Account Value Account Value Annualized Paid During Period
              9/1/08               2/28/09               Expense Ratio               9/1/08 to 2/28/09*
Actual Fund return
Class A $ 1,000.00 $ 1,004.70 0.87% $4.32
Class B 1,000.00 1,001.00 1.62%   8.04
Class C 1,000.00 1,001.00 1.62%   8.04
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

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

Beginning Ending Expenses
Account Value Account Value Annualized Paid During Period
              9/1/08               2/28/09               Expense Ratio               9/1/08 to 2/28/09*
Actual Fund return
Class A $ 1,000.00 $ 990.80 0.85% $4.20
Class B 1,000.00 988.10 1.60%   7.89
Class C 1,000.00 988.10 1.60%   7.89
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

*“Expenses Paid During Period” are equal to a Fund’s annualized expense ratios, multiplied by the average account value over the period, multiplied by the 181/365 (to reflect the one-half year period).

3


Sector allocations and credit quality breakdowns
Delaware Tax-Free Arizona Fund

 As of February 28, 2009


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

Sector        Percentage of net assets
Municipal Bonds   98.98%  
Corporate Revenue Bonds 1.29%
Education Revenue Bonds 6.06%
Electric Revenue Bonds 5.34%
Escrowed to Maturity Bonds 0.29%
Health Care Revenue Bonds 5.44%
Housing Revenue Bonds 2.07%
Lease Revenue Bonds 10.42%
Local General Obligation Bonds 7.86%
Pre-Refunded Bonds 30.55%
Special Tax Revenue Bonds 8.64%
State General Obligation Bonds 4.75%
Transportation Revenue Bonds 4.98%
Water & Sewer Revenue Bonds 11.29%
Short-Term Investment 0.09%
Total Value of Securities 99.07%
Receivables and Other Assets Net of Liabilities 0.93%
Total Net Assets 100.00%
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 26.97%
AA 43.78%
A 18.23%
BBB 11.02%
Total   100.00%

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

4


Delaware Tax-Free California Fund

 As of February 28, 2009

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

Sector        Percentage of net assets
Municipal Bonds 96.28%  
Education Revenue Bonds 12.40%
Electric Revenue Bonds 3.79%
Health Care Revenue Bonds   6.47%
Housing Revenue Bonds 9.19%
Lease Revenue Bonds 7.66%
Local General Obligation Bonds 15.66%
Pre-Refunded Bonds   13.87%
Special Tax Revenue Bonds 10.98%
State General Obligation Bonds 4.83%
Transportation Revenue Bonds 3.48%
Water & Sewer Revenue Bonds 7.95%
Short-Term Investments 2.72%
Money Market Instrument 1.45%
Variable Rate Demand Note 1.27%
Total Value of Securities 99.00%
Receivables and Other Assets Net of Liabilities 1.00%
Total Net Assets 100.00%
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 40.32%
AA 23.56%
A 17.15%
BBB 10.91%
Not Rated 8.06%
Total 100.00%

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

5


Sector allocations and credit quality breakdowns
Delaware Tax-Free Colorado Fund

 As of February 28, 2009


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

Sector        Percentage of net assets
Municipal Bonds 98.47%
Education Revenue Bonds 10.48%
Electric Revenue Bonds 5.35%
Escrowed to Maturity Bonds 2.37%
Health Care Revenue Bonds 13.30%
Housing Revenue Bonds 1.56%  
Lease Revenue Bonds 2.73%
Local General Obligation Bonds   14.50%
Pre-Refunded Bonds 34.21%
Special Tax Revenue Bonds 6.02%
State General Obligation Bonds   3.70%
Transportation Revenue Bonds 2.51%
Water & Sewer Revenue Bonds 1.74%
Short-Term Investment 0.14%
Total Value of Securities 98.61%
Receivables and Other Assets Net of Liabilities 1.39%
Total Net Assets 100.00%
 
Credit quality breakdown (as a % of fixed income investments)*
AAA  24.06%
AA 33.13%
A 19.31%
BBB 13.82%
Not Rated 9.68%
Total 100.00%

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

6


Delaware Tax-Free Idaho Fund

 As of February 28, 2009

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

Sector        Percentage of net assets
Municipal Bonds 97.89%
Corporate Revenue Bonds 5.45%
Education Revenue Bonds 11.20%
Electric Revenue Bonds 1.10%
Escrowed to Maturity Bonds 2.05%
Health Care Revenue Bonds 6.00%
Housing Revenue Bonds   6.86%  
Lease Revenue Bonds   5.49%
Local General Obligation Bonds 25.82%
Pre-Refunded Bonds 15.75%
Special Tax Revenue Bonds 7.29%
State General Obligation Bonds 2.65%
Transportation Revenue Bonds 4.66%
Water & Sewer Revenue Bonds 3.57%
Short-Term Investment 1.99%
Total Value of Securities 99.88%
Receivables and Other Assets Net of Liabilities 0.12%
Total Net Assets 100.00%
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 41.63%
AA 22.85%
A 18.78%
BBB 14.40%
BB 1.99%
Not Rated 0.35%
Total 100.00%

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

7


Sector allocations and credit quality breakdowns
Delaware Tax-Free New York Fund

 As of February 28, 2009


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

Sector        Percentage of net assets
Municipal Bonds 96.99%
Corporate Revenue Bonds 4.48%
Education Revenue Bonds   15.75%
Electric Revenue Bonds 3.52%
Health Care Revenue Bonds 7.06%
Housing Revenue Bonds   0.95%
Lease Revenue Bonds 4.64%
Local General Obligation Bonds 2.83%
Pre-Refunded Bonds 19.84%
Special Tax Revenue Bonds 19.72%
State General Obligation Bonds 2.54%
Transportation Revenue Bonds 13.55%
Water & Sewer Revenue Bonds 2.11%
Short-Term Investment 2.23%
Total Value of Securities 99.22%  
Receivables and Other Assets Net of Liabilities 0.78%
Total Net Assets 100.00%
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 29.61%
AA 36.57%
A 18.92%
BBB 10.56%
BB 3.78%
Not Rated 0.56%
Total 100.00%

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.

8


Statements of net assets  
Delaware Tax-Free Arizona Fund February 28, 2009 (Unaudited)

Principal amount Value
Municipal Bonds – 98.98%               
Corporate Revenue Bonds – 1.29%
          Maricopa County Pollution Control
                    (Palo Verde Project) Series A 5.05% 5/1/29 (AMBAC) $ 2,000,000 $ 1,594,460
  1,594,460
Education Revenue Bonds – 6.06%
          Arizona State Board of Regents
                    (University of Arizona) 5.00% 6/1/21 1,255,000 1,353,379
          Arizona State University Certificates of Participation
                    (Research Infrastructure Project)
                    5.00% 9/1/30 (AMBAC) 2,000,000 1,926,000
          Energy Management Services (University of Arizona-
                    Main Campus) 5.25% 7/1/17 (MBIA) 1,500,000 1,625,730
          Pima County Industrial Development Authority Educational
                    Revenue (Tucson Country Day School Project)
                    5.00% 6/1/37 1,000,000 597,370
          South Campus Group Student Housing Revenue
                    (University of Arizona-South Campus Project)  
                    5.625% 9/1/35 (MBIA) 1,000,000 960,770
          Tucson Industrial Development Authority
                    (University of Arizona-Marshall Foundation)
                    Series B 5.00% 7/15/27 (AMBAC) 1,000,000 919,760
          University of Arizona Certificates of Participation
                    (University of Arizona Project)  
                    Series A 5.125% 6/1/21 (AMBAC)   85,000 87,029
  7,470,038
Electric Revenue Bonds – 5.34%  
          Mesa Utilities System Revenue
                    5.00% 7/1/18 (MBIA) (FGIC) 2,150,000 2,318,754
          Puerto Rico Electric Power Authority Revenue
                    Series WW 5.00% 7/1/28 1,430,000 1,271,999
          Salt River Project Agricultural Improvement &
                    Power District Electric System Revenue
                    Series A 5.00% 1/1/22 1,000,000 1,064,620
                    Series B 5.00% 1/1/31 (MBIA) 2,000,000 1,922,760
  6,578,133
Escrowed to Maturity Bonds – 0.29%
          Phoenix Street & Highway User Revenue (Senior Lien)
                    6.50% 7/1/09 (AMBAC) 350,000 357,294
357,294

9

Statements of net assets
Delaware Tax-Free Arizona Fund

Principal amount Value
Municipal Bonds (continued)               
Health Care Revenue Bonds – 5.44%
          Glendale Industrial Development Authority Hospital
                    Revenue (John C. Lincoln Health) 5.00% 12/1/42 $ 2,500,000 $ 1,679,625
          Maricopa County Industrial Development Authority Health
                    Facilities Revenue (Catholic Health Care West)
                    Series A 5.50% 7/1/26 1,000,000 923,660
          Scottsdale Industrial Development Authority Hospital
                    Revenue (Scottsdale Health Care)
                    Series A 5.25% 9/1/30 1,250,000 1,041,913
          University Medical Center Hospital Revenue
                    5.00% 7/1/24 800,000   649,256
                    5.00% 7/1/35 1,000,000 723,850
          Yavapai County Industrial Development Authority
                    Revenue (Yavapai Regional Medical Center)
                    Series A 5.25% 8/1/21 (RADIAN) 2,000,000   1,685,280
    6,703,584
Housing Revenue Bonds – 2.07%
          Pima County Industrial Development Authority
                    Single Family Housing Revenue  
                    Series A-1 6.125% 11/1/33
                    (GNMA) (FNMA) (FHLMC) (AMT) 15,000 15,015
                    Series B-1 6.10% 5/1/31 (GNMA) (AMT)   45,000 45,722
          Yuma Industrial Development Authority
                    Multifamily Housing Revenue
                    Series A 6.10% 9/20/19 (GNMA) (AMT) 2,340,000 2,489,643
  2,550,380
Lease Revenue Bonds – 10.42%
          Arizona Game & Fish Department & Community
                    Beneficial Interest Certificates (Administration
                    Building Project) 5.00% 7/1/32 1,300,000 1,180,127
          Marana Municipal Property Facilities Revenue
                    5.00% 7/1/28 (AMBAC) 575,000 577,409
          Maricopa County Industrial Development Authority
                    Correctional Contract Revenue (Phoenix West Prison)
                    Series B 5.375% 7/1/22 (ACA) 1,000,000 826,680
          Phoenix Industrial Development Authority Lease
                    Revenue (Capitol Mall II, LLC Project)
                    5.00% 9/15/28 (AMBAC) 2,000,000 1,894,820

10


Principal amount Value
Municipal Bonds (continued)               
Lease Revenue Bonds (continued)
          Pinal County Certificates of Participation
          5.00% 12/1/29 $ 1,300,000 $ 1,115,699
          5.125% 6/1/21 (AMBAC) 4,000,000 4,054,760
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities) Series D  
          5.25% 7/1/27 470,000 408,891
          5.25% 7/1/36 270,000 222,051
Salt River Project Arizona Agricultural Improvement &
          Power District Certificates of Participation
          5.00% 12/1/18 (MBIA) 1,500,000 1,573,575
University of Arizona Certificates of Participation
          Series B 5.00% 6/1/31 (AMBAC) 1,000,000 988,020
  12,842,032
Local General Obligation Bonds – 7.86%  
Chandler 5.00% 7/1/17 1,935,000 2,229,527
Cochise County Unified School District #68  
          (Sierra Vista) 7.50% 7/1/10 (MBIA) (FGIC)     1,000,000 1,074,100
Coconino & Yavapai Counties Joint Unified School
          District #9 (Sedona Oak Creek Project of 2007)
          Series A 4.50% 7/1/18 (FSA) 1,520,000 1,688,826
          Series B 5.375% 7/1/28 1,350,000 1,361,097
DC Ranch Community Facilities 5.00% 7/15/27 (AMBAC) 1,000,000 849,890
Φ Gila County Unified School District #10
          (Payson School Improvement-Project of 2006)
          Series A 1.00% 7/1/27 (AMBAC) 1,000,000 924,110
Maricopa County Unified School District #41
          (Gilbert School Improvement-Projects of
          2005 & 2007) 3.25% 7/1/15 1,500,000 1,548,660
  9,676,210
§Pre-Refunded Bonds – 30.55%
Arizona State Board of Regents Certificates of
          Participation (University of Arizona-Main Campus)
          Series 2000 A-1 5.125% 6/1/25-11 (AMBAC) 1,250,000 1,356,200
Glendale Industrial Development Authority
          Revenue (Midwestern University)
          Series A 5.875% 5/15/31-11 1,000,000 1,102,620
Mesa Industrial Development Authority
          Revenue (Discovery Health Systems)
          Series A 5.625% 1/1/29-10 (MBIA) 9,000,000 9,440,999

11

Statements of net assets
Delaware Tax-Free Arizona Fund

Principal amount Value
Municipal Bonds (continued)               
§Pre-Refunded Bonds (continued)
          Phoenix Industrial Development Authority Lease
                    Revenue (Capitol Mall LLC Project)
                    5.50% 9/15/27-10 (AMBAC) $ 3,000,000 $ 3,207,150
          Phoenix Industrial Development Authority Multifamily
                    Housing Revenue (Ventana Palms Apartments Project)
                    Series A 6.20% 10/1/34-09 (MBIA) 940,000 990,704
          Phoenix Variable Purpose Series B 5.00% 7/1/27-12 2,435,000 2,478,319
          Puerto Rico Commonwealth Highway &
                    Transportation Authority Revenue Series K
                    5.00% 7/1/35-15 750,000 871,050
                    5.00% 7/1/40-15 590,000 685,226
          Puerto Rico Commonwealth Public
                    Improvement Revenue Series A  
                    5.00% 7/1/27-12 1,000,000 1,113,560
                    5.125% 7/1/31-11 705,000 768,513
          Puerto Rico Commonwealth Revenue
                    Series B 5.00% 7/1/35-16 2,000,000   2,344,500
          Puerto Rico Electric Power Authority Revenue
                    Series NN 5.00% 7/1/32-13 (MBIA) 1,750,000 1,987,283
                    Series RR 5.00% 7/1/35-15 (FGIC) 1,545,000 1,797,329
          Puerto Rico Public Buildings Authority Revenue
                    (Guaranteed Government Facilities)  
                    Series D 5.25% 7/1/27-12 1,280,000 1,402,355
                    Series I 5.25% 7/1/33-14   5,000 5,634
          Scottsdale Industrial Development Authority Hospital
                    Revenue (Scottsdale Health Care) 5.70% 12/1/21-11   500,000 557,010
          Scottsdale Municipal Property Corporation Excise
                    Tax Revenue 5.00% 7/1/21-16 1,505,000 1,755,417
          Southern Arizona Capital Facilities Finance Revenue
                    (University of Arizona Project) 5.10% 9/1/33-12 (MBIA) 3,250,000 3,642,178
          University of Arizona Certificates of Participation
                    (University of Arizona Project)
                    Series A 5.125% 6/1/21-12 (AMBAC) 915,000 1,015,366
                    Series B 5.125% 6/1/22-12 (AMBAC) 1,000,000 1,112,390
  37,633,803
Special Tax Revenue Bonds – 8.64%
          Arizona State Transportation Board Excise Tax Revenue
                    (Maricopa County Regional Area Road Foundation)
                    5.00% 7/1/19 1,500,000 1,655,820

12


Principal amount Value
Municipal Bonds (continued)               
Special Tax Revenue Bonds (continued)
          Arizona Tourism & Sports Authority Tax Revenue
                    (Multipurpose Stadium Facilities)
                    Series A 5.00% 7/1/28 (MBIA) $ 2,500,000 $ 2,451,250
          Flagstaff Aspen Place Sawmill Improvement District
                    Revenue 5.00% 1/1/32 1,350,000 1,239,705
          Marana Tangerine Farm Road Improvement District
                    Revenue 4.60% 1/1/26 963,000 686,658
          Mesa Street & Highway Revenue 5.00% 7/1/20 (FSA) 1,000,000 1,098,570
          Peoria Municipal Development Authority Transition
                    Sales Tax, Excise Tax & State Shared Revenue
                    (Senior Lien & Subordinated Lien) 4.50% 1/1/16 1,000,000 1,101,910
          Phoenix Civic Improvement Transition Excise Tax  
                    Revenue (Light Rail Project) 5.00% 7/1/20 (AMBAC) 2,270,000 2,403,907
  10,637,820
State General Obligation Bonds – 4.75%
          Puerto Rico Commonwealth Public
                    Improvement Refunding Series A  
                    5.50% 7/1/17 1,765,000 1,713,197
                    5.50% 7/1/19 1,300,000 1,228,786
                    Unrefunded Balance Series A
                    5.125% 7/1/30 (FSA) 480,000   459,840
                    5.125% 7/1/31 2,000,000 1,661,660
          Virgin Islands Public Finance Authority
                    (Gross Receipts Taxes) 5.00% 10/1/31 (ACA) 1,000,000 783,560
  5,847,043
Transportation Revenue Bonds – 4.98%  
          Arizona State Transportation Board Grant Anticipation    
                    Notes 5.00% 7/1/14 1,500,000 1,692,075
          Arizona State Transportation Board Highway Revenue
                    Series A 5.00% 7/1/23 1,000,000 1,042,510
          Phoenix Civic Improvement Corporation Airport
                    Revenue Series B
                    5.25% 7/1/27 (MBIA) (FGIC) (AMT) 1,000,000 878,760
                    5.25% 7/1/32 (MBIA) (FGIC) (AMT) 3,000,000 2,520,870
  6,134,215
Water & Sewer Revenue Bonds – 11.29%
          Arizona Water Infrastructure Finance Authority Revenue
                    (Water Quality) Series A 5.00% 10/1/14 1,500,000 1,713,555

13

Statements of net assets
Delaware Tax-Free Arizona Fund

Principal amount Value
Municipal Bonds (continued)               
Water & Sewer Revenue Bonds (continued)
          Glendale Water & Sewer Revenue (Senior Lien)
                    5.00% 7/1/28 (AMBAC) $ 2,000,000 $ 1,956,200
          Phoenix Civic Improvement Corporation
                    Wastewater Systems Revenue
                    5.00% 7/1/19 (MBIA) 2,750,000 3,029,400
                    (Junior Lien) 5.00% 7/1/24 (MBIA) (FGIC) 1,000,000   1,004,980
          Phoenix Civic Improvement Corporation Water Systems
                    Revenue (Junior Lien) 5.00% 7/1/26 (MBIA) (FGIC) 3,750,000 3,750,900
          Scottsdale Water & Sewer Revenue  
                    4.00% 7/1/14   175,000 190,797
                    4.00% 7/1/15 500,000   546,810
                    4.00% 7/1/16 375,000   409,624
                    5.25% 7/1/22 1,150,000 1,308,332
  13,910,598
Total Municipal Bonds (cost $123,687,058) 121,935,610
 
Number of shares
Short-Term Investment – 0.09%
Money Market Instrument – 0.09%
          Federated Arizona Municipal Cash Trust 114,789 114,789
Total Short-Term Investment (cost $114,789) 114,789
 
Total Value of Securities – 99.07%
          (cost $123,801,847) 122,050,399
Receivables and Other Assets
          Net of Liabilities – 0.93% 1,140,838
Net Assets Applicable to 11,590,105
          Shares Outstanding – 100.00% $ 123,191,237
 
Net Asset Value – Delaware Tax-Free Arizona Fund
          Class A ($108,716,317 / 10,230,203 Shares)   $10.63
Net Asset Value – Delaware Tax-Free Arizona Fund
          Class B ($7,597,112 / 714,377 Shares)  $10.63
Net Asset Value – Delaware Tax-Free Arizona Fund
          Class C ($6,877,808 / 645,525 Shares)  $10.65

14


        
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 127,901,846  
Undistributed net investment income 267
Accumulated net realized loss on investments (2,959,428 )
Net unrealized depreciation of investments (1,751,448 )
Total net assets $ 123,191,237

Φ Step coupon bond. Coupon increases periodically based on a predetermined schedule. Stated rate in effect at February 28, 2009.
§ Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”

Summary of abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHLMC — Insured by the Federal Home Loan Mortgage Corporation
FNMA — Federal National Mortgage Association collateral
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association collateral
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance

Net Asset Value and Offering Price Per Share –
        Delaware Tax-Free Arizona Fund
Net asset value Class A (A) $ 10.63
Sales charge (4.50% of offering price) (B) 0.50
Offering price $ 11.13

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

See accompanying notes

15


Statements of net assets  
Delaware Tax-Free California Fund February 28, 2009 (Unaudited)

Principal amount Value
Municipal Bonds – 96.28%               
Education Revenue Bonds – 12.40%
          California Educational Facilities Authority Revenue
                    (Claremont McKenna College) 5.00% 1/1/39 $ 1,000,000 $ 975,700
                    (University of Southern California)
                    Series A 5.00% 10/1/39 1,000,000 999,950
                    (University of the Pacific) Un-Refunded Balance
                    5.75% 11/1/30 (MBIA) 310,000 310,363
                    (Woodbury University) 5.00% 1/1/36 1,000,000 637,720
          California Municipal Finance Authority Educational
                    Revenue (American Heritage Foundation Project)
                    Series A 5.25% 6/1/36 1,000,000   636,800
          California Statewide Communities Development  
                    Authority Revenue
                    (California Baptist University Project)
                    Series A 5.50% 11/1/38 1,000,000   587,640
                    (Viewpoint School Project) 5.75% 10/1/33 (ACA) 1,000,000 790,280
                    (Windrush School Project) 5.50% 7/1/37 1,000,000 591,760
          California Statewide Communities Development
                    Authority Student Housing Revenue  
                    (East Campus Apartments, LLC)  
                    Series A 5.625% 8/1/34 (ACA) 1,000,000 809,010
          San Diego County Certificates of Participation
                    (University of San Diego) 5.375% 10/1/41 1,000,000 903,970
          University of California Revenue (Multiple Purpose Projects)
                    Series L 5.00% 5/15/16 225,000 255,292
                    Series L 5.00% 5/15/19   850,000 930,827
                    Series Q 5.00% 9/1/20 (FSA) 1,290,000 1,356,705
  9,786,017
Electric Revenue Bonds – 3.79%
          California Department of Water Resources Power
                    Supply Revenue Series H 5.00% 5/1/17 1,000,000 1,099,930
          Chino Basin Regional Financing Authority Revenue
                    Series A 5.00% 11/1/24 (AMBAC) 845,000 858,021
          Southern California Public Power Authority Revenue
                    (Transmission Project) Series A 5.00% 7/1/22 1,000,000 1,030,430
  2,988,381
Health Care Revenue Bonds – 6.47%
          Association Bay Area Governments Finance Authority
                    for California Nonprofit Corporations (San Diego
                    Hospital Association) Series A 6.125% 8/15/20 1,250,000 1,200,300

16


Principal amount Value
Municipal Bonds (continued)               
Health Care Revenue Bonds (continued)
          California Health Facilities Financing Authority Revenue
                    (Catholic Health Care West) Series G 5.25% 7/1/23 $ 1,000,000 $ 946,390
                    (The Episcopal Home) Series A 5.30% 2/1/32 (RADIAN) 1,000,000 872,080
          California Infrastructure & Economic Development
                    Bank Revenue (Kaiser Hospital Associates I, LLC)
                    Series A 5.55% 8/1/31 1,000,000 905,520
          California Statewide Communities Development Authority
                    Revenue
                    (Presbyterian Homes Senior Living)
                    Series A 4.875% 11/15/36 1,000,000 622,030
                    (Valleycare Health Systems) Series A 5.125% 7/15/31 1,000,000   557,950
  5,104,270
Housing Revenue Bonds – 9.19%
          California Housing Finance Agency  
                    Revenue (Home Mortgage)  
                    Series K 5.30% 8/1/23 (AMT) 1,000,000 914,050
                    Series M 5.95% 8/1/25 (AMT) 1,000,000 952,660
          California Statewide Communities Development
                    Authority Multifamily Housing Revenue  
                    (Citrus Gardens Apartments) Series D-1 5.375% 7/1/32 1,800,000 1,626,102
                  ·(Silver Ridge Apartments) Series H  
                    5.80% 8/1/33 (FNMA) (AMT) 1,000,000 1,029,960
          Palm Springs Mobile Home Park Revenue
                    (Sahara Mobile Home Park) Series A 5.75% 5/15/37   1,000,000 760,540
          Santa Clara County Multifamily Housing Authority
                    Revenue (Rivertown Apartments Project)
                    Series A 5.85% 8/1/31 (AMT) 1,000,000 990,090
          Ventura County Area Multifamily Housing Authority
                    Revenue (Glen Oaks Apartments)
                    Series A 6.35% 7/20/34 (GNMA) 963,000 983,156
  7,256,558
Lease Revenue Bonds – 7.66%
          California State Public Works Board Lease
                    Revenue (Department of Corrections)
                    Series A 5.00% 3/1/27 (AMBAC) 1,000,000 929,260
          Elsinore Valley Municipal Water District Certificates of
                    Participation Series A 5.00% 7/1/24 (BHAC) 1,000,000 1,046,290
          Franklin-McKinley School District Certificates of
                    Participation (Financing Project)
                    Series B 5.00% 9/1/27 (AMBAC) 1,060,000 991,916

17

Statements of net assets
Delaware Tax-Free California Fund

Principal amount Value
Municipal Bonds (continued)               
Lease Revenue Bonds (continued)
          Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series M-2 5.50% 7/1/35 (AMBAC) $ 700,000 $ 644,168
San Diego County Certificates of Participation
          5.75% 7/1/31 (MBIA) 1,000,000 972,960
San Diego County Regional Building Authority Lease
          Revenue (County Operations & Annexation Center)
          Series A 5.375% 2/1/36 1,000,000   983,880
^ San Mateo Unified High School District Certificates of
          Participation Capital Appreciation (Partnership Phase I
          Projects) Series B 5.00% 12/15/43 (AMBAC) 1,000,000     474,550
  6,043,024
Local General Obligation Bonds – 15.66%  
^ Anaheim School District Election 2002
          4.58% 8/1/25 (MBIA)   1,250,000 480,525
Central Unified School District Election 2008
          Series A 5.625% 8/1/33 (ASSURED GTY) 1,000,000 1,016,120
Desert Community College District Election 2004
          Series C 5.00% 8/1/37 (FSA) 1,050,000 1,012,914
Fairfield-Suisun Unified School District Election 2002
          5.50% 8/1/28 (MBIA) 500,000 510,545
Grossmont Union High School District Election 2004
          5.00% 8/1/23 (MBIA) 1,000,000 1,029,460
Lawndale Elementary School District
          Series B 5.00% 8/1/32 (FSA) 1,000,000 983,690
Los Angeles Community College District Election 2001
          Series E-1 5.00% 8/1/33 1,000,000 971,130
Los Angeles Unified School District
          Series B 4.75% 7/1/19 (FSA) 1,000,000 1,067,940
Monterey Peninsula Community College District
          Election 2002 Series C 4.50% 8/1/19 (FSA) 1,000,000 1,073,550
San Diego Unified School District
          Series E 5.00% 7/1/28 (FSA) 2,000,000 2,138,160
Santa Barbara Community College
          Series A 5.25% 8/1/33 1,000,000 1,011,080
Sierra Joint Community College Improvement District #2
          (Western Nevada) Series A 5.25% 8/1/21 (BHAC) (FGIC) 1,000,000 1,060,520
  12,355,634

18


          Principal amount       Value
Municipal Bonds (continued)            
§Pre-Refunded Bonds – 13.87%
California Department of Water Resources (Central
          Valley Project) Series X 5.00% 12/1/29-12 (FGIC)  $ 5,000 $ 5,639
California State
          5.00% 2/1/33-14 1,000,000 1,145,310
          5.00% 2/1/33-14 (MBIA) 1,000,000 1,145,310
Commerce Joint Powers Financing Authority
          Revenue (Redevelopment Projects)
          Series A 5.00% 8/1/28-13 (RADIAN) 60,000 68,267
Golden State Tobacco Securitization Settlement
          Revenue (Asset-Backed Senior Notes) Series B
          5.50% 6/1/43-13 (RADIAN) 1,000,000 1,127,750
          5.625% 6/1/33-13 1,000,000 1,132,800
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series K 5.00% 7/1/45-15 1,500,000 1,742,100
Puerto Rico Commonwealth Series B 5.00% 7/1/35-16 1,000,000 1,172,250
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.50% 7/1/23-14 1,000,000 1,139,240
Sacramento County Airport System Revenue
          Series A 5.00% 7/1/32-12 (FSA) 1,000,000 1,114,950
Southern California Logistics Airport Authority 
          Tax Allocation 6.50% 12/1/31-11 1,000,000 1,153,550
10,947,166
Special Tax Revenue Bonds – 10.98%
Commerce Joint Powers Financing Authority Revenue
          (Redevelopment Projects) Un-Refunded Balance
          Series A 5.00% 8/1/28 (RADIAN) 940,000 748,268
Fremont Community Facilities District #1
          (Special Tax Pacific Commons) 5.375% 9/1/36 1,000,000 695,270
Lake Elsinore Public Financing Authority Tax Allocation
          Series A 5.50% 9/1/30 1,000,000 816,840
Lammersville School District Community Facilities
          District #2002 (Mountain House) 5.125% 9/1/35  500,000 322,385
Modesto Special Tax Community Facilities
          District #04-1 (Village 2) 5.15% 9/1/36 1,000,000 637,290
@ Palm Drive Health Care District Parcel Tax
          Revenue 5.25% 4/1/30 2,000,000 1,198,240
Poway Redevelopment Agency Tax Allocation
          Revenue 5.75% 6/15/33 (MBIA) 270,000 235,624

19

Statements of net assets
Delaware Tax-Free California Fund

          Principal amount      Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds (continued)
Poway Unified School District Community Facilities
          District #1 Special Tax Refunding 5.00% 10/1/17 (FSA) $ 1,000,000 $ 1,125,650
Puerto Rico Commonwealth Government Development
          Bank Senior Notes Series B 5.00% 12/1/15 1,000,000 953,430
Roseville Westpark Special Tax Public Community
          Facilities District #1 5.25% 9/1/37 500,000 290,460
San Bernardino County Special Tax Community
          Facilities District #2002-1 5.90% 9/1/33 2,000,000 1,642,540
8,665,997
State General Obligation Bonds – 4.83%
California State Various Purpose 5.50% 11/1/33 1,000,000 998,570
· California State Veterans Series BJ 5.70% 12/1/32 (AMT) 640,000 577,101
Puerto Rico Commonwealth Public Improvement Series A
          5.00% 7/1/16 (ASSURED GTY) 540,000 540,292
          5.25% 7/1/15 1,750,000 1,699,372
3,815,335
Transportation Revenue Bonds – 3.48%
Bay Area Toll Authority Bridge Revenue
          Series F 5.00% 4/1/22 1,000,000 1,050,040
Port of Oakland Revenue
          Series L 5.375% 11/1/27 (FGIC) (AMT) 1,000,000 843,910
San Diego Redevelopment Agency (Centre City
          Redevelopment Project) Series A 6.40% 9/1/25 1,000,000 850,300
2,744,250
Water & Sewer Revenue Bonds – 7.95%
California Department of Water Resources Systems
          Revenue (Central Valley Project)
          Series A 5.00% 12/1/22 1,000,000 1,073,020
          Series A 5.00% 12/1/24 1,000,000 1,051,540
          Un-Refunded Balance Series X 5.00% 12/1/29 (FGIC) 995,000 996,612
Glendale Water Revenue 4.00% 2/1/18 (FSA) 1,120,000 1,185,598
Los Angeles Department of Water & Power Systems
          Revenue Series A 5.00% 7/1/39 1,000,000 974,040
Metropolitan Water District Southern California Waterworks
          Authority Revenue Series B-1 5.00% 10/1/36 (FGIC) 1,000,000 996,980
6,277,790
Total Municipal Bonds (cost $82,014,562)   75,984,422

20


          Number of shares      Value
Short-Term Investments – 2.72%
Money Market Instrument – 1.45%
Federated California Municipal Cash Trust 1,144,744 $ 1,144,744
  1,144,744
 
Principal amount
·Variable Rate Demand Note – 1.27%
California State Department of Water Resources & Power
          Supply Revenue Subseries F-4 0.35% 5/1/22 $ 1,000,000 1,000,000
1,000,000
Total Short-Term Investments (cost $2,144,744) 2,144,744
 
Total Value of Securities – 99.00%
(cost $84,159,306) 78,129,166
Receivables and Other Assets
Net of Liabilities – 1.00%  792,564
Net Assets Applicable to 7,814,295
Shares Outstanding – 100.00% $ 78,921,730
 
 
Net Asset Value – Delaware Tax-Free California Fund
Class A ($60,647,310 / 6,008,153 Shares) $10.09
Net Asset Value – Delaware Tax-Free California Fund
Class B ($5,332,613 / 526,137 Shares) $10.14
Net Asset Value – Delaware Tax-Free California Fund
Class C ($12,941,807 / 1,280,005 Shares) $10.11
 
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 86,657,165
Undistributed net investment income 2,943
Accumulated net realized loss on investments (1,708,238 )
Net unrealized depreciation of investments (6,030,140 )
Total net assets $ 78,921,730

21

Statements of net assets
Delaware Tax-Free California Fund

   
·

Variable rate security. The rate shown is the rate as of February 28, 2009.

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

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

@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $1,198,240, which represented 1.52% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

Summary of abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
BHAC — Insured by the Berkshire Hathaway Assurance Company
FGIC — Insured by the Financial Guaranty Insurance Company
FNMA — Federal National Mortgage Association collateral
FSA — Insured by Financial Security Assurance
GNMA — Government National Mortgage Association collateral
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance

Net Asset Value and Offering Price Per Share –   
     Delaware Tax-Free California Fund   
Net asset value Class A (A)  $ 10.09
Sales charge (4.50% of offering price) (B)    0.48
Offering price  $ 10.57

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

See accompanying notes

22


Delaware Tax-Free Colorado Fund February 28, 2009 (Unaudited)

          Principal amount      Value
Municipal Bonds – 98.47%          
Education Revenue Bonds – 10.48%
Boulder County Development Revenue
          (University Corporation for Atmospheric Research)
            5.00% 9/1/33 (MBIA) $ 1,000,000 $ 952,510
          5.00% 9/1/35 (AMBAC) 1,000,000 950,710
Colorado Educational & Cultural Facilities Authority Revenue
          (Charter School Project) 5.50% 5/1/36 (XLCA) 2,280,000 1,932,004
          (Johnson & Wales University Project)
          Series A 5.00% 4/1/28 (XLCA) 1,000,000 833,370
          (Liberty Common Charter School Project)
          5.125% 12/1/33 (XLCA) 2,740,000 2,227,236
          (Montessori Districts Charter School Projects)
          6.125% 7/15/32 5,590,000 4,198,481
          (Pinnacle Charter School Project)
          5.00% 6/1/33 (XLCA) 2,170,000 1,734,850
          (University of Northern Colorado Student Housing
          Project) 5.125% 7/1/37 (MBIA) 5,505,000 4,433,837
          (Woodrow Wilson Charter School Project)
          5.25% 12/1/34 (XLCA) 1,960,000 1,613,276
Colorado School Mines Auxillary Facilities
          Revenue 5.00% 12/1/37 (AMBAC) 425,000 403,253
University of Colorado Enterprise System
          Revenue Series A
          5.00% 6/1/30 (AMBAC) 2,000,000 2,005,880
          5.375% 6/1/26 1,000,000 1,008,050
University of Puerto Rico Revenue
          Series Q 5.00% 6/1/36 2,750,000 1,987,068
24,280,525
Electric Revenue Bonds – 5.35%
Colorado Springs Utilities Revenue
          Series A 5.00% 11/15/29  5,000,000 5,012,200
Platte River Power Authority Colorado Revenue Series HH
          5.00% 6/1/27 2,795,000 2,857,859
          5.00% 6/1/29 2,355,000 2,383,119
Puerto Rico Electric Power Authority Revenue
          Series WW 5.00% 7/1/28 2,400,000 2,134,824
12,388,002

23

Statements of net assets
Delaware Tax-Free Colorado Fund

          Principal amount      Value
Municipal Bonds (continued)          
Escrowed to Maturity Bonds – 2.37%
Colorado Health Facilities Authority Revenue
          (Catholic Health Initiatives) Series A 5.50% 3/1/32 $ 5,000,000 $ 5,259,450
Galleria Metropolitan District 7.25% 12/1/09 230,000 241,459
5,500,909
Health Care Revenue Bonds – 13.30%
Aurora Hospital Revenue (Children’s Hospital)
          Series D 5.00% 12/1/23 (FSA) 2,775,000 2,727,048
Colorado Health Facilities Authority Revenue
          (Adventist Health/Sunbelt) Series E 5.125% 11/15/24 1,375,000 1,260,091
          (Catholic Health Initiatives)
          Series A 4.75% 9/1/40 1,000,000 848,200
          Series D 6.25% 10/1/33 2,000,000 2,068,360
          (Christian Living Community Project)
          Series A 5.75% 1/1/37 1,500,000 965,025
          (Covenant Retirement Communities)
          Series A 5.50% 12/1/33 (RADIAN) 5,000,000 3,411,550
          (Evangelical Lutheran)
          5.00% 6/1/35 2,000,000 1,441,080
          Series A 5.25% 6/1/34 2,750,000 2,071,850
          (Parkview Medical Center) 5.00% 9/1/25 1,000,000 871,920
          (Porter Place) Series A 6.00% 1/20/36 (GNMA)  5,000,000 5,024,649
          (Vail Valley Medical Center Project) 5.80% 1/15/27 3,475,000 3,067,522
          (Valley View Hospital Association) 5.50% 5/15/28 1,000,000 825,770
Delta County Memorial Hospital District Enterprise
          Revenue 5.35% 9/1/17 4,000,000 3,713,960
Denver Health & Hospital Authority Health Care
          Revenue Series A 4.75% 12/1/36 1,500,000 940,470
Mesa County Residential Care Facilities Mortgage Revenue
         (Hilltop Community Resources)
         Series A 5.375% 12/1/28 (RADIAN) 475,000 356,535
University of Colorado Hospital Authority Revenue
          Series A 5.00% 11/15/37 1,690,000 1,218,237
30,812,267
Housing Revenue Bonds – 1.56%
Colorado Housing & Finance Authority
          (Multifamily Housing Insured Mortgage)
          Series C3 6.15% 10/1/41   1,590,000 1,595,883
Puerto Rico Housing Finance Authority Subordinate
          Capital Foundation Modernization 5.125% 12/1/27 2,040,000 2,024,047
  3,619,930

24


          Principal amount      Value
Municipal Bonds (continued)          
Lease Revenue Bonds – 2.73%
Colorado Educational & Cultural National
          Conference of State Legislatures Office Building
          Facilities Authority Revenue 5.25% 6/1/21 $ 2,000,000 $ 2,012,320
@ Conejos & Alamosa Counties School #11J
          Certificates of Participation 6.50% 4/1/11 675,000 675,189
El Paso County Certificates of Participation (Detention
          Facilities Project) Series B 5.00% 12/1/27 (AMBAC) 1,500,000 1,489,065
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.25% 7/1/33 1,475,000 1,227,495
          Series M-2 5.50% 7/1/35 (AMBAC) 1,000,000 920,240
6,324,309
Local General Obligation Bonds – 14.50%
Adams & Arapahoe Counties Joint School District
            #28J (Aurora) 6.00% 12/1/28 2,500,000 2,733,450
Arapahoe County Water & Wastewater Public
          Improvement District Refunding
          Series A 5.125% 12/1/32 (MBIA) 2,555,000 2,402,773
Boulder Larimer & Weld Counties (St. Vrain Valley
          School District #1J) 5.00% 12/15/33 2,500,000 2,489,250
Denver City & County Justice System
          5.50% 8/1/16 5,000,000 5,915,399
          (Facilities & Zoo) 5.00% 8/1/19 1,020,000 1,136,668
Denver West Metropolitan District
          5.00% 12/1/33 (RADIAN) 1,400,000 998,830
Douglas County School District #1
          (Douglas & Elbert Counties) Series B
          5.00% 12/15/24 2,355,000 2,438,014
          5.125% 12/15/25 (FSA)   2,000,000 2,028,420
El Paso County School District #2 (Harrison)
          5.00% 12/1/27 (MBIA) 2,115,000 2,117,707
Garfield County School District #2
          5.00% 12/1/25 (FSA) 3,280,000 3,397,163
Grand County School District #2 (East Grand)
          5.25% 12/1/25 (FSA) 2,485,000 2,580,424
Gunnison Watershed Colorado School District #1J
          Series 2009 5.25% 12/1/33 1,400,000 1,428,826
La Plata County School District #9-R (Durango)
          5.125% 11/1/24 (MBIA) 1,000,000   1,027,310

25

Statements of net assets
Delaware Tax-Free Colorado Fund

          Principal amount        Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
@ North Range Metropolitan
          District #1 4.50% 12/15/31 (ACA) $ 1,500,000 $ 680,865
          District #2 5.50% 12/15/37 1,200,000 612,960
Sand Creek Metropolitan District Refunding &
          Improvement 5.00% 12/1/31 (XLCA) 500,000 398,435
Weld County School District #4 5.00% 12/1/19 (FSA) 1,085,000 1,216,220
33,602,714
§Pre-Refunded Bonds – 34.21%
Aurora Certificates of Participation
          5.50% 12/1/30-10 (AMBAC) 8,000,000 8,606,400
Boulder County Hospital Revenue (Development Longmont
          United Hospital Project)
            6.00% 12/1/30-10 (RADIAN) 5,000,000 5,418,800
Colorado Educational & Cultural Facilities Authority Revenue
          (Littleton Academy Charter School Project)
          6.125% 1/15/31-12 2,000,000 2,251,740
          (Renaissance Charter School Project) 6.75% 6/1/29-09 2,000,000 2,028,200
          (Stargate Charter School Project) 6.125% 5/1/33-13 2,000,000 2,324,820
          (University of Denver Project)
          5.375% 3/1/23-11 (AMBAC) 2,000,000 2,162,601
          Series A 5.00% 3/1/27-12 (MBIA) 5,000,000 5,502,150
Colorado Health Facilities Authority Revenue (Adventist
          Health/Sunbelt) 5.125% 11/15/24-16 75,000 88,207
Colorado School Mines Auxillary Facilities
          5.00% 12/1/37-12 (AMBAC) 2,705,000 3,035,984
Colorado Springs Revenue (Colorado College Project)
          5.375% 6/1/32-09 2,570,000 2,628,416
E-470 Public Highway Authority
          Series A 5.75% 9/1/35-10 (MBIA) 3,100,000 3,367,251
El Paso County Certificates of Participation (Judicial
          Building Project) Series A 5.00% 12/1/27-12 (AMBAC) 2,000,000 2,224,580
El Paso County School District #49 (Falcon)
          5.50% 12/1/21-11 (FGIC) 2,000,000 2,217,720
Fremont County School District #1 (Canon City)
          5.00% 12/1/24-13 (MBIA) 1,735,000 1,984,805
Garfield Pitkin & Eagle County School District #1
          (Roaring Fork County) Series A 5.00% 12/15/27-14 (FSA) 1,500,000 1,730,220
Lincoln Park Metropolitan District 7.75% 12/1/26-11   2,500,000   2,908,050

26


          Principal amount      Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds (continued)
North Range Metropolitan District #1
          7.25% 12/15/31-11 $ 3,390,000 $ 3,878,262
Northwest Parkway Public Highway Authority
          Series A 5.25% 6/15/41-11 (FSA) 11,100,000 12,194,126
Pueblo County Certificates of Participation
          6.50% 12/1/24-10 5,460,000 5,964,777
Puerto Rico Commonwealth
          Series A 5.25% 7/1/30-16 1,235,000 1,468,390
            Series B 5.00% 7/1/35-16 310,000 363,398
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series K 5.00% 7/1/40-15 2,500,000 2,903,500
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.25% 7/1/33-14  25,000 28,172
University of Colorado Hospital Authority Revenue
          Series A 5.60% 11/15/31-11  3,650,000 3,986,603
79,267,172
Special Tax Revenue Bonds – 6.02%
Aspen Sales Tax Revenue (Parks & Open Spaces)
          Series B 5.25% 11/1/23 (FSA) 2,040,000 2,141,062
@ Baptist Road Rural Transportation Authority Sales &
          Use Tax Revenue 5.00% 12/1/26 2,000,000 1,128,000
Loveland Special Improvements District #1 7.50% 7/1/29 4,980,000 5,474,762
Park Meadows Business Improvement District
          Shared Sales Tax Revenue
          5.30% 12/1/27 950,000 597,313
          5.35% 12/1/31 720,000 428,033
Puerto Rico Commonwealth Government Development
          Bank Senior Notes Series B 5.00% 12/1/15 1,000,000 953,430
Puerto Rico Commonwealth Infrastructure Financing
          Authority Special Tax Revenue Series B 5.00% 7/1/46 1,200,000 916,164
Regional Transportation District Sales Tax Revenue
          Series A 5.25% 11/1/18 2,000,000 2,301,080
13,939,844
State General Obligation Bonds – 3.70%
Rico Commonwealth
          Series A 5.25% 7/1/30 765,000 650,686
          Series B 5.00% 7/1/35 190,000 151,056

27

Statements of net assets
Delaware Tax-Free Colorado Fund

          Principal amount      Value
Municipal Bonds (continued)          
State General Obligation Bonds (continued)
Puerto Rico Commonwealth Government Development
          Bank Senior Notes Series B 5.00% 12/1/14 $ 1,000,000 $ 963,520
Puerto Rico Commonwealth Public Improvement Series A
          5.25% 7/1/15 1,650,000 1,602,266
          5.25% 7/1/21 4,000,000 3,636,599
Virgin Islands Public Finance Authority
          (Gross Receipts Taxes) 5.00% 10/1/31 (ACA) 2,000,000 1,567,120
  8,571,247
Transportation Revenue Bonds – 2.51%
Denver City & County Airport Revenue
          Series A 5.00% 11/15/25 (MBIA) 2,000,000 2,017,700
          Series B 5.00% 11/15/33 (XLCA) 4,000,000 3,798,440
5,816,140
Water & Sewer Revenue Bonds – 1.74%
Pueblo Board Waterworks Revenue
          5.00% 11/1/21 (FSA) 1,000,000 1,044,330
Ute Water Conservancy District Revenue
          5.75% 6/15/20 (MBIA) 2,900,000 2,983,143
4,027,473
Total Municipal Bonds (cost $234,554,990) 228,150,532
   
  Number of shares
Short Term-Investment – 0.14%  
Money Market Instrument – 0.14%
Dreyfus Cash Management Fund 340,264 340,264
Total Short-Term Investment (cost $340,264) 340,264
 
Total Value of Securities – 98.61%
(cost $234,895,254) 228,490,796
Receivables and Other Assets
Net of Liabilities – 1.39% 3,212,969
Net Assets Applicable to 22,893,552
Shares Outstanding – 100.00% $ 231,703,765

28


   
Net Asset Value – Delaware Tax-Free Colorado Fund
       Class A ($218,943,351 / 21,635,089 Shares) $10.12  
Net Asset Value – Delaware Tax-Free Colorado Fund
       Class B ($3,173,111 / 313,330 Shares) $10.13
Net Asset Value – Delaware Tax-Free Colorado Fund
       Class C ($9,587,303 / 945,133 Shares) $10.14
 
Components of Net Assets at February 28, 2009:  
Shares of beneficial interest (unlimited authorization – no par) $246,899,640
Undistributed net investment income 2,866
Accumulated net realized loss on investments (8,794,283 )
Net unrealized depreciation of investments (6,404,458 )
Total net assets $231,703,765

@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $3,097,014, which represented 1.34% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”
§ Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”

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

29

Statements of net assets
Delaware Tax-Free Colorado Fund

 

 
Net Asset Value and Offering Price Per Share –
       Delaware Tax-Free Colorado Fund  
Net asset value Class A (A) $ 10.12
Sales charge (4.50% of offering price) (B) 0.48
Offering price $ 10.60

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

See accompanying notes

30


Delaware Tax-Free Idaho Fund February 28, 2009 (Unaudited)

  Principal amount      Value
Municipal Bonds – 97.89%          
Corporate Revenue Bonds – 5.45%
          Meridian Economic Industrial Development Revenue
                    (Hi-Micro Project) 5.85% 8/15/11 (AMT) $ 965,000 $ 966,969
          Nez Perce County Pollution Control Revenue
                    (Potlatch Project) 6.00% 10/1/24 2,535,000 1,745,905
          Power County Pollution Control Revenue  
                    (FMC Project) 5.625% 10/1/14 2,475,000 2,236,014
4,948,888
Education Revenue Bonds – 11.20%
          Boise State University Revenue
                    5.00% 4/1/17 (AMBAC) 500,000 539,850
                    5.375% 4/1/22 (FGIC) 15,000 15,515
                    Series A 4.25% 4/1/32 (MBIA) 1,500,000 1,266,810
                    Series A 5.00% 4/1/18 (FGIC) 1,500,000 1,596,179
                    Series A 5.00% 4/1/39 1,000,000 973,160
          Idaho State University Revenue Refunding & Improvement
                    5.00% 4/1/20 (FSA) 1,130,000 1,179,189
                    5.00% 4/1/23 (FSA) 2,115,000 2,148,522
          University of Idaho (General Refunding)
                    Series A 5.00% 4/1/21 (AMBAC) 1,150,000 1,195,207
                    Series B 4.50% 4/1/41 (FSA) 1,000,000 1,085,000
          University of Puerto Rico Revenue  
                    Series Q 5.00% 6/1/36 250,000 180,643
10,180,075
Electric Revenue Bonds – 1.10%
          Boise-Kuna Irrigation District Revenue  
                    (Arrowrock Hydroelectric Project) 6.30% 6/1/31 1,000,000 1,001,270
1,001,270
Escrowed to Maturity Bonds – 2.05%  
          Puerto Rico Commonwealth Infrastructure Financing
                    Authority Revenue Series A 5.375% 10/1/24   1,750,000 1,860,302
  1,860,302
Health Care Revenue Bonds – 6.00%    
          Idaho Health Facilities Authority Hospital Revenue
                    (Idaho Elks Rehabilitation Hospital Project)
                    5.30% 7/15/18 625,000 605,438
                    5.45% 7/15/23 2,000,000 1,792,580

31

Statements of net assets
Delaware Tax-Free Idaho Fund

 

Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          Idaho Health Facilities Authority Revenue
                    (Portneuf Medical Center Project)
                    Series A 5.00% 9/1/35 (RADIAN) $ 1,000,000 $ 1,000,740
                    (St. Luke’s Medical Center Project) 6.75% 11/1/37 1,000,000 1,023,760
                    (Trinity Health Credit Group) Series B 6.125% 12/1/28 1,000,000 1,033,270
5,455,788
Housing Revenue Bonds – 6.86%
          Idaho Housing Agency Single Family Mortgage Revenue
                    Series A 6.05% 7/1/13 (AMBAC) (FHA) (VA) (AMT) 25,000 25,032
                    Series A 6.10% 7/1/16 (FHA) (VA) (AMT)  30,000 30,046
                    Series A-1 6.85% 7/1/12 (AMT) 5,000 5,013
                    Series B 6.45% 7/1/15 (AMT) 15,000 15,019
                    Series C-2 6.35% 7/1/15 (AMT) 15,000 15,017
                    Series E 6.35% 7/1/15 (FHA) (AMT) 25,000 25,029
                    Series G-2 6.15% 7/1/15 (FHA) (VA) (AMT) 115,000 115,124
          Idaho Housing & Finance Association 
                    Single Family Mortgage Revenue
                    Series B Class I 5.00% 7/1/37 (AMT) 840,000 761,023
                    Series C Class III 5.35% 1/1/25 (AMT)  270,000 261,023
                    Series D Class III 5.45% 7/1/23 (AMT)  900,000 903,033
                    Series E Class III 4.875% 1/1/26 (AMT)  1,345,000   1,236,700
                    Series E Class III 5.00% 1/1/28 (AMT)  925,000 877,955
                    Series I Class I 5.45% 1/1/39 (AMT) 1,000,000 967,040
          Puerto Rico Housing Finance Authority Subordinate-  
                    Capital Foundation Modernization 5.125% 12/1/27 1,000,000 992,180
  6,229,234
Lease Revenue Bonds – 5.49%  
          Blaine School District #61 Certificate of Participation    
                    5.00% 7/30/10 (AMBAC) 750,000 775,515
          Boise City Certificate of Participation 
                    5.375% 9/1/20 (FGIC) (AMT) 2,100,000 2,015,055
          Boise City Revenue Series A 5.375% 12/1/31 (MBIA) 500,000 500,910
          Idaho State Building Authority Revenue 
                    Series A 5.00% 9/1/43 (XLCA) 1,000,000 933,560
                    Series B 5.00% 9/1/21 (MBIA) 750,000 762,900
4,987,940

32


Principal amount      Value
Municipal Bonds (continued)          
Local General Obligation Bonds – 25.82%
          Ada & Canyon Counties Joint School District #2
                    Meridian (School Board Guaranteed Program)
                    4.75% 2/15/20 $ 1,000,000 $ 1,069,500
                    5.00% 7/30/20 600,000 634,860
                    5.125% 7/30/19 1,005,000 1,072,305
                    5.50% 7/30/16 1,305,000 1,537,225
          Bannock County School District #025
                    (Pocatello Idaho School Board Guaranteed Program)
                    5.00% 8/15/15 1,040,000 1,177,467
                    5.00% 8/15/16 1,100,000 1,233,122
          Boise City Independent School District
                    5.00% 8/1/24 (FSA) 1,500,000 1,581,990
          Canyon County Idaho School District # 132 (Caldwell)  
                    5.00% 7/30/15 (FGIC) (MBIA) 2,000,000 2,194,380
                    Series A 5.00% 9/15/22 (FSA) 1,725,000 1,876,041
                    Series A 5.00% 9/15/23 (FSA) 1,810,000 1,940,447
          Idaho Board Bank Authority Revenue    
                    Series B 5.00% 9/15/28 1,000,000 1,010,210
          Lemhi County 5.20% 8/1/27 (FSA) 2,145,000   2,170,719
          Nampa Idaho 5.00% 8/1/21 (FGIC) 2,475,000 2,560,783
          Power & Cassia Counties Joint School District #381  
                    (American Falls) 5.00% 8/1/17 1,155,000 1,231,288
          Twin Falls County Idaho School District #413 (Filer)
                    5.25% 9/15/25 2,000,000 2,167,040
23,457,377
§Pre-Refunded Bonds – 15.75%
          Ada & Canyon Counties Joint School District # 2
                    Meridan (School Board Guaranteed Program)
                    5.00% 7/30/20-12 1,555,000 1,728,585
          Boise State University Revenue Refunding & Improvement
                    5.125% 4/1/31-12 (FGIC)    1,000,000 1,106,790
                    5.375% 4/1/22-12 (FGIC)  985,000 1,097,595
          Puerto Rico Commonwealth Highway & Transportation
                    Authority Revenue
                    Series D 5.25% 7/1/38-12 1,000,000 1,108,200
                    Series G 5.00% 7/1/33-13 1,310,000 1,485,868
                    Series Y 5.00% 7/1/36-16 1,250,000 1,465,313
          Puerto Rico Commonwealth Public Improvement Revenue
                    Series A 5.125% 7/1/31-11  1,010,000 1,100,991

33

Statements of net assets
Delaware Tax-Free Idaho Fund

 

Principal amount      Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds (continued)
          Puerto Rico Electric Power Authority Revenue
                    Series II 5.25% 7/1/31-12 $ 1,000,000 $ 1,131,190
                    Series NN 5.125% 7/1/29-13 500,000 570,069
          Puerto Rico Public Buildings Authority Revenue
                    (Guaranteed Government Facilities)
                    Series I 5.50% 7/1/23-14  1,000,000 1,139,240
          University of Idaho Revenue (Student Fee Housing
                    Improvements Project) 5.25% 4/1/31-11 (FGIC) 2,195,000 2,374,265
14,308,106
Special Tax Revenue Bonds – 7.29%  
          Boise Urban Renewal Agency Parking
                    Revenue (Tax Increment)  
                    Series A 6.125% 9/1/15 1,315,000 1,316,459
                    Series B 6.125% 9/1/15 1,075,000 1,076,193
          Bonner County Local Improvement District #93-1
                    6.50% 4/30/10 60,000 60,127
          Coeur D’Alene Local Improvement District #6  
                    Series 1995 6.00% 7/1/09 85,000 85,921
                    Series 1996 6.05% 7/1/10 90,000 90,951
                    Series 1997 6.10% 7/1/12 40,000 40,334
                    Series 1998 6.10% 7/1/14 45,000 45,291
          Idaho Board Bank Authority Revenue Series B
                    4.125% 9/15/36 (MBIA) 755,000   612,139
                    5.00% 9/15/30 (MBIA) 725,000 727,240
          Puerto Rico Commonwealth Highway & Transportation
                    Authority Revenue Series W 5.50% 7/1/15 175,000   172,232
          Puerto Rico Sales Tax Financing Revenue
                    Series A 5.25% 8/1/57 1,000,000 835,110
          Virgin Islands Public Finance Authority Revenue 
                    (Senior Lien-Matching Fund Loan Note) Series A
                    5.25% 10/1/20 500,000 446,800
                    5.25% 10/1/21 500,000 436,820
                    5.25% 10/1/24 800,000 674,048
6,619,665
State General Obligation Bonds – 2.65%
          Puerto Rico Commonwealth Public Improvement Series A
                    5.125% 7/1/31 1,815,000 1,507,956
                    5.25% 7/1/22 1,000,000 901,070
2,409,026

34


Principal amount      Value
Municipal Bonds (continued)          
Transportation Revenue Bonds – 4.66%
          Idaho Housing & Finance Association Grant Revenue
                    (Anticipated Federal Highway Trust)
                    5.00% 7/15/24 (MBIA) $ 2,000,000 $ 2,083,680
                    5.25% 7/15/25 (ASSURED GTY) 1,500,000 1,592,925
          Puerto Rico Commonwealth Highway & Transportation
                    Authority Revenue Series G 5.00% 7/1/33 690,000 553,559
  4,230,164
Water & Sewer Revenue Bonds – 3.57%
          Idaho Bond Bank Authority Revenue Series C
                    5.375% 9/1/16 1,000,000 1,022,830
          Moscow Sewer Revenue 5.00% 11/1/22 (FSA) 2,175,000 2,218,739
3,241,569
Total Municipal Bonds (cost $89,222,751) 88,929,404
 
Number of shares  
Short-Term Investment – 1.99%  
Money Market Instrument – 1.99%
          Dreyfus Cash Management Fund 1,808,356 1,808,356
Total Short-Term Investment (cost $1,808,356)    1,808,356
 
Total Value of Securities – 99.88%
          (cost $91,031,107) 90,737,760
Receivables and Other Assets
          Net of Liabilities – 0.12%     106,786
Net Assets Applicable to 8,193,690
          Shares Outstanding – 100.00% $ 90,844,546
 
Net Asset Value – Delaware Tax-Free Idaho Fund
          Class A ($74,448,311 / 6,713,603 Shares)   $11.09
Net Asset Value – Delaware Tax-Free Idaho Fund
          Class B ($4,455,559 / 402,536 Shares) $11.07
Net Asset Value – Delaware Tax-Free Idaho Fund
          Class C ($11,940,676 / 1,077,551 Shares) $11.08

35

Statements of net assets
Delaware Tax-Free Idaho Fund

 

 
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 91,441,146
Distributions in excess of net investment income (11,699 )
Accumulated net realized loss on investments (291,554 )
Net unrealized depreciation of investments   (293,347 )
Total net assets $ 90,844,546

§

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

Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to the Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
FSA — Insured by Financial Security Assurance
MBIA — Insured by the Municipal Bond Insurance Association
RADIAN — Insured by Radian Asset Assurance
VA — Insured by the Veterans Administration
XLCA — Insured by XL Capital Assurance

Net Asset Value and Offering Price Per Share –
       Delaware Tax-Free Idaho Fund  
Net asset value Class A (A) $ 11.09
Sales charge (4.50% of offering price) (B) 0.52
Offering price $ 11.61

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

See accompanying notes

36


Delaware Tax-Free New York Fund February 28, 2009 (Unaudited)

Principal amount      Value
Municipal Bonds – 96.99%          
Corporate Revenue Bonds – 4.48%
          New York City Industrial Development Agency Revenue
                    (Brooklyn Navy Yard Cogen Partners)
                    5.75% 10/1/36 (AMT) $ 450,000 $ 298,026
          New York Energy Research & Development Authority
                    Pollution Control Revenue (Central Hudson Gas) 
                    Series A 5.45% 8/1/27 (AMBAC) 500,000 502,430
          Suffolk County Industrial Development Agency Revenue
                    (Keyspan-Port Jefferson Energy Center)
                    5.25% 6/1/27 (AMT) 250,000 204,485
1,004,941
Education Revenue Bonds – 15.75%
          Albany Industrial Development Agency Civic Facilities Revenue
                    (Brighter Choice Charter School) Series A 5.00% 4/1/37 250,000 152,063
          Amherst Industrial Development Agency Civic Facilities
                    Revenue (UBF Faculty Student Housing) Series A 
                    5.75% 8/1/30 (AMBAC) 200,000 200,852
          Dutchess County Industrial Development Agency 
                    (Marist College) 5.00% 7/1/20 500,000 506,290
          Madison County Industrial Development Agency Civic  
                    Facility Revenue (Colgate University Project) Series A
                    5.00% 7/1/39 (MBIA) 400,000 383,708
          New York State Dormitory Authority Revenue  
                    (Columbia University) Series A 5.00% 7/1/23 500,000 519,834
                    (Pratt Institute) 6.00% 7/1/20 (RADIAN)   500,000 485,755
                    Un-Refunded Series B 7.50% 5/15/11 125,000 138,618
                  ·Series B 5.25% 11/15/23 250,000 264,813
          New York State Dormitory Authority Revenue
                    Non-State Supported Debt  
                    (New York University) Series A 5.25% 7/1/48 400,000 390,800
                    (Teachers College) 5.50% 3/1/39 250,000     252,585
                 D(University of Rochester) Series A-2 4.375% 7/1/20 250,000 235,540
3,530,858
Electric Revenue Bonds – 3.52%
          Long Island Power Authority Electric System Revenue
                    Series A 5.75% 4/1/39 350,000 361,424
                    Series B 5.75% 4/1/33 250,000 258,495
          Puerto Rico Electric Power Authority Revenue Series WW
                    5.00% 7/1/28 190,000 169,007
788,926

37

Statements of net assets
Delaware Tax-Free New York Fund

 

Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds – 7.06%
          East Rochester Housing Authority Revenue
                    (Senior Living-Woodland Village Project) 5.50% 8/1/33 $ 200,000   $ 123,532
          New York Dormitory Authority Revenue
                    (Chapel Oaks) 5.45% 7/1/26 (LOC, Allied Irish Bank) 450,000 451,016
                    (Millard Fillmore Hospital) 5.375% 2/1/32 (AMBAC) (FHA) 225,000   222,217
                    (Winthrop South Nassau Hospital) Series B 5.50% 7/1/23 500,000 440,365
          New York Dormitory Authority Revenue
                    Non-State Supported Debt 
                    (Orange Regional Medical Center) 6.125% 12/1/29 175,000 131,142
                    (Memorial Sloan-Kettering) Series 1 5.00% 7/1/35 225,000 215,766
    1,584,038
Housing Revenue Bonds – 0.95%
          New York City Multifamily Housing Development Revenue
                    Series G-1 4.875% 11/1/39 (AMT) 250,000 213,845
213,845
Lease Revenue Bonds – 4.64%
          Battery Park City Authority Revenue
                    Series A 5.00% 11/1/26 250,000 254,255
          Nassau County Tobacco Settlement (Asset-Backed) 
                    Series A-3 5.125% 6/1/46    125,000 77,123
          Tobacco Settlement Financing Authority Revenue 
                    (Asset-Backed) Series B-1C   
                    5.50% 6/1/20 200,000 203,648
                    5.50% 6/1/21 500,000 506,100
  1,041,126
Local General Obligation Bonds – 2.83%  
          New York City
                    Series D 5.00% 11/1/34 125,000 117,149
                    Subordinated Series C-1 5.00% 10/1/19 500,000 518,175
635,324
§Pre-Refunded Bonds – 19.84%
          Albany Parking Authority Revenue Series A
                    5.625% 7/15/25-11 280,000 311,847
          Metropolitan Transportation Authority Revenue 
                    (Dedicated Tax) Series A 6.125% 4/1/17-10 (FGIC) 1,000,000 1,059,889
          New York City Series J 5.25% 6/1/28-13 310,000 355,840

38


Principal amount Value
Municipal Bonds (continued)               
§Pre-Refunded Bonds (continued)
          New York Dormitory Authority Revenue
                    (North Shore Long Island Jewish Group Project)
                    5.50% 5/1/33-13 $ 500,000 $ 578,095
                    Series B 7.50% 5/15/11-09 130,000 136,500
          Puerto Rico Commonwealth Highway & Transportation
                    Authority Revenue Series Y 5.50% 7/1/36-16 475,000 572,708
          Puerto Rico Commonwealth Series B 5.25% 7/1/32-16 155,000 184,292
          Puerto Rico Electric Power Authority Revenue
                    Series II 5.25% 7/1/31-12 500,000 565,595
                    Series NN 5.125% 7/1/29-13 600,000 684,086
  4,448,852
Special Tax Revenue Bonds – 19.72%
          New York City Transitional Finance Authority Revenue
                    (Building Aid Revenue Fiscal 2009)
                    Series S-3 5.25% 1/15/39 250,000     242,293
                    (Subordinated Future Tax Secured)
                    Series B 5.00% 11/1/18 500,000   554,790
          New York City Trust for Cultural Resources Revenue
                    (Museum of Modern Art) Series 1A 5.00% 4/1/31 250,000 247,355
          New York Dormitory Authority State Personal
                    Income Tax Revenue
                    Series A 5.00% 3/15/38 500,000 487,275
                    Series C 5.00% 3/15/15   250,000 282,250
          New York Dormitory Authority Supported Debt Revenue  
                    (Consolidated Services Contract) 5.00% 7/1/17 (FSA)   500,000 557,484
          New York Sales Tax Asset Receivables Series A
                    5.25% 10/15/27 (AMBAC) 500,000 517,945
          New York State Urban Development Revenue
                    State Personal Income Tax
                    Series A-1 5.00% 12/15/22 250,000 264,420
                    Series B-1 5.00% 3/15/36 250,000 244,910
          Puerto Rico Commonwealth Infrastructure Financing
                    Authority Revenue Series B 5.00% 7/1/15 250,000 239,490
          Puerto Rico Sales Tax Financing Revenue
                    Series A 5.25% 8/1/57 325,000 271,411
          Schenectady Metroplex Development Authority Revenue
                    Series A 5.375% 12/15/21 500,000 511,635
4,421,258

39

Statements of net assets
Delaware Tax-Free New York Fund

Principal amount Value
Municipal Bonds (continued)               
State General Obligation Bonds – 2.54%
          New York State Series A 5.00% 3/1/38 $ 500,000 $ 489,500
          Puerto Rico Commonwealth Series B 5.25% 7/1/32 95,000 79,531
  569,031
Transportation Revenue Bonds – 13.55%
          Albany Parking Authority Revenue Series A  
                    5.625% 7/15/25 220,000 218,704
          Metropolitan Transportation Authority Revenue
                  ·Series A 5.00% 11/15/27 200,000 209,558
                    Series C 6.50% 11/15/28 200,000 220,982
                    Series F 5.00% 11/15/15 150,000   160,785
          New York City Industrial Development Agency Special  
                    Airport Facilities (JFK Airs Project) Series A  
                    5.50% 7/1/28 (AMT) 500,000 331,165
          New York State Thruway Authority General Revenue Series H
                    5.00% 1/1/14 (MBIA) 500,000 548,305
                    5.00% 1/1/15 (MBIA)   250,000 276,330
          Onondaga County Industrial Development Authority  
                    Revenue (Subordinated Air Cargo Project)
                    7.25% 1/1/32 (AMT) 500,000 397,050
          Port Authority New York & New Jersey (Consolidated-One
                    Hundred Fifty-Third) 5.00% 7/15/35 250,000 249,260
          Triborough Bridge & Tunnel Authority Revenue
                    Series C 5.00% 11/15/24 200,000 207,676
                  ·Subordinated Series B-1 5.00% 11/15/25 200,000 219,214
  3,039,029
Water & Sewer Revenue Bonds – 2.11%
          New York City Municipal Finance Authority Water &
                    Sewer System Revenue
                    (Fiscal 2009) Series A 5.75% 6/15/40 200,000 213,562
                    (Second General Resolution) Series FF-2
                    5.50% 6/15/40 250,000 258,828
  472,390
Total Municipal Bonds (cost $21,808,672) 21,749,618

40


Principal amount Value
Short-Term Investment – 2.23%               
·Variable Rate Demand Note – 2.23%
          New York City Industrial Development Agency Civic
                    Facility Revenue (New York Law School Project)
                    Series A 0.53% 7/1/36 $ 500,000 $ 500,000
Total Short-Term Investment (cost $500,000) 500,000
 
Total Value of Securities – 99.22%
          (cost $22,308,672) 22,249,618
Receivables and Other Assets
          Net of Liabilities – 0.78% 174,536
Net Assets Applicable to 2,243,570
          Shares Outstanding – 100.00% $ 22,424,154
 
Net Asset Value – Delaware Tax-Free New York Fund
          Class A ($17,688,616 / 1,768,888 Shares) $10.00
Net Asset Value – Delaware Tax-Free New York Fund
          Class B ($1,169,818 / 117,253 Shares)       $  9.98
Net Asset Value – Delaware Tax-Free New York Fund  
          Class C ($3,565,720 / 357,429 Shares) $  9.98
 
Components of Net Assets at February 28, 2009:
Shares of beneficial interest (unlimited authorization – no par) $ 22,704,433
Distributions in excess of net investment income (647 )
Accumulated net realized loss on investments (220,578 )
Net unrealized depreciation of investments (59,054 )
Total net assets $ 22,424,154

· Variable rate security. The rate shown is the rate as of February 28, 2009.
D Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
§ Pre-Refunded Bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”

41

Statements of net assets
Delaware Tax-Free New York Fund

 

Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
FGIC — Insured by the Financial Guaranty Insurance Company
FHA — Insured by the Federal Housing Administration
LOC — Letter of Credit
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 New York Fund
Net asset value Class A (A)      $ 10.00
Sales charge (4.50% of offering price) (B) 0.47
Offering price $ 10.47

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

See accompanying notes

42


Statements of  operations
Six Months Ended February 28, 2009 (Unaudited)

Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
     Arizona Fund      California Fund      Colorado Fund
Investment Income:
       Interest     $ 3,062,690        $ 2,112,163        $ 6,158,132   
 
Expenses:
       Management fees 313,134 222,286 630,632
       Distribution expenses – Class A 138,136 77,223 271,526
       Distribution expenses – Class B 39,750 28,426 17,166
       Distribution expenses – Class C 36,173 67,824 45,832
       Dividend disbursing and transfer agent
              fees and expenses 26,673 20,294 58,700  
       Accounting and administration expenses 26,451 17,301 45,864
       Legal fees 13,939 8,271 17,955
       Registration fees 9,171   7,298 4,274
       Audit and tax 9,071 7,855 11,909
       Reports and statements to shareholders 8,044 4,874   14,801
       Trustees’ fees 4,112   2,654 7,489
       Pricing fees 4,046 3,874 4,513
       Insurance fees 2,028 1,346 3,437
       Custodian fees 1,468 1,123   3,208
       Consulting fees 852   556   1,544
       Trustees’ expenses     379 243 684
       Dues and services 258 190 635
       Taxes (other than taxes on income) 251 154 509
  633,936 471,792 1,140,678
       Less fees waived (104,657 ) (42,291 ) (37,885 )
       Less expense paid indirectly (58 ) — —
       Total operating expenses 529,221 429,501 1,102,793
Net Investment Income 2,533,469 1,682,662 5,055,339
 
Net Realized and Unrealized Loss
       on Investments:
       Net realized loss on investments (882,642 ) (379,243 ) (286,240 )
       Net change in unrealized appreciation/
              depreciation of investments (3,426,863 ) (5,607,822 ) (11,921,658 )
Net Realized and Unrealized Loss
       on Investments (4,309,505 ) (5,987,065 ) (12,207,898 )
 
Net Decrease in Net Assets
       Resulting from Operations $ (1,776,036 ) $ (4,304,403 ) $ (7,152,559 )

See accompanying notes

44


Delaware Tax-Free Delaware Tax-Free
Idaho Fund      New York Fund
Investment Income:              
       Interest $ 2,103,030 $ 488,946
 
Expenses:
       Management fees 235,924 54,289
       Distribution expenses – Class A 87,851     19,709
       Distribution expenses – Class B 22,691 6,487
       Distribution expenses – Class C 55,007 13,098
       Dividend disbursing and transfer agent    
              fees and expenses 18,899 7,328
       Accounting and administration expenses 17,145 3,948
       Legal fees 8,250 536
       Audit and tax 7,705 2,026
       Reports and statements to shareholders 5,167 5,982
       Pricing fees   3,826 153
       Trustees’ fees 2,782   629
       Registration fees   2,532 4,797
       Insurance fees 1,479 2,787
       Custodian fees   806 293
       Consulting fees 388 120
       Trustees’ expenses 288 56
       Dues and services 224 39
       Taxes (other than taxes on income) — 26
  470,964 122,303
       Less fees waived (39,726 ) (23,557 )
       Less expense paid indirectly (11 ) (82 )
       Total operating expenses 431,227 98,664
Net Investment Income 1,671,803 390,282
 
Net Realized and Unrealized Gain (Loss)
       on Investments:
       Net realized gain on investments 17,280 4,181
       Net change in unrealized appreciation/
              depreciation of investments (1,253,968 ) (508,422 )
Net Realized and Unrealized Loss
       on Investments (1,236,688 ) (504,241 )
 
Net Increase (Decrease) in Net Assets
       Resulting from Operations $ 435,115 $ (113,959 )

See accompanying notes

45

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

Six Months Year
Ended Ended
      2/28/09       8/31/08
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 2,533,469 $ 5,547,803  
       Net realized loss on investments (882,642 ) (122,728 )
       Net change in unrealized
              appreciation/depreciation of investments (3,426,863 ) (1,640,599 )
       Net increase (decrease) in net assets resulting
              from operations (1,776,036 ) 3,784,476
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (2,277,390 ) (4,918,990 )
              Class B (133,961 ) (359,177 )
              Class C (121,851 ) (269,611 )
(2,533,202 ) (5,547,778 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 2,670,006 14,751,087
              Class B 20,166 343
              Class C 484,559 2,945,439
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 1,139,733 2,407,736
              Class B 69,256 184,069
              Class C 77,969 174,113
4,461,689 20,462,787

46


Six Months Year
Ended Ended
      2/28/09       8/31/08
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (13,428,049 ) $ (19,237,873 )
              Class B (1,808,614 ) (2,845,303 )
              Class C (2,177,769 ) (1,815,293 )
  (17,414,432 ) (23,898,469 )
Decrease in net assets derived from
       capital share transactions (12,952,743 ) (3,435,682 )
Net Decrease in Net Assets (17,261,981 ) (5,198,984 )
 
Net Assets:
       Beginning of period 140,453,218 145,652,202
       End of period1 $ 123,191,237 $ 140,453,218
 
       1Including undistributed net investment income $ 267 $ —

See accompanying notes

47

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

Six Months Year
Ended Ended
      2/28/09       8/31/08
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 1,682,662   $ 3,715,410
       Net realized loss on investments (379,243 ) (461,721 )
       Net change in unrealized
              appreciation/depreciation of investments (5,607,822 ) (1,438,134 )
       Net increase (decrease) in net assets resulting
              from operations (4,304,403 ) 1,815,555
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (1,336,698 ) (2,975,104 )
              Class B (101,690 ) (272,986 )
              Class C (242,631 ) (467,320 )
(1,681,019 ) (3,715,410 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 5,982,601 13,897,604
              Class B 90,441 141,422
              Class C 1,360,743 4,752,482
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 807,913 1,795,621
              Class B 69,809 191,370
              Class C 182,824 353,985
8,494,331 21,132,484

48


Six Months Year
Ended Ended
      2/28/09       8/31/08
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (8,792,733 ) $ (23,597,793 )
              Class B   (969,303 ) (2,976,125 )
              Class C (2,579,137 ) (3,278,508 )
  (12,341,173 ) (29,852,426 )
Decrease in net assets derived from
       capital share transactions (3,846,842 ) (8,719,942 )
Net Decrease in Net Assets (9,832,264 ) (10,619,797 )
 
Net Assets:
       Beginning of period 88,753,994 99,373,791
       End of period1 $ 78,921,730 $ 88,753,994
 
       1Including undistributed net investment income $ 2,943 $ 1,300

See accompanying notes

49

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

Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)       
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 5,055,339 $ 10,555,283
       Net realized loss on investments (286,240 ) (620,603 )
       Net change in unrealized
              appreciation/depreciation of investments   (11,921,658 )   (1,307,241 )
       Net increase (decrease) in net assets resulting
              from operations   (7,152,559 )   8,627,439
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (4,833,338 ) (10,088,211 )
              Class B (63,498 ) (155,100 )
              Class C   (169,520 )   (340,507 )
    (5,066,356 )   (10,583,818 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 7,308,154 10,216,326
              Class B 1,085 19
              Class C 857,896 1,027,663
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions: 
              Class A 3,098,322   6,399,592
              Class B 28,004   72,523
              Class C   116,569     231,599
  11,410,030   17,947,722

50


Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)       
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (14,551,214 ) $ (26,823,353 )
              Class B (624,343 ) (1,411,740 )
              Class C   (738,738 )   (1,502,110 )
    (15,914,295 )   (29,737,203 )
Decrease in net assets derived from
       capital share transactions (4,504,265 )   (11,789,481 )
Net Decrease in Net Assets (16,723,180 ) (13,745,860 )
 
Net Assets:
       Beginning of period   248,426,945       262,172,805
       End of period1 $ 231,703,765 $ 248,426,945
 
       1Including undistributed net investment income $ 2,866 $ —  

See accompanying notes

51

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

Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)       
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 1,671,803 $ 3,256,157
       Net realized gain on investments 17,280 75,661
       Net change in unrealized
              appreciation/depreciation of investments   (1,253,968 )   (89,235 )
       Net increase in net assets resulting
              from operations   435,115   3,242,583
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (1,416,131 ) (2,732,459 )
              Class B (74,447 ) (170,938 )
              Class C   (180,386 )   (349,960 )
  (1,670,964 )   (3,253,357 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 6,782,307 8,896,373
              Class B 11,946 12
              Class C 1,352,696 1,462,472
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:  
              Class A 923,122     1,765,961
              Class B 54,496 115,322
              Class C   114,189     215,873
9,238,756 12,456,013  

52


Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)       
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (4,535,232 ) $ (8,346,549 )
              Class B (635,614 ) (1,000,259 )
              Class C   (837,421 )   (1,717,154 )
    (6,008,267 )   (11,063,962 )
Increase in net assets derived from
       capital share transactions   3,230,489   1,392,051
Net Increase in Net Assets 1,994,640 1,381,277
 
Net Assets:
       Beginning of period   88,849,906   87,468,629
       End of period1 $ 90,844,546 $ 88,849,906
 
       1Including distributions in excess of
              net investment income $ (11,699 )   $ (11,301 )

See accompanying notes

53

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

Six Months Year
Ended Ended
2/28/09 8/31/08
(Unaudited)       
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 390,282 $ 718,580
       Net realized gain (loss) on investments 4,181 (59,331 )
       Net change in unrealized
              appreciation/depreciation of investments   (508,422 )   64,192
       Net increase (decrease) in net assets resulting
              from operations   (113,959 )   723,441
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (324,449 ) (591,360 )
              Class B (21,855 ) (58,984 )
              Class C   (43,973 )   (68,233 )
    (390,277 )   (718,577 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 4,545,079 1,725,009
              Class B 4,280 15,697
              Class C 1,916,775 773,501
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 184,890 340,675
              Class B 13,379     34,201
              Class C   21,021     26,265
  6,685,424   2,915,348  

54


Six Months Year
Ended Ended
2/28/09        8/31/08
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (1,956,393 ) $ (1,537,264 )
              Class B (345,614 ) (674,159 )
              Class C   (392,534 )   (883,325 )
    (2,694,541 )   (3,094,748 )
Increase (decrease) in net assets derived from
       capital share transactions   3,990,883   (179,400 )
Net Increase (Decrease) in Net Assets   3,486,647   (174,536 )
 
Net Assets:
       Beginning of period   18,937,507   19,112,043  
       End of period1 $ 22,424,154 $ 18,937,507
 
       1Including distributions in excess of    
              net investment income $ (647 )   $ (652 )

See accompanying notes

55

Financial highlights
Delaware Tax-Free Arizona Fund Class A

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


Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

56


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
$10.930 $11.070 $11.350 $11.560 $11.410 $11.160
   
 
  0.214 0.444 0.465 0.467 0.468 0.469
(0.300 ) (0.140 ) (0.280 ) (0.210 ) 0.174 0.308
(0.086 ) 0.304 0.185 0.257 0.642 0.777
 
 
(0.214 ) (0.444 ) (0.465 ) (0.467 ) (0.468 ) (0.469 )
— — — — (0.024 ) (0.058 )
(0.214 ) (0.444 ) (0.465 ) (0.467 ) (0.492 ) (0.527 )
 
$10.630 $10.930 $11.070 $11.350 $11.560 $11.410
 
(0.74% ) 2.78% 1.63% 2.31% 5.74% 7.09%
 
 
$108,716 $122,027 $125,636 $131,468 $134,874 $122,436
0.75% 0.75% 0.76% 0.76% 0.80% 0.90%
 
0.92% 0.91% 0.91% 0.91% 0.91% 0.90%
4.13% 4.02% 4.11% 4.12% 4.07% 4.14%
 
3.96% 3.86%     3.96% 3.97% 3.96% 4.14%
2% 29% 9%     8%     3%     19%  

57

Financial highlights
Delaware Tax-Free Arizona Fund Class B

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


Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.


See accompanying notes

58


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
$10.940 $11.070 $11.360 $11.570 $11.420 $11.170
 
 
0.175 0.361 0.380 0.382 0.382 0.384
(0.310 ) (0.130 ) (0.290 ) (0.210 ) 0.174 0.308
(0.135 ) 0.231 0.090 0.172 0.556 0.692
 
 
(0.175 ) (0.361 ) (0.380 ) (0.382 ) (0.382 ) (0.384 )
— — — — (0.024 ) (0.058 )
(0.175 ) (0.361 ) (0.380 ) (0.382 ) (0.406 ) (0.442 )
 
$10.630 $10.940 $11.070 $11.360 $11.570 $11.420
 
(1.20% ) 2.10% 0.78% 1.54% 4.95% 6.28%
 
 
$7,597 $9,620 $12,407 $16,413 $19,005 $13,355
1.50% 1.50% 1.51% 1.51% 1.55% 1.65%
 
1.67% 1.66% 1.66% 1.66% 1.66% 1.65%
3.38% 3.27% 3.36% 3.37% 3.32% 3.39%
 
3.21% 3.11% 3.21% 3.22% 3.21% 3.39%
2% 29% 9% 8% 3% 19%

59

Financial highlights
Delaware Tax-Free Arizona Fund Class C

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

 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

60


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04  
(Unaudited)  
$10.960 $11.090 $11.380 $11.580 $11.430 $11.180
 
   
  0.175 0.361 0.380 0.381 0.382 0.384
(0.310 ) (0.130 ) (0.290 ) (0.200 ) 0.174 0.308
(0.135 ) 0.231 0.090 0.181 0.556 0.692
 
 
(0.175 ) (0.361 ) (0.380 ) (0.381 ) (0.382 ) (0.384 )
—   —   —   —   (0.024 )   (0.058 )  
(0.175 ) (0.361 ) (0.380 ) (0.381 ) (0.406 ) (0.442 )  
 
$10.650 $10.960 $11.090 $11.380 $11.580 $11.430  
 
(1.20% ) 2.09% 0.77% 1.63% 4.94% 6.27%
 
 
$6,878 $8,806 $7,609 $8,117 $8,591 $6,651
1.50% 1.50% 1.51% 1.51% 1.55% 1.65%
 
1.67% 1.66% 1.66% 1.66% 1.66% 1.65%
3.38% 3.27% 3.36% 3.37% 3.32% 3.39%
 
3.21% 3.11% 3.21% 3.22% 3.21% 3.39%
2% 29% 9% 8% 3% 19%

61

Financial highlights
Delaware Tax-Free California Fund Class A

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

 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

62


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04  
(Unaudited)  
$10.800 $11.010 $11.400 $11.490 $11.110 $10.750
 
 
  0.216 0.449 0.454 0.450 0.462 0.518
  (0.710 ) (0.210 ) (0.390 ) (0.090 ) 0.380 0.360
(0.494 ) 0.239 0.064 0.360 0.842 0.878
 
 
  (0.216 ) (0.449 ) (0.454 ) (0.450 )   (0.462 )   (0.518 )  
(0.216 )   (0.449 ) (0.454 ) (0.450 ) (0.462 ) (0.518 )  
 
$10.090 $10.800 $11.010 $11.400 $11.490 $11.110
 
(4.54% ) 2.21% 0.51% 3.24% 7.72% 8.34%
 
 
$60,647 $67,174 $76,537 $75,995 $60,744 $24,797
0.88% 0.88% 0.89% 0.88% 0.84% 0.50%
 
0.98% 0.97% 0.97% 0.97% 1.06% 0.96%
4.33% 4.11% 3.98% 3.97% 4.03% 4.72%
 
4.23% 4.02% 3.90% 3.88% 3.81% 4.26%
20% 34% 21% 14% 11% 48%

63

Financial highlights
Delaware Tax-Free California Fund Class B

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

 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

64


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04  
(Unaudited)
$10.840 $11.060 $11.440 $11.530 $11.160 $10.790
   
 
  0.178 0.367 0.368 0.365 0.377 0.436
(0.700 ) (0.220 ) (0.380 ) (0.090 )   0.370   0.370  
(0.522 ) 0.147 (0.012 ) 0.275 0.747 0.806
 
   
  (0.178 ) (0.367 ) (0.368 ) (0.365 ) (0.377 ) (0.436 )
(0.178 ) (0.367 ) (0.368 ) (0.365 ) (0.377 ) (0.436 )
 
$10.140 $10.840 $11.060 $11.440 $11.530 $11.160
 
(4.78% )   1.34%   (0.15% ) 2.46%   6.80%   7.60%
 
 
$5,333 $6,589 $9,384 $14,918 $18,254 $14,530
1.63%   1.63%   1.64%   1.63%   1.59%   1.25%  
 
1.73%   1.72%   1.72%   1.72%   1.81%   1.71%  
3.58%   3.36%   3.23%   3.22%   3.28%   3.97%  
 
3.48%   3.27%   3.15%   3.13%   3.06%   3.51%  
20%   34%   21%   14%   11%   48%  

65

Financial highlights
Delaware Tax-Free California Fund Class C

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

 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

66


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04  
(Unaudited)
$10.810 $11.030 $11.420 $11.500 $11.130 $10.760
 
 
0.178 0.367 0.368 0.365 0.377 0.436
    (0.700 ) (0.220 ) (0.390 )   (0.080 )   0.370   0.370
(0.522 ) 0.147 (0.022 ) 0.285 0.747 0.806  
 
 
(0.178 ) (0.367 ) (0.368 ) (0.365 ) (0.377 ) (0.436 )
(0.178 ) (0.367 ) (0.368 ) (0.365 ) (0.377 ) (0.436 )
 
$10.110 $10.810 $11.030 $11.420 $11.500 $11.130
 
(4.80% ) 1.35% (0.24% ) 2.56% 6.81% 7.62%
 
 
  $12,942 $14,991 $13,453 $12,768 $9,756 $5,595
1.63% 1.63% 1.64% 1.63% 1.59% 1.25%
 
1.73% 1.72% 1.72% 1.72% 1.81% 1.71%
3.58% 3.36% 3.23% 3.22% 3.28% 3.97%
 
3.48% 3.27% 3.15% 3.13% 3.06% 3.51%
20% 34% 21% 14% 11% 48%

67

Financial highlights
Delaware Tax-Free Colorado Fund Class A

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

 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

68


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04  
(Unaudited)
$10.640 $10.730 $11.040 $11.200 $11.070 $10.830
 
 
0.223 0.448   0.464 0.488 0.495 0.510
  (0.520 ) (0.089 ) (0.310 ) (0.160 )   0.130   0.240    
(0.297 ) 0.359 0.154 0.328 0.625 0.750
 
 
(0.223 ) (0.449 ) (0.464 ) (0.488 ) (0.495 ) (0.510 )  
  (0.223 ) (0.449 ) (0.464 ) (0.488 ) (0.495 ) (0.510 )  
 
$10.120 $10.640 $10.730 $11.040 $11.200 $11.070
 
(2.76% ) 3.38% 1.38% 3.03% 5.78% 7.04%
 
 
$218,944 $234,630 $246,695 $258,773 $270,149 $276,534
0.92% 0.93% 0.94% 0.93% 0.94% 0.95%
 
0.95% 0.95% 0.96% 0.94% 0.94% 0.95%
4.44% 4.16% 4.22% 4.43% 4.46% 4.63%
 
4.41% 4.14% 4.20% 4.42% 4.46% 4.63%
14% 15% 12% 8% 8% 13%

69

Financial highlights
Delaware Tax-Free Colorado Fund Class B

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
      prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

70


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)    
    $10.640 $10.730 $11.050 $11.200 $11.080 $10.830
 
   
  0.185   0.367 0.382   0.405 0.412   0.427
  (0.510 ) (0.089 )   (0.320 )   (0.150 )   0.120   0.250
  (0.325 ) 0.278 0.062 0.255 0.532 0.677
 
 
  (0.185 ) (0.368 ) (0.382 ) (0.405 ) (0.412 ) (0.427 )
  (0.185 ) (0.368 ) (0.382 ) (0.405 ) (0.412 )   (0.427 )
 
  $10.130 $10.640 $10.730 $11.050 $11.200 $11.080  
 
  (3.03% ) 2.60% 0.53% 2.35% 4.89% 6.34%
 
 
  $3,173 $3,961 $5,326 $8,221 $10,370 $12,411
  1.67% 1.68% 1.69% 1.68% 1.69% 1.70%
 
  1.70% 1.70% 1.71% 1.69% 1.69% 1.70%
  3.69% 3.41% 3.47% 3.68% 3.71% 3.88%
 
  3.66% 3.39% 3.45% 3.67% 3.71% 3.88%
  14% 15% 12% 8% 8% 13%

71

Financial highlights
Delaware Tax-Free Colorado Fund Class C

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
      prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.


See accompanying notes

72


  Six Months Ended Year Ended
  2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
  (Unaudited)    
  $10.660   $10.750 $11.070 $11.220 $11.090 $10.850
 
 
  0.185 0.367 0.382 0.405 0.413 0.427
  (0.520 ) (0.089 ) (0.320 ) (0.150 ) 0.130 0.240
  (0.335 ) 0.278 0.062 0.255 0.543 0.667
 
 
  (0.185 ) (0.368 ) (0.382 ) (0.405 ) (0.413 ) (0.427 )
  (0.185 ) (0.368 ) (0.382 ) (0.405 ) (0.413 ) (0.427 )
 
  $10.140 $10.660 $10.750 $11.070 $11.220 $11.090
 
  (3.12% ) 2.60% 0.53% 2.34% 4.99% 6.23%
 
 
  $9,587 $9,836 $10,152 $9,971 $9,170 $9,579
  1.67% 1.68% 1.69% 1.68% 1.69% 1.70%
 
  1.70% 1.70% 1.71% 1.69% 1.69% 1.70%
  3.69% 3.41% 3.47% 3.68% 3.71% 3.88%
 
  3.66% 3.39% 3.45% 3.67% 3.71% 3.88%
  14% 15% 12% 8% 8% 13%

73

Financial highlights
Delaware Tax-Free Idaho Fund Class A

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period 
 
Total return2
 
Ratios and supplemental data: 
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
      prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.


See accompanying notes

74


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)                
  $11.260     $11.260     $11.450     $11.630   $11.490   $11.140  
 
   
0.216 0.437 0.448 0.449 0.452 0.478
(0.170 ) — (0.190 ) (0.180 ) 0.140 0.353
0.046 0.437 0.258 0.269 0.592 0.831
 
 
(0.216 ) (0.437 ) (0.448 ) (0.449 ) (0.452 ) (0.481 )
(0.216 ) (0.437 ) (0.448 ) (0.449 ) (0.452 ) (0.481 )
 
$11.090 $11.260 $11.260 $11.450 $11.630 $11.490
 
0.47% 3.93% 2.27% 2.40% 5.25% 7.58%
 
 
$74,448 $72,237 $69,931 $62,808 $60,554 $55,572
0.87% 0.85% 0.86% 0.85% 0.87% 0.97%
 
0.96% 0.96% 0.98% 0.98% 0.98% 0.97%
4.02% 3.87% 3.92% 3.95% 3.92% 4.21%
 
3.93% 3.76% 3.80% 3.82% 3.81% 4.21%
5% 11% 8% 15% 27% 13%

75

Financial highlights
Delaware Tax-Free Idaho Fund Class B

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

76


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)            
$11.240     $11.240     $11.430 $11.610 $11.480 $11.130  
 
 
0.176 0.353 0.363 0.364 0.366   0.393
  (0.170 ) — (0.190 ) (0.180 )   0.130   0.353
0.006 0.353 0.173     0.184     0.496 0.746
 
 
(0.176 ) (0.353 ) (0.363 ) (0.364 ) (0.366 ) (0.396 )
(0.176 ) (0.353 ) (0.363 ) (0.364 ) (0.366 ) (0.396 )
 
$11.070 $11.240 $11.240 $11.430 $11.610 $11.480
 
0.10% 3.17% 1.51% 1.64% 4.39% 6.79%
 
 
$4,456 $5,123 $6,003 $7,892 $10,911 $13,044
1.62% 1.60% 1.61% 1.60% 1.62% 1.72%
 
1.71% 1.71% 1.73% 1.73% 1.73% 1.72%
3.27% 3.12% 3.17% 3.20% 3.17% 3.46%
 
3.18% 3.01% 3.05% 3.07% 3.06% 3.46%
5% 11% 8% 15% 27% 13%

77

Financial highlights
Delaware Tax-Free Idaho Fund Class C

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect.

See accompanying notes

78


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)          
$11.250 $11.250 $11.440 $11.630 $11.490 $11.130
   
 
0.176 0.352 0.363 0.364 0.366 0.393
  (0.170 ) — (0.190 ) (0.190 ) 0.140 0.362
0.006     0.352     0.173     0.174     0.506     0.755
 
   
(0.176 ) (0.352 ) (0.363 ) (0.364 ) (0.366 )   (0.395 )
(0.176 ) (0.352 ) (0.363 ) (0.364 ) (0.366 ) (0.395 )
 
$11.080 $11.250 $11.250 $11.440 $11.630 $11.490
 
0.10% 3.16% 1.51% 1.56% 4.47% 6.87%
 
 
$11,941 $11,490 $11,535 $13,430 $15,678 $15,041
1.62% 1.60% 1.61% 1.60% 1.62% 1.72%
 
1.71% 1.71% 1.73% 1.73% 1.73% 1.72%
3.27% 3.12% 3.17% 3.20% 3.17% 3.46%
 
3.18% 3.01% 3.05% 3.07% 3.06% 3.46%
5% 11% 8% 15% 27% 13%

79

Financial highlights
Delaware Tax-Free New York Fund Class A

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

80


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
  $10.300 $10.300 $10.550 $10.700 $10.470 $10.220
 
 
0.200 0.411 0.435 0.449 0.453 0.479
(0.300 ) — (0.250 ) (0.150 )   0.230 0.250
(0.100 ) 0.411 0.185 0.299 0.683 0.729
 
 
(0.200 ) (0.411 ) (0.435 ) (0.449 ) (0.453 ) (0.479 ) 
(0.200 ) (0.411 ) (0.435 ) (0.449 ) (0.453 ) (0.479 )
 
$10.000   $10.300     $10.300     $10.550     $10.700     $10.470
 
(0.92% ) 4.04% 1.75% 2.90% 6.65% 7.26%  
 
 
$17,688 $15,340 $14,817 $13,519 $13,153 $11,523
0.85% 0.85% 0.79% 0.65% 0.66% 0.50%
 
1.09% 1.09% 1.10% 1.09% 1.12% 1.02%
4.09% 3.97% 4.13% 4.28% 4.29% 4.60%
 
3.85% 3.73% 3.82% 3.84% 3.83% 4.08%
12% 28% 14% 20% 13% 26%

81

Financial highlights
Delaware Tax-Free New York Fund Class B

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

82


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
$10.270 $10.280 $10.530 $10.670 $10.450 $10.200
   
   
 0.164 0.333 0.357 0.370 0.374 0.401
(0.290 ) (0.010 ) (0.250 ) (0.140 ) 0.220 0.250
(0.126 ) 0.323 0.107 0.230 0.594 0.651
   
   
(0.164 ) (0.333 ) (0.357 ) (0.370 ) (0.374 ) (0.401 )
(0.164 ) (0.333 ) (0.357 ) (0.370 ) (0.374 ) (0.401 )
     
$9.980 $10.270 $10.280 $10.530 $10.670 $10.450  
   
(1.19% ) 3.17% 0.99% 2.23% 5.77% 6.47%
   
   
  $1,170     $1,549   $2,164     $2,858     $3,023     $2,858
1.60% 1.60% 1.54% 1.40% 1.41% 1.25%  
   
1.84% 1.84% 1.85% 1.84% 1.87% 1.77%
3.34% 3.22% 3.38% 3.53% 3.54% 3.85%
   
3.10% 2.98% 3.07% 3.09% 3.08% 3.33%
12% 28% 14% 20% 13% 26%

83

Financial highlights
Delaware Tax-Free New York Fund Class C

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

Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly
Portfolio turnover

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.

2 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.

See accompanying notes

84


Six Months Ended Year Ended
2/28/091 8/31/08 8/31/07 8/31/06 8/31/05 8/31/04
(Unaudited)
$10.270 $10.280 $10.530 $10.670 $10.450 $10.200
 
 
0.164 0.333   0.357   0.370   0.376     0.401
  (0.290 ) (0.010 ) (0.250 ) (0.140 ) 0.220 0.250
(0.126 )   0.323 0.107 0.230 0.596 0.651
 
 
(0.164 ) (0.333 ) (0.357 ) (0.370 ) (0.376 ) (0.401 )
(0.164 ) (0.333 ) (0.357 ) (0.370 ) (0.376 ) (0.401 )
 
$9.980 $10.270 $10.280 $10.530 $10.670 $10.450  
 
(1.19% ) 3.17% 0.99% 2.23% 5.80% 6.47%  
 
 
$3,566 $2,049 $2,131 $2,068 $886 $2,329
1.60% 1.60% 1.54% 1.40% 1.41% 1.25%
 
1.84% 1.84% 1.85% 1.84% 1.87% 1.77%
3.34% 3.22% 3.38% 3.53% 3.54% 3.85%
 
3.10% 2.98% 3.07% 3.09% 3.08% 3.33%
12% 28% 14% 20% 13% 26%

85


Notes to financial statements

Delaware multi-state funds  February 28, 2009 (Unaudited) 

Voyageur Mutual Funds is organized as a Delaware statutory trust and offers five series: Delaware Minnesota High-Yield Municipal Bond Fund, Delaware National High-Yield Municipal Bond Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund. Voyageur Mutual Funds II is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Colorado Fund. Voyageur Insured Funds is organized as a Delaware statutory trust and offers one series: Delaware Tax-Free Arizona Fund. Voyageur Mutual Funds, Voyageur Mutual Funds II, and Voyageur Insured Funds are individually referred to as a “Trust” and collectively as the “Trusts.” These financial statements and related notes pertain to Delaware Tax-Free Arizona Fund, Delaware Tax-Free California Fund, Delaware Tax-Free Colorado Fund, Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund (each, a Fund or, collectively, the Funds). The above Trusts are open-end investment companies. The Funds are considered diversified under the Investment Company Act of 1940, as amended, and offer Class A, Class B, and Class C shares. Class A shares are sold with a maximum front-end sales charge of up to 4.50%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first 12 months.

The investment objective of the Funds is to seek as high a level of current income exempt from federal income tax and personal income tax in their respective states, as is consistent with preservation of capital.

1. Significant Accounting Policies

The following accounting policies are in accordance with U.S. generally accepted accounting principles and are consistently followed by the Funds.

Security Valuation — Long-term debt securities are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Open-end investment companies are valued at their published net asset value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Board of Trustees (each, a Board, and collectively, the Boards). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Funds may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before each Fund values its securities at 4:00 p.m. Eastern Time. The earlier close of these

86

foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading or news events, may have occurred in the interim. To account for this, the Funds may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).

Federal Income Taxes — No provision for federal income taxes has been made as each Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. The Funds did not record any tax benefit or expense in the current period.

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

Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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

The Funds receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under this arrangement is included in custodian fees on the statements of operations with the corresponding expense offset shown as “expense paid indirectly.”

87

Notes to financial statements
Delaware multi-state funds

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

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

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

DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse each Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and non-routine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, “non-routine expenses”)) do not exceed specified percentages of average daily net assets as shown below. For purposes of these waivers and reimbursements, non-routine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by each Fund’s Board and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Funds.

Delaware Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
Effective January 1, 2009,
       operating expense
       limitation as a  
       percentage of average  
       daily net assets          
       (per annum) 0.50%   0.63%   0.64%     0.65%     0.60%  
Expiration date 12/31/09  12/31/09    12/31/09   12/31/09   12/31/09
Through December 31, 2008,  
       operating expense
       limitation as a
       percentage of average
       daily net assets
       (per annum) 0.50% 0.63% 0.68% 0.60% 0.60%
Expiration date    12/31/08        12/31/08        12/31/08        12/31/08        12/31/08    

88

Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. For these services, each Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments Family of Funds on a relative net asset value basis. For the six months ended February 28, 2009, each Fund was charged for these services as follows:

Delaware Delaware Delaware Delaware Delaware
Tax-Free   Tax-Free   Tax-Free Tax-Free   Tax-Free
Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
$3,131 $2,106 $5,733 $2,145 $494

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

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

At February 28, 2009, each Fund had liabilities payable to affiliates as follows:

Delaware Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund       California Fund       Colorado Fund       Idaho Fund       New York Fund
Investment management  
       fee payable to DMC   $33,081     $27,890   $89,717     $34,306   $5,689  
Dividend disbursing,        
       transfer agent and fund        
       accounting oversight        
       fees and other expenses    
       payable to DSC 4,847 3,588 10,584 3,540 1,404
Distribution fees
       payable to DDLP 32,336 26,034 52,004 26,726   7,010
Other expenses payable to
       DMC and affiliates* 11,885 7,383 21,821 8,208 3,664

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

89

Notes to financial statements
Delaware multi-state funds

2.   

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

As provided in the investment management agreement, each Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to each Fund by DMC and/or its affiliates’ employees. For the six months ended February 28, 2009, each Fund was charged for internal legal and tax services provided by DMC and/or its affiliates’ employees as follows:

Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free   Tax-Free   Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund   Colorado Fund   Idaho Fund   New York Fund
$4,828 $3,122 $8,973 $3,392 $796

For the six months ended February 28, 2009, DDLP earned commissions on sales of Class A shares for each Fund as follows:

Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free   Tax-Free   Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund Colorado Fund   Idaho Fund New York Fund
$6,902 $5,678 $6,928 $15,937   $6,127

For the six months ended February 28, 2009, DDLP received gross CDSC commissions on redemption of each Fund’s Class A, Class B and Class C shares, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares. The amounts received were as follows:

Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund Colorado Fund Idaho Fund New York Fund
Class A     $ 994         $ —          $ —         $ —          $ 305    
Class B   683     858   2,858       952       430
Class C 8,988 5,186   28 177 —

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

3. Investments

For the six months ended February 28, 2009, the Funds made purchases and sales of investment securities other than short-term investments as follows:

Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free   Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund   Colorado Fund Idaho Fund New York Fund
Purchases $ 1,345,869 $ 8,025,857 $ 15,720,049   $ 7,556,190   $ 5,549,076
Sales 13,424,345 15,849,739 18,042,609  2,073,750 1,179,780

90

At February 28, 2009, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At February 28, 2009, the cost of investments and unrealized appreciation (depreciation) for each Fund were as follows:

      Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund Colorado Fund Idaho Fund New York Fund
Cost of
       investments   $ 123,801,847 $ 84,159,306 $ 234,908,491 $ 91,000,223   $ 22,308,672
Aggregate      
       unrealized
       appreciation $ 4,143,429 $ 1,611,449   $ 10,763,835 $ 2,925,424 $ 910,523
Aggregate    
       unrealized      
       depreciation   (5,894,877 ) (7,641,589 ) (17,181,530 ) (3,187,887 ) (969,577 )
Net unrealized
       depreciation $ (1,751,448 ) $ (6,030,140 ) $ (6,417,695 ) $ (262,463 ) $ (59,054 )

Effective September 1, 2008, the Funds adopted Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value as the price that the Funds would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a framework for measuring fair value, and a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. Each Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

Level 1 – inputs are quoted prices in active markets

Level 2 – inputs are observable, directly or indirectly

Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity

91

Notes to financial statements
Delaware multi-state funds

3. Investments (continued)

The following table summarizes the valuation of the Funds’ investments by the FAS 157 fair value hierarchy levels as of February 28, 2009:

      Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund  California Fund Colorado Fund  Idaho Fund New York Fund
Level 1   $   114,789 $ 1,144,744 $   340,264 $   1,808,356 $ —
Level 2 121,935,610   76,984,422 228,150,532   88,929,404   22,249,618
Level 3   — —     —   — —
Total $   122,050,399 $ 78,129,166 $ 228,490,796 $ 90,737,760   $ 22,249,618

There were no Level 3 securities at the beginning or end of the period.

4. Dividend and Distribution Information

Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended February 28, 2009 and the year ended August 31, 2008 was as follows:

      Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund Colorado Fund Idaho Fund New York Fund
Six months ended 2/28/09*
Tax-exempt income $   2,533,202 $   1,681,019 $   5,053,847 $   1,670,964 $      390,277
Ordinary income —   — 12,509 — —
Total   $ 2,533,202 $ 1,681,019 $ 5,066,356 $ 1,670,964 $    390,277
 
Year ended 8/31/08          
Tax-exempt income $ 5,547,778 $ 3,715,410 $ 10,556,654   $ 3,253,357   $     718,577
Ordinary income — —   27,164 — —
Total $ 5,547,778 $ 3,715,410 $ 10,583,818 $ 3,253,357 $    718,577

*Tax information for the period ended February 28, 2009 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.

92

5. Components of Net Assets on a Tax Basis

The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of February 28, 2009, the estimated components of net assets on a tax basis were as follows:

Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund Colorado Fund Idaho Fund New York Fund
Shares of
       beneficial  
       interest $  127,901,846 $  86,657,165   $  246,899,640 $  91,441,146 $  22,704,433
Distributions
       payable (80,509 )     (54,699 ) (170,360 ) (56,064 ) (14,509 )
Undistributed
       tax-exempt  
       income 80,776 57,642 173,226 44,365 13,862
Realized gains
       (losses) 9/1/08 –  
       2/28/09 (190,453 ) (558,577 ) (802,603 ) 2,660 (31,321 )
Post-October  
       losses   (1,008,831 ) (259,726 ) (57,112 )   —   (8,900 )
Capital loss  
       carryforwards as  
       of 8/31/08 (1,760,144 ) (889,935 ) (7,921,331 ) (325,098 ) (180,357 )
Unrealized    
       depreciation of
       investments (1,751,448 ) (6,030,140 ) (6,417,695 ) (262,463 ) (59,054 )
Net assets $ 123,191,237 $ 78,921,730 $ 231,703,765 $ 90,844,546 $ 22,424,154

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

Post-October losses represent losses realized on investment transactions from November 1, 2008 through February 28, 2009 that, in accordance with federal income tax regulations, each Fund has elected to defer and treat as having arisen in the following year.

93

Notes to financial statements
Delaware multi-state funds

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

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2009, the Funds recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.

Delaware           Delaware
Tax-Free Tax-Free
Colorado Fund Idaho Fund
Undistributed (distributions in excess of)      
       net investment income   $ 13,883 $ (1,237 )
Accumulated net realized        
       gain (loss) (13,883 ) 1,237

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at August 31, 2008 will expire as follows:

      Delaware       Delaware       Delaware       Delaware       Delaware
Year of Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Expiration   Arizona Fund California Fund Colorado Fund Idaho Fund New York Fund
2009  $   —   $   662,241    $   1,044,895  $   77,838     $   165,428  
2010 —   — —     166,949 —
2011 78,759 6,039 — — —  
2012 1,681,385 — 4,571,043 — —
2013   — — 57,695 — —
2014   —   — 2,203,520 23,435 —
2015 — — — 56,876 —
2016 — 221,655     44,178 —     14,929
Total  $ 1,760,144 $ 889,935  $ 7,921,331  $ 325,098 $ 180,357

For the six months ended February 28, 2009, the Funds had capital gains (losses) which may reduce (increase) capital loss carryforwards.

Delaware       Delaware       Delaware       Delaware       Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund California Fund   Colorado Fund   Idaho Fund   New York Fund
$(190,453) $(558,577) $(802,603) $2,660 $(31,321)

94

6. Capital Shares

Transactions in capital shares were as follows:

      Delaware Tax-Free       Delaware Tax-Free       Delaware Tax-Free
Arizona Fund California Fund Colorado Fund
Six Months       Year Six Months       Year Six Months       Year
Ended Ended Ended   Ended Ended Ended
2/28/09 8/30/08 2/28/09 8/30/08 2/28/09 8/30/08
Shares sold:
       Class A 256,211 1,334,775 597,013 1,269,777 722,775 948,236
       Class B 1,942 31 8,984 12,972 107 1
       Class C 45,692 266,518 135,140 433,780 84,569 95,653
 
Shares issued upon reinvestment of dividends and distributions:  
       Class A 109,117 217,919 80,657 164,369 307,378 594,257
       Class B 6,625 16,633 6,938 17,433 2,775 6,724
       Class C 7,440 15,736 18,217 32,379 11,539 21,454
427,027 1,851,612 846,949   1,930,710 1,129,143 1,666,325  
 
Shares repurchased:    
       Class A (1,300,805 ) (1,740,104 ) (891,097 ) (2,161,501 ) (1,451,405 ) (2,487,354 )
       Class B (173,825 ) (257,420 ) (97,629 ) (271,127 ) (61,601 ) (130,940 )
       Class C (211,246 ) (164,512 ) (259,480 ) (299,668 ) (73,471 ) (139,008 )
(1,685,876 ) (2,162,036 ) (1,248,206 ) (2,732,296 ) (1,586,477 ) (2,757,302 )
Net decrease (1,258,849 ) (310,424 ) (401,257 ) (801,586 ) (457,334 ) (1,090,977 )
 
Delaware Tax-Free Delaware Tax-Free
Idaho Fund New York Fund
Six Months Year Six Months Year
Ended Ended Ended Ended
2/28/09 8/30/08 2/28/09 8/30/08
Shares sold:
       Class A 627,030 787,130 460,307 166,604
       Class B 1,123 1 440 1,496
       Class C 123,145 128,677 197,268 74,906
 
Shares issued upon reinvestment of dividends and distributions:
       Class A 85,341 155,988 18,788 32,892
       Class B 5,049 10,201 1,363 3,309
       Class C 10,573 19,082 2,138 2,539
852,261 1,101,079 680,304 281,746
 
Shares repurchased:
       Class A (414,390 ) (736,838 ) (199,771 ) (148,374 )
       Class B (59,477 ) (88,298 ) (35,344 ) (64,544 )
       Class C (77,321 ) (151,455 ) (41,395 ) (85,398 )
(551,188 ) (976,591 ) (276,510 ) (298,316 )
Net increase
       (decrease) 301,073 124,488 403,794 (16,570 )

95

Notes to financial statements
Delaware multi-state funds

6. Capital Shares (continued)

For the six months ended February 28, 2009 and the year ended August 31, 2008, the following shares and values were converted from Class B to Class A shares. The respective amounts are included in Class B redemptions and Class A subscriptions in the tables on page 95 and the statements of changes in net assets.

      Six Months Ended       Year Ended
2/28/09 8/31/08
Class B       Class A       Class B       Class A      
Shares Shares Value Shares Shares Value
Delaware Tax-Free
       Arizona Fund 43,097 43,097 $ 445,201 29,536 29,541 $ 328,168
Delaware Tax-Free  
       California Fund 52,920   53,139 515,990 79,561 79,848 881,603
Delaware Tax-Free  
       Colorado Fund 10,206 10,206     99,945 88,870 88,933   958,664
Delaware Tax-Free        
       Idaho Fund 23,989 23,943 256,873   43,828 43,749 496,288
Delaware Tax-Free    
       New York Fund 14,684 14,653 140,684 14,375 14,339 148,612

7. Line of Credit

Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $225,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement expired on November 18, 2008.

Effective November 18, 2008, the Funds, along with the other Participants, entered into an amendment to the agreement with BNY Mellon for a $35,000,000 revolving line of credit. The agreement, as amended, is to be used as described above and operates in substantially the same manner as the original agreement. The agreement, as amended, expires on November 17, 2009. The Funds had no amounts outstanding at any time during the period ended February 28, 2009.

96

8. Credit and Market Risk

The Funds concentrate their investments in securities issued by municipalities. The value of these investments may be adversely affected by new legislation within the states, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. A real or perceived decline in creditworthiness of a bond insurer can have an adverse impact on the value of insured bonds held in the Fund. At February 28, 2009, the percentage of each Fund’s net assets insured by bond insurers are listed below and these securities have been identified in the statements of net assets.

Delaware             Delaware             Delaware             Delaware             Delaware
Tax-Free   Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Fund   California Fund   Colorado Fund   Idaho Fund   New York Fund
59.06% 38.73% 45.25% 43.31% 21.20%

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

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

97

Notes to financial statements
Delaware multi-state funds

8. Credit and Market Risk (continued)

Each Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair each Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, each Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of each Fund’s limitation on investments in illiquid assets. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to each Fund’s 15% limit on investments in illiquid securities. As of February 28, 2009, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.

9. Contractual Obligations

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

98

About the organization

 

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

Board of trustees  
 
Patrick P. Coyne Ann R. Leven 
Chairman, President, and Consultant 
Chief Executive Officer ARL Associates 
Delaware Investments Family of Funds New York, NY 
Philadelphia, PA  
  Thomas F. Madison 
Thomas L. Bennett  President and Chief Executive Officer 
Private Investor  MLM Partners, Inc. 
Rosemont, PA  Minneapolis, MN 
 
John A. Fry  Janet L. Yeomans 
President  Vice President and Treasurer 
Franklin & Marshall College  3M Corporation 
Lancaster, PA  St. Paul, MN 
 
Anthony D. Knerr  J. Richard Zecher 
Founder and Managing Director  Founder 
Anthony Knerr & Associates  Investor Analytics 
New York, NY   Scottsdale, AZ 
 
Lucinda S. Landreth   
Former Chief Investment Officer   
Assurant, Inc.   
Philadelphia, PA   

99


Affiliated officers  Contact information 
 
David F. Connor  Investment manager 
Vice President, Deputy General Counsel, and  Delaware Management Company, a series of 
Secretary  Delaware Management Business Trust 
Delaware Investments® Family of Funds  Philadelphia, PA 
Philadelphia, PA   
  National distributor 
Daniel V. Geatens  Delaware Distributors, L.P. 
Vice President and Treasurer  Philadelphia, PA 
Delaware Investments Family of Funds   
Philadelphia, PA  Shareholder servicing, dividend disbursing, 
  and transfer agent 
David P. O’Connor  Delaware Service Company, Inc. 
Senior Vice President, General Counsel,  2005 Market Street 
and Chief Legal Officer  Philadelphia, PA 19103-7094 
Delaware Investments Family of Funds   
Philadelphia, PA  For shareholders 
  800 523-1918 
Richard Salus   
Senior Vice President and  For securities dealers and financial 
Chief Financial Officer  institutions representatives only 
Delaware Investments Family of Funds  800 362-7500 
Philadelphia, PA   
  Web site 
  www.delawareinvestments.com 

Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries.

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

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

100

Item 2. Code of Ethics

     Not applicable.

Item 3. Audit Committee Financial Expert

     Not applicable.

Item 4. Principal Accountant Fees and Services

     Not applicable.

Item 5. Audit Committee of Listed Registrants

     Not applicable.

Item 6. Investments

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

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

     Not applicable.

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

     Not applicable.

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

     Not applicable.

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

     Not applicable.

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

     Not applicable.

Item 11. Controls and Procedures

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

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

Item 12. Exhibits

(a) (1) Code of Ethics

     Not applicable.

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

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

     Not applicable.

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

SIGNATURES

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

Name of Registrant: VOYAGEUR MUTUAL FUNDS

PATRICK P. COYNE
By: Patrick P. Coyne
Title: Chief Executive Officer  
Date:     May 4, 2009

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

PATRICK P. COYNE
By:  Patrick P. Coyne
Title:  Chief Executive Officer 
Date:     May 4, 2009
 
 
RICHARD SALUS 
By: Richard Salus
Title: Chief Financial Officer 
Date:     May 4, 2009