N-CSR 1 delminnesota_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, 2010


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, 2010
 
 
 
 
Fixed income mutual funds
 
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.
 
The figures in the semiannual report for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted.
 
You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund prospectus contains this and other important information about the Fund. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money.
 
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit www.delawareinvestments.com/edelivery.
 


Experience Delaware Investments
 
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
 
If you are interested in learning more about creating an investment plan, contact your financial advisor.
 
You can learn more about Delaware Investments or obtain a prospectus for Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund at www.delawareinvestments.com.
 
Manage your investments online
  • 24-hour access to your account information
  • Obtain share prices
  • Check your account balance and recent transactions
  • Request statements or literature
  • Make purchases and redemptions
On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Funds’ prospectus and any supplements thereto for more complete information.
 
Investments in Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including subsidiaries or related companies, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Funds, the repayment of capital from the Funds, or any particular rate of return.
 
Table of contents
Disclosure of Fund expenses 1
Sector allocations and credit quality breakdowns 4
Statements of net assets 7
Statements of operations 36
Statements of changes in net assets 38
Financial highlights 44
Notes to financial statements 62
Other Fund information 75
About the organization 86

Unless otherwise noted, views expressed herein are current as of Feb. 28, 2010, and are subject to change.
 
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. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
 
© 2010 Delaware Management Holdings, Inc.
 
All third-party trademarks cited are the property of their respective owners.
 

Disclosure of Fund expenses
For the period September 1, 2009 to February 28, 2010
 
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 from September 1, 2009 to February 28, 2010.
 
Actual expenses
 
The first section of the tables shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
 
Hypothetical example for comparison purposes
 
The second section of the tables shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of 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
          9/1/09           2/28/10           Expense Ratio           9/1/09 to 2/28/10*
Actual Fund return    
Class A   $1,000.00   $1,041.10 0.93%   $4.71
Class B 1,000.00   1,037.20 1.68% 8.49
Class C 1,000.00 1,037.10 1.68% 8.49
Hypothetical 5% return (5% return before expenses)
Class A   $1,000.00   $1,020.18 0.93%   $4.66
Class B 1,000.00 1,016.46 1.68% 8.40
Class C 1,000.00 1,016.46 1.68% 8.40

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
          9/1/09           2/28/10           Expense Ratio           9/1/09 to 2/28/10*
Actual Fund return  
Class A   $1,000.00   $1,033.80   0.79%   $3.98
Class B 1,000.00 1,029.40 1.64% 8.25
Class C 1,000.00 1,029.40 1.64% 8.25
Hypothetical 5% return (5% return before expenses)
Class A   $1,000.00   $1,020.88 0.79%   $3.96
Class B 1,000.00 1,016.66 1.64% 8.20
Class C 1,000.00 1,016.66 1.64% 8.20

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
          9/1/09           2/28/10           Expense Ratio           9/1/09 to 2/28/10*
Actual Fund return
Class A   $1,000.00   $1,063.30   0.91%   $4.66  
Class B 1,000.00 1,060.40 1.66% 8.48
Class C 1,000.00 1,059.30 1.66% 8.48
Hypothetical 5% return (5% return before expenses)
Class A   $1,000.00   $1,020.28 0.91%   $4.56
Class B 1,000.00 1,016.56 1.66% 8.30
Class C 1,000.00 1,016.56 1.66% 8.30

*“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, 2010

Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector Percentage of net assets
Municipal Bonds 100.51 %
Corporate-Backed Revenue Bonds 4.02 %
Education Revenue Bonds 6.06 %
Electric Revenue Bonds 5.18 %
Escrowed to Maturity Bonds 8.91 %
Health Care Revenue Bonds 21.95 %
Housing Revenue Bonds 7.15 %
Lease Revenue Bonds 3.42 %
Local General Obligation Bonds 17.56 %
Pre-Refunded Bonds 17.54 %
Special Tax Revenue Bonds 3.73 %
State General Obligation Bonds 3.49 %
Transportation Revenue Bonds 1.13 %
Water & Sewer Revenue Bonds 0.37 %
Total Value of Securities 100.51 %
Liabilities Net of Receivables and Other Assets (0.51 %)
Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 27.65 %
AA 27.31 %
A 23.72 %
BBB 11.16 %
BB 2.52 %
Not Rated 7.64 %
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, 2010

Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector Percentage of net assets
Municipal Bonds 101.47 %
Corporate-Backed Revenue Bonds 1.65 %
Education Revenue Bonds 9.90 %
Electric Revenue Bonds 7.56 %
Escrowed to Maturity Bonds 1.72 %
Health Care Revenue Bonds 17.24 %
Housing Revenue Bonds 4.15 %
Lease Revenue Bonds 1.94 %
Local General Obligation Bonds 26.28 %
Pre-Refunded Bonds 8.49 %
Special Tax Revenue Bonds 11.05 %
State General Obligation Bonds 5.80 %
Transportation Revenue Bonds 2.41 %
Water & Sewer Revenue Bonds 3.28 %
Short-Term Investment 0.31 %
Total Value of Securities 101.78 %
Liabilities Net of Receivables and Other Assets (1.78 %)
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 31.97 %
AA 32.62 %
A 21.87 %
BBB 7.20 %
BB 1.17 %
Not Rated 5.17 %
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, 2010

Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector Percentage of net assets
Municipal Bonds 98.30 %
Corporate-Backed Revenue Bonds 3.35 %
Education Revenue Bonds 9.43 %
Electric Revenue Bonds 6.04 %
Health Care Revenue Bonds 28.55 %
Housing Revenue Bonds 12.58 %
Lease Revenue Bonds 0.90 %
Local General Obligation Bonds 11.44 %
Pre-Refunded Bonds 8.69 %
Special Tax Revenue Bonds 7.76 %
State General Obligation Bonds 4.01 %
Transportation Revenue Bond 1.39 %
Water & Sewer Revenue Bonds 4.16 %
Short-Term Investments 0.55 %
Total Value of Securities 98.85 %
Receivables and Other Assets Net of Liabilities 1.15 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 15.94 %
AA 21.19 %
A 24.34 %
BBB 17.61 %
BB 3.07 %
Not Rated 17.85 %
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, 2010 (Unaudited)

          Principal amount       Value
Municipal Bonds – 100.51%            
Corporate-Backed Revenue Bonds – 4.02%
Cloquet Pollution Control Revenue Refunding
          (Potlatch Project) 5.90% 10/1/26 $ 6,500,000 $ 5,983,965
Laurentian Energy Authority I Cogeneration Revenue  
          Series A 5.00% 12/1/21 8,000,000 7,743,680
Sartell Environmental Improvement Revenue Refunding
          (International Paper) Series A 5.20% 6/1/27 7,265,000 6,733,057
Seaway Port Authority of Duluth Industrial Development
          Dock & Wharf Revenues Refunding (Cargill Project)
          Series E 6.125% 11/1/14 4,500,000 4,520,340
  24,981,042
Education Revenue Bonds – 6.06%
Minnesota Colleges & Universities Revenue Fund Series A
          5.00% 10/1/22 (AGM) 5,135,000 5,413,985
          5.00% 10/1/28 8,900,000 9,666,556
          5.00% 10/1/29 (NATL-RE) 5,665,000 5,971,079
Minnesota Higher Education Facilities Authority Revenue
          (Augsburg College)
          Series 6-C 5.00% 5/1/20 1,250,000 1,270,638
          Series 6-J1 5.00% 5/1/36 2,225,000 2,112,816
          (Bethel University) Refunding Series 6-R 5.50% 5/1/37 2,500,000 2,365,175
          (Carleton College) Series 6-T 5.00% 1/1/28 1,000,000 1,061,200
          (University of St. Thomas)
          Series 6-X 5.25% 4/1/39 5,000,000 5,100,600
          Series 7-A 5.00% 10/1/39 2,000,000 2,016,600
St. Cloud Housing & Redevelopment Authority Revenue
          (State University Foundation Project) 5.00% 5/1/23 2,000,000 2,059,520
University Minnesota Series C 4.00% 2/1/16 515,000 569,441
  37,607,610
Electric Revenue Bonds – 5.18%
Chaska Electric Revenue Refunding (Generating Facilities)
          Series A 5.00% 10/1/30 3,000,000 3,067,410
Minnesota Municipal Power Agency Electric Revenue
          5.00% 10/1/35 3,000,000 3,033,420
          Series A
          5.00% 10/1/34 6,250,000 6,329,000
          5.125% 10/1/29 3,000,000 3,074,460

7
 

Statements of net assets
Delaware Tax-Free Minnesota Fund
 
          Principal amount       Value
Municipal Bonds (continued)            
Electric Revenue Bonds (continued)
Northern Municipal Power Agency Electric System
          Revenue Refunding Series B 4.75% 1/1/20 (AMBAC) $ 2,500,000 $ 2,507,000
Puerto Rico Electric Power Authority Power Revenue  
          Refunding Series GG 4.75% 7/1/21 (AGM) 1,000,000 1,006,880
          Series TT 5.00% 7/1/37 2,500,000 2,388,700
          Series WW 5.50% 7/1/38 4,800,000 4,860,480
Southern Minnesota Municipal Power Agency Supply
          System Revenue Series A
          5.25% 1/1/15 (AMBAC) 2,900,000 3,304,463
          ^Capital Appreciation 4.44% 1/1/25 (NATL-RE) 5,000,000 2,578,650
  32,150,463
Escrowed to Maturity Bonds – 8.91%
Dakota-Washington Counties Housing & Redevelopment
          Authority Single Family Residential Mortgage Revenue
          8.15% 9/1/16 (GNMA) (NATL-RE) (AMT) 405,000 540,238
          (Anoka County) 8.45% 9/1/19 (GNMA) (AMT) 9,000,000 12,744,540
          (Bloomington Mortgage) Refunding Series B
          8.375% 9/1/21 (GNMA) (FHA) (VA) (AMT) 14,115,000 20,591,526
Southern Minnesota Municipal Power Agency Power
          Supply System Revenue Refunding Series B
          5.50% 1/1/15 (AMBAC) 990,000 1,046,232
University of Minnesota Series A
          5.50% 7/1/21 12,500,000 14,811,125
          5.75% 7/1/18 3,840,000 4,600,358
Western Minnesota Municipal Power Agency Supply
          Revenue Series A 9.75% 1/1/16 (NATL-RE) 715,000 979,865
  55,313,884
Health Care Revenue Bonds – 21.95%
Aitkin Health Care Facilities Revenue Refunding
          (Riverwood Health Care Center) 5.60% 2/1/32 2,100,000 1,876,119
Apple Valley Economic Development Authority Health
          Care Revenue (Augustana Home St. Paul Project)
          Series A 6.00% 1/1/40 2,700,000 2,437,884
Bemidji Health Care Facilities First Mortgage Revenue
          (North Country Health Services)
          5.00% 9/1/24 (RADIAN) 740,000 731,719
          5.00% 9/1/31 (RADIAN) 500,000 465,705

8
 

     Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          Breckenridge Catholic Health Initiatives
          Series A 5.00% 5/1/30 $ 2,500,000 $ 2,554,650
Maple Grove Health Care System Revenue
          (Maple Grove Hospital) 5.25% 5/1/37 2,950,000 2,806,483
Minneapolis Health Care Facility Revenue
          (Jones-Harrison Residence Project) 5.60% 10/1/30 1,050,000 930,447
Minneapolis Health Care System Revenue
          (Fairview Health Services)
          Series A 6.625% 11/15/28 3,000,000 3,370,170
          Series B 6.50% 11/15/38 (ASSURED GTY) 1,140,000 1,274,064
          Series D
          5.00% 11/15/30 (AMBAC) 2,500,000 2,496,600
          5.00% 11/15/34 (AMBAC) 10,750,000 10,408,365
Minneapolis - St. Paul Housing & Redevelopment
          Authority Health Care System Revenue
          (Health Partners Obligation Group Project)  
          5.875% 12/1/29 1,000,000 1,004,740
  Minnesota Agricultural & Economic  
          Development Board Revenue
          (Benedictine Health Systems) 5.75% 2/1/29 1,895,000 1,742,547
          (Essentia Remarketing) Series C-1
          5.00% 2/15/30 (ASSURED GTY) 5,725,000 5,774,121
          5.25% 2/15/23 (ASSURED GTY) 5,000,000   5,372,950
          5.50% 2/15/25 (ASSURED GTY)     5,120,000 5,463,962
          (Fairview Health Care System)    
          Un-Refunded Balance Series A
          5.75% 11/15/26 (NATL-RE) 180,000 180,072
          6.375% 11/15/29 15,000 15,231
Northfield Hospital Revenue 5.375% 11/1/26 3,785,000 3,658,505
Rochester Health Care & Housing Revenue Refunding
          (Samaritan Bethany) Series A 7.375% 12/1/41 5,220,000 5,400,716
Shakopee Health Care Facilities Revenue
          (St. Francis Regional Medical Center)
          5.10% 9/1/25 2,000,000 1,938,920
          5.25% 9/1/34 7,000,000 6,542,900
Sherburne County Health Care Facilities Revenue
          (Guardian Angels Health Services) 5.55% 10/1/36 1,500,000 1,288,695

9
 

Statements of net assets
Delaware Tax-Free Minnesota Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          St. Cloud Health Care Revenue (Centracare Health
          System Project)
          Series A
          5.00% 5/1/25 $ 1,035,000 $ 1,037,412
          5.125% 5/1/30 5,350,000 5,339,568
          Series D Remarketing 5.50% 5/1/39 (ASSURED GTY) 6,000,000 6,172,380
St. Louis Park Health Care Facilities Revenue Refunding
          (Park Nicollet Health Services)
            5.75% 7/1/39 15,200,000 15,231,311
          Series C  
          5.50% 7/1/23 1,925,000 1,991,547
          5.625% 7/1/26   3,000,000 3,109,410
          5.75% 7/1/30 5,000,000 5,102,500
St. Paul Housing & Redevelopment Authority    
          Health Care Revenue
          (Allina Health System)
          Series A 5.00% 11/15/18 (NATL-RE) 5,720,000 6,072,924
          Series A-1 5.25% 11/15/29 5,605,000 5,621,479
          (Health Partners Obligation Group Project)  
          5.25% 5/15/36   7,900,000 7,287,513
St. Paul Housing & Redevelopment Authority
          Hospital Revenue (Health East Project)
          6.00% 11/15/30 4,000,000 3,709,360
          6.00% 11/15/35 4,340,000 3,979,216
          Series A 5.70% 11/1/15 1,150,000 1,149,885
St. Paul Housing & Redevelopment Authority
          Multifamily Housing Revenue Refunding
          (Marion Center Project) Series A
          5.30% 11/1/30 500,000 421,620
          5.375% 5/1/43 500,000 416,060
Stillwater Health Care Revenue (Health System
          Obligation Group) 5.00% 6/1/35 1,000,000 945,120
Washington County Housing & Redevelopment
          Authority Hospital Facilities Revenue (Health East Project)
          5.50% 11/15/27 1,000,000 915,220
136,238,090

10
 

     Principal amount      Value
Municipal Bonds (continued)          
Housing Revenue Bonds – 7.15%
          Dakota County Housing & Redevelopment Authority
          Single Family Mortgage Revenue
          5.85% 10/1/30 (GNMA) (FNMA) (AMT) $ 113,000 $ 113,069
@ Hutchinson Multifamily Housing Revenue
          (Evergreen Apartments Project)
          5.75% 11/1/28 (HUD Section 8) 740,000 747,918
Minneapolis Multifamily Housing Revenue
            (Bottineau Commons Project)
          5.45% 4/20/43 (GNMA) (AMT) 1,500,000 1,508,340
          (Grant Street Apartments Project) Series A 7.25% 11/1/29 750,000 757,710
            (Seward Towers Project) 5.00% 5/20/36 (GNMA) 8,000,000 8,068,960
          (Sumner Field) Series A 5.50% 11/20/26 (GNMA) (AMT) 890,000 907,079
          (Trinity Apartments) Refunding Series A
          6.75% 5/1/21 (HUD Section 8) 1,535,000 1,544,578
Minnesota Housing Finance Agency Rental Housing
          Revenue Series C-2 5.95% 2/1/15 (AMBAC) 1,495,000 1,498,304
Minnesota Housing Finance Agency Residential Housing
          Series A 5.30% 7/1/19 440,000 447,784
          Series B-1 5.35% 1/1/33 (AMT) 2,590,000 2,599,479
        •Series D 4.80% 7/1/38 (AMT) 2,500,000 2,359,475
          Series I 4.85% 7/1/38 (AMT) 2,000,000 1,902,360
          Series I 5.15% 7/1/38 (AMT)   5,530,000 5,537,908
          Series L 5.10% 7/1/38 (AMT) 9,910,000 9,821,306
          Series M 4.875% 7/1/37 (AMT)   4,500,000   4,351,275
@ Washington County Housing & Redevelopment  
          Authority Governmental Revenue Refunding    
          (Briar Pond Project) Series C 7.25% 8/20/34 920,000   762,588
White Bear Lake Multifamily Revenue Refunding
          (Lake Square) Series A 5.875% 2/1/15 (FHA) 680,000 681,448
Willmar Housing & Redevelopment Authority
          Multifamily Housing Revenue (Highland Apartments)
          5.85% 6/1/19 (HUD Section 8) 755,000 755,000
44,364,581

11
 

Statements of net assets
Delaware Tax-Free Minnesota Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Lease Revenue Bonds – 3.42%
          Minneapolis Special School District #001 Series A
          5.00% 2/1/18 (AGM) $ 1,545,000 $ 1,653,073
          5.00% 2/1/19 (AGM) 1,535,000 1,642,373
          5.00% 2/1/20 (AGM) 1,690,000 1,808,216
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)  
          Un-Refunded Balance Series D 5.25% 7/1/36 1,070,000 1,025,756
  St. Paul Port Authority Lease Revenue  
          (Cedar Street Office Building Project)
          5.00% 12/1/22 2,500,000   2,599,325
          5.25% 12/1/27 3,840,000 3,969,253
          Series 3-12 5.125% 12/1/27 3,000,000 3,120,930
          (Robert Street Office Building Project)  
          Series 3-11 4.75% 12/1/23 2,000,000 2,075,320
          Series 3-11 5.00% 12/1/27 2,500,000 2,589,050
          Series 9 5.25% 12/1/27 725,000 749,404
21,232,700
Local General Obligation Bonds – 17.56%      
Anoka County Capital Improvement Series A
          5.00% 2/1/19 1,270,000 1,488,186
          5.00% 2/1/22 500,000 570,380
Brainerd Independent School District #181
          Refunding (School Building) Series A
          4.00% 2/1/22 3,255,000 3,425,562
          4.00% 2/1/23 5,990,000 6,247,330
Centennial Independent School District #012
          Series A 5.00% 2/1/18 (AGM) 1,270,000 1,360,703
Dakota County Capital Improvement
          Series A 4.75% 2/1/26 1,000,000 1,012,190
Dakota County Community Development Agency
          (Senior Housing Facilities) 5.00% 1/1/21 1,275,000 1,312,319
Farmington Independent School District #192 Series B
          5.00% 2/1/27 (AGM) 10,705,000 11,363,892
          ^Capital Appreciation 5.34% 2/1/21 (AGM) 1,500,000 894,540
          ^Capital Appreciation 5.424% 2/1/20 (AGM) 1,650,000 1,037,834
Lakeville Independent School District #194
          Series A 4.75% 2/1/22 (AGM) 6,850,000 7,137,425

12
 

               Principal amount      Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
^ Mahtomedi Independent School District #832 Capital
       Appreciation Series B 5.90% 2/1/14 (NATL-RE) $ 1,540,000 $ 1,444,135
Metropolitan Council Minneapolis-St. Paul
         Metropolitan Area Waste Water Treatment
       Series B 5.00% 12/1/21 1,200,000 1,332,420
       Series C
       5.00% 3/1/16 2,440,000 2,867,781
       5.00% 3/1/28 5,000,000 5,362,900
Minneapolis Library 5.00% 12/1/25 1,500,000 1,563,375
Morris Independent School District #769 Building
       5.00% 2/1/24 (NATL-RE) 4,875,000   5,348,948
Mounds View Independent School District #621 Series A
       5.00% 2/1/20 (NATL-RE) 2,970,000 3,176,207
       5.375% 2/1/24 (FGIC) 6,170,000 6,423,649
New Brighton Tax Increment  
       Series A 5.00% 2/1/27 (NATL-RE) 1,000,000 1,077,860
Osseo Independent School District #279
       Series A 5.00% 2/1/21 (AGM) 3,570,000 3,819,722
Prior Lake Independent School District #719  
       Series B 5.00% 2/1/19 (AGM)   3,145,000 3,425,503
Ramsey County State Aid Series C 5.00% 2/1/28   1,060,000   1,100,746
Robbinsdale Independent School District #281  
       5.00% 2/1/21 (AGM) 1,310,000 1,407,110
^ Rosemount Independent School District #196
       Capital Appreciation Series B
       5.931% 4/1/11 (AGM) 2,600,000 2,582,970
       5.961% 4/1/12 (AGM) 1,850,000 1,810,188
       6.008% 4/1/13 (AGM) 1,915,000 1,837,404
^ Sartell Independent School District #748
       Capital Appreciation Refunding Series B
       5.976% 2/1/13 (NATL-RE) 540,000 511,202
       6.10% 2/1/15 (NATL-RE) 1,075,000 944,044
       6.15% 2/1/16 (NATL-RE) 1,750,000 1,460,813
^ Sauk Rapids Independent School District #047 Series B
       5.983% 2/1/15 (AGM) 2,700,000 2,109,618
       6.083% 2/1/17 (AGM) 2,245,000 1,552,440

13
 

Statements of net assets
Delaware Tax-Free Minnesota Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
          South Washington County Independent School
          District #833 Series A
          4.75% 2/1/25 $ 2,500,000 $ 2,695,675
          4.75% 2/1/26 3,600,000 3,851,280
          4.75% 2/1/27 2,300,000 2,442,669
St. Michael Independent School District #885
            5.00% 2/1/20 (AGM) 1,970,000   2,110,697
          5.00% 2/1/27 (AGM) 3,435,000 3,680,328
St. Peter’s Hospital Series A 5.00% 9/1/24 (NATL-RE) 1,905,000 1,942,757
Todd Morrison Cass & Wadena Counties Staples United
          Hospital District (Health Care Facilities-Lakewood)
          5.00% 12/1/21   2,000,000 2,099,120
          5.125% 12/1/24   1,000,000   1,044,770
Willmar (Rice Memorial Hospital Project)
          5.00% 2/1/22 (AGM)   1,000,000   1,067,570
          5.00% 2/1/25 (AGM) 1,000,000 1,029,850
108,974,112
§Pre-Refunded Bonds – 17.54%
Chaska Electric Revenue Series A 6.00% 10/1/25-10 1,000,000 1,034,810
Duluth Economic Development Authority
          Health Care Facilities Revenue
          (Benedictine Health System - St. Mary’s Hospital)
          5.25% 2/15/33-14 10,000,000 11,539,200
          5.50% 2/15/23-14 1,000,000 1,163,570
Hennepin County Regional Railroad Authority
          5.00% 12/1/31-10 4,030,000 4,064,457
Hopkins Housing & Redevelopment Authority
          (Public Works & Fire Station) Series A
          5.00% 2/1/23-13 (NATL-RE) 1,210,000 1,355,067
Minneapolis Health Care System Revenue
          (Allina Health Systems) Series A 5.75% 11/15/32-12 17,300,000 19,581,351
          (Fairview Health Services) Series A 5.625% 5/15/32-12 16,925,000 18,916,396
Minneapolis - St. Paul Metropolitan Airports
          Commission Revenue
          Series A 5.25% 1/1/32-11 (FGIC) 5,000,000 5,211,650
          Series C 5.25% 1/1/32-11 (FGIC) 6,845,000 7,129,341

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 $ 511,287
Minnesota State 5.00% 11/1/20-10 (AGM) 13,675,000 14,125,728
Rochester Electric Utilities Revenue 5.25% 12/1/30-10 4,915,000 5,102,065
Southern Minnesota Municipal Power Agency Power Supply
       Revenue Series A
       5.75% 1/1/18-13 3,790,000 4,099,529
       5.75% 1/1/18-13 (NATL-RE) 1,000,000 1,081,670
       5.75% 1/1/18-13 (AMBAC) 670,000 724,719
St. Louis Park Health Care Facilities Revenue
       (Park Nicollet Health Services) Series B
       5.25% 7/1/30-14 9,420,000 10,903,273
       5.50% 7/1/25-14 2,000,000 2,335,880
108,879,993
Special Tax Revenue Bonds – 3.73%  
Hennepin County Sales Revenue
       (Second Lien - Ballpark Project) Series B  
       5.00% 12/15/19 2,100,000 2,397,696
       5.00% 12/15/20 1,000,000 1,132,750
       5.00% 12/15/24 1,150,000 1,271,463
Minneapolis Tax Increment Revenue Refunding
       (St. Anthony Falls Project) 5.75% 2/1/27   1,000,000   889,780
Puerto Rico Commonwealth Highway & Transportation  
       Authority Revenue Series K 5.00% 7/1/30 5,605,000 5,316,567
Puerto Rico Commonwealth Infrastructure Financing
       Authority Special Tax Revenue Series B 5.00% 7/1/46   4,000,000 3,549,400
Puerto Rico Sales Tax Financing Sales Tax Revenue
       First Subordinate Series A
    •5.00% 8/1/39 925,000 971,315
       5.75% 8/1/37 5,620,000 5,809,787
Virgin Islands Public Finance Authority Revenue
       (Senior Lien-Matching Fund Loan) Series A
       5.25% 10/1/22 1,785,000 1,812,917
23,151,675

15
 

Statements of net assets
Delaware Tax-Free Minnesota Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
State General Obligation Bonds – 3.49%
          Minnesota State
            5.00% 10/1/15 $ 5,000,000 $ 5,884,649
          5.00% 8/1/21 2,400,000 2,619,432
          Series A 5.00% 12/1/21 5,000,000 5,853,200
Puerto Rico Commonwealth Public Improvement
          Series C 6.00% 7/1/39 4,045,000 4,164,125
          Un-Refunded Balance
          Series A 5.00% 7/1/34 1,670,000 1,545,936
          Series B 5.00% 7/1/35 575,000 530,001
Puerto Rico Government Development Bank
          Senior Notes Series B 5.00% 12/1/14 1,000,000 1,062,760
  21,660,103
Transportation Revenue Bonds – 1.13%  
Minneapolis - St. Paul Metropolitan Airports
          Commission Revenue Series A
          5.00% 1/1/15 (AMT) 3,095,000 3,375,128
          5.00% 1/1/22 (NATL-RE)   2,000,000 2,055,380
          5.25% 1/1/16 (NATL-RE) 1,460,000 1,585,575
  7,016,083
Water & Sewer Revenue Bonds – 0.37%
Minnesota Public Facilities Authority Drinking Water
          Revenue Series B 5.25% 3/1/13   1,000,000 1,130,620
Minnesota Public Facilities Authority Water Pollution
          Control Revenue Refunding Series B 5.00% 3/1/19 1,000,000   1,184,160
2,314,780
Total Municipal Bonds (cost $595,508,886) 623,885,116
 
Number of shares
Short-Term Investment – 0.00%
Money Market Instrument – 0.00%
Federated Minnesota Municipal Cash Trust 1,532 1,532
Total Short-Term Investment (cost $1,532) 1,532

16
 

      
Total Value of Securities – 100.51%
          (cost $595,510,418) $ 623,886,648
Liabilities Net of Receivables and
          Other Assets – (0.51%) (3,151,625 )
Net Assets Applicable to 49,898,379
          Shares Outstanding – 100.00% $ 620,735,023
 
Net Asset Value – Delaware Tax-Free Minnesota Fund
          Class A ($575,674,206 / 46,285,234 Shares) $12.44
Net Asset Value – Delaware Tax-Free Minnesota Fund
          Class B ($8,474,379 / 680,871 Shares) $12.45
Net Asset Value – Delaware Tax-Free Minnesota Fund
          Class C ($36,586,438 / 2,932,274 Shares)   $12.48
 
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par) $ 591,374,256
Distributions in excess of net investment income (145,617 )
Accumulated net realized gain on investments 1,130,154
Net unrealized appreciation of investments 28,376,230
Total net assets $ 620,735,023

^ 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, 2010.
§ Pre-Refunded bonds. Municipal bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 9 in ”Notes to financial statements.” 
@ Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $1,510,506, which represented 0.24% of the Fund’s net assets. See Note 9 in “Notes to financial statements.”

17
 

Statements of net assets
Delaware Tax-Free Minnesota Fund
 
 
Summary of abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
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 Administration
FNMA — Federal National Mortgage Association Collateral
GNMA — Government National Mortgage Association Collateral
HUD — Housing and Urban Development
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
VA — Veterans Administration Collateral

Net Asset Value and Offering Price Per Share –  
       Delaware Tax-Free Minnesota Fund  
Net asset value Class A (A) $ 12.44
Sales charge (4.50% of offering price) (B) 0.59
Offering price $ 13.03

(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, 2010 (Unaudited)

     Principal amount      Value
Municipal Bonds – 101.47%          
Corporate-Backed Revenue Bonds – 1.65%
          Laurentian Energy Authority I Cogeneration Revenue
          Series A 5.00% 12/1/21 $ 750,000 $ 725,970
Minneapolis Community Development Agency
          (Limited Tax Common Bond Fund)
            Series 4 6.20% 6/1/17 (AMT) 870,000 874,124
1,600,094
Education Revenue Bonds – 9.90%  
Minnesota Colleges & Universities Revenue Fund
          Series A 5.00% 10/1/28 1,000,000 1,086,130
Minnesota Higher Education Facilities Authority Revenue
          (Carleton College) Series 6-T 4.75% 1/1/23 1,000,000   1,074,430
          (Macalester College) Series 6-P 4.25% 3/1/27 750,000 753,615
          (St. Johns University) Series 6-U
          4.40% 10/1/21 325,000 335,585
          4.50% 10/1/23 265,000 271,890
          (University of St. Thomas)
          Series 5-Y 5.25% 10/1/19 1,590,000   1,694,145
          Series 6-X 5.00% 4/1/24 1,000,000 1,056,160
St. Cloud Housing & Redevelopment Authority Revenue  
          (State University Foundation Project) 5.00% 5/1/23 1,000,000 1,029,760
University of Minnesota  
          Series A 4.00% 4/1/15 310,000 345,228
          Series C 4.00% 2/1/14 250,000 276,908
University of Minnesota Special Purpose Revenue  
          (State Supported Stadium Debt) 5.00% 8/1/18 1,500,000 1,683,090
9,606,941
Electric Revenue Bonds – 7.56%
Chaska Electric Revenue Refunding (Generating Facilities)
          Series A 5.25% 10/1/25 1,000,000 1,046,770
Minnesota Municipal Power Agency Electric Revenue
          5.25% 10/1/21 1,000,000 1,070,890
Northern Municipal Power Agency Electric System
          Revenue Series A
          5.00% 1/1/13 (ASSURED GTY) 1,200,000 1,318,020
          5.00% 1/1/14 (ASSURED GTY) 510,000 570,588
          5.00% 1/1/15 (ASSURED GTY) 1,000,000 1,129,510

19
 

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
 
          Principal amount Value
Municipal Bonds (continued)               
Electric Revenue Bonds (continued)
Southern Minnesota Municipal Power Agency Supply System
          Revenue Series A
          5.25% 1/1/15 (AMBAC) $ 1,000,000 $ 1,139,470
          5.25% 1/1/30 1,000,000 1,054,180
7,329,428
Escrowed to Maturity Bonds – 1.72%
University of Minnesota Series A
          5.75% 7/1/16 1,000,000 1,189,620
          5.75% 7/1/18 400,000 479,204
1,668,824
Health Care Revenue Bonds – 17.24%
Bemidji Health Care Facilities First Mortgage Revenue
          (North Country Health Services)
          5.00% 9/1/31 (RADIAN) 650,000 605,417
Glencoe Health Care Facilities Revenue (Glencoe Regional
          Health Services Project) 5.00% 4/1/31 1,000,000 911,230
Minneapolis Health Care System Revenue
          (Fairview Health Services) Series A 6.625% 11/15/28 1,500,000 1,685,085
Minneapolis-St. Paul Housing & Redevelopment Authority
          (Health Partners Obligation Group Project)
          6.00% 12/1/17 850,000 890,333
Minnesota Agricultural & Economic Development Board
          Health Care Revenue (Essentia Remarketing)
          Series C-1 5.50% 2/15/25 (ASSURED GTY) 2,500,000 2,667,949
Moorhead Economic Development Authority Multifamily
          Housing Revenue Refunding
          (Eventide Lutheran Home Project) 4.70% 6/1/18 475,000 435,879
Rochester Minnesota Health Care & Housing Revenue
          (Samaritan Bethany) Refunding Series A 6.875% 12/1/29 950,000 978,785
St. Cloud Minnesota Health Care Revenue (Centracare Health
          System Project) 5.375% 5/1/31 (ASSURED GTY) 1,000,000 1,036,200
          Series A 5.125% 5/1/30 750,000 748,538
St. Louis Park Health Care Facilities Revenue Refunding
          (Park Nicollet Health Services)
          5.50% 7/1/29 1,000,000 1,016,730
          Series C 5.625% 7/1/26 2,500,000 2,586,424
St. Paul Housing & Redevelopment Authority Health Care
          Revenue (Allina Health System)
          Series A-2 5.25% 11/15/28 2,000,000 2,011,782

20
 

          Principal amount Value
Municipal Bonds (continued)               
Health Care Revenue Bonds (continued)
St. Paul Housing & Redevelopment Authority Hospital
          Revenue (Health East Project) Series B 5.85% 11/1/17 $ 1,160,000 $ 1,152,820
  16,727,172
Housing Revenue Bonds – 4.15%
Minneapolis Multifamily Housing Revenue Refunding
          (Trinity Apartments)
          Series A 6.75% 5/1/21 (HUD Section 8) 1,595,000 1,604,952
Minnesota Housing Finance Agency Residential Housing
         •Series D 4.75% 7/1/32 (AMT) 750,000 719,048
          Series I 5.10% 7/1/20 (AMT) 705,000 714,278
          Series M 4.85% 7/1/31 (AMT) 1,000,000 982,970
4,021,248
Lease Revenue Bonds – 1.94%
Edina Housing & Redevelopment Authority Public Project
          Revenue (Appropriate Lease Obligation)
          5.125% 2/1/19 1,000,000 1,038,100
Virginia Housing & Redevelopment Authority Health Care
          Facility Lease Revenue 5.25% 10/1/25 880,000 843,339
  1,881,439
Local General Obligation Bonds – 26.28%
Anoka County Capital Improvements
          Series A 4.00% 2/1/17 1,175,000 1,301,559
          Series C 5.00% 2/1/27 500,000 543,770
Anoka-Hennepin Independent School District #11
          Refunding 5.00% 2/1/17 1,000,000 1,173,510
Big Lake Independent School District #727
          Series C Refunding
          5.00% 2/1/16 (AGM) 1,180,000 1,224,333
          5.00% 2/1/17 (AGM) 1,000,000 1,037,570
Brainerd Independent School District #181 Refunding
          (School Building) Series A 4.00% 2/1/22 2,500,000 2,631,000
Centennial Independent School District #012 Series A
          5.00% 2/1/18 (AGM) 1,000,000 1,071,420
          5.00% 2/1/20 (AGM) 750,000 803,565
Dakota County Capital Improvement Series A
          4.75% 2/1/17 1,000,000 1,036,510

21
 

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
 
          Principal amount Value
Municipal Bonds (continued)               
Local General Obligation Bonds (continued)
Duluth Independent School District #709 Revenue
          Certificates of Participation Series A 4.25% 2/1/20 (AGM) $ 1,710,000 $ 1,863,746
Hopkins Independent School District #270
          5.125% 2/1/17 (FGIC) 2,000,000 2,147,600
Mankato Independent School District #77 (Formerly Blue
          Earth County Independent School District #10)
          4.125% 2/1/22 1,000,000 1,060,400
Metropolitan Council Minneapolis-St. Paul Metropolitan
          Area Waste Water Treatment Series C
          5.00% 3/1/16 560,000 658,179
          5.00% 3/1/28 1,000,000 1,072,580
Minneapolis Various Purposes 4.00% 12/1/23 1,500,000 1,561,920
Osseo Independent School District #279
          Series A 5.00% 2/1/21 (AGM) 1,500,000 1,604,925
South Washington County Independent School District #833
          Series A 4.00% 2/1/22 750,000 784,380
          Series B 5.00% 2/1/16 (AGM) 1,560,000 1,670,635
St. Paul Independent School District #625
          (School Building) Series A 4.00% 2/1/15 1,020,000 1,137,351
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 1,109,270
  25,494,223
§Pre-Refunded Bonds – 8.49%
Hennepin County Series B 4.75% 12/1/14-10 1,000,000 1,034,720
Minneapolis Health Care System Revenue
          (Allina Health Systems) Series A 5.75% 11/15/32-12 1,500,000 1,697,805
          (Fairview Health Services) Series A 5.625% 5/15/32-12 1,750,000 1,955,905
Minneapolis -St. Paul Metropolitan Airports Commission
          Revenue Series C 5.125% 1/1/20-11 (FGIC) 750,000 780,368
Minnesota Higher Education Facilities Authority Revenue
          (College of Art & Design) Series 5-D 6.625% 5/1/20-10 1,000,000 1,011,490
St. Louis Park Health Care Facilities Revenue
          (Park Nicollet Health Services)
          Series B 5.50% 7/1/25-14 1,500,000 1,751,910
8,232,198

22
 

          Principal amount      Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds – 11.05%
Hennepin County Sales Tax Revenue (Second Lien-Ballpark)
          Series B 5.00% 12/15/17 $ 1,740,000 $ 2,042,794
Minneapolis Art Center Facilities Revenue (Walker Art
          Center Project) 5.125% 7/1/21 2,250,000 2,301,637
@ Minneapolis Tax Increment Revenue (Ivy Tower Project)
          5.50% 2/1/22 415,000 314,288
Minnesota 911 Revenue (Public Safety Radio
          Communication System Project)
          4.00% 6/1/14 (ASSURED GTY) 1,370,000 1,515,234
          4.25% 6/1/18 (ASSURED GTY) 1,170,000 1,284,836
          4.50% 6/1/25 (ASSURED GTY) 1,000,000 1,063,910
Puerto Rico Sales Tax Financing Sales Tax Revenue
          First Subordinate Series A
         •5.00% 8/1/39 500,000 525,035
          5.25% 8/1/27 1,000,000 1,023,110
          6.125% 8/1/29 250,000 258,473
         Ω(Capital Appreciation) 6.75% 8/1/32 510,000 388,156
10,717,473
State General Obligation Bonds – 5.80%
Minnesota State
          Refunding 5.00% 8/1/15 2,000,000 2,347,540
          Various Purposes Series A 5.00% 12/1/21 1,000,000 1,170,640
Puerto Rico Commonwealth Public Improvement
          Refunding Series A 5.25% 7/1/15 1,000,000 1,068,820
• Puerto Rico Public Finance (Commonwealth Appropriation)
          Series A 5.75% 8/1/27
          (LOC - Puerto-Rico Government Bank) 1,000,000 1,034,750
5,621,750
Transportation Revenue Bonds – 2.41%
Minneapolis-St. Paul Metropolitan Airports
          Commission Refunding
          Series 14 5.50% 1/1/11 (AMT) 750,000 777,608
          Series A 5.00% 1/1/13 (AMT) 500,000 539,140
          Series B 5.00% 1/1/22 (AMT) 1,000,000 1,022,900
2,339,648

23
 

Statements of net assets
Delaware Tax-Free Minnesota Intermediate Fund
 
          Principal amount      Value  
Municipal Bonds (continued)          
Water & Sewer Revenue Bonds – 3.28%
  Minnesota Public Facilities Authority Water
          Pollution Control Revenue Refunding
            Series C 5.00% 3/1/18 $ 1,000,000 $ 1,141,420
          Series D 5.00% 3/1/14 500,000 576,000
St. Paul Sewer Revenue Series D 5.00% 12/1/20 1,275,000 1,463,279
  3,180,699
Total Municipal Bonds (cost $94,141,771) 98,421,137
 
Number of shares  
Short-Term Investment – 0.31%
Money Market Instrument – 0.31%
Federated Minnesota Municipal Cash Trust 305,097 305,097
Total Short-Term Investment (cost $305,097) 305,097
 
Total Value of Securities – 101.78%
(cost $94,446,868) 98,726,234
Liabilities Net of Receivables
and Other Assets – (1.78%) (1,729,873 )
Net Assets Applicable to 8,819,362
Shares Outstanding – 100.00% $ 96,996,361
 
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
Class A ($83,801,578 / 7,621,778 Shares)   $11.00
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
Class B ($157,178 / 14,255 Shares)   $11.03
Net Asset Value – Delaware Tax-Free Minnesota Intermediate Fund
Class C ($13,037,605 / 1,183,329 Shares)   $11.02
 
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par) $ 93,577,105
Undistributed net investment income 2,522
Accumulated net realized loss on investments (862,632 )
Net unrealized appreciation of investments 4,279,366
Total net assets $ 96,996,361

24
 

   
@ Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $314,288, which represented 0.32% of the Fund’s net assets. See Note 9 in “Notes to financial statements.”
§ Pre-Refunded bonds. Municipal bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 9 in “Notes to financial statements.”
• Variable rate security. The rate shown is the rate as of February 28, 2010.
Ω
Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
 
Summary of abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
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
HUD — Housing and Urban Development
LOC — Letter of Credit
RADIAN — Insured by Radian Asset Assurance
 
Net Asset Value and Offering Price Per Share –  
       Delaware Tax-Free Minnesota Intermediate Fund  
Net asset value Class A (A)       $11.00
Sales charge (2.75% of offering price) (B)   0.31
Offering price $11.31

(A)   Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
 
See accompanying notes
 
25
 

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund February 28, 2010 (Unaudited)

          Principal amount Value
Municipal Bonds – 98.30%               
Corporate-Backed Revenue Bonds – 3.35%
Cloquet Pollution Control Revenue Refunding
          (Potlatch Project) 5.90% 10/1/26 $ 1,700,000 $ 1,565,037
Laurentian Energy Authority I Cogeneration Revenue
          Series A 5.00% 12/1/21 1,750,000 1,693,930
Sartell Environmental Improvement Revenue Refunding
          (International Paper) Series A 5.20% 6/1/27 1,750,000 1,621,865
  4,880,832
Education Revenue Bonds – 9.43%
Baytown Township Lease Revenue (St. Croix
          Preparatory Academy) Series A 7.00% 8/1/38 500,000 475,795
Minnesota Higher Education Facilities Authority Revenue
          (Augsburg College)
          Series 6-C 5.00% 5/1/23 700,000 703,619
          Series 6-J1 5.00% 5/1/36 1,000,000 949,580
          (Bethel University) Series 6-R 5.50% 5/1/37 1,500,000 1,419,105
          (Macalester College) Series 6-P 4.25% 3/1/32 1,000,000 955,870
          (St. John’s University) Series 6-U 4.75% 10/1/33 825,000 806,636
          (St. Olaf) Series 6-O
          4.50% 10/1/32 1,000,000 926,210
          5.00% 10/1/22 1,000,000 1,062,510
          (University of St. Thomas)
          Series 6-I 5.00% 4/1/23 1,500,000 1,580,220
          Series 7-A 5.00% 10/1/39 1,000,000 1,008,300
University of Minnesota Series A 5.125% 4/1/34 1,000,000 1,068,290
University of Minnesota Special Purpose Revenue
          (Supported Stadium Debt) 5.00% 8/1/29 2,660,000 2,784,860
  13,740,995
Electric Revenue Bonds – 6.04%
Chaska Electric Revenue Refunding
          (Generating Facilities) Series A 5.25% 10/1/25 1,000,000 1,046,770
Minnesota Municipal Power Agency Electric Revenue
          Series A 5.00% 10/1/34 2,750,000 2,784,760
Northern Municipal Power Agency Electric System Revenue
          Series A
          5.00% 1/1/16 (ASSURED GTY) 1,200,000 1,352,472
          5.00% 1/1/18 (ASSURED GTY) 1,000,000 1,124,000
Southern Minnesota Municipal Power Agency Supply
          System Revenue Series A 5.25% 1/1/16 (AMBAC) 1,000,000 1,139,360

26
 

          Principal amount      Value
Municipal Bonds (continued)          
Electric Revenue Bonds (continued)
Western Minnesota Municipal Power Agency Supply
          Revenue Series A 5.00% 1/1/30 (NATL-RE) $ 1,335,000 $ 1,351,154
  8,798,516
Health Care Revenue Bonds – 28.55%  
Aitkin Health Care Facilities Revenue Refunding
          (Riverwood Health Care Center) 5.50% 2/1/24 700,000 680,736
Apple Valley Economic Development Authority Health
          Care Revenue (Augustanna Home St. Paul Project)
          Series A 5.80% 1/1/30 1,000,000 916,220
  Bemidji Health Care Facilities First Mortgage Revenue
          (North Country Health Services)  
          5.00% 9/1/31 (RADIAN) 1,350,000   1,257,404
          Refunding 5.00% 9/1/20   1,150,000   1,171,091
Breckenridge Catholic Health Initiatives
          Series A 5.00% 5/1/30 2,000,000   2,043,719
Detroit Lakes Housing & Health Facilities Revenue  
          Refunding (Mankato Lutheran Homes)
          Series D 5.50% 8/1/21 500,000 498,010
Glencoe Health Care Facilities Revenue
          (Glencoe Regional Health Services Project)
          5.00% 4/1/20 1,100,000 1,105,346
          5.00% 4/1/31 1,965,000 1,790,567
Mahtomedi Senior Housing Revenue Refunding
          (St. Andrews Village Project) 5.75% 12/1/40 1,000,000 824,720
Maple Grove Health Care Facilities Revenue
          (North Memorial Health Care) 5.00% 9/1/35 1,880,000 1,718,264
Maple Grove Health Care System Revenue
          (Maple Grove Hospital)
          5.25% 5/1/28 2,200,000 2,252,667
          5.25% 5/1/37 1,000,000 951,350
Minneapolis Health Care System Revenue
          (Fairview Health Services)
          Series A 6.625% 11/15/28 1,900,000 2,134,440
          Series B 6.50% 11/15/38 (ASSURED GTY) 250,000 279,400
          Series D 5.00% 11/15/34 (AMBAC) 1,000,000 968,220
Minneapolis-St. Paul Housing & Redevelopment Authority
          (Health Partners Obligation Group Project)
          6.00% 12/1/17 525,000 549,911

27
 

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
 
          Principal amount      Value
Municipal Bonds (continued)            
Health Care Revenue Bonds (continued)
Minnesota Agricultural & Economic Development
          Board Revenue (Benedictine Health Systems)
          5.75% 2/1/29 $ 1,000,000 $ 919,550
Moorhead Economic Development Authority
          Multifamily Housing Revenue Refunding
            (Eventide Project) Series A 5.15% 6/1/29 550,000 473,787
Northfield Hospital Revenue 5.375% 11/1/31   1,000,000 929,230
Owatonna Senior Housing Revenue  
          (Senior Living Project) Series A
          5.80% 10/1/29 400,000 368,488
          6.00% 4/1/41 1,250,000 1,119,750
Rochester Minnesota Health Care & Housing Revenue  
          (Samaritan Bethany) Refunding Series A
          6.875% 12/1/29 1,000,000   1,030,300
          7.375% 12/1/41 375,000   387,983
Shakopee Health Care Facilities Revenue  
          (St. Francis Regional Medical Center) 5.25% 9/1/34 1,000,000 934,700
St. Cloud Health Care Revenue
          (Centracare Health System Project)
          5.50% 5/1/39 (ASSURED GTY) 1,500,000 1,543,095
          Series A 5.125% 5/1/30 1,125,000 1,122,806
St. Louis Park Health Care Facilities Revenue Refunding
          (Park Nicollet Health Services)
          Series C 5.50% 7/1/23 1,000,000 1,036,470
St. Paul Housing & Redevelopment Authority
          Health Care Facilities Revenue
          (Allina Health System) Series A 5.00% 11/15/18 (NATL-RE) 1,900,000 2,017,230
          (Health Partners Obligation Group Project)
          5.25% 5/15/36 1,000,000 922,470
St. Paul Housing & Redevelopment Authority
          Hospital Revenue (Health East Project)
          6.00% 11/15/25 1,000,000 977,040
          6.00% 11/15/30 1,000,000 927,340
          Series A 5.70% 11/1/15 705,000 704,930
          Series B 5.85% 11/1/17 250,000 248,453
St. Paul Housing and Redevelopment Authority
          Multifamily Housing Revenue Refunding
          (Marion Center Project) Series A 5.375% 5/1/43 1,000,000 832,120

28
 

          Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
Stillwater Health Care Revenue
          (Health System Obligation Group)
          5.00% 6/1/25 $ 2,000,000 $ 2,010,140
          5.00% 6/1/35 1,000,000 945,120
@ Twin Valley Congregate Housing Revenue
          (Living Options Project) 5.95% 11/1/28 1,825,000 1,667,831
  Winona Health Care Facilities Revenue Refunding
          (Winona Health Obligation Group) 5.15% 7/1/31 1,500,000 1,347,540
    41,608,438
Housing Revenue Bonds – 12.58%
Chanhassen Multifamily Housing Revenue Refunding  
          (Heritage Park Apartments Project)
          6.20% 7/1/30 (FHA) (AMT) (HUD Section 8) 300,000 300,264
Chaska Multifamily Housing Revenue (West Suburban
          Housing Partners Project) 5.875% 3/1/31 (AMT)   1,000,000 769,650
@ Hutchinson Multifamily Housing Revenue (Evergreen    
          Apartments Project) 5.75% 11/1/28 (HUD Section 8) 1,600,000 1,617,120
Minneapolis Multifamily Housing Revenue  
          (Grant Street Apartments Project)
          Refunding Series A 7.25% 11/1/29 2,085,000 2,106,434
          (Olson Townhomes Project) 6.00% 12/1/19 (AMT) 1,265,000 1,265,228
          (Trinity Apartments) Refunding
          Series A 6.75% 5/1/21 (HUD Section 8) 590,000 593,682
Minneapolis-St. Paul Housing Finance Board Single
          Family Mortgage (City Living Project)
          Series A-2 5.00% 12/1/38 (GNMA) (FNMA) (AMT) 839,784 841,506
Minnesota Housing Finance Agency
          (Rental Housing)
          Series A 4.875% 8/1/24 (AMT) 585,000 586,351
          Series A-1 5.00% 8/1/40 (AMT) 2,265,000 2,192,700
          (Residential Housing)
          Series G 5.00% 7/1/36 (AMT) 1,000,000 982,680
          Series I 4.85% 7/1/38 (AMT) 1,145,000 1,089,101
          Series L 5.10% 7/1/38 (AMT) 1,500,000 1,486,575
          Series M 4.875% 7/1/37 (AMT) 2,500,000 2,417,374
          (Single Family Mortgage) Series E 6.25% 1/1/23 (AMT) 5,000 5,006

29
 

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
 
          Principal amount      Value
Municipal Bonds (continued)          
Housing Revenue Bonds (continued)
St. Paul Housing & Redevelopment Authority
          Multifamily Housing Revenue (Shelby Grotto Housing
          Project) 5.50% 9/20/44 (GNMA) (FHA) (AMT) $ 750,000 $ 763,065
  Stillwater Multifamily Housing Revenue
          (Orleans Homes Project) 5.50% 2/1/42 (AMT) 750,000   606,300
@ Washington County Housing & Redevelopment
          Authority Revenue Refunding  
          (Briar Pond Project) Series B 7.125% 8/20/34 805,000 704,319
    18,327,355
Lease Revenue Bonds – 0.90%  
Hibbing Economic Development Authority Revenue
          (Public Project - Hibbing Lease Obligation)  
          6.40% 2/1/12 275,000 275,160
St. Paul Port Authority Lease Revenue (Robert Street  
          Office Building Project) Series 3-11 5.00% 12/1/27 1,000,000 1,035,620
  1,310,780
Local General Obligation Bonds – 11.44%
Chaska Independent School District #112
          Series A 4.50% 2/1/28 (NATL-RE) 1,000,000 1,030,280
Farmington Independent School District #192
          Series B 5.00% 2/1/27 (AGM) 1,000,000 1,061,550
Foley Independent School District #51 (School Building)
          Refunding Series A 5.00% 2/1/21 1,105,000 1,221,191
Hopkins Independent School District #270 Facilities
          5.00% 2/1/26 (NATL-RE) 1,055,000 1,118,216
Lakeville Independent School District #194
          Series A 4.75% 2/1/22 (AGM) 1,000,000 1,041,960
Metropolitan Council Minneapolis-St. Paul
          Metropolitan Area Waste Water Treatment
          Series B 5.00% 12/1/21 500,000 555,175
          Series C 5.00% 3/1/28 1,000,000 1,072,580
Minneapolis Various Purposes 4.00% 12/1/23 1,500,000 1,561,920
Moorhead Improvement Series B 5.00% 2/1/33 (NATL-RE) 750,000 768,780
Perham Disposal System 6.00% 5/1/22 (AMT) 1,500,000 1,517,205
South Washington County Independent School District #833
          Series A 4.75% 2/1/27 1,500,000 1,593,045

30
 

                Principal amount      Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
Todd Morrison Cass & Wadena Counties United
          Hospital District (Health Care Facilities-Lakewood)
          5.00% 12/1/21
 $ 610,000 $ 640,232
          5.125% 12/1/24
 205,000 214,178
          5.25% 12/1/26
 1,540,000 1,610,409
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 1,663,904
16,670,625
§Pre-Refunded Bonds – 8.69%
Andover Economic Development Authority Public
          Facilities Lease Revenue (Andover Community Center)
 
          5.20% 2/1/34-14
 1,000,000 1,114,590
Duluth Economic Development Authority
          Health Care Facilities Revenue
          (Benedictine Health System - St. Mary’s Hospital)
          5.25% 2/15/28-14
 1,000,000 1,153,920
          5.25% 2/15/33-14
 2,250,000 2,596,320
Minneapolis Community Development Agency Supported  
          Development Revenue (Limited Tax Common Bond Fund)
          Series G-3 5.45% 12/1/31-11
 1,000,000   1,081,360
Minneapolis Health Care System Revenue
          (Allina Health Systems) Series A 5.75% 11/15/32-12
 1,500,000 1,697,805
          (Fairview Health Services) Series A 5.625% 5/15/32-12
 2,000,000   2,235,320
Minnesota Higher Education Facilities Authority Revenue  
          (College of Art & Design Project)
          Series 5-D 6.75% 5/1/26-10
 500,000 505,855
Puerto Rico Electric Power Authority Revenue Series II
          5.25% 7/1/31-12
   1,000,000 1,117,450
St. Louis Park Health Care Facilities Revenue (Park
          Nicollet Health Services) Series B 5.25% 7/1/30-14
 1,000,000 1,157,460
12,660,080
Special Tax Revenue Bonds – 7.76%
Hennepin County Sales Tax Revenue
          (First Lien - Ball Park Project)
          Series B 5.00% 12/15/24
 1,000,000 1,112,130

31
 

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
 
                Principal amount      Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds (continued)
Hennepin County Sales Tax Revenue (continued)
          (Second Lien - Ballpark Project) Series B
          5.00% 12/15/20
 $ 1,500,000 $ 1,699,124
          5.00% 12/15/24
 1,000,000 1,105,620
Minneapolis Supported Development Revenue
          (Limited Tax-Common Bond Fund)
          Series 2A 5.00% 6/1/28 (AMT)
 1,170,000 1,103,018
Minneapolis Tax Increment Revenue
 
      @(Ivy Tower Project) 5.70% 2/1/29
 785,000 537,011
          (St. Anthony Falls Project) 5.65% 2/1/27
 500,000 439,930
Minnesota 911 Revenue (Public Safety Radio Commission
          System Project) 5.00% 6/1/24 (ASSURED GTY)
 1,000,000 1,094,160
Puerto Rico Commonwealth Infrastructure Financing
          Authority Special Tax Revenue Series B 5.00% 7/1/46
 800,000 709,880
Puerto Rico Sales Tax Financing Revenue First Subordinate
          Series A 5.75% 8/1/37
 930,000 961,406
St. Paul Port Authority (Brownsfields Redevelopment Tax)
          Series 2 5.00% 3/1/37
 1,500,000 1,538,325
Virgin Islands Public Finance Authority Revenue
          (Senior Lien-Matching Fund Loan Note)
          Series A 5.25% 10/1/24
 1,000,000 1,012,560
11,313,164
State General Obligation Bonds – 4.01%
Minnesota State
          5.00% 6/1/14
 1,000,000 1,158,240
          5.00% 8/1/21 (AGM)
 1,250,000 1,390,375
Puerto Rico Commonwealth Public Improvement Series A
          5.25% 7/1/22
 1,000,000 1,015,010
          Un-Refunded Balance 5.00% 7/1/34
 185,000 171,256
Puerto Rico Commonwealth Refunding Public Improvement
          Series C 6.00% 7/1/39
 1,010,000 1,039,745
Puerto Rico Government Development Bank Senior Notes
          Series B 5.00% 12/1/14
 1,000,000 1,062,760
5,837,386
Transportation Revenue Bond – 1.39%
Minneapolis - St. Paul Metropolitan Airports
          Commission Revenue Series A 5.00% 1/1/28 (NATL-RE)
 2,000,000 2,021,540
2,021,540

32
 

                Principal amount      Value
Municipal Bonds (continued)          
Water & Sewer Revenue Bonds – 4.16%
Minnesota Public Facilities Authority Clean Water
          Revenue Series B 5.00% 3/1/18
 $ 2,000,000 $ 2,351,700
Minnesota Public Facilities Authority Water Pollution
          Control Revenue Refunding
          Series C 5.00% 3/1/18
 1,000,000 1,141,420
          Series D 5.00% 3/1/14
 1,000,000 1,152,000
St. Paul Sewer Revenue Series D 5.00% 12/1/19 1,220,000 1,411,955
6,057,075
Total Municipal Bonds (cost $141,743,534) 143,226,786
 
Number of shares
Short-Term Investments – 0.55%
Money Market Instrument – 0.07%
Federated Minnesota Municipal Cash Trust 98,648 98,648
98,648
 
Principal amount
•Variable Rate Demand Note – 0.48%
Minneapolis & St. Paul Minnesota Housing &
          Redevelopment Authority Health Care System Revenue
          (Allina Health System) Series B-2 0.14% 11/15/35
          (LOC - JPMorgan Chase Bank)
 $ 700,000 700,000
700,000
Total Short-Term Investments (cost $798,648) 798,648
 
Total Value of Securities – 98.85%
(cost $142,542,182) 144,025,434
Receivables and Other Assets
Net of Liabilities – 1.15% 1,681,898
Net Assets Applicable to 14,094,931
Shares Outstanding – 100.00% $ 145,707,332
 
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund
Class A ($114,087,435 / 11,040,662 Shares)   $10.33
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund
Class B ($4,897,103 / 473,244 Shares)   $10.35
Net Asset Value – Delaware Minnesota High-Yield Municipal Bond Fund
Class C ($26,722,794 / 2,581,025 Shares)   $10.35

33
 

Statements of net assets
Delaware Minnesota High-Yield Municipal Bond Fund
 
       
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par)   $ 148,984,462
Undistributed net investment income 97
Accumulated net realized loss on investments (4,760,479 )
Net unrealized appreciation of investments   1,483,252  
Total net assets $ 145,707,332
 
§ Pre-Refunded bonds. Municipal bonds that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 9 in “Notes to financial statements.”
@
 Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $4,526,281, which represented 3.11% of the Fund’s net assets. See Note 9 in “Notes to financial statements.”
• Variable rate security. The rate shown is the rate as of February 28, 2010.
 
Summary of abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FHA — Insured by the Federal Housing Administration
FNMA — Federal National Mortgage Association Collateral
GNMA — Government National Mortgage Association Collateral
HUD — Housing and Urban Development
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
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) $ 10.33
Sales charge (4.50% of offering price) (B)   0.49
Offering price $ 10.82

(A)   Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
 
See accompanying notes
 
34
 

Statements of operations  
Six Months Ended February 28, 2010 (Unaudited)

            Delaware       Delaware
Delaware Tax-Free Minnesota
Tax-Free Minnesota High-Yield
Minnesota Intermediate Municipal
Fund Fund Bond Fund
Investment Income:
        Interest
 $ 14,576,928 $ 1,965,938 $ 3,521,242
 
Expenses:
       Management fees
 1,645,868 235,447 390,265
       Distribution expenses – Class A
 706,024 101,843 138,959
       Distribution expenses – Class B
 43,733 886 24,465
       Distribution expenses – Class C
 174,967 61,200 128,689
       Dividend disbursing and transfer agent fees
              and expenses
 151,215 32,850 52,452
       Accounting and administration expenses
 121,542 18,803 28,334
       Legal fees
 42,669 9,149 12,787
       Reports and statements to shareholders
 32,112 7,354 8,521
       Registration fees
 25,247 14,957 3,785
       Audit and tax
 25,006 8,103 9,877
       Trustees’ fees
 20,265 2,833 4,268
       Insurance fees
 10,100 1,360 2,264
       Pricing fees
 6,615   3,518   4,770
       Custodian fees
 6,194 1,270 1,501
       Consulting fees
 4,122   522 909
       Dues and services
   1,690 169   342
       Trustees’ expenses 1,436 213 310
3,018,805   500,477 812,498
       Less fees waived (34,681 ) (34,611 ) (51,786 )
       Less waived distribution expenses – Class A   — (40,737 ) —
       Total operating expenses 2,984,124 425,129 760,712  
Net Investment Income 11,592,804 1,540,809 2,760,530

36
 

            Delaware       Delaware
Delaware Tax-Free Minnesota
Tax-Free Minnesota High-Yield
Minnesota Intermediate Municipal
Fund Fund Bond Fund
Net Realized and Unrealized Gain
       (Loss) on Investments:
       Net realized gain (loss) on investments
 $ 1,058,752 $ 146,313 $ (10,939 )
       Net change in unrealized appreciation/
              depreciation of investments
 11,472,358 1,299,557 5,959,399
Net Realized and Unrealized Gain
       on Investments
 12,531,110 1,445,870 5,948,460
 
Net Increase in Net Assets
       Resulting from Operations
 $ 24,123,914 $ 2,986,679 $ 8,708,990

See accompanying notes
 
37
 

Statements of changes in net assets
Delaware Tax-Free Minnesota Fund
 
      Six Months       Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Increase in Net Assets from Operations:
       Net investment income
 $ 11,592,804 $ 23,410,864
       Net realized gain on investments
 1,058,752 398,012
       Net change in unrealized
              appreciation/depreciation of investments
 11,472,358 4,329,928
       Net increase in net assets resulting from operations 24,123,914 28,138,804
 
Dividends and Distributions to Shareholders from:
       Net Investment Income:
              Class A
 (10,908,175 ) (22,065,961 )
              Class B
 (136,865 ) (336,274 )
              Class C
 (547,431 ) (964,553 )
 
       Net realized gain on investments:
              Class A
 — (2,257,248 )
              Class B
   — (43,630 )
              Class C
 — (114,457 )
(11,592,471 ) (25,782,123 )
 
Capital Share Transactions:  
       Proceeds from shares sold:
              Class A
 25,986,906 42,839,664
              Class B
   — 137,140
              Class C
 3,861,093 9,478,506
 
       Net asset value of shares issued upon reinvestment
    
              of dividends and distributions:
  
              Class A
 7,086,591 15,962,228
              Class B
 93,906 264,058  
              Class C
 399,106     810,983
37,427,602 69,492,579

38
 

      Six Months       Year
Ended   Ended
2/28/10 8/31/09
(Unaudited)  
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A
 $ (28,415,895 ) $ (76,315,603 )
              Class B
 (1,318,569 ) (2,471,909 )
              Class C
 (2,562,063 ) (4,080,940 )
(32,296,527 ) (82,868,452 )
Increase (decrease) in net assets derived from
              capital share transactions
 5,131,075 (13,375,873 )
Net Increase (Decrease) in Net Assets 17,662,518 (11,019,192 )
 
Net Assets:      
       Beginning of period
 603,072,505 614,091,697
       End of period
 $ 620,735,023 $ 603,072,505
 
       Distributions in excess of net investment income
 $ (145,617 ) $ (144,872 )

See accompanying notes
 
39
 

Statements of changes in net assets
Delaware Tax-Free Minnesota Intermediate Fund
 
      Six Months       Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
       Net investment income
 $ 1,540,809 $ 2,618,389
       Net realized gain (loss) on investments
 146,313 (536,519 )
       Net change in unrealized
              appreciation/depreciation of investments
 1,299,557 1,614,867
       Net increase in net assets resulting from operations
 2,986,679 3,696,737
 
Dividends and Distributions to Shareholders from:
       Net Investment Income:
              Class A
 (1,379,872 ) (2,352,412 )
              Class B
 (2,241 ) (16,198 )
              Class C
 (155,251 ) (247,432 )
(1,537,364 ) (2,616,042 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A
 14,068,670 25,615,997
              Class B
   13,787 23,351
              Class C
 3,042,918   5,125,080
 
       Net asset value of shares issued upon reinvestment
    
              of dividends and distributions:
              Class A
 928,937 1,512,023  
              Class B
 2,026 12,783
              Class C
 107,255 170,452
  18,163,593 32,459,686

40
 

      Six Months       Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A
 $ (10,476,638 ) $ (8,485,220 )
              Class B
 (180,255 ) (608,734 )
              Class C
 (1,573,232 ) (1,331,367 )
  (12,230,125 ) (10,425,321 )
Increase in net assets derived from  
              capital share transactions
 5,933,468 22,034,365
Net Increase in Net Assets 7,382,783 23,115,060
 
Net Assets:
       Beginning of period
 89,613,578     66,498,518
       End of period
 $ 96,996,361 $ 89,613,578
 
       Undistributed net investment income
 $ 2,522 $ 2,522

See accompanying notes
 
41
 

Statements of changes in net assets
Delaware Minnesota High-Yield Municipal Bond Fund
 
      Six Months       Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
       Net investment income
 $ 2,760,530 $ 5,743,736
       Net realized loss on investments
 (10,939 ) (3,479,426 )
       Net change in unrealized
              appreciation/depreciation of investments
 5,959,399 509,407
       Net increase in net assets resulting from operations
 8,708,990 2,773,717
 
Dividends and Distributions to Shareholders from:
       Net Investment Income:
              Class A
 (2,242,248 ) (4,628,073 )
              Class B
 (80,365 ) (192,230 )
              Class C
 (422,601 ) (911,013 )
(2,745,214 ) (5,731,316 )
 
Capital Share Transactions:  
       Proceeds from shares sold:
  
              Class A
 7,793,594 15,056,968
              Class B
   — 73,695
              Class C
 2,058,183 2,660,111
 
       Net asset value of shares issued upon reinvestment
      
              of dividends and distributions:
              Class A
 1,454,637 2,988,359
              Class B
 54,952 121,542
              Class C
 300,003 647,117
11,661,369 21,547,792

42
 

     Six Months      Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (7,791,548 ) $ (24,926,201 )
              Class B (365,145 ) (992,296 )
              Class C (1,447,518 ) (6,740,684 )
(9,604,211 ) (32,659,181 )
Increase (decrease) in net assets derived from
              capital share transactions 2,057,158 (11,111,389 )
Net Increase (Decrease) in Net Assets 8,020,934 (14,068,988 )
                         
Net Assets:
       Beginning of period 137,686,398 151,755,386
       End of period $ 145,707,332   $ 137,686,398
       Undistributed net investment income $ 97 $ 97

See accompanying notes
 
43
 

Financial highlights
Delaware Tax-Free Minnesota Fund Class A
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued
Interest and fees on short-term floating rate notes issued
Total expenses3
 
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued prior to 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
44
 
 
Six Months Ended Year Ended
2/28/101      8/31/09      8/31/08      8/31/07      8/31/06      8/31/05     
  (Unaudited)                         
        $12.180         $12.120   $12.170   $12.490   $12.690 $12.620
 
   
0.237 0.474 0.495 0.511 0.511 0.527
0.260 0.107 (0.041 ) (0.313 ) (0.172 ) 0.222
0.497 0.581 0.454 0.198 0.339 0.749
 
 
(0.237 ) (0.473 ) (0.502 ) (0.507 )   (0.513 ) (0.526 )
— (0.048 ) (0.002 ) (0.011 ) (0.026 ) (0.153 )
(0.237 ) (0.521 ) (0.504 ) (0.518 ) (0.539 ) (0.679 )
 
  $12.440   $12.180   $12.120   $12.170   $12.490 $12.690
 
4.11%   5.04%   3.77%   1.58%   2.78%   6.12%  
 
 
  $575,674   $559,393   $574,914   $578,194   $381,720 $364,491
 
  0.93% 0.92% 0.93% 0.94% 0.93% 0.93%
  —   0.01%   0.18%   0.29%   0.26%   0.19%  
0.93%   0.93%     1.11%   1.23%     1.19%   1.12%  
                         
 
0.94%     0.94%   0.93%   0.96%   0.94%     0.94%  
— 0.01%   0.18%     0.29%   0.26%     0.19%  
  0.94%     0.95%     1.11%     1.25%     1.20%     1.13%  
 
3.86%     4.03%     4.05%     4.12%     4.11%     4.19%    
 
  3.85%     4.01%   4.05%   4.10%     4.10%     4.18%    
22%     20%     17%     7%     13%     10%    

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 Note 8 in “Notes to financial statements”.
 
45
 

Financial highlights
Delaware Tax-Free Minnesota Fund Class B
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued
Interest and fees on short-term floating rate notes issued
Total expenses3
 
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued prior to 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
46
 

Six Months Ended Year Ended
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05     
(Unaudited)
        $12.190         $12.130   $12.180   $12.500   $12.700   $12.630
   
 
0.191 0.386 0.403 0.419 0.418 0.433
  0.260 0.107 (0.041 ) (0.314 ) (0.172 ) 0.222
0.451 0.493 0.362 0.105 0.246 0.655
 
 
(0.191 ) (0.385 ) (0.410 ) (0.414 ) (0.420 ) (0.432 )
— (0.048 ) (0.002 ) (0.011 ) (0.026 ) (0.153 )
(0.191 ) (0.433 ) (0.412 ) (0.425 ) (0.446 ) (0.585 )
 
  $12.450   $12.190   $12.130   $12.180   $12.500   $12.700
 
3.72%   4.26%   2.99%   0.82%   2.01%   5.33%  
 
 
  $8,474   $9,506   $11,593   $15,674   $11,354   $12,810
 
1.68%   1.67%   1.68%   1.69%   1.68%   1.68%  
— 0.01%   0.18%   0.29%   0.26%   0.19%  
1.68%   1.68%   1.86%   1.98%   1.94%     1.87%  
 
 
1.69%   1.69%   1.68%   1.71%   1.69%   1.69%  
— 0.01%   0.18%   0.29%   0.26%   0.19%  
1.69%   1.70%   1.86%   2.00%     1.95%   1.88%  
 
3.11%     3.28%     3.30%     3.37%   3.36%   3.44%  
 
3.10%   3.26%   3.30%   3.35%   3.35%   3.43%  
22%   20%   17%   7%   13%   10%  

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 Note 8 in “Notes to financial statements”.
 
47
 

Financial highlights
Delaware Tax-Free Minnesota Fund Class C
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Net realized gain on investments
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued
Interest and fees on short-term floating rate notes issued
Total expenses3
 
Ratio of expenses to average net assets excluding interest and fees on short-term floating
       rate notes issued prior to 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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
48
 

Six Months Ended Year Ended
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05     
(Unaudited)
        $12.220         $12.160   $12.200   $12.530   $12.720   $12.650
 
 
  0.191 0.386 0.403 0.418 0.418 0.433
  0.261 0.107 (0.031 ) (0.323 ) (0.162 ) 0.222
0.452 0.493 0.372 0.095 0.256 0.655
 
 
(0.192 ) (0.385 ) (0.410 ) (0.414 ) (0.420 ) (0.432 )
— (0.048 ) (0.002 ) (0.011 ) (0.026 ) (0.153 )
(0.192 ) (0.433 ) (0.412 ) (0.425 ) (0.446 ) (0.585 )
 
  $12.480   $12.220   $12.160   $12.200   $12.530   $12.720
 
3.71%   4.25%   3.06%   0.73%   2.08%   5.32%  
 
 
  $36,587   $34,174   $27,585   $26,830   $15,125   $13,971
 
  1.68%   1.67%   1.68%   1.69%   1.68%   1.68%  
— 0.01%   0.18%   0.29%   0.26%   0.19%  
1.68%   1.68%   1.86%   1.98%   1.94%   1.87%  
 
 
  1.69%   1.69%     1.68%   1.71%   1.69%   1.69%  
— 0.01%   0.18%   0.29%   0.26%   0.19%  
1.69%   1.70%   1.86%   2.00%     1.95%   1.88%  
 
3.11%   3.28%     3.30%   3.37%     3.36%     3.44%  
  
3.10%   3.26%   3.30%     3.35%   3.35%   3.43%  
22%   20%   17%   7%   13%   10%    

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 Note 8 in “Notes to financial statements”.

49
 

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class A
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net 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 during all of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect.
 
See accompanying notes
 
50
 

Six Months Ended Year Ended
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05      
(Unaudited)
        $10.820         $10.720   $10.610   $10.860   $11.010   $10.890
 
   
0.184 0.384 0.414 0.445 0.429 0.407
0.179 0.100 0.110 (0.250 ) (0.150 ) 0.120
0.363 0.484 0.524 0.195 0.279 0.527
 
 
(0.183 ) (0.384 ) (0.414 ) (0.445 ) (0.429 ) (0.407 )
(0.183 ) (0.384 ) (0.414 ) (0.445 ) (0.429 ) (0.407 )
 
  $11.000   $10.820   $10.720   $10.610   $10.860   $11.010
 
3.38%   4.67%   5.00%     1.80%   2.62%   4.93%  
 
 
  $83,801   $78,021   $58,465   $48,477   $48,297   $52,958
0.79%   0.75%   0.75%     0.76%   0.75%   0.79%  
 
0.96%     0.97%     0.95%     1.00%   0.97%   0.95%  
3.38%     3.62%     3.83%   4.11%     3.96%     3.72%  
 
  3.21%     3.40%   3.63%   3.87%   3.74%   3.56%  
21%   12%   27%   15%     11%   25%    

51
 

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class B
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net 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 during all periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
52
 

Six Months Ended Year Ended
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05      
(Unaudited)
        $10.850         $10.750   $10.640   $10.890   $11.040   $10.920
 
 
0.138 0.295 0.322 0.353 0.337 0.314
  0.180 0.100 0.110 (0.250 ) (0.150 ) 0.120
0.318 0.395 0.432 0.103 0.187 0.434
 
 
(0.138 ) (0.295 ) (0.322 ) (0.353 ) (0.337 ) (0.314 )
(0.138 ) (0.295 ) (0.322 ) (0.353 ) (0.337 ) (0.314 )
 
  $11.030   $10.850   $10.750   $10.640   $10.890   $11.040
 
2.94%   3.79%   4.10%   0.94%   1.75%   4.03%  
 
 
  $157   $317   $908   $1,713   $1,993   $2,811
1.64%   1.60%   1.60%   1.61%   1.60%   1.64%  
 
1.71%   1.72%   1.70%   1.75%     1.72%   1.70%  
2.53%     2.77%   2.98%   3.26%   3.11%     2.87%    
 
2.46%   2.65%     2.88%     3.12%   2.99%   2.81%  
21%   12%   27%   15%   11%   25%  

53
 

Financial highlights
Delaware Tax-Free Minnesota Intermediate Fund Class C
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net 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 during all periods shown 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
2/28/101 8/31/09   8/31/08   8/31/07   8/31/06   8/31/05        
(Unaudited)
      $10.840       $10.740 $10.630 $10.880 $11.030 $10.910
 
 
0.138 0.295 0.322 0.353 0.337 0.314
0.179 0.100 0.110 (0.250 ) (0.150 ) 0.120
0.317 0.395 0.432 0.103 0.187 0.434
 
 
(0.137 ) (0.295 ) (0.322 ) (0.353 ) (0.337 ) (0.314 )
(0.137 ) (0.295 ) (0.322 ) (0.353 ) (0.337 ) (0.314 )
 
$11.020 $10.840 $10.740 $10.630 $10.880 $11.030
 
2.94% 3.78% 4.10% 0.94% 1.75% 4.04%
 
 
$13,038 $11,276 $7,126 $4,936 $5,162 $5,996
1.64% 1.60% 1.60% 1.61% 1.60% 1.64%
 
1.71% 1.72% 1.70% 1.75% 1.72% 1.70%
2.53% 2.77% 2.98% 3.26% 3.11% 2.87%
 
2.46% 2.65% 2.88% 3.12% 2.99% 2.81%
21% 12% 27% 15% 11% 25%

55
 

Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class A
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to 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 during all periods shown 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     
2/28/101 8/31/09   8/31/08   8/31/07   8/31/06   8/31/05  
(Unaudited)
      $ 9.910       $10.000 $10.180 $10.530 $10.610 $10.240
 
   
0.205 0.422 0.418 0.430 0.445 0.469
0.419 (0.091 ) (0.180 ) (0.350 ) (0.082 ) 0.372
0.624 0.331 0.238 0.080 0.363 0.841
 
 
(0.204 ) (0.421 ) (0.418 ) (0.430 ) (0.443 ) (0.471 )
(0.204 ) (0.421 ) (0.418 ) (0.430 ) (0.443 ) (0.471 )
 
$10.330 $9.910 $10.000 $10.180 $10.530 $10.610
 
6.33% 3.63% 2.35% 0.71% 3.54% 8.40%
 
 
$114,087 $107,951 $116,999 $109,807 $87,504 $63,802
0.91% 0.89% 0.89% 0.90% 0.89% 0.89%
 
0.98% 0.97% 0.97% 1.00% 1.00% 0.98%
4.05% 4.49% 4.11% 4.09% 4.26% 4.50%
 
3.98% 4.41% 4.03% 3.99% 4.15% 4.41%
4% 12% 10% 10% 4% 3%

57
 

Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class B
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to 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 during all periods shown 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     
2/28/101 8/31/09   8/31/08   8/31/07   8/31/06   8/31/05  
(Unaudited)
      $9.920       $10.010 $10.190 $10.550 $10.630 $10.250
 
 
0.168 0.352 0.341 0.351 0.367 0.391
0.429 (0.091 ) (0.179 ) (0.360 ) (0.082 ) 0.381
0.597 0.261 0.162 (0.009 ) 0.285 0.772
 
 
(0.167 ) (0.351 ) (0.342 ) (0.351 ) (0.365 ) (0.392 )
(0.167 ) (0.351 ) (0.342 ) (0.351 ) (0.365 ) (0.392 )
 
$10.350 $9.920 $10.010 $10.190 $10.550 $10.630
 
6.04% 2.86% 1.58% (0.13% ) 2.77% 7.68%
 
 
$4,897 $4,995 $5,907 $7,334 $9,578 $10,505
1.66% 1.64% 1.64% 1.65% 1.64% 1.64%
 
1.73% 1.72% 1.72% 1.75% 1.75% 1.73%
3.30% 3.74% 3.36% 3.34% 3.51% 3.75%
 
3.23% 3.66% 3.28% 3.24% 3.40% 3.66%
4% 12% 10% 10% 4% 3%

59
 

Financial highlights
Delaware Minnesota High-Yield Municipal Bond Fund Class C
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to 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 during all periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
60
 

Six Months Ended Year Ended
2/28/101 8/31/09   8/31/08   8/31/07   8/31/06   8/31/05       
(Unaudited)
      $9.930       $10.020 $10.200 $10.550 $10.630 $10.250
 
 
0.168 0.352 0.342 0.351 0.367 0.391
0.419 (0.091 ) (0.181 ) (0.350 ) (0.082 ) 0.381
0.587 0.261 0.161 0.001 0.285 0.772
 
 
(0.167 ) (0.351 ) (0.341 ) (0.351 ) (0.365 ) (0.392 )
(0.167 ) (0.351 ) (0.341 ) (0.351 ) (0.365 ) (0.392 )
 
$10.350 $ 9.930 $10.020 $10.200 $10.550 $10.630
 
5.93% 2.85% 1.58% (0.04% ) 2.76% 7.68%
 
 
$26,723 $24,740 $28,849 $26,016 $20,516 $15,809
1.66% 1.64% 1.64% 1.65% 1.64% 1.64%
 
1.73% 1.72% 1.72% 1.75% 1.75% 1.73%
3.30% 3.74% 3.36% 3.34% 3.51% 3.75%
 
3.23% 3.66% 3.28% 3.24% 3.40% 3.66%
4% 12% 10% 10% 4% 3%

61
 

Notes to financial statements  
Delaware Minnesota Municipal Bond Funds February 28, 2010 (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 the 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 be purchased only 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 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.
 
62
 

1. Significant Accounting Policies
 
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Funds.
 
Security Valuation — 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. Short-term debt securities are valued at market value. Open-end investment companies are valued at their published net asset value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Board of Trustees (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.
 
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. Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (August 31, 2006 – August 31, 2009), and has concluded that no provision for federal income tax is required in the Funds’ financial statements.
 
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.
 
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP 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
 
63
 

Notes to financial statements
Delaware Minnesota Municipal Bond Funds
 
1. Significant Accounting Policies (continued)
 
amortized to interest income over the lives of the respective securities. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually.
 
The Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended February 28, 2010.
 
On July 1, 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source of authoritative nongovernmental U.S. GAAP, superseding existing literature of the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other sources. The Codification is effective for interim and annual periods ending after September 15, 2009. The Funds adopted the Codification for the six months ended February 28, 2010. There was no impact to financial statements as the Codification requirements are disclosure-only in nature.
 
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 voluntarily agreed to waive that portion, if any, of its management fee and reimburse Delaware Minnesota High-Yield Municipal Bond Fund to the extent necessary to ensure that total annual operating expenses, (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, nonroutine expenses)), do not exceed 0.70% of average daily net assets from January 1, 2010 until such time as the waiver is discontinued. For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by Delaware Minnesota High-Yield
 
64
 

Municipal Bond Fund’s Board and DMC. This expense waiver and reimbursement applies only to expenses paid directly by the Fund, and may be discontinued at any time because it is voluntary. Prior to January 1, 2010, DMC had contractually agreed to waive that portion, if any, of each Fund’s management fees and reimburse the Funds 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 nonroutine expenses) did not exceed the specified percentages of average daily net assets as shown below:
 
              Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
    Minnesota Fund   Intermediate Fund   Bond Fund
Through December 31, 2009
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

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. 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, 2010, 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
  $15,219   $2,354   $3,548

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, 2010 to no more than 0.15% of average daily net assets.
 
65
 

Notes to financial statements
Delaware Minnesota Municipal Bond Funds 
 
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
 
At February 28, 2010, 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 $ 256,403 $ 37,253 $ 55,994
Dividend disbursing, transfer
       agent and fund accounting
       oversight fees and other
       expenses payable to DSC 20,314 3,981 6,156
Distribution fees payable
       to DDLP 144,229 19,591 45,908
Other expenses payable to
       DMC and affiliates* 23,830 3,793 5,567

*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, 2010, 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
  $22,290   $3,066   $4,618

For the six months ended February 28, 2010, 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
  $40,036   $9,173   $13,477

66
 

For the six months ended February 28, 2010, 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 Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
  Minnesota Fund   Intermediate Fund   Bond Fund
Class A       $ —             $  —              $ —       
Class B 465 — 1,009
Class C 1,333 1,123 283

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, 2010, 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    $ 78,768,690       $ 19,163,907       $ 5,568,368   
Sales 66,263,369 9,733,171 3,001,084
 
At February 28, 2010, 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, 2010, the cost of investments and unrealized appreciation (depreciation) 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    $ 595,243,001       $ 94,444,924        $ 142,408,844    
Aggregate unrealized appreciation $ 35,500,477 $ 4,572,699 $ 5,293,031
Aggregate unrealized depreciation (6,856,830 ) (291,389 ) (3,676,441 )
Net unrealized appreciation $ 28,643,647 $ 4,281,310 $ 1,616,590  

U.S. GAAP 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 under current market conditions. A three level hierarchy for fair value measurements has been established 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
 
67
 

Notes to financial statements
Delaware Minnesota Municipal Bond Funds 
 
3. Investments (continued)
 
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 fair value hierarchy levels as of February 28, 2010:
 
        Delaware Tax-Free Minnesota Fund
     Level 1       Level 2       Total
Municipal Bonds $ — $ 623,885,116 $ 623,885,116
Short-Term 1,532 — 1,532
Total $ 1,532 $ 623,885,116 $ 623,886,648

Delaware Tax-Free Minnesota Intermediate Fund
      Level 1       Level 2       Total
Municipal Bonds $ — $ 98,421,137 $ 98,421,137
Short-Term 305,097 — 305,097
Total $ 305,097 $ 98,421,137 $ 98,726,234

Delaware Minnesota High-Yield Municipal Bond Fund
Level 1 Level 2 Total
Municipal Bonds       $ —         $ 143,226,786           $ 143,226,786  
Short-Term 98,648 700,000 798,648
Total $ 98,648 $ 143,926,786 $ 144,025,434

There were no Level 3 securities at the beginning or end of the period.
 
In January 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for the Funds’ year ending August 31, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
 
68
 

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. GAAP. 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, 2010 and the year ended August 31, 2009 was as follows:
 
                  Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
  Minnesota Fund   Intermediate Fund   Bond Fund
Six Months Ended 2/28/10*                      
Ordinary income $ 25,263 $ 12,151   $ —  
Tax-exempt income 11,567,208 1,525,213 2,745,214
Total $ 11,592,471 $ 1,537,364 $ 2,745,214
 
Year Ended 8/31/09
Ordinary income $ 71,606 $  — $ 5,947
Tax-exempt income 23,418,382 2,616,042 5,725,369
Long-term capital gain 2,292,135 — —
Total $ 25,782,123 $ 2,616,042 $ 5,731,316

*Tax information for the period ended February 28, 2010 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, 2010, 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    $ 591,374,256       $ 93,577,105        $ 148,984,462    
Distributions payable (395,449 ) (53,714 ) (91,965 )
Undistributed long-term capital gains 555,102 — —
Undistributed tax-exempt income 249,832 56,236 92,062
Undistributed ordinary income 307,635 — —
Realized losses 9/1/09-2/28/10 — (88,807 ) (3,472,773 )
Post-October losses — — (11,312 )
Capital loss carryforwards
       as of 8/31/09 — (775,769 ) (1,409,732 )
Unrealized appreciation of investments 28,643,647 4,281,310 1,616,590
Net assets $ 620,735,023 $ 96,996,361 $ 145,707,332  

69
 

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 on debt instruments.
 
Post-October losses represent losses realized on investment transactions from November 1, 2009 through February 28, 2010 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 on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2010, the Funds recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
 
                  Delaware Tax-Free       Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
  Minnesota Fund   Intermediate Fund   Bond Fund
Undistributed (distributions in excess of)                                              
       net investment income $ (1,078 ) $ (3,445 )   $ (15,316 )
Accumulated realized gain (loss) 1,078 3,445 15,316  

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, 2009 will expire as follows:
 
  Delaware Tax-Free Delaware Minnesota
Minnesota High-Yield Municipal
Year of Expiration Intermediate Fund   Bond Fund
2010      $ 4,037                  $ 57,521      
2011   246,659 243,334
2012   — 684,248
2014   81,340 —
2015   109,745 96,079
2016   — 198,826
2017   333,988 129,724
Total $ 775,769 $ 1,409,732

For the six months ended February 28, 2010, 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
  $88,807   $3,472,773

70
 

6. Capital Shares
 
Transactions in capital shares were as follows:
 
Delaware Tax-Free Delaware Minnesota
Delaware 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
2/28/10 8/31/09 2/28/10 8/31/09 2/28/10 8/31/09
Shares sold:
       Class A 2,069,163 3,674,457 1,283,071 2,423,967 755,166 1,614,974
       Class B — 11,946 1,264 2,214 — 7,863
       Class C 306,151 807,342 277,034 486,526 199,072 281,808
 
Shares issued upon reinvestment of dividends and distributions:
       Class A 603,135 1,360,233 88,191 143,180 148,182 317,830
       Class B 7,579 22,511 185 1,215 5,358 12,919
       Class C 36,962 68,882 10,019 16,111 31,006 68,762
3,022,990 5,945,371 1,659,764 3,073,213 1,138,784 2,304,156
 
Shares repurchased:
       Class A (2,296,773 ) (6,565,859 ) (959,150 ) (810,239 ) (759,895 ) (2,739,090 )
       Class B (106,233 ) (210,875 ) (16,425 ) (58,625 ) (35,680 ) (107,260 )
       Class C (206,368 ) (349,626 ) (143,488 ) (126,181 ) (141,633 ) (738,199 )
(2,609,374 ) (7,126,360 ) (1,119,063 ) (995,045 ) (937,208 ) (3,584,549 )
Net increase (decrease) 413,616 (1,180,989 ) 540,701 2,078,168 201,576 (1,280,393 )

For the six months ended February 28, 2010 and the year ended August 31, 2009, 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
  2/28/10 8/31/09
Class B Class A Class B Class A
      Shares       Shares       Value       Shares       Shares       Value
Delaware Tax-Free
       Minnesota Fund 66,864 66,918 $ 831,340 97,466 97,549 $ 1,145,062
Delaware Tax-Free Minnesota
       Intermediate Fund 11,945 11,977 131,502 39,832 39,916 410,681
Delaware Minnesota High-Yield
       Municipal Bond Fund 19,945 19,964 204,598 38,299 38,350 356,368

71
 

Notes to financial statements
Delaware Minnesota Municipal Bond Funds 
 
7. Line of Credit
 
The Funds, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participate in a $35,000,000 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 are charged an annual commitment fee, which is allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The agreement expires on November 16, 2010. The Funds had no amounts outstanding as of February 28, 2010 or at any time during the period then ended.
 
8. Derivatives
 
U.S. GAAP requires enhanced disclosures that enable investors to understand: 1) how and why an entity uses derivatives, 2) how they are accounted for, and 3) how they affect an entity’s results of operations and financial position.
 
Inverse Floaters — Each Fund may participate in inverse floater programs where a fund transfers its own bonds to a trust that issues floating rate securities and inverse floating rate securities (inverse floaters) with an aggregate principal amount equal to the principal of the transferred bonds. The inverse floaters received by the Funds are derivative tax-exempt obligations with floating or variable interest rates that move in the opposite direction of short-term interest rates, usually at an accelerated speed. Consequently, the market values of the inverse floaters will generally be more volatile than other tax-exempt investments. The Funds typically use inverse floaters to adjust the duration of their portfolio. Duration measures a portfolio’s sensitivity to changes in interest rates. By holding inverse floaters with a different duration than the underlying bonds that a Fund transferred to the trust, the Fund seeks to adjust its portfolio’s sensitivity to changes in interest rates. The Funds may also invest in inverse floaters to add additional income to the Funds or to adjust the Funds’ exposure to a specific segment of the yield curve. At February 28, 2010, the Funds held no investments in inverse floaters.
 
9. 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, 2010, the percentages of each Fund’s net assets insured by insurers are listed and these securities have been identified in the statements of net assets.
 
    Delaware Tax-Free   Delaware Minnesota
Delaware Tax-Free Minnesota High-Yield Municipal
Minnesota Fund Intermediate Fund Bond Fund
24% 24% 14%

72
 

The Funds invest a portion of their 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.
 
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 Funds’ 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, 2010, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.
 
73
 

Notes to financial statements
Delaware Minnesota Municipal Bond Funds 
 
10. Contractual Obligations
 
The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds’ existing contracts and expects the risk of loss to be remote.
 
11. Sale of Delaware Investments to Macquarie Group
 
On August 18, 2009, Lincoln National Corporation (parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP, and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP and DSC are now wholly owned subsidiaries of Macquarie.
 
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreement between DMC and the Funds. On January 4, 2010, the new investment management agreement between DMC and the Funds that was approved by the shareholders became effective.
 
12. Subsequent Events
 
Management has evaluated whether any events or transactions occurred subsequent to February 28, 2010 through April 15, 2010, the date of issuance of the Funds’ financial statements, and determined that there were no material events or transactions that would require recognition or disclosure in the Funds’ financial statements.
 
74
 

Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
 
Proxy Results
 
At Joint Special Meetings of Shareholders of Voyageur Tax-Free Funds, on behalf of Delaware Tax-Free Minnesota Fund; Voyageur Intermediate Tax-Free Funds, on behalf of Delaware Tax-Free Minnesota Intermediate Fund; and Voyageur Mutual Funds, on behalf of Delaware Minnesota High-Yield Municipal Bond Fund (Voyageur Tax-Free Funds, Voyageur Intermediate Tax-Free Funds, and Voyageur Mutual Fund hereinafter each, a “Trust” and collectively, the “Trusts” and Delaware Tax-Free Minnesota Fund, Delaware Tax-Free Minnesota Intermediate Fund, and Delaware Minnesota High-Yield Municipal Bond Fund hereinafter each, a “Fund” and collectively, the “Funds”) held on November 12, 2009 and reconvened on December 4, 2009 for Delaware Tax-Free Minnesota Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond Fund only and March 16, 2010, the shareholders of each Fund voted to (i) elect a Board of Trustees for each Trust; and to (ii) approve new investment advisory agreements between each Trust, on behalf of the respective Fund, and Delaware Management Company, respectively. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
 
The following proposals were submitted for a vote of the shareholders:
 
1. To elect a Board of Trustees for each Trust.
 
Voyageur Tax-Free Funds
 
          % of       % of               % of       % of
outstanding shares     outstanding shares
Shares voted for   shares   voted   Shares withheld   shares   voted
Thomas L. Bennett 34,658,325.107 70.064 96.985 1,077,535.235 2.178 3.015
Patrick P. Coyne 34,637,532.827 70.022 96.927 1,098,327.515 2.220 3.073
John A. Fry 34,678,965.504 70.106 97.042 1,056,894.838 2.136 2.958
Anthony D. Knerr 34,658,281.949 70.064 96.985 1,077,578.393 2.178 3.015
Lucinda S. Landreth 34,690,535.224 70.129 97.075 1,045,325.118 2.113 2.925
Ann R. Leven 34,683,926.638 70.116 97.056 1,051,933.704 2.126 2.944
Thomas F. Madison 34,602,190.932 69.950 96.828 1,133,669.410 2.292 3.172
Janet L. Yeomans 34,292,557.980 70.133 97.081 1,043,302.362 2.109 2.919
J. Richard Zecher 34,643,543.675 70.034 96.943 1,092,316.667 2.208 3.057

Voyageur Intermediate Tax-Free Funds
 
        % of       % of             % of       % of
outstanding shares outstanding shares
Shares voted for   shares   voted   Shares withheld   shares   voted
Thomas L. Bennett 6,484,566.470 77.047 97.545 163,206.620 1.939 2.455
Patrick P. Coyne 6,484,949.955 77.052 97.551 162,823.125 1.934 2.449
John A. Fry 6,483,192.193 77.031 97.524 164,580.897 1.955 2.476
Anthony D. Knerr 6,485,116.711 77.054 97.553 162,656.379 1.932 2.447
Lucinda S. Landreth 6,487,230.281 77.079 97.585 160,542.809 1.907 2.415
Ann R. Leven 6,485,837.612 77.062 97.564 161,935.478 1.924 2.436
Thomas F. Madison 6,485,116.711 77.054 97.553 162,656.379 1.932 2.447
Janet L. Yeomans 6,487,230.281 77.079 97.585 160,542.809 1.907 2.415
J. Richard Zecher 6,482,808.708 77.026 97.519 164,964.382 1.960 2.481

75
 

Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
 
Proxy Results (continued)
 
1. To elect a Board of Trustees for each Trust. (continued)
 
Voyageur Mutual Funds
 
% of % of % of % of
outstanding shares outstanding shares
        Shares voted for         shares         voted         Shares withheld         shares         voted
Thomas L. Bennett 27,534,201.174 64.687 94.418 1,627,955.392 3.825 5.582
Patrick P. Coyne 27,538,840.631 64.698 94.433 1,623,315.935 3.814 5.567
John A. Fry 27,541,310.882 64.704 94.442 1,620,845.684 3.808 5.558
Anthony D. Knerr 27,543,108.286 64.708 94.448 1,619,048.280 3.804 5.552
Lucinda S. Landreth 27,542,973.819 64.708 94.448 1,619,182.747 3.804 5.552
Ann R. Leven 27,540,505.439 64.702 94.439 1,621,651.127 3.810 5.561
Thomas F. Madison 27,534,959.779 64.689 94.420 1,627,196.787 3.823 5.580
Janet L. Yeomans 27,539,087.174 64.698 94.434 1,623,069.392 3.814 5.566
J. Richard Zecher 27,532,297.843 64.683 94.411 1,629,858.723 3.829 5.589

2.   To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund, and Delaware Management Company.

Delaware Tax-Free Minnesota Fund
Shares Voted For         25,635,126.154
Percentage of Outstanding Shares 51.823%
Percentage of Shares Voted 71.790%
Shares Voted Against 570,789.999
Percentage of Outstanding Shares 1.154%
Percentage of Shares Voted 1.599%
Shares Abstained 1,400,776.175
Percentage of Outstanding Shares 2.832%
Percentage of Shares Voted 3.922%
Broker Non-Votes 8,101,614.624

Delaware Tax-Free Minnesota Intermediate Fund
Shares Voted For         4,242,203.541
Percentage of Outstanding Shares 50.404%
Percentage of Shares Voted 64.304%
Shares Voted Against 70,842.414
Percentage of Outstanding Shares 0.842%
Percentage of Shares Voted 1.073%
Shares Abstained 130,166.113
Percentage of Outstanding Shares 1.547%
Percentage of Shares Voted 1.974%
Broker Non-Votes 2,153,938.780

76
 

Delaware Minnesota High-Yield Municipal Bond Fund
Shares Voted For         6,910,587.530
Percentage of Outstanding Shares 49.779%
Percentage of Shares Voted 68.802%
Shares Voted Against 194,397.369
Percentage of Outstanding Shares 1.401%
Percentage of Shares Voted 1.935%
Shares Abstained 315,809.744
Percentage of Outstanding Shares 2.274%
Percentage of Shares Voted 3.145%
Broker Non-Votes 2,623,411.893

77
 

Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
 
Board Consideration of New Investment Advisory Agreement
 
At a meeting held on September 3, 2009 (the “Meeting”), the Board of Trustees of the Delaware Investments® Family of Funds (the “Board”), including the independent Trustees, unanimously approved a new investment advisory agreement between each registrant on behalf of each series (each, a “Fund” and together, the “Funds”) and Delaware Management Company (“DMC”) in connection with the sale of Delaware Investments’ advisory business to Macquarie Bank Limited (the “Macquarie Group”) (the “Transaction”). In making its decision, the Board considered information furnished specifically in connection with the approval of the new investment advisory agreements with DMC (the “New Investment Advisory Agreements”) which included extensive materials about the Transaction and matters related to the proposed approvals. To assist the Board in considering the New Investment Advisory Agreements, Macquarie Group provided materials and information about Macquarie Group, including detailed written responses to the questions posed by the independent Trustees. DMC also provided materials and information about the Transaction, including detailed written responses to the questions posed by the independent Trustees.
 
At the Meeting, the Trustees discussed the Transaction with DMC management and with key Macquarie Group representatives. The Meeting included discussions of the strategic rationale for the Transaction and Macquarie Group’s general plans and intentions regarding the Funds and DMC. The Board members also inquired about the plans for, and anticipated roles and responsibilities of, key employees and officers of Delaware Management Holdings Inc. and DMC in connection with the Transaction.
 
In connection with the Trustees’ review of the New Investment Advisory Agreements for the Funds, DMC and/or Macquarie Group emphasized that:
  • They expected that there would be no adverse changes as a result of the Transaction, in the nature, quality, or extent of services currently provided to the Funds and their shareholders, including investment management, distribution, or other shareholder services.
     
  • No material changes in personnel or operations were contemplated in the operation of DMC under Macquarie Group as a result of the Transaction and no material changes were currently contemplated in connection with third party service providers to the Funds.
     
  • Macquarie Group had no intention to cause DMC to alter the voluntary expense waivers and reimbursements currently in effect for the Funds.
     
  • Under the agreement between Macquarie Group and Lincoln National Corporation (“LNC”) (the “Transaction Agreement”), Macquarie Group has agreed to conduct, and to cause its affiliates to conduct, their respective businesses in compliance with the conditions of Section 15(f) of the Investment Company Act of 1940 (the “1940 Act”) with respect to the Funds, to the extent within its control, including maintaining Board composition of at least 75% of the Board members qualifying as independent Trustees and not imposing any “unfair burden” on the Funds for at least two years from the closing of the Transaction (the “Closing”).
78
 

In addition to the information provided by DMC and Macquarie Group as described above, the Trustees also considered all other factors they believed to be relevant to evaluating the New Investment Advisory Agreements, including the specific matters discussed below. In their deliberations, the Trustees did not identify any particular information that was controlling, and different Trustees may have attributed different weights to the various factors. However, for each Fund, the Trustees determined that the overall arrangements between the Fund and DMC, as provided in the respective New Investment Advisory Agreement, including the proposed advisory fee and the related administration arrangements between the Fund and DMC, were fair and reasonable in light of the services to be performed, expenses incurred, and such other matters as the Trustees considered relevant. Factors evaluated included:
  • The potential for expanding distribution of Fund shares through access to Macquarie Group’s existing distribution channels;
     
  • Delaware Investments’ acquisition of an exclusive wholesaling sales force from a subsidiary of LNC;
     
  • The reputation, financial strength, and resources of Macquarie Group as well as its historic and ongoing commitment to the asset management business in Australia as well as other parts of the world;
     
  • The terms and conditions of the New Investment Advisory Agreements, including that each Fund’s total contractual fee rate under the New Investment Advisory Agreement will remain the same;
     
  • The Board’s full annual review (or initial approval) of the current investment advisory agreements at their in-person meeting in May 2009 as required by the 1940 Act and its determination that (i) DMC had the capabilities, resources, and personnel necessary to provide the satisfactory advisory and administrative services currently provided to each Fund and (ii) the advisory and/or management fees paid by each Fund, taking into account any applicable fee waivers and breakpoints, represented reasonable compensation to DMC in light of the services provided, the costs to DMC of providing those services, economies of scale, and the fees and other expenses paid by similar funds and such other matters that the Board considered relevant in the exercise of its reasonable judgment;
     
  • The portfolio management teams for the Funds are not currently expected to change as a result of the Transaction;
     
  • LNC and Macquarie Group were expected to execute a reimbursement agreement pursuant to which LNC and Macquarie Group would agree to pay (or reimburse) all reasonable out-of-pocket costs and expenses of the Funds in connection with the Board’s consideration of the Transaction, the New Investment Advisory Agreements and related agreements, and all costs related to the proxy solicitation (the “Expense Agreement”);
79
 

Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
 
Board Consideration of New Investment Advisory Agreement (continued)
  • The likelihood that Macquarie Group would invest additional amounts in Delaware Investments, including DMC, which could result in increased assets under management, which in turn would allow some Funds the potential opportunity to achieve economies of scale and lower fees payable by Fund shareholders; and
     
  • The compliance and regulatory history of Macquarie Group and its affiliates.
In making their decision relating to the approval of each Fund’s New Investment Advisory Agreement, the independent Trustees gave attention to all information furnished. The following discussion, however, identifies the primary factors taken into account by the Trustees and the conclusions reached in approving the New Investment Advisory Agreements.
 
Nature, Extent, and Quality of Service. The Trustees considered the services historically provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered that the New Investment Advisory Agreements would be substantially similar to the current investment advisory agreements between the Funds and DMC (the “Current Investment Advisory Agreements”), and therefore, considered the many reports furnished to them throughout 2008 and 2009 at regular Board meetings covering matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; the compliance of management personnel with the code of ethics adopted throughout the Delaware Investments® Family of Funds complex; and the adherence to fair value pricing procedures as established by the Board. The Trustees were pleased with the current staffing of DMC and the emphasis placed on research and risk management in the investment process. Favorable consideration was given to DMC’s efforts to maintain expenditures and, in some instances, increase financial and human resources committed to Fund matters.
 
The Board also considered the transfer agent and shareholder services that would continue to be provided to Fund shareholders by DMC’s affiliate, Delaware Service Company, Inc. (“DSC”). The Trustees noted, in particular, DSC’s commitment to maintain a high level of service as well as DMC’s expenditures to improve the delivery of shareholder services. The Board was assured that shareholders would continue to receive the benefits provided to Fund shareholders by being part of the Delaware Investments Family of Funds, including each shareholder’s ability to exchange an investment in one Delaware Investments Fund for the same class of shares in another Delaware Investments Fund without a sales charge, to reinvest Fund dividends into additional shares of any of the Funds, and the privilege to combine holdings in other Funds to obtain a reduced sales charge.
 
Based on the information provided by DMC and Macquarie Group, including that Macquarie Group and DMC currently expected no material changes as a result of the Transaction in (i) personnel or operations of DMC or (ii) third party service providers to the Funds, the Board concluded that the satisfactory nature, extent, and quality of services currently provided to the Funds and their shareholders were very likely to continue under the New Investment Advisory Agreements. Moreover, the Board concluded that the Funds would probably benefit from the expanded distribution resources that would become available to Delaware Investments following the Transaction. The Board also
 
80
 

concluded that it was very unlikely that any “unfair burden” would be imposed on any of the Funds for the first two years following the Closing as a result of the Transaction. Consequently, the Board concluded that it did not expect the Transaction to result in any adverse changes in the nature, quality, or extent of services (including investment management, distribution or other shareholder services) currently provided to the Funds and their shareholders.
 
Investment Performance. The Board considered the overall investment performance of DMC and the Funds. The Trustees placed significant emphasis on the investment performance of the Funds in view of its importance to shareholders. Although the Trustees gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Trustees gave particular weight to their review of investment performance in connection with the approval of the Current Investment Advisory Agreements at the Board meeting held in May 2009. At that meeting, the Trustees reviewed reports prepared by Lipper, Inc., an independent statistical compilation organization (“Lipper”), which showed each Fund’s investment performance as of December 31, 2008 in comparison to a group of funds selected by Lipper as being similar to the Fund (the “Performance Universe”). During the May 2009 agreement review process, the Trustees observed the significant improvements to relative investment performance of the Funds compared to the Funds’ performance as of December 31, 2007.
 
At their meeting on September 3, 2009, the Trustees, including the independent Trustees in consultation with their independent counsel, reviewed the investment performance of each Fund. The Trustees compared the performance of each Fund relative to that of its respective Performance Universe for the 1-, 3-, 5-, and 10-year periods ended June 30, 2009 and compared its relative investment performance against the corresponding relative investment performance of each Fund for such time periods ended December 31, 2008, to the extent applicable. As of June 30, 2009, 30 of the Funds had investment performance relative to that of the respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for all applicable time periods. At June 30, 2009, an additional 6 Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for a majority of the applicable time periods. At June 30, 2009, 15 additional Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative performance at December 31, 2008 and only 29 Funds had poorer relative investment performance at June 30, 2009 compared to that at December 31, 2008.
 
The Board therefore concluded that the investment performance of the Funds, on an aggregate basis, had continued to improve relative to their respective Performance Universe since the data reviewed at the May 2009 meeting. Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreement would likely have an adverse effect on the investment performance of any Fund because (i) DMC and Macquarie Group did not currently expect the Transaction to cause any material change to the Funds’ portfolio management teams responsible for investment performance, which the Board found to be satisfactory and improving; and (ii) as discussed in more detail below, the Funds’ expenses were not expected to increase as a result of the Transaction.
 
81
 

Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
Comparative Expenses. The Trustees also considered expense comparison data for the Funds previously provided in May 2009. At that meeting, DMC had provided the Board with information on pricing levels and fee structures for the Funds and comparative funds. The Trustees focused on the comparative analysis of the effective management fees and total expense ratios of each Fund versus the effective management fees and expense ratios of a group of funds selected by Lipper as being similar to each Fund (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into account any applicable breakpoints and fee limitations. Each Fund’s total expenses were also compared with those of its Expense Group. The Trustees also considered fees paid to Delaware Investments for nonmanagement services. At the September 3, 2009 meeting, DMC advised the Board that the more recent comparative expenses for the Funds remained consistent with the previous review in May 2009 and, consequently, the Trustees concluded that expenses of the Funds were satisfactory.
 
The Board also considered the Expense Agreement under negotiation in evaluating Fund expenses. The Trustees expected that the Expense Agreement would provide that LNC and Macquarie Group would pay or reimburse the Trusts for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the consideration of the New Investment Advisory Agreements (subject to certain limited exceptions).
 
Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreements likely would have an adverse effect on the Funds’ expenses because (i) each Fund’s contractual fee rates under the New Investment Advisory Agreement would remain the same; (ii) under the Expense Agreement, the Funds would be reimbursed for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the related proxy solicitation (subject to certain limited exceptions); and (iii) the expense ratios of certain Funds might decline as a result of the possible increased investment in Delaware Investments by Macquarie Group, as discussed below under “Economies of Scale.”
 
Management Profitability. At their meeting on September 3, 2009, the Board evaluated DMC’s profitability in connection with the operation of the Funds. The Board had previously considered DMC’s profitability in connection with the operation of the Funds at its May 2009 meeting. At that meeting, the Board reviewed an analysis that addressed the overall profitability of Delaware Investments’ business in providing management and other services to each of the Funds and the Delaware Investments® Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability.
 
At the May 2009 meeting, representatives of DMC had stated that the level of profits of DMC, to a certain extent, reflect operational cost savings and efficiencies initiated by Delaware Investments (including DMC and its affiliates that provide services to the Funds). The Board considered
 
82
 

Delaware Investments’ efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide U.S. Securities and Exchange Commission initiatives. At that meeting, the Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC. At the September 3, 2009 meeting, DMC advised the Board that DMC did not expect the Transaction to affect materially the profitability of Delaware Investments compared to the level of profitability considered during the May 2009 review. Moreover, the Trustees reviewed pro forma balance sheets of certain key companies in Delaware Investments as of June 30, 2009 (which were provided by Macquarie Group and DMC in response to the Trustees’ requests) and evaluated the projections of Delaware Investments’ capitalization following the Transaction for purposes of evaluating the financial ability of Delaware Investments to continue to provide the nature, extent, and quality of services as it had under the Current Investment Advisory Agreement.
 
Based on information provided by DMC and Macquarie Group, the Board concluded that DMC and Delaware Investments would be sufficiently capitalized following the Transaction to continue the same level and quality of services to the Funds under the New Investment Advisory Agreements as was the case under the Current Investment Advisory Agreements. The Board also concluded that Macquarie Group had sufficient financial strength and resources, as well as an ongoing commitment to a global asset management business, to continue investing in Delaware Investments, including DMC, to the extent that Macquarie Group determined it was appropriate. Finally, because services and costs were expected to be substantially the same (and DMC had represented that, correspondingly, profitability would be about the same), under the New Investment Advisory Agreements as under the Current Investment Advisory Agreements, the Trustees concluded that the profitability of Delaware Investments would not result in an inequitable charge on the Funds or their shareholders. Accordingly, the Board concluded that the fees charged under the New Investment Advisory Agreements would be reasonable in light of the services to be provided and the expected profitability of DMC.
 
Economies of Scale. The Trustees considered whether economies of scale would be realized by Delaware Investments as each Fund’s assets increase and the extent to which any economies of scale would be reflected in the management fees charged. The Trustees took into account DMC’s practice of maintaining the competitive nature of management fees based on its analysis of fees charged by comparable funds. DMC management believed, and the Board agreed, that the Funds were priced with breakpoints and relatively low management fees to reflect potential economies of scale to Fund shareholders.
 
The Board also acknowledged Macquarie Group’s statement that the Transaction would not by itself immediately provide additional economies of scale given Macquarie Group’s limited presence in the U.S. mutual fund market. Nonetheless, the Trustees concluded that additional economies of scale could potentially be achieved in the future if DMC were owned by Macquarie Group as a result of Macquarie Group’s willingness to invest further in Delaware Investments if appropriate opportunities arise. The Board further concluded that potential economies of scale could be achieved as a result of Delaware Investments’ expanded distribution capabilities arising from the Transaction, as well as opportunities that might arise from Macquarie Group’s global asset management business.
 
83
 

Other Fund information
(Unaudited)
Delaware Minnesota Municipal Bond Funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
Fall-Out Benefits. The Board acknowledged that DMC would continue to benefit from soft dollar arrangements using portfolio brokerage of each Fund that invests in equity securities and that DMC’s profitability would likely be somewhat lower without the benefit of practices with respect to allocating Fund portfolio brokerage for brokerage and research services. The Board also considered that Macquarie Group and Delaware Investments may derive reputational, strategic, and other benefits from their association with the Delaware Investments Family of Funds, including service relationships with DMC, DSC, and Delaware Distributors, L.P., and evaluated the extent to which Delaware Investments might derive ancillary benefits from Fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds and the benefits from allocation of Fund brokerage to improve trading efficiencies. However, the Board concluded that (i) any such benefits under the New Investment Advisory Agreements would not be dissimilar from those existing under the Current Investment Advisory Agreements; (ii) such benefits did not impose a cost or burden on the Funds or their shareholders; and (iii) such benefits would probably have an indirectly beneficial effect on the Funds and their shareholders because of the added importance that DMC and Macquarie Group might attach to the Funds as a result of the fall-out benefits that the Funds conveyed.
 
Board Review of Macquarie Group. The Trustees reviewed detailed information supplied by Macquarie Group about its operations as well as other information regarding Macquarie Group provided by independent legal counsel to the independent Trustees. Based on this review, the Trustees concluded that Delaware Investments would continue to have the financial ability to maintain the high quality of services required by the Funds. The Trustees noted that there would be a limited transition period during which some services previously provided by LNC to Delaware Investments would continue to be provided by LNC after the Closing, and concluded that this arrangement would help minimize disruption in Delaware Investments’ provision of services to the Funds following the Transaction.
 
The Board considered Macquarie Group’s support for Delaware Investments’ plans for Fund distribution by transferring wholesalers from Lincoln Financial Distributors, Inc., LNC’s retail distributor, to Delaware Investments, and Macquarie Group’s current intention to leave the Funds’ other service providers in place. The Board also considered Macquarie Group’s current strategic plans to increase its asset management activities, one of its core businesses, particularly in North America, and its statement that its acquisition of DMC is an important component of this strategic growth and the establishment of a significant presence in the United States. Based in part on the information provided by DMC and Macquarie Group, the Board concluded that Macquarie Group’s acquisition of Delaware Investments could potentially enhance the nature, quality, and extent of services provided to the Funds and their shareholders.
 
84
 

Conclusion. The Board concluded that the advisory fee rate under each New Investment Advisory Agreement was reasonable in relation to the services provided and that execution of the New Investment Advisory Agreement would be in the best interests of the shareholders. For each Fund, the Trustees noted that they had concluded in their most recent advisory agreement continuance considerations in May 2009 that the management fees and total expense ratios were at acceptable levels in light of the quality of services provided to the Funds and in comparison to those of the Funds’ respective peer groups; that the advisory fee schedule would not be increased and would stay the same for all of the Funds; that the total expense ratio had not changed materially since that determination; and that DMC had represented that the overall expenses for each Fund were not expected to be adversely affected by the Transaction. The Trustees also noted, with respect to the Funds that currently had the benefit of voluntary fee limitations, that Macquarie Group had no present intention to cause DMC to alter any voluntary expense limitations or reimbursements currently in effect. On that basis, the Trustees concluded that the total expense ratios and proposed advisory fees for the Funds anticipated to result from the Transaction were acceptable. In approving each New Investment Advisory Agreement, the Board stated that it anticipated reviewing the continuance of the New Investment Advisory Agreement in advance of the expiration of the initial two-year period.
 
85
 

About the organization
 
Board of trustees
 
Patrick P. Coyne
Chairman, President, and
Chief Executive Officer
Delaware Investments®
Family of Funds
Philadelphia, PA
 
Thomas L. Bennett
Private Investor
Rosemont, PA
 
John A. Fry
President
Franklin & Marshall
College
Lancaster, PA
Anthony D. Knerr
Founder and Managing
Director
Anthony Knerr &
Associates
New York, NY
 
Lucinda S. Landreth
Former Chief Investment
Officer
Assurant, Inc.
Philadelphia, PA
Ann R. Leven
Consultant
ARL Associates
New York, NY
 
Thomas F. Madison
President and
Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
Janet L. Yeomans
Vice President and
Treasurer
3M Corporation
St. Paul, MN
 
J. Richard Zecher
Founder
Investor Analytics
Scottsdale, AZ
 
Affiliated officers
 
David F. Connor
Vice President, Deputy
General Counsel, and
Secretary
Delaware Investments
Family of Funds
Philadelphia, PA
Daniel V. Geatens
Vice President and
Treasurer
Delaware Investments
Family of Funds
Philadelphia, PA
David P. O’Connor
Senior Vice President,
General Counsel,
and Chief Legal Officer
Delaware Investments
Family of Funds
Philadelphia, PA
Richard Salus
Senior Vice President and
Chief Financial Officer
Delaware Investments
Family of Funds
Philadelphia, PA

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.
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 (SEC) 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 SEC’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 SEC’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 SEC’s Web site at www.sec.gov.
 
86
 

Semiannual report
 
Delaware Tax-Free USA Fund
 
Delaware Tax-Free USA Intermediate Fund
 
Delaware National High-Yield Municipal
Bond Fund
 
February 28, 2010
 
Fixed income mutual funds
 
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.
 
The figures in the semiannual report for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted.
 
You should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund prospectus contains this and other important information about the Fund. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money.
 
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit www.delawareinvestments.com/edelivery.
 


Experience Delaware Investments
 
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
 
If you are interested in learning more about creating an investment plan, contact your financial advisor.
 
You can learn more about Delaware Investments or obtain a prospectus for Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund at www.delawareinvestments.com.
 
Manage your investments online
  • 24-hour access to your account information
  • Obtain share prices
  • Check your account balance and recent transactions
  • Request statements or literature
  • Make purchases and redemptions
On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Funds’ prospectus and any supplements thereto for more complete information.
 
Investments in Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including subsidiaries or related companies, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Funds, the repayment of capital from the Funds, or any particular rate of return.
 
Table of contents
Disclosure of Fund expenses 1
Sector allocations and credit quality breakdowns 4
Statements of net assets 7
Statements of operations 48
Statements of changes in net assets 50
Financial highlights 56
Notes to financial statements 79
Other Fund information 92
About the organization 102

Unless otherwise noted, views expressed herein are current as of Feb. 28, 2010, and are subject to change.
 
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. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
 
© 2010 Delaware Management Holdings, Inc.
 
All third-party trademarks cited are the property of their respective owners.
 

Disclosure of Fund expenses
For the period September 1, 2009 to February 28, 2010
 
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 from September 1, 2009 to February 28, 2010.
 
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
          9/1/09           2/28/10           Expense Ratio           9/1/09 to 2/28/10*
Actual Fund return  
Class A   $1,000.00   $1,056.10 0.80%   $4.08
Class B 1,000.00 1,052.10 1.56% 7.94
Class C 1,000.00   1,052.10   1.56% 7.94
Institutional Class 1,000.00 1,063.50 0.56% 2.87
Hypothetical 5% return (5% return before expenses)
Class A   $1,000.00   $1,020.83 0.80%   $4.01
Class B 1,000.00 1,017.06 1.56% 7.80
Class C 1,000.00 1,017.06 1.56% 7.80
Institutional Class 1,000.00 1,022.02 0.56% 2.81
 
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
9/1/09 2/28/10 Expense Ratio 9/1/09 to 2/28/10*
Actual Fund return
Class A   $1,000.00   $1,043.30 0.75%   $3.80
Class B 1,000.00 1,039.00 1.60% 8.09
Class C 1,000.00 1,039.00 1.60% 8.09
Institutional Class 1,000.00 1,053.20 0.60% 3.05
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
          9/1/09           2/28/10           Expense Ratio           9/1/09 to 2/28/10*
Actual Fund return  
Class A   $1,000.00   $1,102.60 0.85%   $4.43  
Class B 1,000.00   1,098.40   1.60% 8.32
Class C 1,000.00 1,098.20 1.60% 8.32
Institutional Class 1,000.00 1,113.70 0.60% 3.14
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
Institutional Class 1,000.00 1,021.82 0.60% 3.01

*“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 USA Fund  As of February 28, 2010

Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector Percentage of net assets
Municipal Bonds 98.87 %
Corporate Revenue Bonds 17.53 %
Education Revenue Bonds 7.24 %
Electric Revenue Bonds 1.70 %
Escrowed to Maturity Bonds 6.75 %
Health Care Revenue Bonds 12.13 %
Housing Revenue Bonds 0.92 %
Lease Revenue Bonds 3.36 %
Local General Obligation Bonds 5.38 %
Pre-Refunded Bonds 13.18 %
Special Tax Revenue Bonds 10.51 %
State General Obligation Bonds 6.29 %
Transportation Revenue Bonds 10.57 %
Water & Sewer Revenue Bonds 3.31 %
Short-Term Investments 0.31 %
Total Value of Securities 99.18 %
Receivables and Other Assets Net of Liabilities 0.82 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 24.31 %
AA 11.67 %
A 24.34 %
BBB 27.62 %
BB 1.74 %
B 2.46 %
CCC 1.45 %
Not Rated 6.41 %
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, 2010

Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector Percentage of net assets
Municipal Bonds 97.41 %
Corporate Revenue Bonds 9.40 %
Education Revenue Bonds 5.19 %
Electric Revenue Bonds 2.41 %
Escrowed to Maturity Bonds 0.08 %
Health Care Revenue Bonds 11.79 %
Housing Revenue Bonds 1.28 %
Lease Revenue Bonds 2.24 %
Local General Obligation Bonds 7.62 %
Pre-Refunded Bonds 5.78 %
Resource Recovery Revenue Bonds 0.20 %
Special Tax Revenue Bonds 12.03 %
State General Obligation Bonds 22.30 %
Transportation Revenue Bonds 10.42 %
Water & Sewer Revenue Bonds 6.67 %
Short-Term Investments 1.33 %
Total Value of Securities 98.74 %
Receivables and Other Assets Net of Liabilities 1.26 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 23.76 %
AA 24.94 %
A 27.11 %
BBB 17.85 %
BB 1.34 %
B 0.39 %
CCC 0.57 %
Not Rated 4.04 %
Total 100.00 %

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
 
5
 

Sector allocations and credit quality breakdowns
Delaware National High-Yield Municipal Bond Fund As of February 28, 2010

Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector Percentage of net assets
Municipal Bonds 98.31 %
Corporate Revenue Bonds 22.87 %
Education Revenue Bonds 17.48 %
Health Care Revenue Bonds 31.17 %
Housing Revenue Bonds 0.97 %
Lease Revenue Bonds 2.81 %
Pre-Refunded Bonds 1.55 %
Special Tax Revenue Bonds 11.46 %
State General Obligation Bonds 5.61 %
Transportation Revenue Bonds 4.39 %
Short-Term Investments 2.74 %
Total Value of Securities 101.05 %
Liabilities Net of Receivables and Other Assets (1.05 %)
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 6.93 %
AA 2.27 %
A 13.75 %
BBB 41.33 %
BB 7.43 %
B 4.79 %
CCC 1.45 %
Not Rated 22.05 %
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, 2010 (Unaudited)

          Principal amount       Value
Municipal Bonds – 98.87%            
Corporate Revenue Bonds – 17.53%
Alliance Airport Authority, Texas Special
          Facilities Revenue (American Airlines Project)
          Series B 5.25% 12/1/29 (AMT) $ 2,250,000 $ 1,422,270
• Brazos, Texas Harbor Industrial Development
          Environmental Facilities Revenue  
          (Dow Chemical Co. Project) 5.90% 5/1/38 (AMT) 1,940,000 1,910,085
Brazos, Texas River Authority Pollution Control Revenue
          (Texas Utilities) 5.40% 5/1/29 (AMT) 3,000,000 1,444,800
        •(TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) 3,500,000 1,872,640
Buckeye, Ohio Tobacco Settlement Financing Authority
          Asset-Backed Series A-2 5.875% 6/1/47 8,040,000 6,047,768
Clayton County, Georgia Development Authority
          Special Facilities Revenue (Delta Airlines)
          Series B 9.00% 6/1/35 (AMT) 3,800,000 3,855,366
Cloquet, Minnesota Pollution Control Revenue
          (Potlatch Corp. Project) 5.90% 10/1/26 1,695,000 1,560,434
Harris County, Texas Industrial Development
          Corporation Solid Waste Disposal Revenue
          (Deer Park Refining Project) 5.00% 2/1/23 2,880,000 2,939,818
Hawaii State Department Budget & Finance Special
          Purpose Revenue (Hawaiian Electric Co. Subsidiary)
          6.50% 7/1/39 5,350,000 5,768,905
Indianapolis, Indiana Airport Authority Revenue Special
          Facilities (Federal Express Corp. Project)
          5.10% 1/15/17 (AMT) 2,750,000 2,846,635
          Series 1998 5.50% 5/1/29 (AMT) 2,000,000 1,913,320
Iowa Finance Authority Pollution Control Facility Revenue
          (Interstate Power) 5.00% 7/1/14 (FGIC) 3,640,000 3,911,435
Mason County, West Virginia Pollution Control Revenue
          (Appalachian Power Co. Project) Series K
          6.05% 12/1/24 (AMBAC) 3,000,000 3,036,600
Mississippi Business Finance Corporation Pollution Control
          Revenue (System Energy Resources, Inc. Project)
          5.90% 5/1/22 3,000,000 2,999,730
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 2,205,082

7
 

Statements of net assets
Delaware Tax-Free USA Fund
 
          Principal amount       Value
Municipal Bonds (continued)            
Corporate Revenue Bonds (continued)
• Mobile, Alabama Industrial Development Board
          Pollution Control Revenue (Alabama Power Co.)
            Series B 4.875% 6/1/34 $ 4,750,000 $ 5,098,413
M-S-R Energy Authority, California Gas Revenue Series A
          6.125% 11/1/29 1,915,000 1,991,868
          6.50% 11/1/39 3,915,000 4,161,762
Nassau County, New York Tobacco Settlement
          Asset-Backed Series A-3 5.125% 6/1/46 2,215,000 1,789,698
New Jersey Economic Development Authority Special
          Facility Revenue (Continental Airlines, Inc. Project)
          6.25% 9/15/29 (AMT) 2,000,000 1,771,660
• New York City, New York Industrial Development
          Agency Special Facilities Revenue
          (American Airlines - JFK International Airport)
          7.625% 8/1/25 (AMT) 4,620,000 4,554,673
          7.75% 8/1/31 (AMT) 2,000,000 2,007,180
Ohio State Air Quality Development Authority Revenue
          Environmental Improvement (First Energy Generation)
          Series A 5.70% 8/1/20 4,750,000 5,045,308
Owen County, Kentucky Waterworks System Revenue
          (American Water Co.) Series B 5.625% 9/1/39 3,300,000 3,399,198
Pennsylvania Economic Development
          Financing Authority Exempt Facilities Revenue
          (Allegheny Energy Supply Co.) 7.00% 7/15/39 6,340,000 7,093,635
Petersburg, Indiana Pollution Control Revenue
          (Indianapolis Power & Light Co. Project)
          6.375% 11/1/29 (AMT) 5,000,000 5,049,600
Phenix City, Alabama Industrial Development Board
          Environmental Improvement Revenue (Mead Westvaco
          Corp. Project) Series A 6.35% 5/15/35 (AMT) 3,000,000 2,759,880
Richmond County, Georgia Development Authority
          Environmental Improvement Revenue (International
          Paper Co.) Series B 5.95% 11/15/25 (AMT) 5,000,000 4,911,950
Salt Verde Financial Corporation, Arizona Gas
          Revenue Senior 5.00% 12/1/37 5,500,000 4,707,725
South Carolina Jobs-Economic Development Authority
          Industrial Revenue (South Carolina Electric & Gas Co.
          Project) Series B 5.45% 11/1/32 (AMBAC) (AMT) 500,000 494,825

8
 

          Principal amount       Value
Municipal Bonds (continued)            
Corporate Revenue Bonds (continued)  
Sugar Creek, Missouri Industrial Development
          Revenue (Lafarge North America Project)
          Series A 5.65% 6/1/37 (AMT) $ 500,000 $ 454,075
Sweetwater County, Wyoming Solid Waste Disposal
          Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) 3,250,000 3,025,588
Tobacco Settlement Financing Corporation, Virginia Senior
       ΩConvertible Series B-2 5.20% 6/1/46 2,500,000 1,530,375
          Series B-1 5.00% 6/1/47 2,020,000 1,387,922
  104,970,223
Education Revenue Bonds – 7.24%
Amherst, New York Industrial Development Agency
          Civic Facilities Revenue (UBF Faculty Student Housing)
          Series A 5.75% 8/1/30 (AMBAC) 1,300,000 1,319,630
Broward County, Florida Educational Facilities Authority
          Revenue (Nova Southeastern Project)
          5.25% 4/1/27 (RADIAN) 1,000,000 948,060
California Statewide Communities Development Authority
          Student Housing Revenue (East Campus Apartments, LLC)
          Series A 5.625% 8/1/34 (ACA) 3,400,000 3,258,458
Connecticut State Health & Educational Facilities Authority
          Revenue (Yale University) Series A-1 5.00% 7/1/25 3,000,000 3,371,670
Gainesville, Georgia Redevelopment Authority Educational
          Facilities Revenue (Riverside Military Academy Project)
          5.125% 3/1/37 3,735,000 2,324,851
Marietta, Georgia Development Authority Revenue
          (Life University Income Project) 7.00% 6/15/39 4,200,000 3,918,936
Massachusetts State Health & Educational
          Facilities Authority Revenue
          (Harvard University) Series A 5.50% 11/15/36 4,515,000 5,042,578
          (Nichols College Project) Series C 6.125% 10/1/29 4,350,000 4,175,000
Missouri State Health & Educational Facilities Authority
          Educational Facilities Revenue (Washington University)
          Series A 5.375% 3/15/39 5,000,000 5,445,899
New Hampshire Higher Educational & Health Facilities
          Authority Revenue (New Hampton School Issue)
          5.375% 10/1/28 3,070,000 2,755,079

9
 

Statements of net assets
Delaware Tax-Free USA Fund
 
          Principal amount       Value
Municipal Bonds (continued)            
Education Revenue Bonds (continued)  
New Jersey State Educational Facilities Authority Revenue
          (University of Medical & Dentistry)
          Series B 7.50% 12/1/32 $ 1,435,000 $ 1,626,472
Provo, Utah Charter School Revenue (Freedom Academy
          Foundation Project) 5.50% 6/15/37 1,750,000 1,322,895
Saint Louis, Missouri Industrial Development Authority
          Revenue (Confluence Academy Project) Series A
          5.25% 6/15/25 1,150,000 923,841
          5.35% 6/15/32 2,300,000 1,724,011
Texas A & M University Revenue Financing System
          5.00% 5/15/17 4,060,000 4,745,775
University of the Virgin Islands Series A 5.375% 6/1/34 500,000 476,840
43,379,995
Electric Revenue Bonds – 1.70%
Chelan County, Washington Public Utilities District #001
          Consolidated Revenue (Chelan Hydro System)
          Series A 5.45% 7/1/37 (AMBAC) (AMT) 5,000,000 4,929,700
Puerto Rico Electric Power Authority Revenue
          Series PP 5.00% 7/1/25 (NATL-RE) (FGIC) 1,000,000 1,008,870
          Series TT 5.00% 7/1/37 1,105,000 1,055,805
          Series WW 5.50% 7/1/38 2,100,000 2,126,460
Sikeston, Missouri Electric Revenue Refunding
          6.00% 6/1/13 (NATL-RE) 1,000,000 1,063,740
10,184,575
Escrowed to Maturity Bonds – 6.75%
Cape Girardeau County, Missouri Industrial Development
          Authority Health Care Facilities Revenue (Southeast
          Missouri Hospital) 5.25% 6/1/16 (NATL-RE) 440,000 496,910
^ Greene County, Missouri Single Family Mortgage Revenue
          Municipal Multiplier (Private Mortgage Insurance)
          6.10% 3/1/16 1,225,000 1,046,995
Louisiana Public Facilities Authority Hospital Revenue
          (Southern Baptist Hospital, Inc. Project) 8.00% 5/15/12 2,715,000 2,943,141
New Jersey State Highway Authority Garden State
          Parkway General Revenue (Senior Parkway)
          5.50% 1/1/14 (FGIC) 5,000,000 5,821,300
          5.50% 1/1/15 (FGIC) 7,310,000 8,696,488
          5.50% 1/1/16 (FGIC) 1,000,000 1,201,070

10
 

          Principal amount      Value
Municipal Bonds (continued)          
Escrowed to Maturity Bonds (continued)
Oklahoma State Turnpike Authority Revenue
          (First Senior) 6.00% 1/1/22
 $ 13,535,000 $ 17,487,224
Virgin Islands Public Finance Authority Revenue
          Series A 7.30% 10/1/18
 2,200,000 2,744,368
40,437,496
Health Care Revenue Bonds – 12.13%
Arizona Health Facilities Authority Revenue
          (Banner Health) Series D 5.375% 1/1/32
 2,500,000 2,555,175
Brevard County, Florida Health Facilities Authority Health
          Care Facilities Revenue (Heath First Inc. Project)
          Series B 7.00% 4/1/39
 1,610,000 1,759,247
Butler County, Pennsylvania Hospital Authority Revenue
          (Butler Health System Project) 7.125% 7/1/29
 2,250,000 2,503,778
California Municipal Finance Authority Certificates
          of Participation (Community Hospital Center)
          5.50% 2/1/39
 4,380,000 3,862,853
Cape Girardeau County, Missouri Industrial Development
          Authority Health Care Facilities Revenue Unrefunded
          Balance (St. Francis Medical Center)
          Series A 5.50% 6/1/32
 1,000,000 1,002,570
Chatham County, Georgia Hospital Authority Revenue
          (Memorial Health Medical Center)
          Series A 6.125% 1/1/24
 1,805,000 1,806,967
@ Cleveland-Cuyahoga County, Ohio Port Authority
          Revenue Senior Housing (St. Clarence - Geac)
          Series A 6.25% 5/1/38
 1,500,000 1,259,880
Colorado Health Facilities Authority Revenue (Evangelical
          Lutheran) Series A 5.25% 6/1/34
 4,275,000 3,892,901
Cuyahoga County, Ohio Revenue (Cleveland Clinic Health
          Systems) Series A 5.50% 1/1/29
 4,000,000 4,154,240
Fairfax County, Virginia Industrial Development
          Authority Revenue (Inova Health Services)
          Series A 5.50% 5/15/35
 2,500,000 2,619,450
Gainesville & Hall County, Georgia Development Authority
          Revenue Senior Living Facilities (Lanier Village Estates
          Project) Series C 7.25% 11/15/29
 1,000,000 1,020,850
Illinois Finance Authority Revenue (Silver Cross & Medical
          Centers) 7.00% 8/15/44
 5,500,000 5,721,980

11
 

Statements of net assets
Delaware Tax-Free USA Fund
 
          Principal amount      Value
Municipal Bonds (continued)               
Health Care Revenue Bonds (continued)
Illinois Health Facilities Authority Revenue (Elmhurst
          Memorial Healthcare Project) 5.625% 1/1/28
 $ 2,000,000 $ 1,924,700
Lucas County, Ohio Health Care Facility Revenue (Sunset
          Retirement Communities) Series A 6.625% 8/15/30
 2,000,000 2,018,120
Maricopa County, Arizona Industrial Development
          Authority Health Facilities Revenue (Catholic Healthcare
          West) Series A 6.00% 7/1/39
 3,690,000 3,850,515
Michigan State Hospital Finance Authority Revenue
          (Ascension Health Credit Group) Series B 5.25% 11/15/26
 3,500,000 3,619,000
          (Trinity Health Credit) Series C 5.375% 12/1/30
 6,000,000 6,050,760
New York State Dormitory Authority Revenue
          Non State Supported Debt
          (North Shore LI Jewish Health System)
          Series A 5.50% 5/1/37
 3,500,000 3,552,605
          (Orange Regional Medical Center) 6.50% 12/1/21
 2,745,000 2,801,547
North Carolina Medical Care Commission Health Care
          Facilities Revenue (First Mortgage - Presbyterian
          Homes) 5.40% 10/1/27
 3,260,000 3,096,511
Ohio State Higher Educational Facility Community
          Revenue (Cleveland Clinic Health System Obligation
          Group) Series A 5.25% 1/1/33
 2,000,000 2,062,100
Oregon Health Science University Revenue
        ^(Capital Appreciation Insured) Series A
          5.50% 7/1/21 (NATL-RE)
 2,000,000 1,078,180
          Series A 5.75% 7/1/39
 3,700,000 3,907,755
Oregon State Facilities Authority Revenue
          (Samaritan Health Services) Series A 5.25% 10/1/40
 2,775,000 2,777,081
Puerto Rico Industrial, Tourist, Educational, Medical &
          Environmental Control Facilities Revenue
          (Hospital Auxilio Mutuo Obligated Group)
          Series A 6.25% 7/1/24 (NATL-RE)
 1,200,000 1,201,140
Tallahassee, Florida Health Facilities Revenue
          (Tallahassee Memorial Regional Medical Center)
          Series B 6.00% 12/1/15 (NATL-RE)
 2,500,000 2,504,600
72,604,505

12
 

               Principal amount      Value
Municipal Bonds (continued)          
Housing Revenue Bonds – 0.92%
Florida Housing Finance Agency
          (Landings at Sea Forest Apartments) Series T
          5.85% 12/1/18 (AMBAC) (FHA) (AMT)
 $ 300,000 $ 300,198
          6.05% 12/1/36 (AMBAC) (FHA) (AMT)
 700,000 700,147
          (Spinnaker Cove Apartments) Series G
          6.50% 7/1/36 (AMBAC) (FHA) (AMT)
 500,000 500,285
Missouri State Housing Development Commission
          Mortgage Revenue Single Family Homeowner Loan A
  
          5.20% 9/1/33 (GNMA) (FNMA) (AMT)
 190,000 191,064
Missouri State Housing Development Commission  
          Multifamily Housing Revenue
          (Hyder) Series 3 5.60% 7/1/34 (FHA) (AMT)
 1,435,000 1,457,600
          (San Remo) Series 5 5.45% 1/1/36 (FHA) (AMT)
 500,000 506,320
New Mexico Mortgage Finance Authority Revenue
          Series B Class III 6.75% 7/1/25 (GNMA) (FNMA)
 90,000 93,694
          Series E 6.95% 1/1/26 (GNMA) (AMT)
 105,000 107,837
Orange County, Florida Housing Finance Authority
          Homeowner Revenue Series B
          5.25% 3/1/33 (GNMA) (FNMA) (AMT)
 135,000 135,914
Oregon Health, Housing, Educational, & Cultural
          Facilities Authority Revenue (Pier Park Project)
          Series A 6.05% 4/1/18 (GNMA) (AMT)
 890,000 891,193
Santa Fe, New Mexico Single Family Mortgage Revenue
          Series B-1 6.20% 11/1/16 (GNMA) (FNMA) (AMT)
 135,000 135,184
Volusia County, Florida Multifamily Housing Finance
          Authority (San Marco Apartments)
          Series A 5.60% 1/1/44 (AGM) (AMT)
 500,000 503,450
5,522,886
Lease Revenue Bonds – 3.36%
Capital Trust Agency Florida Revenue
          (Fort Lauderdale/Cargo Acquisition Project)
          5.75% 1/1/32 (AMT)
 3,750,000 3,151,799
          (Orlando/Cargo Acquisition Project)
          6.75% 1/1/32 (AMT)
 2,395,000 2,057,018
Golden State Tobacco Securitization Corporation
          Settlement Revenue Enhanced Asset-Backed
          Series A 5.00% 6/1/45
 3,450,000 2,915,354

13
 

Statements of net assets
Delaware Tax-Free USA Fund
 
          Principal amount      Value
Municipal Bonds (continued)               
Lease Revenue Bonds (continued)
Grapevine, Texas Industrial Development Corporation
          Revenue (Air Cargo) 6.50% 1/1/24 (AMT)
 $ 905,000 $ 846,790
Houston, Texas Industrial Development Corporation
          Revenue (Air Cargo) 6.375% 1/1/23 (AMT)
 1,990,000 1,828,671
Loudoun County, Virginia Industrial Development
          Authority Public Safety Facility Lease Revenue
          Series A 5.25% 12/15/23 (AGM)
 700,000 768,145
Missouri State Development Finance Board Infrastructure
          Facilities Revenue
          (Branson Landing Project) Series A
          5.25% 12/1/19
 1,435,000 1,470,631
          5.625% 12/1/28
 2,430,000 2,450,339
          (Sewer System Improvement Project)
          Series C 5.00% 3/1/25
 605,000 605,163
          (Triumph Foods Project) Series A 5.25% 3/1/25
 500,000 502,455
Puerto Rico Commonwealth Industrial Development
          Company General Purpose Revenue
          Series B 5.375% 7/1/16
 1,000,000 1,000,950
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series F 5.25% 7/1/25
 930,000 925,090
^ St. Louis, Missouri Industrial Development Authority
          Leasehold Revenue (Convention Center Hotel)
          5.80% 7/15/20 (AMBAC)
 3,035,000 1,576,015
20,098,420
Local General Obligation Bonds – 5.38%
Boerne, Texas Independent School District Building
          5.25% 2/1/27 (PSF)
 4,000,000 4,176,800
Desert, California Community College District Election
          2004 Series C 5.00% 8/1/37 (AGM)
 4,785,000 4,841,080
Los Angeles, California Unified School District Election of
          2005 Series F 5.00% 1/1/34
 6,180,000 6,211,702
Melrose Park, Illinois Tax Increment
          Series B 6.00% 12/15/19 (AGM)
 1,250,000 1,293,463
New York City, New York
          Series I 5.125% 3/1/23
 5,875,000 6,091,259
          Series I-1 5.375% 4/1/36
 5,000,000 5,369,800
          Series J 5.25% 6/1/28
 2,055,000 2,123,843
Powell, Ohio 5.50% 12/1/32 (NATL-RE) 2,000,000 2,109,800
32,217,747

14
 

               Principal amount      Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds – 13.18%
Alexandria, Virginia Industrial Development Authority
          Revenue (Institute for Defense Analyses)
          Series A 5.90% 10/1/30-10 (AMBAC)
 $ 6,000,000 $ 6,266,340
Deschutes County, Oregon Hospital Facilities Authority
          Hospital Revenue (Cascade Health Services)
          5.60% 1/1/32-12
 1,250,000 1,364,025
Duluth, Minnesota Economic Development Authority
          Health Care Facilities Revenue (Benedictine Health
          System - St. Mary’s Hospital) 5.25% 2/15/33-14
 4,000,000 4,615,680
Florida State Board of Education (Lottery Revenue)
          Series A 6.00% 7/1/14-10 (FGIC)
 1,000,000 1,030,380
Golden State, California Tobacco Securitization
          Corporation Settlement Revenue
          Series B 5.625% 6/1/38-13
 7,500,000 8,570,699
Henrico County, Virginia Economic Development Authority
          Revenue (Bon Secours Health System)
          Series A 5.60% 11/15/30-11
 130,000 146,619
Highlands County, Florida Health Facilities Authority
          (Adventist Health System/Sunbelt)
          Series A 6.00% 11/15/31-11
 1,500,000 1,645,665
Illinois Educational Facilities Authority Student Housing
          Revenue (Educational Advancement Fund - University
          Center Project) 6.25% 5/1/30-12
 5,000,000 5,641,850
Jackson, Ohio Local School District (Stark & Summit
          Counties) School Facilities Construction & Improvement
          5.625% 12/1/25-10 (AGM)
 1,000,000 1,041,630
Jackson, Oregon School District #6 Central Point
          5.25% 6/15/20-10 (FGIC)
 1,175,000 1,193,224
Lee County, Florida Airport Revenue
          Series B 5.75% 10/1/33-10 (AGM)
 3,000,000 3,129,930
Linn County, Oregon Community School District #9
          Lebanon 5.60% 6/15/30-13 (FGIC)
 2,000,000 2,304,480
Maryland State Economic Development Corporation,
          Student Housing Revenue (University of Maryland
          College Park Project) 5.625% 6/1/35-13
 1,125,000 1,296,281
Milledgeville-Baldwin County, Georgia Development
          Authority Revenue (Georgia College & State University
          Foundation Student Housing Project) 6.00% 9/1/33-14
 1,000,000 1,211,590

15
 

Statements of net assets
Delaware Tax-Free USA Fund
 
          Principal amount      Value
Municipal Bonds (continued)               
§Pre-Refunded Bonds (continued)
New Jersey State Educational Facilities Authority
          Revenue (Stevens Institute of Technology)
          Series B 5.25% 7/1/24-14
 $ 2,085,000 $ 2,435,343
New York City, New York Series J 5.25% 6/1/28-13 2,895,000 3,305,656
North Carolina Medical Care Commission Hospital
          Revenue (Northeast Medical Center Project)
          5.125% 11/1/34-14
 1,250,000 1,465,663
Osceola County, Florida School Board Certificates of
          Participation Series A 5.25% 6/1/27-12 (AMBAC)
 4,000,000 4,422,280
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 4,300,720
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series G 5.00% 7/1/42-13
 525,000 595,718
Puerto Rico Electric Power Authority Revenue
          Series II 5.25% 7/1/31-12
 6,000,000 6,704,700
          Series NN 5.125% 7/1/29-13
 1,105,000 1,255,645
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.25% 7/1/33-14
 175,000 202,715
Richmond, Virginia Public Utilities Revenue
          5.00% 1/15/27-12 (AGM)
 10,000,000 10,830,999
St. Louis, Missouri Airport Revenue (Capital Improvement
          Project) Series A 5.375% 7/1/21-12 (NATL-RE) 1,635,000 1,807,558
Vancouver, Washington Limited Tax
          5.50% 12/1/25-10 (AMBAC)
 1,250,000 1,300,850
Wisconsin Housing & Economic Developing Authority
          Revenue 6.10% 6/1/21-17 (FHA)
 690,000 828,449
78,914,689
Special Tax Revenue Bonds – 10.51%
Brooklyn Arena Local Development Corporation, New York
          Pilot Revenue (Barclays Center Project) 6.50% 7/15/30
 8,230,000 8,938,849
California State Economic Recovery Refunding
          Series A 5.25% 7/1/21
 3,130,000 3,482,814
Florida Enterprise Community Development District Special
          Assessment 6.10% 5/1/16 (NATL-RE)
 695,000 697,836

16
 

          Principal amount      Value
Municipal Bonds (continued)               
Special Tax Revenue Bonds (continued)
Henderson, Nevada Local Improvement Districts #T-18
          5.30% 9/1/35
 $ 2,315,000 $ 921,393
Hollywood, Florida Community Redevelopment Agency
          Revenue (Beach CRA) 5.625% 3/1/24
 1,200,000 1,157,736
Jacksonville, Florida Excise Taxes Revenue
          Series B 5.00% 10/1/26 (AMBAC)
 1,000,000 1,025,640
Lammersville, California School District Community
          Facilities District #2002 (Mountain House)
          5.125% 9/1/35
 4,125,000 3,167,051
Middlesex County, New Jersey Improvement Authority
          Senior Revenue (Heldrich Center
          Hotel/Conference Project) Series A
          5.00% 1/1/32
 1,500,000 846,525
          5.125% 1/1/37
 1,500,000 848,415
Missouri State Development Finance Board Infrastructure
          Facilities Revenue (Crackerneck Creek Project)
          Series C 5.00% 3/1/26
 500,000 500,715
New Jersey Economic Development Authority Revenue
          (Cigarette Tax)
          5.50% 6/15/31
 1,000,000 944,810
          5.75% 6/15/34
 1,935,000 1,866,153
New York City, New York Transitional Finance Authority
          Series D 5.00% 2/1/31
 5,000,000 5,113,200
New York Sales Tax Asset Receivables
          Series A 5.25% 10/15/27 (AMBAC)
 1,000,000 1,112,690
New York State Dormitory Authority State
          Personal Income Tax Revenue
          Series A 5.00% 3/15/38
 4,545,000 4,732,936
          Series B 5.25% 3/15/38
 6,000,000 6,381,900
Puerto Rico Sales Tax Financing Corporation
          Sales Tax Revenue
       Ω(Capital Appreciation) Series A 6.75% 8/1/32
 10,780,000 8,204,550
        •Series A 5.00% 8/1/39
 5,500,000 5,775,385
          Series A 5.75% 8/1/37
 5,905,000 6,104,412
Tampa, Florida Sports Authority Revenue Sales Tax
          (Tampa Bay Arena Project) 5.75% 10/1/20 (NATL-RE)
 1,000,000 1,092,040
62,915,050
 
17
 

Statements of net assets
Delaware Tax-Free USA Fund
 
          Principal amount      Value
Municipal Bonds (continued)               
State General Obligation Bonds – 6.29%
California State
          6.00% 4/1/38
 $ 4,060,000 $ 4,194,711
          6.50% 4/1/33
 2,570,000 2,782,462
Connecticut State Economic Recovery
          Series A 5.00% 1/1/16 1,960,000 2,278,794
Guam Government Series A 7.00% 11/15/39 4,295,000 4,600,117
Maryland State & Local Facilities Land Capital
          Improvement Second Series 5.00% 8/1/16
 4,000,000 4,729,400
Massachusetts State Consolidated Loan
          Series C 5.50% 11/1/15
 1,860,000 2,226,308
Puerto Rico Commonwealth Public Improvement
          Series A 5.125% 7/1/31
 7,880,000 7,529,891
          Series A 5.25% 7/1/23
 500,000 504,215
          Series A 5.50% 7/1/19 (NATL-RE)
 5,000,000 5,350,200
          Series C 6.00% 7/1/39
 3,370,000 3,469,247
37,665,345
Transportation Revenue Bonds – 10.57%
Bay Area, California Toll Bridge Authority Revenue
          (San Francisco Bay Area) Series F-1 5.625% 4/1/44
 4,265,000 4,557,366
Branson, Missouri Regional Airport Transportation
          Development District Revenue (Branson Airport Project)
          Series B 6.00% 7/1/37 (AMT)
 1,500,000 981,585
Dallas-Fort Worth, Texas International Airport Revenue
          Series A 5.50% 11/1/31 (NATL-RE) (FGIC) (AMT)
 1,500,000 1,509,420
Maryland State Economic Development Corporation
          Revenue (Transportation Facilities Project)
          Series A 5.75% 6/1/35
 5,075,000 5,188,985
Missouri State Highways & Transportation Commission
          State Road Revenue Series B 5.00% 5/1/24
 9,000,000 9,888,300
New York State Thruway Authority General Revenue
          Series H 5.00% 1/1/19 (NATL-RE)
 6,240,000 6,931,392
North Texas Tollway Authority Revenue (First Tier)
          Series A 6.00% 1/1/24
 3,345,000 3,638,825
          Series E-3 5.75% 1/1/38
 4,320,000 4,898,102
Ω Pennsylvania State Turnpike Commission Turnpike
          Revenue (Capital Appreciation) Subordinate
          Series E 6.375% 12/1/38
 10,000,000 6,400,000

18
 

          Principal amount      Value
Municipal Bonds (continued)               
Transportation Revenue Bonds (continued)
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series G 5.00% 7/1/42
 $ 275,000 $ 250,833
Sacramento County, California Airport System Revenue
          (PFC/Grant) Series C 6.00% 7/1/41
 6,500,000 6,989,190
Saint Louis, Missouri Airport Revenue (Lambert-St. Louis
          International) Series A-1 6.625% 7/1/34
 5,995,000 6,351,882
Texas Private Activity Bond Surface Transportation
          Corporation Senior Lien Note (Mobility Partners)
          6.875% 12/31/39
 5,500,000 5,716,535
63,302,415
Water & Sewer Revenue Bonds – 3.31%
Atlanta, Georgia Water & Wastewater Revenue
          Series A 6.25% 11/1/39
 5,500,000 5,852,604
Missouri State Environmental Improvement & Energy
          Resource Authority Water Pollution Control Revenue
          Unrefunded Balance (State Revolving Fund Project)
          Series A 6.05% 7/1/16 (AGM)
 1,060,000 1,064,643
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 4,484,160
          Series A 5.25% 6/15/34
 3,705,000 3,781,953
Tampa, Florida Water and Sewer Revenue
          6.00% 10/1/16 (AGM)
 1,000,000 1,203,870
Virgin Islands Water & Power Authority Water System
          Revenue 5.50% 7/1/17
 510,000 512,183
West Virginia State Water Development Authority
          Revenue (Loan Program III) Series A
          6.375% 7/1/39 (AMBAC) (AMT)
 2,890,000 2,926,848
19,826,261
Total Municipal Bonds (cost $566,886,890) 592,039,607
 
Short-Term Investments – 0.31%
•Variable Rate Demand Notes – 0.31%
Allegheny County, Pennsylvania Industrial Development
          Authority Revenue (Zoological Society) Series A
          0.29% 6/1/19 (LOC – PNC Bank)
 550,000 550,000

19
 

Statements of net assets
Delaware Tax-Free USA Fund
 
               Principal amount      Value
Short-Term Investments (continued)          
Variable Rate Demand Notes (continued)
Minneapolis & St. Paul, Minnesota Housing &
          Redevelopment Authority Health Care Revenue
          (Allina Health System) Series B-2 0.14% 11/15/35
          (LOC – JPMorgan Chase Bank)
 $ 400,000 $ 400,000
Pennsylvania State Higher Educational Facilities Authority
          Revenue (Association of Independent Colleges &
          Universities) Series G3 0.24% 11/1/20 (LOC – PNC Bank)
 900,000 900,000
Total Short-Term Investments (cost $1,850,000) 1,850,000
 
Total Value of Securities – 99.18%
(cost $568,736,890) 593,889,607
Receivables and Other Assets
Net of Liabilities – 0.82% 4,927,676
Net Assets Applicable to 53,282,571
Shares Outstanding – 100.00% $ 598,817,283
 
Net Asset Value – Delaware Tax-Free USA Fund
Class A ($568,139,835 / 50,553,120 Shares) $11.24
Net Asset Value – Delaware Tax-Free USA Fund
Class B ($6,830,173 / 608,068 Shares) $11.23
Net Asset Value – Delaware Tax-Free USA Fund
Class C ($23,837,538 / 2,120,523 Shares) $11.24
Net Asset Value – Delaware Tax-Free USA Fund
Institutional Class ($9,737 / 860 Shares) $11.32
   
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par) $ 583,884,892
Undistributed net investment income 66,906
Accumulated net realized loss on investments (10,287,232 )
Net unrealized appreciation of investments 25,152,717
Total net assets $ 598,817,283

20
 

   
§ Pre-Refunded Bonds. Municipals bonds 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, 2010.
@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $1,259,880, which represented 0.21% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”
Ω
Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
^ Zero coupon security. The rate shown is the yield at the time of purchase.

Summary of Abbreviations:
ACA — Insured by American Capital Access
AMBAC — Insured by the AMBAC Assurance Corporation
AGM — Insured by Assured Guaranty Municipal 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
GNMA — Government National Mortgage Association collateral
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
PSF — Insured by the Permanent School Fund
RADIAN — Insured by Radian Asset Assurance
 
Net Asset Value and Offering Price Per Share –
       Delaware Tax-Free USA Fund
Net asset value Class A (A) $ 11.24
Sales charge (4.50% of offering price) (B)   0.53
Offering price $ 11.77

(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, 2010 (Unaudited)

          Principal amount      Value
Municipal Bonds – 97.41%               
Corporate Revenue Bonds – 9.40%
Allegheny County, Pennsylvania Industrial Development
          Authority Revenue (Environmental Improvement - U.S.
          Steel Corp. Project) 6.50% 5/1/17
 $ 2,315,000 $ 2,448,321
Alliance Airport Authority, Texas Special Facilities Revenue
          (Federal Express Corp. Project) 4.85% 4/1/21 (AMT)
 2,000,000 1,985,340
• Brazos, Texas Harbor Industrial Development Environmental
          Facilities Revenue (Dow Chemical Co. Project)
          5.90% 5/1/38 (AMT)
 1,010,000 994,426
Brazos, Texas River Authority Pollution Control Revenue
          (Texas Utilities) 5.40% 5/1/29 (AMT)
 1,000,000 481,600
Buckeye, Ohio Tobacco Settlement Financing Authority
          Asset-Backed Series A-2
          5.125% 6/1/24
 5,000,000 4,615,700
          5.875% 6/1/47
 5,645,000 4,246,225
• Chesapeake, Virginia Economic Development Authority
          Pollution Control Revenue (Electric & Power Co. Project)
          Series A 3.60% 2/1/32
 1,150,000 1,196,863
Chesterfield County, Virginia Economic Development
          Authority Pollution Control Revenue
          (Virginia Electric & Power) Series A 5.00% 5/1/23
 1,460,000 1,568,858
Clayton County, Georgia Development Authority Special
          Facilities Revenue (Delta Air Lines)
          Series A 8.75% 6/1/29
 1,770,000 1,835,419
Harris County, Texas Industrial Development Corporation
          Solid Waste Disposal Revenue
          (Deer Park Refining Project) 5.00% 2/1/23
 2,750,000 2,807,118
Indianapolis, Indiana Airport Authority Revenue Special
          Facilities (Federal Express Corp. Project)
          5.10% 1/15/17 (AMT)
 750,000 776,355
Iowa Finance Authority Pollution Control Facilities Revenue
          (Interstate Power) 5.00% 7/1/14 (FGIC)
 2,000,000 2,149,140
Maryland Economic Development Corporation Pollution
          Control Revenue (Potomac Electric Project)
          6.20% 9/1/22
 1,780,000 2,043,404
Memphis-Shelby County, Tennessee Airport Authority
          Special Facilities Revenue (Federal Express Corp. Project)
          5.05% 9/1/12
 1,000,000 1,067,550
Michigan State Strategic Fund Limited Obligation Revenue
          (Dow Chemical Project) Series B-2 6.25% 6/1/14
 4,500,000 5,084,865

22
 

          Principal amount      Value
Municipal Bonds (continued)          
Corporate Revenue Bonds (continued)
• Mobile, Alabama Industrial Development Board Pollution
          Control Revenue (Alabama Power Co.)
          Series B 4.875% 6/1/34 $ 2,840,000   $ 3,048,314
M-S-R Energy Authority, California Gas Revenue
          Series A 6.125% 11/1/29 3,640,000 3,786,110
  Ohio State Air Quality Development Authority Revenue
          Environmental Improvement (First Energy)
          Series A 5.70% 2/1/14     2,225,000   2,381,128
          Series A 5.70% 8/1/20 4,320,000 4,588,574
          Series C 5.625% 6/1/18 2,370,000 2,534,241
          (USX Project) 5.00% 11/1/15 1,000,000 1,049,230
• Pennsylvania Economic Development Financing Authority
            Exempt Facilities Revenue (Exelon Generation Co.
          Project) 5.00% 12/1/42 1,355,000 1,437,370
Prattville, Alabama Industrial Development Board
          Environmental Improvement Revenue (International
          Paper Co. Project) Series A 6.70% 3/1/24 (AMT) 1,000,000 1,010,490
• Sabine, Texas River Authority Pollution Control Revenue
          (TXU Electric Co. Project) Series A 5.50% 5/1/22 1,000,000 951,570
Sugar Creek, Missouri Industrial Development Revenue
          (Lafarge North America Project)
          Series A 5.65% 6/1/37 (AMT) 500,000 454,075
54,542,286
Education Revenue Bonds – 5.19%
California Municipal Finance Authority Educational Revenue
          (American Heritage Education Foundation Project)
          Series A 5.25% 6/1/26 1,000,000 894,940
California Statewide Communities Development
          Authority Student Housing Revenue
          (Irvine, LLC - UCI East Campus) 6.00% 5/15/23 3,150,000 3,333,803
Chattanooga, Tennessee Health Educational & Housing
          Facilities Board Revenue (CDFI Phase I, LLC Project)
          Series B 5.50% 10/1/20 1,030,000 939,391
Connecticut State Health & Educational Facilities Authority
          Revenue (Yale University) Series A-1 5.00% 7/1/25 8,500,000 9,553,064
Fulton County, Georgia Development Authority Revenue
          (Molecular Science Building Project)
          5.25% 5/1/21 (NATL-RE) 1,000,000 1,098,800

23
 

Statements of net assets
Delaware Tax-Free USA Intermediate Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Education Revenue Bonds (continued)
          Grand Traverse, Michigan Public School Academy Revenue
          5.00% 11/1/36 $ 1,000,000 $ 758,780
Marietta, Georgia Development Authority Revenue
          (Life University Income Project) 6.25% 6/15/20 1,180,000 1,114,829
Massachusetts State Health & Educational Facilities
          Authority Revenue
          (Nichols College Project) Series C 6.125% 10/1/29 1,000,000   959,770
        •(Northeastern University) 4.125% 10/1/37 2,360,000 2,455,792
Michigan Higher Education Facilities Authority Revenue
          (Kalamazoo College Project) 5.50% 12/1/19 500,000 521,455
Nassau County, New York Industrial Development Agency
          Civic Facility Revenue (New York Institute of Technology
          Project) Series A 4.75% 3/1/26 1,710,000 1,694,849
New York State Dormitory Authority Revenue
          (Brooklyn Law School) Series A 5.50% 7/1/18 (RADIAN) 1,000,000 1,037,610
          (Non State Supported Debt - Rockefeller University)
          Series A 5.00% 7/1/27 1,055,000 1,173,519
Ohio State Higher Educational Facility Revenue  
          (John Carroll University) 5.50% 11/15/18   335,000 357,676
Ohio State University General Receipts Revenue  
          Series B 5.25% 6/1/21   180,000 198,936
University of California Revenue
          Series A 5.125% 5/15/20 (AMBAC) 250,000 269,928
University of Oklahoma Research Facilities Revenue
          5.00% 3/1/23 (AMBAC) 1,065,000 1,098,217
University of Virginia General Revenue Series B    
          5.00% 6/1/20 1,250,000 1,337,738
          5.00% 6/1/21 1,250,000 1,333,425
30,132,522
Electric Revenue Bonds – 2.41%
• Burke County, Georgia Development Authority Pollution
          Control Revenue (Oglethorpe Power)
          Series C-2 4.625% 1/1/37 (AMBAC) 3,320,000 3,333,247
Metropolitan Government Nashville & Davidson County,
          Tennessee Electric Revenue Series B 5.50% 5/15/14 1,000,000 1,168,470
Orlando, Florida Utilities Commission Water & Electric
          Revenue 5.25% 10/1/20 555,000 596,769

24
 

     Principal amount      Value
Municipal Bonds (continued)          
Electric Revenue Bonds (continued)
          Rochester, Minnesota Electric Utilities Revenue
          Series C 5.00% 12/1/18 (NATL-RE) $ 2,000,000 $ 2,275,800
  South Carolina State Public Service Authority Revenue
          Series A 5.125% 1/1/21 (AGM) 1,000,000 1,078,660
Texas Municipal Power Agency Revenue
          4.00% 9/1/11 (AMBAC) 750,000 751,845
Vernon, California Electric System Revenue
          Series A 5.125% 8/1/21 4,500,000 4,761,225
13,966,016
Escrowed to Maturity Bonds – 0.08%
California State Economic Recovery Series A 5.25% 7/1/14 225,000 265,104
Southcentral, Pennsylvania General Authority Revenue
          (Wellspan Health Obligated Project) 5.625% 5/15/26 180,000 192,596
457,700
Health Care Revenue Bonds – 11.79%  
Allegheny County, Pennsylvania Municipal Development
          Authority Revenue (University of Pittsburgh Medical
          Center) Series A 5.00% 9/1/14 4,000,000 4,519,160
Berks County, Pennsylvania Hospital Authority Revenue
          (Reading Hospital & Medical Center Project)
          Series A-3 5.25% 11/1/24 4,405,000 4,591,376
Butler County, Pennsylvania Hospital Authority Revenue
          (Butler Health System Project) 7.125% 7/1/29 2,250,000 2,503,778
California Municipal Finance Authority Certificates of
          Participation (Community Hospitals Center)  
          5.25% 2/1/24 1,695,000   1,588,198
California Statewide Communities Development Authority    
          Revenue (Kaiser Permanente) Series A 5.00% 4/1/19 5,325,000 5,760,478
Cape Girardeau County, Missouri Industrial Development  
          Authority Health Care Facilities Revenue  
          (St. Francis Medical Center) Series A 5.50% 6/1/34 640,000 640,902
Chatham County, Georgia Hospital Authority Revenue
          (Memorial Health Medical Center)
          Series A 6.125% 1/1/24 905,000 905,986
@ Cleveland-Cuyahoga County, Ohio Port Authority
          Revenue (Saint Clarence - Geac) Series A
          6.125% 5/1/26 715,000 642,778

25
 

Statements of net assets
Delaware Tax-Free USA Intermediate Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          Cumberland County, Pennsylvania Municipal Authority
          Revenue (Diakon Lutheran Social Ministries)
          6.25% 1/1/24 $ 2,625,000 $ 2,740,684
Cuyahoga County, Ohio Revenue
          (Cleveland Clinic Health System) Series A 6.00% 1/1/21 1,000,000 1,080,560
Dauphin County, Pennsylvania General Authority Health
          System Revenue (Pinnacle Health System Project)  
          Series A 6.00% 6/1/29 4,500,000   4,711,050
Georgia Medical Center Hospital Authority Revenue
          (Spring Harbor Green Island Project) 5.25% 7/1/37 2,300,000 1,817,023
Lycoming County, Pennsylvania Authority Health System
          Revenue (Susquehanna Health System Project)
          5.50% 7/1/28 2,500,000 2,494,075
Maryland State Health & Higher Education Facilities
          Authority Revenue  
        •(John Hopkins Health Systems) 5.00% 5/15/46 790,000 869,387
          (Union Hospital of Cecil County) 5.625% 7/1/32 500,000 505,260
Massachusetts State Health & Educational Facilities
          Authority Revenue (Caregroup) Series E-2 5.375% 7/1/21 1,970,000   2,037,433
Michigan State Hospital Finance Authority Revenue
          (Oakwood Obligation Group) 5.50% 11/1/14 2,230,000 2,369,420
Minneapolis, Minnesota Health Care System Revenue  
          (Fairview Health) Series A 6.375% 11/15/23 3,710,000   4,161,322
New York State Dormitory Authority Revenue Non State  
          Supported Debt
          (North Shore LI Jewish Health System) Series A 5.50% 5/1/30 1,700,000 1,754,247
          (Orange Regional Medical Center) 6.50% 12/1/21 2,000,000 2,041,200
North Carolina Medical Care Commission Health Care
          Facilities Revenue (First Mortgage - Presbyterian Homes)
          5.40% 10/1/27 780,000 740,883
Ohio State Higher Educational Facilities Commission
          Revenue (Cleveland Clinic Health System
          Obligation Group) Series A
          5.00% 1/1/17 2,000,000 2,224,920
          5.00% 1/1/18 1,000,000 1,104,270
Oregon State Facilities Authority Revenue (Samaritan
          Health Services) Series A 5.25% 10/1/40 1,685,000 1,686,264

26
 

     Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
          Scottsdale, Arizona Industrial Development Authority
          Hospital Revenue (Scottsdale Healthcare)
          Series A 5.00% 9/1/19 $ 3,065,000 $ 3,155,540
South Carolina Jobs-Economic Development Authority
          Hospital Revenue (Palmetto Health) 5.50% 8/1/26 5,000,000 4,993,349
St. Louis Park, Minnesota Health Care Facilities Revenue
          (Nicollet Health Services) Series C 5.50% 7/1/18 4,240,000 4,556,516
St. Mary Hospital Authority, Pennsylvania Health System  
          Revenue (Catholic Health East) Series A 5.25% 11/15/16 1,200,000 1,278,360
St. Paul, Minnesota Housing & Redevelopment Authority
            Hospital Revenue (Health East Project) 6.00% 11/15/25 1,000,000 977,040
68,451,459
Housing Revenue Bonds – 1.28%
California Housing Finance Agency Revenue
          (Home Mortgage) Series M 5.95% 8/1/25 (AMT) 2,700,000 2,810,538
Puerto Rico Housing Finance Authority Subordinate  
          (Capital Fund Modernization) 5.50% 12/1/16 4,120,000 4,623,299
7,433,837
Lease Revenue Bonds – 2.24%
Capital Trust Agency Florida Revenue (Fort Lauderdale/
          Cargo Acquisition Project) 5.75% 1/1/32 (AMT) 1,750,000 1,470,840
Golden State, California Tobacco Securitization Corporation  
          Settlement Revenue Refunding Asset-Backed Series A 1,170,000   1,169,988
          5.00% 6/1/18
          5.00% 6/1/21 (AMBAC)   1,000,000 982,530
Michigan State Building Authority Revenue Series I
          5.00% 10/15/24 2,860,000 2,906,990
          5.50% 10/15/18   2,050,000 2,157,994
New York State Municipal Bond Bank Agency Special  
          School Purpose Revenue Series C 5.25% 6/1/22 1,000,000 1,052,660
• Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series J 5.00% 7/1/28 1,000,000 1,028,920
Tobacco Settlement Financing New York Revenue
          (Asset-Backed) Series B 5.00% 6/1/12 2,060,000 2,240,806
13,010,728

27
 

Statements of net assets
Delaware Tax-Free USA Intermediate Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Local General Obligation Bonds – 7.62%
          Chicago, Illinois Board of Education Refunding Dedicated
          Revenue Series B 5.00% 12/1/23 (AMBAC) $ 3,500,000 $ 3,717,245
Chicago, Illinois Modern Schools Across Chicago
          Series J 5.00% 12/1/23 (AMBAC) 2,865,000 3,056,239
Chicago, Illinois Project & Refunding
          Series C 5.50% 1/1/40 (NATL-RE) (FGIC) 2,940,000 2,994,831
Dallas, Texas 5.125% 2/15/15 3,000,000 3,507,120
Fairfax County, Virginia Refunding & Public Improvement
          5.25% 4/1/14 3,500,000 4,081,840
Gwinnett County, Georgia School District
          5.00% 2/1/11 3,000,000   3,132,780
          5.00% 2/1/21 4,975,000 5,923,434
  Lansing, Michigan Community College
          (College Building and Site)
          5.00% 5/1/21 (NATL-RE) 1,325,000 1,426,137
Los Angeles, California Unified School District
          (Election 1997) Series F    
          5.00% 7/1/21 (FGIC)   2,880,000 2,993,040
          (Election 2004) Series G
          5.00% 7/1/13 (AMBAC) 2,000,000   2,227,640
          5.00% 7/1/31 (AMBAC)   3,870,000 3,880,178
Middlesex County, New Jersey Improvement Authority  
          Revenue (County Guaranteed Open Space Trust)
          5.25% 9/15/20 1,000,000 1,122,250
New York City, New York
          Series A-1 5.00% 8/1/19 3,500,000 3,886,995
          Series G 5.25% 8/1/15 1,000,000 1,114,950
          Series I 5.00% 8/1/21 1,000,000 1,065,610
          Series J 5.50% 6/1/23 100,000 105,260
44,235,549
§Pre-Refunded Bonds – 5.78%
Benton & Linn Counties, Oregon School District #509J
          5.00% 6/1/21-13 (AGM) 1,000,000 1,131,050
Cook County, Illinois Series A 5.375% 11/15/21-11 (FGIC) 2,160,000 2,291,695
Duluth, Minnesota Economic Development
          Authority Health Care Facilities Revenue
          (Benedictine Health System - St. Mary’s Hospital) 1,000,000 1,153,920
          5.25% 2/15/28-14
          5.50% 2/15/23-14 1,000,000 1,163,570

28
 

     Principal amount      Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds (continued)
          Forest Grove, Oregon Revenue Campus
          (Pacific University) 6.30% 5/1/25-10 (RADIAN) $ 1,000,000 $ 1,011,140
  Illinois Educational Facilities Authority Student
          Housing Revenue (Educational Advancement -
          University Center Project) 6.00% 5/1/22-12 750,000 842,235
Lancaster County, Pennsylvania Hospital Authority
          Revenue (Lancaster General Hospital Project)
          5.75% 3/15/21-13 1,000,000 1,151,630
Lunenburg County, Virginia
          Series B 5.25% 2/1/29-13 (NATL-RE) 715,000 813,684
Miami-Dade County, Florida Educational Facilities
          Authority Revenue (University of Miami)
          Series A 5.00% 4/1/34-14 (AMBAC) 3,500,000 4,018,071
Michigan State Building Authority Revenue
          (Facilities Program)
          Series I 5.00% 10/15/24-11 140,000 150,130
          Series I 5.50% 10/15/18-11 125,000   135,061
Minneapolis, Minnesota Health Care System Revenue
          (Allina Health Systems) Series A 5.75% 11/15/32-12 500,000   565,935
New Jersey State Educational Facilities Authority
          Revenue (Georgian Court College Project)  
          Series C 6.50% 7/1/33-13   500,000 590,385
New Jersey State Transportation Trust Fund Authority
          (Transportation System) Series C 5.50% 6/15/22-13 1,700,000 1,952,688
New York City, New York Series J 5.50% 6/1/23-13   900,000 1,034,892
North Texas Health Facilities Development Corporation
          Hospital Revenue (United Regional Health Care System,
          Inc. Project) 6.00% 9/1/23-13 1,000,000 1,158,980
• Ohio State Higher Educational Facility Revenue  
          Adjustable Medium Term (Kenyon College Project)
          4.70% 7/1/37-13 1,000,000 1,119,910
Ohio State University General Receipts
          (Ohio State University) Series B 5.25% 6/1/21-13 820,000 933,185
Pennsylvania State First Series 5.125% 1/15/19-11 3,515,000 3,699,643
Pennsylvania State Higher Educational Facilities Authority
          College & University Revenue (Geneva College Project)
          6.125% 4/1/22-12 1,000,000 1,111,960

29
 

Statements of net assets
Delaware Tax-Free USA Intermediate Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds (continued)
          Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series J 5.50% 7/1/21-14 $ 1,000,000 $ 1,165,190
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.50% 7/1/23-14 2,000,000 2,337,720
  Southcentral, Pennsylvania General Authority Revenue
          (Welllspan Health Obligated Project)
          5.625% 5/15/26-11 820,000 880,967
University of North Carolina Revenue (Chapel Hill)
          Series A 5.375% 12/1/14-11 2,000,000 2,127,280
Virginia State Resource Authority Clean Water Revenue
          (State Revolving Fund) 6.00% 10/1/16-10 1,000,000 1,034,810
33,575,731
Resource Recovery Revenue Bonds – 0.20%
Pennsylvania Economic Development Financing
          Authority Resource Recovery Revenue
          (Subordinate Colver Project)
          Series G 5.125% 12/1/15 (AMT) 1,300,000 1,174,069
1,174,069
Special Tax Revenue Bonds – 12.03%
Baltimore, Maryland Convention Center Hotel Revenue
          Subordinated Series B 5.00% 9/1/16 1,200,000 1,074,408
Brooklyn Arena Local Development Corporation
          New York Pilot Revenue (Barclays Center Project)
          6.50% 7/15/30 5,500,000 5,973,714
California State Economic Recovery Series A  
          5.25% 7/1/14 775,000   883,864
          5.25% 7/1/21 2,740,000   3,048,853
Casa Grande, Arizona Excise Tax Revenue  
          5.00% 4/1/22 (AMBAC)   1,600,000 1,633,760
Columbia County, Georgia Sales Tax 5.00% 4/1/16   1,265,000 1,478,241
Dallas, Texas Convention Center Hotel Development  
          Revenue Series A
          5.00% 1/1/24 3,420,000 3,513,298
          5.25% 1/1/23 5,375,000 5,682,288

30
 

     Principal amount      Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds (continued)
           Guam Government Limited Obligation Revenue
          (Section 30) Series A
          5.375% 12/1/24 $ 1,750,000 $ 1,774,413
          5.625% 12/1/29 1,185,000 1,203,119
Hampton, Virginia Convention Center Revenue
          5.25% 1/15/23 (AMBAC) 1,000,000 1,045,620
Louisiana State Citizens Property Insurance
          Corporation Assessment Revenue
          Series C-2 6.75% 6/1/26 (ASSURED GTY) 3,600,000 4,215,348
Metropolitan Pier & Exposition Authority, Illinois
          Dedicate State Tax Revenue
          (McCormick Place Expansion Project)
          Series A 5.50% 12/15/24 (NATL-RE) (FGIC) 2,000,000 2,027,300
Middlesex County, New Jersey Improvement Authority
          Senior Revenue (Heldrich Center Hotel/Conference
          Project) Series A 5.00% 1/1/32 1,000,000 564,350
@ Modesto, California Special Tax Community Facilities
          District #04-1 (Village 2) 5.15% 9/1/36 1,500,000   1,103,475
New Jersey Economic Development Authority Revenue  
          (Cigarette Tax)  
          5.00% 6/15/11 (FGIC) 2,750,000 2,809,345
          5.50% 6/15/31   1,000,000   944,810
          5.625% 6/15/18 1,000,000 1,000,250
• New York City, New York Transitional Finance Authority
          Revenue Refunding - Future Tax Secured
          Series A 5.50% 11/1/26   1,000,000 1,075,890
New York State Urban Development Corporation Revenue
          (State Personal Income Tax) Series A-1 5.00% 12/15/28   4,000,000 4,300,280
Oregon Department of Administrative Services Lottery
          Revenue Series A 5.25% 4/1/26 2,000,000 2,253,180
Puerto Rico Sales Tax Financing Corporation Sales Tax
          Revenue Series A
        •5.00% 8/1/39 4,500,000 4,725,315
          5.25% 8/1/27 4,685,000 4,793,270
          6.125% 8/1/29 2,500,000 2,584,725
Richmond Heights, Missouri Tax Increment & Transaction
          Sales Tax Revenue Refunding & Improvement
          (Francis Place Redevelopment Project) 5.625% 11/1/25 1,000,000 860,860

31
 

Statements of net assets
Delaware Tax-Free USA Intermediate Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds (continued)
@ St. Joseph, Missouri Industrial Development Authority Tax
          Increment Revenue (Shoppes at North Village Project)
          Series A 5.10% 11/1/19 $ 250,000 $ 230,938
          Series B 5.375% 11/1/23 1,000,000 891,470
          Washington State Motor Vehicle Fuel Tax  
            Series B 5.00% 7/1/16 4,250,000 4,949,890
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 1,533,015
Wyoming State Loan & Investment Board Facilities
          Revenue 5.00% 10/1/24 1,550,000 1,635,421
  69,810,710
State General Obligation Bonds – 22.30%
  California State 5.25% 11/1/17 1,000,000 1,068,090
California State Various Purpose
          5.00% 10/1/18 5,000,000 5,393,750
          6.50% 4/1/33 4,500,000 4,872,015
California Statewide Communities Development Authority  
          Revenue (Purchase Proposition 1A Receivables Program)
          5.00% 6/15/13   2,690,000 2,898,636
Connecticut State Economic Recovery  
          Series A 5.00% 1/1/16 4,700,000 5,464,455
Connecticut State Series C 5.00% 11/1/24 2,000,000   2,252,800
Florida State Board Education Capital Outlay Public
          Education Series D 5.75% 6/1/22     2,000,000 2,045,200
Georgia State
          5.00% 8/1/12 3,125,000 3,452,750
          5.00% 7/1/17 4,810,000 5,711,779
          Series D 5.00% 7/1/11 6,865,000 7,292,848
Guam Government Series A 7.00% 11/15/39 1,560,000 1,670,822
Illinois State Refunding Series B 5.00% 1/1/13 3,475,000 3,797,411
Maryland State 5.00% 8/1/17 1,500,000 1,754,265
Maryland State & Local Facilities Loan Capital Improvement
          First Series 5.00% 3/15/19 3,675,000 4,222,355
          Second Series 5.00% 7/15/14 975,000 1,134,422
          Series C 5.00% 11/1/17 2,750,000 3,276,323

32
 

     Principal amount      Value
Municipal Bonds (continued)          
State General Obligation Bonds (continued)
          Massachusetts State Consolidated Loan
          Series A 5.25% 8/1/13 $ 5,000,000 $ 5,716,650
          Series C 5.50% 11/1/15 4,090,000 4,895,485
Minnesota State 5.00% 6/1/14 900,000 1,042,416
Mississippi State Series A 5.00% 10/1/17 4,860,000 5,690,331
North Carolina State Public Improvement Series A
          5.00% 3/1/12 4,000,000 4,357,000
          5.00% 3/1/15 1,200,000 1,403,772
North Carolina State Refunding Series B 5.00% 4/1/15 4,000,000 4,684,480
Ohio State
          Series A 5.00% 6/15/13 3,750,000 4,219,763
          Series D 5.00% 9/15/14 3,500,000 4,060,735
Pennsylvania State  
          5.50% 2/1/13 3,200,000 3,628,160
          Second Series A 5.00% 8/1/13 4,000,000   4,545,480
Puerto Rico Commonwealth Government Development
          Bank 4.75% 12/1/15 (NATL-RE) 4,765,000 4,904,757
Puerto Rico Commonwealth Public Improvement Series A
          5.00% 7/1/16 (ASSURED GTY) 2,110,000 2,329,060
            5.25% 7/1/22 3,470,000 3,499,391
          5.25% 7/1/23 1,125,000   1,134,484
          5.50% 7/1/17 4,415,000 4,728,244
• Puerto Rico Commonwealth Series A 5.00% 7/1/30 1,000,000 1,043,350
• Puerto Rico Public Finance Corporation Commonwealth
          Appropriation (LOC-Puerto Rico Government Bank)    
          Series A 5.75% 8/1/27   1,000,000 1,034,750
Virginia State
          5.00% 6/1/23 2,000,000 2,277,720
          Series D 5.00% 6/1/19 5,715,000 6,809,537
Washington State Variable Purpose Series A 5.00% 7/1/16 1,000,000 1,164,680
129,478,166
Transportation Revenue Bonds – 10.42%
Broward County, Florida Airport System Revenue
          Series O 5.375% 10/1/29 3,895,000 4,020,068
Charlotte, North Carolina Airport Revenue
          (Charlotte Douglas) Series A
          5.00% 7/1/13 2,375,000 2,640,881
          5.00% 7/1/15 750,000 848,738

33
 

Statements of net assets
Delaware Tax-Free USA Intermediate Fund
 
     Principal amount      Value
Municipal Bonds (continued)          
Transportation Revenue Bonds (continued)
          Chicago, Illinois O’ Hare International Airport
          Revenue General-Airport-Third Lien
          Series A-2 5.75% 1/1/20 (AGM) (AMT) $ 1,000,000 $ 1,050,850
Dallas-Fort Worth, Texas International Airport Revenue
          Series A
          5.00% 11/1/22 680,000 722,024
          5.00% 11/1/23 750,000 792,285
          5.00% 11/1/24 400,000 420,352
Georgia Federal Highway Road and Tollway Authority
          Revenue Bonds 5.00% 6/1/10 (NATL-RE) 2,000,000 2,025,500
Idaho Housing & Finance Association Grant Revenue
          (Antic Federal Highway Transportation)
          Series A 5.25% 7/15/21 (ASSURED GTY) 2,760,000   3,124,154
Maryland State Economic Development Revenue
            (Transportation Facilities Project)
          Series A 5.375% 6/1/25   2,470,000   2,511,694
Metropolitan, New York Transportation Authority Revenue  
          Series A 5.00% 11/15/18 2,500,000 2,812,375
          Series C 6.50% 11/15/28   2,860,000 3,288,571
Metropolitan, Washington D.C. Airport Authority Systems
          Revenue Series A 5.50% 10/1/19 (NATL-RE) (FGIC) (AMT) 1,000,000 1,042,160
New York State Thruway Authority Revenue
          (General Highway and Bridge Trust Fund)
          Series B 5.25% 4/1/13 (AMBAC)   3,300,000 3,721,773
North Texas Tollway Authority Revenue System (First Tier)  
          Series A 6.00% 1/1/20 3,925,000 4,401,260
        •Series E-3 5.75% 1/1/38 2,470,000 2,800,535
Pennsylvania State Turnpike Commission Revenue
          Series A 5.25% 12/1/20 (AMBAC) 1,230,000 1,360,515
Sacramento County, California Airport System Revenue
          (PFC/Grant) Series D
          5.50% 7/1/28 2,020,000 2,172,247
          5.625% 7/1/29 1,685,000 1,816,801
Saint Louis, Missouri Airport Revenue
          (Lambert-St. Louis International)
          Series A-1 6.125% 7/1/24 3,780,000 4,050,119
Texas Private Activity Bond Surface Transportation
          Corporate Senior Note (Mobility Partners)
          7.50% 12/31/31 3,565,000 3,872,695

34
 

     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 $ 1,960,202
Triborough, New York Bridge & Tunnel Authority Revenue
          Series A 5.00% 11/15/17 1,720,000 2,003,181
        •Series B-1 5.00% 11/15/25 4,000,000 4,453,040
        •Series B-3 5.00% 11/15/38 1,800,000 2,021,526
Virginia Port Authority Commonwealth Port Fund Revenue
          Resolution 5.00% 7/1/12 (AMT) 500,000 536,600
60,470,146
Water & Sewer Revenue Bonds – 6.67%
Alabama Water Pollution Control Authority Revenue
          5.50% 8/15/23 (AMBAC) 1,000,000 1,001,980
Arizona Water Infrastructure Finance Authority Revenue  
          Water Quality) Series A 5.00% 10/1/21 2,430,000 2,788,279
Atlanta, Georgia Water & Wastewater Revenue
          Series A 6.00% 11/1/25 2,925,000 3,172,777
          Series B 5.50% 11/1/23 (AGM) 3,000,000 3,300,390
Dallas, Texas Waterworks & Sewer System Revenue
          5.00% 10/1/24 (AGM) 6,500,000 6,520,865
Florida Water Pollution Control Financing Corporation
          Revenue (Water Pollution Control)
          Series A 5.00% 1/15/25 5,000,000 5,401,700
  King County, Washington Sewer Revenue Refunding  
          Series B 5.00% 1/1/14 (NATL-RE) 3,500,000   3,985,065
Massachusetts State Water Pollution Abatement Trust  
          5.00% 8/1/16 2,170,000 2,545,388
New York State Environmental Facilities Corporation
          Revenue (State Clean Water & Drinking Water  
          Revolving Foundation)  
          Series A 5.00% 6/15/22   1,405,000 1,588,170
          Series D 5.00% 9/15/23 3,360,000 3,730,978
Portland, Oregon Sewer System Revenue (First Lien)
          Series A 5.00% 6/15/18 4,000,000 4,662,880
38,698,472
Total Municipal Bonds (cost $541,154,180) 565,437,391

35
 

Statements of net assets
Delaware Tax-Free USA Intermediate Fund
 
          Principal amount Value
Short-Term Investments – 1.33%               
•Variable Rate Demand Notes – 1.33%
Allegheny County, Pennsylvania Industrial Development
          Authority Revenue (Zoological Society)
          Series A 0.29% 6/1/19 (LOC – PNC Bank) $ 100,000 $ 100,000
Minneapolis & St. Paul, Minnesota Housing &
          Redevelopment Authority Health Care Revenue
          (Allina Health System)
          Series B-2 0.14% 11/15/35 (LOC – JPMorgan Chase Bank) 700,000 700,000
Pittsburgh, Pennsylvania Water & Sewer Authority Water &
          Sewer Systems Revenue First Lien
          Series B2 0.16% 9/1/39 (LOC – PNC Bank) 500,000 500,000
Robbinsdale, Minnesota Revenue (North Memorial)
          Series A-3 0.14% 5/1/33 (LOC – Wells Fargo Bank) 4,800,000 4,800,000
University of Minnesota
          Series C 0.23% 12/1/36 (SPA – JPMorgan Chase Bank) 1,600,000 1,600,000
Total Short-Term Investments (cost $7,700,000) 7,700,000
 
Total Value of Securities – 98.74%
(cost $548,854,180) 573,137,391
Receivables and Other Assets
Net of Liabilities – 1.26% 7,342,504
Net Assets Applicable to 49,441,743
Shares Outstanding – 100.00% $ 580,479,895
 
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Class A ($528,683,883 / 45,028,348 Shares) $11.74
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Class B ($675,102 / 57,555 Shares)   $11.73
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Class C ($50,502,968 / 4,303,717 Shares)   $11.73
Net Asset Value – Delaware Tax-Free USA Intermediate Fund
Institutional Class ($617,942 / 52,123 Shares)   $11.86

36
 

 
Components of Net Assets at February 28, 2010:      
Shares of beneficial interest (unlimited authorization – no par) $ 561,570,141
Undistributed net investment income 16,225
Accumulated net realized loss on investments (5,389,682 )
Net unrealized appreciation of investments 24,283,211
Total net assets $ 580,479,895

§ 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, 2010.
@ Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $2,868,661, which represented 0.49% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”

Summary of abbreviations:
AMBAC — Insured by the AMBAC Assurance Corporation
AGM — Insured by Assured Guaranty Municipal 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
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
SPA — Stand-by Purchase Agreement
 
Net Asset Value and Offering Price Per Share –      
       Delaware Tax-Free USA Intermediate Fund
Net asset value Class A (A) $ 11.74
Sales charge (2.75% of offering price) (B) 0.33
Offering price $ 12.07

(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
 
37
 

Statements of net assets
Delaware National High-Yield Municipal Bond Fund February 28, 2010 (Unaudited)

          Principal amount Value
Municipal Bonds – 98.31%               
Corporate Revenue Bonds – 22.87%
Allegheny County, Pennsylvania Industrial Development
          Authority Revenue (Environmental Improvement -
          U.S. Steel Corp.) 6.875% 5/1/30 $ 1,000,000 $ 1,035,800
• Beaver County, Pennsylvania Industrial Development
          Authority Pollution Control Revenue (First Energy
          General Corp. Project) Series C 7.125% 6/1/28 (AMT) 1,000,000 1,047,920
• Brazos, Texas Harbor Industrial Development
          Environmental Facilities Revenue (Dow Chemical Co.
          Project) 5.90% 5/1/38 (AMT) 190,000 187,070
• Brazos, Texas River Authority Pollution Control Revenue
          (TXU Energy Co. Project) Series B 6.30% 7/1/32 (AMT) 1,000,000 535,040
Buckeye, Ohio Tobacco Settlement Financing Authority
          Asset-Backed Series A-2 6.50% 6/1/47 1,000,000 826,430
Clayton County, Georgia Development Authority Special
          Facilities Revenue (Delta Airlines)
          Series B 9.00% 6/1/35 (AMT) 1,000,000 1,014,570
Cloquet, Minnesota Pollution Control Revenue
          (Potlatch Corp. Project) 5.90% 10/1/26 750,000 690,458
De Soto Parish, Louisiana Environmental Improvement
          Revenue (International Paper Co. Project)
          Series A 6.35% 2/1/25 (AMT) 1,650,000 1,663,464
Golden State, California Tobacco Securitization Settlement
          Revenue Refunding Asset-Backed Senior Series A-1
          5.75% 6/1/47 3,000,000 2,212,109
Gulf Coast, Texas Waste Disposal Authority Revenue
          (Valero Energy Corp. Project) 6.65% 4/1/32 (AMT) 1,000,000 1,010,210
Hawaii State Department Budget & Finance Special Purpose
          Revenue (Hawaiian Electric Co. Subsidiary) 6.50% 7/1/39 970,000 1,045,951
Michigan Tobacco Settlement Finance Authority
          Revenue Asset-Backed Series A 6.00% 6/1/48 555,000 439,971
Mississippi Business Finance Corporation Pollution
          Control Revenue (System Energy Resources, Inc.
          Project) 5.90% 5/1/22 900,000 899,919
M-S-R Energy Authority, California Gas Revenue
          Series C 6.50% 11/1/39 1,000,000 1,063,030
Nassau County, New York Tobacco Settlement
          Asset-Backed Series A-3 5.125% 6/1/46 525,000 424,195
New Jersey Economic Development Authority Special
          Facility Revenue (Continental Airlines Inc. Project)
          6.40% 9/15/23 (AMT) 1,000,000 917,680

38
 

          Principal amount Value
Municipal Bonds (continued)               
Corporate Revenue Bonds (continued)
New York City, New York Industrial Development Agency
          Special Facilities Revenue
          •(American Airlines - JFK International Airport)
          7.75% 8/1/31 (AMT) $ 1,000,000 $ 1,003,590
          (JetBlue Airways Corp. Project) 5.125% 5/15/30 (AMT) 1,000,000 759,690
Pennsylvania Economic Development Financing Authority
          Exempt Facilities Revenue (Allegheny Energy Supply Co.)
          7.00% 7/15/39 1,000,000 1,118,870
Petersburg, Indiana Pollution Control Revenue (Indianapolis
          Power & Light Co. Project) 6.375% 11/1/29 (AMT) 1,000,000 1,009,920
Phenix City, Alabama Industrial Development Board
          Environmental Improvement Revenue (Mead Westvaco
          Corp. Project) Series A 6.35% 5/15/35 (AMT) 500,000 459,980
Salt Verde Financial Corporation, Arizona Gas Revenue
          Senior 5.00% 12/1/37 1,000,000 855,950
St. John Baptist Parish, Louisiana Revenue (Marathon
          Oil Corp.) Series A 5.125% 6/1/37 1,000,000 938,950
Sugar Creek, Missouri Industrial Development Revenue
          (Lafarge North America Project)
          Series A 5.65% 6/1/37 (AMT) 500,000 454,075
Sweetwater County, Wyoming Solid Waste Disposal
          Revenue (FMC Corp. Project) 5.60% 12/1/35 (AMT) 1,000,000 930,950
Tobacco Settlement Financing Corporation, Virginia
          Senior Series B-1 5.00% 6/1/47 1,000,000 687,090
Toledo, Lucas County, Ohio Port Authority Development
          Revenue (Toledo Express Airport Project) Series C
          6.375% 11/15/32 (AMT) 1,000,000 946,310
24,179,192
Education Revenue Bonds – 17.48%
California Statewide Communities Development
          Authority Revenue (California Baptist University
          Project) Series A 5.50% 11/1/38 1,000,000 810,170
California Statewide Communities Development
          Authority Student Housing Revenue (East Campus
          Apartments, LLC) Series A 5.625% 8/1/34 (ACA) 1,000,000 958,370
Chattanooga, Tennessee Health Educational & Housing
          Facilities Board Revenue (CDFI Phase I, LLC Project)
          Subordinate Series B 6.00% 10/1/35 1,000,000 855,360

39
 

Statements of net assets
Delaware National High-Yield Municipal Bond Fund
 
          Principal amount      Value
Municipal Bonds (continued)          
Education Revenue Bonds (continued)
Idaho Housing & Finance Association Nonprofit
          Facilities Revenue (North Star Charter School Project)
          Series A 9.50% 7/1/39 $ 1,000,000 $ 1,142,630
Indiana State Finance Authority Revenue Educational Facilities
          (Drexel Foundation - Thea Bowman Academy
          Charter School) 7.00% 10/1/39 1,000,000 1,030,170
          (Irvington Community) Series A 9.00% 7/1/39 1,000,000 1,159,989
Marietta, Georgia Development Authority Revenue
          (Life University Income Project) 7.00% 6/15/39 1,000,000 933,080
Maryland State Economic Development Corporation
          Student Housing Revenue (University of Maryland
          College Park Projects) 5.75% 6/1/33 930,000 943,950
@ Maryland State Health & Higher Educational
          Facilities Authority Revenue (Washington
          Christian Academy Project) Series A 5.50% 7/1/38 1,170,000 561,612
Massachusetts State Health & Educational
          Facilities Authority Revenue
          (Nichols College Project) Series C 6.125% 10/1/29 1,000,000 959,770
          (Springfield College) 5.625% 10/15/40 1,000,000 999,200
Michigan Public Education Facilities Authority Revenue
          (Limited Obligation - Landmark Academy)
          7.00% 12/1/39 1,000,000 1,014,460
Minnesota State Higher Education Facilities Authority
          Revenue (Bethel University) Series 6-R 5.50% 5/1/37 1,000,000 946,070
New Jersey State Educational Facilities Authority Revenue
          (Fairleigh Dickinson Project) Series C 5.50% 7/1/23 750,000 751,088
          (University of Medical & Dentistry) Series B 7.50% 12/1/32 1,000,000 1,133,430
Ohio State Higher Educational Facility Revenue
          (Otterbein College Project) Series A 5.50% 12/1/28 950,000 1,015,265
Oregon State Facilities Authority Revenue
          (College Housing Northwest Project)
          Series A 5.45% 10/1/32 1,000,000 874,320
Pennsylvania State Higher Educational Facilities
          Authority Revenue (Edinboro University Foundation
          Student Housing) 6.00% 7/1/42 1,000,000 957,360
Philadelphia, Pennsylvania Authority for Industrial
          Development Revenue (First Philadelphia Charter
          Project) Series A 5.75% 8/15/32 745,000 673,756

40
 

          Principal amount Value
Municipal Bonds (continued)               
Education Revenue Bonds (continued)
Provo, Utah Charter School Revenue (Freedom Academy
          Foundation Project) 5.50% 6/15/37 $ 1,000,000 $ 755,940
18,475,990
Health Care Revenue Bonds – 31.17%
Alhambra, California Revenue (Atherton Baptist Homes)
          Series A 7.625% 1/1/40 1,000,000 1,010,660
Apple Valley, Minnesota Economic Development
          Authority Health Care Revenue (Augustana Home
          St. Paul Project) Series A 6.00% 1/1/40 1,000,000 902,920
Bexar County, Texas Health Facilities Development
          Corporation Revenue (Army Retirement Residence
          Project) 5.875% 7/1/30 1,000,000 998,140
Brevard County, Florida Healthcare Facilities Authority
          Health Care Facilities Revenue (Heath First Inc. Project)
          Series B 7.00% 4/1/39 1,000,000 1,092,700
Butler County, Pennsylvania Hospital Authority Revenue
          (Butler Health System Project) 7.125% 7/1/29 900,000 1,001,511
California Municipal Finance Authority Certificates of
          Participation (Community Hospital Center) 5.50% 2/1/39 730,000 643,809
California Statewide Communities Development
          Authority Revenue (Senior Living - Southern California)
          7.25% 11/15/41 500,000 533,320
Chatham County, Georgia Hospital Authority Revenue
          (Memorial Health Medical Center)
          Series A 6.125% 1/1/24 750,000 750,818
@ Cleveland-Cuyahoga County, Ohio Port Authority
          Revenue Senior Housing (St. Clarence - Geac)
          Series A 6.25% 5/1/38 1,000,000 839,920
Colorado Health Facilities Authority Revenue
          (Christian Living Community Project)
          Series A 5.75% 1/1/37 500,000 425,805
East Rochester, New York Housing Authority Revenue
          Refunding (Senior Living - Woodland Village Project)
          5.50% 8/1/33 500,000 414,700
Gainesville & Hall County, Georgia Development
          Authority Revenue Senior Living Facilities
          (Lanier Village Estates Project) Series C 7.25% 11/15/29 1,000,000 1,020,850
Hamden, Connecticut Facilities Revenue
          (Whitney Center Project) Series A 7.75% 1/1/43 1,000,000 1,041,400

41
 

Statements of net assets
Delaware National High-Yield Municipal Bond Fund
 
          Principal amount Value
Municipal Bonds (continued)               
Health Care Revenue Bonds (continued)
Hawaii State Department Budget & Finance Special
          Purpose Senior Living Revenue
          (Craigside Project) Series A 9.00% 11/15/44 $ 1,000,000 $ 1,085,470
Illinois Finance Authority Revenue
          (Provena Health) Series A 7.75% 8/15/34 1,000,000 1,128,860
          (Silver Cross & Medical Centers) 7.00% 8/15/44 1,000,000 1,040,360
Illinois Health Facilities Authority Revenue
          (Elmhurst Memorial Healthcare Project) 5.625% 1/1/28 1,000,000 962,350
Kentucky Economic Development Finance Authority
          Hospital Revenue (Owensboro Medical Health System)
          Series A 6.50% 3/1/45 1,000,000 995,880
Lancaster County, Pennsylvania Hospital Authority Revenue
          (Brethren Village Project) Series A 6.375% 7/1/30 725,000 690,461
Lebanon County, Pennsylvania Health Facilities Authority
          Center Revenue (Pleasant View Retirement)
          Series A 5.30% 12/15/26 1,000,000 854,590
Medford, Oregon Hospital Facilities Authority Revenue
          (Asante Health System) Series A 5.00% 8/15/40 (AGM) 1,000,000 996,570
New Jersey Health Care Facilities Financing Authority
          Revenue (St. Josephs Healthcare System) 6.625% 7/1/38 860,000 867,843
New York State Dormitory Authority Revenue Non State
          Supported Debt (Orange Regional Medical Center)
          6.25% 12/1/37 1,000,000 906,330
North Carolina Medical Care Commission Health Care
          Facilities Revenue (First Mortgage - Presbyterian Homes)
          5.60% 10/1/36 1,000,000 898,330
Orange County, Florida Health Facilities Authority
          Revenue (Orlando Regional Healthcare)
          Series C 5.25% 10/1/35 1,000,000 984,720
Oregon State Facilities Authority Revenue
          (Samaritan Health Services) Series A 5.25% 10/1/40 1,000,000 1,000,750
Pennsylvania Economic Development Financing Authority
          Health System Revenue (Evalbert Einstein Healthcare)
          Series A 6.25% 10/15/23 1,000,000 1,065,450
Pennsylvania State Higher Educational Facilities Authority
          Revenue (University of Pittsburgh Medical Center)
          Series E 5.00% 5/15/31 1,000,000 1,003,100

42
 

          Principal amount Value
Municipal Bonds (continued)               
Health Care Revenue Bonds (continued)
Richland County, Ohio Hospital Facilities Revenue
          (Medcentral Health System Project)
          Series B 6.375% 11/15/30 $ 500,000 $ 508,260
South Carolina Jobs-Economic Development Authority
          Hospital Revenue (Palmetto Health) 5.75% 8/1/39 1,000,000 976,390
@ St. Joseph County, Indiana Industrial Economic
          Development Revenue (Madison Center Project)
          5.50% 2/15/21 1,150,000 1,150,138
St. Paul, Minnesota Housing & Redevelopment
          Authority Hospital Revenue (Healtheast Project)
          6.00% 11/15/30 1,000,000 927,340
Travis County, Texas Health Facilities Development
          Corporation Revenue (Westminister Manor Project)
          7.125% 11/1/40 1,000,000 1,005,790
Washington State Health Care Facilities Authority Revenue
          (Multicare Health System)
          Series B 6.00% 8/15/39 (ASSURED GTY) 1,250,000 1,328,237
Winchester, Virginia Industrial Development Authority
          Residential Care Facility Revenue (Westminster -
          Canterbury Project) Series A 5.30% 1/1/35 1,000,000 890,060
Yavapai County, Arizona Industrial Development Authority
          Hospital Revenue (Yavapai Regional Medical Center)
          Series A 6.00% 8/1/33 1,000,000 1,004,860
32,948,692
Housing Revenue Bonds – 0.97%
North Carolina Housing Finance Agency Homeownership
          Revenue Series 27-A 5.55% 7/1/38 (AMT) 1,000,000 1,028,150
1,028,150
Lease Revenue Bonds – 2.81%
Missouri State Development Finance Board Infrastructure
          Facilities Revenue (Branson Landing Project)
          Series A 5.50% 12/1/24 720,000 730,577
New York, New York City Industrial Development Agency
          Special Airport Facilities (Airis JFK I, LLC Project)
          Series A 5.50% 7/1/28 (AMT) 905,000 749,593
Oklahoma City, Oklahoma Industrial & Cultural Facilities
          Subordinated (Air Cargo - Obligated Group)
          6.75% 1/1/23 (AMT) 1,160,000 1,035,358

43
 

Statements of net assets
Delaware National High-Yield Municipal Bond Fund
 
          Principal amount Value
Municipal Bonds (continued)               
Lease Revenue Bonds (continued)
Onondaga County, New York Industrial Development
          Authority Revenue Subordinated (Air Cargo Project)
          7.25% 1/1/32 (AMT) $ 500,000 $ 456,240
2,971,768
§Pre-Refunded Bonds – 1.55%
Bexar County, Texas Health Facilities Development
          Corporation Revenue (Army Retirement Residence
          Project) 6.30% 7/1/32-12 1,000,000 1,127,270
Minnesota State Higher Education Facilities Authority
          Revenue (College of Art & Design Project)
          Series 5-D 6.75% 5/1/26-10 500,000 505,855
1,633,125
Special Tax Revenue Bonds – 11.46%
Baltimore, Maryland Convention Center Hotel Revenue
          Subordinated Series B 5.875% 9/1/39 1,000,000 806,990
Brooklyn Arena Local Development Corporation, New York
          Pilot Revenue (Barclays Center Project) 6.50% 7/15/30 1,000,000 1,086,130
Chicago, Illinois Tax Increment Allocation
          (Chatham Ridge Redevelopment Project)
          5.95% 12/15/12 750,000 764,430
Farms New Kent, Virginia Community Development
          Authority Special Assessment Series C 5.80% 3/1/36 1,000,000 735,090
Henderson, Nevada Local Improvement Districts #T-18
          5.30% 9/1/35 665,000 264,677
Lancaster, California Redevelopment Agency Tax Allocation
          (Combined Redevelopment Project Areas) 6.875% 8/1/39 500,000 534,475
Middlesex County, New Jersey Improvement Authority
          Senior Revenue (Heldrich Center Hotel/Conference
          Project) Series A
          5.00% 1/1/32 500,000 282,175
          5.125% 1/1/37 870,000 492,081
New Jersey Economic Development Authority Revenue
          (Cigarette Tax) 5.75% 6/15/34 965,000 930,665
Prescott Valley, Arizona Improvement District Special
          Assessment (Sewer Collection System Roadway Repair
          Project) 7.90% 1/1/12 80,000 83,364
Puerto Rico Sales Tax Financing Corporation Sales Tax Revenue
         Ω(Capital Appreciation) Series A 6.75% 8/1/32 2,030,000 1,545,012
          Series A 5.75% 8/1/37 940,000 971,744

44
 

          Principal amount Value
Municipal Bonds (continued)               
Special Tax Revenue 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 $ 1,033,032
@ Southwestern Illinois Development Authority Revenue
          (Local Government Program - Collinsville Limited Project)
          5.35% 3/1/31 500,000 376,485
@ St. Joseph, Missouri Industrial Development Authority Tax
          Increment Revenue (Shoppes at North Village Project) Series A
          5.375% 11/1/24 1,000,000 878,990
          5.50% 11/1/27 500,000 433,200
Winter Garden Village at Fowler Groves Community
          Development District, Florida Special Assessment Revenue
          5.65% 5/1/37 975,000 895,304
12,113,844
State General Obligation Bonds – 5.61%
Georgia State Series I 5.00% 7/1/20 3,000,000 3,577,320
Guam Government Series A 6.75% 11/15/29 1,565,000 1,659,776
Puerto Rico Commonwealth Refunding
          (Public Improvement) Series C 6.00% 7/1/39 675,000 694,879
5,931,975
Transportation Revenue Bonds – 4.39%
Branson, Missouri Regional Airport Transportation Development
          District (Airport Project) Series A 6.00% 7/1/37 500,000 343,435
Maryland State Economic Development Corporation
          Revenue (Transportation Facilities Project) Series A
          5.75% 6/1/35 1,000,000 1,022,460
Sacramento County, California Airport Services Revenue
          (PFC/Grant) Series C 6.00% 7/1/41 1,000,000 1,075,260
Saint Louis, Missouri Airport Revenue (Lambert - St. Louis
          International) Series A-1 6.625% 7/1/34 1,090,000 1,154,888
Texas Private Activity Bond Surface Transportation
          Corporation Senior Lien Note (Mobility Partners)
          6.875% 12/31/39 1,000,000 1,039,370
4,635,413
Total Municipal Bonds (cost $105,045,685) 103,918,149

45
 

Statements of net assets
Delaware National High-Yield Municipal Bond Fund
 
          Principal amount     Value
Short-Term Investments – 2.74%
•Variable Rate Demand Notes – 2.74%               
Colorado Educational & Cultural Facilities Authority
          Revenue (National Jewish Federal Bond Program)
          0.17% 2/1/35 (LOC – Bank of America) $ 400,000 $ 400,000
Lincoln County, Wyoming Pollution Control Revenue
          (Exxon Project) 0.09% 8/1/15 1,000,000 1,000,000
Minneapolis & St. Paul, Minnesota Housing &
          Redevelopment Authority Health Care Revenue
          (Allina Health System) Series B-2 0.14% 11/15/35
          (LOC – JPMorgan Chase Bank) 1,000,000 1,000,000
Pittsburgh, Pennsylvania Water & Sewer Authority
          Water & Sewer System Revenue First Lien
          Series B2 0.16% 9/1/39 (LOC – PNC Bank) 500,000 500,000
Total Short-Term Investments (cost $2,900,000) 2,900,000
 
Total Value of Securities – 101.05%
(cost $107,945,685) 106,818,149
Liabilities Net of Receivables
and Other Assets – (1.05%) (1,107,181 )
Net Assets Applicable to 11,034,719
Shares Outstanding – 100.00% $ 105,710,968
 
Net Asset Value – Delaware National High-Yield Municipal
Bond Fund Class A ($88,480,462 / 9,242,211 Shares)     $9.57
Net Asset Value – Delaware National High-Yield Municipal
Bond Fund Class B ($1,483,006 / 154,620 Shares)     $9.59
Net Asset Value – Delaware National High-Yield Municipal
Bond Fund Class C ($15,727,307 / 1,635,800 Shares)     $9.61
Net Asset Value – Delaware National High-Yield Municipal
Bond Fund Institutional Class ($20,193 / 2,088 Shares)     $9.67
 
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par) $ 109,461,683
Distributions in excess of net investment income (3,573 )
Accumulated net realized loss on investments (2,619,606 )
Net unrealized depreciation of investments (1,127,536 )
Total net assets $ 105,710,968

46
 

 
   
§ Pre-Refunded Bonds. Municipals bonds 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, 2010.
@ Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $4,240,345, which represented 4.01% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”
Ω
Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
 
Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
CDFI — Community Development Financial Institutions
LOC — Letter of Credit
 
Net Asset Value and Offering Price Per Share –
       Delaware National High-Yield Municipal Bond Fund
Net asset value Class A (A)       $ 9.57
Sales charge (4.50% of offering price) (B)     0.45
Offering price $ 10.02

(A)   Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
 
See accompanying notes
 
47
 

Statements of operations
  Six Months Ended February 28, 2010 (Unaudited)

Delaware Delaware Delaware
Tax-Free Tax-Free USA National High-Yield
      USA Fund       Intermediate Fund       Municipal Bond Fund
Investment Income:
       Interest $ 15,823,075      $ 11,932,099             $ 2,878,338       
 
Expenses:
       Management fees 1,580,586 1,339,967 248,614
       Distribution expenses – Class A 659,364 736,117 96,787
       Distribution expenses – Class B 37,298 3,942 7,333
       Distribution expenses – Class C 110,388 221,646 54,835
       Dividend disbursing and transfer
              agent fees and expenses 211,714 281,972 41,307
       Accounting and administration expenses 116,327 107,428 18,047
       Registration fees 46,063 55,250 27,271
       Legal fees 35,657 35,312 6,798
       Reports and statements to shareholders 32,674 40,832 3,625
       Audit and tax 23,485 20,392 7,802
       Trustees’ fees 17,519 16,108 2,696
       Pricing fees 9,756 8,739 4,473
       Insurance fees 9,179 7,847 1,226
       Custodian fees 6,410 6,322 973
       Consulting fees 3,741 3,077 464
       Due and services 1,503 1,305 172
       Trustees’ expenses 1,353 1,208 186
2,903,017 2,887,464 522,609
       Less expenses absorbed or waived (456,714 ) (311,068 ) (91,794 )
       Less waived distribution expenses – Class A — (368,058 ) —
       Total operating expenses 2,446,303 2,208,338 430,815
Net Investment Income 13,376,772 9,723,761 2,447,523

48
 

Delaware Delaware Delaware
Tax-Free Tax-Free USA National High-Yield
      USA Fund       Intermediate Fund       Municipal Bond Fund
Net Realized and Unrealized Gain        
       on Investments:
       Net realized gain on investments $ 2,540,203 $ 3,410,910   $ 695,527
       Net change in unrealized appreciation/
              depreciation of investments 15,634,707 9,666,141 5,309,989
Net Realized and Unrealized Gain
       on Investments 18,174,910 13,077,051 6,005,516
 
Net Increase in Net Assets
       Resulting from Operations $ 31,551,682    $ 22,800,812           $ 8,453,039       

See accompanying notes
 
49
 

Statements of changes in net assets
Delaware Tax-Free USA Fund
 
Six Months Year
Ended Ended
      2/28/10       8/31/09
(Unaudited)  
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 13,376,772   $ 24,505,230
       Net realized gain (loss) on investments 2,540,203 (2,838,744 )
       Net change in unrealized  
              appreciation/depreciation of investments 15,634,707 1,152,242
       Net increase in net assets resulting from operations 31,551,682 22,818,728
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (12,804,772 ) (23,405,639 )
              Class B (144,406 ) (352,615 )
              Class C (427,491 ) (681,841 )
              Institutional Class (90 ) (32 )
(13,376,759 ) (24,440,127 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 38,339,077 118,535,984
              Class B 86,533 70,203
              Class C 3,686,170 6,869,985
              Institutional Class 8,470 1,022
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 6,835,343 12,514,345
              Class B 64,405 172,056
              Class C 314,296 484,088
              Institutional Class 29 32
49,334,323 138,647,715

50
 

Six Months Year
Ended Ended
      2/28/10       8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:    
              Class A $ (30,689,671 ) $ (104,004,049 )
              Class B (1,740,782 ) (3,624,046 )
              Class C (1,392,772 ) (3,541,888 )
              Institutional Class (15 ) —
  (33,823,240 ) (111,169,983 )
Increase in net assets derived from
       capital share transactions 15,511,083 27,477,732
Net Increase in Net Assets 33,686,006 25,856,333
 
Net Assets:
       Beginning of period 565,131,277 539,274,944
       End of period $ 598,817,283 $ 565,131,277
 
       Undistributed net investment income $ 66,906 $ 66,893

See accompanying notes
 
51
 

Statements of changes in net assets
Delaware Tax-Free USA Intermediate Fund
 
Six Months Year
Ended Ended
      2/28/10       8/31/09
  (Unaudited)  
Increase (Decrease) in Net Assets from Operations:  
       Net investment income $ 9,723,761   $ 15,162,112
       Net realized gain (loss) on investments 3,410,910 (2,348,573 )
       Net change in unrealized
              appreciation/depreciation of investments 9,666,141 11,254,947
       Net increase in net assets resulting from operations 22,800,812 24,068,486
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (9,079,674 ) (14,270,823 )
              Class B (11,234 ) (25,400 )
              Class C (631,171 ) (817,862 )
              Institutional Class (1,682 ) (26 )
(9,723,761 ) (15,114,111 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 131,573,672 235,187,166
              Class B — 184,940
              Class C 13,312,641 19,373,068
              Institutional Class 611,565 1,022
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 6,222,993 9,817,928
              Class B 8,086 18,329
              Class C 469,170 581,579
              Institutional Class 1,374 24
152,199,501 265,164,056

52
 

Six Months Year
Ended Ended
      2/28/10       8/31/09
(Unaudited)
Capital Share Transactions (continued):    
       Cost of shares repurchased:  
              Class A $ (80,877,568 ) $ (201,015,285 )
              Class B (213,474 ) (616,595 )
              Class C (4,580,396 ) (5,491,621 )
              Institutional Class (789 ) —
  (85,672,227 ) (207,123,501 )
Increase in net assets derived from
       capital share transactions 66,527,274 58,040,555
Net Increase in Net Assets 79,604,325 66,994,930
 
Net Assets:
       Beginning of period 500,875,570 433,880,640
       End of period $ 580,479,895 $ 500,875,570
 
       Undistributed net investment income $ 16,225 $ 16,225

See accompanying notes
 
53
 

Statements of changes in net assets
Delaware National High-Yield Municipal Bond Fund
 
Six Months Year
Ended Ended
      2/28/10       8/31/09
(Unaudited)
Increase (Decrease) in Net Assets from Operations:  
       Net investment income $ 2,447,523   $ 4,135,883
       Net realized gain (loss) on investments 695,527 (898,271 )
       Net change in unrealized
              appreciation/depreciation of investments 5,309,989 (3,755,920 )
       Net increase (decrease) in net assets resulting
              from operations 8,453,039 (518,308 )
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (2,151,324 ) (3,657,847 )
              Class B (35,511 ) (110,366 )
              Class C (263,855 ) (335,892 )
              Institutional Class (161 ) (47 )
(2,450,851 ) (4,104,152 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 22,562,529 12,889,514
              Class B 14,560 289,157
              Class C 8,164,964 2,516,187
              Institutional Class 18,454 1,016
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 1,310,493 2,236,012
              Class B 16,927 50,724
              Class C 167,611 220,675
              Institutional Class 158 45
32,255,696 18,203,330

54
 

Six Months Year
Ended Ended
      2/28/10       8/31/09
(Unaudited)  
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (9,428,997 ) $ (10,110,767 )
              Class B (100,818 ) (1,746,311 )
              Class C (1,048,199 )   (1,588,149 )
              Institutional Class (15 ) —
  (10,578,029 ) (13,445,227 )
Increase in net assets derived from
       capital share transactions 21,677,667 4,758,103
Net Increase in Net Assets 27,679,855 135,643
 
Net Assets:
       Beginning of period 78,031,113 77,895,470
       End of period $ 105,710,968 $ 78,031,113
 
       Undistributed (distributions in excess of)
              net investment income $ (3,573 ) $ 13,405

See accompanying notes
 
55
 

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 during some of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.
 
See accompanying notes
 
56
 

Six Months Ended Year Ended
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05
(Unaudited)                  
    $10.890     $10.970   $11.230   $11.570   $11.760     $11.460
 
 
0.257 0.479 0.462 0.466 0.458 0.512
0.350 (0.081 ) (0.260 ) (0.337 ) (0.186 ) 0.300
0.607 0.398 0.202 0.129 0.272 0.812
 
 
(0.257 ) (0.478 ) (0.462 ) (0.469 ) (0.462 ) (0.512 )
(0.257 ) (0.478 ) (0.462 ) (0.469 ) (0.462 ) (0.512 )
 
  $11.240   $10.890   $10.970   $11.230   $11.570   $11.760
 
5.61%   3.91%   1.82%   1.08% 2.42% 7.23%
 
 
  $568,140   $536,420   $510,822   $735,584   $656,813   $453,982
0.80% 0.84% 0.85% 0.87% 0.86% 0.86%
 
0.96% 0.97% 0.94% 0.95% 1.00% 0.98%
4.63% 4.60% 4.13% 4.03% 3.97% 4.43%
 
4.47% 4.47% 4.04% 3.95% 3.83% 4.31%
28% 66% 28% 36% 41% 47%  
 
57
 

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 during all of the periods shown 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
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05
(Unaudited)                  
    $10.880     $10.960   $11.230   $11.570   $11.760   $11.460
 
 
0.214 0.399 0.378 0.378 0.370 0.423
0.350 (0.080 ) (0.270 ) (0.337 ) (0.186 ) 0.300
0.564 0.319 0.108 0.041 0.184 0.723
 
 
(0.214 ) (0.399 ) (0.378 ) (0.381 ) (0.374 ) (0.423 )
(0.214 ) (0.399 ) (0.378 ) (0.381 ) (0.374 ) (0.423 )
 
  $11.230   $10.880   $10.960   $11.230   $11.570   $11.760
 
5.21%   3.13%   0.96%   0.32%   1.63% 6.42%
 
 
  $6,830   $8,168   $11,812   $17,286   $22,189   $16,507
1.56% 1.60% 1.61% 1.63% 1.63%   1.63%
 
1.72% 1.73% 1.70% 1.71% 1.73% 1.71%
3.87% 3.84% 3.37% 3.27% 3.20% 3.66%
 
3.71% 3.71% 3.28% 3.19% 3.10% 3.58%  
28% 66% 28% 36% 41% 47%  
 
59
 

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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
60
 

Six Months Ended Year Ended
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05
(Unaudited)                
    $10.890     $10.970   $11.230   $11.570   $11.760   $11.460
 
 
0.214 0.399 0.377 0.378 0.370 0.423
0.350 (0.080 ) (0.260 ) (0.337 ) (0.186 ) 0.300
  0.564 0.319 0.117 0.041 0.184 0.723
 
 
(0.214 ) (0.399 ) (0.377 ) (0.381 ) (0.374 ) (0.423 )
(0.214 ) (0.399 ) (0.377 ) (0.381 ) (0.374 ) (0.423 )
 
  $11.240   $10.890   $10.970   $11.230   $11.570   $11.760
 
5.21%   3.13%   0.96%   0.41%   1.63% 6.42%
 
 
  $23,837   $20,542   $16,641   $16,871   $15,110   $5,963
1.56% 1.60% 1.61% 1.63% 1.63% 1.63%
 
1.72% 1.73% 1.70% 1.71% 1.73% 1.71%
3.87% 3.84% 3.37% 3.27% 3.20% 3.66%
 
3.71% 3.71% 3.28% 3.19% 3.10% 3.58%
28% 66% 28% 36% 41%   47%  
 
61
 

Financial highlights
Delaware Tax-Free USA Fund Institutional Class
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
      Six Months Ended       12/31/082
2/28/101 to
(Unaudited) 8/31/09      
Net asset value, beginning of period      $10.890      $10.020
 
Income from investment operations:
Net investment income 0.267 0.322
Net realized and unrealized gain on investments 0.430 0.870
Total from investment operations 0.697 1.192
 
Less dividends and distributions from:
Net investment income (0.267 ) (0.322 )
Total dividends and distributions (0.267 ) (0.322 )
 
Net asset value, end of period $11.320 $10.890
 
Total return3 6.35% 12.15%
 
Ratios and supplemental data:
Net assets, end of period (000 omitted) $10   $1
Ratio of expenses to average net assets 0.56% 0.60%
Ratio of expenses to average net assets  
       prior to fees waived and expense paid indirectly 0.72%   0.73%
Ratio of net investment income to average net assets 4.87% 4.84%  
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly 4.71% 4.71%  
Portfolio turnover 28%   66% 4

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
4 Portfolio turnover is representative of the Fund for the entire year.

See accompanying notes
 
62
 

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 during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect.
 
See accompanying notes
 
64
 

Six Months Ended Year Ended
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)          
  $11.460   $11.250   $11.210   $11.470   $11.610   $11.390
 
 
0.213 0.388 0.383 0.414 0.408 0.410
0.280 0.210 0.041 (0.260 ) (0.140 ) 0.220
0.493 0.598 0.424 0.154 0.268 0.630
 
 
(0.213 ) (0.388 ) (0.384 ) (0.414 ) (0.408 ) (0.410 )
(0.213 ) (0.388 ) (0.384 ) (0.414 ) (0.408 ) (0.410 )
 
  $11.740   $11.460   $11.250   $11.210   $11.470   $11.610
 
4.33% 5.49% 3.83% 1.34% 2.38% 5.63%
 
 
  $528,684   $459,782   $407,729   $306,215   $204,525   $120,273
0.75% 0.75% 0.75% 0.76% 0.75% 0.79%
 
1.02% 1.03% 1.03% 1.03% 1.07% 1.11%
3.69% 3.51% 3.38% 3.60% 3.56% 3.55%
 
3.42% 3.23% 3.10% 3.33% 3.24% 3.23%
30% 47%   28% 40% 37% 18%  

65
 

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class B
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to 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 during all of the periods shown 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
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)          
  $11.450   $11.240   $11.200   $11.460   $11.610   $11.380
 
 
0.164 0.294 0.287 0.317 0.311 0.313
0.280 0.210 0.041 (0.260 ) (0.150 ) 0.230
0.444 0.504 0.328 0.057 0.161 0.543
 
 
(0.164 ) (0.294 ) (0.288 ) (0.317 ) (0.311 ) (0.313 )
(0.164 ) (0.294 ) (0.288 ) (0.317 ) (0.311 ) (0.313 )
 
  $11.730   $11.450   $11.240   $11.200   $11.460   $11.610
   
3.90% 4.61% 2.95% 0.48% 1.43% 4.83%
 
 
  $675   $861   $1,272   $1,786   $2,413   $3,203
1.60% 1.60% 1.60% 1.61% 1.60% 1.64%
 
1.72% 1.73% 1.73% 1.73% 1.77% 1.81%
2.84%   2.66% 2.53% 2.75% 2.71% 2.70%
 
2.72% 2.53% 2.40% 2.63% 2.54% 2.53%
30%   47% 28% 40% 37% 18%
 
67
 

Financial highlights
Delaware Tax-Free USA Intermediate Fund Class C
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income
Net realized and unrealized gain (loss) on investments
Total from investment operations
 
Less dividends and distributions from:
Net investment income
Total dividends and distributions
 
Net asset value, end of period
 
Total return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets
Ratio of expenses to average net assets
       prior to 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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
68
 

Six Months Ended Year Ended
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)          
  $11.450   $11.240   $11.200   $11.470   $11.610   $11.390
 
 
0.164 0.294 0.287 0.317 0.311 0.313
0.280 0.210 0.041 (0.270 ) (0.140 ) 0.220
0.444 0.504 0.328 0.047 0.171 0.533
 
 
(0.164 ) (0.294 ) (0.288 ) (0.317 ) (0.311 ) (0.313 )
(0.164 ) (0.294 ) (0.288 ) (0.317 ) (0.311 ) (0.313 )
 
  $11.730   $11.450   $11.240   $11.200   $11.470   $11.610
 
3.90%   4.60%   2.95%   0.39%   1.52%   4.74%  
   
 
  $50,503   $40,232   $24,880   $28,237   $28,004   $25,125
1.60%   1.60%   1.60%   1.61%   1.60%   1.64%  
 
1.72%   1.73%   1.73%   1.73%   1.77%   1.81%  
2.84%   2.66%   2.53%   2.75%   2.71%   2.70%  
 
2.72%   2.53%   2.40%   2.63%   2.54%   2.53%  
30%   47%   28%   40% 37%   18%

69
 

Financial highlights
Delaware Tax-Free USA Intermediate Fund Institutional Class
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
      Six Months Ended       12/31/082      
2/28/101 to
(Unaudited) 8/31/09
Net asset value, beginning of period         $11.460         $10.800
 
Income from investment operations:
Net investment income 0.205 0.269
Net realized and unrealized gain on investments 0.400 0.660
Total from investment operations 0.605 0.929
 
Less dividends and distributions from:
Net investment income (0.205 ) (0.269 )
Total dividends and distributions (0.205 ) (0.269 )
 
Net asset value, end of period   $11.860   $11.460
 
Total return3 5.32% 8.68%
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)   $618   $1
Ratio of expenses to average net assets 0.60% 0.60%
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly 0.72% 0.73%
Ratio of net investment income to average net assets 3.84% 3.65%
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly 3.72% 3.52%
Portfolio turnover 30% 47% 4

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
4 Portfolio turnover is representative of the Fund for the entire year.

See accompanying notes
 
70
 

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 during all of the periods shown 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
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)          
  $8.920   $9.510   $10.030   $10.320   $10.380   $10.010
 
   
0.257 0.505 0.484 0.482 0.477 0.503
0.652 (0.595 ) (0.520 ) (0.290 ) (0.060 ) 0.371
0.909 (0.090 ) (0.036 ) 0.192 0.417 0.874
 
 
(0.259 ) (0.500 ) (0.484 ) (0.482 ) (0.477 ) (0.504 )
(0.259 ) (0.500 ) (0.484 ) (0.482 ) (0.477 ) (0.504 )
 
  $9.570   $8.920   $9.510   $10.030   $10.320   $10.380
 
10.26%   (0.38% ) (0.37% ) 1.82%   4.15%   8.93%  
 
 
  $88,481   $68,812   $67,762   $65,143   $68,663   $66,451
0.85%   0.90%   0.90%   0.91%   0.90%   0.93%  
 
1.06%   1.08%   1.04%   1.03%   1.02%   1.01%  
5.52%   6.06%   4.94%   4.66%   4.66%   4.92%  
 
5.31%   5.88%   4.80%   4.54%   4.54%   4.84%  
37%   67%   24%   37%   73%   36%
 
73
 

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 during all of the periods shown 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
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)          
  $8.940   $9.530   $10.050   $10.350   $10.400   $10.030
 
 
0.223 0.440 0.410 0.404 0.400 0.426
0.652 (0.592 ) (0.520 ) (0.300 ) (0.050 ) 0.371
0.875 (0.152 ) (0.110 ) 0.104 0.350 0.797
 
 
(0.225 )   (0.438 ) (0.410 ) (0.404 ) (0.400 ) (0.427 )
(0.225 ) (0.438 ) (0.410 ) (0.404 ) (0.400 ) (0.427 )
 
  $9.590   $8.940   $9.530   $10.050   $10.350   $10.400
 
9.84%   (1.11% ) (1.12% ) 0.96%   3.47%   8.10%  
 
 
  $1,483   $1,448   $3,135   $5,972   $9,519   $13,046
1.60%   1.65%   1.65%   1.66%   1.65%   1.68%  
 
1.81%   1.83%   1.79%   1.78%   1.77%   1.76%  
4.77%   5.31%   4.19%   3.91%   3.91%   4.17%  
 
4.56%   5.13%   4.05%   3.79%   3.79%   4.09%  
37%   67%   24%   37%   73%   36%

75
 

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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
76
 

Six Months Ended Year Ended     
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05  
(Unaudited)
  $8.960   $9.550 $10.070 $10.360 $10.420 $10.040
 
 
0.223 0.441 0.410 0.404 0.400 0.426  
0.652 (0.592 ) (0.520 ) (0.290 ) (0.060 ) 0.381
0.875 (0.151 ) (0.110 ) 0.114 0.340 0.807
 
 
(0.225 )   (0.439 )   (0.410 )   (0.404 )   (0.400 )   (0.427 )
(0.225 ) (0.439 ) (0.410 ) (0.404 ) (0.400 ) (0.427 )
 
$9.610 $8.960 $9.550 $10.070 $10.360 $10.420
 
9.82% (1.11% ) (1.12% ) 1.06% 3.36% 8.19%
 
 
$15,727 $7,770 $6,998 $4,848 $5,332 $5,234
1.60% 1.65% 1.65% 1.66% 1.65% 1.68%
 
1.81% 1.83% 1.79% 1.78% 1.77% 1.76%
4.77% 5.31% 4.19% 3.91% 3.91% 4.17%
 
4.56% 5.13% 4.05% 3.79% 3.79% 4.09%
37% 67% 24% 37% 73% 36%

77
 

Financial highlights
Delaware National High-Yield Municipal Bond Fund Institutional Class
 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Six Months Ended 12/31/082
2/28/101 to
(Unaudited) 8/31/09     
Net asset value, beginning of period   $8.930 $7.590
 
Income from investment operations:
Net investment income 0.265 0.342  
Net realized and unrealized gain on investments 0.742 1.338
Total from investment operations 1.007 1.680
 
Less dividends and distributions from:
Net investment income   (0.267 ) (0.340 )
Total dividends and distributions (0.267 )   (0.340 )
 
Net asset value, end of period $9.670 $8.930
 
Total return3 11.37% 22.55%  
 
Ratios and supplemental data:
Net assets, end of period (000 omitted) $20 $1
Ratio of expenses to average net assets 0.60%   0.65%  
Ratio of expenses to average net assets
       prior to fees waived and expense paid indirectly 0.81%   0.85%  
Ratio of net investment income to average net assets 5.77%   6.41%  
Ratio of net investment income to average net assets
       prior to fees waived and expense paid indirectly 5.56%   6.21%  
Portfolio turnover 37%   67% 4

1 Ratios and portfolio turnover have been annualized and total return has not been annualized.
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized.
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
4 Portfolio turnover is representative of the Fund for the entire year.
 
See accompanying notes
 
78
 

Notes to financial statements  
Delaware National Tax-Free Funds February 28, 2010 (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 be purchased only through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares of the Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares of the Delaware Tax-Free USA Fund and Delaware National High-Yield Municipal Bond Fund will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class B shares of Delaware Tax-Free USA Intermediate Fund were sold with a CDSC that declines from 2% to zero depending upon the period of time the shares were held. Class B shares of the 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 the 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 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.
 
79
 

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 (U.S. GAAP) and are consistently followed by the Funds.
 
Security Valuation — 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 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.
 
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. Management has analyzed each Fund’s tax positions taken on federal income tax returns for all open tax years (August 31, 2006 – August 31, 2009), and has concluded that no provision for federal income tax is required for each Fund’s financial statements.
 
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. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Other — Expenses directly attributable to a Fund are charged directly to that Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums are
 
80
 

amortized to interest income over the lives of the respective securities. Each Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually.
 
The Funds may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the period ended February 28, 2010.
 
On July 1, 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source of authoritative nongovernmental U.S. GAAP, superseding existing literature of the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other sources. The Codification is effective for interim and annual periods ending after September 15, 2009. The Funds adopted the Codification for the six months ended February 28, 2010. There was no impact to financial statements as the Codification requirements are disclosure-only in nature.
 
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 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%

Effective January 1, 2010, DMC has voluntarily agreed to waive that portion, if any, of its management fee and/or pay/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, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations), do not exceed 0.56%, 0.60%, and 0.60% 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. For purposes of these waivers and reimbursements, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Funds’ Boards and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Funds and may be discontinued at any time because they are voluntary. Prior to January 1, 2010, DMC had contractually agreed to waive that portion, if any, of its management fee
 
81
 

Notes to financial statements
Delaware National Tax-Free Funds
 
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
 
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 nonroutine expenses), did 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.
 
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Funds. For these services, each Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the six months ended February 28, 2010, 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
$14,566   $13,452   $2,260

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 the Delaware National High-Yield Municipal Bond Fund and 1.00% of the average daily net assets of the Class B and C shares for all 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 January 1, 2010 in order to prevent distribution and service fees of Class A shares from exceeding 0.15% of average daily net assets for the Delaware Tax-Free USA Intermediate Fund.
 
82
 

At February 28, 2010, 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 $175,722 $175,161 $27,920
Dividend disbursing, transfer
       agent and fund accounting
       oversight fees and other
       expenses payable to DSC 27,704 39,920 5,181
Distribution fees payable
       to DDLP   128,858   97,693 29,071
Other expenses payable to
       DMC and affiliates* 22,991   21,586     3,823  

*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, 2010, 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
$18,938   $17,605   $3,000

For the six months ended February 28, 2010, 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
$21,932 $28,344 $27,367

83
 

Notes to financial statements
Delaware National Tax-Free Funds
 
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
 
For the six months ended February 28, 2010, DDLP received gross CDSC commissions on redemptions 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-dealer 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 3,393       1,110   372
Class C 516 3,694 370

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, 2010, 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   $ 98,834,212     $ 133,570,531     $ 35,717,071
Sales 79,978,707 77,731,939 16,184,970  

At February 28, 2010, 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, 2010, 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 $ 568,736,890      $ 548,854,180               $ 107,916,548         
Aggregate unrealized
       appreciation   $ 40,171,659   $ 28,056,038   $ 4,526,685
Aggregate unrealized  
       depreciation (15,018,942 ) (3,772,827 ) (5,625,084 )
Net unrealized appreciation    
       (depreciation) $ 25,152,717 $ 24,283,211 $ (1,098,399 )

84
 

U.S. GAAP 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 under current market conditions. A three level hierarchy for fair value measurements has been established 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 each Fund’s investments by fair value hierarchy levels as of February 28, 2010:
 
Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
Municipal Bonds         USA Fund       USA Intermediate Fund       Municipal Bond Fund
Level 1    $ —         $ —              $ —        
Level 2 593,889,607       573,137,391   106,818,149
Level 3     — —       —  
Total $ 593,889,607 $ 573,137,391 $ 106,818,149

There were no Level 3 securities at the beginning or end of the period.
 
In January 2010, the FASB issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for each Fund’s year ending August 31, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
 
85
 

Notes to financial statements
Delaware National Tax-Free Funds
 
4. Dividend and Distribution Information
 
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. 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, 2010 and the year ended August 31, 2009 was as follows:
 
Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
      USA Fund       USA Intermediate Fund       Municipal Bond Fund
Six months ended 2/28/10*                    
Tax-exempt income    $ 13,102,897          $ 9,589,762         $ 2,399,406  
Ordinary income 273,862 133,999 51,445
Total $ 13,376,759 $ 9,723,761 $ 2,450,851
 
Year ended 8/31/09
Tax-exempt income   $ 24,389,642       $ 15,114,111       $ 4,103,777  
Ordinary income   50,485 — 375
Total $ 24,440,127 $ 15,114,111 $ 4,104,152

*Tax information for the period ended February 28, 2010 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, 2010, 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    $ 583,884,892         $ 561,570,141               $ 109,461,683         
Distributions payable (451,446 ) (329,190 ) (88,396 )
Undistributed tax-exempt
       income 518,352 345,415 84,823
Realized gains
       9/1/09 – 2/28/10 1,266,695 2,885,468 131,614
Post-October losses (237,351 ) — (787 )
Capital loss carryforward  
       as of 8/31/09     (11,316,576 )       (8,275,150 )     (2,779,570 )
Unrealized appreciation
       (depreciation)
       of investments 25,152,717 24,283,211 (1,098,399 )
Net assets $ 598,817,283 $ 580,479,895 $ 105,710,968

86
 

The differences between book basis and tax basis components of the 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, 2009 through February 28, 2010 that, in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.
 
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of market discount and premium on certain debt instruments. Results of operations and net assets were not affected by these reclassifications. For the six months ended February 28, 2010, the Delaware National High-Yield Municipal Bond Fund recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
 
Undistributed net investment income $ (13,650 )
Accumulated net realized gain 13,650

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, 2009 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
2010    $ —           $ —                  $ 70,671          
2011 — 249,429 997,721
2012 — 5,791 980,742
2014 — 119,427   —
2015 — — 355,701
2016 797,494   2,127,384 —
2017       10,519,082 5,773,119   374,735
Total $ 11,316,576     $ 8,275,150   $ 2,779,570  

For the six months ended February 28, 2010, the Funds had capital gains which may decrease the capital loss carryforwards.
 
Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
USA Fund       USA Intermediate Fund       Municipal Bond Fund
$1,266,695 $2,885,468 $131,614

87
 

Notes to financial statements
Delaware National Tax-Free Funds
 
6. Capital Shares
 
Transactions in capital shares were as follows:
 
Delaware Tax-Free Delaware Tax-Free Delaware National High-Yield
     USA Fund      USA Intermediate Fund      Municipal Bond Fund
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
2/28/10      8/31/09 2/28/10      8/31/09 2/28/10      8/31/09
Shares sold:
       Class A 3,392,790 11,607,343 11,139,618 21,288,665 2,381,296 1,543,457
       Class B 7,080 7,042 — 16,760 1,252 36,455
       Class C 314,636 662,828 1,116,341 1,748,249 857,127 298,334
       Institutional Class 754 102 51,976 95 1,934 134
 
Shares issued upon reinvestment of dividends and distributions:
       Class A 647,660 1,198,786 709,961 885,386 147,002 269,659
       Class B 6,408 16,525 920 1,659 2,108 6,137
       Class C 43,446 46,310 67,913 52,363 22,443 26,475
       Institutional Class 2 3 117 2 17 5
4,412,776 13,538,939 13,086,846 23,993,179 3,413,179 2,180,656
 
Shares repurchased:
       Class A (2,746,932 )   (10,115,087 ) (6,948,986 )   (18,287,462 ) (996,919 )   (1,230,554 )
       Class B (155,877 ) (350,505 ) (18,562 ) (56,382 ) (10,685 ) (209,703 )
       Class C (123,463 ) (339,849 ) (393,834 ) (500,042 ) (110,599 ) (190,984 )
       Institutional Class (1 ) — (67 ) —   (2 )   —
  (3,026,273 )   (10,805,441 )   (7,361,449 )   (18,843,886 )   (1,118,205 )   (1,631,241 )
Net increase 1,386,503 2,733,498 5,725,397 5,149,293 2,294,974 549,415

For the six months ended February 28, 2010 and the year ended August 31, 2009, 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.
 
Six Months Ended Year Ended
2/28/10 8/31/09
Class B Class A Class B Class A
     Shares      Shares      Value      Shares      Shares      Value
Delaware Tax-Free
       USA Fund 45,747 45,706 $511,497 161,252   161,199   $1,668,006
Delaware Tax-Free  
       USA Intermediate Fund   5,747   5,742   66,938 23,056 23,046 253,527
Delaware National High-Yield
       Municipal Bond Fund 6,867 6,882 64,710 26,693 26,746 211,723

88
 

7. Line of Credit
 
Each Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participates in a $35,000,000 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 are charged an annual commitment fee, which is allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The agreement expires on November 16, 2010. The Funds had no amounts outstanding as of February 28, 2010, 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, as applicable, 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 Funds. At February 28, 2010, 10.43% of the Delaware Tax-Free USA Fund’s net assets, 14.30% of the Delaware Tax-Free USA Intermediate Fund’s net assets, and 3.11% of the Delaware National High-Yield Municipal Bond Fund’s net assets were insured by bond insurers. These securities have been identified in 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
 
89
 

Notes to financial statements
Delaware National Tax-Free Funds
 
8. Credit and Market Risk (continued)
 
bearing debt securities which are then deposited in an irrevocable escrow account held by an escrow agent to secure all future payments of principal and interest and bond premium of the advance refunded bond. Bonds are “escrowed to maturity” when the proceeds of the refunding issue are deposited in an escrow account for investment sufficient to pay all of the principal and interest on the original interest payment and maturity dates.
 
Bonds are considered “pre-refunded” when the refunding issue’s proceeds are escrowed only until a permitted call date or dates on the refunded issue with the refunded issue being redeemed at the time, including any required premium. Bonds become “defeased” when the rights and interests of the bondholders and of their lien on the pledged revenues or other security under the terms of the bond contract and are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s, 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 each Fund’s 15% limit on investments in illiquid securities. As of February 28, 2010, 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.
 
90
 

10. Sale of Delaware Investments to Macquarie Group
 
On August 18, 2009, Lincoln National Corporation (parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP and DSC are now wholly owned subsidiaries of Macquarie.
 
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreements between DMC and the Funds. On January 4, 2010, the new investment management agreements between DMC and the Funds that were approved by the shareholders became effective.
 
11. Subsequent Event
 
Management has evaluated whether any events or transactions occurred subsequent to February 28, 2010 through April 15, 2010, the date of issuance of each Fund’s financial statements, and determined that there were no material events or transactions that would require recognition or disclosure in the Funds’ financial statements.
 
91
 

Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
 
Proxy Results
 
At Joint Special Meetings of Shareholders of Delaware Group® Tax-Free Fund, on behalf of Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate Fund, and Voyageur Mutual Funds, on behalf of Delaware National High-Yield Municipal Bond Fund (Delaware Group Tax-Free Fund and Voyageur Mutual Fund hereinafter each, a “Trust” and collectively, the “Trusts” and Delaware Tax-Free USA Fund, Delaware Tax-Free USA Intermediate Fund, and Delaware National High-Yield Municipal Bond Fund hereinafter each, a “Fund” and collectively, the “Funds”) held on November 12, 2009 and reconvened on December 4, 2009 for Delaware Tax-Free USA Intermediate Fund and Delaware National High-Yield Municipal Bond Fund only and March 16, 2010, the shareholders of each Fund voted to (i) elect a Board of Trustees for each Trust; and to (ii) approve new investment advisory agreements between each Trust, on behalf of the respective Fund(s), and Delaware Management Company, respectively. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
 
The following proposals were submitted for a vote of the shareholders:
 
1. To elect a Board of Trustees for each Trust.
 
Delaware Group Tax-Free Fund
 
% of % of % of % of
outstanding shares outstanding shares
      Shares voted for       shares       voted       Shares withheld       shares       voted
Thomas L. Bennett 57,663,480.933 59.738 93.260 4,167,443.865 4.317 6.740
Patrick P. Coyne 57,670,502.981 59.745 93.271 4,160,421.817 4.310 6.729
John A. Fry 57,765,224.307 59.750 93.279 4,155,700.491 4.305 6.721
Anthony D. Knerr 57,615,106.318 59.688 93.182 4,215,818.480 4.367 6.818
Lucinda S. Landreth 57,681,544.675 59.757 93.289 4,149,380.123 4.298 6.711
Ann R. Leven 57,665,095.874 59.740 93.263 4,165,828.924 4.315 6.737
Thomas F. Madison 57,580,216.101 59.652 93.125 4,250,708.697 4.403 6.875
Janet L. Yeomans 57,681,074.073 59.756 93.288 4,149,850.725 4.299 6.712
J. Richard Zecher 57,636,553.113 59.710 93.216 4,194,371.685 4.345 6.784

Voyageur Mutual Fund
 
% of % of % of % of
outstanding shares outstanding shares
      Shares voted for       shares       voted       Shares withheld       shares       voted
Thomas L. Bennett 27,534,201.174 64.687 94.418 1,627,955.392 3.825 5.582
Patrick P. Coyne 27,538,840.631 64.698 94.433 1,623,315.935 3.814 5.567
John A. Fry 27,541,310.882 64.704 94.442 1,620,845.684 3.808 5.558
Anthony D. Knerr 27,543,108.286 64.708 94.448 1,619,048.280 3.804 5.552
Lucinda S. Landreth 27,542,973.819 64.708 94.448 1,619,182.747 3.804 5.552
Ann R. Leven 27,540,505.439 64.702 94.439 1,621,651.127 3.810 5.561
Thomas F. Madison 27,534,959.779 64.689 94.420 1,627,196.787 3.823 5.580
Janet L. Yeomans 27,539,087.174 64.698 94.434 1,623,069.392 3.814 5.566
J. Richard Zecher 27,532,297.843 64.683 94.411 1,629,858.723 3.829 5.589

92
 

2. To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund(s), and Delaware Management Company.
 
Delaware Tax-Free USA Fund      
Shares Voted For 24,966,636.809
Percentage of Outstanding Shares 48.161%
Percentage of Shares Voted 70.120%
Shares Voted Against 541,765.486
Percentage of Outstanding Shares 1.045%
Percentage of Shares Voted 1.521%
Shares Abstained 1,698,792.191
Percentage of Outstanding Shares 3.277%
Percentage of Shares Voted 4.772%
Broker Non-Votes 8,398,482.448

Delaware Tax-Free USA Intermediate Fund      
Shares Voted For 17,330,532.228
Percentage of Outstanding Shares 38.782%
Percentage of Shares Voted 67.129%
Shares Voted Against 177,979.836
Percentage of Outstanding Shares 0.398%
Percentage of Shares Voted 0.689%
Shares Abstained 545,651.634
Percentage of Outstanding Shares 1.221%
Percentage of Shares Voted 2.114%
Broker Non-Votes 7,762,659.315

Delaware National High-Yield Municipal Bond Fund      
Shares Voted For 3,610,477.879
Percentage of Outstanding Shares 40.739%
Percentage of Shares Voted 67.476%
Shares Voted Against 94,516.225
Percentage of Outstanding Shares 1.066%
Percentage of Shares Voted 1.766%
Shares Abstained 127,978.565
Percentage of Outstanding Shares 1.445%
Percentage of Shares Voted 2.392%
Broker Non-Votes 1,517,805.114

93
 

Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
 
Board Consideration of New Investment Advisory Agreement
 
At a meeting held on September 3, 2009 (the “Meeting”), the Board of Trustees of the Delaware Investments® Family of Funds (the “Board”), including the independent Trustees, unanimously approved a new investment advisory agreement between each registrant on behalf of each series (each, a “Fund” and together, the “Funds”) and Delaware Management Company (“DMC”) in connection with the sale of Delaware Investments’ advisory business to Macquarie Bank Limited (the “Macquarie Group”) (the “Transaction”). In making its decision, the Board considered information furnished specifically in connection with the approval of the new investment advisory agreements with DMC (the “New Investment Advisory Agreements”) which included extensive materials about the Transaction and matters related to the proposed approvals. To assist the Board in considering the New Investment Advisory Agreements, Macquarie Group provided materials and information about Macquarie Group, including detailed written responses to the questions posed by the independent Trustees. DMC also provided materials and information about the Transaction, including detailed written responses to the questions posed by the independent Trustees.
 
At the Meeting, the Trustees discussed the Transaction with DMC management and with key Macquarie Group representatives. The Meeting included discussions of the strategic rationale for the Transaction and Macquarie Group’s general plans and intentions regarding the Funds and DMC. The Board members also inquired about the plans for, and anticipated roles and responsibilities of, key employees and officers of Delaware Management Holdings Inc. and DMC in connection with the Transaction.
 
In connection with the Trustees’ review of the New Investment Advisory Agreements for the Funds, DMC and/or Macquarie Group emphasized that:
  • They expected that there would be no adverse changes as a result of the Transaction, in the nature, quality, or extent of services currently provided to the Funds and their shareholders, including investment management, distribution, or other shareholder services.
     
  • No material changes in personnel or operations were contemplated in the operation of DMC under Macquarie Group as a result of the Transaction and no material changes were currently contemplated in connection with third party service providers to the Funds.
     
  • Macquarie Group had no intention to cause DMC to alter the voluntary expense waivers and reimbursements currently in effect for the Funds.
     
  • Under the agreement between Macquarie Group and Lincoln National Corporation (“LNC”) (the “Transaction Agreement”), Macquarie Group has agreed to conduct, and to cause its affiliates to conduct, their respective businesses in compliance with the conditions of Section 15(f) of the Investment Company Act of 1940 (the “1940 Act”) with respect to the Funds, to the extent within its control, including maintaining Board composition of at least 75% of the Board members qualifying as independent Trustees and not imposing any “unfair burden” on the Funds for at least two years from the closing of the Transaction (the “Closing”).
94
 

In addition to the information provided by DMC and Macquarie Group as described above, the Trustees also considered all other factors they believed to be relevant to evaluating the New Investment Advisory Agreements, including the specific matters discussed below. In their deliberations, the Trustees did not identify any particular information that was controlling, and different Trustees may have attributed different weights to the various factors. However, for each Fund, the Trustees determined that the overall arrangements between the Fund and DMC, as provided in the respective New Investment Advisory Agreement, including the proposed advisory fee and the related administration arrangements between the Fund and DMC, were fair and reasonable in light of the services to be performed, expenses incurred, and such other matters as the Trustees considered relevant. Factors evaluated included:
  • The potential for expanding distribution of Fund shares through access to Macquarie Group’s existing distribution channels;
     
  • Delaware Investments’ acquisition of an exclusive wholesaling sales force from a subsidiary of LNC;
     
  • The reputation, financial strength, and resources of Macquarie Group as well as its historic and ongoing commitment to the asset management business in Australia as well as other parts of the world;
     
  • The terms and conditions of the New Investment Advisory Agreements, including that each Fund’s total contractual fee rate under the New Investment Advisory Agreement will remain the same;
     
  • The Board’s full annual review (or initial approval) of the current investment advisory agreements at their in-person meeting in May 2009 as required by the 1940 Act and its determination that (i) DMC had the capabilities, resources, and personnel necessary to provide the satisfactory advisory and administrative services currently provided to each Fund and (ii) the advisory and/or management fees paid by each Fund, taking into account any applicable fee waivers and breakpoints, represented reasonable compensation to DMC in light of the services provided, the costs to DMC of providing those services, economies of scale, and the fees and other expenses paid by similar funds and such other matters that the Board considered relevant in the exercise of its reasonable judgment;
     
  • The portfolio management teams for the Funds are not currently expected to change as a result of the Transaction;
     
  • LNC and Macquarie Group were expected to execute a reimbursement agreement pursuant to which LNC and Macquarie Group would agree to pay (or reimburse) all reasonable out-of-pocket costs and expenses of the Funds in connection with the Board’s consideration of the Transaction, the New Investment Advisory Agreements and related agreements, and all costs related to the proxy solicitation (the “Expense Agreement”);
95
 

Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
 
Board Consideration of New Investment Advisory Agreement (continued)
  • The likelihood that Macquarie Group would invest additional amounts in Delaware Investments, including DMC, which could result in increased assets under management, which in turn would allow some Funds the potential opportunity to achieve economies of scale and lower fees payable by Fund shareholders; and
     
  • The compliance and regulatory history of Macquarie Group and its affiliates.
In making their decision relating to the approval of each Fund’s New Investment Advisory Agreement, the independent Trustees gave attention to all information furnished. The following discussion, however, identifies the primary factors taken into account by the Trustees and the conclusions reached in approving the New Investment Advisory Agreements.
 
Nature, Extent, and Quality of Service. The Trustees considered the services historically provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered that the New Investment Advisory Agreements would be substantially similar to the current investment advisory agreements between the Funds and DMC (the “Current Investment Advisory Agreements”), and therefore, considered the many reports furnished to them throughout 2008 and 2009 at regular Board meetings covering matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; the compliance of management personnel with the code of ethics adopted throughout the Delaware Investments® Family of Funds complex; and the adherence to fair value pricing procedures as established by the Board. The Trustees were pleased with the current staffing of DMC and the emphasis placed on research and risk management in the investment process. Favorable consideration was given to DMC’s efforts to maintain expenditures and, in some instances, increase financial and human resources committed to Fund matters.
 
The Board also considered the transfer agent and shareholder services that would continue to be provided to Fund shareholders by DMC’s affiliate, Delaware Service Company, Inc. (“DSC”). The Trustees noted, in particular, DSC’s commitment to maintain a high level of service as well as DMC’s expenditures to improve the delivery of shareholder services. The Board was assured that shareholders would continue to receive the benefits provided to Fund shareholders by being part of the Delaware Investments Family of Funds, including each shareholder’s ability to exchange an investment in one Delaware Investments Fund for the same class of shares in another Delaware Investments Fund without a sales charge, to reinvest Fund dividends into additional shares of any of the Funds, and the privilege to combine holdings in other Funds to obtain a reduced sales charge.
 
Based on the information provided by DMC and Macquarie Group, including that Macquarie Group and DMC currently expected no material changes as a result of the Transaction in (i) personnel or operations of DMC or (ii) third party service providers to the Funds, the Board concluded that the satisfactory nature, extent, and quality of services currently provided to the Funds and their shareholders were very likely to continue under the New Investment Advisory
 
96
 

Agreements. Moreover, the Board concluded that the Funds would probably benefit from the expanded distribution resources that would become available to Delaware Investments following the Transaction. The Board also concluded that it was very unlikely that any “unfair burden” would be imposed on any of the Funds for the first two years following the Closing as a result of the Transaction. Consequently, the Board concluded that it did not expect the Transaction to result in any adverse changes in the nature, quality, or extent of services (including investment management, distribution or other shareholder services) currently provided to the Funds and their shareholders.
 
Investment Performance. The Board considered the overall investment performance of DMC and the Funds. The Trustees placed significant emphasis on the investment performance of the Funds in view of its importance to shareholders. Although the Trustees gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Trustees gave particular weight to their review of investment performance in connection with the approval of the Current Investment Advisory Agreements at the Board meeting held in May 2009. At that meeting, the Trustees reviewed reports prepared by Lipper, Inc., an independent statistical compilation organization (“Lipper”), which showed each Fund’s investment performance as of December 31, 2008 in comparison to a group of funds selected by Lipper as being similar to the Fund (the “Performance Universe”). During the May 2009 agreement review process, the Trustees observed the significant improvements to relative investment performance of the Funds compared to the Funds’ performance as of December 31, 2007.
 
At their meeting on September 3, 2009, the Trustees, including the independent Trustees in consultation with their independent counsel, reviewed the investment performance of each Fund. The Trustees compared the performance of each Fund relative to that of its respective Performance Universe for the 1-, 3-, 5-, and 10-year periods ended June 30, 2009 and compared its relative investment performance against the corresponding relative investment performance of each Fund for such time periods ended December 31, 2008, to the extent applicable. As of June 30, 2009, 30 of the Funds had investment performance relative to that of the respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for all applicable time periods. At June 30, 2009, an additional 6 Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for a majority of the applicable time periods. At June 30, 2009, 15 additional Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative performance at December 31, 2008 and only 29 Funds had poorer relative investment performance at June 30, 2009 compared to that at December 31, 2008.
 
The Board therefore concluded that the investment performance of the Funds, on an aggregate basis, had continued to improve relative to their respective Performance Universe since the data reviewed at the May 2009 meeting. Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreement
 
97
 

Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
would likely have an adverse effect on the investment performance of any Fund because (i) DMC and Macquarie Group did not currently expect the Transaction to cause any material change to the Funds’ portfolio management teams responsible for investment performance, which the Board found to be satisfactory and improving; and (ii) as discussed in more detail below, the Funds’ expenses were not expected to increase as a result of the Transaction.
 
Comparative Expenses. The Trustees also considered expense comparison data for the Funds previously provided in May 2009. At that meeting, DMC had provided the Board with information on pricing levels and fee structures for the Funds and comparative funds. The Trustees focused on the comparative analysis of the effective management fees and total expense ratios of each Fund versus the effective management fees and expense ratios of a group of funds selected by Lipper as being similar to each Fund (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into account any applicable breakpoints and fee limitations. Each Fund’s total expenses were also compared with those of its Expense Group. The Trustees also considered fees paid to Delaware Investments for nonmanagement services. At the September 3, 2009 meeting, DMC advised the Board that the more recent comparative expenses for the Funds remained consistent with the previous review in May 2009 and, consequently, the Trustees concluded that expenses of the Funds were satisfactory.
 
The Board also considered the Expense Agreement under negotiation in evaluating Fund expenses. The Trustees expected that the Expense Agreement would provide that LNC and Macquarie Group would pay or reimburse the Trusts for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the consideration of the New Investment Advisory Agreements (subject to certain limited exceptions).
 
Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreements likely would have an adverse effect on the Funds’ expenses because (i) each Fund’s contractual fee rates under the New Investment Advisory Agreement would remain the same; (ii) under the Expense Agreement, the Funds would be reimbursed for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the related proxy solicitation (subject to certain limited exceptions); and (iii) the expense ratios of certain Funds might decline as a result of the possible increased investment in Delaware Investments by Macquarie Group, as discussed below under “Economies of Scale.”
 
98
 

Management Profitability. At their meeting on September 3, 2009, the Board evaluated DMC’s profitability in connection with the operation of the Funds. The Board had previously considered DMC’s profitability in connection with the operation of the Funds at its May 2009 meeting. At that meeting, the Board reviewed an analysis that addressed the overall profitability of Delaware Investments’ business in providing management and other services to each of the Funds and the Delaware Investments® Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability.
 
At the May 2009 meeting, representatives of DMC had stated that the level of profits of DMC, to a certain extent, reflect operational cost savings and efficiencies initiated by Delaware Investments (including DMC and its affiliates that provide services to the Funds). The Board considered Delaware Investments’ efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide U.S. Securities and Exchange Commission initiatives. At that meeting, the Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC. At the September 3, 2009 meeting, DMC advised the Board that DMC did not expect the Transaction to affect materially the profitability of Delaware Investments compared to the level of profitability considered during the May 2009 review. Moreover, the Trustees reviewed pro forma balance sheets of certain key companies in Delaware Investments as of June 30, 2009 (which were provided by Macquarie Group and DMC in response to the Trustees’ requests) and evaluated the projections of Delaware Investments’ capitalization following the Transaction for purposes of evaluating the financial ability of Delaware Investments to continue to provide the nature, extent, and quality of services as it had under the Current Investment Advisory Agreement.
 
Based on information provided by DMC and Macquarie Group, the Board concluded that DMC and Delaware Investments would be sufficiently capitalized following the Transaction to continue the same level and quality of services to the Funds under the New Investment Advisory Agreements as was the case under the Current Investment Advisory Agreements. The Board also concluded that Macquarie Group had sufficient financial strength and resources, as well as an ongoing commitment to a global asset management business, to continue investing in Delaware Investments, including DMC, to the extent that Macquarie Group determined it was appropriate. Finally, because services and costs were expected to be substantially the same (and DMC had represented that, correspondingly, profitability would be about the same), under the New Investment Advisory Agreements as under the Current Investment Advisory Agreements, the Trustees concluded that the profitability of Delaware Investments would not result in an inequitable charge on the Funds or their shareholders. Accordingly, the Board concluded that the fees charged under the New Investment Advisory Agreements would be reasonable in light of the services to be provided and the expected profitability of DMC.
 
99
 

Other Fund information
(Unaudited)
Delaware National Tax-Free Funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
Economies of Scale. The Trustees considered whether economies of scale would be realized by Delaware Investments as each Fund’s assets increase and the extent to which any economies of scale would be reflected in the management fees charged. The Trustees took into account DMC’s practice of maintaining the competitive nature of management fees based on its analysis of fees charged by comparable funds. DMC management believed, and the Board agreed, that the Funds were priced with breakpoints and relatively low management fees to reflect potential economies of scale to Fund shareholders.
 
The Board also acknowledged Macquarie Group’s statement that the Transaction would not by itself immediately provide additional economies of scale given Macquarie Group’s limited presence in the U.S. mutual fund market. Nonetheless, the Trustees concluded that additional economies of scale could potentially be achieved in the future if DMC were owned by Macquarie Group as a result of Macquarie Group’s willingness to invest further in Delaware Investments if appropriate opportunities arise. The Board further concluded that potential economies of scale could be achieved as a result of Delaware Investments’ expanded distribution capabilities arising from the Transaction, as well as opportunities that might arise from Macquarie Group’s global asset management business.
 
Fall-Out Benefits. The Board acknowledged that DMC would continue to benefit from soft dollar arrangements using portfolio brokerage of each Fund that invests in equity securities and that DMC’s profitability would likely be somewhat lower without the benefit of practices with respect to allocating Fund portfolio brokerage for brokerage and research services. The Board also considered that Macquarie Group and Delaware Investments may derive reputational, strategic, and other benefits from their association with the Delaware Investments Family of Funds, including service relationships with DMC, DSC, and Delaware Distributors, L.P., and evaluated the extent to which Delaware Investments might derive ancillary benefits from Fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds and the benefits from allocation of Fund brokerage to improve trading efficiencies. However, the Board concluded that (i) any such benefits under the New Investment Advisory Agreements would not be dissimilar from those existing under the Current Investment Advisory Agreements; (ii) such benefits did not impose a cost or burden on the Funds or their shareholders; and (iii) such benefits would probably have an indirectly beneficial effect on the Funds and their shareholders because of the added importance that DMC and Macquarie Group might attach to the Funds as a result of the fall-out benefits that the Funds conveyed.
 
100
 

Board Review of Macquarie Group. The Trustees reviewed detailed information supplied by Macquarie Group about its operations as well as other information regarding Macquarie Group provided by independent legal counsel to the independent Trustees. Based on this review, the Trustees concluded that Delaware Investments would continue to have the financial ability to maintain the high quality of services required by the Funds. The Trustees noted that there would be a limited transition period during which some services previously provided by LNC to Delaware Investments would continue to be provided by LNC after the Closing, and concluded that this arrangement would help minimize disruption in Delaware Investments’ provision of services to the Funds following the Transaction.
 
The Board considered Macquarie Group’s support for Delaware Investments’ plans for Fund distribution by transferring wholesalers from Lincoln Financial Distributors, Inc., LNC’s retail distributor, to Delaware Investments, and Macquarie Group’s current intention to leave the Funds’ other service providers in place. The Board also considered Macquarie Group’s current strategic plans to increase its asset management activities, one of its core businesses, particularly in North America, and its statement that its acquisition of DMC is an important component of this strategic growth and the establishment of a significant presence in the United States. Based in part on the information provided by DMC and Macquarie Group, the Board concluded that Macquarie Group’s acquisition of Delaware Investments could potentially enhance the nature, quality, and extent of services provided to the Funds and their shareholders.
 
Conclusion. The Board concluded that the advisory fee rate under each New Investment Advisory Agreement was reasonable in relation to the services provided and that execution of the New Investment Advisory Agreement would be in the best interests of the shareholders. For each Fund, the Trustees noted that they had concluded in their most recent advisory agreement continuance considerations in May 2009 that the management fees and total expense ratios were at acceptable levels in light of the quality of services provided to the Funds and in comparison to those of the Funds’ respective peer groups; that the advisory fee schedule would not be increased and would stay the same for all of the Funds; that the total expense ratio had not changed materially since that determination; and that DMC had represented that the overall expenses for each Fund were not expected to be adversely affected by the Transaction. The Trustees also noted, with respect to the Funds that currently had the benefit of voluntary fee limitations, that Macquarie Group had no present intention to cause DMC to alter any voluntary expense limitations or reimbursements currently in effect. On that basis, the Trustees concluded that the total expense ratios and proposed advisory fees for the Funds anticipated to result from the Transaction were acceptable. In approving each New Investment Advisory Agreement, the Board stated that it anticipated reviewing the continuance of the New Investment Advisory Agreement in advance of the expiration of the initial two-year period.
 
101
 

About the organization
 
 
Board of trustees
 
Patrick P. Coyne
Chairman, President, and
Chief Executive Officer
Delaware Investments®
Family of Funds
Philadelphia, PA
 
Thomas L. Bennett
Private Investor
Rosemont, PA
 
John A. Fry
President
Franklin & Marshall
College
Lancaster, PA
Anthony D. Knerr
Founder and Managing
Director
Anthony Knerr &
Associates
New York, NY
 
Lucinda S. Landreth
Former Chief Investment
Officer
Assurant, Inc.
Philadelphia, PA
 
Ann R. Leven
Consultant
ARL Associates
New York, NY
 
Thomas F. Madison
President and
Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
 
Janet L. Yeomans
Vice President and
Treasurer
3M Corporation
St. Paul, MN
 
J. Richard Zecher
Founder
Investor Analytics
Scottsdale, AZ
 
 
Affiliated officers
 
David F. Connor
Vice President, Deputy
General Counsel, and
Secretary
Delaware Investments
Family of Funds
Philadelphia, PA
Daniel V. Geatens
Vice President and
Treasurer
Delaware Investments
Family of Funds
Philadelphia, PA
 
David P. O’Connor
Senior Vice President,
General Counsel,
and Chief Legal Officer
Delaware Investments
Family of Funds
Philadelphia, PA
Richard Salus
Senior Vice President and
Chief Financial Officer
Delaware Investments
Family of Funds
Philadelphia, PA
 

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.
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 (SEC) 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 SEC’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 SEC’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 SEC’s Web site at www.sec.gov.
 
102
 

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, 2010
 
Fixed income mutual funds
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.
 
The figures in the semiannual report 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 represent past results, which are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted.
 
You should consider the investment objectives, risks, charges, and expenses of the Funds carefully before investing. The 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 prospectus contains this and other important information about the Funds. Prospectuses for all open-end funds in the Delaware Investments® Family of Funds are available from your financial advisor, online at www.delawareinvestments.com, or by phone at 800 523-1918. Please read the prospectus carefully before you invest or send money.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit www.delawareinvestments.com/edelivery.
 

Experience Delaware Investments
 
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
 
If you are interested in learning more about creating an investment plan, contact your financial advisor.
 
You can learn more about Delaware Investments or obtain a 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 at www.delawareinvestments.com.
 
Manage your investments online
  • 24-hour access to your account information
  • Obtain share prices
  • Check your account balance and recent transactions
  • Request statements or literature
  • Make purchases and redemptions
On January 4, 2010, Delaware Management Holdings, Inc., and its subsidiaries (collectively known by the marketing name of Delaware Investments) were sold by a subsidiary of Lincoln National Corporation to Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services. Please see your Funds’ prospectus and any supplements thereto for more complete information.
 
Investments in 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 are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including subsidiaries or related companies, and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
 
Table of contents        
Disclosure of Fund expenses 1
Sector allocations and credit quality breakdowns 4
Statements of net assets 9
Statements of operations 48
Statements of changes in net assets 50
Financial highlights 60
Notes to financial statements 90
Other Fund information 104
About the organization 115

Unless otherwise noted, views expressed herein are current as of Feb. 28, 2010, and are subject to change.
 
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. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Funds’ distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
 
© 2010 Delaware Management Holdings, Inc.
 
All third-party trademarks cited are the property of their respective owners.
 

Disclosure of Fund expenses
For the period September 1, 2009 to February 28, 2010
 
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 from September 1, 2009 to February 28, 2010.
 
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 Arizona Fund
Expense analysis of an investment of $1,000
 
             Beginning
Account Value
9/1/09		              Ending
Account Value
2/28/10		              Annualized
Expense Ratio		              Expenses
Paid During Period
9/1/09 to 2/28/10*
Actual Fund return
Class A $ 1,000.00 $ 1,042.70 0.81 % $ 4.10
Class B 1,000.00 1,038.80 1.56 % 7.89
Class C 1,000.00 1,038.80 1.56 % 7.89
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.78 0.81 % $ 4.06
Class B 1,000.00 1,017.06 1.56 % 7.80
Class C 1,000.00 1,017.06 1.56 % 7.80

Delaware Tax-Free California Fund
Expense analysis of an investment of $1,000
 
             Beginning
Account Value
9/1/09		              Ending
Account Value
2/28/10		              Annualized
Expense Ratio		              Expenses
Paid During Period
9/1/09 to 2/28/10*
Actual Fund return
Class A $ 1,000.00 $ 1,063.20 0.82 % $ 4.19
Class B 1,000.00 1,059.10 1.57 % 8.02
Class C 1,000.00 1,059.20 1.57 % 8.02
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.73 0.82 % $ 4.11
Class B 1,000.00 1,017.01 1.57 % 7.85
Class C 1,000.00 1,017.01 1.57 % 7.85

Delaware Tax-Free Colorado Fund
Expense analysis of an investment of $1,000
 
             Beginning
Account Value
9/1/09		              Ending
Account Value
2/28/10		              Annualized
Expense Ratio		              Expenses
Paid During Period
9/1/09 to 2/28/10*
Actual Fund return
Class A $ 1,000.00 $ 1,048.20 0.91 % $ 4.62
Class B 1,000.00 1,043.30 1.66 % 8.41
Class C 1,000.00 1,043.30 1.66 % 8.41
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.28 0.91 % $ 4.56
Class B 1,000.00 1,016.56 1.66 % 8.30
Class C 1,000.00 1,016.56 1.66 % 8.30

2
 

Delaware Tax-Free Idaho Fund
Expense analysis of an investment of $1,000
 
             Beginning
Account Value
9/1/09		              Ending
Account Value
2/28/10		              Annualized
Expense Ratio		              Expenses
Paid During Period
9/1/09 to 2/28/10*
Actual Fund return
Class A $ 1,000.00 $ 1,040.00 0.93 % $ 4.70
Class B 1,000.00 1,036.20 1.68 % 8.48
Class C 1,000.00 1,036.20 1.68 % 8.48
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.18 0.93 % $ 4.66
Class B 1,000.00 1,016.46 1.68 % 8.40
Class C 1,000.00 1,016.46 1.68 % 8.40

Delaware Tax-Free New York Fund
Expense analysis of an investment of $1,000
 
             Beginning
Account Value
9/1/09		              Ending
Account Value
2/28/10		              Annualized
Expense Ratio		              Expenses
Paid During Period
9/1/09 to 2/28/10*
Actual Fund return
Class A $ 1,000.00 $ 1,049.80 0.80 % $ 4.07
Class B 1,000.00 1,046.00 1.55 % 7.86
Class C 1,000.00 1,046.00 1.55 % 7.86
Hypothetical 5% return (5% return before expenses)
Class A $ 1,000.00 $ 1,020.83 0.80 % $ 4.01
Class B 1,000.00 1,017.11 1.55 % 7.75
Class C 1,000.00 1,017.11 1.55 % 7.75

*“Expenses Paid During Period” are equal to a Fund’s annualized expense ratios, 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 Arizona Fund As of February 28, 2010

Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector         Percentage of net assets
Municipal Bonds 99.00 %
Corporate Revenue Bonds 6.78 %
Education Revenue Bonds 10.23 %
Electric Revenue Bonds 5.38 %
Health Care Revenue Bonds 13.09 %
Housing Revenue Bond 0.01 %
Lease Revenue Bonds 12.93 %
Local General Obligation Bonds 5.14 %
Pre-Refunded Bonds 9.42 %
Special Tax Revenue Bonds 15.41 %
State General Obligation Bonds 7.52 %
Transportation Revenue Bonds 5.37 %
Water & Sewer Revenue Bonds 7.72 %
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 12.20 %
AA 29.67 %
A 26.42 %
BBB 29.64 %
B 1.22 %
Not Rated 0.85 %
Total 100.00 %

*Bond ratings are determined by independent, nationally recognized statistical rating organizations.
 
4
 

Delaware Tax-Free California Fund As of February 28, 2010
 
Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector         Percentage of net assets
Municipal Bonds 98.78 %
Corporate Revenue Bonds 5.70 %
Education Revenue Bonds 9.32 %
Electric Revenue Bonds 4.18 %
Health Care Revenue Bonds 16.82 %
Housing Revenue Bonds 7.26 %
Lease Revenue Bonds 7.83 %
Local General Obligation Bonds 6.29 %
Pre-Refunded Bonds 3.01 %
Resource Recovery Revenue Bond 1.26 %
Special Tax Revenue Bonds 19.66 %
State General Obligation Bonds 7.32 %
Transportation Revenue Bonds 6.17 %
Water & Sewer Revenue Bonds 3.96 %
Short-Term Investments 0.62 %
Money Market Instrument 0.38 %
Variable Rate Demand Note 0.24 %
Total Value of Securities 99.40 %
Receivables and Other Assets Net of Liabilities 0.60 %
Total Net Assets 100.00 %
  
Credit quality breakdown (as a % of fixed income investments)*
AAA 10.79 %
AA 15.33 %
A 43.82 %
BBB 16.16 %
BB 1.93 %
B 2.29 %
Not Rated 9.68 %
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, 2010
 
Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector         Percentage of net assets
Municipal Bonds 99.07 %
Corporate Revenue Bond 2.17 %
Education Revenue Bonds 11.42 %
Electric Revenue Bonds 5.86 %
Escrowed to Maturity Bond 2.23 %
Health Care Revenue Bonds 21.12 %
Housing Revenue Bonds 2.11 %
Lease Revenue Bonds 3.62 %
Local General Obligation Bonds 15.03 %
Pre-Refunded Bonds 15.11 %
Special Tax Revenue Bonds 8.56 %
State General Obligation Bonds 6.09 %
Transportation Revenue Bonds 3.49 %
Water & Sewer Revenue Bonds 2.26 %
Short-Term Investment 1.02 %
Total Value of Securities 100.09 %
Liabilities Net of Receivables and Other Assets (0.09 %)
Total Net Assets 100.00 %
  
Credit quality breakdown (as a % of fixed income investments)*
AAA 13.37 %
AA 27.92 %
A 29.16 %
BBB 18.55 %
B 1.09 %
Not Rated 9.91 %
Total 100.00 %

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

6
 

Delaware Tax-Free Idaho Fund As of February 28, 2010
 
Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector         Percentage of net assets
Municipal Bonds 97.33 %
Corporate Revenue Bonds 4.52 %
Education Revenue Bonds 9.56 %
Electric Revenue Bonds 1.38 %
Health Care Revenue Bonds 1.81 %
Housing Revenue Bonds 7.00 %
Lease Revenue Bonds 3.61 %
Local General Obligation Bonds 21.59 %
Pre-Refunded Bonds 14.42 %
Special Tax Revenue Bonds 17.08 %
State General Obligation Bonds 5.70 %
Transportation Revenue Bonds 7.93 %
Water & Sewer Revenue Bonds 2.73 %
Short-Term Investment 1.41 %
Total Value of Securities 98.74 %
Receivables and Other Assets Net of Liabilities 1.26 %
Total Net Assets 100.00 %
 
Credit quality breakdown (as a % of fixed income investments)*
AAA 19.31 %
AA 34.49 %
A 29.15 %
BBB 12.46 %
BB 2.98 %
B 1.40 %
Not Rated 0.21 %
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, 2010
 
Sector designations may be different than the sector designations presented in other Fund materials.
 
Sector         Percentage of net assets
Municipal Bonds 95.98 %
Corporate Revenue Bonds 7.93 %
Education Revenue Bonds 22.90 %
Electric Revenue Bonds 2.97 %
Health Care Revenue Bonds 8.54 %
Housing Revenue Bonds 1.95 %
Lease Revenue Bonds 8.94 %
Local General Obligation Bonds 3.17 %
Pre-Refunded Bonds 6.27 %
Special Tax Revenue Bonds 20.51 %
State General Obligation Bonds 4.70 %
Transportation Revenue Bonds 6.22 %
Water & Sewer Revenue Bonds 1.88 %
Short-Term Investments 4.16 %
Total Value of Securities 100.14 %
Liabilities Net of Receivables and Other Assets (0.14 %)
Total Net Assets 100.00 %
  
Credit quality breakdown (as a % of fixed income investments)*
AAA 12.55 %
AA 27.41 %
A 30.76 %
BBB 22.38 %
BB 2.98 %
B 2.39 %
Not Rated 1.53 %
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, 2010 (Unaudited)

Principal amount         Value
Municipal Bonds – 99.00%                
Corporate Revenue Bonds – 6.78%
           Maricopa County Pollution Control (Palo Verde Project)
          Series A 5.05% 5/1/29 (AMBAC) $ 2,000,000 $ 1,875,980
• Navajo County Pollution Control Revenue Refunding
          (Arizona Public Services Company-Cholla)
          Series D 5.75% 6/1/34 1,500,000 1,577,670
Pima County Industrial Development Authority Pollution
          Control Revenue (Tucson Electric Power Company-San
          Juan) Series A 4.95% 10/1/20 1,500,000 1,507,305
Pima County Industrial Development Authority Revenue
          Remarketed (Tucson Electric Power)
          5.75% 9/1/29 750,000 758,190
Salt Verde Financial Corporation Gas Revenue Senior
          5.00% 12/1/37 2,895,000 2,477,975
8,197,120
Education Revenue Bonds – 10.23%
Arizona Health Facilities Authority Healthcare
          Education Revenue (Kirksville College)
          5.125% 1/1/30 1,500,000 1,497,120
Arizona State Board of Regents
          (University of Arizona System Revenue)
          Series A 5.00% 6/1/21 1,255,000 1,400,266
          Series A 5.00% 6/1/39 1,500,000 1,539,045
Arizona State University Certificates of Participation
          (Research Infrastructure Project)
          5.00% 9/1/30 (AMBAC) 2,000,000 2,027,380
Arizona State University Energy Management Revenue
          (Arizona State University-Tempe Campus II Project)
          4.50% 7/1/24 1,385,000 1,416,786
Energy Management Services Energy Conservation Revenue
          (Arizona State University-Main Campus Project)
          5.25% 7/1/17 (NATL-RE) 1,500,000 1,633,950
Pima County Industrial Development Authority Educational
          Revenue Refunding (Tucson Country Day School Project)
          5.00% 6/1/37 1,000,000 754,060
South Campus Group Student Housing Revenue
          (Arizona State University-South Campus Project)
          5.625% 9/1/35 (NATL-RE) 1,000,000 1,003,620

9
 

Statements of net assets
Delaware Tax-Free Arizona Fund
 
  Principal amount   Value
Municipal Bonds (continued)                 
Education Revenue Bonds (continued)            
           Tucson Industrial Development Authority Lease Revenue
          (University of Arizona-Marshall Foundation) Series A
          5.00% 7/15/27 (AMBAC) $ 1,000,000 $ 1,007,540
University of Arizona Certificates of Participation
          (University of Arizona Project)
          Series A 5.125% 6/1/21 (AMBAC) 85,000 90,480
12,370,247
Electric Revenue Bonds – 5.38%
Mesa Utilities System Revenue Refunding
          5.00% 7/1/18 (NATL-RE) (FGIC) 2,150,000 2,428,920
Puerto Rico Electric Power Authority Revenue Series WW
          5.00% 7/1/28 1,430,000 1,428,198
          5.50% 7/1/38 600,000 607,560
Salt River Project Agricultural Improvement &
          Power District Electric System Revenue
          Series B 5.00% 1/1/31 (NATL-RE) (IBC) 2,000,000 2,042,680
6,507,358
Health Care Revenue Bonds – 13.09%
Arizona Health Facilities Authority Revenue
          (Catholic Healthcare West) Series D 5.00% 7/1/28 1,500,000 1,482,165
Glendale Industrial Development Authority Hospital
          Revenue (John C. Lincoln Health) 5.00% 12/1/42 2,500,000 2,171,925
Maricopa County Industrial Development Authority Health
          Facilities Revenue (Catholic Healthcare West) Series A
          5.50% 7/1/26 1,000,000 1,020,030
       6.00% 7/1/39 2,500,000 2,608,750
Scottsdale Industrial Development Authority
          Hospital Revenue (Scottsdale Healthcare)
          Series A 5.25% 9/1/30 1,250,000 1,236,063
University Medical Center Hospital Revenue
          5.00% 7/1/24 800,000 790,272
          5.00% 7/1/35 2,000,000 1,864,000
          6.50% 7/1/39 2,500,000 2,659,899
Yavapai County Industrial Development Authority
          Revenue (Yavapai Regional Medical Center)
          Series A 5.25% 8/1/21 (RADIAN) 2,000,000 1,991,420
15,824,524

10
 

  Principal amount   Value
Municipal Bonds (continued)               
Housing Revenue Bond – 0.01%          
           Pima County Industrial Development Authority  
          Single Family Housing Revenue  
          Series A-1 6.125% 11/1/33
          (GNMA) (FNMA) (FHLMC) (AMT)  $ 15,000 $ 15,026
15,026
Lease Revenue Bonds – 12.93%
Arizona Game & Fish Department &
          Community Beneficial Interest Certificates
          (Administration Building Project) 5.00% 7/1/32 1,300,000 1,294,722
Arizona State Certificates of Participation Department
          Administration Series A 5.25% 10/1/25 (AGM) 1,500,000 1,598,880
Marana Municipal Property Facilities Revenue
          5.00% 7/1/28 (AMBAC) 575,000 590,278
Maricopa County Industrial Development Authority
          Correctional Contract Revenue (Phoenix West Prison)
          Series B 5.375% 7/1/22 (ACA) 1,000,000 980,930
Phoenix Industrial Development Authority Lease
          Revenue (Capitol Mall II, LLC Project)
          5.00% 9/15/28 (AMBAC) 2,000,000 2,002,260
Pima County Industrial Development Authority Lease
          Revenue Metro Police Facility (Nevada Project) Series A
          5.25% 7/1/31 1,500,000 1,543,425
          5.375% 7/1/39 1,500,000 1,525,800
Pinal County Certificates of Participation
          5.00% 12/1/29 1,300,000 1,293,435
          5.125% 6/1/21 (AMBAC) 3,000,000 3,074,039
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities) Series D
          5.25% 7/1/27 470,000 463,129
          5.25% 7/1/36 270,000 258,836
University of Arizona Certificates of Participation
          Prerefunded (University of Arizona Project)
          Series B 5.00% 6/1/31 (AMBAC) 1,000,000 1,003,210
15,628,944

11
 

Statements of net assets
Delaware Tax-Free Arizona Fund 
 
  Principal amount   Value
Municipal Bonds (continued)               
Local General Obligation Bonds – 5.14%      
           Cochise County Unified School District #68        
          (Sierra Vista) 7.50% 7/1/10 (NATL-RE) (FGIC) $ 1,000,000 $ 1,022,960
Coconino & Yavapai Counties Joint Unified School
          District #9 (Sedona Oak Creek Project of 2007)
          Series A 4.50% 7/1/18 (AGM) 1,520,000 1,728,073
          Series B 5.375% 7/1/28 1,350,000 1,453,113
DC Ranch Community Facilities
          5.00% 7/15/27 (AMBAC) 1,000,000 971,670
• Gila County Unified School District #10
          (Payson School Improvement Project of 2006)
          Series A 5.25% 7/1/27 (AMBAC) 1,000,000 1,032,520
6,208,336
§Pre-Refunded Bonds – 9.42%
Phoenix Variable Purpose Series B 5.00% 7/1/27-12 2,435,000 2,507,904
Puerto Rico Commonwealth Highway &
          Transportation Authority Revenue Series K
          5.00% 7/1/35-15 750,000 882,060
Puerto Rico Electric Power Authority Revenue
          Series NN 5.00% 7/1/32-13 (NATL-RE) 1,750,000 1,981,385
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series D 5.25% 7/1/27-12 1,280,000 1,408,230
          Series I 5.25% 7/1/33-14 5,000 5,792
Southern Arizona Capital Facilities Finance
          Revenue (University of Arizona Project)
          5.10% 9/1/33-12 (NATL-RE) 3,250,000 3,603,568
University of Arizona Certificates of Participation
          (University of Arizona Project)
          Series A 5.125% 6/1/21-12 (AMBAC) 915,000 1,002,904
11,391,843
Special Tax Revenue Bonds – 15.41%
Arizona State Transportation Board Excise Tax Revenue
          (Maricopa County Regional Area Road Foundation)
          5.00% 7/1/19 1,500,000 1,695,390
Arizona Tourism & Sports Authority Tax Revenue
          (Multipurpose Stadium Facilities)
          Series A 5.00% 7/1/28 (NATL-RE) 1,345,000 1,355,626

12
 

  Principal amount   Value
Municipal Bonds (continued)                   
Special Tax Revenue Bonds (continued)      
           Flagstaff Aspen Place Sawmill Improvement District
          Revenue 5.00% 1/1/32 $ 1,350,000 $ 1,350,162
Gilbert Public Facilities Municipal Property
          Revenue 5.00% 7/1/25 1,250,000 1,331,563
Marana Tangerine Farm Road Improvement District
          Revenue 4.60% 1/1/26 924,000 836,728
Mesa Street & Highway Revenue 5.00% 7/1/20 (AGM) 1,000,000 1,144,650
Peoria Municipal Development Authority Transition
          Sales Tax, Excise Tax & State Shared Revenue
          (Senior Lien & Subordinated Lien) 4.50% 1/1/16 1,000,000 1,122,600
Phoenix Civic Improvement Transition Excise Tax Revenue
          (Light Rail Project) 5.00% 7/1/20 (AMBAC) 2,270,000 2,443,586
Puerto Rico Commonwealth Infrastructure Financing
          Authority Special Tax Revenue Refunding
          Series C 5.50% 7/1/25 (AMBAC) 1,955,000 2,003,836
Puerto Rico Sales Tax Financing Corporation
          Revenue Series A
        ΩCapital Appreciation-First Subordinate 6.75% 8/1/32 3,045,000 2,317,518
          First Subordinate
         •5.00% 8/1/39 1,500,000 1,575,105
          5.75% 8/1/37 1,405,000 1,452,447
18,629,211
State General Obligation Bonds – 7.52%
Guam Government Series A
          6.75% 11/15/29 115,000 121,964
          7.00% 11/15/39 1,250,000 1,338,800
Puerto Rico Commonwealth Public Improvement
          Refunding Series A
          5.50% 7/1/17 1,765,000 1,890,227
          5.50% 7/1/19 1,300,000 1,384,942
          Series C 6.00% 7/1/39 1,010,000 1,039,745
          Un-Refunded Balance Series A
          5.125% 7/1/30 (FSA) 480,000 481,920
          5.125% 7/1/31 2,000,000 1,911,140
Virgin Islands Public Finance Authority
          (Gross Receipts Taxes Loan Note)
          5.00% 10/1/31 (ACA) 1,000,000 927,670
9,096,408

13
 

Statements of net assets
Delaware Tax-Free Arizona Fund 
 
 
 
  Principal amount   Value
Municipal Bonds (continued)                   
Transportation Revenue Bonds – 5.37%
           Arizona State Transportation Board Grant Anticipation
          Notes Series A 5.00% 7/1/14 $ 1,250,000   $ 1,423,250
Arizona State Transportation Board Highway
          Revenue Subordinated Series A 5.00% 7/1/23 1,000,000 1,079,130
Phoenix Civic Improvement Airport
          Revenue (Senior Lien) Series B
          5.25% 7/1/27 (NATL-RE) (FGIC) (AMT) 1,000,000 1,005,620
          5.25% 7/1/32 (NATL-RE) (FGIC) (AMT) 3,000,000 2,980,260
6,488,260
Water & Sewer Revenue Bonds – 7.72%
Phoenix Civic Improvement Corporation
          Waste System Revenue (Junior Lien)
          5.00% 7/1/26 (NATL-RE) (FGIC) 3,750,000 3,806,785
Phoenix Civic Improvement Wastewater Corporation
          Systems Revenue (Junior Lien)
          5.00% 7/1/19 (NATL-RE) 2,750,000 3,072,658
          Refunding 5.00% 7/1/24 (NATL-RE) (FGIC) 1,000,000 1,034,570
Scottsdale Water & Sewer Revenue 5.25% 7/1/22 1,150,000 1,418,652
9,332,665
Total Municipal Bonds (cost $115,787,713) 119,689,942
   
Total Value of Securities – 99.00%
(cost $115,787,713) 119,689,942
Receivables and Other Assets
Net of Liabilities – 1.00% 1,208,111
Net Assets Applicable to 10,660,132
Shares Outstanding – 100.00%   $ 120,898,053
  
Net Asset Value – Delaware Tax-Free Arizona Fund  
Class A ($108,625,920 / 9,579,914 Shares)     $11.34
Net Asset Value – Delaware Tax-Free Arizona Fund  
Class B ($4,708,051 / 414,923 Shares)     $11.35
Net Asset Value – Delaware Tax-Free Arizona Fund  
Class C ($7,564,082 / 665,295 Shares)     $11.37

14
 

  
Components of Net Assets at February 28, 2010:    
Shares of beneficial interest (unlimited authorization – no par) $ 117,512,086
Undistributed net investment income 26,197
Accumulated net realized loss on investments (542,459 )
Net unrealized appreciation of investments 3,902,229
Total net assets $ 120,898,053  

§ Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in ”Notes to financial statements.”
Ω Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
• Variable rate security. The rate shown is the rate as of February 28, 2010.

Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
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
IBC — Insured by Integrity Building Corporation
NATL-RE — Insured by the National Public Finance Guarantee Corporation
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) $ 11.34
Sales charge (4.50% of offering price) (B) 0.53
Offering price $ 11.87

(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, 2010 (Unaudited)

  Principal amount   Value
Municipal Bonds – 98.78%                   
Corporate Revenue Bonds – 5.70%  
           Chula Vista Industrial Development Revenue
          (San Diego Gas & Electric) Series D
          5.875% 1/1/34 $ 1,000,000 $ 1,099,970
Golden State Tobacco Securitization Corporation
          Settlement Revenue (Asset-Backed Senior Notes)
          Series A-1
          5.125% 6/1/47 1,075,000 722,873
          5.75% 6/1/47 1,000,000 737,370
M-S-R Energy Authority Gas Revenue Series A
          6.50% 11/1/39 2,000,000 2,126,060
4,686,273
Education Revenue Bonds – 9.32%
California Educational Facilities Authority Revenue
          (University of the Pacific) 5.50% 11/1/39 1,000,000 1,013,400
          (Woodbury University) 5.00% 1/1/36 1,000,000 826,280
California Municipal Finance Authority
          Educational Revenue
          (American Heritage Foundation Project)
          Series A 5.25% 6/1/36 1,000,000 837,940
California Statewide Communities Development
          Authority Revenue
          (California Baptist University Project)
          Series A 5.50% 11/1/38 1,000,000 810,170
          (Viewpoint School Project) 5.75% 10/1/33 (ACA) 1,000,000 882,710
          (Windrush School Project) 5.50% 7/1/37 1,000,000 784,130
California Statewide Communities Development
          Authority Student Housing Revenue
          (East Campus Apartments, LLC)
          Series A 5.625% 8/1/34 (ACA) 1,000,000 958,370
San Diego County Certificates of Participation
          (University of San Diego) 5.375% 10/1/41 1,000,000 988,700
University of California Revenue
          (Multiple Purpose Projects)
          Series L 5.00% 5/15/19 500,000 563,490
7,665,190

16
 

  Principal amount   Value
Municipal Bonds (continued)                   
Electric Revenue Bonds – 4.18%
           Chino Basin Regional Financing Authority Revenue  
          Series A 5.00% 11/1/24 (AMBAC) $ 845,000 $ 882,729
Puerto Rico Electric Power Authority Revenue
          Series WW 5.50% 7/1/38 400,000 405,040
Southern California Public Power Authority Revenue
          (Transmission Project) Series A 5.00% 7/1/22 1,000,000 1,090,330
Vernon Electric System Revenue Series A 5.125% 8/1/21 1,000,000 1,058,050
3,436,149
Health Care Revenue Bonds – 16.82%
Association Bay Area Governments Finance Authority
          for California Nonprofit Corporations
          (San Diego Hospital Association)
          Series A 6.125% 8/15/20 1,250,000 1,277,776
          (Sharp Health Care) Series B 6.25% 8/1/39 1,000,000 1,081,310
California Health Facilities Financing Authority Revenue
          (Adventist Health System West) Series A 5.75% 9/1/39 1,000,000 1,017,580
          (Catholic Health Care West)
          Series A 6.00% 7/1/39 1,000,000 1,048,740
          Series E 5.625% 7/1/25 1,000,000 1,047,670
          Series G 5.25% 7/1/23 1,000,000 1,018,580
          (Children’s Hospital Orange County)
          Series A 6.50% 11/1/38 1,000,000 1,054,220
          (St. Joseph Health System) Series A 5.75% 7/1/39 1,000,000 1,035,740
          (The Episcopal Home) Series A 5.30% 2/1/32 (RADIAN) 1,000,000 917,930
California Infrastructure & Economic Development Bank
          Revenue (Kaiser Hospital Associates I, LLC)
          Series A 5.55% 8/1/31 1,000,000 1,011,140
California Municipal Finance Authority Certificates of
          Participation (Community Hospital of Central California)
          5.50% 2/1/39 1,000,000 881,930
California Statewide Communities Development
          Authority Revenue
          (Kaiser Permanente) Series A 5.00% 4/1/19 1,000,000 1,081,780
          (Southern California Senior Living) 7.25% 11/15/41 500,000 533,320
          (Valleycare Health Systems) Series A 5.125% 7/15/31 1,000,000 818,360
13,826,076

17
 

Statements of net assets
Delaware Tax-Free California Fund
 
  Principal amount   Value
Municipal Bonds (continued)                   
Housing Revenue Bonds – 7.26%
           California Housing Finance Agency Revenue
            (Home Mortgage)
          Series K 5.30% 8/1/23 (AMT) $ 1,000,000 $ 988,610
          Series M 5.95% 8/1/25 (AMT) 1,000,000 1,040,940
California Statewide Communities Development
          Multifamily Housing Authority Revenue
          (Citrus Gardens Apartments) Series D-1 5.375% 7/1/32 1,000,000 942,290
          (Silver Ridge Apartments) Series H 5.80% 8/1/33
          (FNMA) (AMT) 1,000,000 1,031,240
Palm Springs Mobile Home Park Revenue (Sahara
          Mobile Home Park) Series A 5.75% 5/15/37 1,000,000 957,530
Santa Clara County Multifamily Housing Authority
          Revenue (Rivertown Apartments Project)
          Series A 5.85% 8/1/31 (AMT) 1,000,000 1,004,540
5,965,150
Lease Revenue Bonds – 7.83%
California State Public Works Board Lease Revenue
          (General Services) Series A 6.25% 4/1/34 1,000,000 1,024,300
Elsinore Valley Municipal Water District Certificates
          of Participation Series A 5.00% 7/1/24 (BHAC) 1,000,000 1,084,730
Franklin-McKinley School District Certificates
          of Participation (Financing Project)
          Series B 5.00% 9/1/27 (AMBAC) 1,060,000 1,072,232
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series M-2 5.50% 7/1/35 (AMBAC) 700,000 719,950
San Diego County Certificates of Participation
          5.75% 7/1/31 (NATL-RE) 1,000,000 1,009,290
San Mateo Joint Powers Financing Authority Lease
          Revenue Refunding (Capital Projects)
          Series A 5.25% 7/15/26 1,000,000 1,085,880
Ω San Mateo Unified High School District Certificates
          of Participation Capital Appreciation
          (Partnership Phase I Projects)
          Series B 5.00% 12/15/43 (AMBAC) 1,000,000 437,480
6,433,862

18
 

  Principal amount   Value
Municipal Bonds (continued)                   
Local General Obligation Bonds – 6.29%
^ Anaheim School District Election 2002
                     4.58% 8/1/25 (NATL-RE) $ 1,000,000 $ 376,380
Central Unified School District Election 2008
          Series A 5.625% 8/1/33 (ASSURED GTY) 1,000,000 1,066,640
Fairfield-Suisun Unified School District Election 2002
          5.50% 8/1/28 (NATL-RE) 500,000 533,925
Grossmont Union High School District Election 2004
          5.00% 8/1/23 (NATL-RE) 1,000,000 1,062,040
Santa Barbara Community College District Election 2008
          Series A 5.25% 8/1/33 1,000,000 1,044,250
Sierra Joint Community College Improvement
          District #2 (Western Nevada)
          Series A 5.25% 8/1/21 (BHAC) (FGIC) 1,000,000 1,083,520
5,166,755
§Pre-Refunded Bonds – 3.01%
California Department of Water Resources
          (Central Valley Project) Series X
          5.00% 12/1/29-12 (NATL-RE) (FGIC) 5,000 5,581
Commerce Joint Powers Financing Authority Revenue
          (Redevelopment Projects) Series A
          5.00% 8/1/28-13 (RADIAN) 60,000 68,209
Golden State Tobacco Securitization Corporation Settlement
          Revenue (Asset-Backed Senior Notes) Series B
          5.50% 6/1/43-13 (RADIAN) 1,000,000 1,138,760
          5.625% 6/1/33-13 1,000,000 1,142,759
Port Oakland Revenue Series L 5.375% 11/1/27-12
          (NATL-RE) (FGIC) (AMT) 110,000 123,272
2,478,581
Resource Recovery Revenue Bond – 1.26%
South Bayside Waste Management Authority
          Revenue (Shoreway Environmental Center)
          Series A 6.00% 9/1/36 1,000,000 1,032,910
1,032,910

19
 

Statements of net assets
Delaware Tax-Free California Fund  
 
  Principal amount   Value
Municipal Bonds (continued)                   
Special Tax Revenue Bonds – 19.66%  
           California State Economic Recovery Refunding
          Series A 5.25% 7/1/21 $ 1,000,000 $ 1,112,720
Commerce Joint Powers Financing Authority Revenue
          (Redevelopment Projects) Un-Refunded Balance
          Series A 5.00% 8/1/28 (RADIAN) 940,000 817,997
Fremont Community Facilities District #1
            (Special Tax Pacific Commons) 5.375% 9/1/36 1,000,000 804,280
Glendale Redevelopment Agency Tax Allocation Revenue
          (Central Glendale Redevelopment Project)
          5.50% 12/1/24 1,000,000 996,910
Lake Elsinore Public Financing Authority Tax Allocation
          Series A 5.50% 9/1/30 1,000,000 985,490
Lammersville School District Community Facilities
          District #2002 (Mountain House) 5.125% 9/1/35 500,000 383,885
Lancaster Redevelopment Agency Tax Allocation
          Combined Revenue (Combined Redevelopment
          Project Areas) 6.875% 8/1/39 500,000 534,475
@ Modesto Special Tax Community Facilities District #04-1
          (Village 2) 5.15% 9/1/36 1,000,000 735,650
@ Palm Drive Health Care District Parcel Tax Revenue
          5.25% 4/1/30 2,000,000 1,572,040
Poway Redevelopment Agency Tax Allocation Revenue
          5.75% 6/15/33 (NATL-RE) 270,000 270,043
Poway Unified School District Community Facilities
          District #1 Special Tax Refunding
          5.00% 10/1/17 (AGM) 1,000,000 1,142,750
Puerto Rico Sales Tax Financing Corporation Revenue Series A
          5.25% 8/1/27 1,000,000 1,023,110
      ΩCapital Appreciation-First Subordinate 6.75% 8/1/32 2,040,000 1,552,624
          First Subordinate
         •5.00% 8/1/39 1,000,000 1,050,070
          5.75% 8/1/37 930,000 961,406
Roseville Westpark Special Tax Public Community
          Facilities District #1 5.25% 9/1/37 500,000 377,215
San Bernardino County Special Tax Community
          Facilities District #2002-1 5.90% 9/1/33 2,000,000 1,842,861
16,163,526

20
 

          Principal amount      Value
Municipal Bonds (continued)          
State General Obligation Bonds – 7.32%
California State Various Purposes 6.00% 4/1/38 $ 515,000 $ 532,088
Guam Government Series A 6.75% 11/15/29 1,755,000 1,861,283
Puerto Rico Commonwealth Government Development
          Bank Senior Notes Series B 5.00% 12/1/15 1,000,000 1,056,080
Puerto Rico Commonwealth Public Improvement
          Series A 5.25% 7/1/15 1,750,000   1,870,434
          Series C 6.00% 7/1/39 675,000 694,879
  6,014,764
Transportation Revenue Bonds – 6.17%  
Bay Area Toll Bridge Authority Revenue
          (San Francisco Bay Area)    
          Series F-1 5.625% 4/1/44   2,000,000 2,137,100
Port Oakland Revenue Series L 5.375% 11/1/27
          (NATL-RE) (FGIC) (AMT) 890,000 855,094
  Sacramento County Airport Services Revenue (PFC/Grant)
          Series C 6.00% 7/1/41 1,000,000 1,075,260
San Diego Redevelopment Agency
          (Centre City Redevelopment Project)
          Series A 6.40% 9/1/25 1,000,000 1,002,120
  5,069,574
Water & Sewer Revenue Bonds – 3.96%
California Department of Water Resources Systems
          Revenue (Central Valley Project) Series A
          5.00% 12/1/22 1,000,000 1,129,520
          5.00% 12/1/24 1,000,000 1,103,540
          Un-Refunded Balance Series X
          5.00% 12/1/29 (NATL-RE) (FGIC) 995,000 1,019,029
  3,252,089
Total Municipal Bonds (cost $81,269,253) 81,190,899

21
 

Statements of net assets
Delaware Tax-Free California Fund
 
          Number of shares      Value
Short-Term Investments – 0.62%          
Money Market Instrument – 0.38%
Federated California Municipal Cash Trust 311,090 $ 311,090
311,090
 
Principal amount
•Variable Rate Demand Note – 0.24%
California Infrastructure & Economic Development Bank
          Revenue (Asian Art Museum Foundation)
            0.11% 6/1/34 (LOC, JP Morgan Chase Bank) (NATL-RE) $ 200,000 200,000
  200,000  
Total Short-Term Investments (cost $511,090) 511,090
 
Total Value of Securities – 99.40%
(cost $81,780,343) 81,701,989
Receivables and Other Assets    
Net of Liabilities – 0.60%   490,237
Net Assets Applicable to 7,438,115
Shares Outstanding – 100.00% $ 82,192,226
   
Net Asset Value – Delaware Tax-Free California Fund
Class A ($64,722,850 / 5,859,945 Shares)   $11.04
Net Asset Value – Delaware Tax-Free California Fund
Class B ($3,942,847 / 355,519 Shares) $11.09
Net Asset Value – Delaware Tax-Free California Fund
Class C ($13,526,529 / 1,222,651 Shares) $11.06
 
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par) $ 82,343,166
Undistributed net investment income 18,787
Accumulated net realized loss on investments (91,373 )
Net unrealized depreciation of investments (78,354 )
Total net assets $ 82,192,226

22
 
 
   
^ Zero coupon security. The rate shown is the yield at the time of purchase.
Ω Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
§ 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, 2010, the aggregate amount of illiquid securities was $2,307,690, which represented 2.81% of the Fund’s net assets. See Note 8 in “Notes to financial statements.”
•
Variable rate security. The rate shown is the rate as of February 28, 2010.
 
Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
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
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
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) $ 11.04
Sales charge (4.50% of offering price) (B)   0.52
Offering price $ 11.56

(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
 
23
 

Statements of net assets
Delaware Tax-Free Colorado Fund February 28, 2010 (Unaudited)

          Principal amount      Value
Municipal Bonds – 99.07%          
Corporate Revenue Bond – 2.17%
Public Authority Energy National Gas Purpose
          Revenue Series 2008 6.50% 11/15/38 $ 5,000,000 $ 5,383,050
  5,383,050
Education Revenue Bonds – 11.42%
Boulder County Development Revenue  
          (University Corporation for Atmospheric Research)
          5.00% 9/1/33 (NATL-RE) 1,000,000 1,001,390
          5.00% 9/1/35 (AMBAC) 1,000,000 1,005,750
Colorado Educational & Cultural Facilities
          Authority Revenue    
          (Charter School Project) 5.50% 5/1/36 (XLCA) 2,280,000 2,283,169
          (Johnson & Wales University Project)
          Series A 5.00% 4/1/28 (XLCA)   1,000,000 949,690
          (Liberty Common Charter School Project)
          5.125% 12/1/33 (XLCA) 2,740,000 2,653,827
          (Montessori Districts Charter School Projects)  
          6.125% 7/15/32   5,590,000 5,532,479
          (Pinnacle Charter School Project)
          5.00% 6/1/33 (XLCA) 2,170,000 2,066,643
          (University of Northern Colorado Student
          Housing Project) 5.125% 7/1/37 (NATL-RE) 4,000,000 3,730,040
          (Woodrow Wilson Charter School Project)
          5.25% 12/1/34 (XLCA) 1,960,000 1,891,420
Colorado School Mines Auxiliary Facilities
          5.00% 12/1/37 (AMBAC) 425,000 418,693
Colorado State Board Governors University Enterprise
          System Revenue Series A 5.00% 3/1/39 2,300,000 2,375,808
University of Colorado Enterprise System
          Revenue Series A 5.00% 6/1/30 (AMBAC) 2,000,000 2,070,480
University of Puerto Rico Revenue Series Q
          5.00% 6/1/36 2,750,000 2,401,520
  28,380,909
Electric Revenue Bonds – 5.86%
Colorado Springs Utilities Revenue
          Series A 5.00% 11/15/29 5,000,000 5,065,350
Platte River Power Authority Revenue Series HH
          5.00% 6/1/27 2,795,000 3,046,718
          5.00% 6/1/29 2,355,000 2,530,942

24
 

          Principal amount      Value
Municipal Bonds (continued)          
Electric Revenue Bonds (continued)
Puerto Rico Electric Power Authority Revenue
          Series TT 5.00% 7/1/37 $ 525,000 $ 501,627
          Series WW 5.00% 7/1/28 2,400,000 2,396,976
          Series WW 5.50% 7/1/38 1,000,000 1,012,600
  14,554,213
Escrowed to Maturity Bond – 2.23%
Colorado Health Facilities Authority Revenue  
          (Catholic Health Initiatives) Series A 5.50% 3/1/32 5,000,000 5,529,550
  5,529,550
Health Care Revenue Bonds – 21.12%
Aurora Hospital Revenue (Childrens Hospital)  
          Series D 5.00% 12/1/23 (AGM) (FSA) 2,775,000 2,925,988
Colorado Health Facilities Authority Revenue
          •(Adventist Health/Sunbelt) 5.125% 11/15/24 1,375,000   1,413,816
          (Catholic Health Initiatives)  
          Series A 4.75% 9/1/40 1,000,000 985,720
          Series A 5.00% 7/1/39 2,500,000 2,531,500
          Series D 6.25% 10/1/33     2,000,000 2,221,540
            (Christian Living Community Project)
          Series A 5.75% 1/1/37 1,500,000 1,277,415
          (Covenant Retirement Communities)
          Series A 5.50% 12/1/33 (RADIAN) 5,000,000 4,459,250
          (Evangelical Lutheran)
          5.00% 6/1/35 2,000,000 1,750,720
          6.125% 6/1/38 5,250,000   5,279,662
          Series A 5.25% 6/1/34 2,750,000 2,504,205
          (Parkview Medical Center) 5.00% 9/1/25 1,000,000 996,470
          (Porter Place) Series A 6.00% 1/20/36 (GNMA) 5,000,000 5,067,250
          (Vail Valley Medical Center Project) 5.80% 1/15/27 3,475,000 3,490,116
          (Valley View Hospital Association) 5.50% 5/15/28 1,000,000 993,090
Colorado Springs Hospital Revenue 6.25% 12/15/33 2,500,000 2,650,100
Delta County Memorial Hospital District Enterprise
          Revenue 5.35% 9/1/17 4,000,000 4,051,480
Denver Health & Hospital Authority Health Care Revenue
          Series A 4.75% 12/1/36 1,500,000 1,212,510

25
 

Statements of net assets
Delaware Tax-Free Colorado Fund
 
          Principal amount      Value
Municipal Bonds (continued)          
Health Care Revenue Bonds (continued)
University of Colorado Hospital Authority
          Revenue Series A
          5.00% 11/15/37 $ 2,690,000 $ 2,580,786
          5.25% 11/15/39 3,500,000 3,473,645
          6.00% 11/15/29 2,460,000 2,594,980
  52,460,243
Housing Revenue Bonds – 2.11%
  Colorado Housing & Finance Authority  
          (Multifamily Housing Insured Mortgage)
          Series C3 6.15% 10/1/41 1,590,000   1,591,431
          (Single Family Mortgage)
          Series A 5.50% 11/1/29 (FHA) 1,500,000   1,580,535
Puerto Rico Housing Finance Authority
          Subordinate (Capital Foundation of Modernization)
          5.125% 12/1/27 2,040,000 2,060,645
  5,232,611
Lease Revenue Bonds – 3.62%    
Aurora Certificates of Participation Refunding  
          Series A 5.00% 12/1/30   2,370,000 2,479,802
Colorado Educational & Cultural National
          Conference of State Legislatures Office Building
          Facilities Authority Revenue 5.25% 6/1/21 2,000,000 2,022,500
@ Conejos & Alamosa Counties School #11J
          Certificates of Participation 6.50% 4/1/11 520,000 520,629
El Paso County Certificates of Participation (Detention
          Facilities Project) Series B 5.00% 12/1/27 (AMBAC) 1,500,000 1,527,780
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.25% 7/1/33 1,475,000 1,415,499
        •Series M-2 5.50% 7/1/35 (AMBAC) 1,000,000 1,028,500
  8,994,710
Local General Obligation Bonds – 15.03%
Adams & Arapahoe Counties Joint School
          District #28J (Aurora) 6.00% 12/1/28 2,500,000 2,882,375
Arapahoe County Water & Wastewater
          Public Improvement District Refunding
          Series A 5.125% 12/1/32 (NATL-RE) 2,555,000 2,561,643

26
 

          Principal amount      Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
Boulder Larimer & Weld Counties
          (St. Vrain Valley School District #1J)
          5.00% 12/15/33 $ 2,500,000 $ 2,597,225
Denver City & County Justice System
          5.50% 8/1/16 5,000,000 5,974,702
          (Facilities & Zoo) 5.00% 8/1/19 1,020,000 1,146,245
Denver City & County School District #1
          Series A 5.00% 12/1/29 960,000 1,034,035
Denver West Metropolitan District
          5.00% 12/1/33 (RADIAN) 1,400,000   1,111,838
Douglas County School District #1  
          (Douglas & Elbert Counties) Series B
          5.00% 12/15/24 2,355,000 2,547,969
El Paso County School District #2 (Harrison)
            5.00% 12/1/27 (NATL-RE) 2,115,000 2,204,020
Garfield County School District #2
          5.00% 12/1/25 (AGM) (FSA)   3,280,000 3,526,128
Grand County School District #2 (East Grand)  
          5.25% 12/1/25 (FSA) 2,485,000   2,716,577
Gunnison Watershed School District #1J
          Series 2009 5.25% 12/1/33 1,400,000 1,479,408
Jefferson County School District #R-001
          5.25% 12/15/24 2,500,000 2,952,950
La Plata County School District #9-R (Durango)
          5.125% 11/1/24 (NATL-RE) 1,000,000 1,067,620
@ North Range Metropolitan
          District #1 4.50% 12/15/31 (ACA) 1,500,000 1,040,025
          District #2 5.50% 12/15/37 1,200,000 839,160
Sand Creek Metropolitan District Refunding & Improvement
          5.00% 12/1/31 (XLCA) 500,000 422,480
Weld County School District #4
          5.00% 12/1/19 (AGM) (FSA) 1,085,000 1,245,667
37,350,067
§Pre-Refunded Bonds – 15.11%
Boulder County Hospital Revenue
          (Development Longmont United Hospital Project)
          6.00% 12/1/30-10 (RADIAN) 1,500,000 1,564,710

27
 

Statements of net assets
Delaware Tax-Free Colorado Fund
 
          Principal amount      Value
Municipal Bonds (continued)          
§Pre-Refunded Bonds (continued)
Colorado Educational & Cultural Facilities
          Authority Revenue
          (Littleton Academy Charter School Project)
          6.125% 1/15/31-12 $ 2,000,000 $ 2,201,620
          (Stargate Charter School Project) 6.125% 5/1/33-13 2,000,000 2,314,740
          (University of Denver Project)
          Series A 5.00% 3/1/27-12 (NATL-RE) 5,000,000 5,433,599
• Colorado Health Facilities Authority Revenue
          (Adventist Health/Sunbelt) 5.125% 11/15/24-16 75,000 89,043
Douglas County School District #1  
          (Douglas & Elbert Counties)
          Series B 5.125% 12/15/25-12 (AGM) (FSA) 2,000,000   2,236,400
El Paso County Certificates of Participation
          (Judicial Building Project)    
          Series A 5.00% 12/1/27-12 (AMBAC)   2,000,000 2,216,240
Fremont County School District #1 (Canon City)  
          5.00% 12/1/24-13 (NATL-RE) 1,735,000 1,989,178
Garfield Pitkin & Eagle County School
          District #1 (Roaring Fork County)
          Series A 5.00% 12/15/27-14 (AGM) (FSA) 1,500,000 1,752,075
  Lincoln Park Metropolitan District 7.75% 12/1/26-11 2,500,000 2,816,575
Loveland Special Improvements District #1
          7.50% 7/1/29-10 4,980,000 5,196,778
North Range Metropolitan District #1
          7.25% 12/15/31-11 3,385,000 3,761,514
Northwest Parkway Public Highway Authority
          Series A 5.25% 6/15/41-11 (AGM) (FSA) 3,150,000 3,405,371
Puerto Rico Commonwealth Series A 5.25% 7/1/30-16 1,235,000 1,473,516
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.25% 7/1/33-14 25,000 28,959
University of Colorado Enterprise System Revenue
          Refunding Series 2001A 5.375% 6/1/26-11 1,000,000 1,062,980
37,543,298

28
 

          Principal amount      Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds – 8.56%
Aspen Sales Tax Revenue (Parks & Open Spaces)
          Series B 5.25% 11/1/23 (AGM) (FSA) $ 2,040,000 $ 2,209,565
@ Baptist Road Rural Transportation Authority
          Sales & Use Tax Revenue 5.00% 12/1/26 2,000,000 1,300,080
Park Meadows Business Improvement District
            Shared Sales Tax Revenue
          5.30% 12/1/27 950,000 834,452
          5.35% 12/1/31 720,000 610,870
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series K 5.00% 7/1/30 2,200,000   2,086,788
Puerto Rico Commonwealth Infrastructure Financing
          Authority Special Tax Revenue Series B 5.00% 7/1/46 1,200,000   1,064,820
Puerto Rico Sales Tax Financing Corporation
           Revenue First Subordinate Series A  
         •5.00% 8/1/39 2,500,000 2,625,175
          5.25% 8/1/27 1,100,000 1,125,421
          5.75% 8/1/37     3,095,000 3,199,518
      ΩCapital Appreciation 6.75% 8/1/32 5,075,000 3,862,531
Regional Transportation District Sales Tax Revenue
          Series A 5.25% 11/1/18 2,000,000 2,346,580
21,265,800
State General Obligation Bonds – 6.09%
Guam Government Series A 7.00% 11/15/39 2,500,000 2,677,600
Puerto Rico Commonwealth Government Development
          Bank Senior Notes Series B
          5.00% 12/1/14 1,000,000 1,062,760
          5.00% 12/1/15 1,000,000 1,056,080
Puerto Rico Commonwealth Public Improvement
          Series A 5.25% 7/1/21 4,000,000 4,048,640
          Series C 6.00% 7/1/39 1,685,000 1,734,623
          Refunding Series A 5.25% 7/1/15 1,650,000 1,763,553
Puerto Rico Commonwealth
          Series A 5.25% 7/1/30 765,000 749,034
          Series B 5.00% 7/1/35 190,000 175,131
Virgin Islands Public Finance Authority Revenue
          (Gross Receipts Taxes Loan Note)
          5.00% 10/1/31 (ACA) 2,000,000 1,855,340
15,122,761

29
 

Statements of net assets
Delaware Tax-Free Colorado Fund
 
          Principal amount      Value
Municipal Bonds (continued)          
Transportation Revenue Bonds – 3.49%
Denver City & County Airport Revenue
          5.25% 11/15/36 $ 2,500,000 $ 2,576,575
          Series A 5.00% 11/15/25 (NATL-RE) (FGIC) 2,000,000 2,102,260
          Series B 5.00% 11/15/33 (XLCA) 4,000,000 3,988,680
  8,667,515
Water & Sewer Revenue Bonds – 2.26%
Colorado Springs Utilities Systems Improvement Revenue
          Series C 5.50% 11/15/48 3,250,000 3,411,004
Eagle River Water & Sanitation District Enterprise Revenue  
          5.00% 12/1/29 (ASSURED GTY) 250,000 263,003
            5.125% 12/1/39 (ASSURED GTY) 850,000 872,602
Pueblo Board Waterworks Revenue  
          5.00% 11/1/21 (AGM) (FSA) 1,000,000   1,069,070
    5,615,679
Total Municipal Bonds (cost $239,825,572)   246,100,406
     
  Number of shares
Short-Term Investment – 1.02%    
Money Market Instrument – 1.02%
Dreyfus Cash Management Fund 2,536,650 2,536,650
Total Short-Term Investment (cost $2,536,650) 2,536,650
                     
Total Value of Securities – 100.09%
(cost $242,362,222) 248,637,056
Liabilities Net of Receivables and
Other Assets – (0.09%) (219,936 )
Net Assets Applicable to 22,838,222
Shares Outstanding – 100.00% $ 248,417,120
                     
Net Asset Value – Delaware Tax-Free Colorado Fund
Class A ($232,516,628 / 21,379,748 Shares)   $10.88
Net Asset Value – Delaware Tax-Free Colorado Fund
Class B ($2,023,024 / 185,865 Shares) $10.88
Net Asset Value – Delaware Tax-Free Colorado Fund
Class C ($13,877,468 / 1,272,609 Shares) $10.90

30
 

         
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par) $ 246,563,644
Undistributed net investment income 6,252
Accumulated net realized loss on investments (4,427,610 )
Net unrealized appreciation of investments 6,274,834
Total net assets $ 248,417,120
 
@ Illiquid security. At February 28, 2010, the aggregate amount of illiquid securities was $3,699,894, which represented 1.49% 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.”
Ω Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
•
Variable rate security. The rate shown is the rate as of February 28, 2010.
 
Summary of abbreviations:
ACA — Insured by American Capital Access
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
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
GNMA — Government National Mortgage Association collateral
NATL-RE — Insured by the National Public Finance Guarantee Corporation
RADIAN — Insured by Radian Asset Assurance
XLCA — Insured by XL Capital Assurance
 
31
 

Statements of net assets
Delaware Tax-Free Colorado Fund
 
 
Net Asset Value and Offering Price Per Share –
       Delaware Tax-Free Colorado Fund     
Net asset value Class A (A) $ 10.88
Sales charge (4.50% of offering price) (B) 0.51
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
 
32
 

Delaware Tax-Free Idaho Fund February 28, 2010 (Unaudited)

          Principal amount      Value
Municipal Bonds – 97.33%          
Corporate Revenue Bonds – 4.52%
Meridian Economic Industrial Development Revenue
          (Hi-Micro Project) 5.85% 8/15/11 (AMT)   $ 660,000   $ 662,132
Nez Perce County Pollution Control Revenue
          (Potlatch Project) 6.00% 10/1/24 2,535,000 2,407,312
Power County Pollution Control Revenue  
          (FMC Project) 5.625% 10/1/14 2,475,000 2,462,501
5,531,945
Education Revenue Bonds – 9.56%  
  Boise State University Revenue
          5.00% 4/1/17 (AMBAC) 500,000 533,215
          Series A 4.25% 4/1/32 (NATL-RE) 1,500,000 1,455,960
          Series A 5.00% 4/1/18 (NATL-RE) (FGIC) 1,500,000 1,601,265
          Series A 5.00% 4/1/39 1,000,000 1,042,260
          Un-Refunded Series 07 5.375% 4/1/22 (FGIC) 15,000 15,805
Idaho Housing & Financing Association Nonprofit
          Facilities Revenue (North Star Charter School Project)
          Series A 9.50% 7/1/39 1,000,000 1,142,630
Idaho State University Revenue Refunding & Improvement  
          5.00% 4/1/20 (AGM) 1,130,000 1,214,400
          5.00% 4/1/23 (AGM) 2,115,000 2,193,740
University of Idaho (General Refunding)
          Series A 5.00% 4/1/21 (AMBAC) 1,150,000 1,219,932
         •Series B 4.50% 4/1/41 (AGM) 1,000,000 1,052,140
University of Puerto Rico Revenue
          Series Q 5.00% 6/1/36 250,000 218,320
11,689,667
Electric Revenue Bonds – 1.38%
Boise-Kuna Irrigation District Revenue
          (Arrowrock Hydroelectric Project) 6.30% 6/1/31 1,000,000 1,075,120
Puerto Rico Electric Power Authority Revenue
          Series TT 5.00% 7/1/37 210,000 200,651
          Series WW 5.50% 7/1/38 400,000 405,040
1,680,811
Health Care Revenue Bonds – 1.81%
Idaho Health Facilities Authority Revenue
          (St. Luke’s Medical Center Project) 6.75% 11/1/37 1,000,000 1,100,480
          (Trinity Health Credit Group) Series B 6.125%12/1/28 1,000,000 1,113,470
2,213,950

33
 

Statements of net assets
Delaware Tax-Free Idaho Fund
 
          Principal amount      Value
Municipal Bonds (continued)          
Housing Revenue Bonds – 7.00%
Idaho Housing Agency Single Family Mortgage Revenue
    Series A 6.05% 7/1/13 (AMBAC) (FHA) (VA) (AMT) $ 15,000 $ 15,022
    Series A 6.10% 7/1/16 (FHA) (VA) (AMT) 25,000 25,034
    Series B 6.45% 7/1/15 (AMT) 10,000 10,016
    Series C-2 6.35% 7/1/15 (AMT) 10,000 10,015
    Series E 6.35% 7/1/15 (FHA) (AMT) 20,000 20,030
    Series G-2 6.15% 7/1/15 (FHA) (VA) (AMT) 75,000 75,105
Idaho Housing & Finance Association
    Single Family Mortgage Revenue
    Series B Class I 5.00% 7/1/37 (AMT) 815,000 815,293
    Series B Class I 5.50% 7/1/38 985,000 1,023,582
    Series C Class II 4.95% 7/1/31 1,000,000 1,011,130
    Series C Class III 5.35% 1/1/25 (AMT) 225,000 229,082
    Series D Class III 5.45% 7/1/23 (AMT) 795,000 814,454
    Series E 4.85% 7/1/28 (AMT) 1,500,000 1,483,739
    Series E Class III 4.875% 1/1/26 (AMT) 145,000 145,207
    Series E Class III 5.00% 1/1/28 (AMT) 885,000 860,406
    Series I Class I 5.45% 1/1/39 (AMT) 1,000,000 1,018,440
Puerto Rico Housing Finance Authority Subordinate-
    Capital Foundation Modernization
    5.125% 12/1/27 1,000,000 1,010,120
8,566,675
Lease Revenue Bonds – 3.61%
Boise City Certificate of Participation
    5.375% 9/1/20 (NATL-RE) (FGIC) (AMT) 2,100,000 2,106,573
Boise City Revenue Series A 5.375% 12/1/31 (NATL-RE) 500,000 513,515
Idaho State Building Authority Revenue
    Series A 5.00% 9/1/43 (XLCA) 1,000,000 1,005,260
    Series B 5.00% 9/1/21 (NATL-RE) 750,000 790,568
4,415,916
Local General Obligation Bonds – 21.59%
Ada & Canyon Counties Joint School District #2 Meridian
    (School Board Guaranteed Program)
    4.50% 7/30/22 1,500,000 1,663,695
    4.75% 2/15/20 1,000,000 1,084,990
    5.50% 7/30/16 1,305,000 1,565,426

34
 

          Principal amount      Value
Municipal Bonds (continued)          
Local General Obligation Bonds (continued)
Bannock County School District #025
          (Pocatello School Board Guaranteed Program)  
          5.00% 8/15/15 $ 1,040,000 $ 1,189,510
          5.00% 8/15/16 1,100,000 1,239,315
Boise City Independent School District
          5.00% 8/1/24 (AGM)   1,500,000 1,661,895
Canyon County School District #132 Caldwell
          5.00% 7/30/15 (NATL-RE) (FGIC) 2,000,000 2,273,700
          Class A 5.00% 9/15/22 (AGM)   1,725,000 1,953,149
          Class A 5.00% 9/15/23 (AGM) 1,810,000   2,037,046
Idaho Bond Bank Authority Revenue Series A
          5.00% 9/15/28 1,000,000   1,093,980
          5.25% 9/15/26 2,000,000 2,267,020
Lemhi County 5.20% 8/1/27 (AGM) 2,145,000 2,239,595
Nampa Series B 5.00% 8/1/21 (NATL-RE) (FGIC) 2,475,000 2,634,414
Power & Cassia Counties Joint School District #381
          American Falls 5.00% 8/1/17 1,155,000 1,225,143
Twin Falls County School District #413 Filer
          5.25% 9/15/25 2,000,000 2,280,200
  26,409,078
§Pre-Refunded Bonds – 14.42%
Ada & Canyon Counties Joint School District #2 Meridian
          (School Board Guaranteed Program)
          5.00% 7/30/20-12 1,555,000 1,714,325
          5.125% 7/30/19-12 1,005,000 1,093,510
          Un-Refunded 5.00% 7/30/20-12 600,000 651,060
Boise State University Revenue Refunding & Improvement
          5.125% 4/1/31-12 (FGIC) 1,000,000 1,093,830
          5.375% 4/1/22-12 (FGIC) 985,000 1,082,545
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue
          Series D 5.25% 7/1/38-12 1,000,000 1,098,220
          Series Y 5.00% 7/1/36-16 1,250,000 1,472,863
Puerto Rico Commonwealth Infrastructure Financing
          Authority Revenue Series A 5.375% 10/1/24-10 1,750,000 1,822,100
Puerto Rico Commonwealth Public Improvement Revenue
          Series A 5.125% 7/1/31-11 1,010,000 1,075,822

35
 

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 $ 1,117,450
          Series NN 5.125% 7/1/29-13 105,000 119,315
          Series RR 5.00% 7/1/35-15 (FGIC) 1,545,000 1,810,987
Puerto Rico Public Buildings Authority Revenue
          (Guaranteed Government Facilities)
          Series I 5.50% 7/1/23-14 1,000,000 1,168,860
University of Idaho Revenue
          (Student Fee Housing Improvements Project)
          5.25% 4/1/31-11 (FGIC) 2,195,000 2,312,805
17,633,692
Special Tax Revenue Bonds – 17.08%
Boise Urban Renewal Agency Parking Revenue
          (Tax Increment)
          Series A 6.125% 9/1/15 1,160,000 1,174,535
          Series B 6.125% 9/1/15 950,000 961,904
Bonner County Local Improvement District #93-1
          6.50% 4/30/10 60,000 60,226
Coeur D’Alene Local Improvement District #6
          Series 1996 6.05% 7/1/10 90,000 91,246
          Series 1997 6.10% 7/1/12 40,000 40,488
          Series 1998 6.10% 7/1/14 45,000 45,452
Idaho Bond Bank Authority Revenue
          Series B 4.125% 9/15/36 (NATL-RE) 755,000 715,967
          Series B 5.00% 9/15/30 (NATL-RE) 725,000 766,630
          Series C 4.00% 9/15/29 1,320,000 1,316,423
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue
          Series K 5.00% 7/1/30 890,000 844,201
          Series W 5.50% 7/1/15 175,000 189,142
Puerto Rico Sales Tax Financing Corporation Revenue Series A
          5.25% 8/1/57 1,000,000 992,860
Ω Capital Appreciation-First Subordinate 6.75% 8/1/32 5,040,000 3,835,893
          First Subordinate
          5.25% 8/1/27 3,000,000 3,069,329
          5.50% 8/1/42 1,500,000 1,502,204
          5.75% 8/1/37 3,350,000 3,463,129

36
 

          Principal amount Value
Municipal Bonds (continued)               
Special Tax Revenue Bonds (continued)
Virgin Islands Public Finance Authority Revenue
          (Senior Lien-Matching Fund Loan Note) Series A
          5.25% 10/1/20 $ 500,000 $ 510,190
          5.25% 10/1/21 500,000 509,325
          5.25% 10/1/24 800,000 810,048
20,899,192
State General Obligation Bonds – 5.70%
Guam Government Series A 6.75% 11/15/29 1,565,000 1,659,776
Puerto Rico Commonwealth Government Development
            Bank Refunding Remarketed
          4.75% 12/1/15 (NATL-RE) 1,000,000 1,029,330
Puerto Rico Commonwealth Public Improvement
          Series A 5.25% 7/1/22 1,000,000 1,008,470
          Series C 6.00% 7/1/39 1,500,000 1,544,175
          Un-Refunded Series A 5.125% 7/1/31 1,815,000 1,734,360
6,976,111
Transportation Revenue Bonds – 7.93%
Idaho Housing & Finance Association Grant Revenue
          (Anticipated Federal Highway Trust)
          4.00% 7/15/17 500,000 546,545
          4.75% 7/15/19 1,410,000 1,583,881
          5.00% 7/15/24 (NATL-RE) 2,000,000 2,141,780
          5.25% 7/15/20 (ASSURED GTY) 2,750,000 3,136,266
          5.25% 7/15/25 (ASSURED GTY) 1,500,000 1,652,055
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Un-Refunded
          Series G 5.00% 7/1/33 690,000 641,472
9,701,999
Water & Sewer Revenue Bonds – 2.73%
Idaho Bond Bank Authority Revenue
          Series C 5.375% 9/15/38 1,000,000 1,077,340
Moscow Sewer Revenue 5.00% 11/1/22 (AGM) 2,175,000 2,265,828
3,343,168
Total Municipal Bonds (cost $113,787,659) 119,062,204

37
 

Statements of net assets
Delaware Tax-Free Idaho Fund
 
Number of shares      Value
Short-Term Investment – 1.41%
Money Market Instrument – 1.41%
          Dreyfus Cash Management Fund 1,727,684 $ 1,727,684
Total Short-Term Investment (cost $1,727,684) 1,727,684
 
Total Value of Securities – 98.74%
          (cost $115,515,343) 120,789,888
Receivables and Other Assets
          Net of Liabilities – 1.26% 1,544,617
Net Assets Applicable to 10,430,836  
          Shares Outstanding – 100.00% $ 122,334,505
 
Net Asset Value – Delaware Tax-Free Idaho Fund
          Class A ($93,004,765 / 7,928,338 Shares)     $11.73
Net Asset Value – Delaware Tax-Free Idaho Fund
          Class B ($3,014,065 / 257,425 Shares)   $11.71
Net Asset Value – Delaware Tax-Free Idaho Fund
          Class C ($26,315,675 / 2,245,073 Shares)   $11.72  
 
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par) $ 117,058,432
Distributions in excess of net investment income (11,301 )
Accumulated net realized gain on investments 12,829
Net unrealized appreciation of investments 5,274,545
Total net assets $ 122,334,505

§ Pre-Refunded bonds. Municipals that are generally backed or secured by U.S. Treasury bonds. For Pre-Refunded bonds, the stated maturity is followed by the year in which the bond is pre-refunded. See Note 8 in “Notes to financial statements.”
Ω
Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
• Variable rate security. The rate shown is the rate as of February 28, 2010.

38
 

 
Summary of abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
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
NATL-RE — Insured by the National Public Finance Guarantee Corporation
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)      $ 11.73
Sales charge (4.50% of offering price) (B) 0.55
Offering price $ 12.28

(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
 
39
 

Statements of net assets
Delaware Tax-Free New York Fund February 28, 2010 (Unaudited)

          Principal amount      Value
Municipal Bonds – 95.98%          
Corporate Revenue Bonds – 7.93%
Jefferson County Industrial Development Agency  
          Solid Waste Disposal (International Paper)
          Series A 5.20% 12/1/20 (AMT) $ 350,000   $ 343,473
Liberty Development Corporation Revenue  
          (Goldman Sachs Headquarters) 5.25% 10/1/35 500,000   507,539
Nassau County Tobacco Settlement Refunding
          (Asset-Backed) Series A-3 5.125% 6/1/46 500,000 403,995
New York City Industrial Development Agency Revenue
          (Brooklyn Navy Yard Cogen Partners)
          5.75% 10/1/36 (AMT) 450,000 346,001
• New York City Industrial Development Agency
          Special Facilities Revenue  
          (American Airlines-JFK International Airport)
          7.625% 8/1/25 (AMT) 250,000 246,465
          7.75% 8/1/31 (AMT) 250,000 250,898
New York Energy Research & Development Authority
          Pollution Control Revenue Refunding
          (Central Hudson Gas)
          Series A 5.45% 8/1/27 (AMBAC) 500,000 505,224
Suffolk County Industrial Development Agency Revenue
          (Keyspan-Port Jefferson Energy Center)
          5.25% 6/1/27 (AMT) 250,000 246,078
TSASC Tobacco Settlement Refunding (Asset-Backed)
          Series 1 5.125% 6/1/42 250,000 203,520
3,053,193
Education Revenue Bonds – 22.90%
Albany Industrial Development Agency Civic Facilities
          Revenue (Brighter Choice Charter School)
          Series A 5.00% 4/1/37 250,000 199,810
Amherst Industrial Development Agency Civic Facilities
          Revenue (UBF Faculty Student Housing)
          Series A 5.75% 8/1/30 (AMBAC) 200,000 203,020
Dutchess County Industrial Development Agency
          (Marist College) 5.00% 7/1/20 500,000 509,840
Hempstead Town Local Development Corporation
          Revenue (Molloey College Project) 5.75% 7/1/23 400,000 424,916

40
 

          Principal amount Value
Municipal Bonds (continued)               
Education Revenue Bonds (continued)
Madison County Industrial Development Agency Civic
          Facility Revenue (Colgate University Project)
          Series A 5.00% 7/1/39 (NATL-RE) $ 400,000 $ 405,588
New York State Dormitory Authority Revenue
          (Columbia University) Series A 5.00% 7/1/23 500,000 528,739
          (Pratt Institute) Series C 5.125% 7/1/39 (ASSURED GTY)   300,000 309,078
        •Series B 5.25% 11/15/23 250,000 271,738
          Un-Refunded Series B 7.50% 5/15/11 125,000   135,018
New York State Dormitory Authority Revenue    
          Non-State Supported Debt
          (Brooklyn Law School) 5.75% 7/1/33 340,000 348,367
          (Cornell University) Series A
          4.75% 7/1/29 100,000 104,960
          5.00% 7/1/34 170,000 180,078
          5.00% 7/1/39 500,000 525,304
          (Ithaca College) 5.00% 7/1/16 400,000 441,108
          (Manhattan Marymount) 5.00% 7/1/24 350,000 354,148
          (Mt. Sinai School Medicine) 5.125% 7/1/39 500,000 501,255
          (New York University) Series A 5.25% 7/1/48 400,000 411,680
          (Rockefeller University) Series A 5.00% 7/1/27 250,000   278,085
          (Teachers College) 5.50% 3/1/39 250,000 261,008
          (University of Rochester)
          Series A 5.125% 7/1/39 250,000 258,713
       ΩSeries A-2 4.375% 7/1/20 250,000 242,690
Onondaga County Trust for Cultural Resources Revenue
          (Syracuse University Project)
          Series B 5.00% 12/1/19 350,000 406,473
St. Lawrence County Industrial Development Agency
          Civic Faculty Revenue
          (St. Lawrence University) Series A 5.00% 10/1/16 500,000 566,794
Suffolk County Industrial Development Agency
          Civic Faculty Revenue Refunding
          (New York Institute of Technology Project)
          Series A 5.00% 3/1/26 600,000 601,841
Yonkers Industrial Development Agency
          Civic Faculty Revenue
          (Sarah Lawrence) Series A 6.00% 6/1/29 325,000 340,243
8,810,494

41
 

Statements of net assets
Delaware Tax-Free New York Fund
 
          Principal amount      Value
Municipal Bonds (continued)          
Electric Revenue Bonds – 2.97%
Long Island Power Authority New York Electric System Revenue
          Series A 5.75% 4/1/39 $ 350,000 $ 381,531
          Series B 5.75% 4/1/33 250,000 272,133
Puerto Rico Electric Power Authority Revenue
          Series TT 5.00% 7/1/37 100,000 95,548
          Series WW 5.00% 7/1/28 190,000 189,761
          Series WW 5.50% 7/1/38 200,000 202,520
1,141,493
Health Care Revenue Bonds – 8.54%
Albany Industrial Development Agency Civic Facility
          Revenue (St. Peter’s Hospital Project)
          Series A 5.25% 11/15/32 500,000 472,705
East Rochester Housing Authority Revenue Refunding
          (Senior Living-Woodland Village Project) 5.50% 8/1/33 200,000 165,880
New York Dormitory Authority Revenue
          (Catholic Health Long Island Obligation Group)
          5.00% 7/1/27 400,000 380,368
          (Chapel Oaks) 5.45% 7/1/26 (LOC, Allied Irish Bank) 450,000 452,043
          (Millard Fillmore Hospital) 5.375% 2/1/32 (AMBAC) (FHA) 225,000 225,005
          (Winthrop South Nassau Hospital) Series B 5.50% 7/1/23 500,000 507,275
New York Dormitory Authority Revenue
          Non-State Supported Debt (Memorial Sloan-Kettering)
          Series 1 5.00% 7/1/35 225,000 229,397
          (North Shore Long Island Jewish Group)
          Series A 5.50% 5/1/37 500,000 507,514
          (Orange Regional Medical Center) 6.125% 12/1/29 365,000 346,352
3,286,539
Housing Revenue Bonds – 1.95%
New York City Housing Development Multifamily Housing
          Revenue Series G-1 4.875% 11/1/39 (AMT) 250,000 242,543
New York State Housing Finance Agency Revenue
          (Affordable Housing) Series A 5.25% 11/1/41 500,000 507,235
749,778
Lease Revenue Bonds – 8.94%
Battery Park City Authority Revenue Series A 5.00% 11/1/26 250,000 264,428
Erie County Industrial Development Agency
          School Faculty Revenue (City School District of Buffalo)
          Series A 5.25% 5/1/25 500,000 545,995

42
 

          Principal amount Value
Municipal Bonds (continued)               
Lease Revenue Bonds (continued)
Hudson Yards Infrastructure Revenue
          Series A 5.00% 2/15/47 $ 500,000 $ 478,430
New York City Industrial Development Agency
          Special Airport Facility Revenue
          (Airis JFK I Project) Series A 5.50% 7/1/28 (AMT) 500,000   414,140
Onondaga County Industrial Development Authority  
          Revenue Subordinated  
          (Air Cargo) 7.25% 1/1/32 (AMT) 500,000 456,240
Tobacco Settlement Financing Authority
          Revenue (Asset-Backed) Series B-1C
          5.50% 6/1/20 200,000 215,122
          5.50% 6/1/21 500,000 536,790
United Nations Development Corporation
          Revenue Refunding Series A 5.00% 7/1/26 500,000 527,465
3,438,610
Local General Obligation Bonds – 3.17%
New York City
          Series D 5.00% 11/1/34 125,000 127,498
          Subordinated Series C-1 5.00% 10/1/19 500,000 556,085
          Subordinated Series I-1 5.375% 4/1/36 500,000 536,980
1,220,563
§Pre-Refunded Bonds – 6.27%
Albany Parking Authority Revenue
          Series A 5.625% 7/15/25-11 280,000 303,100
New York Dormitory Authority Revenue
          (North Shore Long Island Jewish Group Project)
          5.50% 5/1/33-13 500,000 572,085
          Pre-Refunding Series B 7.50% 5/15/11-10 75,000 76,128
Puerto Rico Commonwealth Highway &
          Transportation Authority Revenue
          Series Y 5.50% 7/1/36-16 475,000 573,781
Puerto Rico Commonwealth Series B 5.25% 7/1/32-16 155,000 184,935
Puerto Rico Electric Power Authority Revenue
          Series II 5.25% 7/1/31-12 500,000 558,725
          Series NN 5.125% 7/1/29-13 125,000 142,041
2,410,795

43
 

Statements of net assets
Delaware Tax-Free New York Fund
 
Principal amount      Value
Municipal Bonds (continued)          
Special Tax Revenue Bonds – 20.51%
          Brooklyn Arena Local Development Corporation Pilot
          Revenue (Barclays Center Project) 6.50% 7/15/30 $ 500,000 $ 543,065
Metropolitan Transportation Authority Revenue
          (Dedicated Tax Fund) Series B 5.00% 11/15/34 500,000 521,875
New York City Industrial Development Agency Revenue
          (Yankee Stadium Project-Pilot) 5.00% 3/1/46 (FGIC) 300,000 280,587
New York City Transitional Finance Authority Revenue
          (Subordinated Future Tax Secured)
          Series B 5.00% 11/1/18 500,000 568,989
New York City Trust for Cultural Resources Revenue Refunding
          (American Museum of National History)
          Series A 5.00% 7/1/44 (NATL-RE) 250,000 253,788
          (Museum of Modern Art) Series 1A 5.00% 4/1/31 250,000 263,928
New York Dormitory Authority State Personal Income Tax
          Revenue Series C 5.00% 3/15/15 250,000 290,018
New York Dormitory Authority State Supported Debt
          Revenue (Consolidated Services Contract)
          5.00% 7/1/17 (AGM) (FSA) 500,000 569,544
New York Sales Tax Asset Receivables
          Series A 5.25% 10/15/27 (AMBAC) 500,000 556,344
New York State Thruway Authority  
          (State Personal Income Tax Revenue-Education)
          Series A 5.00% 3/15/38 500,000 520,675
New York State Urban Development Revenue  
          Personal Income Tax Series A-1 5.00% 12/15/22 250,000 277,760
Puerto Rico Commonwealth Highway & Transportation
          Authority Revenue Series K 5.00% 7/1/30 235,000 222,907
Puerto Rico Commonwealth Infrastructure Financing
          Authority Revenue Series B 5.00% 7/1/15 250,000 261,915
Puerto Rico Sales Tax Financing Corporation Revenue Series A
          5.25% 8/1/57 325,000 322,680
        ΩCapital Appreciation-First Subordinate 6.75% 8/1/32 510,000 388,156
          First Subordinate
         •5.00% 8/1/39 500,000 525,035
          5.50% 8/1/42 500,000 500,735
          5.75% 8/1/37 485,000 501,378
Schenectady Metroplex Development Authority Revenue  
          Series A 5.375% 12/15/21 500,000 523,040
  7,892,419

44
 


Principal amount Value
Municipal Bonds (continued)
State General Obligation Bonds – 4.70%          
          Guam Government Series A 7.00% 11/15/39 $ 395,000      $ 423,061
New York State Series A  
          5.00% 3/1/38 500,000 519,730
          5.00% 2/15/39 250,000 260,825
Puerto Rico Commonwealth Government Development
          Bank Refunding Remarketed 4.75% 12/1/15 (NATL-RE) 230,000 236,746
Puerto Rico Commonwealth Public Improvement
          Refunding Series C 6.00% 7/1/39 270,000 277,952
Puerto Rico Commonwealth Series B 5.25% 7/1/32 95,000 91,840
1,810,154
Transportation Revenue Bonds – 6.22%
Albany Parking Authority Revenue Series A 5.625% 7/15/25 220,000 223,984
Metropolitan Transportation Authority Revenue
          Series 2008C 6.50% 11/15/28 200,000 229,970
           •Series B 5.00% 11/15/27 200,000 222,348
          Series F 5.00% 11/15/15 150,000 170,541
New York State Thruway Authority General Revenue Series H
          5.00% 1/1/14 (NATL-RE) 500,000 560,590
          5.00% 1/1/15 (NATL-RE) 250,000 282,010
Port Authority New York & New Jersey
          (Consolidated-One Hundred Fifty-Third) 5.00% 7/15/35 250,000 260,235
Triborough Bridge & Tunnel Authority Revenue
          Series C 5.00% 11/15/24 200,000 220,516
         •Subordinated Series B-1 5.00% 11/15/25 200,000 222,652
2,392,846
Water & Sewer Revenue Bonds – 1.88%
New York City Municipal Water Finance Authority
          Water & Sewer System Revenue
          (Fiscal 2009) Series A 5.75% 6/15/40 200,000 224,208
            (Second General Resolution) Series FF-2 5.50% 6/15/40 250,000 275,203
New York State Environmental Facilities Corporation
          State Clean Water & Drinking Water Revolving Funds
          (New York City Municipal Project)  
          Subordinated Series B 5.00% 6/15/21 200,000 222,594
722,005
Total Municipal Bonds (cost $35,086,159) 36,928,889

45
 

Statements of net assets
Delaware Tax-Free New York Fund
 
Principal amount Value
Short-Term Investments – 4.16%               
•Variable Rate Demand Notes – 4.16%
          New York City Industrial Development Agency Civic Facility
                    Revenue Remarketed (New York Law School Project)
                    Series B-2 0.40% 7/1/36 $ 300,000   $ 300,000
New York City Subseries A-7 0.14% 8/1/20 1,300,000 1,300,000
Total Short-Term Investments (cost $1,600,000) 1,600,000
 
Total Value of Securities – 100.14%
          (cost $36,686,159)   38,528,889
Liabilities Net of Receivables
          and Other Assets – (0.14%) (53,637 )
Net Assets Applicable to 3,582,593
          Shares Outstanding – 100.00%   $ 38,475,252
 
Net Asset Value – Delaware Tax-Free New York Fund  
          Class A ($28,593,584 / 2,660,807 Shares)     $10.75
Net Asset Value – Delaware Tax-Free New York Fund  
          Class B ($829,666 / 77,373 Shares)       $10.72
Net Asset Value – Delaware Tax-Free New York Fund  
          Class C ($9,052,002 / 844,413 Shares)     $10.72
 
Components of Net Assets at February 28, 2010:
Shares of beneficial interest (unlimited authorization – no par)   $ 36,641,785
Distributions in excess of net investment income       (651 )
Accumulated net realized loss on investments (8,612 )
Net unrealized appreciation of investments 1,842,730  
Total net assets   $ 38,475,252  
 
Ω Step coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
§ 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, 2010.

46
 

 
Summary of abbreviations:
AGM — Insured by Assured Guaranty Municipal Corporation
AMBAC — Insured by the AMBAC Assurance Corporation
AMT — Subject to Alternative Minimum Tax
ASSURED GTY — Insured by the Assured Guaranty Corporation
FHA — Insured by the Federal Housing Administration
FGIC — Insured by the Financial Guaranty Insurance Company
FSA — Insured by Financial Security Assurance
LOC — Letter of Credit
NATL-RE — Insured by the National Public Finance Guarantee Corporation
 
Net Asset Value and Offering Price Per Share –  
       Delaware Tax-Free New York Fund
Net asset value Class A (A) $ 10.75
Sales charge (4.50% of offering price) (B)   0.51
Offering price              $ 11.26
 
(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
 
47
 

Statements of operations
Six Months Ended February 28, 2010 (Unaudited)
  
Delaware Tax-Free      Delaware Tax-Free      Delaware Tax-Free
Arizona Fund California Fund Colorado Fund
Investment Income:
       Interest $ 2,963,871 $ 2,172,084 $ 6,324,731
Expenses:  
       Management fees 310,592 222,222 677,425
       Distribution expenses – Class A 139,312 78,761 288,697
       Distribution expenses – Class B 26,633   22,247 12,146
       Distribution expenses – Class C 37,629 66,524 63,967
       Dividend disbursing and transfer agent
              fees and expenses 33,733 27,902 65,802
       Accounting and administration expenses 25,374 16,134 49,183
       Legal fees 11,783 7,175 17,875
       Audit and tax 9,525 8,107 13,117
       Reports and statements to shareholders 8,557 5,956 17,109
       Registration fees 7,457 3,302 4,231
       Pricing fees 3,910 3,842 4,390
       Trustees’ fees 3,744 2,424 7,405
       Insurance fees 2,112 1,356 4,016
       Custodian fees 1,318 862   2,509
       Consulting fees 857 544 1,607
       Dues and services 308 216 641
       Trustees’ expenses 276 177 573
  623,120 467,751 1,230,693
       Less fees waived (70,644 ) (68,268 ) (48,381 )
       Total operating expenses 552,476 399,483 1,182,312
Net Investment Income 2,411,395   1,772,601 5,142,419
 
Net Realized and Unrealized Gain
       on Investments:
       Net realized gain on investments 853,830 123,716 677,070
       Net change in unrealized appreciation/
              depreciation of investments 1,943,371 3,067,593 5,605,838
Net Realized and Unrealized Gain
       on Investments 2,797,201 3,191,309 6,282,908
 
Net Increase in Net Assets    
       Resulting from Operations $ 5,208,596 $ 4,963,910 $ 11,425,327  

See accompanying notes
 
48
 

Delaware Tax-Free      Delaware Tax-Free
Idaho Fund New York Fund
Investment Income:
       Interest $ 2,655,253 $ 814,825
Expenses:
       Management fees 315,318 92,277
       Distribution expenses – Class A 111,007 31,748
       Distribution expenses – Class B 16,033 4,165
       Distribution expenses – Class C 111,704 35,503
       Dividend disbursing and transfer agent
              fees and expenses 30,265 18,673
       Accounting and administration expenses 22,891 6,699
       Legal fees 10,304 3,264
       Audit and tax 8,661 6,283
       Reports and statements to shareholders 7,947 3,094
       Pricing fees 4,380 4,468
       Trustees’ fees 3,447 1,004
       Registration fees 3,010 5,194
       Insurance fees 1,650 426
       Custodian fees 1,337 494
       Consulting fees 644 168
       Trustees’ expenses 257 71
       Dues and services 203 55
  649,058 213,586
       Less fees waived (22,204 ) (49,598 )
       Total operating expenses 626,854 163,988
Net Investment Income 2,028,399 650,837
 
Net Realized and Unrealized Gain
       on Investments:
       Net realized gain on investments 99,017 4,710
       Net change in unrealized appreciation/
              depreciation of investments 2,239,984 910,946
Net Realized and Unrealized Gain
       on Investments 2,339,001     915,656
 
Net Increase in Net Assets  
       Resulting from Operations $ 4,367,400 $ 1,566,493

See accompanying notes
 
49
 

Statements of changes in net assets
Delaware Tax-Free Arizona Fund
 
Six Months      Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Increase in Net Assets from Operations:
       Net investment income $ 2,411,395 $ 4,979,083
       Net realized gain on investments 853,830 676,245
       Net change in unrealized
              appreciation/depreciation of investments 1,943,371 283,443
       Net increase in net assets resulting from operations 5,208,596 5,938,771
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (2,197,987 ) (4,473,743 )
              Class B (85,095 ) (247,800 )
              Class C (120,160 ) (235,244 )
  (2,403,242 ) (4,956,787 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 2,806,733 8,072,718
              Class B — 20,443
              Class C 665,269 1,098,183
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 1,087,466 2,209,302
              Class B 45,031 128,925
              Class C   74,068   146,249
4,678,567   11,675,820  

50
 

Six Months      Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (11,453,562 ) $ (19,633,059 )
              Class B (1,993,380 ) (3,235,890 )
              Class C (593,873 ) (2,787,126 )
(14,040,815 ) (25,656,075 )
Decrease in net assets derived from
       capital share transactions (9,362,248 ) (13,980,255 )
Net Decrease in Net Assets (6,556,894 ) (12,998,271 )
 
Net Assets:
       Beginning of period 127,454,947 140,453,218
       End of period1 $ 120,898,053   $ 127,454,947
               
       1Including undistributed net investment income $ 26,197 $ 26,196  

See accompanying notes
 
51
 

Statements of changes in net assets
Delaware Tax-Free California Fund
 
Six Months Year
Ended      Ended
2/28/10 8/31/09
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 1,772,601 $ 3,401,520
       Net realized gain on investments 123,716 709,018
       Net change in unrealized
              appreciation/depreciation of investments 3,067,593 (2,723,629 )
       Net increase in net assets resulting from operations 4,963,910 1,386,909
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (1,434,393 ) (2,701,738 )
              Class B (84,594 ) (195,352 )
              Class C (253,021 ) (487,982 )
  (1,772,008 ) (3,385,072 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 5,441,784 8,313,126
              Class B 72,778 90,914
              Class C 1,073,161 2,115,521
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 816,057 1,547,832
              Class B 63,142   137,850
              Class C 175,416 358,106
  7,642,338   12,563,349  

52
 

Six Months      Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (5,113,300 ) $ (14,448,671 )
              Class B (1,322,228 ) (1,676,431 )
              Class C (1,806,384 ) (3,594,180 )
  (8,241,912 ) (19,719,282 )
Decrease in net assets derived from
       capital share transactions (599,574 ) (7,155,933 )
Net Increase (Decrease) in Net Assets 2,592,328 (9,154,096 )
 
Net Assets:
       Beginning of period 79,599,898 88,753,994
       End of period1 $ 82,192,226 $ 79,599,898
 
       1Including undistributed net investment income $ 18,787 $ 18,763  

See accompanying notes
 
53
 

Statements of changes in net assets
Delaware Tax-Free Colorado Fund
 
Six Months      Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Increase (Decrease) in Net Assets from Operations:
       Net investment income $ 5,142,419 $ 10,196,318
       Net realized gain on investments 677,070 3,397,919
       Net change in unrealized
              appreciation/depreciation of investments 5,605,838 (4,848,204 )
       Net increase in net assets resulting from operations 11,425,327 8,746,033
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (4,905,642 ) (9,697,369 )
              Class B (42,369 ) (116,434 )
              Class C (223,889 ) (355,221 )
  (5,171,900 ) (10,169,024 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 9,384,375 14,183,751
              Class B — 10,613
              Class C 2,684,725 2,881,769  
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 3,094,932   6,074,319
              Class B 19,977 50,248
              Class C   162,038   248,362
15,346,047 23,449,062

54
 

Six Months      Year
Ended Ended
2/28/10 8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (12,231,987 ) $ (27,122,635 )
              Class B (756,040 ) (1,264,891 )
              Class C (822,583 ) (1,437,234 )
  (13,810,610 ) (29,824,760 )
Increase (decrease) in net assets derived from
       capital share transactions 1,535,437 (6,375,698 )
Net Increase (Decrease) in Net Assets 7,788,864 (7,798,689 )
 
Net Assets:  
       Beginning of period 240,628,256 248,426,945
       End of period1 $ 248,417,120 $ 240,628,256
 
       1Including undistributed net investment income $ 6,252 $ 43,501  

See accompanying notes
 
55
 

Statements of changes in net assets
Delaware Tax-Free Idaho Fund
 
Six Months Year
Ended Ended
        2/28/10         8/31/09
(Unaudited)
Increase in Net Assets from Operations:
       Net investment income $ 2,028,399 $ 3,502,126
       Net realized gain on investments 99,017 242,232
       Net change in unrealized
              appreciation/depreciation of investments 2,239,984 2,073,940
       Net increase in net assets resulting from operations 4,367,400 5,818,298
  
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (1,677,579 ) (2,944,277 )
              Class B (48,447 ) (136,217 )
              Class C (339,141 ) (403,213 )
(2,065,167 ) (3,483,707 )
  
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 7,385,655 17,915,127
              Class B 9,917 63,569
              Class C 8,084,516 8,501,134
  
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 1,146,361 1,894,609
              Class B 34,269 98,426
              Class C 234,546 249,454
16,895,264 28,722,319

56
 

Six Months Year
Ended Ended
        2/28/10         8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (3,775,749 ) $ (7,521,138 )
              Class B (457,355 ) (1,954,363 )
              Class C (1,610,323 ) (1,450,880 )
  (5,843,427 ) (10,926,381 )
Increase in net assets derived from
       capital share transactions 11,051,837 17,795,938
Net Increase in Net Assets 13,354,070 20,130,529
  
Net Assets:
       Beginning of period 108,980,435 88,849,906
       End of period1 $ 122,334,505 $ 108,980,435
 
       1Including undistributed (distributions in excess of)
              net investment income $ (11,301 ) $ 5,851

See accompanying notes
 
57
 

Statements of changes in net assets
Delaware Tax-Free New York Fund
 
Six Months Year
Ended Ended
        2/28/10         8/31/09
(Unaudited)
Increase in Net Assets from Operations:
       Net investment income $ 650,837 $ 900,508
       Net realized gain on investments 4,710 190,585
       Net change in unrealized
              appreciation/depreciation of investments 910,946 482,416
       Net increase in net assets resulting from operations 1,566,493 1,573,509
 
Dividends and Distributions to Shareholders from:
       Net investment income:
              Class A (519,354 ) (738,485 )
              Class B (13,901 ) (39,735 )
              Class C (118,423 ) (116,762 )
(651,678 ) (894,982 )
 
Capital Share Transactions:
       Proceeds from shares sold:
              Class A 6,618,707 10,366,325
              Class B 9,343 47,828
              Class C 4,419,871 3,939,824
 
       Net asset value of shares issued upon reinvestment
              of dividends and distributions:
              Class A 305,790 403,783
              Class B 8,181 22,930
              Class C 77,572 62,861
11,439,464 14,843,551

58
 

Six Months Year
Ended Ended
        2/28/10         8/31/09
(Unaudited)
Capital Share Transactions (continued):
       Cost of shares repurchased:
              Class A $ (1,808,898 ) $ (3,831,875 )
              Class B (235,092 ) (593,493 )
              Class C (1,284,034 ) (585,220 )
  (3,328,024 ) (5,010,588 )
Increase in net assets derived from
       capital share transactions 8,111,440 9,832,963
Net Increase in Net Assets 9,026,255 10,511,490
 
Net Assets:
       Beginning of period 29,448,997 18,937,507
       End of period1 $ 38,475,252 $ 29,448,997
 
       1Including undistributed (distributions in excess of)
              net investment income $ (651 ) $ 3,746

See accompanying notes
 
59
 

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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
60
 

  Six Months Ended Year Ended
  2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05        
  (Unaudited)
  $11.090 $10.930 $11.070 $11.350 $11.560 $11.410
 
 
  0.222 0.431 0.444 0.465 0.467 0.468
  0.249 0.158 (0.140 ) (0.280 ) (0.210 ) 0.174
  0.471 0.589 0.304 0.185 0.257 0.642
 
 
  (0.221 ) (0.429 ) (0.444 ) (0.465 ) (0.467 ) (0.468 )
  — — — — — (0.024 )
  (0.221 ) (0.429 ) (0.444 ) (0.465 ) (0.467 ) (0.492 )
 
  $11.340 $11.090 $10.930 $11.070 $11.350 $11.560
 
  4.27% 5.64% 2.78% 1.63% 2.31% 5.74%
 
 
  $108,626 $113,689 $122,027 $125,636 $131,468 $134,874
  0.81% 0.75% 0.75% 0.76% 0.76% 0.80%
 
  0.93% 0.91% 0.91% 0.91% 0.91% 0.91%
  3.96% 4.07% 4.02% 4.11% 4.12% 4.07%
 
  3.84% 3.91% 3.86% 3.96% 3.97% 3.96%
  15% 27% 29% 9% 8% 3%

61
 

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 during all of the periods shown 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
  2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05        
  (Unaudited)
  $11.100   $10.940 $11.070 $11.360 $11.570 $11.420
 
 
  0.180 0.352 0.361 0.380 0.382 0.382
  0.249 0.158 (0.130 ) (0.290 ) (0.210 ) 0.174
  0.429 0.510 0.231 0.090 0.172 0.556
 
 
  (0.179 ) (0.350 ) (0.361 ) (0.380 ) (0.382 ) (0.382 )
  — — — — — (0.024 )
  (0.179 ) (0.350 ) (0.361 ) (0.380 ) (0.382 ) (0.406 )
 
  $11.350 $11.100 $10.940 $11.070 $11.360 $11.570
 
  3.88% 4.85% 2.10% 0.78% 1.54% 4.95%
 
 
  $4,708 $6,509 $9,620 $12,407 $16,413 $19,005
  1.56% 1.50% 1.50% 1.51% 1.51% 1.55%
 
  1.68% 1.66% 1.66% 1.66% 1.66% 1.66%
  3.21% 3.32% 3.27% 3.36% 3.37% 3.32%
 
  3.09% 3.16% 3.11% 3.21% 3.22% 3.21%
  15% 27% 29% 9% 8% 3%

63
 

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 during all of the periods shown 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
  2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05        
  (Unaudited)
  $11.120 $10.960 $11.090 $11.380 $11.580 $11.430
 
 
  0.180 0.352 0.361 0.380 0.381 0.382
  0.249 0.158 (0.130 ) (0.290 ) (0.200 ) 0.174
  0.429 0.510 0.231 0.090 0.181 0.556
 
 
  (0.179 ) (0.350 ) (0.361 ) (0.380 ) (0.381 ) (0.382 )
  — — — — — (0.024 )
  (0.179 ) (0.350 ) (0.361 ) (0.380 ) (0.381 ) (0.406 )
 
  $11.370 $11.120 $10.960 $11.090 $11.380 $11.580
 
  3.88% 4.84% 2.09% 0.77% 1.63% 4.94%
 
 
  $7,564 $7,257 $8,806 $7,609 $8,117 $8,591
  1.56% 1.50% 1.50% 1.51% 1.51% 1.55%
 
  1.68% 1.66% 1.66% 1.66% 1.66% 1.66%
  3.21% 3.32% 3.27% 3.36% 3.37% 3.32%
 
  3.09% 3.16% 3.11% 3.21% 3.22% 3.21%
  15% 27% 29% 9% 8% 3%

65
 

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 during all of the periods shown 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
  2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05        
  (Unaudited)
  $10.620 $10.800 $11.010 $11.400 $11.490 $11.110
 
 
  0.248 0.448 0.449 0.454 0.450 0.462
  0.420 (0.182 ) (0.210 ) (0.390 ) (0.090 ) 0.380
  0.668 0.266 0.239 0.064 0.360 0.842
 
 
  (0.248 ) (0.446 ) (0.449 ) (0.454 ) (0.450 ) (0.462 )
  (0.248 ) (0.446 ) (0.449 ) (0.454 ) (0.450 ) (0.462 )
 
  $11.040 $10.620 $10.800 $11.010 $11.400 $11.490
 
  6.32% 2.74% 2.21% 0.51% 3.24% 7.72%
 
 
  $64,723 $61,132 $67,174 $76,537 $75,995 $60,744
  0.82% 0.88% 0.88% 0.89% 0.88% 0.84%
 
  0.99% 0.97% 0.97% 0.97% 0.97% 1.06%
  4.55% 4.42% 4.11% 3.98% 3.97% 4.03%
 
  4.38% 4.33% 4.02% 3.90% 3.88% 3.81%
  21% 59% 34% 21% 14% 11%

67
 

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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
68
 

Six Months Ended Year Ended
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05
(Unaudited)     
  $10.670   $10.840   $11.060   $11.440   $11.530   $11.160
 
 
  0.208   0.373   0.367 0.368 0.365   0.377
  0.420     (0.172 )   (0.220 )   (0.380 )   (0.090 ) 0.370  
0.628 0.201 0.147   (0.012 ) 0.275 0.747
 
 
(0.208 ) (0.371 ) (0.367 )   (0.368 )   (0.365 )   (0.377 )
(0.208 ) (0.371 ) (0.367 ) (0.368 ) (0.365 ) (0.377 )
 
  $11.090   $10.670   $10.840   $11.060   $11.440   $11.530
 
5.91%   2.07%   1.34%   (0.15% ) 2.46%   6.80%  
 
 
  $3,943   $4,938   $6,589   $9,384   $14,918   $18,254
1.57%   1.63%   1.63%   1.64%   1.63%   1.59%
 
1.74%   1.72%   1.72%   1.72%   1.72%   1.81%  
3.80%   3.67%   3.36%   3.23%   3.22%   3.28%  
 
3.63%   3.58%   3.27%   3.15%   3.13%   3.06%  
21%   59%   34%   21%   14%   11%  

69
 

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 during all of the periods shown 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
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05
(Unaudited)     
    $10.640   $10.810   $11.030   $11.420   $11.500   $11.130
 
  
    0.207 0.373 0.367 0.368 0.365 0.377
  0.420 (0.172 ) (0.220 ) (0.390 ) (0.080 ) 0.370
  0.627 0.201 0.147 (0.022 ) 0.285 0.747  
   
  
  (0.207 ) (0.371 ) (0.367 ) (0.368 ) (0.365 ) (0.377 )
  (0.207 ) (0.371 ) (0.367 ) (0.368 ) (0.365 ) (0.377 )
 
    $11.060   $10.640   $10.810   $11.030   $11.420   $11.500
  
  5.92%   2.07%   1.35%   (0.24% ) 2.56%   6.81%  
   
 
    $13,526     $13,530   $14,991   $13,453   $12,768   $9,756
  1.57%   1.63%   1.63%   1.64%   1.63%   1.59%  
   
  1.74%   1.72%     1.72%   1.72%     1.72%     1.81%  
  3.80%   3.67%   3.36%   3.23%   3.22%   3.28%  
   
  3.63%   3.58%   3.27%   3.15%   3.13%   3.06%  
  21%   59%   34%   21%   14%   11%  

71
 

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 during some of the periods shown 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
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05
(Unaudited)     
    $10.600   $10.640   $10.730   $11.040   $11.200   $11.070
 
 
  0.220 0.452 0.448 0.464 0.488 0.495
  0.288 (0.041 ) (0.089 ) (0.310 ) (0.160 ) 0.130
  0.508 0.411 0.359 0.154 0.328 0.625
 
 
  (0.228 ) (0.451 ) (0.449 ) (0.464 ) (0.488 ) (0.495 )
  (0.228 ) (0.451 ) (0.449 ) (0.464 ) (0.488 ) (0.495 )
 
      $10.880   $10.600   $10.640   $10.730   $11.040   $11.200  
 
  4.82%   4.11%   3.38%   1.38%   3.03%   5.78%  
   
 
     $232,517   $226,393   $234,630   $246,695   $258,773   $270,149
  0.91%   0.90%   0.93%   0.94%   0.93%   0.94%  
 
    0.95%   0.95%   0.95%   0.96%   0.94%   0.94%  
  4.22%   4.43%   4.16%   4.22%   4.43%   4.46%  
 
  4.18%   4.38%   4.14%   4.20%     4.42%   4.46%  
  9%   27%   15%   12%   8%     8%  

73
 

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 during some of the periods shown 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
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05
(Unaudited)     
  $10.610   $10.640   $10.730   $11.050   $11.200   $11.080
 
 
  0.181 0.375 0.367 0.382 0.405 0.412
  0.277 (0.031 )   (0.089 )   (0.320 ) (0.150 ) 0.120
  0.458 0.344 0.278 0.062 0.255 0.532
 
 
  (0.188 ) (0.374 ) (0.368 ) (0.382 ) (0.405 ) (0.412 )
  (0.188 ) (0.374 ) (0.368 ) (0.382 ) (0.405 )   (0.412 )
 
  $10.880   $10.610   $10.640   $10.730   $11.050   $11.200
 
  4.33%   3.43%   2.60%   0.53%   2.35%   4.89%  
 
 
  $2,023   $2,693   $3,961   $5,326   $8,221   $10,370
  1.66%   1.65%   1.68%   1.69%   1.68%   1.69%  
 
  1.70%   1.70%   1.70%   1.71%   1.69%   1.69%  
  3.47%   3.68%   3.41%   3.47%   3.68%   3.71%  
 
  3.43%     3.63%     3.39%     3.45%     3.67%     3.71%  
  9%   27%   15%   12%   8%   8%  

75
 

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 during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
76
 

Six Months Ended Year Ended
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05
(Unaudited)
    $10.630   $10.660   $10.750   $11.070   $11.220   $11.090
 
 
    0.181 0.375 0.367 0.382 0.405 0.413  
  0.277 (0.031 ) (0.089 ) (0.320 ) (0.150 ) 0.130  
  0.458 0.344 0.278 0.062 0.255 0.543  
 
 
  (0.188 ) (0.374 ) (0.368 ) (0.382 ) (0.405 )   (0.413 )
  (0.188 ) (0.374 ) (0.368 ) (0.382 )   (0.405 ) (0.413 )
 
    $10.900   $10.630   $10.660   $10.750   $11.070   $11.220
 
  4.33%   3.43%   2.60%   0.53%   2.34%   4.99%  
 
 
    $13,877   $11,542   $9,836   $10,152   $9,971   $9,170
  1.66%   1.65%   1.68%   1.69%   1.68%   1.69%  
 
  1.70%   1.70%   1.70%   1.71%   1.69%   1.69%  
  3.47%   3.68%   3.41%   3.47%   3.68%   3.71%  
 
  3.43%     3.63%     3.39%     3.45%   3.67%   3.71%  
    9%   27%   15%   12%   8%   8%  

77
 

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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
78
 

Six Months Ended Year Ended
2/28/101 8/31/09 8/31/08 8/31/07 8/31/06 8/31/05
(Unaudited)
  $11.490   $11.260   $11.260   $11.450   $11.630   $11.490
 
 
  0.217 0.436 0.437 0.448 0.449 0.452
  0.240 0.228 — (0.190 ) (0.180 ) 0.140
  0.457 0.664 0.437 0.258 0.269 0.592
 
 
  (0.217 ) (0.434 ) (0.437 ) (0.448 ) (0.449 ) (0.452 )
  (0.217 ) (0.434 ) (0.437 ) (0.448 ) (0.449 ) (0.452 )
 
    $11.730   $11.490   $11.260   $11.260   $11.450   $11.630
 
  4.00%   6.12%   3.93%   2.27%   2.40%   5.25%  
 
 
    $93,005   $86,445   $72,237   $69,931   $62,808   $60,554
  0.93%   0.88%   0.85%   0.86%   0.85%   0.87%  
 
  0.97%   0.96%   0.96%   0.98%   0.98%   0.98%  
  3.70%   3.94%   3.87%   3.92%   3.95%   3.92%  
 
    3.66%     3.86%     3.76%   3.80%     3.82%     3.81%  
  7%   10%   11%     8%   15%     27%  

79
 

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 during all of the periods shown 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
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)
    $11.470     $11.240   $11.240   $11.430   $11.610   $11.480
 
 
0.175 0.353 0.353 0.363 0.364 0.366
0.239 0.228 — (0.190 ) (0.180 ) 0.130
0.414 0.581 0.353 0.173 0.184 0.496
 
 
(0.174 ) (0.351 ) (0.353 ) (0.363 ) (0.364 ) (0.366 )
(0.174 ) (0.351 ) (0.353 ) (0.363 ) (0.364 ) (0.366 )
 
  $11.710   $11.470   $11.240   $11.240   $11.430   $11.610
 
3.62%   5.34%   3.17%   1.51%   1.64%   4.39%  
 
 
  $3,014   $3,359   $5,123   $6,003   $7,892   $10,911
1.68%   1.63%   1.60%     1.61%     1.60%   1.62%  
 
1.72% 1.71%   1.71%   1.73%   1.73%   1.73%  
2.95% 3.19%     3.12%   3.17%   3.20%   3.17%  
 
2.91% 3.11%   3.01%   3.05%   3.07%   3.06%  
7% 10%   11% 8%   15%   27%  

81
 

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 during all of the periods shown 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
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)  
    $11.480     $11.250   $11.250   $11.440   $11.630   $11.490
 
 
0.175 0.353 0.352 0.363 0.364 0.366
0.239 0.228 — (0.190 ) (0.190 ) 0.140
0.414 0.581 0.352 0.173 0.174 0.506
 
 
(0.174 ) (0.351 ) (0.352 ) (0.363 ) (0.364 ) (0.366 )
(0.174 ) (0.351 ) (0.352 ) (0.363 ) (0.364 ) (0.366 )
 
  $11.720   $11.480   $11.250   $11.250   $11.440   $11.630
  
3.62%   5.34%   3.16%   1.51%   1.56%   4.47%  
 
 
  $26,316   $19,176   $11,490   $11,535   $13,430   $15,678
1.68%   1.63%   1.60%   1.61%   1.60%   1.62%  
 
1.72%   1.71%   1.71%   1.73%   1.73%   1.73%  
2.95%   3.19%   3.12%   3.17%   3.20%   3.17%  
 
2.91%   3.11%   3.01%   3.05%   3.07%   3.06%  
7%   10%   11%   8%   15%   27%  

83
 

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 during all of the periods shown 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
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)  
    $10.450     $10.300   $10.300   $10.550   $10.700   $10.470
 
 
0.217 0.409   0.411 0.435   0.449 0.453
0.300 0.148 —   (0.250 ) (0.150 ) 0.230
0.517 0.557 0.411 0.185 0.299 0.683
 
 
(0.217 ) (0.407 ) (0.411 ) (0.435 ) (0.449 ) (0.453 )
(0.217 ) (0.407 ) (0.411 ) (0.435 ) (0.449 ) (0.453 )
 
  $10.750   $10.450   $10.300   $10.300   $10.550   $10.700
 
4.98%   5.65%   4.04%   1.75%   2.90%   6.65%
 
 
  $28,593   $22,780   $15,340   $14,817   $13,519   $13,153
0.80%   0.85%   0.85%   0.79%   0.65%   0.66%
 
1.10%   1.10%   1.09%   1.10%   1.09%   1.12%
4.06%   4.10%   3.97%   4.13%   4.28%   4.29%  
 
3.76%   3.85%   3.73%   3.82%   3.84%   3.83%
2%   36%   28%   14%   20%   13%  

85
 

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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
86
 

  Six Months Ended   Year Ended
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)  
  $10.420     $10.270   $10.280   $10.530   $10.670   $10.450
 
 
  0.177 0.334 0.333 0.357 0.370 0.374
0.300 0.148 (0.010 ) (0.250 ) (0.140 ) 0.220
0.477 0.482 0.323 0.107 0.230 0.594
 
 
(0.177 ) (0.332 ) (0.333 ) (0.357 ) (0.370 ) (0.374 )
(0.177 ) (0.332 ) (0.333 ) (0.357 ) (0.370 ) (0.374 )
  
  $10.720   $10.420   $10.270   $10.280   $10.530   $10.670
 
4.60%   4.88%   3.17%   0.99% 2.23% 5.77%  
 
 
  $830   $1,018   $1,549   $2,164   $2,858   $3,023
1.55%   1.60%   1.60%   1.54%   1.40% 1.41%  
 
1.85%   1.85%   1.84%   1.85%   1.84% 1.87%
3.31%   3.35%   3.22%   3.38%   3.53% 3.54%
 
3.01%   3.10%   2.98%   3.07%   3.09% 3.08%
2%   36%   28% 14%   20%   13%  

87
 

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 during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect.
 
See accompanying notes
 
88
 

  Six Months Ended   Year Ended
2/28/101   8/31/09   8/31/08   8/31/07   8/31/06   8/31/05      
(Unaudited)  
  $10.420     $10.270   $10.280   $10.530   $10.670   $10.450
 
 
0.177 0.333 0.333 0.357 0.370 0.376
0.300 0.148 (0.010 ) (0.250 ) (0.140 ) 0.220
0.477 0.481 0.323 0.107 0.230 0.596
 
  
(0.177 ) (0.331 ) (0.333 ) (0.357 ) (0.370 ) (0.376 )
(0.177 ) (0.331 ) (0.333 ) (0.357 ) (0.370 ) (0.376 )
 
  $10.720   $10.420   $10.270   $10.280   $10.530   $10.670
 
4.60%   4.88%   3.17%   0.99%   2.23%   5.80%  
 
 
  $9,052   $5,651   $2,049   $2,131   $2,068   $886
1.55%   1.60%   1.60%   1.54%   1.40%   1.41%  
 
  1.85%   1.85%   1.84%   1.85%   1.84%   1.87%  
3.31%   3.35%   3.22%   3.38%   3.53%   3.54%  
 
3.01%   3.10%   2.98%   3.07%   3.09%   3.08%  
2%   36%   28%   14%   20%   13%  

89
 

Notes to financial statements
Delaware multiple state tax-free funds Six Months Ended February 28, 2010 (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 twelve months.
 
The investment objective of each Fund is to seek as high a level of current income exempt from federal income tax and personal income tax in their respective states, as is consistent with preservation of capital.
 
1. Significant Accounting Policies
 
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Funds.
 
Security Valuation — 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. Short-term debt securities are valued at market value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of each Fund’s Board of Trustees (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.
 
90
 

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. Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years (August 31, 2006 – August 31, 2009), and has concluded that no provision for federal income tax is required in the Funds’ financial statements.
 
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. GAAP 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 may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended February 28, 2010.
 
On July 1, 2009, the Financial Accounting Standards Board (FASB) issued the FASB Accounting Standards Codification (Codification). The Codification became the single source of authoritative nongovernmental U.S. GAAP, superseding existing literature of the FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other sources. The Codification is effective for interim and annual periods ending after September 15, 2009. The Funds adopted the Codification for the six months ended February 28, 2010. There was no impact to financial statements as the Codification requirements are disclosure-only in nature.
 
91
 

Notes to financial statements
Delaware multiple state tax-free 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 voluntarily 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 nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, nonroutine expenses)), do not exceed specified percentages of average daily net assets as shown below until such time as the waivers are discontinued. For purposes of these waivers and reimbursements, nonroutine 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 September 11, 2009                                        
       and renewed January 1, 2010
       operating expense limitation  
       as a percentage of    
       average daily net assets      
       (per annum) —%   0.57%   —%     —%   0.55%  
 
Through December 31, 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

92
 

Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to each Fund. 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. 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, 2010, 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
$3,106 $2,020 $6,158 $2,867 $839

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, 2010, 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     $46,305         $21,848         $104,795         $51,238         $  5,791    
Dividend disbursing,
       transfer agent, fund  
       accounting oversight      
       fees and other expenses      
       payable to DSC 4,154   3,149   8,487 3,804 2,097
Distribution fees          
       payable to DDLP 30,211   25,734 56,655   39,848 12,517
Other expenses payable to
       DMC and affiliates* 4,729 3,153 9,579 4,627 1,367

*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.
 
93
 
 
 

Notes to financial statements
Delaware multiple state tax-free 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, 2010, 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
  $4,005   $2,617   $7,991   $3,747   $1,108

For the six months ended February 28, 2010, 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
  $4,906   $2,932      $13,520   $27,227   $18,569

For the six months ended February 28, 2010, 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 $ — $ —   $ — $ — $ —
Class B     860       230 303     462   —
Class C 445 308 459 7,192 828

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, 2010, 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 $  8,990,919   $8,485,477 $ 15,582,684 $ 16,827,186 $7,591,797
Sales 17,881,010 9,960,648 11,352,945 3,794,625 339,868

94
 
 


At February 28, 2010, 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, 2010, 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 $ 115,735,553 $ 81,772,727 $ 242,364,999 $ 115,511,902 $ 36,683,112
Aggregate  
       unrealized
       appreciation   $ 5,072,610   $ 3,193,249 $ 11,315,281 $ 5,689,613 $ 2,166,170
Aggregate      
       unrealized        
       depreciation (1,118,221 )   (3,263,987 )     (5,043,224 ) (411,627 ) (320,393 )
Net unrealized  
       appreciation
       (depreciation) $ 3,954,389 $ (70,738 ) $ 6,272,057 $ 5,277,986 $ 1,845,777  

U.S. GAAP 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 under current market conditions. A three level hierarchy for fair value measurements has been established 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
 
95
 
 


Notes to financial statements
Delaware multiple state tax-free funds
 
3. Investments (continued)
 
The following table summarizes the valuation of the Funds’ investments by fair value hierarchy levels as of February 28, 2010:
 
 
Delaware Tax-Free Arizona Fund
 Level 2
Municipal Bonds $119,689,942
 
       Delaware Tax-Free California Fund
        Level 1        Level 2        Total
Municipal Bonds $ —   $ 81,190,899 $ 81,190,899
Short-Term   311,090 200,000   511,090
Total $ 311,090 $ 81,390,899 $ 81,701,989
 
Delaware Tax-Free Colorado Fund
        Level 1        Level 2        Total
Municipal Bonds $ — $ 246,100,406 $ 246,100,406
Short-Term 2,536,650     —   2,536,650
Total $ 2,536,650 $ 246,100,406 $ 248,637,056
 
Delaware Tax-Free Idaho Fund
        Level 1         Level 2         Total
Municipal Bonds   $ — $ 119,062,204   $ 119,062,204
Short-Term   1,727,684   — 1,727,684
Total $ 1,727,684 $ 119,062,204 $ 120,789,888
 
Delaware Tax-Free New York Fund
        Level 1         Level 2          Total
Municipal Bonds $ — $ 36,928,889 $ 36,928,889
Short-Term —   1,600,000   1,600,000
Total $ — $ 38,528,889 $ 38,528,889
 
There were no Level 3 securities at the beginning or end of the period.
 
In January 2010, the Financial Accounting Standards Board issued an Accounting Standards Update, Improving Disclosures about Fair Value Measurements, which introduces new disclosure requirements and clarifies certain existing disclosure requirements around fair value measurements currently presented above. The new disclosures and clarifications of existing disclosures are generally effective for the Funds’ year ending August 31, 2011 and interim periods therein. Management is evaluating the impact of this update on its current disclosures.
 
96
 

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. GAAP. 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, 2010 and the year ended August 31, 2009 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 2/28/10*                        
Tax-exempt income $ 2,329,053 $ 1,721,593 $ 5,049,157 $ 1,969,503   $ 639,398
Ordinary income 74,189   50,415 122,743     95,664 12,280  
Total $ 2,403,242 $ 1,772,008   $ 5,171,900 $ 2,065,167 $ 651,678
 
Year Ended 8/31/09  
Tax-exempt income $ 4,956,787 $ 3,385,072 $ 10,156,494 $ 3,483,707 $ 894,982
Ordinary income — — 12,530 — —
Total $ 4,956,787 $ 3,385,072 $ 10,169,024 $ 3,483,707 $ 894,982

*Tax information for the period ended February 28, 2010 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
 
97
 

Notes to financial statements
Delaware multiple state 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, 2010, 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 $ 117,512,086 $ 82,343,166 $ 246,563,644 $ 117,058,432 $ 36,641,785
Distributions
       payable (76,597 ) (59,199 ) (170,577 ) (81,767 ) (22,704 )
Undistributed
       tax-exempt  
       income   102,794 77,986 176,829   70,466   22,053
Realized gains  
       9/1/09 –      
       2/28/10 853,852 217,477 677,120 99,011 3,270
Post-October      
       losses —   (88,772 ) — — —
Capital loss        
       carryforwards as  
       of 8/31/09 (1,448,471 ) (227,694 ) (5,101,953 ) (89,623 ) (14,929 )
Unrealized
       appreciation  
       (depreciation) of
       investments 3,954,389 (70,738 ) 6,272,057 5,277,986 1,845,777
Net assets $ 120,898,053 $ 82,192,226 $ 248,417,120 $ 122,334,505 $ 38,475,252  

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, 2009 through February 28, 2010 that, in accordance with federal income tax regulations, each Fund has elected to defer and treat as having arisen in the following fiscal year.
 
98
 

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, 2010, the Funds recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end:
 
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
Undistributed        
       (distributions in excess of)            
       net investment income $  (8,152 ) $  (569 )    $  (7,768 )   $ 19,616      $  (3,556 )
Accumulated net realized          
       gain (loss) 8,152 569 7,768 (19,616 ) 3,556  

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, 2009 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
2010 $ —       $ —             $ —             $ 9,312             $ —      
2011 — 6,039   — — —
2012 1,448,471 — 2,796,560 — —
2013   — — 57,695 —     —  
2014   —   —   2,203,520     23,435   —
2015 —   — — 56,876 —
2016 — 221,655 44,178 — 14,929
Total $ 1,448,471 $ 227,694 $ 5,101,953 $ 89,623  $ 14,929

For the six months ended February 28, 2010, the Funds had capital gains which may reduce 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
  $853,852   $217,477   $677,120   $99,011   $3,270

99
 

Notes to financial statements
Delaware multiple state tax-free funds
 
6. Capital Shares
 
Transactions in capital shares were as follows:
 
        Delaware Tax-Free         Delaware Tax-Free         Delaware Tax-Free
Arizona Fund California Fund Colorado Fund
Six Months         Year Six Months         Year Six Months         Year
Ended Ended Ended Ended Ended Ended
2/28/10 8/31/09 2/28/10 8/31/09 2/28/10 8/31/09
Shares sold:
       Class A 238,804 756,808 490,841 825,013 852,300   1,387,638  
       Class B — 1,968 6,562 9,030 — 1,049
       Class C 55,074 102,547 91,322 208,816 243,575 281,038
 
Shares issued upon reinvestment of dividends and distributions:
       Class A 105,105 207,965 79,230 152,565 295,109 595,084
       Class B 4,646 12,138 5,784 13,524 1,884 4,925
       Class C 10,074 13,735 22,204 35,227 18,459   24,239
  413,703 1,095,161 695,943 1,244,175 1,411,327 2,293,973
 
Shares repurchased:    
       Class A (1,014,731 ) (1,879,717 ) (465,208 )   (1,444,076 )   (1,128,914 ) (2,677,810 )
       Class B   (176,171 )   (307,293 ) (119,828 ) (167,397 ) (69,963 ) (124,079 )
       Class C (52,384 ) (267,390 ) (162,564 ) (358,482 ) (75,544 ) (141,654 )
  (1,243,286 ) (2,454,400 ) (747,600 ) (1,969,955 ) (1,274,421 ) (2,943,543 )
Net increase  
       (decrease) (829,583 ) (1,359,239 ) (51,657 ) (725,780 ) 136,906 (649,570 )

        Delaware Tax-Free         Delaware Tax-Free
Idaho Fund New York Fund
Six Months         Year Six Months         Year
Ended Ended Ended Ended
  2/28/10 8/31/09   2/28/10 8/31/09
Shares sold:      
       Class A   622,761   1,615,020   617,416   1,035,723  
       Class B 727   5,765   880 4,787
       Class C 691,613 758,087   408,631   396,933
 
Shares issued upon reinvestment of dividends and distributions:
       Class A 107,707 171,510 32,700 40,258
       Class B 3,065   8,957   768 2,303
       Class C   22,010 22,570   14,843   6,249
1,447,883   2,581,909 1,075,238   1,486,253
 
Shares repurchased:
       Class A (324,505 ) (679,777 ) (169,691 ) (385,163 )
       Class B (39,213 ) (177,717 ) (21,974 ) (60,185 )
       Class C (138,424 ) (131,937 ) (121,254 ) (60,407 )
  (502,142 ) (989,431 ) (312,919 ) (505,755 )
Net increase 945,741 1,592,478 762,319 980,498

100
 
 


For the six months ended February 28, 2010 and the year ended August 31, 2009, 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.
 
        Six Months Ended         Year Ended
2/28/10 8/31/09
Class B         Class A         Class B         Class A        
Shares Shares Value Shares Shares Value
Delaware Tax-Free
       Arizona Fund 108,371 108,467 $ 1,231,308 126,754 126,825 $ 1,338,820
Delaware Tax-Free  
       California Fund 58,900 59,124 649,036 92,283 92,659 913,283
Delaware Tax-Free        
       Colorado Fund 29,504 29,506   319,777 28,997 29,016   288,928
Delaware Tax-Free  
       Idaho Fund 20,438 20,403 238,806 58,929 58,820 644,988
Delaware Tax-Free
       New York Fund 21,600 21,539   231,114 33,488 33,413 327,019

7. Line of Credit
 
The Funds, along with certain other funds in the Delaware Investments® Family of Funds (Participants), participate in a $35,000,000 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 are charged an annual commitment fee, which is allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants may borrow up to a maximum of one third of their net assets under the agreement. The agreement expires on November 16, 2010. The Funds had no amounts outstanding as of February 28, 2010 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, as applicable, 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
 
101
 

Notes to financial statements
Delaware multiple state tax-free funds
 
8. Credit and Market Risk (continued)
 
impact on the value of insured bonds held in the Funds. At February 28, 2010, the percentages 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
40% 20% 23% 31% 11%

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 are substituted with an alternative source of revenues (the escrow securities) sufficient to meet payments of principal and interest to maturity or to the first call dates. Escrowed secured bonds will often receive a rating of AAA from Moody’s Investors Service Inc., Standard & Poor’s Rating Group, and/or Fitch 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 each Fund’s 15% limit on investments in illiquid securities. As of February 28, 2010, there were no Rule 144A securities. Illiquid securities have been identified on the statements of net assets.
 
102
 

9. Contractual Obligations
 
The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds’ existing contracts and expects the risk of loss to be remote.
 
10. Sale of Delaware Investments to Macquarie Group
 
On August 18, 2009, Lincoln National Corporation (parent company of Delaware Investments) and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, DDLP and DSC, would be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). The Transaction was completed on January 4, 2010. DMC, DDLP, and DSC are now wholly owned subsidiaries of Macquarie.
 
The Transaction resulted in a change of control of DMC which, in turn, caused the termination of the investment management agreement between DMC and the Funds. On January 4, 2010, the new investment management agreement between DMC and the Funds that was approved by the shareholders became effective.
 
11. Subsequent Events
 
Management has evaluated whether any events or transactions occurred subsequent to February 28, 2010 through April 15, 2010, the date of issuance of the Funds’ financial statements, and determined that there were no material events or transactions that would require recognition or disclosure in the Funds’ financial statements.
 
103
 

Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
 
Proxy Results
 
At Joint Special Meetings of Shareholders of Voyageur Insured Funds, on behalf of Delaware Tax-Free Arizona Fund; Voyageur Mutual Funds, on behalf of Delaware Tax-Free California Fund, Delaware Tax-Free Idaho Fund, and Delaware Tax-Free New York Fund; and Voyageur Mutual Funds II, on behalf of Delaware Tax-Free Colorado Fund (Voyageur Insured Funds, Voyageur Mutual Fund, and Voyageur Mutual Funds II hereinafter each, a “Trust” and collectively, the “Trusts” and 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 hereinafter each, a “Fund” and collectively, the “Funds”) held on November 12, 2009 and reconvened on December 17, 2009 for Delaware Tax-Free California Fund, December 4, 2009 for Delaware Tax-Free Idaho Fund and Delaware Tax-Free New York Fund only and March 16, 2010, the shareholders of each Fund voted to (i) elect a Board of Trustees for each Trust; and to (ii) approve new investment advisory agreements between each Trust, on behalf of the respective Fund(s), and Delaware Management Company, respectively. At the meeting, the following people were elected to serve as Independent Trustees: Thomas L. Bennett, John A. Fry, Anthony D. Knerr, Lucinda S. Landreth, Ann R. Leven, Thomas F. Madison, Janet L. Yeomans, and J. Richard Zecher. In addition, Patrick P. Coyne was elected to serve as an Interested Trustee.
 
The following proposals were submitted for a vote of the shareholders:
 
1. To elect a Board of Trustees for each Trust.
 
Voyageur Insured Funds
 
% of % of % of % of
outstanding shares outstanding shares
       Shares voted for        shares        voted        Shares withheld        shares        voted
Thomas L. Bennett 7,510,444.878 65.587 94.052 474,979.649 4.148 5.948
Patrick P. Coyne   7,510,706.365 65.589 94.055 474,718.162 4.146 5.945
John A. Fry 7,512,009.667   65.600 94.072 473,414.860 4.135 5.928
Anthony D. Knerr 7,512,519.072 65.605 94.078 472,905.455   4.130 5.922
Lucinda S. Landreth 7,506,669.072 65.554 94.005 478,755.455 4.181 5.995
Ann R. Leven 7,506,669.072 65.554   94.005   478,755.455 4.181 5.995
Thomas F. Madison 7,510,196.960 65.585 94.049 475,227.567 4.150   5.951
Janet L. Yeomans 7,506,669.072 65.554 94.005 478,755.455 4.181 5.995
J. Richard Zecher 7,512,009.667 65.600 94.072 473,414.860 4.135 5.928

104
 

Voyageur Mutual Funds
 
% of % of % of % of
outstanding shares outstanding shares
       Shares voted for        shares        voted        Shares withheld        shares        voted
Thomas L. Bennett 27,534,201.174 64.687   94.418 1,627,955.392 3.825 5.582
Patrick P. Coyne 27,538,840.631 64.698 94.433 1,623,315.935 3.814 5.567
John A. Fry 27,541,310.882 64.704 94.442 1,620,845.684 3.808 5.558
Anthony D. Knerr 27,543,108.286 64.708 94.448   1,619,048.280 3.804   5.552
Lucinda S. Landreth 27,542,973.819 64.708 94.448 1,619,182.747 3.804 5.552
Ann R. Leven 27,540,505.439 64.702 94.439 1,621,651.127 3.810 5.561
Thomas F. Madison   27,534,959.779   64.689 94.420 1,627,196.787 3.823 5.580
Janet L. Yeomans 27,539,087.174 64.698 94.434 1,623,069.392 3.814 5.566
J. Richard Zecher 27,532,297.843 64.683 94.411 1,629,858.723   3.829 5.589

Voyageur Mutual Funds II
 
% of % of % of % of
outstanding shares   outstanding shares
       Shares voted for        shares        voted        Shares withheld        shares        voted
Thomas L. Bennett 14,479,703.149 63.926 97.135 427,065.079 1.885 2.865
Patrick P. Coyne   14,469,317.651 63.880 97.065 437,450.577 1.931 2.935
John A. Fry 14,488,749.660 63.966 97.196 418,018.568 1.845 2.804
Anthony D. Knerr 14,482,486.274 63.938 97.154 424,281.954 1.873 2.846
Lucinda S. Landreth 14,488,816.962 63.966 97.196   417,951.266 1.845   2.804
Ann R. Leven 14,478,371.695 63.920 97.126 428,396.533 1.891 2.874
Thomas F. Madison 14,378,358.428 63.478   96.455 528,409.800   2.333 3.545
Janet L. Yeomans 14,486,139.464   63.954 97.178 420,628.764 1.857 2.822
J. Richard Zecher 14,486,180.936 63.954 97.179 420,587.292 1.857 2.821

2.   To approve a new investment advisory agreement between each Trust, on behalf of the respective Fund(s), and Delaware Management Company.

Delaware Tax-Free Arizona Fund  
Shares Voted For 5,503,268.604
Percentage of Outstanding Shares 48.059%
Percentage of Shares Voted 68.305%
Shares Voted Against 318,946.724
Percentage of Outstanding Shares 2.785%
Percentage of Shares Voted 3.958%
Shares Abstained 303,633.649
Percentage of Outstanding Shares 2.651%
Percentage of Shares Voted 3.769%
Broker Non-Votes 1,931,085.658

105
 

Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
 
Proxy Results (continued)
 
Delaware Tax-Free California Fund
Shares Voted For 3,161,738.551
Percentage of Outstanding Shares 42.260%
Percentage of Shares Voted 67.222%
Shares Voted Against 113,090.044
Percentage of Outstanding Shares 1.512%
Percentage of Shares Voted 2.404%
Shares Abstained 269,836.501
Percentage of Outstanding Shares 3.606%
Percentage of Shares Voted 5.737%
Broker Non-Votes 1,158,761.563
 
Delaware Tax-Free Colorado Fund
Shares Voted For 10,641,098.445
Percentage of Outstanding Shares 46.979%
Percentage of Shares Voted 70.809%
Shares Voted Against 394,714.534
Percentage of Outstanding Shares 1.742%
Percentage of Shares Voted 2.627%
Shares Abstained 468,241.663
Percentage of Outstanding Shares 2.068%
Percentage of Shares Voted 3.115%
Broker Non-Votes 3,523,768.881
 
Delaware Tax-Free Idaho Fund
Shares Voted For 4,722,925.538
Percentage of Outstanding Shares 50.058%
Percentage of Shares Voted 67.836%
Shares Voted Against 490,745.060
Percentage of Outstanding Shares 5.202%
Percentage of Shares Voted 7.049%
Shares Abstained 198,509.218
Percentage of Outstanding Shares 2.104%
Percentage of Shares Voted 2.851%
Broker Non-Votes 1,550,081.012
 
Delaware Tax-Free New York Fund
Shares Voted For 1,323,953.644
Percentage of Outstanding Shares 45.593%
Percentage of Shares Voted 67.540%
Shares Voted Against 18,938.743
Percentage of Outstanding Shares 0.652%
Percentage of Shares Voted 0.966%
Shares Abstained 60,164.796
Percentage of Outstanding Shares 2.072%
Percentage of Shares Voted 3.069%
Broker Non-Votes 557,205.446

106
 

Board Consideration of New Investment Advisory Agreement
 
At a meeting held on September 3, 2009 (the “Meeting”), the Board of Trustees of the Delaware Investments® Family of Funds (the “Board”), including the independent Trustees, unanimously approved a new investment advisory agreement between each registrant on behalf of each series (each, a “Fund” and together, the “Funds”) and Delaware Management Company (“DMC”) in connection with the sale of Delaware Investments’ advisory business to Macquarie Bank Limited (the “Macquarie Group”) (the “Transaction”). In making its decision, the Board considered information furnished specifically in connection with the approval of the new investment advisory agreements with DMC (the “New Investment Advisory Agreements”), which included extensive materials about the Transaction and matters related to the proposed approvals. To assist the Board in considering the New Investment Advisory Agreements, Macquarie Group provided materials and information about Macquarie Group, including detailed written responses to the questions posed by the independent Trustees. DMC also provided materials and information about the Transaction, including detailed written responses to the questions posed by the independent Trustees.
 
At the Meeting, the Trustees discussed the Transaction with DMC management and with key Macquarie Group representatives. The Meeting included discussions of the strategic rationale for the Transaction and Macquarie Group’s general plans and intentions regarding the Funds and DMC. The Board members also inquired about the plans for, and anticipated roles and responsibilities of, key employees and officers of Delaware Management Holdings Inc. and DMC in connection with the Transaction.
 
In connection with the Trustees’ review of the New Investment Advisory Agreements for the Funds, DMC and/or Macquarie Group emphasized that:
  • They expected that there would be no adverse changes as a result of the Transaction, in the nature, quality, or extent of services currently provided to the Funds and their shareholders, including investment management, distribution, or other shareholder services.
     
  • No material changes in personnel or operations were contemplated in the operation of DMC under Macquarie Group as a result of the Transaction and no material changes were currently contemplated in connection with third party service providers to the Funds.
     
  • Macquarie Group had no intention to cause DMC to alter the voluntary expense waivers and reimbursements currently in effect for the Funds.
     
  • Under the agreement between Macquarie Group and Lincoln National Corporation (“LNC”) (the “Transaction Agreement”), Macquarie Group has agreed to conduct, and to cause its affiliates to conduct, their respective businesses in compliance with the conditions of Section 15(f) of the Investment Company Act of 1940 (the “1940 Act”) with respect to the Funds, to the extent within its control, including maintaining Board composition of at least 75% of the Board members qualifying as independent Trustees and not imposing any “unfair burden” on the Funds for at least two years from the closing of the Transaction (the “Closing”).
107
 

Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
In addition to the information provided by DMC and Macquarie Group as described above, the Trustees also considered all other factors they believed to be relevant to evaluating the New Investment Advisory Agreements, including the specific matters discussed below. In their deliberations, the Trustees did not identify any particular information that was controlling, and different Trustees may have attributed different weights to the various factors. However, for each Fund, the Trustees determined that the overall arrangements between the Fund and DMC, as provided in the respective New Investment Advisory Agreement, including the proposed advisory fee and the related administration arrangements between the Fund and DMC, were fair and reasonable in light of the services to be performed, expenses incurred, and such other matters as the Trustees considered relevant. Factors evaluated included:
  • The potential for expanding distribution of Fund shares through access to Macquarie Group’s existing distribution channels;
     
  • Delaware Investments’ acquisition of an exclusive wholesaling sales force from a subsidiary of LNC;
     
  • The reputation, financial strength, and resources of Macquarie Group as well as its historic and ongoing commitment to the asset management business in Australia as well as other parts of the world;
     
  • The terms and conditions of the New Investment Advisory Agreements, including that each Fund’s total contractual fee rate under the New Investment Advisory Agreement will remain the same;
     
  • The Board’s full annual review (or initial approval) of the current investment advisory agreements at their in-person meeting in May 2009 as required by the 1940 Act and its determination that (i) DMC had the capabilities, resources, and personnel necessary to provide the satisfactory advisory and administrative services currently provided to each Fund and (ii) the advisory and/or management fees paid by each Fund, taking into account any applicable fee waivers and breakpoints, represented reasonable compensation to DMC in light of the services provided, the costs to DMC of providing those services, economies of scale, and the fees and other expenses paid by similar funds and such other matters that the Board considered relevant in the exercise of its reasonable judgment;
     
  • The portfolio management teams for the Funds are not currently expected to change as a result of the Transaction;
     
  • LNC and Macquarie Group were expected to execute a reimbursement agreement pursuant to which LNC and Macquarie Group would agree to pay (or reimburse) all reasonable out-of-pocket costs and expenses of the Funds in connection with the Board’s consideration of the Transaction, the New Investment Advisory Agreements and related agreements, and all costs related to the proxy solicitation (the “Expense Agreement”);
108
 

  • The likelihood that Macquarie Group would invest additional amounts in Delaware Investments, including DMC, which could result in increased assets under management, which in turn would allow some Funds the potential opportunity to achieve economies of scale and lower fees payable by Fund shareholders; and
     
  • The compliance and regulatory history of Macquarie Group and its affiliates.
In making their decision relating to the approval of each Fund’s New Investment Advisory Agreement, the independent Trustees gave attention to all information furnished. The following discussion, however, identifies the primary factors taken into account by the Trustees and the conclusions reached in approving the New Investment Advisory Agreements.
 
Nature, Extent, and Quality of Service. The Trustees considered the services historically provided by DMC to the Funds and their shareholders. In reviewing the nature, extent, and quality of services, the Board considered that the New Investment Advisory Agreements would be substantially similar to the current investment advisory agreements between the Funds and DMC (the “Current Investment Advisory Agreements”), and therefore, considered the many reports furnished to them throughout 2008 and 2009 at regular Board meetings covering matters such as the relative performance of the Funds; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Funds; the compliance of management personnel with the code of ethics adopted throughout the Delaware Investments® Family of Funds complex; and the adherence to fair value pricing procedures as established by the Board. The Trustees were pleased with the current staffing of DMC and the emphasis placed on research and risk management in the investment process. Favorable consideration was given to DMC’s efforts to maintain expenditures and, in some instances, increase financial and human resources committed to Fund matters.
 
The Board also considered the transfer agent and shareholder services that would continue to be provided to Fund shareholders by DMC’s affiliate, Delaware Service Company, Inc. (“DSC”). The Trustees noted, in particular, DSC’s commitment to maintain a high level of service as well as DMC’s expenditures to improve the delivery of shareholder services. The Board was assured that shareholders would continue to receive the benefits provided to Fund shareholders by being part of the Delaware Investments Family of Funds, including each shareholder’s ability to exchange an investment in one Delaware Investments Fund for the same class of shares in another Delaware Investments Fund without a sales charge, to reinvest Fund dividends into additional shares of any of the Funds, and the privilege to combine holdings in other Funds to obtain a reduced sales charge.
 
Based on the information provided by DMC and Macquarie Group, including that Macquarie Group and DMC currently expected no material changes as a result of the Transaction in (i) personnel or operations of DMC or (ii) third party service providers to the Funds, the Board concluded that the satisfactory nature, extent, and quality of services currently provided to the Funds and their shareholders were very likely to continue under the New Investment Advisory
 
109
 

Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
Agreements. Moreover, the Board concluded that the Funds would probably benefit from the expanded distribution resources that would become available to Delaware Investments following the Transaction. The Board also concluded that it was very unlikely that any “unfair burden” would be imposed on any of the Funds for the first two years following the Closing as a result of the Transaction. Consequently, the Board concluded that it did not expect the Transaction to result in any adverse changes in the nature, quality, or extent of services (including investment management, distribution or other shareholder services) currently provided to the Funds and their shareholders.
 
Investment Performance. The Board considered the overall investment performance of DMC and the Funds. The Trustees placed significant emphasis on the investment performance of the Funds in view of its importance to shareholders. Although the Trustees gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Trustees gave particular weight to their review of investment performance in connection with the approval of the Current Investment Advisory Agreements at the Board meeting held in May 2009. At that meeting, the Trustees reviewed reports prepared by Lipper, Inc., an independent statistical compilation organization (“Lipper”), which showed each Fund’s investment performance as of December 31, 2008 in comparison to a group of funds selected by Lipper as being similar to the Fund (the “Performance Universe”). During the May 2009 agreement review process, the Trustees observed the significant improvements to relative investment performance of the Funds compared to the Funds’ performance as of December 31, 2007.
 
At their meeting on September 3, 2009, the Trustees, including the independent Trustees in consultation with their independent counsel, reviewed the investment performance of each Fund. The Trustees compared the performance of each Fund relative to that of its respective Performance Universe for the 1-, 3-, 5-, and 10-year periods ended June 30, 2009 and compared its relative investment performance against the corresponding relative investment performance of each Fund for such time periods ended December 31, 2008, to the extent applicable. As of June 30, 2009, 30 of the Funds had investment performance relative to that of the respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for all applicable time periods. At June 30, 2009, an additional 6 Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative investment performance at December 31, 2008 for a majority of the applicable time periods. At June 30, 2009, 15 additional Funds had investment performance relative to that of their respective Performance Universe that was better than the corresponding relative performance at December 31, 2008 and only 29 Funds had poorer relative investment performance at June 30, 2009 compared to that at December 31, 2008.
 
The Board therefore concluded that the investment performance of the Funds, on an aggregate basis, had continued to improve relative to their respective Performance Universe since the data reviewed at the May 2009 meeting. Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreement would likely have an adverse effect on the investment performance of any Fund because (i) DMC
 
110
 

and Macquarie Group did not currently expect the Transaction to cause any material change to the Funds’ portfolio management teams responsible for investment performance, which the Board found to be satisfactory and improving; and (ii) as discussed in more detail below, the Funds’ expenses were not expected to increase as a result of the Transaction.
 
Comparative Expenses. The Trustees also considered expense comparison data for the Funds previously provided in May 2009. At that meeting, DMC had provided the Board with information on pricing levels and fee structures for the Funds and comparative funds. The Trustees focused on the comparative analysis of the effective management fees and total expense ratios of each Fund versus the effective management fees and expense ratios of a group of funds selected by Lipper as being similar to each Fund (the “Expense Group”). In reviewing comparative costs, each Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) of other funds within the Expense Group, taking into account any applicable breakpoints and fee limitations. Each Fund’s total expenses were also compared with those of its Expense Group. The Trustees also considered fees paid to Delaware Investments for nonmanagement services. At the September 3, 2009 meeting, DMC advised the Board that the more recent comparative expenses for the Funds remained consistent with the previous review in May 2009 and, consequently, the Trustees concluded that expenses of the Funds were satisfactory.
 
The Board also considered the Expense Agreement under negotiation in evaluating Fund expenses. The Trustees expected that the Expense Agreement would provide that LNC and Macquarie Group would pay or reimburse the Trusts for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the consideration of the New Investment Advisory Agreements (subject to certain limited exceptions).
 
Based on information provided by DMC and Macquarie Group, the Board concluded that neither the Transaction nor the New Investment Advisory Agreements likely would have an adverse effect on the Funds’ expenses because (i) each Fund’s contractual fee rates under the New Investment Advisory Agreement would remain the same; (ii) under the Expense Agreement, the Funds would be reimbursed for all reasonable out-of-pocket costs and expenses in connection with the Transaction and the related proxy solicitation (subject to certain limited exceptions); and (iii) the expense ratios of certain Funds might decline as a result of the possible increased investment in Delaware Investments by Macquarie Group, as discussed below under “Economies of Scale.”
 
Management Profitability. At their meeting on September 3, 2009, the Board evaluated DMC’s profitability in connection with the operation of the Funds. The Board had previously considered DMC’s profitability in connection with the operation of the Funds at its May 2009 meeting. At that meeting, the Board reviewed an analysis that addressed the overall profitability of Delaware Investments’ business in providing management and other services to each of the Funds and the Delaware Investments® Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability.
 
111
 

Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
At the May 2009 meeting, representatives of DMC had stated that the level of profits of DMC, to a certain extent, reflect operational cost savings and efficiencies initiated by Delaware Investments (including DMC and its affiliates that provide services to the Funds). The Board considered Delaware Investments’ efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide U.S. Securities and Exchange Commission initiatives. At that meeting, the Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC. At the September 3, 2009 meeting, DMC advised the Board that DMC did not expect the Transaction to affect materially the profitability of Delaware Investments compared to the level of profitability considered during the May 2009 review. Moreover, the Trustees reviewed pro forma balance sheets of certain key companies in Delaware Investments as of June 30, 2009 (which were provided by Macquarie Group and DMC in response to the Trustees’ requests) and evaluated the projections of Delaware Investments’ capitalization following the Transaction for purposes of evaluating the financial ability of Delaware Investments to continue to provide the nature, extent, and quality of services as it had under the Current Investment Advisory Agreement.
 
Based on information provided by DMC and Macquarie Group, the Board concluded that DMC and Delaware Investments would be sufficiently capitalized following the Transaction to continue the same level and quality of services to the Funds under the New Investment Advisory Agreements as was the case under the Current Investment Advisory Agreements. The Board also concluded that Macquarie Group had sufficient financial strength and resources, as well as an ongoing commitment to a global asset management business, to continue investing in Delaware Investments, including DMC, to the extent that Macquarie Group determined it was appropriate. Finally, because services and costs were expected to be substantially the same (and DMC had represented that, correspondingly, profitability would be about the same), under the New Investment Advisory Agreements as under the Current Investment Advisory Agreements, the Trustees concluded that the profitability of Delaware Investments would not result in an inequitable charge on the Funds or their shareholders. Accordingly, the Board concluded that the fees charged under the New Investment Advisory Agreements would be reasonable in light of the services to be provided and the expected profitability of DMC.
 
Economies of Scale. The Trustees considered whether economies of scale would be realized by Delaware Investments as each Fund’s assets increase and the extent to which any economies of scale would be reflected in the management fees charged. The Trustees took into account DMC’s practice of maintaining the competitive nature of management fees based on its analysis of fees charged by comparable funds. DMC management believed, and the Board agreed, that the Funds were priced with breakpoints and relatively low management fees to reflect potential economies of scale to Fund shareholders.
 
112
 

The Board also acknowledged Macquarie Group’s statement that the Transaction would not by itself immediately provide additional economies of scale given Macquarie Group’s limited presence in the U.S. mutual fund market. Nonetheless, the Trustees concluded that additional economies of scale could potentially be achieved in the future if DMC were owned by Macquarie Group as a result of Macquarie Group’s willingness to invest further in Delaware Investments if appropriate opportunities arise. The Board further concluded that potential economies of scale could be achieved as a result of Delaware Investments’ expanded distribution capabilities arising from the Transaction, as well as opportunities that might arise from Macquarie Group’s global asset management business.
 
Fall-Out Benefits. The Board acknowledged that DMC would continue to benefit from soft dollar arrangements using portfolio brokerage of each Fund that invests in equity securities and that DMC’s profitability would likely be somewhat lower without the benefit of practices with respect to allocating Fund portfolio brokerage for brokerage and research services. The Board also considered that Macquarie Group and Delaware Investments may derive reputational, strategic, and other benefits from their association with the Delaware Investments® Family of Funds, including service relationships with DMC, DSC, and Delaware Distributors, L.P., and evaluated the extent to which Delaware Investments might derive ancillary benefits from Fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds and the benefits from allocation of Fund brokerage to improve trading efficiencies. However, the Board concluded that (i) any such benefits under the New Investment Advisory Agreements would not be dissimilar from those existing under the Current Investment Advisory Agreements; (ii) such benefits did not impose a cost or burden on the Funds or their shareholders; and (iii) such benefits would probably have an indirectly beneficial effect on the Funds and their shareholders because of the added importance that DMC and Macquarie Group might attach to the Funds as a result of the fall-out benefits that the Funds conveyed.
 
Board Review of Macquarie Group. The Trustees reviewed detailed information supplied by Macquarie Group about its operations as well as other information regarding Macquarie Group provided by independent legal counsel to the independent Trustees. Based on this review, the Trustees concluded that Delaware Investments would continue to have the financial ability to maintain the high quality of services required by the Funds. The Trustees noted that there would be a limited transition period during which some services previously provided by LNC to Delaware Investments would continue to be provided by LNC after the Closing, and concluded that this arrangement would help minimize disruption in Delaware Investments’ provision of services to the Funds following the Transaction.
 
113
 

Other Fund information
(Unaudited)
Delaware multiple state tax-free funds
 
Board Consideration of New Investment Advisory Agreement (continued)
 
The Board considered Macquarie Group’s support for Delaware Investments’ plans for Fund distribution by transferring wholesalers from Lincoln Financial Distributors, Inc., LNC’s retail distributor, to Delaware Investments, and Macquarie Group’s current intention to leave the Funds’ other service providers in place. The Board also considered Macquarie Group’s current strategic plans to increase its asset management activities, one of its core businesses, particularly in North America, and its statement that its acquisition of DMC is an important component of this strategic growth and the establishment of a significant presence in the United States. Based in part on the information provided by DMC and Macquarie Group, the Board concluded that Macquarie Group’s acquisition of Delaware Investments could potentially enhance the nature, quality, and extent of services provided to the Funds and their shareholders.
 
Conclusion. The Board concluded that the advisory fee rate under each New Investment Advisory Agreement was reasonable in relation to the services provided and that execution of the New Investment Advisory Agreement would be in the best interests of the shareholders. For each Fund, the Trustees noted that they had concluded in their most recent advisory agreement continuance considerations in May 2009 that the management fees and total expense ratios were at acceptable levels in light of the quality of services provided to the Funds and in comparison to those of the Funds’ respective peer groups; that the advisory fee schedule would not be increased and would stay the same for all of the Funds; that the total expense ratio had not changed materially since that determination; and that DMC had represented that the overall expenses for each Fund were not expected to be adversely affected by the Transaction. The Trustees also noted, with respect to the Funds that currently had the benefit of voluntary fee limitations, that Macquarie Group had no present intention to cause DMC to alter any voluntary expense limitations or reimbursements currently in effect. On that basis, the Trustees concluded that the total expense ratios and proposed advisory fees for the Funds anticipated to result from the Transaction were acceptable. In approving each New Investment Advisory Agreement, the Board stated that it anticipated reviewing the continuance of the New Investment Advisory Agreement in advance of the expiration of the initial two-year period.
 
114
 

About the organization
 

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

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.
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 (SEC) 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 SEC’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 SEC’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 SEC’s Web site at www.sec.gov.
 
115
 

Item 2. Code of Ethics
 
     Not applicable.
 
Item 3. Audit Committee Financial Expert
 
     Not applicable.
 
Item 4. Principal Accountant Fees and Services
 
     Not applicable.
 
Item 5. Audit Committee of Listed Registrants
 
     Not applicable.
 
Item 6. Investments
 
     (a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
 
     (b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
 
     Not applicable.
 
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
 
     Not applicable.
 
Item 8. Portfolio Managers of Closed-End Management Investment Companies
 
     Not applicable.
 
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
 
     Not applicable.
 
Item 10. Submission of Matters to a Vote of Security Holders
 
     Not applicable.
 
Item 11. Controls and Procedures
 
     The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
 

     There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
 
Item 12. Exhibits
 
(a) (1) Code of Ethics
 
         Not applicable.
 
(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.
 
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.
 
         Not applicable.
 
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.
 

SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
 
Name of Registrant: VOYAGEUR MUTUAL FUNDS
 
PATRICK P. COYNE
By:  Patrick P. Coyne
Title:    Chief Executive Officer
Date:
May 5, 2010

     Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
PATRICK P. COYNE
By:  Patrick P. Coyne 
Title:    Chief Executive Officer
Date:
May 5, 2010

RICHARD SALUS  
By:  Richard Salus 
Title:    Chief Financial Officer 
Date:  May 5, 2010