<PAGE>
For Tax-Exempt Income
Delaware Tax-Free Pennsylvania Fund
Delaware Tax-Free New Jersey Fund
Delaware Tax-Free Ohio Fund
service and guidance
professional management
goals
(Photo of Illustration from Tax-Exempt Brochure)
1999
Semi-Annual
Report
DELAWARE
INVESTMENTS
- -----------
Philadelphia o London
<PAGE>
for tax-
exempt
income
2
August 4, 1999
Dear Shareholder:
Over the last six months, a booming stock market and concerns about higher
interest rates created a challenging economic backdrop for all types of fixed
income investments, including tax-free municipal bonds.
During March and April, U.S. Treasuries lost what remained of their "safe
haven" appeal as a strong U.S. economy, tame inflation and growing evidence of
economic improvement overseas supported advances in the equity markets. Key
equity indexes like the Dow Jones Industrial Average and the Standard and Poor's
500 Index, while somewhat volatile, posted impressive gains during the period.
As prices on Treasury bonds fell, municipal bond prices held up slightly better
due to a significant drop in 1999 new municipal bond issues.
Consumer spending remained strong as extraordinary stock market gains created
optimism about the economy and helped push the current period of national
expansion into its ninth year. As summer approached, however, it appeared as
though the U.S. economy might be on the verge of overheating.
In June, investors' focus turned to the Federal Reserve Board as a host of
government reports showed increases in consumer prices, producer prices and
wages, suggesting the possibility of higher inflation. The threat of rising
interest rates, which reduce the value of bonds, further dampened the 1999
performance of fixed-income investments, especially municipal bonds. As
expected, the Federal Reserve raised short-term interest rates by 0.25% in June
and again in August.
While the past six months were very difficult for most municipal bond funds,
as measured by the Lehman Brothers Municipal Bond Index, they were even more
challenging for Delaware Tax-Free New Jersey Fund and Delaware Tax-Free
CUMULATIVE TOTAL RETURN
- --------------------------------------------------------------------------------
Six Months Ended
August 31, 1999
- --------------------------------------------------------------------------------
Delaware Tax-Free Pennsylvania Fund Class A -2.98%
Lipper Pennsylvania Municipal Bond Fund Average (262 funds) -3.09%
- --------------------------------------------------------------------------------
Delaware Tax-Free New Jersey Fund Class A -5.17%
Lipper New Jersey Municipal Bond Fund Average (47 funds) -3.05%
- --------------------------------------------------------------------------------
Delaware Tax-Free Ohio Fund Class A -4.13%
Lipper Ohio Municipal Bond Fund Average (133 funds) -2.87%
- --------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index -2.06%
- --------------------------------------------------------------------------------
All performance shown above is at net asset value and assumes reinvestment of
distributions. Past performance does not guarantee future results. Performance
of other Fund classes varies due to different charges and expenses. The
unmanaged Lehman Brothers index is composed of bonds with a variety of quality
ratings from many states. It is not possible to invest directly in any index.
Complete performance information for all funds can be found on page 9.
<PAGE>
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3
Ohio Fund. This was largely due to our lengthening of each Fund's average
duration. Over the last 12 months we increased both Funds' average duration
(which measures a fund's sensitivity to interest rates) in order to take
advantage of higher yields available on longer term tax-exempt debt. This helped
performance when interest rates were cut three times during the fall and winter
of 1998, but had a negative impact when inflation became a concern during the
second quarter of 1999.
Delaware Tax-Free Pennsylvania Fund's total return reflects this difficult
market environment for fixed-income investments over the last six months.
Nevertheless, we preserved capital to a greater extent than the average of other
tax-free municipal bond funds in Pennsylvania tracked by Lipper Analytical
Services.
We maintain a cautious short-term outlook for municipal bonds due to
continued strength in the stock market and the Federal Reserve's vigilant
position on inflation. However, we believe municipal bond funds have an
important place in balanced portfolios. In our view, municipal bond funds can
offer investors substantial value by providing: o The potential to earn income
that is exempt from federal, and in some cases, state taxes; o A cushion from
the volatility of more growth-oriented investments; and o Portfolio
diversification.
In the pages that follow, your Funds' portfolio managers, Patrick Coyne and
Mitchell Conery provide an overview of the municipal bond market, discuss the
performance of Delaware's tax-free funds in Pennsylvania, New Jersey and Ohio
and offer an outlook for the coming months. We value your ongoing commitment to
Delaware Investments and look forward to updating you on your Fund's performance
next March.
Sincerely,
/s/ Wayne A. Stork
- ------------------------------------
Wayne A. Stork
Chairman,
Delaware Investments Family of Funds
/s/ David K. Downes
- ------------------------------------
David K. Downes
President and Chief Executive Officer,
Delaware Investments Family of Funds
<PAGE>
for tax-
exempt
income
4
Portfolio Managers' Review
BY PATRICK P. COYNE AND
MITCHELL L. CONERY
Vice Presidents/Senior Portfolio Managers
MUNICIPAL BONDS OFFERED
ATTRACTIVE VALUE COMPARED TO
U.S. TREASURIES
In the fall of 1998, global demand for higher quality investments increased the
appeal of U.S. Treasury bonds. Prices rose sharply, driving yields to historic
lows. Municipal bond prices, on the other hand, held relatively steady due to
unusually high bond supply and a lack of demand from foreign investors. As a
result, in October 1998, tax-free municipal bonds appeared to offer remarkable
value relative to comparable U.S. Treasury bonds.
Non-traditional investors, such as foreign investors and corporations began
to view the municipal bond market as undervalued and ripe with potential for
price appreciation. In our opinion, the participation of non-traditional buyers,
as well as a declining supply of new municipal bond issues, helped stabilize
municipal bond prices as fixed-income investments took a back seat to equities
in the first quarter of 1999.
Consumer prices, producer prices and wages began to tick upwards during the
second quarter of 1999. When higher interest rates became a reality, municipal
bond yields rose throughout the summer. Many of the non-traditional municipal
bond investors attempted to lock in profits, which we believe contributed to
weaker municipal bond price performance.
By August 31, 1999, municipal bond yields had risen to 5.78% (Source:
Bloomberg Business News). Treasury yields also increased, but less dramatically
than municipal bonds. As a result, long-term municipal bond yields again reached
what seemed to be attractive levels, offering 89% of the income of comparable
30-year U.S. Treasury bonds, compared to the historical average of 84%
Municipal bonds typically offer about 84% of the income that is offered by
comparable Treasury Securities. When yields exceed 84% of Treasuries, municipal
bonds are considered to be undervalued. (Source: Municipal Market Data).
MUNICIPAL BONDS VALUE COMPARED TO TREASURIES
Date Yield Ratio
2/28/89 0.81
2/28/90 0.82
2/28/91 0.84
2/29/92 0.83
2/28/93 0.80
2/28/94 0.84
2/28/95 0.80
2/29/96 0.84
2/28/97 0.81
2/28/98 0.86
2/28/99 0.89
8/31/99 0.89
The above chart represents the percentage of income that the average 30-year
AAA-rated general obligation municipal bond provided compared to a 30-year U.S.
Treasury bond. Principal and interest of municipal bonds, unlike Treasuries, are
not guaranteed by the U.S. government. Source: Bloomberg Business News
<PAGE>
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5
(Source: Bloomberg Business News). Toward the end of the fiscal period,
these attractive municipal bond yields appeared to be drawing investors back
into the market.
ROBUST 1998 MUNICIPAL BOND SUPPLY SLOWS IN 1999
After the market absorbed a near record $285 billion of new supply during 1998,
municipal bond issues slowed substantially in 1999. During the first seven
months of 1999, new municipal bond issues stood at $133 billion, down nearly 24%
from the same period in the previous year (Source: The Bond Buyer).
We believe this was due in part to a drop in refunding activity, since many
municipalities had already taken advantage of lower interest rates to refinance
their debt in 1998. In addition, higher borrowing costs in 1999 reduced the
incentive for municipalities to issue bonds to fund capital projects. While
reduced supply limited our bond selection, it also helped keep municipal bond
prices from falling as steeply as Treasuries during the equity market rally in
the first quarter of 1999.
CREDIT QUALITY LEVELS OUT
Over the last three years, the municipal bond market has enjoyed steadily
improving credit quality. In 1999, however, that trend appeared to wind down. So
far this year, credit upgrades are only slightly ahead of downgrades.
As a result, bond issuers are beginning to offer higher yields to investors
willing to take on the risk of lower rated or unrated bonds. In many cases,
these higher yielding, higher risk municipal bonds are being issued by
not-for-profit health care providers. We avoided these bonds because in our
view, increased competition and funding cuts will challenge the profitability of
this sector.
STRATEGIC POSITIONING
DELAWARE TAX-FREE
PENNSYLVANIA FUND
Over the last six months we modestly increased Delaware Tax-Free Pennsylvania
Fund's average duration by purchasing higher yielding securities at the long end
of the maturity spectrum. As of August 31, 1999 our duration was positioned at
7.9 years, which was comparable to our benchmark, the Lehman Brothers Municipal
Bond Fund Index. Duration measures a fund's probable sensitivity to rising or
falling interest rates and is a key factor in municipal bond performance.
A longer duration allowed us to generate higher potential income for the
Fund. Rising interest rates, however, which lower the value of bonds, had a
negative impact on the Fund's six-month price performance.
In a challenging economic environment for municipal bonds,
<TABLE>
<CAPTION>
CREDIT QUALITY
- ----------------------------------------------------------------------------------------------
August 31, 1999*
Delaware Delaware Delaware
Tax-Free Pennsylvania Fund Tax-Free New Jersey Fund Tax-Free Ohio Fund
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA 61.62% 78.83% 43.36%
AA 10.41% 2.02% 8.63%
A 6.03% 9.05% none
BBB 8.16% 5.46% 19.67%
BB & B 4.01% 1.06% 12.57%
Unrated 9.77% 3.58% 15.77%
</TABLE>
*Subject to change
<PAGE>
for tax-
exempt
income
6
Delaware Tax-Free Pennsylvania Fund had a six-month cumulative return of -2.98%
(Class A shares with distributions reinvested at net asset value). We were
slightly more successful at preserving capital than the Fund's peers in the
Lipper Pennsylvania Municipal Bond Fund category, but underperformed the
unmanaged Lehman Brothers Municipal Bond Fund Index. This index, however, tracks
the performance of municipal bond funds from many states, not just in the state
of Pennsylvania.
We balanced our slightly more aggressive duration strategy with a focus on
higher quality bonds. As of August 31, 1999, 86% of the Fund was allocated to
investment grade bonds rated BBB or better by Standard and Poor's or Moody's
Investors Services. A widening yield gap between higher quality, lower risk
bonds and higher yielding, higher risk bonds created an opportunity to increase
yield by reducing credit quality. However, we were reluctant to increase the
portfolio's credit risk in a volatile interest rate environment.
Pre-refunded bonds continued to represent a substantial portion of the Fund's
portfolio comprising nearly 20% of the Fund's assets as of August 31, 1999.
Issuers often pre-refund their bonds when interest rates are low to reduce their
interest costs. The pre-refunded securities in Delaware Tax-Free Pennsylvania
Fund are backed by U.S. government bonds, which improves their credit quality.
Pre-refunding also reduces a bond's sensitivity to interest rates, which can
lead to higher prices.
DELAWARE TAX-FREE
NEW JERSEY FUND
Since its inception, Delaware Tax-Free New Jersey Fund has invested in longer
term securities in an effort to generate the highest income possible for the
Fund's shareholders.
During a stable or falling interest rate environment, this strategy can
benefit both the Fund's price performance and its yield. However, over the last
six months, two Federal Reserve Board interest rate increases and concerns that
future hikes may be necessary, reduced the value of our longer term bonds.
THE PRE-REFUNDED SECURITIES IN DELAWARE TAX-FREE PENNSYLVANIA FUND ARE BACKED BY
U.S. GOVERNMENT BONDS, WHICH IMPROVES THEIR CREDIT QUALITY. PRE-REFUNDING ALSO
REDUCES A BOND'S SENSITIVITY TO INTEREST RATES, WHICH CAN LEAD TO HIGHER PRICES.
PORTFOLIO HIGHLIGHTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AUGUST 31, 1999
Delaware Tax-Free Delaware Tax-Free Delaware Tax-Free
Pennsylvania Fund New Jersey Fund Ohio Fund
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of Securities 122 43 25
Average Weighted Maturity 12.78 years 21.90 years 21.08 years
Average Duration 7.9 years 12.7 years 11.3 years
AMT Income* 2.01% 12.90% 17.48%
Average Coupon 6.03% 4.97% 5.45%
Current 30-Day SEC Yield**
(Class A) 4.3% 4.8% 4.9%
(Classes B and C) 3.7% 4.1% 4.3%
</TABLE>
* Percentage of income generated for the 12 months ended August 31, 1999 that
was subject to the federal alternative minimum tax.
** Calculated according to Securities and Exchange Commission Guidelines.
<PAGE>
for tax-
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7
As a result, Delaware Tax-Free New Jersey Fund had a disappointing total
return of -5.17% (Class A shares with distributions reinvested at net asset
value) for the six-months ended August 31, 1999. At the end of the semi-annual
period, our duration was positioned at 12.7 years, substantially longer than our
benchmark, the Lehman Brothers Municipal Bond Fund Index. Our increased
sensitivity to interest rates helps explain why we were less successful at
preserving capital than the Lehman Brothers Index and many other tax-free funds
in New Jersey tracked by Lipper Analytical Services. While the Federal Reserve
left the door open for additional rate hikes, in our opinion substantial
increases are unlikely during the balance of 1999. Should interest rates
stabilize, it could benefit the price performance of Delaware Tax-Free New
Jersey Fund in the coming months.
We attempted to offset our duration by placing a high priority on credit
quality when selecting bonds for Delaware Tax-Free New Jersey Fund. Currently
90% of the Fund's securities are rated A or better by Standard & Poor's with a
concentration of 79% in AAA-rated bonds.
Unlike many other states, new bond issues in New Jersey remained strong in
1999. Through the first seven months of 1999 municipal bond sales in New Jersey
were just 4.5% below the torrid pace set during the same period in 1998 (Source:
The Bond Buyer). Unless demand remains high enough to meet New Jersey's abundant
municipal bond supply, we could see limited potential for price appreciation in
the state. However, according to the Tax Foundation, New Jersey currently is the
12th highest-ranking state in terms of state and local taxes as a percentage of
income, which should support continued strong investor demand for New Jersey
tax-exempt bonds.
DELAWARE TAX-FREE OHIO FUND
Similar to Delaware Tax-Free New Jersey Fund, a longer average duration was
largely responsible for Delaware Tax-Free Ohio Fund's disappointing six-month
performance. As longer term securities began to offer substantially higher
yields, we extended our duration (a measure of sensitivity to interest rates) to
boost the Fund's income stream. Over the last six months, our duration rose by
more than 3% to 11.3 years. This was substantially longer than the average
duration of our benchmark, the Lehman Brothers Municipal Bond Fund Index.
A longer duration reduced the Fund's six-month total return performance when
the Federal Reserve hiked short-term interest rates twice this past summer.
Consequently, Delaware Tax-Free Ohio Fund's total return was -4.13% for the six
months ended August 31, 1999 (Class A shares with distributions reinvested at
net asset value). The Fed could tighten again, however, we do not expect
interest rates to rise substantially throughout the balance of 1999. This should
allow Delaware Tax-Free Ohio Fund to continue earning an attractive level of
income with potential for some modest price appreciation in the coming months.
ACCORDING TO THE TAX FOUNDATION, NEW JERSEY CURRENTLY IS THE 12TH
HIGHEST-RANKING STATE IN TERMS OF STATE AND LOCAL TAXES AS A PERCENTAGE OF
INCOME, WHICH SHOULD SUPPORT CONTINUED STRONG INVESTOR DEMAND FOR NEW JERSEY
TAX-EXEMPT BONDS.
<PAGE>
for tax-
exempt
income
8
In 1913, Ohio earned the dubious distinction of being the first state to impose
an income tax on its residents. Ohio is still considered a high-tax state,
currently ranking 11th out of 50 states in terms of state and local taxes as a
percentage of income (Source: The Tax Foundation). This has helped create strong
investor demand for tax-exempt bond funds in the state. Strong demand coupled
with a declining supply of new municipal bond issues in Ohio could benefit
Delaware Tax- Free Ohio Fund in the coming months.
OUTLOOK
As the U.S. economy continued its record peacetime expansion, we began to see
signs of overheating in the late spring of 1999. A primary concern for the
Federal Reserve Board has been rising labor costs. As economic expansion
continues to create new jobs, competition between employers looking to fill
those positions is leading to higher wages. While this scenario certainly
benefits employees, the Fed is concerned that higher labor costs will eventually
translate to higher consumer prices.
Another potential source of inflation is vigorous U.S. consumer spending.
Confident about their jobs, their income prospects and the economy, consumers
continued to open their wallets to retailers at a brisk pace throughout 1999. In
August, retail sales increased by 1.2%, more than twice what analysts had
predicted and the largest gain in six months (Source: Bloomberg Business News).
Despite rising wages and steady consumer spending, we believe that with two
short-term interest rate hikes this summer, the Federal Reserve has gone a long
way toward stifling inflation. In August, consumer prices, (excluding food and
energy) rose at the smaller than expected rate of just 0.1% (Source: Bloomburg
Business News). Wage increases in August, according to a government employment
report, were also below expectations.
At their October 5 meeting, the Federal Reserve adopted a "tightening" bias,
increasing the likehood that they will raise rates again in November. However,
unless labor costs or consumer prices begin to accelerate rapidly, we think
substantial interest rate hikes in 1999 will not be necessary. If inflation
remains relatively tame and interest rates stabilize, this could promote
stronger price performance for tax-free municipal bonds in the coming months.
We also expect refunding activity to remain light during the next several
months, which should continue to limit the supply of available municipal bonds.
Reduced municipal bond supply may also contribute to higher municipal bond
prices.
While the short-term outlook for municipal bonds is somewhat uncertain, we
continue to believe they offer an important long-term benefit to investors
seeking to increase their income potential but not their tax burden. In addition
to their tax advantages, municipal bonds also offer investors an opportunity to
help diversify their portfolio and reduce volatility.
STRONG DEMAND COUPLED WITH A DECLINING SUPPLY OF NEW MUNICIPAL BOND ISSUES IN
OHIO COULD BENEFIT DELAWARE TAX-FREE OHIO FUND IN THE COMING MONTHS.
<PAGE>
for tax-
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income
9
Performance Summary
DELAWARE TAX-FREE PENNSYLVANIA FUND
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Lifetime Ten Years Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 3/23/77)
Excluding Sales Charge +6.31% +6.35% +4.96% -1.37%
Including Sales Charge +6.13% +5.94% +4.17% -5.09%
- --------------------------------------------------------------------------------
Class B (Est. 5/2/94)
Excluding Sales Charge +4.21% - +4.12% -2.15%
Including Sales Charge +4.06% - +3.80% -5.88%
- --------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +3.15% - - -2.15%
Including Sales Charge +3.15% - - -3.09%
DELAWARE TAX-FREE NEW JERSEY AND OHIO FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Tax-Free New Jersey Fund Tax-Free Ohio Fund
Lifetime One Year Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 9/3/97)
Excluding Sales Charge +3.08% -3.45% +3.56% -2.40%
Including Sales Charge +1.16% -6.99% +1.64% -6.00%
- --------------------------------------------------------------------------------
Class B (Est. 9/3/97)
Excluding Sales Charge +2.07% -4.18% +1.74% -3.13%
Including Sales Charge +0.15% -7.87% -0.17% -6.81%
- --------------------------------------------------------------------------------
Class C (Est. 9/3/97)
Excluding Sales Charge +1.85% -4.16% +1.91% -3.13%
Including Sales Charge +1.85% -5.09% +1.91% -4.05%
Performance for all Funds includes reinvestment of distributions and applicable
sales charges as described below. Returns and share values will fluctuate so
that shares when redeemed may be worth more or less than the original cost. Past
performance is not a guarantee of future results. Performance for Class B and C
shares excluding sales charges assumes either contingent sales charges did not
apply or the investment was not redeemed. Returns reflect a voluntary expense
limitation in effect at the time. Returns would have been lower without the
limitation.
Class A shares of each Fund have a 3.75% maximum front-end sales charge and for
periods after 6/1/92, a 12b-1 fee.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If shares are
redeemed within 12 months, a 1% contingent deferred sales charge applies.
<PAGE>
10 for tax-exempt income
FINANCIAL STATEMENTS
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
DELAWARE TAX-FREE PENNSYLVANIA FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------------------
MUNICIPAL BONDS - 98.88%
AIRPORT REVENUE BONDS - 0.85%
Philadelphia Pennsylvania Authority for Industrial
Development Airport Revenue Systems (Philadelphia
Airport Project) Series A
5.125% 07/01/28 AMT (FGIC)........................ $ 8,000,000 $ 7,196,000
-----------
7,196,000
-----------
CONTINUING CARE/RETIREMENT REVENUE BONDS - 0.63%
Philadelphia Pennsylvania Authority for Industrial
Development Revenue (Stapley In Germantown
Continuing Care Community)
6.60% 01/01/16 ................................... 5,250,000 5,325,968
-----------
5,325,968
-----------
HIGHER EDUCATION REVENUE BONDS - 13.91%
Dauphin County General Authority College Revenue
(Holy Family College) 7.50% 12/01/19 ............. 3,025,000 3,128,727
Delaware County Authority College Revenue
(Eastern College) Series B 5.50% 10/01/19......... 1,500,000 1,396,530
(Eastern College) Series B 5.50% 10/01/24......... 2,850,000 2,614,562
Delaware County Authority University Revenue
(Villanova University)
5.80% 08/01/25 (AMBAC)............................ 7,000,000 7,034,790
(Villanova University) 9.625% 08/01/02
(Escrowed to Maturity)............................ 285,000 307,780
Montgomery County Higher Education and Health
Authority Revenue (Beaver College)
5.85% 04/01/21 (Connie Lee)....................... 5,465,000 5,545,609
Northampton County Higher Education Authority
Revenue (Lehigh University) Series A
5.50% 11/15/11.................................... 2,630,000 2,636,733
(Lehigh University) Series B
5.25% 11/15/21.................................... 3,000,000 2,830,890
Gettysburg Municipal Authority College Revenue
(Gettysburg College) Series B
4.75% 08/15/23 (AMBAC)............................ 2,100,000 1,806,714
Pennsylvania State Higher Educational Facilities
Authority Revenue College Revenue
(Allegheny College) Series B
5.00% 11/01/26 (MBIA)............................. 3,000,000 2,677,290
(Elizabethtown College) 6.50% 06/15/15............ 6,700,000 6,918,353
(LaSalle University) 9.50% 05/01/03
(Escrowed to Maturity)............................ 300,000 326,724
(Temple University)
5.00% 04/01/29 (MBIA)............................. 1,650,000 1,470,662
(Temple University)
5.75% 04/01/31 (MBIA)............................. 8,000,000 8,011,520
(University of Pennsylvania)
4.625% 07/15/30................................... 4,000,000 3,240,400
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
----------------------
MUNICIPAL BONDS (CONTINUED)
HIGHER EDUCATION REVENUE BONDS (CONTINUED)
(University of Pennsylvania)
4.75% 07/15/33 ................................... $14,420,000 $ 11,838,386
(University of Pennsylvania)
5.90% 09/01/15 ................................... 4,205,000 4,337,458
Pennsylvania State Higher Educational Facilities
Authority Revenue State System
Series M 5.75% 06/15/20 (AMBAC)................... 17,730,000 17,849,500
Series P 5.00% 06/15/19 (AMBAC)................... 10,000,000 9,152,900
Pennsylvania State University
Series A 5.00% 08/15/17 (MBIA).................... 3,695,000 3,410,485
Series A 5.00% 08/15/27 (MBIA).................... 15,000,000 13,406,100
Swarthmore Borough Authority (Swarthmore College)
5.00% 09/15/28.................................... 2,000,000 1,771,440
6.00% 09/15/12.................................... 5,730,000 6,037,701
-----------
117,751,254
-----------
HOSPITAL REVENUE BONDS - 22.24%
Allegheny County Pennsylvania Hospital Development
Authority Revenue (Allegheny Valley Hospital)
7.75% 08/01/20 ................................... 2,840,000 2,828,640
(Allegheny Valley Hospital Facility
Management Co.) 7.50% 08/01/13 ................... 390,000 389,493
Allegheny County Pennsylvania Hospital Development
Authority Revenue Health Center
(UPMC Health) Series B
6.00% 07/01/23 (MBIA)............................. 5,745,000 6,013,694
(UPMC Health) Series B
6.00% 07/01/24 (MBIA)............................. 5,000,000 5,245,350
(UPMC Health) Series B
6.00% 07/01/26 (MBIA)............................. 4,750,000 4,991,348
(UPMC Health) Series B
6.00% 07/01/27 (MBIA)............................. 9,325,000 9,806,263
Allegheny County Pennsylvania Hospital Development
Authority Revenue Health System Revenue
(Catholic Health East) Series A
4.875% 11/15/18 (AMBAC)........................... 5,665,000 5,050,404
(Catholic Health East) Series A
4.875% 11/15/26 (AMBAC)........................... 8,500,000 7,265,120
Berks County Pennsylvania Municipal Authority
Health Care Reading Hospital Pooled
Financial Project 5.00% 03/01/28.................. 20,000,000 17,506,200
Chester County Pennsylvania Health and Educational
Facilities Authority Health System Revenue
(Jefferson Health Systems) Series B
5.375% 05/15/27 .................................. 18,270,000 16,712,300
Delaware County Pennsylvania Authority
(Escrowed to Maturity)
(Mercy Health Corp.) 6.00% 12/15/26 .............. 3,500,000 3,689,175
<PAGE>
for tax-exempt income 11
DELAWARE TAX-FREE PENNSYLVANIA FUND
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------------------
MUNICIPAL BONDS (CONTINUED)
HOSPITAL REVENUE BONDS (CONTINUED)
Monroeville Hospital Authority Revenue
(Forbes Health System) 6.25% 10/01/15............. $ 3,500,000 $ 3,451,315
(Forbes Health System) 7.00% 10/01/13............. 7,265,000 7,240,662
Philadelphia Pennsylvania Hospital Higher Education
Facilities Authority Hospital Revenue
(Children's Hospital of Philadelphia) Series A
5.50% 02/15/22.................................... 5,600,000 5,323,024
(Children's Seashore House) Series A
7.00% 08/15/17 ................................... 3,100,000 3,301,314
(Children's Seashore House) Series B
7.00% 08/15/22.................................... 2,100,000 2,235,786
(Jeanes Health System Project)
6.85% 07/01/22.................................... 18,020,000 18,788,913
(Presbyterian Medical Center) 6.65% 12/01/19
(Escrowed to Maturity)............................ 13,000,000 14,775,930
(Roxborough Memorial Hospital)
7.25% 03/01/24 ................................... 12,015,000 12,169,513
(Temple University Hospital)
6.625% 11/15/23 .................................. 14,500,000 14,886,425
Sayre-Health Care Facilities
(VHA of Pennsylvania, Inc.)
(Capital Asset Financing Program-Guthrie
Medical Center)
Series A 7.625% 12/01/15 (AMBAC) ................. 1,000,000 1,037,500
Series B 7.625% 12/01/15 (AMBAC) ................. 2,490,000 2,583,375
(Guthrie Health Care System)
Series A 6.00% 03/01/21 (AMBAC)................... 7,000,000 7,058,520
Scranton-Lackawanna Health and Welfare Authority
(Allied Services Rehabilitation Hospitals)
7.60% 07/15/20 ................................... 5,640,000 6,065,312
Westmoreland County Pennsylvania Industrial
Development Authority Hospital Revenue
(Citizen General Hospital) 5.25% 07/01/15......... 11,000,000 9,812,000
------------
188,227,576
------------
HOUSING REVENUE BONDS - 5.53%
Montgomery County Pennsylvania Redevelopment
Authority Multi-Family Housing
(KBF Associates Project)
Series A 6.50% 07/01/25........................... 20,810,000 21,602,653
Series B 7.25% 07/01/25........................... 14,995,000 15,553,414
Pennsylvania Housing Finance Agency Single
Family Mortgage Series Y
7.45% 04/01/16 (FHA) ............................. 1,220,000 1,245,486
Pennsylvania Housing Finance Agency Single Family
Mortgage AMT Series 57A 6.15% 04/01/27 ........... 5,000,000 5,090,200
Series 59A 5.80% 10/01/29 ........................ 2,950,000 2,920,825
Philadelphia Pennsylvania Redevelopment Authority
Home Improvement Series A
7.375% 06/01/03 .................................. 400,000 404,000
------------
46,816,578
------------
<PAGE>
Principal Market
Amount Value
----------------------
MUNICIPAL BONDS (CONTINUED)
Industrial Development Revenue Bonds - 0.81%
Philadelphia Pennsylvania Authority for Industrial
Development Industrial and Commercial Revenue
(Girard Estates Facilities Leasing Project)
5.00% 05/15/27 ................................... $ 7,500,000 $ 6,820,875
-----------
6,820,875
-----------
POLLUTION CONTROL REVENUE BONDS - 8.30%
Beaver County Pennsylvania Industrial Development
Authority Pollution Control Revenue
(Cleveland Electric Illuminating Project)
7.625% 05/01/25 .................................. 8,500,000 9,387,570
Series A 7.75% 07/15/25 .......................... 10,000,000 11,131,700
Delaware County Pennsylvania Industrial Development
Authority Pollution Control Revenue
(Philadelphia Electric Company) Series A
7.375% 04/01/21 .................................. 10,250,000 10,832,918
Lehigh County Pennsylvania Industrial Development
Authority Pollution Control Revenue
(Pennsylvania Power and Light Company Project)
Series A 5.50% 02/15/27 (MBIA).................... 5,000,000 4,835,000
Series A 6.40% 11/01/21 (MBIA).................... 7,000,000 7,387,660
Series B 6.40% 09/01/29 (MBIA) ................... 15,000,000 16,069,800
Montgomery County Pennsylvania Industrial
Development Authority Pollution Control Revenue
(Philadelphia Electric Company)
6.70% 12/01/21 (MBIA)............................. 10,000,000 10,605,000
-----------
70,249,648
-----------
*PRE-REFUNDED BONDS - 19.65%
Abington School District
6.00% 05/15/26-06 (FGIC).......................... 6,000,000 6,443,400
Allegheny County Pennsylvania Hospital Development
Authority Revenue (South Hills Health Facilities)
6.00% 05/01/20-02 (MBIA).......................... 1,500,000 1,564,530
Allegheny County Pennsylvania Sanitation Authority
Revenue Series C
6.50% 12/01/16-01 (FGIC).......................... 4,500,000 4,726,980
Cambria County Hospital Development Authority
Health Center Revenue (Allegheny Lutheran
Social Ministries Project)
8.25% 06/15/17-02 ................................ 3,250,000 3,576,755
Delaware County Authority University Revenue
(Haverford College)
7.375% 11/15/20-00 (MBIA)......................... 3,275,000 3,470,616
Harrisburg Water Authority Revenue
7.00% 07/15/15-01 (FGIC).......................... 12,000,000 12,614,040
Philadelphia Authority For Industrial Development
Revenue (Cathedral Village)
7.25% 04/01/15-03 ................................ 2,000,000 2,215,300
Pennsylvania Higher Education Facilities Authority
College & University Revenue (Hahnemann
University) 6.90% 07/01/21-01 (MBIA).............. 13,000,000 13,870,350
<PAGE>
12 for tax-exempt income
DELAWARE TAX-FREE PENNSYLVANIA FUND
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------------------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED BONDS (CONTINUED)
Pennsylvania Intergovernmental Cooperative Authority
Special Tax Revenue (City of Philadelphia Funding
Program) 6.80% 06/15/22-02 ....................... $ 2,125,000 $ 2,264,506
Pennsylvania State Turnpike Commission
Turnpike Revenue
Series E 7.55% 12/01/17-99 (MBIA) ................ 495,000 509,593
Series I 7.20% 12/01/17-01 (FGIC) ................ 8,915,000 9,659,848
Series J 7.20% 12/01/17-01 (FGIC) ................ 8,995,000 9,746,532
Series K 7.50% 12/01/19-99 ....................... 10,000,000 10,293,600
Philadelphia Regional Port Authority Lease Revenue
7.15% 08/01/20-00 (MBIA) ......................... 16,315,000 16,825,823
Philadelphia Water & Sewer Revenue
7.00% 08/01/18-01 ................................ 20,650,000 21,731,234
Puerto Rico (Commonwealth of) General Obligation
6.00% 07/01/22-02 ................................ 3,585,000 3,805,908
7.25% 07/01/10-00 ................................ 1,370,000 1,437,281
Sewickley Valley Hospital Authority Refunding
(Sewickley Valley Hospital Project)
7.50% 10/01/06-99 ................................ 1,295,000 1,324,681
Swarthmore Borough Authority (Swarthmore College)
6.00% 09/15/12-00 ................................ 1,270,000 1,354,214
7.375% 09/15/20-00 ............................... 14,000,000 14,655,760
University Area Joint Authority Water and
Sewer Revenue 7.10% 09/01/20-00 (MBIA) ........... 6,000,000 6,260,040
Washington County Authority Revenue
(Shadyside Hospital) Series 85D
7.45% 12/15/18-00 (AMBAC)......................... 7,500,000 7,938,075
York County Hospital Revenue Authority
(York Hospital)
7.00% 07/01/21-01 (AMBAC)......................... 9,500,000 10,035,610
------------
166,324,676
------------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS - 2.97%
Central Dauphin Pennsylvania School District Series AA
4.50% 12/01/18 (MBIA) ............................. 1,000,000 857,630
McGuffey Pennsylvania School District Series B
4.75% 08/01/28 (AMBAC)............................. 2,750,000 2,340,553
Philadelphia Pennsylvania Area School District Series A
4.75% 04/01/27 (MBIA) ............................. 24,450,000 20,877,611
Pottsville Pennsylvania Area School District
9.375% 05/01/06
(Escrowed to Maturity) (AMBAC)..................... 900,000 1,087,011
------------
25,162,805
------------
TRANSPORTATION REVENUE BONDS - 2.89%
Pennsylvania State Turnpike Commission Oil Franchise
Tax Revenue
Series A 5.00% 12/01/23 (AMBAC).................... 7,500,000 6,786,750
Series A 4.75% 12/01/27 (AMBAC) ................... 6,000,000 5,092,620
Pennsylvania State Turnpike Commission Turnpike Revenue
Series L 6.25% 06/01/11 (AMBAC) ................... 9,000,000 9,414,810
Series N 6.50% 12/01/13 ........................... 3,000,000 3,160,290
-----------
24,454,470
-----------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
----------------------
MUNICIPAL BONDS (CONTINUED)
WASTE DISPOSAL REVENUE BONDS - 0.15%
Greater Lebanon Refuse Authority Solid Waste
Revenue Refunding 7.00% 11/15/04.................. $ 1,200,000 $ 1,275,876
-----------
1,275,876
-----------
WATER & SEWER REVENUE BONDS - 3.89%
Dauphin County Pennsylvania Industrial Development
Authority Water Development Revenue
(Dauphin Consolidated Water Supply)
Series B 6.70% 06/01/17 ......................... 1,750,000 1,929,060
Philadelphia Pennsylvania Water & Waste Water
Revenue 5.60% 08/01/18 (MBIA) .................... 6,870,000 6,853,718
Series A 5.00% 08/01/22 (AMBAC)................... 1,320,000 1,193,188
Series A 5.125% 08/01/27 (AMBAC).................. 13,750,000 12,508,788
Pittsburgh Pennsylvania Water & Sewer Revenue
7.25% 09/01/14
(Escrowed to Maturity) (FGIC) .................... 9,000,000 10,413,450
-----------
32,898,204
-----------
OTHER GENERAL OBLIGATION BONDS - 5.09%
Falls Township Pennsylvania General Obligation
7.00% 12/15/10 (MBIA) ............................ 3,000,000 3,088,440
New Morgan Pennsylvania General Obligation
Guaranteed Revenue 8.00% 11/01/05 ................ 7,745,000 8,197,385
Philadelphia Pennsylvania General Obligation
4.75% 05/15/20 (FGIC)............................. 10,800,000 9,489,960
Philadelphia Pennsylvania General Obligation
5.00% 05/15/25 (MBIA) ............................ 4,190,000 3,801,713
Puerto Rico (Commonwealth of) General Obligation
5.40% 07/01/25 ................................... 7,500,000 7,295,850
5.75% 07/01/17 ................................... 11,000,000 11,205,700
-----------
43,079,048
-----------
OTHER REVENUE BONDS - 11.97%
Chester (City Of) Pennsylvania Guaranteed
Host Community Resource Recovery
Revenue 7.25% 12/01/05 ........................... 10,405,000 10,945,748
Dauphin County Pennsylvania General Authority
Office & Parking/Forum PL Series A
6.00% 01/15/25 ................................... 4,000,000 3,757,400
Dauphin County Pennsylvania General Authority
Office & Parking/Riverfront Office Center
Project Series A 6.00% 01/01/25 ................... 5,000,000 4,696,850
Delaware County Authority Revenue
(Main Line & Haverford Nursing and
Rehabilitation Center) 9.00% 08/01/22 ............. 1,950,000 2,176,512
Erie Western Pennsylvania Port Authority
General Revenue 6.25% 06/15/10 AMT ................ 1,365,000 1,441,617
**FAC Municipal Trust Series 99-1, Inverse Floater
8.65% 12/15/14 ................................... 21,000,000 20,334,510
Harrisburg Pennsylvania Authority Office &
Parking Revenue Series A
6.00% 05/01/19 ................................... 3,000,000 2,889,240
<PAGE>
for tax-exempt income 13
DELAWARE TAX-FREE PENNSYLVANIA FUND
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------
MUNICIPAL BONDS (CONTINUED)
OTHER REVENUE BONDS (CONTINUED)
Pennsylvania Intergovernmental Coopertive Authority
Special Tax Revenue (Philadelphia Funding Project)
4.75% 06/15/23 (FGIC) ............................ $22,000,000 $ 19,191,480
+Philadelphia Gas Works Revenue
5.53% 01/01/12 (AMBAC) ........................... 2,500,000 1,276,125
Philadelphia Pennsylvania Parking Authority
Parking Revenue Series A
5.125% 02/15/24 (AMBAC) (FSA) .................... 6,500,000 5,961,995
Philadelphia Pennsylvania Parking Authority
Parking Revenue Airport
5.25% 09/01/29 (FSA) ............................. 17,250,000 15,885,698
Southeastern Pennsylvania Transportation Authority
Special Revenue
Series A 4.75% 03/01/24 (FGIC) ................... 10,000,000 8,577,600
Series A 4.75% 03/01/29 (FGIC) ................... 5,000,000 4,194,700
------------
101,329,475
------------
Total Municipal Bonds (cost $829,688,444) ........... 836,912,453
------------
TOTAL MARKET VALUE OF SECURITIES - 98.88%
(COST $829,688,444) .................................. $836,912,453
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.12% .. 9,482,134
-------------
NET ASSETS APPLICABLE TO 107,901,348 SHARES
OUTSTANDING - 100.00% ................................. $846,394,587
=============
NET ASSET VALUE - TAX-FREE PENNSYLVANIA FUND A CLASS
($799,970,998 / 101,983,113 SHARES)................... $7.84
=====
NET ASSET VALUE - TAX-FREE PENNSYLVANIA FUND B CLASS
($42,318,907 / 5,394,958 SHARES) ..................... $7.84
=====
NET ASSET VALUE - TAX-FREE PENNSYLVANIA FUND C CLASS
($4,104,682 / 523,277 SHARES) ........................ $7.84
=====
- ------------------------
Summary of Abbreviations:
AMBAC - Insured by AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
Connie Lee - Insured by College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Administration
FSA - Insured by the Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
- ------------------------
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
** Inverse floaters represent a security that pays interest at rates that
increase (decrease) with a decrease (increase) in a specific index. Interest
rates disclosed are in effect on August 31, 1999.
+ The interest rate shown for this security is the effective yield.
COMPONENTS OF NET ASSETS AT AUGUST 31, 1999:
Capital shares (unlimited authorization-no par)................ $846,546,697
Distributions in excess of net investment income .............. (15,276)
Accumulated net realized loss on investments .................. (7,360,843)
Net unrealized appreciation of investments .................... 7,224,009
------------
Total net assets .............................................. $846,394,587
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
TAX-FREE PENNSYLVANIA FUND
Net asset value A Class (A) ................................... $7.84
Sales charge (3.75% of offering price or 3.95%
of amount invested per share) (B) ............................. 0.31
-----
Offering price ................................................ $8.15
=====
- -------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $100,000 or
more.
See accompanying notes
<PAGE>
14 for tax-exempt income
DELAWARE GROUP STATE TAX-FREE INCOME TRUST -
DELAWARE TAX-FREE NEW JERSEY FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------
MUNICIPAL BONDS - 95.68%
GENERAL OBLIGATION REVENUE BONDS - 1.12%
Evesham Township New Jersey Series A
5.00% 09/15/17 (FGIC) ............................ $ 50,000 $ 47,217
--------
47,217
--------
HIGHER EDUCATION REVENUE BONDS - 9.59%
New Jersey St. Educational Facilities Authority
(Drew University Issue) Series C
5.00% 07/01/17 (MBIA) ............................ 65,000 60,981
(Georgian) Series B 5.20% 07/01/15 ............... 200,000 183,586
(Montclair State University) Series F
5.40% 07/01/25 (AMBAC)............................ 30,000 28,906
(Princeton Theological) Series A
5.00% 07/01/22 ................................... 20,000 18,366
(Richard Stockton College) Series C
5.10% 07/01/23 (AMBAC)............................ 70,000 64,301
(University Medicine & Dentistry)
5.25% 12/01/21 (AMBAC)............................ 50,000 47,602
--------
403,742
--------
HOSPITAL REVENUE BONDS - 8.70%
New Jersey Health Care Facilities Financing Authority
(AHS Hospital) Series A
5.00% 07/01/27 (AMBAC) ........................... 150,000 134,654
(Holy Name Hospital)
5.25% 07/01/20 (AMBAC) ........................... 50,000 47,801
(JFK Medical Center/Hartwyck)
5.00% 07/01/18 (MBIA) ............................ 100,000 92,191
(Palisades Medical Center)
5.25% 07/01/28 ................................... 100,000 91,293
--------
365,939
--------
HOUSING REVENUE BONDS - 1.14%
New Jersey State Housing and Mortgage Finance
Agency AMT Series A
5.65% 05/01/40 (AMBAC) ........................... 50,000 47,928
--------
47,928
--------
INDUSTRIAL DEVELOPMENT AUTHORITY
REVENUE BONDS - 2.39%
New Jersey Economic Development Authority
(Kapkowski Road Landfill) Series A
6.375% 04/01/18 (AMBAC) .......................... 100,000 100,566
--------
100,566
--------
PARKING REVENUE BONDS - 4.37%
Essex County New Jersey Improvement Authority
Parking Facility Series B
5.25% 10/01/27 (MBIA) ............................ 40,000 37,598
5.00% 10/01/22 (AMBAC) ........................... 60,000 54,286
New Brunswick New Jersey Parking Authority Revenue
5.00% 01/01/20 (FGIC) ............................ 100,000 91,968
--------
183,852
--------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------
MUNICIPAL BONDS (CONTINUED)
PORTS & HARBORS REVENUE BONDS - 3.16%
Delaware River and Bay Authority
5.25% 01/01/26 (FGIC) ............................ $ 50,000 $ 47,866
Port Authority of New York and New Jersey
Construction 114th Series 4.75% 08/01/33 ......... 100,000 85,147
--------
133,013
--------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS - 15.66%
Carteret New Jersey Board of Education Certificate
of Participation 4.75% 04/15/19 (MBIA) ........... 300,000 263,364
Freehold Township New Jersey Board of Education
5.40% 07/15/23 (FSA) ............................. 50,000 48,817
Mount Olive Township New Jersey Board of Education
5.00% 01/15/19 (FGIC) ............................ 25,000 23,464
Newark New Jersey Schools
5.30% 9/01/15 (MBIA) ............................. 50,000 50,032
Sparta Township School District
5.00% 09/01/20 ................................... 200,000 186,930
Summit New Jersey 4.50% 11/01/18 .................... 100,000 86,322
--------
658,929
--------
TERRITORIAL GENERAL OBLIGATION BONDS - 8.04%
Puerto Rico Commonwealth
5.375% 07/01/21 (MBIA) ........................... 50,000 49,395
Puerto Rico Commonwealth Highway &
Transportation Authority (Highway Improvements)
Series Y 5.50% 07/01/26 .......................... 250,000 242,815
Puerto Rico Industrial Tourist Educational
Medical and Environmental Control Facilities
(Mennonite General Hospital) Series A
5.625% 07/01/27 .................................. 50,000 46,206
--------
338,416
--------
WATER & SEWER REVENUE BONDS - 29.34%
Bayonne New Jersey Municipal Utilities Authority
Water Systems 5.00% 01/01/28 (MBIA) .............. 50,000 44,848
Essex County New Jersey Improvement Authority
Revenue Utility System (East Orange Franchise)
5.00% 07/01/28 (MBIA) ............................ 100,000 89,622
Jersey City New Jersey Municipal Utilities
Authority Sewer Revenue 5.25% 12/01/13 ........... 100,000 99,200
Mount Holly New Jersey Utilities and Sewer
4.75% 12/01/18 ................................... 140,000 123,077
New Jersey Economic Development Water
5.00% 11/01/28 ................................... 300,000 265,641
New Jersey Economic Development
Authority Natural Gas Facilities
3.00% 08/01/30 (AMBAC) ........................... 200,000 200,000
New Jersey Environmental Infrastructure
4.50% 09/01/18 ................................... 200,000 171,128
<PAGE>
for tax-exempt income 15
DELAWARE TAX-FREE NEW JERSEY FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
MUNICIPAL BONDS (CONTINUED)
WATER & SEWER REVENUE BONDS (CONTINUED)
North Jersey District Water Supply Series A
(Wanaque North Project)
5.125% 11/15/21 (MBIA) ........................... $150,000 $ 139,737
Stafford New Jersey Municipal Utilities Authority
Water and Sewer Revenue
5.00% 12/01/22 (FGIC) ............................ 60,000 54,622
Wanaque Borough New Jersey Sewer Authority
Sewer Revenue 5.25% 12/01/21 ..................... 50,000 46,761
----------
1,234,636
----------
MISCELLANEOUS REVENUE BONDS - 12.17%
Middlesex County New Jersey Improvement Authority
Revenue 4.70% 09/15/18 ........................... 85,000 74,663
New Jersey State Transportation Industrial
Development Revenue Bonds-0.81% .................. 300,000 254,433
New Jersey Economic Development Authority Special
Facilities Revenue Continental Airlines
Project 5.50% 04/01/28 ........................... 50,000 44,606
New Jersey Economic Development Authority Revenue
Reference First Mortgage The Evergreens
6.00% 10/01/22 ................................... 50,000 50,185
Union County New Jersey Utilities Authority County
Deficiency Series A2 5.00% 06/15/28 .............. 100,000 88,225
----------
512,112
----------
Total Municipal Bonds (cost $4,302,728) ............. 4,026,350
----------
<PAGE>
TOTAL MARKET VALUE OF SECURITIES - 95.68%
(COST $4,302,728) ................................ $4,026,350
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 4.32% ....................... 181,773
----------
NET ASSETS APPLICABLE TO 789,896 SHARES
OUTSTANDING - 100.00% ............................ $4,208,123
==========
NET ASSET VALUE - TAX-FREE NEW JERSEY FUND A CLASS
($1,913,119 / 359,112 SHARES) .................... $5.33
=====
NET ASSET VALUE - TAX-FREE NEW JERSEY FUND B CLASS
($2,118,707 / 397,693 SHARES) .................... $5.33
=====
NET ASSET VALUE - TAX-FREE NEW JERSEY FUND C CLASS
($176,297 / 33,091 SHARES) ....................... $5.33
=====
- -----------------------------
Summary of Abbreviations:
AMBAC - Insured by AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT AUGUST 31, 1999:
Capital shares (unlimited authorization-no par) ..... $4,484,501
Net unrealized depreciation of investments .......... (276,378)
----------
Total net assets .................................... $4,208,123
==========
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
TAX-FREE NEW JERSEY FUND
Net asset value Class A (A) ......................... $5.33
Sales charge (3.75% of offering price or 3.94%
of amount invested per share) (B) ................ 0.21
-----
Offering price ...................................... $5.54
=====
- -------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $100,000 or
more.
See accompanying notes
<PAGE>
16 for tax-exempt income
DELAWARE GROUP STATE TAX-FREE INCOME TRUST -
DELAWARE TAX-FREE OHIO FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------
MUNICIPAL BONDS - 95.13%
AIRPORT REVENUE BONDS - 14.60%
Cleveland Ohio Airport Special Revenue
(Continental Airlines Project)
5.375% 09/15/27 AMT .............................. $130,000 $113,040
Toledo Lucas County Ohio Port Authority
Airport Revenue Refunding Improvement Series 1
5.50% 05/15/20 ................................... 175,000 160,046
--------
273,086
--------
HIGHER EDUCATION REVENUE BONDS - 7.70%
Ohio State Higher Educational Facility Revenue
(Case Western Reserve University)
5.125% 10/01/17 .................................. 50,000 46,834
University of Akron Ohio
5.25% 01/01/22 (AMBAC) ........................... 50,000 47,114
University of Cincinnati Ohio Series T
5.00% 06/01/18 ................................... 55,000 50,065
--------
144,013
--------
HOSPITAL REVENUE BONDS - 12.78%
Cuyahoga County Ohio Health Care Facilities Revenue
(Benjamin Rose Institute Project)
5.50% 12/01/28 ................................... 150,000 134,960
Lorain County Ohio Hospital Revenue Catholic
Healthcare Partners
5.50% 09/01/27 (MBIA) ............................ 50,000 48,746
Puerto Rico Industrial Tourist Educational
Medical and Environmental Control Facilities
(Mennonite General Hospital)
Series A 5.625% 07/01/27 ......................... 60,000 55,447
--------
239,153
--------
HOUSING REVENUE BONDS - 5.27%
Franklin County Ohio Mortgage Revenue Briggs/
Wedgewood 5.55% 11/20/17
AMT (GNMA) ....................................... 50,000 49,264
Ohio Housing Finance Agency Mortgage Revenue
Residential-Series C AMT
5.75% 09/01/28 AMT (GNMA) ........................ 50,000 49,375
--------
98,639
--------
*PRE-REFUNDED BONDS - 4.25%
Ohio State Turnpike Commission Turnpike
Revenue 1996 Series A
5.50% 02/15/26-06 (MBIA) ......................... 75,000 79,415
--------
79,415
--------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------
MUNICIPAL BONDS (CONTINUED)
POLLUTION CONTROL REVENUE BONDS - 9.92%
Ohio State Air Quality Development Authority
JMG Funding Limited Partnership
5.625% 10/01/22 (AMBAC) .......................... $ 65,000 $ 63,560
Cleveland Electric Illuminating Refunding Pollution
Control Series B 6.00% 08/01/20 .................. 125,000 122,084
----------
185,644
----------
POWER AUTHORITY REVENUE BONDS - 8.16%
Cleveland Ohio Public Power Systems Revenue
5.00% 11/15/24 (MBIA) ............................ 30,000 27,170
Guam Power Authority Revenue Series A
5.125% 10/01/29 .................................. 75,000 66,762
Puerto Rico Electric Power Authority Power Revenue
Series X 5.50% 07/01/25 .......................... 60,000 58,780
----------
152,712
----------
SCHOOL DISTRICT GENERAL OBLIGATION BONDS - 10.87%
Brecksville-Broadview Heights Ohio School
District 5.25% 12/01/21 (FGIC) ................... 50,000 47,179
Gahanna-Jefferson Ohio Public Schools
4.75% 12/01/21 ................................... 75,000 64,469
Oak Hills Ohio Local School District
5.125% 12/01/25 (MBIA) ........................... 100,000 91,703
----------
203,351
----------
TRANSPORTATION REVENUE BONDS - 10.01%
Dayton Ohio Special Facilities Revenue
(Emery Air Freight) 6.05% 10/01/09 ............... 180,000 187,148
----------
187,148
----------
OTHER GENERAL OBLIGATION BONDS - 7.54%
Muskingum County Ohio Refunding and County
Facilities Improvement
5.25% 12/01/27 (MBIA) ............................ 100,000 93,049
Elyria Ohio General Obligations
5.40% 12/01/22 (FGIC) ............................ 50,000 48,014
----------
141,063
----------
OTHER REVENUE BONDS - 4.03%
Cleveland Ohio Cleveland Stadium Project
5.25% 11/15/17 (AMBAC) ........................... 50,000 48,570
Hamilton County Football Revenue
5.00% 12/01/27 (MBIA) ............................ 30,000 26,873
----------
75,443
----------
Total Municipal Bonds (cost $1,877,224) ............. 1,779,667
----------
<PAGE>
for tax-exempt income 17
DELAWARE TAX-FREE OHIO FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES - 95.13%
(COST $1,877,224) ................................ $1,779,667
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 4.87% ....................... 91,070
----------
NET ASSETS APPLICABLE TO 353,895 SHARES
OUTSTANDING - 100.00% ............................ $1,870,737
==========
NET ASSET VALUE - TAX-FREE OHIO FUND A CLASS
($1,546,044 / 292,471 SHARES) .................... $5.29
=====
NET ASSET VALUE - TAX-FREE OHIO FUND B CLASS
($242,562 / 45,886 SHARES) ....................... $5.29
=====
NET ASSET VALUE - TAX-FREE OHIO FUND C CLASS
($82,131 / 15,538 SHARES) ........................ $5.29
=====
- ----------------------------
Summary of Abbreviations:
AMBAC - Insured by AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
- --------------------------
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond pre-refunded.
COMPONENTS OF NET ASSETS AT AUGUST 31, 1999:
Capital shares (unlimited authorization -- no par) .. $1,968,803
----------
Distributions in excess of net realized gains on
investments ........................................ (509)
Net unrealized depreciation of investments .......... (97,557)
----------
Total net assets .................................... $1,870,737
==========
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
TAX-FREE OHIO FUND
Net asset value Class A (A) ......................... $5.29
Sales charge (3.75% of offering price or 3.97% of amount
invested per share) (B) .......................... 0.21
-----
Offering price ...................................... $5.50
=====
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $100,000 or
more.
See accompanying notes
<PAGE>
DELAWARE GROUP STATE TAX-FREE INCOME TRUST -
TAX-FREE NEW JERSEY FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments at market ............................... $4,026,350
Cash ................................................ 127,773
Interest receivable ................................. 63,672
Subscriptions receivable ............................ 286
Other assets ........................................ 31,191
----------
Total assets ........................................ 4,249,272
==========
LIABILITIES:
Other accounts payable and accrued expenses ......... 41,149
----------
Total liabilities ................................... 41,149
----------
TOTAL NET ASSETS .................................... $4,208,123
==========
Investments at cost ................................. $4,302,728
==========
See accompanying notes
DELAWARE GROUP STATE TAX-FREE INCOME TRUST -
TAX-FREE OHIO FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investments at market ............................... $1,779,667
Cash ................................................ 62,567
Interest receivable ................................. 29,710
Other assets ........................................ 19,683
-----------
Total assets ........................................ 1,891,627
===========
LIABILITIES:
Other accounts payable and accrued expenses ......... 20,890
-----------
Total liabilities ................................... 20,890
-----------
TOTAL NET ASSETS .................................... $1,870,737
===========
Investments at cost ................................. $1,877,224
===========
See accompanying notes
<PAGE>
18 for tax-exempt income
DELAWARE GROUP TAX-FREE INCOME TRUST
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DELAWARE TAX-FREE DELAWARE TAX-FREE DELAWARE TAX-FREE
PENNSYLVANIA FUND NEW JERSEY FUND OHIO FUND
--------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest ......................................................... $ 26,676,288 $ 105,543 $ 46,768
------------ ------------ ------------
EXPENSES:
Management fees .................................................. 2,398,238 11,550 4,926
Distribution expense ............................................. 1,089,647 13,588 3,220
Dividend disbursing and transfer agent fees
and expenses ................................................... 316,459 1,860 366
Accounting and administration .................................... 174,592 822 351
Reports and statements to shareholders ........................... 30,000 1,391 750
Professional fees ................................................ 43,857 3,600 3,900
Registration fees ................................................ 15,000 600 1,789
Custodian fees ................................................... 92,726 3,926 1,743
Directors' fees .................................................. 10,163 675 658
Other ............................................................ 101,389 1,858 909
------------ ------------ ------------
4,272,071 39,870 18,612
Less expenses absorbed or waived ................................. -- (17,222) (11,683)
Less expenses paid indirectly .................................... (102,249) (3,773) (1,454)
------------ ------------ ------------
Total expenses ................................................... 4,169,822 18,875 5,475
------------ ------------ ------------
NET INVESTMENT INCOME ............................................ 22,506,466 86,668 41,293
------------ ------------ ------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments ................................. (199,747) -- --
Net change in unrealized depreciation of investments ............. (48,808,405) (324,198) (125,258)
------------ ------------ ------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS .................. (49,008,152) (324,198) (125,258)
------------ ------------ ------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. ($26,501,686) ($237,530) ($83,965)
============ ============ ============
</TABLE>
See accompanying notes
<PAGE>
for tax-exempt income 19
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
TAX-FREE TAX-FREE TAX-FREE
PENNSYLVANIA FUND NEW JERSEY FUND OHIO FUND
----------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 2/28/99 8/31/99 2/28/99 8/31/99 2/28/99
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ........................ $22,506,466 $ 45,875,352 $ 86,668 $ 93,679 $ 41,293 $ 64,513
Net realized gain (loss) on investments ...... (199,747) (1,073,741) -- -- -- 15,175
Net change in unrealized appreciation /
depreciation of investments ............... (48,808,405) (2,219,826) (324,198) (13,876) (125,258) (9,770)
------------ ------------ ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
from operations ........................... (26,501,686) 42,581,785 (237,530) 107,755 (83,965) 69,918
------------ ------------ ---------- ---------- ---------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
Class A ................................... (21,515,619) (44,094,893) (45,205) (64,796) (36,193) (61,390)
Class B ................................... (919,092) (1,652,189) (38,658) (27,121) (3,803) (2,654)
Class C ................................... (87,031) (128,270) (2,805) (1,962) (1,297) (469)
Net realized gain on investments:
Class A ................................... -- (10,135,844) -- (5,549) -- (20,891)
Class B ................................... -- (457,794) -- (2,531) -- --
Class C ................................... -- (37,685) -- (44) -- (249)
------------ ------------ ---------- ---------- ---------- ----------
(22,521,742) (56,506,675) (86,668) (102,003) (41,293) (85,653)
------------ ------------ ---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A ................................... 12,444,526 30,667,419 138,543 921,669 205,197 173,857
Class B ................................... 3,780,706 8,898,276 636,079 1,787,503 174,294 310,000
Class C ................................... 749,703 1,652,106 76,081 170,610 119,925 15,000
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
Class A ................................... 12,222,353 32,513,835 35,890 64,130 28,808 76,004
Class B ................................... 526,378 1,335,707 27,965 20,735 3,784 480
Class C ................................... 66,059 131,038 1,650 1,277 1,449 708
------------ ------------ ---------- ---------- ---------- ----------
29,789,725 75,198,381 916,208 2,965,924 533,457 576,049
------------ ------------ ---------- ---------- ---------- ----------
Cost of shares repurchased:
Class A ................................... (50,033,414) (95,535,313) (161,541) (81,332) (5,016) (11,116)
Class B ................................... (2,591,923) (4,269,130) (64,044) (274,769) -- (233,046)
Class C ................................... (443,260) (336,053) (61,204) (3) (50,000) --
------------ ------------ ---------- ---------- ---------- ----------
(53,068,597) (100,140,496) (286,789) (356,104) (55,016) (244,162)
------------ ------------ ---------- ---------- ---------- ----------
Increase (decrease) in net assets derived from
capital share transactions ................ (23,278,872) (24,942,115) 629,419 2,609,820 478,441 331,887
------------ ------------ ---------- ---------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS: ............................ (72,302,300) (38,867,005) 305,221 2,615,572 353,183 316,152
NET ASSETS:
Beginning of period .......................... 918,696,887 957,563,892 3,902,902 1,287,330 1,517,554 1,201,402
------------ ------------ ---------- ---------- ---------- ----------
End of period ................................ $846,394,587 $918,696,887 $4,208,123 $3,902,902 $1,870,737 $1,517,554
============ ============ ========== ========== ========== ==========
</TABLE>
See accompanying notes
<PAGE>
20 for tax-exempt income
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
TAX-FREE PENNSYLVANIA FUND CLASS A
-------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
8/31/99(1) 2/28/99 2/28/98 2/28/97 2/29/96
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ...................... $ 8.290 $ 8.420 $ 8.240 $ 8.460 $ 8.180
Income (loss) from investment operations:
Net investment income ................................ 0.207 0.415 0.430 0.456 0.476
Net realized and unrealized gain (loss) on investments (0.450) (0.034) 0.193 (0.105) 0.330
-------- -------- -------- -------- ----------
Total from investment operations ..................... (0.243) 0.381 0.623 0.351 0.806
-------- -------- -------- -------- ----------
Less dividends and distributions:
Dividends from net investment income ................. (0.207) (0.415) (0.430) (0.456) (0.476)
Distributions from net realized gain on investments .. none (0.096) (0.013) (0.115) (0.050)
-------- -------- -------- -------- ----------
Total dividends and distributions .................... (0.207) (0.511) (0.443) (0.571) (0.526)
-------- -------- -------- -------- ----------
Net asset value, end of year ............................ $ 7.840 $ 8.290 $ 8.420 $ 8.240 $ 8.460
======== ======== ======== ======== ==========
Total return(2).......................................... (2.98%) 4.64% 7.78% 4.35% 10.08%
Ratios and supplemental data:
Net assets, end of year (000 omitted) ................ $799,971 $871,740 $917,364 $954,258 $1,002,888
Ratio of expenses to average net assets .............. 0.88% 0.95% 0.94% 0.91% 0.90%
Ratio of net investment income to average net assets . 5.04% 4.96% 5.20% 5.52% 5.67%
Portfolio turnover ................................... 30% 41% 32% 27% 25%
</TABLE>
- --------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
<PAGE>
for tax-exempt income 21
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
TAX-FREE PENNSYLVANIA FUND CLASS B
-------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
8/31/99(1) 2/28/99 2/28/98 2/28/97 2/29/96
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $ 8.290 $ 8.420 $ 8.240 $ 8.460 $ 8.180
Income (loss) from investment operations:
Net investment income ................................ 0.174 0.348 0.370 0.390 0.408
Net realized and unrealized gain (loss) on investments (0.450) (0.034) 0.193 (0.105) 0.330
------- ------- ------- ------- -------
Total from investment operations ..................... (0.276) 0.314 0.563 0.285 0.738
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ................. (0.174) (0.348) (0.370) (0.390) (0.408)
Distributions from net realized gain on investments .. none (0.096) (0.013) (0.115) (0.050)
------- ------- ------- ------- -------
Total dividends and distributions .................... (0.174) (0.444) (0.383) (0.505) (0.458)
------- ------- ------- ------- -------
Net asset value, end of period .......................... $ 7.840 $ 8.290 $ 8.420 $ 8.240 $ 8.460
======= ======= ======= ======= =======
Total return(3).......................................... (3.38%) 3.81% 6.92% 3.52% 9.19%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $42,319 $42,994 $37,631 $31,644 $20,861
Ratio of expenses to average net assets .............. 1.68% 1.75% 1.74% 1.71% 1.71%
Ratio of net investment income to average net assets . 4.24% 4.16% 4.40% 4.72% 4.86%
Portfolio turnover ................................... 30% 41% 32% 27% 25%
</TABLE>
- ------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; 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 distributions at net
asset value and does not reflect the impact of a sales charge.
<PAGE>
22 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
TAX-FREE PENNSYLVANIA FUND CLASS C
-------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR 11/29/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99(1) 2/28/99 2/28/98 2/28/97 2/29/96
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $8.290 $8.420 $8.240 $8.460 $8.510
Income (loss) from investment operations:
Net investment income ................................ 0.174 0.355 0.364 0.390 0.102
Net realized and unrealized gain (loss) on investments (0.450) (0.034) 0.193 (0.105) none
------ ------ ------ ------ ------
Total from investment operations ..................... (0.276) 0.321 0.557 0.285 0.102
------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income ................. (0.174) (0.355) (0.364) (0.390) (0.102)
Distributions from net realized gain on investments .. none (0.096) (0.013) (0.115) (0.050)
------ ------ ------ ------ ------
Total dividends and distributions .................... (0.174) (0.451) (0.377) (0.505) (0.152)
------ ------ ------ ------ ------
Net asset value, end of period .......................... $7.840 $8.290 $8.420 $8.240 $8.460
====== ====== ====== ====== ======
Total return(3).......................................... (3.38%) 3.81% 6.92% 3.52% 1.19%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............. $4,105 $3,963 $2,569 $1,181 $ 123
Ratio of expenses to average net assets .............. 1.68% 1.75% 1.74% 1.71% 1.71%
Ratio of net investment income to average net assets . 4.24% 4.16% 4.40% 4.72% 4.86%
Portfolio turnover ................................... 30% 41% 32% 27% 25%
</TABLE>
- --------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; 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 distributions at net
asset value and does not reflect the impact of a sales charge.
<PAGE>
for tax-exempt income 23
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
TAX-FREE NEW JERSEY FUND CLASS A TAX-FREE NEW JERSEY FUND CLASS B
------------------------------------------------------------------------------------
SIX MONTHS YEAR 9/3/97(2) SIX MONTHS YEAR 9/3/97(2)
ENDED ENDED TO ENDED ENDED TO
8/31/99(1) 2/28/99 2/28/98 8/31/99(1) 2/28/99 2/28/98
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .... $ 5.750 $ 5.700 $ 5.500 $ 5.750 $ 5.700 $ 5.500
Income from investment operations:
Net investment income ................ 0.127 0.256 0.115 0.105 0.213 0.069
Net realized and unrealized gain
on investments ..................... (0.420) 0.075 0.200 (0.420) 0.075 0.200
------- ------- ------- ------- ------- -------
Total from investment operations ..... (0.293) 0.331 0.315 (0.315) 0.288 0.269
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income . (0.127) (0.256) (0.115) (0.105) (0.213) (0.069)
Distributions from net realized
gain on investments ................ none (0.025) none none (0.025) none
------- ------- ------- ------- ------- -------
Total dividends and distributions .... (0.127) (0.281) (0.115) (0.105) (0.238) (0.069)
------- ------- ------- ------- ------- -------
Net asset value, end of period .......... $ 5.330 $ 5.750 $ 5.700 $ 5.330 $ 5.750 $ 5.700
======= ======= ======= ======= ======= =======
Total return(3).......................... (5.17%) 5.93% 5.77% (5.54%) 5.14% 4.90%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ...................... $ 1,913 $ 2,052 $ 1,141 $ 2,119 $ 1,680 $ 146
Ratio of expenses to average net
assets ............................. 0.50% 0.50% 0.88% 1.25% 1.25% 1.56%
Ratio of expenses to average net
assets prior to expense limitation
expenses paid indirectly ........... 1.49% 1.75% 1.93% 2.06% 2.50% 2.61%
Ratio of net investment income
to average net assets .............. 4.49% 4.42% 4.23% 3.73% 3.67% 3.63%
Ratio of net investment income to
average net assets prior to expense
limitation and expenses paid
indirectly ......................... 3.50% 3.17% 3.18% 2.91% 2.42% 2.58%
Portfolio turnover ................... 0% 0% 47% 0% 0% 47%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE NEW JERSEY FUND CLASS C
-----------------------------------
SIX MONTHS 4/8/98(2)
ENDED TO
8/31/99(1) 2/28/99
(UNAUDITED)
<S> <C> <C>
Net asset value, beginning of period .... $ 5.750 $ 5.700
Income from investment operations:
Net investment income ................ 0.106 0.213
Net realized and unrealized gain
on investments ..................... (0.420) 0.075
------- -------
Total from investment operations ..... (0.314) 0.288
------- -------
Less dividends and distributions:
Dividends from net investment income . (0.106) (0.213)
Distributions from net realized
gain on investments ................ none (0.025)
------- -------
Total dividends and distributions .... (0.106) (0.238)
------- -------
Net asset value, end of period .......... $ 5.330 $ 5.750
======= =======
Total return(3).......................... (5.52%) 5.14%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ...................... $ 176 $ 171
Ratio of expenses to average net
assets ............................. 1.25% 1.25%
Ratio of expenses to average net
assets prior to expense limitation
and expenses paid indirectly ....... 2.11% 2.50%
Ratio of net investment income
to average net assets ................ 3.86% 3.67%
Ratio of net investment income to
average net assets prior to expense
limitation and expenses paid
indirectly ......................... 3.05% 2.42%
Portfolio turnover ...................... 0% 0%
</TABLE>
- -----------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; 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 distributions at net asset
value and does not reflect the impact of a sales charge.
<PAGE>
24 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
TAX-FREE OHIO FUND CLASS A TAX-FREE OHIO FUND CLASS B(4)
------------------------------------------------------------------------
SIX MONTHS YEAR 9/3/97(2) SIX MONTHS YEAR
ENDED ENDED TO ENDED ENDED
8/31/99(1) 2/28/99 2/28/98 8/31/99(1) 2/28/99
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $ 5.650 $ 5.730 $ 5.500 $ 5.650 $ 5.690
Income from investment operations:
Net investment income ............................. 0.130 0.272 0.120 0.110 0.231
Net realized and unrealized gain on investments ... (0.360) 0.013 0.230 (0.360) 0.053
------- ------- ------- ------- -------
Total from investment operations .................. (0.230) 0.285 0.350 (0.250) 0.284
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .............. (0.130) (0.272) (0.120) (0.110) (0.231)
Distributions from net realized gain on investments none (0.093) none none (0.093)
------- ------- ------- ------- -------
Total dividends and distributions ................. (0.130) (0.365) (0.120) (0.110) (0.324)
------- ------- ------- ------- -------
Net asset value, end of period ....................... $ 5.290 $ 5.650 $ 5.730 $ 5.290 $ 5.650
======= ======= ======= ======= =======
Total return(3)....................................... (4.13%) 5.12% 6.41% (4.48%) 4.37%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........... $ 1,546 $ 1,422 $ 1,201 $ 243 $ 80
Ratio of expenses to average net assets ........... 0.50% 0.50% 0.88% 1.25% 1.25%
Ratio of expenses to average net assets
prior to expense limitation ..................... 1.95% 1.86% 1.93% 2.69% 2.61%
Ratio of net investment income to average
net assets ...................................... 4.69% 4.75% 4.38% 3.91% 4.00%
Ratio of net investment income to average
net assets prior to expense limitation .......... 3.23% 3.39% 3.33% 2.45% 2.64%
Portfolio turnover ................................ 0% 45% 66% 0% 45%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE OHIO FUND CLASS C(4)
-------------------------------
SIX MONTHS YEAR
ENDED ENDED
8/31/99(1) 2/28/99
(UNAUDITED)
<S> <C> <C>
Net asset value, beginning of period ................. $ 5.650 $ 5.690
Income from investment operations:
Net investment income ............................. 0.109 0.231
Net realized and unrealized gain on investments ... (0.360) 0.053
------- -------
Total from investment operations .................. (0.251) 0.284
------- -------
Less dividends and distributions:
Dividends from net investment income .............. (0.109) (0.231)
Distributions from net realized gain on investments none (0.093)
------- -------
Total dividends and distributions ................. (0.109) (0.324)
------- -------
Net asset value, end of period ....................... $ 5.290 $ 5.650
======= =======
Total return(3)....................................... (4.50%) 4.37%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........... $ 82 $ 16
Ratio of expenses to average net assets ........... 1.25% 1.25%
Ratio of expenses to average net assets
prior to expense limitation ..................... 2.67% 2.61%
Ratio of net investment income to average
net assets ...................................... 3.83% 4.00%
Ratio of net investment income to average
net assets prior to expense limitation .......... 2.37% 2.64%
Portfolio turnover ................................ 0% 45%
</TABLE>
- ----------------
(1) Ratios have been annualized and total return has not been annualized.
(2) Date of initial public offering; 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 distributions at net asset
value and does not reflect the impact of a sales charge.
(4) Shares of the Tax-Free Ohio Fund Classes B and C were initially offered on
September 2, 1997. For the period September 2, 1997 through February 28,
1998, there was no shareholder activity besides the initial seed purchase of
1 share. These shareholder data are not being disclosed because the data are
not believed to be meaningful.
See accompanying notes
<PAGE>
for tax-exempt income 25
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1999
- --------------------------------------------------------------------------------
Delaware Group State Tax-Free Income Trust (the "Trust") is registered as a
non-diversified open-end investment company under the Investment Company Act of
1940, as amended. The Trust is organized as a Pennsylvania trust and offers
three series: the Delaware Tax-Free Pennsylvania Fund ("Tax-Free Pennsylvania
Fund"), the Delaware Tax-Free New Jersey Fund ("Tax-Free New Jersey Fund"), and
the Delaware Tax-Free Ohio Fund ("Tax-Free Ohio Fund")(each referred to as a
"Fund" or collectively as the "Funds"). The A Class carries a front-end sales
charge of 3.75%. The B Class carries a back-end deferred sales charge and the C
Class carries a level load deferred sales charge.
The Tax-Free Pennsylvania Fund seeks as high a level of current income exempt
from federal income tax and Pennsylvania state income tax as is consistent with
preservation of principal. The Tax-Free New Jersey Fund seeks as high a level of
current income exempt from federal income tax and New Jersey state income tax as
is consistent with preservation of principal. The Tax-Free Ohio Fund seeks as
high a level of current income exempt from federal income tax and Ohio state
income tax as is consistent with preservation of principal.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Trust:
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Money market instruments having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Directors.
Federal Income Taxes - Each Fund intends to qualify or continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has been made
in the financial statements. Income and capital gain distributions are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles.
Class Accounting - Investment income, common expenses and 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
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Interest income is recorded on the accrual basis. Original issue discounts and
market premiums are amortized to interest income over the lives of the
respective securities. Each Fund declares dividends from net investment income
daily and pays such dividends monthly. Capital gains, if any, are distributed
annually.
<PAGE>
Certain expenses of the Funds are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
Funds may receive earnings credits from its custodian when positive cash
balances are maintained, which are used to offset custody fees. The expenses
paid under the above arrangements are included in their respective expense
captions on the Statement of Operations with the corresponding expense offset
shown as "Expenses paid indirectly". The amounts of these expenses and credits
for the period ended August 31, 1999 are as follows:
"SOFT DOLLAR" EARNINGS
EXPENSES CREDITS
-----------------------
Tax-Free Pennsylvania ............................. $20,523 $81,726
Tax-Free New Jersey ............................... $97 $3,676
Tax-Free Ohio ..................................... $41 $1,413
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, each Fund
pays Delaware Management Company (DMC), the Investment Manager, an annual fee
which is calculated daily based on the net assets of each Fund.
Commencing April 1, 1999 the Tax-Free Pennsylvania Fund, Tax-Free New Jersey
Fund and Tax-Free Ohio Fund pay Delaware Management Company ("DMC"), the
Investment Manager of the Funds, an annual fee which is calculated at the rate
of 0.55% on the first $500 million of average daily net assets of the funds,
0.50% on the next $500 million, 0.45% on the next $1,500 million and 0.425% on
the average daily net assets in excess of $2,500 million. Prior to April 1,
1999, Tax Free Pennsylvania Fund paid at the rate of 0.60% of the first $500
million of average daily net assets of the Fund, 0.575% on the next $250 million
and 0.55% on the average daily net assets over $750 million, less all amounts
paid to the directors, the Tax-Free New Jersey Fund and the Tax-Free Ohio Fund
paid at the rate of 0.55% of the first $500 million of average daily net assets,
0.525% on the next $500 million and 0.50% on the average daily net assets over
$1 billion.
DMC has elected to waive its fees and reimburse the Tax-Free New Jersey Fund and
the Tax-Free Ohio Fund to the extent that annual operating expenses exclusive of
distribution expenses exceed 0.25% of average daily net assets through January
31, 2000.
The Trust has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent and accounting and administration
services. Each Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums. On August 31, 1999, the Tax-Free Pennsylvania Fund had a liability
payable to DSC of $43,300.
Pursuant to the Distribution Agreement, each Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.30% of the average daily net assets of the A Class for the Tax-Free
Pennsylvania Fund and 0.25% of the average daily net assets of the Tax-Free New
Jersey Fund and the Tax-Free Ohio Fund A Classes and 1.00% of the average daily
net assets of the B and C Class for all three Funds.
For the period ended August 31, 1999, DDLP earned $45,301, $206 and $81 for
commissions on sales of the Tax-Free Pennsylvania Fund A Class, the Tax-Free New
Jersey Fund Class A and the Tax-Free Ohio Fund Class A, respectively.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Trust. These officers, directors and employees are paid no compensation
by the Trust.
<PAGE>
26 for tax-exempt income
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
3. Investments
During the period ended August 31, 1999, each Fund had purchases and sales of
investment securities other than temporary cash investments as follows:
TAX-FREE TAX-FREE TAX-FREE
PENNSYLVANIA NEW JERSEY OHIO
FUND FUND FUND
--------------------------------------
Purchases: ........................... $132,932,886 $588,364 $439,852
Sales: ............................... $150,746,114 - -
The cost of investments for federal income tax purposes approximates the cost
for book purposes.
At August 31, 1999, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for each Fund were as follows:
TAX-FREE TAX-FREE TAX-FREE
PENNSYLVANIA NEW JERSEY OHIO
FUND FUND FUND
--------------------------------------
Cost of investments .................. $829,688,444 $4,302,728 $1,877,224
============ ========== ==========
Unrealized appreciation .............. $32,412,799 $1,841 $2,960
Unrealized depreciation .............. ($25,188,790) ($278,219) ($100,517)
------------ ---------- ----------
Net unrealized appreciation/
depreciation ...................... $7,224,009 ($276,378) ($97,557)
============ ========== ==========
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
TAX-FREE PENNSYLVANIA FUND TAX-FREE NEW JERSEY FUND TAX-FREE OHIO FUND
----------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 2/28/99 8/31/99 2/28/99 8/31/99 2/28/99
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A .............................. 1,560,490 3,665,847 24,457 159,315 36,451 30,632
Class B .............................. 467,859 1,063,689 111,979 310,636 30,958 54,573
Class C .............................. 91,623 197,267 13,751 29,510 21,377 2,636
Shares issued upon reinvestment of
distributions from net investment
income and realized gain on investments:
Class A .............................. 1,505,152 3,887,283 6,437 11,163 5,227 13,367
Class B .............................. 64,883 159,712 5,026 3,597 691 85
Class C .............................. 8,147 15,678 296 221 264 125
---------- ----------- ------- ------- ------ -------
3,698,154 8,989,476 161,946 514,442 94,968 101,418
---------- ----------- ------- ------- ------ -------
Shares repurchased:
Class A .............................. (6,178,615) (11,413,196) (28,336) (14,068) (917) (1,925)
Class B .............................. (321,086) (509,600) (11,268) (47,921) -- (40,422)
Class C .............................. (54,325) (40,253) (10,688) -- (8,865) --
---------- ----------- ------- ------- ------ -------
(6,554,026) (11,963,049) (50,292) (61,989) (9,782) (42,347)
Net increase (decrease) ................ (2,855,872) (2,973,573) 111,654 452,453 85,186 59,071
========== =========== ======= ======= ====== =======
</TABLE>
- --------------
*Date of commencement of operations.
5. Lines of Credit
The Trust has a committed line of credit for $29.1 million for the Tax-Free
Pennsylvania Fund, $100,000 for the Tax-Free New Jersey Fund and $100,000 for
the Tax-Free Ohio Fund. No amount was outstanding at August 31, 1999, or at any
time during the fiscal period.
6. Market and Credit Risk
The Funds concentrate their investments in securities issued by municipalities.
The value of these investments may be adversely affected by new legislation
within the states, regional or local economic conditions, and differing levels
of supply and demand for municipal bonds. Many municipalities insure repayment
for their obligations. Although bond insurance reduces the risk of loss due to
default by an issuer, such bonds remain subject to the risk that the market may
fluctuate for other reasons and there is no assurance that the insurance company
will meet its obligations. These securities have been identified in the
Statement of Net Assets.
<PAGE>
for tax-exempt income 27
DELAWARE GROUP STATE TAX-FREE INCOME TRUST
PROXY RESULTS
- --------------------------------------------------------------------------------
For the period ended August 31, 1999, The Delaware Group State Tax-Free Income
Trust shareholders voted on the following proposals at the annual meeting of
shareholders on March 17, 1999 or as adjourned. The description of each proposal
and number of shares voted are as follows:
1. To elect the Delaware Group State Tax-Free Income Trust Board of Directors.
SHARES SHARES VOTED
VOTED WITHHELD
FOR AUTHORITY
---------- ------------
Jeffrey J. Nick*.............................. 79,359,526 5,763,126
Walter P. Babich ............................. 79,246,118 5,876,534
John H. Durham ............................... 79,418,708 5,703,944
Anthony D. Knerr ............................. 79,483,399 5,639,253
Ann R. Leven ................................. 79,517,854 5,604,798
Thomas F. Madison ............................ 79,452,051 5,670,601
Charles E. Peck .............................. 79,529,382 5,593,270
Wayne A. Stork ............................... 79,576,896 5,545,756
Jan L. Yeomans ............................... 79,593,494 5,529,158
2. To approve the reclassification of the investment objective from fundamental
to non-fundamental.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 430,275 17,212 13,417
Tax-Free Ohio Fund ................ 224,330 2,733 --
Tax-Free Pennsylvania Fund ........ 66,460,364 3,479,379 5,099,239
3. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G).
3A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 426,408 15,316 19,180
Tax-Free Ohio Fund ................ 224,330 2,733 --
Tax-Free Pennsylvania Fund ........ 67,655,672 2,308,750 5,074,560
3B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 441,724 -- 19,180
Tax-Free Ohio Fund ................ 221,743 2,733 2,586
Tax-Free Pennsylvania Fund ........ 66,600,585 3,195,201 5,243,196
3C. To adopt a new fundamental investment restriction concerning underwriting.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 430,275 15,316 15,313
Tax-Free Ohio Fund ................ 221,743 2,733 2,586
Tax-Free Pennsylvania Fund......... 67,136,719 2,730,488 5,171,774
<PAGE>
3D. To adopt a new fundamental investment restriction concerning investments in
real estate.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 426,408 15,316 19,180
Tax-Free Ohio Fund ................ 221,743 2,733 2,586
Tax-Free Pennsylvania Fund ........ 67,497,002 2,501,648 5,040,332
3E. To adopt a new fundamental investment restriction concerning investments in
commodities.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 426,408 15,316 19,180
Tax-Free Ohio Fund ................ 221,743 5,320 --
Tax-Free Pennsylvania Fund ........ 66,399,922 3,160,092 5,478,968
3F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 426,408 15,316 19,180
Tax-Free Ohio Fund ................ 221,743 5,320 --
Tax-Free Pennsylvania Fund ........ 66,908,841 2,992,685 5,137,456
3G. To reclassify all current fundamental investment restrictions as
non-fundamental.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 430,275 15,316 15,313
Tax-Free Ohio Fund ................ 224,330 2,733 --
Tax-Free Pennsylvania Fund ........ 66,370,291 3,122,368 5,546,323
4. To approve a new investment management agreement with Delaware Management
Company.
FOR AGAINST ABSTAIN
----- ------- -------
Tax-Free New Jersey Fund .......... 484,490 15,316 15,313
Tax-Free Ohio Fund ................ 252,364 2,733 --
Tax-Free Pennsylvania Fund ........ 66,894,884 3,138,246 5,005,852
5. To ratify the selection of Ernst & Young LLP, as the independent auditors for
Delaware Group State Tax-Free Income Trust.
FOR AGAINST ABSTAIN
----- ------- -------
80,798,219 515,211 3,809,220
6. To approve the restructuring of the Delaware Group State Tax-Free Income
Trust from a Maryland Corporation into a Delaware Business Trust.
FOR AGAINST ABSTAIN
----- ------- -------
68,170,091 2,497,142 5,059,716
* Mr. Nick resigned from the Board of Directors (or Trustees for the Company) on
June 4, 1999.
<PAGE>
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF DELAWARE TAX-FREE PENNSYLVANIA
FUND, DELAWARE TAX-FREE New Jersey Fund and Delaware Tax-Free Ohio Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for Delaware Tax-Free Pennsylvania Fund,
Delaware Tax-Free New Jersey Fund or Delaware Tax-Free Ohio Fund and the
Delaware Investments Performance Update for the most recently completed calendar
quarter. The Prospectus sets forth details about charges, expenses, investment
objectives and operating policies of each Fund. You should read the prospectus
carefully before you invest or send money. The figures in this report represent
past results which are not a guarantee of future results. The return and
principal value of an investment in the Funds will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
(photo of
globes)
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Fund are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
(2200) J5191
SA-007 [8/99] PP10/99
