JULY 1, 1998
Tax-Free Insured Fund
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Supplement to the Prospectus dated October 30, 1997
The following amends all of the sections of the Prospectus discussing the
dealer's commission that may be payable on purchases of $1 million or
more of Class A Shares of the Tax-Free USA Fund and the Tax-Free Insured
Fund and the Limited CDSC applicable to redemptions of those shares:
Beginning July 1, 1998, for initial purchases of Class A
Shares of the Tax-Free USA Fund and the Tax-Free Insured Fund of
$1 million or more, a dealer's commission may be paid by the
Distributor to financial advisers through whom such purchases are
made in accordance with the following schedule:
Dealer's Commission
(as a percentage of
Amount of Purchase amount purchased)
Up to $5 million 1.00%
Next $20 million up to $25 million 0.50
Amount over $25 million 0.25
Such Class A Shares are subject to a Limited CDSC of 1% if
shares are redeemed during the first year after purchase and
0.50% if shares are redeemed during the second year after
purchase.
The Limited CDSC will be paid to the Distributor and will be
assessed on an amount equal to the lesser of (1) the net asset
value at the time of purchase of the Class A Shares being
redeemed or (2) the net asset value of such Class A Shares at the
time of redemption.
Redemptions of such Class A Shares held for more than two
years will not be subjected to the Limited CDSC and an exchange
of such Class A Shares into another fund in the Delaware
Investments family will not trigger the imposition of the Limited
CDSC at the time of such exchange. The period a shareholder owns
shares into which Class A Shares are exchanged will count towards
satisfying the two-year holding period. The Limited CDSC is
assessed if such two-year period is not satisfied irrespective of
whether the redemption triggering its payment is of Class A
Shares of a Fund or Class A Shares acquired in the exchange.
The following amends all of the sections of the Prospectus discussing the
dealer's commission that may be payable on purchases of $1 million or
more of Class A Shares of the Tax-Free USA Intermediate Fund:
Beginning July 1, 1998, for initial purchases of Class A
Shares of the Tax-Free USA Intermediate Fund of $1 million or
more, a dealer's commission may be paid by the Distributor to
financial advisers through whom such purchases are made in
accordance with the following schedule:
Dealer's Commission
(as a percentage of
Amount of Purchase amount purchased)
Up to $5 million 0.50%
Amount over $5 million 0.25%
The Limited CDSC applicable to redemptions of such shares
remains the same as that described in the Prospectus.
The following replaces the information in numbered paragraphs 4 and 5 in
the section of the Prospectus entitled Risk Factors and Special
Considerations under the Synopsis:
4. Intermediate Fund has the right to engage in options and
each Fund has the right to engage in futures transactions for
hedging purposes, to counterbalance portfolio volatility and, in
connection with futures transactions, will maintain certain
collateral in special accounts established by futures commission
merchants in the care of Bankers Trust Company. While a Fund
does not engage in such transactions for speculative purposes,
there are risks that result from the use of these instruments by
the Funds, and an investor should carefully review the
descriptions of such in the Prospectus. Certain options and
futures may be considered to be derivative securities. Tax-Free
Fund, Inc. is not registered as a commodity pool operator nor is
Delaware Management Company, the Funds' investment manager,
registered as a commodities trading adviser, in reliance upon
various exemptive rules. See Options and Futures under Other
Investment Policies and Risk Considerations.
5. Each Fund may invest in inverse floaters which may be
considered to be derivative securities. The interest rates
attributable to inverse floaters may move in the opposite
direction to short-term interest rates at an accelerated speed
causing rapid fluctuations in the value of such securities. See
Inverse Floaters under Other Investment Policies and Risk
Considerations.
The following sentence is added as the second sentence in the section of
the Prospectus entitled Futures under Other Investment Policies and Risk
Considerations:
Tax-Free USA Fund and Tax-Free Insured Fund may invest in
futures contracts and options on such futures contracts to the
extent that investments in these securities, when combined with
inverse floaters and below investment grade securities, do not
exceed 20% of a Fund's total assets.
The following sentence is added as the second sentence in the section of
the Prospectus entitled Inverse Floaters under Other Investment Policies
and Risk Considerations:
Tax-Free USA Fund and Tax-Free Insured Fund may invest in
inverse floaters to the extent that investments in these
securities, when combined with futures contracts and options on
such futures contracts and below investment grade securities, do
not exceed 20% of a Fund's total assets.
