<PAGE>
DELAWARE(SM)
INVESTMENTS
============
Delaware Tax-Free USA Fund
Delaware Tax-Free Insured Fund
Delaware Tax-Free USA Intermediate Fund
Delaware National High-Yield Municipal Bond Fund
Tax-Exempt Income
2000 SEMI-ANNUAL REPORT
[Tax-Exempt Income Artwork]
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TABLE OF CONTENTS
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Letter to Shareholders 1
Portfolio
Management Review 3
Performance Summary
Delaware Tax-Free
USA Fund 6
Delaware Tax-Free
Insured Fund 7
Delaware Tax-Free USA
Intermediate Fund 8
Delaware National High-Yield
Municipal Bond Fund 9
Financial Statements
Statements of Net Assets 10
Statement of Assets
and Liabilities 22
Statements of Operations 23
Statements of Changes in
Net Assets 24
Financial Highlights 26
Notes to Financial
Statements 38
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A TRADITION OF SOUND INVESTING SINCE 1929
- -----------------------------------------
A Commitment To Our Investors
Experienced
o Our seasoned investment professionals average more than 15 years' experience.
o For over 70 years, we have managed money in a variety of investment styles
that have weathered a full range of economic and market environments. We
opened our first mutual fund in 1938.
Disciplined
o We follow strict investment policies and clear buy/sell guidelines.
o We strive to balance risk and reward in order to provide conservative
investment alternatives within any given asset class.
Consistent
o We believe consistent processes are the best way to seek consistent
investment performance.
o Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage approximately
$47 billion in assets as of December 31, 1999.
Comprehensive
o We offer over 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (24 single-state funds)
o International equity o International fixed-income
o Balanced
o Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
Dear Shareholder
"OVER THE PAST SIX MONTHS, YIELDS ON THE BENCHMARK 30-YEAR TREASURY HAVE RISEN.
AT THE SAME TIME, THE DIFFERENCE IN YIELDS BETWEEN MUNICIPAL AND TAXABLE BONDS
WITH THE SAME MATURITIES HAS NARROWED."*
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March 22, 2000
Recap of Events - During the past six months, fixed-income investors have
experienced a volatile and challenging market environment. Following the Federal
Reserve Board's interest rate increase on June 30, 1999, the bond market faced
four additional interest rate hikes through March 21, 2000. It also endured
competition from a rising equity market and year-end 1999 tax loss selling.
Over the past six months, yields on the benchmark 30-year Treasury have risen.
At the same time, the difference in yields between municipal and taxable bonds
with the same maturities has narrowed.* As of February 29, 2000, the yield on
long-term municipal bonds was equal to about 95% of the yield of the 30-year
Treasury bond -- well above the long-term historical ratio of 84% (Source:
Bloomberg).
Although we are now seeing tax-free yields in the neighborhood of 6%, the rising
interest rate environment continues to test the mettle of bond holders in terms
of overall returns and protection of principal. In addition, the extraordinary
returns available in the equity markets continue to draw investors' attention,
diverting investment dollars from bond investments.
Fortunately, the somewhat weak demand for bonds was counterbalanced, at least
partially, by a shrinking supply of new municipal bond issues. While 1999
recorded the second-highest total dollar level of bonds issued for new projects,
the supply decreased relative to 1998, as higher interest rates suppressed
municipalities' desire to refinance.
Average Total Returns
For Period Ended February 29, 2000 Six Months
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Delaware Tax-Free USA Fund Class A -1.25%
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Lipper General Municipal Debt Fund Average (281 funds) -1.31%
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Delaware Tax-Free Insured Fund Class A -0.77%
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Lipper Insured Municipal Debt Fund Average (50 funds) -0.86%
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Delaware Tax-Free USA Intermediate Fund Class A +0.28%
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Lipper Intermediate Municipal Debt Fund Average (127 funds) -0.05%
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Delaware National High-Yield Municipal Bond Fund Class A -3.23%
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Lipper High-Yield Municipal Debt Fund Average (57 funds) -2.90%
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Lehman Brothers Municipal Bond Index -0.24%
Lehman Brothers Insured Municipal Bond Index -0.21%
Merrill Lynch 3-7 Year Municipal Bond Index +0.34%
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All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of distributions. Performance information for
all Fund classes can be found on pages 6 through 9. The Lipper categories
represent the average returns of municipal bond funds with similar investment
objectives tracked by Lipper Analytical. Source: Lipper Analytical Services,
Inc. The unmanaged Lehman Brothers and Merrill Lynch Indexes are composed of
bonds with a variety of quality ratings from many states. You cannot invest
directly in an index. Past performance does not guarantee future results.
*The U.S. government does not guarantee principal and interest of municipal
bonds, unlike Treasuries. Municipal bonds have historically had annual default
rates of less than 2%.
1
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[Tax-Exempt Income Artwork]
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Delaware's National Tax-Free Funds - Given the prevailing market conditions,
your Funds' portfolio managers followed a defensive strategy of shortening
portfolio duration for all of the Funds except Delaware Tax-Free USA Fund while
maintaining credit quality for all of the Funds. As a result, we were able to
maintain or increase the overall yield of Delaware's national tax-free municipal
bond funds, but at a lower level of interest rate risk. This strategy worked
well for each Fund covered in this report except Delaware National High-Yield
Municipal Bond Fund. This Fund's relatively longer duration position at the
start of the fiscal period, along with its larger allocation to the troubled
healthcare sector, hurt the Fund's performance in the fourth quarter of 1999.
In the pages that follow, your Funds' portfolio managers, Mitchell L. Conery and
Patrick P. Coyne discuss their strategy and the performance of Delaware's
national tax-free municipal bond funds.
Market Outlook - We believe fixed-income investments play an important role in
well-balanced portfolios, even as stocks continue to capture more attention and
a larger share of investors' assets. Looking forward, we anticipate that the
next six months will present us with much the same situation as we've been
experiencing: a rising interest rate environment coupled with continued
volatility in the stock market. As we write, Federal Reserve Chairman Alan
Greenspan has reiterated his belief that rising stock market prices, along with
a tight U.S. labor market, continue to fuel concerns about inflation. In our
opinion, the dynamic between a robust new economy and a restrictive monetary
policy which has kept investors on the edge of their seats over the last six
months appears likely to remain the dominant theme for the immediate future.
This climate challenges even the most seasoned fixed-income investors.
In this environment, we believe the best strategy is to patiently reap the
bounty of interest payments, without taking risky bets on specific sectors or
the direction of interest rates. We applaud you for remaining committed to your
investment plan and thank you for your continued confidence in Delaware
Investments.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
- ------------------------------ --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Delaware Investments
Family of Funds Family of Funds
2
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Mitchell L. Conery
Senior Portfolio Manager
Patrick P. Coyne
Senior Portfolio Manager
March 22, 2000
Delaware Tax-Free USA Fund
Portfolio Characteristics
February 29, 2000
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Current 30-Day SEC Yield* 5.11%
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Average Effective Duration 8.0 years
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Average Effective Maturity** 13.9 years
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* For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day yields as of 2/29/00 for Class B shares was
4.51% and for Class C shares was 4.52%. Duration is a common measure of a
bond or bond fund's sensitivity to interest rates.
Delaware Tax-Free Insured Fund
Portfolio Characteristics
February 29, 2000
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Current 30-Day SEC Yield* 4.61%
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Average Effective Duration 7.2 years
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Average Effective Maturity** 11.7 years
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* For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day yields as of 2/29/00 for Class B and C
shares were both 3.99%.
** Average effective maturity is the average time remaining until scheduled
principal repayment by issuers of portfolio securities.
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
- ---------------------------
The Funds' Results
In an environment that was unfavorable to fixed-income funds, our strategy of
maintaining credit quality and lowering duration for most of the Funds generally
worked well. Our focus has been on providing higher income to shareholders. By
buying bonds at a "premium" -- that is bonds selling at prices higher than their
face value -- we have been able to boost yield even while we were shortening the
duration of most of our portfolios. Duration is a common measure of a bond or
bond fund's sensitivity to interest rates. In general, the longer the duration,
the more the bond's price will change for a given increase or decrease in
interest rates. This strategy has resulted in a solid combination of slightly
above-average returns and lower risk for all of the bond funds covered in this
report except Delaware National High-Yield Municipal Bond Fund.
Delaware Tax-Free USA Fund
During the past six months, your Fund preserved principal slightly better than
its peers. The Fund returned -1.25% (Class A shares at net asset value with
distributions reinvested) compared to the Lipper General Municipal Debt Fund
Average of -1.31% for the six months ended February 29, 2000. The duration of
the Fund rose during the period from 7.5 to 8.0 years. The Fund held some older
bonds that were not called on their call date. Their duration increased when
they were subsequently priced to their maturity date.
Two strategies worked well for the Fund. We avoided the healthcare
sector, which continued to perform poorly. In addition, we were able to provide
tax-exempt income by maintaining our focus on higher quality coupon-paying
bonds.
Delaware Tax-Free Insured Fund
Delaware Tax-Free Insured Fund preserved principal somewhat better than its peer
group returning -0.77% (Class A shares at net asset value with distributions
reinvested) compared to a -0.86% return for the Lipper Insured Municipal Debt
Fund Average. Consistent with the Fund's strategy, 85.81% of the portfolio was
invested in AAA-rated, insured bonds. However, as we have done in the past, we
also purchased some uninsured instruments to increase the Fund's 30-day yield
from 4.09% to 4.61% over the period. At the same time, we decreased the
portfolio's duration from 7.7 to 7.2 years. The shorter duration, which means
less sensitivity to interest rate changes, helped the Fund's performance in a
rising interest rate environment.
3
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Delaware Tax-Free USA
Intermediate Fund
Portfolio Characteristics
February 29, 2000
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Current 30-Day SEC Yield*
Before Expense Limitation 4.28%
After Expense Limitation 4.42%
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Average Effective Duration 5.4 years
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Average Effective Maturity** 7.6 years
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* For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yields as of 2/29/00 for Class B shares
were 3.56% before the expense limitation and 3.69% after the expense
limitation. For Class C shares the 30-day SEC yield as of 2/29/00 were 3.55%
before the expense limitation and 3.69% after the limitation.
Delaware National High-Yield
Municipal Bond Fund
Portfolio Characteristics
February 29, 2000
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Current 30-Day SEC Yield*
Before Expense Limitation 5.08%
After Expense Limitation 5.40%
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Average Effective Duration 8.6 years
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Average Effective Maturity** 16.3 years
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* For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yields as of 2/29/00 for Class B shares
were 4.52% before the expense limitation and 4.85% after the expense
limitation. For Class C shares the 30-day SEC yields as of 2/29/00 were 4.51%
before the expense limitation and 4.85% after the limitation.
** Average effective maturity is the average time remaining until scheduled
principal repayment by issuers of portfolio securities.
[Tax-Exempt Income Artwork]
<PAGE>
Delaware Tax-Free USA Intermediate Fund
The past six months have been a fairly successful period for the Fund, which
posted a return of +0.28% (Class A shares at net asset value with distributions
reinvested), beating the Lipper Intermediate Municipal Debt Fund Average of
- -0.05%. We maintained the Fund's AA rating, and we lowered the duration from 6.7
to 5.4 years.
In September, we began to restructure the portfolio's holdings a bit. We
realized gains when we sold some longer term bonds and we repositioned the
portfolio with a shorter duration that we believe is better suited for the
current rising interest rate environment. Your Fund's 30-day yield has increased
during the six-month period, rising from 3.93% to 4.42%.
Delaware National High-Yield Municipal Bond Fund
High-yield, higher risk funds were hit the hardest during the past six months,
particularly in the fourth quarter of 1999. Your Fund finished the period with a
- -3.23% total return (Class A shares at net asset value with distributions
reinvested). The Lipper High-Yield Municipal Debt Fund Average returned -2.90%
for the six-month period. Your Fund's average quality rating was NR, the same as
last fiscal period and we decreased duration from 9 to 8.6 years. Your Fund's
30-day yield increased during the six-month period from 4.76% to 5.40%. We
pursued a more defensive duration posture during the six-month period. Duration
is a common measure of a bond or bond fund's sensitivity to interest rates. In
general, the longer the duration, the more the bond's price will change for a
given increase or decrease in interest rates.
In line with its high-yield focus, this Fund invests in lower quality bonds with
longer maturities and in sectors that offer attractive interest income.
Unfortunately, both the Fund's longer duration compared to its benchmark and
exposure to the healthcare/hospital sector hurt its performance in the last six
months.
4
<PAGE>
"REGARDLESS OF MARKET CONDITIONS, MUNICIPAL BOND FUNDS HAVE THE POTENTIAL TO
OFFER VALUABLE ASSET ALLOCATION BENEFITS WITHOUT ADDING TO TAXABLE INVESTMENT
INCOME."*
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Outlook
The U.S. seems to be the engine of growth for the entire world at this time. We
believe strong forward momentum for the U.S. economy is likely to result in
solid growth for the remainder of this year. We don't think this will create an
inflationary environment if labor productivity can maintain respectable gains.
The Federal Reserve is on the path of increasing short-term interest rates.
There have been five one-quarter point increases in short-term interest rates
since June 1999. Clearly, the Federal Reserve's goal is to slow the pace of the
U.S. economic climate to what it believes is a non-inflationary rate of growth.
We have seen some slowdown in the economy and the equity markets, as evidenced
by the recent drop in the Dow Jones Industrial Average, which is down -12.56%
for the six-month period ended February 29, 2000. We think longer term bonds --
including municipals -- could potentially rally if the equity market remains
subdued. If bond prices rise, state municipal bond mutual funds, such as any of
our four Delaware municipal bond funds have the potential to rise in value.
Regardless of market conditions, municipal bond funds have the potential to
offer valuable asset allocation benefits without adding to taxable investment
income.* In our view, investors seeking to diversify their portfolios with less
volatile investments will continue to find attractive opportunities in municipal
bonds and municipal bond funds in the years to come.
*A portion of the income from tax-exempt funds may be subject to the alternative
minimum tax.
5
<PAGE>
FUND BASICS
Fund Objective
To seek as high a level of current interest income exempt from federal income
tax as is available from municipal obligations and is consistent with prudent
investment management and preservation of capital.
Assets Under Management
$471.52 million
Number of Holdings
102
Fund Start Date
January 11, 1984
Your Fund Managers
Mitchell L. Conery received a bachelor's degree from Boston University and an
MBA in Finance from the State University of New York. Prior to joining Delaware
Investments in 1997, he served as a Municipal Bond Investment Officer with the
Travelers Group and held positions at CS First Boston Corporation, MBIA
Corporation, Thomson McKinnon Securities, Ovest Financial Services, and Merrill
Lynch.
Patrick P. Coyne received a bachelor's degree from Harvard University and
an MBA in Finance from the University of Pennsylvania's Wharton School. He began
his career with Kidder, Peabody & Co., where he managed the firm's trading desk
for four years. He joined Delaware Investments in 1989.
NASDAQ Symbols
Class A DMTFX
Class B DTFCX
Class C DUSCX
DELAWARE TAX-FREE USA FUND PERFORMANCE
Average Total Returns
Through February 29, 2000 Lifetime 10 Years Five Years One Year
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Class A (Est. 1/11/84)
Excluding Sales Charge +8.09% +5.66% +3.54% -5.56%
Including Sales Charge +7.83% +5.26% +2.76% -9.13%
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Class B (Est. 5/2/94)
Excluding Sales Charge +2.86% +2.72% -6.31%
Including Sales Charge +2.73% +2.40% -9.89%
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Class C (Est. 11/29/95)
Excluding Sales Charge +1.60% -6.31%
Including Sales Charge +1.60% -7.21%
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Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.
Class A shares have a 3.75% maximum front-end sales charge, and for periods
after June 1, 1992, a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are subject to a contingent 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 redeemed within
12 months, a 1% contingent deferred sales charge applies.
6
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FUND BASICS
Fund Objective
To seek as high a level of current interest income exempt from federal income
tax as is available from municipal obligations and is consistent with prudent
investment management and preservation of capital by investing in municipal
bonds insured by private insurance companies.
Assets Under Management
$68.74 million
Number of Holdings
36
Fund Start Date
March 25, 1985
Your Fund Managers
Mitchell L. Conery
Patrick P. Coyne
NASDAQ Symbols
Class A DMFIX
Class B DTXBX
Class C DTXCX
DELAWARE TAX-FREE INSURED FUND PERFORMANCE
Average Total Returns
Through February 29, 2000 Lifetime 10 Years Five Years One Year
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Class A (Est. 3/25/85)
Excluding Sales Charge +6.96% +5.59% +4.22% -4.13%
Including Sales Charge +6.69% +5.19% +3.42% -7.74%
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Class B (Est. 5/2/94)
Excluding Sales Charge +3.53% +3.39% -4.90%
Including Sales Charge +3.40% +3.07% -8.55%
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Class C (Est. 11/29/95)
Excluding Sales Charge +2.38% -4.90%
Including Sales Charge +2.38% -5.81%
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Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.
Class A shares have a 3.75% maximum front-end sales charge and, for periods
after June 1, 1992, a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
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 redeemed within
12 months, a 1% contingent deferred sales charge applies.
7
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FUND BASICS
Fund Objective
To seek as high a level of current interest income exempt from federal income
tax as is available from municipal obligations and is consistent with prudent
investment management and preservation of capital.
Assets Under Management
$27.39 million
Number of Holdings
31
Fund Start Date
January 7, 1993
Your Fund Managers
Mitchell L. Conery
Patrick P. Coyne
NASDAQ Symbols
Class A DMUSX
Class B DUIBX
Class C DUICX
DELAWARE TAX-FREE USA INTERMEDIATE
FUND PERFORMANCE
Average Total Returns
Through February 29, 2000 Lifetime Five Years One Year
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Class A (Est. 1/7/93)
Excluding Sales Charge +5.17% +4.76% -1.75%
Including Sales Charge +4.77% +4.18% -4.43%
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Class B (Est. 5/2/94)
Excluding Sales Charge +3.90% +3.88% -2.58%
Including Sales Charge +3.90% +3.88% -4.46%
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Class C (Est. 11/29/95)
Excluding Sales Charge +3.07% -2.58%
Including Sales Charge +3.07% -3.52%
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Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results. Voluntary expense limitations were in effect for
the periods shown. Returns would have been lower without the limitations.
Class A shares have a 2.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 2% if redeemed before the end of the third year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
[Tax-Exempt Income Artwork]
8
<PAGE>
FUND BASICS
Fund Objective
To seek a high level of current income exempt from federal income tax primarily
through investment in a portfolio of medium and lower-grade municipal
obligations.
Assets Under Management
$110.13 million
Number of Holdings
100
Fund Start Date
September 22, 1986
Your Fund Managers
Mitchell L. Conery
Patrick P. Coyne
NASDAQ Symbols
Class A CXHYX
Class B DVNYX
Class C DVHCX
DELAWARE NATIONAL HIGH-YIELD MUNICIPAL
BOND FUND PERFORMANCE
Average Total Returns
Through February 29, 2000 Lifetime 10 Years Five Years One Year
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Class A (Est. 9/22/86)
Excluding Sales Charge +7.06% +6.94 +5.78% -4.55%
Including Sales Charge +6.76% +6.54 +4.98% -8.13%
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Class B (Est. 12/18/96)
Excluding Sales Charge +3.37% -5.25%
Including Sales Charge +2.54% -8.87%
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Class C (Est. 5/27/97)
Excluding Sales Charge +2.82% -5.25%
Including Sales Charge +2.82% -6.15%
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Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results. Voluntary expense limitations were in effect for
the periods shown. Returns would have been lower without the limitations.
Class A shares have a 3.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
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 redeemed within
12 months, a 1% contingent deferred sales charge applies.
9
<PAGE>
Statements of Net Assets
DELAWARE TAX-FREE USA FUND
- --------------------------
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 97.09%
Continuing Care/Retirement Revenue Bonds - 2.60%
Clark County, Nevada Assisted Living
Homestead Boulder City
6.50% 12/1/27 ................................... $ 3,075,000 $ 2,657,323
Delaware County, Pennsylvania Authority
Revenue Main Line & Haverford Nursing
9.00% 8/1/22 .................................... 1,950,000 2,075,853
Delaware State Economic Development
Authority Revenue Peninsula
Series A 6.20% 5/1/15 ........................... 4,000,000 3,665,080
Delaware State Economic Development
Authority Unrefunded Balance First
Mortgage Peninsula United Methodist
Series A 8.50% 5/1/22 ........................... 455,000 482,068
Gainesville & Hall County Development
Authority 7.25% 11/15/29 ........................ 2,000,000 1,899,640
Virginia Beach Development Authority
Residential Care Facility Revenue
7.25% 11/1/32 ................................... 1,500,000 1,466,805
-----------
12,246,769
-----------
Convention Center/Stadium Revenue Bonds - 0.75%
Metropolitan Pier & Exposition Authority
Illinois Hospitality Facilities (McCormick
Pl Convention) 6.25% 7/1/17 ..................... 3,300,000 3,521,133
-----------
3,521,133
-----------
General Obligation Bonds - 4.67%
Albuquerque, New Mexico Gross Receipts
Tax Revenue Series B 5.00% 7/1/25 ............... 2,000,000 1,708,760
Chicago, Illinois Series A
6.75% 1/1/35 .................................... 2,290,000 2,441,117
New York City, New York
Series H 6.125% 8/1/25 .......................... 10,000,000 9,954,700
Seattle, Washington
Series B 5.75% 12/1/28 .......................... 5,000,000 4,789,650
Texas State General Obligation
(Veterans Land Bank)
7.40% 12/1/20 ................................... 3,000,000 3,104,310
-----------
21,998,537
-----------
Higher Education Revenue Bonds - 6.05%
Delaware State Economic Development
Authority Revenue 6.10% 8/1/31 .................. 4,000,000 3,917,600
District of Columbia Revenue
(Gonzaga College High School)
5.375% 7/1/29 ................................... 1,250,000 1,115,925
Jefferson County Student Housing
Industrial Building Revenue
6.50% 9/1/09 .................................... 2,255,000 2,193,529
Missouri State Health and Educational
Facilities Authority (Washington University)
4.75% 11/15/37 .................................. 12,000,000 9,447,840
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Higher Education Revenue Bonds (continued)
Ohio State University 5.75% 12/1/24 ................ $1,250,000 $ 1,216,125
Payne County Economic Development
Authority Student Housing Revenue
6.375% 6/1/30 ................................... 4,000,000 3,826,920
Pennsylvania State Higher Education
Assistance Agency 5.875% 12/15/30 ............... 2,000,000 1,948,440
Ysleta, Texas Independent School District
Public Facility Corporation School
Lease Revenue 5.75% 11/15/19 .................... 5,000,000 4,861,800
-----------
28,528,179
-----------
Hospital Revenue Bonds - 7.22%
Allegheny County, Pennsylvania Hospital
Development Authority Revenue
7.00% 8/1/15 .................................... 375,000 347,696
Allegheny County, Pennsylvania Hospital
Development Authority Revenue
(Allegheny Valley Hospital)
7.75% 8/1/20 .................................... 1,000,000 911,650
Louisiana Public Facilities Authority Hospital
Revenue (Southern Baptist Hospital, Inc.)
(Escrowed to Maturity)
8.00% 5/15/12 ................................... 8,490,000 9,798,394
Monroeville, Pennsylvania Hospital
Authority (Forbes Health System)
6.25% 10/1/15 ................................... 2,000,000 1,844,720
7.00% 10/1/03 ................................... 2,010,000 1,946,524
7.00% 10/1/03 ................................... 3,000,000 2,782,020
New Hampshire Higher Education &
Health Facilities Authority Revenue
New Hampton School Issue
5.375% 10/1/28 .................................. 2,000,000 1,657,940
Philadelphia Hospital & Higher Education
Facilities Authority Hospital Revenue
(Jeanes Health System Project)
5.875% 7/1/17 ................................... 4,575,000 3,919,174
6.85% 7/1/22 .................................... 7,000,000 6,452,880
Washington State Housing Finance
Commonwealth Nonprofit (Virginia
Mason Research Center Project A)
5.70% 1/1/24 .................................... 2,000,000 1,850,880
Westmoreland County, Pennsylvania
Industrial Development Authority
Revenue (Citizen General Hospital)
5.25% 7/1/15 .................................... 3,185,000 2,508,856
-----------
34,020,734
-----------
10
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free USA Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds - 5.01%
Dade County Housing Finance Authority
Single Family Mortgage
6.70% 4/1/28 (GNMA/FNMA) AMT .................... $4,500,000 $ 4,585,815
Massachusetts State Housing Finance
Agency Revenue Family Mortgage
6.95% 6/1/16 .................................... 2,450,000 2,526,538
Montgomery County, Pennsylvania
Redevelopment Authority Multi-Family
Housing Revenue (KBF Associates L.P.)
Series B 7.25% 7/1/25 ........................... 4,905,000 4,906,422
Tennessee Housing Development Agency
Series B 6.60% 7/1/25 ........................... 1,625,000 1,660,116
Utah State Housing Finance Agency,
Single Family Mortgage Series A
7.20% 1/1/27 (FHA/VA) AMT ....................... 845,000 863,565
Virginia State Housing Development
Authority Series A 7.10% 1/1/25 ................. 7,500,000 7,667,175
Wisconsin Housing & Economic Development
Authority Home Ownership
Series B 6.75% 9/1/25 AMT ....................... 1,405,000 1,433,353
-----------
23,642,984
-----------
Industrial Development Revenue Bonds - 2.76%
Luzerne County Industrial Development
Authority (Pennsylvania Gas &
Water Co. Project) 7.00% 12/1/17 ................ 4,000,000 4,359,800
New Jersey Economic Development
Authority 6.25% 9/15/29 ......................... 5,000,000 4,449,500
Prattville Industrial Development
Board Revenue 6.70% 3/1/24 ...................... 4,200,000 4,199,958
-----------
13,009,258
-----------
Leases/Certificates of Participation - 0.82%
Fulton Facilities Certificates of Partnership
5.50% 11/1/18 ................................... 3,000,000 2,861,820
Oregon State Dept. Administrative
5.75% 5/1/19 .................................... 1,000,000 983,960
-----------
3,845,780
-----------
Pollution Control Revenue Bonds - 15.95%
Claiborne County, Mississippi Pollution
Control Revenue System Energy
Resources 7.30% 5/1/25 .......................... 3,000,000 3,065,490
Clark County, Nevada Industrial
Development Revenue (Nevada
Power Co. Project) 7.20% 10/1/22 ................ 8,000,000 8,189,600
Illinois Development Finance Authority
Pollution Control Revenue
(Central Illinois Public Service Co.)
7.60% 3/1/14 .................................... 6,000,000 6,200,100
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Pollution Control Revenue Bonds (continued)
Mississippi Business Finance Corporation
Pollution Control 5.90% 5/1/22 ................ $ 4,000,000 $ 3,431,880
New Hampshire State Business Finance
Authority Pollution Control Revenue
Reference Public Service
Company-D-RMKT 5/1/98
6.00% 5/1/21 .................................. 3,000,000 2,713,830
Nez Perce County, Idaho Pollution Control
Revenue Refunding-Potlatch Project
6.00% 10/1/24 ................................. 7,000,000 6,436,570
Parish of West Feliciana, Louisiana
(Gulf States Utilities Co. Project)
Series A 7.50% 5/1/15 ......................... 22,700,000 23,991,403
Petersburg, Indiana Pollution Control
Revenue Bonds (Indianapolis Power &
Light Co.) 6.63% 12/1/24 ...................... 9,350,000 9,711,097
Sabine River Authority, Texas Pollution
Control (Southwestern Electric Power)
6.10% 4/1/18 .................................. 4,000,000 4,025,080
Sweetwater County, Wyoming Pollution
Control Revenue (Idaho Power Co.)
Series A 6.05% 7/15/26 ........................ 5,000,000 4,871,100
Ohio State Air Quality Development
Authority Dayton Power & Light (MBIA)
6.40% 8/15/27 ................................. 850,000 862,410
Oregon State Solid Waste Disposal
Facilities Economic Development
Revenue 6.40% 12/1/29 ......................... 1,750,000 1,704,430
-----------
75,202,990
-----------
Power Authority Revenue Bonds - 7.47%
**Georgia Municipal Electric Authority
Capital Appreciation
Series 86L 6.212% 1/1/09 ...................... 5,000,000 2,911,650
**Intermountain Power Agency Power
Supply Revenue Capital Appreciation
Series D 5.033% 7/1/20 ........................ 95,575,000 17,544,703
Los Angeles, California Department
Water & Power Electric Pollution
Revenue 6.00% 2/15/30 ......................... 3,000,000 2,999,880
Northern Municipal Power Agency,
Minnesota Series A 5.00% 1/1/21 ............... 8,500,000 7,271,070
Puerto Rico Electric Power Authority
Series EE 4.75% 7/1/24 ........................ 5,500,000 4,494,655
-----------
35,221,958
-----------
11
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free USA Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds - 12.62%
City of Chicago, Illinois Skyway Toll
Bridge Revenue 6.75% 1/1/17-04 ................ $ 3,300,000 $ 3,550,866
Delaware State Economic Development
Authority Peninsula United Methodist
First Mortgage Series A
8.50% 5/1/22-02 ............................... 3,045,000 3,329,647
Florida State Board of Education
7.25% 6/1/23-00 ............................... 2,555,000 2,625,237
Massachusetts State General Obligation
7.50% 12/1/07-00 .............................. 6,615,000 6,910,029
Massachusetts State Water Resource
Authority Series A 7.50% 4/1/09-00 ............ 1,080,000 1,104,430
Michigan State Hospital Finance Authority
Revenue (Genesys Health Systems)
Series A
7.50% 10/1/27-05 .............................. 8,130,000 9,091,535
8.125% 10/1/21-05 ............................. 4,000,000 4,653,920
New Hampshire State Turnpike
System Revenue 7.40% 4/1/20-00 ................ 6,510,000 6,656,605
Tampa, Florida (Florida Aquarium Project)
7.75% 5/1/27-02 ............................... 20,000,000 21,565,200
-----------
59,487,469
-----------
Sales Tax Revenue Bonds - 0.59%
Southeast Wisconsin Professional Baseball
Park District Sales Tax Revenue
5.50% 12/15/26 ................................ 3,000,000 2,804,790
-----------
2,804,790
-----------
School District General Obligation Bonds - 1.95%
Anchor Bay School District
6.00% 5/1/23 .................................. 2,500,000 2,499,750
Fort Bend, Texas Independent School
District 5.375% 2/15/24 ....................... 5,000,000 4,517,450
Lewisville, Texas Independent School
District 6.15% 8/15/21 ........................ 2,160,000 2,178,382
-----------
9,195,582
-----------
Solid Waste Disposal Revenue Bonds - 4.00%
Ashland, Kentucky Sewer & Solid Waste
Revenue (Ashland Inc. Project)
7.13% 2/1/22 .................................. 12,000,000 12,417,960
Pennsylvania Economic Development
Financing Authority Wastewater
Treatment Revenue
(Sun Co. Inc. R & M Project)
Series A 7.60% 12/1/24 AMT .................... 6,000,000 6,439,920
-----------
18,857,880
-----------
Transportation Revenue Bonds - 17.15%
Alliance, Texas Special Facilities Revenue
(Federal Express Corp. Project)
6.375% 4/1/21 AMT ............................. 6,000,000 5,768,040
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Transportation Revenue Bonds (continued)
Connector 2000 Association Inc. South
Carolina Toll Road Revenue Senior
(Southern Connector Project)
Series A 5.375% 1/1/38 .......................... $ 6,000,000 $ 4,302,599
Dallas-Fort Worth, Texas International Airport
Facilities Improvement Corporation
Revenue 6.375% 5/1/35 ........................... 5,000,000 4,666,450
Dallas-Fort Worth, Texas International
Airport (American Airlines)
7.50% 11/1/25 AMT ............................... 8,250,000 8,417,393
Foothill/Eastern Transportation Corridor
Agency California Toll Road Revenue
Senior Lien Series A 5.75% 1/15/40 .............. 3,000,000 2,707,920
Indianapolis, Indiana Airport Authority
Special Facilities (Federal Express
Corp. Project) 7.10% 1/15/17 .................... 7,800,000 8,003,268
Kenton County, Kentucky Airport Board
Special Facilities (Delta Airlines)
Series A 7.25% 2/1/22 ........................... 4,250,000 4,310,010
Series B 7.50% 2/1/12 ........................... 2,000,000 2,080,880
Massachusetts Port Authority
6.00% 9/1/21 .................................... 3,000,000 2,971,410
Massachusetts State Turnpike
Authority Revenue
Series A 5.00% 1/1/39 ........................... 4,000,000 3,292,760
Oklahoma State Turnpike Authority
1st Senior
6.00% 1/1/22 .................................... 13,535,000 13,934,418
6.00% 1/1/22 (Escrowed to Maturity) ............. 7,465,000 7,330,705
Puerto Rico Commonwealth Highway &
Transportation Authority (Highway
Improvements) Series Y
4.75% 7/1/23 .................................... 2,000,000 1,643,600
5.00% 7/1/28 .................................... 2,000,000 1,676,740
5.00% 7/1/36 .................................... 2,000,000 1,649,940
Puerto Rico Commonwealth (MBIA)
5.375% 7/1/21 ................................... 1,000,000 941,290
Toledo-Lucas County, Ohio Port
Authority Revenue 6.45% 12/15/21 ................ 2,000,000 1,947,340
Tulsa, Oklahoma Municipal Airport
(American Airlines) 7.35% 12/1/11 ............... 5,000,000 5,224,400
-----------
80,869,163
-----------
Water and Sewer Revenue Bonds - 4.38%
Atlanta, Georgia Water & Wastewater
Revenue Series A 5.00% 11/1/38 .................. 4,500,000 3,715,155
Highlands Ranch Metropolitan District
Number 3 5.25% 12/1/14 .......................... 1,750,000 1,587,180
Houston, Texas Water and Sewer System
Revenue Series D 6.13% 12/1/25 .................. 6,775,000 6,735,163
12
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free USA Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Water and Sewer Revenue Bonds (continued)
New York City Water Finance Series 97B
5.75% 6/15/29 ................................. $ 6,045,000 $ 5,733,562
West Virginia Water Loan Program
6.38% 7/1/39 .................................. 2,890,000 2,903,150
------------
20,674,210
------------
Other Revenue Bonds - 3.10%
Austin, Texas Revenue Refunded Sub Lien
5.25% 5/15/25 ................................. 14,000,000 12,710,600
Mississippi Development Bank
Special Obligation 6.30% 7/1/22 ............... 2,070,000 1,927,108
------------
14,637,708
------------
Total Municipal Bonds
(cost $451,450,651) 457,765,124
------------
+Variable Rate Notes - 0.95%
New York Dorm Authority Putters Float
3.92% 5/15/15 ................................. 4,500,000 4,500,000
------------
Total Variable Rate Notes
(cost $4,500,000) 4,500,000
------------
Floating Rate Notes - 1.99%
++New York Dormitory Authority Drivers
9.64% 5/15/15 ................................. 10,500,000 9,402,645
------------
Total Floating Rate Notes
(cost $11,769,300) ............................ 9,402,645
------------
Total Market Value of Securities - 100.03%
(cost $467,719,951) ........................... $471,667,769
Liabilities Net of Receivables and
Other Assets - (0.03%) ........................ (150,500)
------------
Net Assets Applicable to 45,065,143
Shares Outstanding - 100.00% .................. $471,517,269
------------
Net Asset Value - Delaware Tax-Free
USA Fund A Class ($441,016,358 /
42,150,028 Shares) ............................ $10.46
------
Net Asset Value - Delaware Tax-Free
USA Fund B Class ($28,197,980 /
2,695,013 Shares) ............................. $10.46
------
Net Asset Value - Delaware Tax-Free
USA Fund C Class ($2,302,931 /
220,102 Shares) ............................... $10.46
------
<PAGE>
- ----------------------
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
** The interest rate shown for this security is the effective yield.
+ Variable Rate Notes - The interest rate shown is the rate as of February 29,
2000.
++ Inverse floaters represent securities that pay interest at rates that
increase (decrease) with a decrease (increase) in a specific index. Interest
rates disclosed are in effect on February 29, 2000.
Summary of Abbreviations:
AMT - Subject to Federal Alternative Minimum Tax
FHA/VA - Insured by the Federal Housing Association/Veterans Association
FNMA - Insured by the Federal National Mortgage Association
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
Components of Net Assets at February 29, 2000:
Shares of Beneficial Interest (unlimited authorization -
no par) .................................................. $499,900,302
Accumulated net realized loss
on investments ........................................... (32,330,851)
Net unrealized appreciation
of investments ........................................... 3,947,818
------------
Total net assets ........................................... $471,517,269
============
Net Asset Value and Offering Price Per Share -
Delaware Tax-Free USA Fund
Net asset value A Class (A) ................................ $10.46
Sales charge (3.75% of offering price or 3.92%
of amount invested per share) (B) ........................ 0.41
------
Offering price ............................................. $10.87
======
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon 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
13
<PAGE>
Statements of Net Assets (continued)
DELAWARE TAX-FREE INSURED FUND
- ------------------------------
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 102.80%
Convention Center/Stadium Revenue Bonds - 1.45%
Tampa, Florida Sports Authority Revenue
5.75% 10/1/20 (MBIA) ........................... $1,000,000 $ 995,168
----------
995,168
----------
General Obligation Bonds - 5.63%
Howell, Michigan Public Schools
5.875% 5/1/22 (MBIA) ........................... 2,000,000 1,971,800
Puerto Rico Commonwealth
5.375% 7/1/21 (MBIA) ........................... 1,000,000 941,290
Seattle, Washington
Series B 5.75% 12/1/28 (FSA) ................... 1,000,000 957,930
----------
3,871,020
----------
Higher Education Revenue Bonds - 10.30%
District of Columbia - Revenue
(Gonzaga College High School)
5.375% 7/1/29 (FSA) ............................ 3,340,000 2,981,752
Maryland State Collegiate Housing
(Towson Collegiate Housing)
Series A 5.75% 6/1/29 .......................... 1,000,000 885,690
Massachusetts State Industrial Finance
Agency Revenue Higher Education
(Clark University Project)
6.10% 7/1/16 ................................... 1,250,000 1,257,975
Pennsylvania State Higher Education
5.875% 12/15/25 (MBIA) ......................... 2,000,000 1,956,940
----------
7,082,357
----------
Hospital Revenue Bonds - 6.54%
Monroeville, Pennsylvania Hospital
Authority Hospital Revenue
(Forbes Health System) 7.00% 10/1/03 ........... 615,000 595,578
Wisconsin State Health & Educational
Facilities Authority Revenue
(Sisters Sorrowful Mother)
Series A 5.70% 8/15/26 (MBIA) .................. 4,200,000 3,897,684
----------
4,493,262
----------
Housing Revenue Bonds - 11.06%
California Housing Facilities Finance
Agency Revenue 6.85% 8/1/23 .................... 3,860,000 3,968,543
Illinois Development Finance Authority
Revenue Reference Mortgage Federal
Housing Authority (Section 8)
Series A 5.80% 7/1/28 (MBIA) ................... 2,790,000 2,631,026
New Mexico Mortgage Finance Authority
(Single Family Mortgage Program)
Series C 6.20% 7/1/26 (GNMA/FNMA) .............. 1,000,000 1,003,980
----------
7,603,549
----------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Industrial Development Revenue Bonds - 3.13%
Luzerne County, Pennsylvania Industrial
Development Authority
(Pennsylvania Gas & Water Co. Project)
7.00% 12/1/17 (AMBAC) ....................... $1,000,000 $ 1,089,950
Northampton County, Pennsylvania
Industrial Development Authority
Revenue 6.95% 8/1/15 ........................ 1,000,000 1,028,790
Ohio State Air Quality Development
Authority Revenue
(JMG Funding LTD Partnership Project)
5.625% 10/1/22 (AMBAC) ...................... 35,000 32,893
------------
2,151,633
------------
Pollution Control Revenue Bonds - 15.81%
Mason County, West Virginia Pollution
Control Revenue (Appalachian Power
Project) Series K 6.05% 12/1/24 ............. 3,000,000 3,002,160
Ohio State Air Quality Development
Authority (Ohio Edison)
Series A 7.45% 3/1/16 (FGIC) ................ 2,000,000 2,040,000
Salem County, New Jersey Industrial
Pollution Control Financing Authority
(Public Service Electric & Gas Co.)
Series D 6.55% 10/1/29 (MBIA) ............... 4,000,000 4,124,440
Trinity River, Texas Pollution Control
Revenue Bonds (Texas Instruments
Inc. Project) 6.20% 3/1/20 (AMT) ............ 1,750,000 1,701,228
-----------
10,867,828
-----------
*Pre-Refunded Bonds - 31.38%
Austin, Texas Revenue Series A
6.00% 5/15/15-00 (FGIC) ..................... 1,090,000 1,094,284
Fort Wayne, Indiana Hospital Authority
6.40% 11/15/22-02 (MBIA) .................... 2,250,000 2,377,193
Massachusetts State Health & Education
Facilities Authority Revenue Series J
6.625% 1/1/21-01 (FGIC) ..................... 2,420,000 2,530,352
6.625% 1/1/21-01 (FGIC) ..................... 80,000 82,182
Michigan State Hospital Finance
Authority Revenue Ref-Hospital-Genesys
Health Systems 7.50% 10/01/27 ............... 1,500,000 1,677,405
Regional Transit Authority Illinois Revenue
Series D 6.75% 3/1/25-04 (FGIC) ............. 7,970,000 8,619,555
Seattle, Washington Municipality
Metropolitan Seattle Sewer Revenue,
Series U 6.60% 1/1/32-01 (FGIC) ............. 5,000,000 5,190,800
-----------
21,571,771
-----------
14
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free Insured Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Sales Tax Revenue Bonds - 1.80%
Brevard County, Florida Constitutional
Fuel Tax Revenue 6.00% 8/1/14 (FSA) .......... $1,195,000 $ 1,238,916
-----------
1,238,916
-----------
Transportation Revenue Bonds - 4.82%
Alliance, Texas Special Facility Revenue
(Federal Express Corp. Project )
6.375% 4/1/21 ................................ 1,000,000 961,340
Dayton, Ohio Special Facilities Revenue
(Air Freight) Series F 6.05% 10/1/09 ......... 2,350,000 2,353,243
-----------
3,314,583
-----------
Water & Sewer Revenue Bonds - 8.04%
Austin, Texas Utility System Revenue
6.00% 5/15/15 (FGIC) ......................... 185,000 185,035
Los Angeles, California Department of
Water & Power Electrical Plant Revenue
6.00% 2/15/30 ................................ 2,000,000 1,999,920
Melrose Park Illinois Water Revenue
Series A 5.00% 1/1/20 (MBIA) ................. 2,400,000 2,082,024
St. Lucie West Services District Florida
Utility Revenue 6.00% 10/1/22 (MBIA) ......... 1,250,000 1,255,413
-----------
5,522,392
-----------
Other Revenue Bonds - 2.84%
Delaware State Economic Developement
Authority Revenue (University Delaware
Project) 6.00% 2/1/21 (AMBAC) ................ 1,000,000 999,940
Fulton County, Georgia Facilities Corp
CTFS Partnership
5.50% 11/1/18 (AMBAC) ........................ 1,000,000 953,940
-----------
1,953,880
-----------
Total Municipal Bonds
(cost $69,334,897) ........................... 70,666,359
-----------
Total Market Value of Securities - 102.80%
(cost $69,334,897) ........................... $70,666,359
Liabilities Net of Receivables and
Other Assets - (2.80%) ....................... (1,926,226)
-----------
Net Assets Applicable to 6,862,696
Shares Outstanding - 100.00% ................. $68,740,133
-----------
Net Asset Value - Delaware Tax-Free Insured
Fund A Class ($63,331,480 /
6,322,721 Shares) ............................ $10.02
-----------
Net Asset Value - Delaware Tax-Free Insured
Fund B Class ($4,509,764 /
450,234 Shares) .............................. $10.02
-----------
Net Asset Value - Delaware Tax-Free Insured
Fund C Class ($898,889 /
89,741 Shares) ............................... $10.02
-----------
<PAGE>
- --------------------------------------------------------------------------------
- ----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Federal Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
Components of Net Assets at February 29, 2000:
Shares of Beneficial Interest, (unlimited authorization -
no par) $71,765,364
Accumulated net realized loss
on investments (4,356,693)
Net unrealized appreciation
of investments 1,331,462
-----------
Total net assets $68,740,133
-----------
Net Asset Value and Offering Price Per Share -
Delaware Tax-Free Insured Fund A Class
Net asset value A Class (A) $10.02
Sales charge (3.75% of offering price or 3.89%
of amount invested per share) (B) 0.39
------
Offering price $10.41
------
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon 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
15
<PAGE>
Statements of Net Assets (continued)
DELAWARE TAX-FREE USA INTERMEDIATE FUND
- ---------------------------------------
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 104.95%
General Obligation Bonds - 2.17%
*North Slope Boro Alaska
4.70% 6/30/09 (MBIA) ........................ $1,000,000 $ 595,320
----------
595,320
----------
Higher Education Bonds - 6.31%
Pennsylvania State Higher Education
Assistance Agency Capital Acquisition
5.875% 12/15/25 ............................. 1,000,000 978,470
Virginia College Building Authority
(Hampton University Project)
6.00% 4/1/20 ................................ 750,000 749,955
----------
1,728,425
----------
Highway Revenue Bonds - 13.65%
Arizona State Transportation Board
Highway Revenue 6.25% 7/1/16 ................ 1,850,000 1,926,720
Dunes, Florida Community Development
District-Intracoastal Waterway Bridge
(ITT Industries Corporation)
5.50% 10/1/07 ............................... 825,000 815,917
San Francisco Bay Area Transportation
Financing Authority (California Bridge
Toll Notes) 5.00% 2/1/07 .................... 1,000,000 997,070
----------
3,739,707
----------
Housing Revenue Bonds - 20.22%
Iowa Finance Authority MultiFamily
Housing (Forest Glen Apartments Project)
Series A 5.60% 11/1/22 (FNMA) ............... 755,000 700,859
Maryland State Community Development
Administration Department of Housing &
Community Development (Single Family
Program) 6th Series 5.90% 4/1/01 ............ 1,000,000 1,015,580
Montana State Board Housing
(Single Family Mortgage)
Series A 6.00% 6/1/16 ....................... 1,000,000 1,002,890
Montgomery County, Pennsylvania
Redevelopment Authority Multi-Family
Housing Revenue (KBF Associates)
6.00% 7/1/04 ................................ 1,825,000 1,815,236
Palatine, Illinois Multi-Family Housing
Prairiebrook Project) Series A
5.50% 12/1/06 (FNMA) ........................ 1,000,000 1,004,040
----------
5,538,605
----------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Industrial Development Revenue Bonds - 8.79%
New York, New York City Industrial
Development Agency Civil Facility
Revenue (YMCA Greater NY Project)
5.40% 8/1/04 ................................ $1,440,000 $1,429,358
Toledo Lucas County, Ohio Port Authority
Development Revenue
6.125% 11/15/09 ............................. 1,000,000 979,180
----------
2,408,538
----------
Pollution Control Revenue Bonds - 9.74%
Beaver County, Pennsylvania Industrial
Development Authority Pollution Control
Revenue (Cleveland Electric Project)
4.60% 10/1/30 ............................... 1,000,000 950,230
Oregon State Solid Waste Disposal Facility
Economic Development Revenue
(USG Corporation Project)
Series 192 6.40% 12/1/29 .................... 750,000 730,470
Saint Charles Parish, LA Pollution Control
Revenue (Entergy LA Project)
Series C 5.35% 10/1/29 ...................... 1,000,000 987,500
----------
2,668,200
----------
Power Authority Revenue Bonds - 11.16%
Los Angeles, California Department
Water & Power Electrical PLT Revenue
6.125% 2/15/18 .............................. 1,000,000 1,013,610
New Madrid, Missouri Power Plant
5.65% 6/1/03 (AMBAC) ........................ 1,000,000 1,025,170
Lower Colorado River Authority, Texas
Revenue Series F 5.50% 5/15/08 .............. 1,000,000 1,019,070
----------
3,057,850
----------
*Pre-Refunded Bonds - 2.61%
Easton, Pennsylvania Joint Sewer Authority
5.60% 4/1/03 (ASSET GTY) .................... 200,000 203,774
Metropolitan Pier & Exposition Authority
Illinois Hospital Facilities (McCormick PL
Convention) 5.75% 7/1/06 .................... 500,000 511,815
----------
715,589
----------
School District General Obligation - 3.73%
Philadelphia, Pennsylvania School District
Series A 6.25% 5/15/01 (AMBAC) .............. 1,000,000 1,020,140
----------
1,020,140
----------
16
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free USA Intermediate Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
State Agency Bonds - 9.26%
Indiana Bond Bank (State Revolving Fund
Program) Series A 6.00% 2/1/01 .................. $ 500,000 $ 507,490
Michigan Municipal Bond Bank Authority
Revenue (Local Government Loan Program)
Series G 5.85% 5/1/01 (AMBAC) ................... 2,000,000 2,029,620
----------
2,537,110
----------
Transportation Revenue Bonds - 9.10%
Harris County, Texas Industrial Development
Corporate Airport Facilities, Refunding
(Continental Airlines Project)
5.00% 7/1/07 AMT ................................ 1,510,000 1,412,077
Rhode Island Port Authority and Economic
5.80% 7/1/02 (FSA) .............................. 565,000 577,012
5.90% 7/1/03 (FSA) .............................. 490,000 504,538
----------
2,493,627
----------
Water & Sewer Revenue Bonds - 4.49%
Marysville, Washington Water & Sewer
Revenue 5.50% 12/1/02 (MBIA) .................... 200,000 204,318
Virginia State Res Authority Clean Water
Revenue 6.00% 10/1/16 ........................... 1,000,000 1,024,330
----------
1,228,648
----------
Other Revenue Bonds - 3.72%
West Virginia School Building Authority
Revenue Capital Improvement
5.625% 7/1/02 (MBIA) ............................ 1,000,000 1,019,660
----------
1,019,660
----------
Total Municipal Bonds
(cost $28,786,028) 28,751,419
----------
Short-Term Investments - 2.92%
Allegheny County, Pennsylvania
Hospital Development Authority
Revenue (Presbyterian University
Hospital) Series D 3.95% 3/1/20 ................. 800,000 800,000
----------
Total Short-Term Investments
(cost $800,000) ................................. 800,000
----------
Total Market Value of Securities - 107.87%
(cost $29,586,028) .............................. $29,551,419
Liabilities Net of Receivables and
Other Assets - (7.87%) .......................... (2,156,543)
----------
Net Assets Applicable to 2,720,363
Shares Outstanding - 100.00% .................... $27,394,876
----------
<PAGE>
Net Asset Value - Delaware Tax-Free
USA Intermediate Fund A Class
($22,511,547 / 2,235,440 Shares) .................. $10.07
------
Net Asset Value - Delaware Tax-Free
USA Intermediate Fund B Class
($2,204,070 / 218,868 Shares) ..................... $10.07
------
Net Asset Value - Delaware Tax-Free
USA Intermediate Fund C Class
($2,679,259 / 266,055 Shares) ..................... $10.07
------
- ----------------------
*The interest rate shown for this security is the effective yield.
Summary of Abbreviations:
ASSET GTY - Insured by the Asset Guaranty Insurance Corporation
AMT - Subject to Federal Alternative Minimum Tax
AMBAC - Insured by the AMBAC Assurance Corporation
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
Components of Net Assets at February 29, 2000:
Shares of Beneficial Interest (unlimited authorization
- no par) $28,828,518
Accumulated net realized loss
on investments (1,399,033)
Net unrealized depreciation of investments (34,609)
-----------
Total net assets $27,394,876
-----------
Net Asset Value and Offering Price Per Share
Delaware Tax-Free USA Intermediate Fund A Class
Net asset value A Class (A) $10.07
Sales charge (2.75% of offering price or 2.78%
of amount invested per share) (B) 0.28
------
Offering price $10.35
------
- ----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon 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
17
<PAGE>
Statements of Net Assets (continued)
DELAWARE NATIONAL HIGH-YIELD MUNICIPAL BOND FUND
- ------------------------------------------------
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 100.63%
Continuing Care/Retirement Revenue Bonds - 7.63%
Gainesville & Hall County, Georgia
Development Authority Revenue
Senior Living Facility 7.25% 11/15/29 ........... $1,500,000 $1,424,730
Indianapolis, Indiana Economic
Development Revenue (National
Benevolent Association)
7.25% 10/1/10 ................................... 700,000 722,120
Manhattan, Kansas Health Care Facilities
Meadowlark Hills Retirement-A
6.375% 5/15/20 .................................. 650,000 561,776
Marion County, Missouri Nursing Home
Revenue 7.00% 8/1/13 ............................ 1,050,000 1,018,899
Philadelphia, Pennsylvania Hospitals &
Higher Education Facilities Authority
Revenue (The Philadelphia Protestant
Home Project) Series A 6.50% 7/1/27 ............. 1,100,000 936,991
South Dakota Health & Education
Facilities Revenue (Westhills
Retirement Village) 7.25% 9/1/13 ................ 1,125,000 1,107,923
State Tammany, Louisiana Public
Transportation Financing Authority
Revenue (Christwood Project)
5.70% 11/15/28 .................................. 1,500,000 1,149,165
Vermont Education & Health Building
Revenue Health Care Facility (Copely
Manor PJ) 6.15% 4/1/19 .......................... 1,730,000 1,477,956
----------
8,399,560
----------
General Obligation Bonds - 4.17%
Illinois State Development Finance
Authority East St. Louis Debt Restructure
Revenue 7.375% 11/15/11 ......................... 1,100,000 1,175,801
Niles, Illinois Park District Unlimited Tax
6.65% 12/1/14 ................................... 860,000 892,362
Orange Beach, Alabama Refunding &
Capital Improvement Unlimited Tax
6.25% 10/1/13 .................................. 1,500,000 1,537,470
Romeoville, Illinois Recreational Facilities
Unlimited Tax 7.80% 1/1/11 ...................... 945,000 991,768
----------
4,597,401
----------
Higher Education Revenue Bonds - 20.09%
California Educational Facilities Authority
Revenue (Fresno Pacific University)
Series A 6.75% 3/1/19 ........................... 750,000 755,513
Jefferson County, Kentucky Student
Housing Industrial Building Revenue
7.00% 9/1/19 .................................... 2,500,000 2,401,350
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Higher Education Revenue Bonds (continued)
Maine Finance Authority Revenue
(Waynflete School) 6.40% 8/1/19 ................. $1,000,000 $ 971,830
Maryland State Collegiate Housing
(Towson Collegiate Housing)
Series A 5.75% 6/1/29 ........................... 2,500,000 2,214,225
Maryland Economic Development
Corporate Housing Revenue
(Collegiate Housing Foundation)
5.75% 6/1/24 .................................... 1,250,000 1,120,838
Maryland Economic Development Housing
Revenue (Salisbury State Collegiate
Housing) 6.00% 6/1/30 ........................... 1,000,000 914,440
Massachusetts State Health & Education
Facilities (Nichols College) Series C
6.00% 10/1/17 ................................... 1,000,000 905,310
6.125% 10/1/29 .................................. 4,400,000 3,889,380
New Hampshire Education & Health
Authority (Brewster Academy)
6.75% 6/1/25 .................................... 1,000,000 1,002,990
New Hampshire Higher Education & Health
(New England College) 6.125% 3/1/19 ............. 2,000,000 1,784,980
New Hampshire Higher Education &
Health Facilities Authority Revenue
(New Hampton School Issue)
5.375% 10/1/28 .................................. 1,070,000 886,998
New Jersey State Educational Facilities
Authority Revenue (Bloomfield College)
Series A 6.85% 7/1/30 ........................... 1,320,000 1,333,358
New Jersey State Educational Facilities
Revenue (Fairleigh Dickinson University)
Series G 5.70% 7/1/28 ........................... 2,000,000 1,685,540
Savannah, Georgia Economic Development
Authority Revenue (College of Art &
Design) 6.50% 10/1/13 ........................... 1,000,000 983,680
Scranton-Lackawana, Pennsylvania
Health & Welfare Revenue
(Lackawana College) 5.75% 11/1/20 ............... 1,510,000 1,271,979
-----------
22,122,411
-----------
Hospital Revenue Bonds - 9.46%
Allegheny County, Pennsylvania Hospital
Development Authority Revenue
(Allegheny Valley Hospital)
7.75% 8/1/20 .................................... 1,000,000 911,650
Cuyahoga County, Ohio Health Care
Facilities Revenue (Benjamin Rose
Institute Project) 5.50% 12/1/28 ................ 1,250,000 935,688
Illinois Health Facilities Authority Revenue
(Midwest Physician Group Limited)
5.50% 11/15/19 .................................. 1,685,000 1,292,513
18
<PAGE>
Statements of Net Assets (continued)
Delaware National Principal Market
High-Yield Municipal Bond Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds (continued)
Mississippi Development Bank Special
Obligation (Madison County Hospital)
6.40% 7/1/29 .................................... $1,585,000 $ 1,472,560
Monroeville, Pennsylvania Hospital
Authority Hospital Revenue
(Forbes Health System)
6.25% 10/1/15 ................................... 1,000,000 922,360
7.00% 10/1/03 ................................... 1,650,000 1,597,893
Royston, Georgia Hospital Authority
Revenue 6.375% 7/1/14 ........................... 775,000 706,723
South Dakota Health & Education Facilities
Revenue (Huron Regional Medical Center)
7.00% 4/1/10 .................................... 1,000,000 1,005,310
Westmorland County, Pennsylvania Industrial
Development Authority Hospital Revenue
(Citizens General Hospital)
5.25% 7/1/15 .................................... 2,000,000 1,575,420
-----------
10,420,117
-----------
Housing Revenue Bonds - 2.38%
Arlington County, Virginia Development
Authority Multi-Family Revenue (Housing
Mortgage Woodbury Park Apartments)
Series B 6.50% 7/1/24 ........................... 1,000,000 924,300
Washington State Housing Finance
Commission (State School Directors
Association-Private Placement)
8.25% 7/1/02 .................................... 110,000 112,748
8.25% 7/1/12 .................................... 625,000 658,569
Washington State Housing Finance
Commonwealth (Nonprofit Virginia
Mason Research Center Project)
5.70% 1/1/24 .................................... 1,000,000 925,440
----------
2,621,057
----------
Industrial Development Revenue Bonds - 8.88%
Alliance, Texas Special Facility Revenue
Bonds Series 1996 (Federal Express
Corp. Project ) 6.375% 4/1/21 ................... 2,350,000 2,259,149
Lower Neches Valley, Texas Industrial
Development (Mobil Oil Refining
Corp. Project) 6.35% 4/1/26 ..................... 1,095,000 1,096,982
Moundville, Alabama Industrial Development
Board Revenue (Lawter International, Inc.)
Project Series LI 6.75% 12/1/11 ................. 1,500,000 1,555,455
Newbern, Tennessee Industrial Development
Board Newbern Rubber, Inc.
(Dana Corporation) 7.90% 3/1/00 ................. 1,000,000 1,000,000
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Industrial Development Revenue Bonds (continued)
New York City Industrial Development
Agency Revenue (Field Hotel Association
LP, JFK) 6.00% 11/1/28 .......................... $1,500,000 $1,262,235
Selma, Alabama Industrial Development
Board of Environmental Improvement
Revenue (International Paper Co.
Project) Series B 6.70% 3/1/24 .................. 2,600,000 2,599,974
----------
9,773,795
----------
Leases/Certificates of Participation - 2.46%
Dauphin County, Pennsylvania General
Authority (Forum Office & Parking)
Series A 6.00% 1/15/25 .......................... 850,000 744,133
Dauphin County, Pennsylvania General
Authority (Riverfront Office & Parking)
Series A 5.75% 1/1/10 ........................... 2,125,000 1,963,840
----------
2,707,973
----------
Pollution Control Revenue Bonds - 8.76%
California Pollution Control Authority
(Pollution Control Revenue-Laidlaw
Environmental) Series A 6.70% 7/1/07 ............ 1,000,000 995,310
East Chicago Solid Waste Disposal Revenue
(USG Corp) 6.375% 8/1/29 ........................ 2,000,000 1,889,920
Mississippi Pollution Control Revenue
(Systems Energy Resources)
5.875% 4/1/22 ................................... 4,000,000 3,421,960
New Hampshire State Business Finance
Authority Pollution Control Revenue
(Public Service Company of New
Hampshire) Series D 6.00% 5/1/21 ................ 3,000,000 2,713,830
Ohio Solid Waste Disposal Revenue
(USG Corp) 5.60% 8/1/32 ......................... 750,000 626,318
----------
9,647,338
----------
Power Revenue Bonds - 1.33%
Cleveland Ohio Public Power Systems
Revenue (Cleveland Power)
5.00% 11/15/24 (MBIA) ........................... 50,000 42,797
Los Angeles, California Department of
Water & Power Electric Plant Revenue
6.125% 2/15/18 .................................. 1,000,000 1,013,610
Ohio State Water Development Authority
Solid Waste Disposal (Bay Shore Power
Project) Series A 5.88% 9/1/20 .................. 500,000 408,005
----------
1,464,412
----------
19
<PAGE>
Statements of Net Assets (continued)
Delaware National Principal Market
High-Yield Municipal Bond Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded Bonds - 12.67%
Alexandria Health Care Facility Revenue
Board of Social Ministry
8.75% 8/1/21-01 ................................. $ 500,000 $ 537,025
Bedford Park, Illinois Tax Increment
Revenue 8.00% 12/1/10-04 ........................ 1,200,000 1,336,332
Chelsea, Oklahoma Gas Authority
7.25% 7/1/13-04 ................................. 600,000 660,600
7.30% 7/1/19-04 ................................. 700,000 772,044
Easton, Pennsylvania Area Joint
Sewer Authority 6.20% 4/1/09-03 ................. 1,000,000 1,035,810
Elizabeth Borough, Pennsylvania Municipal
Authority Guaranteed Sewer
7.15% 1/1/21-02 ................................. 500,000 529,180
Etowah County, Alabama Refunding
Warrants 8.50% 11/1/10-00 ....................... 800,000 831,776
Illinois Health Facility Authority Revenue
(Midwest Physician Group Project)
8.10% 11/15/14-04 ............................... 935,000 1,056,587
Illinois State Development Finance Authority
(Harrisburg Medical Center Project)
7.00% 3/1/06 (Escrowed to Maturity) ............. 400,000 430,832
7.20% 3/1/07-06 ................................. 400,000 435,176
7.20% 3/1/08-06 ................................. 400,000 435,176
New Kensington, Pennsylvania Municipal
Sanitation Authority Revenue
7.50% 10/1/11-01 ................................ 1,000,000 1,041,270
Oklahoma City Public Property Authority
(City Golf System) 8.30% 10/1/16-01 ............. 1,000,000 1,071,860
Pennsylvania Higher Education Facility
Authority (Drexel University)
6.75% 5/1/12-03 ................................. 1,300,000 1,392,625
Spring Park, Minnesota Twin Birch Health
Care Center (Guarantor: Presbyterian
Homes of Minnesota)
8.25% 8/1/11-01 ................................. 500,000 533,650
Volusia, Florida Industrial Development
Authority (Bishops Glen Project
Retirement Health Facilities)
7.50% 11/1/16-06 ................................ 980,000 1,070,660
West Chicago, Illinois Tax Increment
7.375% 12/1/12-02 ............................... 720,000 783,295
-----------
13,953,898
------------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Recreational Area Bonds - 0.77%
North Charleston Golf Centers Revenue
5.50% 5/1/24 ................................... $1,000,000 $ 850,900
----------
850,900
----------
Territorial Revenue Bonds - 0.16%
Virgin Islands Public Finance
Authority Revenue 6.125% 10/1/29 ................ 175,000 171,595
----------
171,595
----------
Transportation Revenue Bonds - 2.08%
Cleveland, Ohio Airport Special Revenue
(Continental Airlines Project)
5.375% 9/15/27 .................................. 470,000 368,019
Houston, Texas Airport Special Facilities
(Continental Airlines)
Series B 6.125% 7/15/27 ......................... 900,000 792,432
Toledo Lucas County, Ohio Port Authority
Airport Revenue (Improvement Series 1)
5.50% 5/15/20 ................................... 1,325,000 1,132,464
----------
2,292,915
----------
Waste Disposal Revenue Bonds - 1.88%
Ashland, Kentucky Sewer & Solid Waste
Revenue (Ashland, Inc. Project)
7.125% 2/1/22 ................................... 1,200,000 1,241,796
Gulf Coast Waste Disposal Revenue
(Valero Energy) 5.70% 4/1/32 .................... 1,000,000 830,520
----------
2,072,316
----------
Water & Sewer Revenue Bonds - 4.47%
Franklin County, Missouri Public Water
Supply (District Waterworks and
Sewer System) 7.375% 12/1/18 .................... 1,255,000 1,293,453
Northern Palm Beach County, Florida
Water Control & Improvement Unit
Development No. 9B 5.90% 8/1/19 ................. 1,000,000 918,570
Upper Bear Creek, Alabama Water, Sewer, &
Fire Revenue District 6.25% 8/1/15 .............. 1,250,000 1,238,463
Vance, Alabama Governmental Utility
Services Corporate Sewer Services
Revenue 7.50% 10/1/18 ........................... 1,535,000 1,470,960
----------
4,921,446
----------
Other Revenue Bonds - 13.44%
Anne Arundel County, Maryland Special
Obligation (Arundel Mills Project)
7.10% 7/1/29 .................................... 1,500,000 1,450,710
Arbor Greene Community Development
District Special Assessment Revenue
7.00% 5/1/03 .................................... 95,000 95,121
20
<PAGE>
Statements of Net Assets (continued)
Delaware National Principal Market
High-Yield Municipal Bond Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Other Revenue Bonds (continued)
Boston Biomedical Research
5.75% 2/1/29 .................................... $1,000,000 $ 852,310
Colorado Postsecondary Education
Facilities Authority (Ocean Journey
Project) 8.00% 12/1/06 .......................... 1,000,000 1,090,380
Lowry Economic Redevelopment Authority
Colorado Revenue
Series A 7.00% 12/1/10 .......................... 1,000,000 1,061,220
Orlando Special Assessment (Conroy Road)
Series B 5.25% 5/1/05 ........................... 1,350,000 1,292,247
Pocatello Development Authority & Tax
Increment Revenue 7.25% 12/1/08 ................. 235,000 231,536
Prescott Valley, Arizona Improvement
District (Special Assessment)
7.90% 1/1/12 .................................... 500,000 542,155
Sacramento, California City Finance
Authority Revenue (Convention Center
Hotel) Series A 6.25% 1/1/30 .................... 3,000,000 2,735,130
Saint Joseph County Industrial Economic
Development (Madison Center Project)
5.50% 2/15/21 ................................... 1,150,000 913,962
San Diego County, California City Finance
(Burnham Institute) 6.25% 9/1/29 ................ 1,000,000 944,890
Santa Fe, New Mexico Municipal Record
Complex Net Revenue
5.625% 12/1/23 .................................. 1,140,000 967,769
Schuylkill County, Pennsylvania Industrial
Development Authority Resource Recovery
Center (Schuylkill Energy Resource Inc.)
6.50% 1/1/10 .................................... 1,315,000 1,292,416
Virginia Beach Development Authority
Revenue (Ramada On The Beach)
6.625% 12/1/09 .................................. 1,000,000 991,040
Westminster, Colorado Shaw Heights
(Special Improvement District)
7.50% 12/1/07 ................................... 350,000 345,114
-----------
14,806,000
-----------
Total Municipal Bonds
(cost $116,280,384) ............................. 110,823,134
-----------
Number of
Shares
---------
Short-Term Investments - 0.93%
Wells Fargo National Tax-Free Money
Market Fund ..................................... 1,026,508 1,026,508
-----------
Total Short-Term Investments
(cost $1,026,508) ............................... 1,026,508
-----------
<PAGE>
Market
Value
- --------------------------------------------------------------------------------
Total Market Value of Securities - 101.56%
(cost $117,306,892) $111,849,642
Liabilities Net of Receivables and
Other Assets - (1.56%) (1,723,305)
------------
Net Assets Applicable to 11,311,113
Shares Outstanding - 100.00% $110,126,337
============
Net Asset Value - Delaware National High-Yield
Municipal Bond Fund A Class
($79,632,135 / 8,184,960 Shares) $9.73
-----
Net Asset Value - Delaware National High-Yield
Municipal Bond Fund B Class
($19,927,069 / 2,043,343 Shares) $9.75
-----
Net Asset Value - Delaware National High-Yield
Municipal Bond Fund C Class
($10,567,133 / 1,082,810 Shares) $9.76
-----
- ----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
MBIA - Insured by the Municipal Bond Insurance Association
Components of Net Assets at February 29, 2000:
Shares of Beneficial Interest (unlimited authorization -
no par) .................................................. $117,704,320
Accumulated net realized loss
on investments ........................................... (2,120,733)
Net unrealized depreciation
of investments ........................................... (5,457,250)
------------
Total net assets ............................................ $110,126,337
============
Net Asset Value and Offering Price Per Share -
National High-Yield Municipal Bond Fund
Net asset value A Class (A) ................................. $9.73
Sales charge (3.75% of offering price or 3.91%
of amount invested per share) (B) ........................ 0.38
------
Offering price .............................................. $10.11
======
- ----------------------
(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
21
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
February 29, 2000 Delaware Tax-Free USA Intermediate Fund
- --------------------------------------------------------------------------------
<S> <C>
Assets:
Investments at market (cost $29,586,028) .................... $29,551,419
Receivables for securities sold ............................. 1,843,140
Cash ........................................................ 1,101,454
Interest receivable ......................................... 418,116
Subscriptions receivable .................................... 141,642
-----------
Total assets ................................................ 33,055,771
-----------
Liabilities:
Payables for securities purchased ........................... 5,571,672
Liquidations payable ........................................ 36,554
Other accounts payable and accrued expenses ................. 28,494
Distributions payable ....................................... 24,175
-----------
Total liabilities ........................................... 5,660,895
-----------
Total Net Assets ............................................ $27,394,876
===========
</TABLE>
See accompanying notes
22
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free USA National High-Yield
Six Months Ended February 29, 2000 (Unaudited) USA Fund Insured Fund Intermediate Fund Municipal Bond Fund
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest ............................................$ 16,045,040 $2,159,162 $779,775 $ 3,757,075
---------------------------------------------------------------------
Expenses:
Management fees ..................................... 1,348,707 177,473 73,500 312,952
Distribution expense ................................ 631,160 96,943 44,043 257,829
Dividend disbursing and transfer agent fees
and expenses ...................................... 226,000 27,245 15,380 60,480
Accounting and administration ....................... 100,700 14,593 5,898 27,300
Reports and statements to shareholders .............. 62,500 10,000 3,883 24,000
Professional fees ................................... 32,000 2,550 1,750 27,000
Taxes (other than taxes on income) .................. 22,280 909 635 59,300
Registration fees ................................... 32,500 14,120 13,400 64,000
Custodian fees ...................................... 85,406 20,537 20,213 6,810
Trustee's fees ...................................... 6,568 1,096 410 2,550
Other ............................................... 45,496 1,703 1,084 22,322
---------------------------------------------------------------------
2,593,317 367,169 180,196 864,543
Less expenses absorbed or waived .................... -- -- (20,623) (177,753)
---------------------------------------------------------------------
Less expenses paid indirectly ....................... (87,480) (12,182) (20,403) (1,315)
---------------------------------------------------------------------
Total operating expenses (before interest expense) .. 2,505,837 354,987 139,170 685,475
---------------------------------------------------------------------
Interest expense .................................... -- -- -- 708
---------------------------------------------------------------------
Total expenses ...................................... 2,505,837 354,987 139,170 686,183
---------------------------------------------------------------------
Net Investment Income ............................... 13,539,203 1,804,175 640,605 3,070,892
---------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on
Investments:
Net realized loss on investment transactions ........ (5,830,020) (1,627,799) (773,110) (2,002,762)
Net change in unrealized appreciation/depreciation
of investments .................................... (13,927,924) (854,068) 158,796 (5,010,892)
---------------------------------------------------------------------
Net Realized and Unrealized Loss on Investments ..... (19,757,944) (2,481,867) (614,314) (7,013,654)
---------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations .........................$ (6,218,741) $ (677,692) $ 26,291 $(3,942,762)
=====================================================================
</TABLE>
See accompanying notes
23
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Tax-Free
USA Fund Insured Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/29/00 8/31/99 2/29/00 8/31/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income ...................................... $ 13,539,203 $ 29,868,197 $ 1,804,175 $ 3,682,046
Net realized loss on investments ........................... (5,830,020) (24,575,865) (1,627,799) (2,602,291)
Net change in unrealized depreciation of investments ....... (13,927,924) (21,125,314) (854,068) (2,249,127)
---------------------------------------------------------------------
Net decrease in net assets resulting from operations ....... (6,218,741) (15,832,982) (677,692) (1,169,372)
---------------------------------------------------------------------
Distributions to Shareholders From:
Net investment income:
A Class .................................................. (12,722,061) (28,129,928) (1,669,087) (3,443,584)
B Class .................................................. (609,190) (1,601,887) (104,151) (189,965)
C Class .................................................. (207,952) (136,382) (30,937) (48,497)
Net realized gain on investments:
A Class .................................................. -- (1,166,868) -- (816,386)
B Class .................................................. -- (77,263) -- (50,900)
C Class .................................................. -- (5,129) -- (7,792)
---------------------------------------------------------------------
(13,539,203) (31,117,457) (1,804,175) (4,557,124)
---------------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class .................................................. 53,347,988 220,161,358 4,256,398 5,625,443
B Class .................................................. 2,971,593 8,302,891 568,347 1,616,545
C Class .................................................. 548,621 1,827,537 294,656 1,494,459
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
A Class .................................................. 6,809,629 15,818,679 881,310 2,385,022
B Class .................................................. 416,229 950,535 60,276 142,623
C Class .................................................. 49,577 96,912 26,875 51,066
---------------------------------------------------------------------
64,143,637 247,157,912 6,087,862 11,315,158
---------------------------------------------------------------------
Cost of shares repurchased:
A Class .................................................. (86,028,498) (293,951,791) (7,964,698) (8,586,906)
B Class .................................................. (8,160,639) (8,893,214) (973,323) (643,535)
C Class .................................................. (1,582,148) (569,079) (873,709) (247,116)
---------------------------------------------------------------------
(95,771,285) (303,414,084) (9,811,730) (9,477,557)
---------------------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions .......................... (31,627,648) (56,256,172) (3,723,868) 1,837,601
---------------------------------------------------------------------
Net Decrease In Net Assets ................................. (51,385,592) (103,206,611) (6,205,735) (3,888,895)
Net Assets:
Beginning of period ........................................ 522,902,861 626,109,472 74,945,868 78,834,763
---------------------------------------------------------------------
End of period .............................................. $471,517,269 $522,902,861 $68,740,133 $74,945,868
=====================================================================
</TABLE>
See accompanying notes
24
<PAGE>
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware National
USA Intermediate High-Yield Municipal
Fund Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/29/00 8/31/99 2/29/00 8/31/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income .................................. $ 640,605 $ 1,242,387 $ 3,070,892 $ 5,160,118
Net realized gain (loss) on investments ................ (773,110) 95,919 (2,002,762) (17,370)
Net change in unrealized appreciation/depreciation
of investments ....................................... 158,796 (1,314,384) (5,010,892) (4,678,686)
------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations ...................................... 26,291 23,922 (3,942,762) 464,062
------------------------------------------------------------------
Distributions to Shareholders From:
Net investment income:
A Class .............................................. (546,250) (1,062,227) (2,327,017) (4,111,560)
B Class .............................................. (39,587) (77,729) (498,624) (694,101)
C Class .............................................. (54,768) (102,431) (245,251) (353,757)
Net realized gain on investments:
A Class .............................................. -- -- -- (172,510)
B Class .............................................. -- -- -- (28,565)
C Class .............................................. -- -- -- (16,175)
------------------------------------------------------------------
(640,605) (1,242,387) (3,070,892) (5,376,668)
------------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class .............................................. 4,358,733 8,813,200 10,316,380 27,884,866
B Class .............................................. 1,173,122 885,556 4,990,060 12,690,424
C Class .............................................. 136,288 2,099,945 3,859,387 7,358,160
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
A Class .............................................. 353,739 679,292 1,408,634 2,406,407
B Class .............................................. 23,061 55,947 283,461 429,601
C Class .............................................. 37,183 72,684 168,885 255,629
------------------------------------------------------------------
6,082,126 12,606,624 21,026,807 51,025,087
------------------------------------------------------------------
Cost of shares repurchased:
A Class .............................................. (6,882,159) (5,872,741) (12,979,672) (10,228,202)
B Class .............................................. (1,141,227) (586,492) (5,496,220) (1,470,819)
C Class .............................................. (740,492) (729,497) (3,114,344) (1,625,869)
------------------------------------------------------------------
(8,763,878) (7,188,730) (21,590,236) (13,324,890)
------------------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions ...................... (2,681,752) 5,417,894 (563,429) 37,700,197
------------------------------------------------------------------
Net Increase (Decrease) In Net Assets .................. (3,296,066) 4,199,429 (7,577,083) 32,787,591
Net Assets:
Beginning of period .................................... 30,690,942 26,491,513 117,703,420 84,915,829
------------------------------------------------------------------
End of period .......................................... $27,394,876 $30,690,942 $110,126,337 $117,703,420
==================================================================
</TABLE>
See accompanying notes
25
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free USA Fund A Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/29/00(2) 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.890 $11.830 $11.710 $11.550 $12.070 $12.040
Income (loss) from investment operations:
Net investment income .................................... 0.291 0.593 0.597 0.666 0.696 0.746
Net realized and unrealized gain (loss) on investments ... (0.430) (0.916) 0.310 0.210 (0.460) 0.030
----------------------------------------------------------------------
Total from investment operations ......................... (0.139) (0.323) 0.907 0.876 0.236 0.776
----------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.291) (0.593) (0.597) (0.666) (0.696) (0.746)
Distributions from net realized gain on investments ...... none (0.024) (0.190) (0.050) (0.060) none
----------------------------------------------------------------------
Total dividends and distributions ........................ (0.291) (0.617) (0.787) (0.716) (0.756) (0.746)
----------------------------------------------------------------------
Net asset value, end of period ............................. $10.460 $10.890 $11.830 $11.710 $11.550 $12.070
======================================================================
Total return(1) ............................................ (1.25%) (2.90%) 8.00% 7.79% 1.91% 6.74%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $441,016 $485,240 $586,848 $615,852 $700,853 $758,470
Ratio of expenses to average net assets .................. 0.97% 1.00% 0.97% 0.94% 0.94% 0.92%
Ratio of net investment income to average net assets ..... 5.59% 5.13% 5.08% 5.73% 5.82% 6.29%
Portfolio turnover ....................................... 59% 59% 81% 44% 42% 27%
</TABLE>
- ----------------------
(1) 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.
(2) Ratios have been annualized and total return has not been annualized.
See accompanying notes
26
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free USA Fund B Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/29/00(2) 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.890 $11.830 $11.710 $11.550 $12.070 $12.040
Income (loss) from investment operations:
Net investment income .................................... 0.249 0.500 0.503 0.573 0.600 0.649
Net realized and unrealized gain (loss) on investments ... (0.430) (0.916) 0.310 0.210 (0.460) 0.030
----------------------------------------------------------------------
Total from investment operations ......................... (0.181) (0.416) 0.813 0.783 0.140 0.679
----------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.249) (0.500) (0.503) (0.573) (0.600) (0.649)
Distributions from net realized gain on investments ...... none (0.024) (0.190) (0.050) (0.060) none
----------------------------------------------------------------------
Total dividends and distributions ........................ (0.249) (0.524) (0.693) (0.623) (0.660) (0.649)
----------------------------------------------------------------------
Net asset value, end of period ............................. $10.460 $10.890 $11.830 $11.710 $11.550 $12.070
======================================================================
Total return(1) ............................................ (1.64%) (3.67%) 7.15% 6.94% 1.11% 5.88%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $28,198 $34,249 $36,919 $35,055 $29,773 $17,779
Ratio of expenses to average net assets .................. 1.77% 1.80% 1.77% 1.74% 1.74% 1.74%
Ratio of net investment income to average net assets ..... 4.79% 4.33% 4.28% 4.93% 5.03% 5.47%
Portfolio turnover ....................................... 59% 59% 81% 44% 42% 27%
</TABLE>
- ----------------------
(1) 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.
(2) Ratios have been annualized and total return has not been annualized.
See accompanying notes
27
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free USA Fund C Class
- ------------------------------------------------------------------------------------------------------------------------
Six Months Period
Ended Year Ended 11/29/95(2) to
2/29/00(3) 8/31/99 8/31/98 8/31/97 8/31/96
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.890 $11.830 $11.710 $11.550 $12.230
Income (loss) from investment operations:
Net investment income .................................... 0.249 0.500 0.504 0.573 0.450
Net realized and unrealized gain (loss) on investments ... (0.430) (0.916) 0.310 0.210 (0.620)
-----------------------------------------------------------
Total from investment operations ......................... (0.181) (0.416) 0.814 0.783 (0.170)
-----------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.249) (0.500) (0.504) (0.573) (0.450)
Distributions from net realized gain on investments ...... none (0.024) (0.190) (0.050) (0.060)
-----------------------------------------------------------
Total dividends and distributions ........................ (0.249) (0.524) (0.694) (0.623) (0.510)
-----------------------------------------------------------
Net asset value, end of period ............................. $10.460 $10.890 $11.830 $11.710 $11.550
===========================================================
Total return(1) ............................................ (1.64%) (3.67%) 7.15% 6.94% (1.44%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $2,303 $3,415 $2,343 $1,505 $805
Ratio of expenses to average net assets .................. 1.77% 1.80% 1.77% 1.74% 1.74%
Ratio of net investment income to average net assets ..... 4.79% 4.33% 4.28% 4.93% 5.03%
Portfolio turnover ....................................... 59% 59% 81% 44% 42%
</TABLE>
- ------------------
(1) 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.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
28
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Insured Fund A Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/29/00(2) 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $10.360 $11.150 $11.050 $10.860 $11.050 $11.020
Income (loss) from investment operations:
Net investment income .................................. 0.259 0.510 0.517 0.573 0.588 0.639
Net realized and unrealized gain (loss) on investments . (0.340) (0.667) 0.295 0.281 (0.160) 0.030
-----------------------------------------------------------------------
Total from investment operations ....................... (0.081) (0.157) 0.812 0.854 0.428 0.669
Less dividends and distributions:
Dividends from net investment income ................... (0.259) (0.510) (0.517) (0.573) (0.588) (0.639)
Distributions from net realized gain on investments .... none (0.123) (0.195) (0.091) (0.030) none
-----------------------------------------------------------------------
Total dividends and distributions ...................... (0.259) (0.633) (0.712) (0.664) (0.618) (0.639)
-----------------------------------------------------------------------
Net asset value, end of period ........................... $10.020 $10.360 $11.150 $11.050 $10.860 $11.050
=======================================================================
Total return(1) .......................................... (0.77%) (1.48%) 7.57% 8.07% 3.88% 6.33%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $63,331 $68,422 $74,246 $78,377 $81,149 $86,756
Ratio of expenses to average net assets ................ 0.93% 0.97% 1.10% 1.05% 0.98% 0.98%
Ratio of net investment income to average net assets ... 5.19% 4.74% 4.65% 5.23% 5.29% 5.89%
Portfolio turnover ..................................... 84% 48% 63% 42% 45% 68%
</TABLE>
- ----------------------
(1) 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.
(2) Ratios have been annualized and total return has not been annualized.
See accompanying notes
29
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Insured Fund B Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/29/00(2) 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $10.360 $11.150 $11.050 $10.860 $11.050 $11.020
Income (loss) from investment operations:
Net investment income ..................................... 0.218 0.430 0.427 0.485 0.499 0.550
Net realized and unrealized gain (loss) from investments .. (0.340) (0.667) 0.295 0.281 (0.160) 0.030
----------------------------------------------------------------------
Total from investment operations .......................... (0.122) (0.237) 0.722 0.766 0.339 0.580
----------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ...................... (0.218) (0.430) (0.427) (0.485) (0.499) (0.550)
Distributions from net realized gain on investments ....... none (0.123) (0.195) (0.091) (0.030) none
----------------------------------------------------------------------
Total dividends and distributions ......................... (0.218) (0.553) (0.622) (0.576) (0.529) (0.550)
----------------------------------------------------------------------
Net asset value, end of period .............................. $10.020 $10.360 $11.150 $11.050 $10.860 $11.050
======================================================================
Total return(1) ............................................. (1.17%) (2.27%) 6.72% 7.21% 3.05% 5.47%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $4,510 $5,022 $4,268 $3,619 $3,375 $2,448
Ratio of expenses to average net assets ................... 1.73% 1.77% 1.90% 1.85% 1.78% 1.80%
Ratio of net investment income to average net assets ...... 4.39% 3.94% 3.85% 4.43% 4.48% 5.07%
Portfolio turnover ........................................ 84% 48% 63% 42% 45% 68%
</TABLE>
- ----------------------
(1) 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.
(2) Ratios have been annualized and total return has not been annualized.
See accompanying notes
30
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Insured Fund C Class
- ---------------------------------------------------------------------------------------------------------------------------
Six Months Period
Ended Year Ended 11/29/95(2) to
2/29/00(3) 8/31/99 8/31/98 8/31/97 8/31/96
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $10.360 $11.150 $11.050 $10.860 $11.260
Income (loss) from investment operations:
Net investment income ..................................... 0.218 0.430 0.425 0.485 0.375
Net realized and unrealized gain (loss) on investments .... (0.340) (0.667) 0.295 0.281 (0.370)
--------------------------------------------------------------
Total from investment operations .......................... (0.122) (0.237) 0.720 0.766 0.005
--------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ...................... (0.218) (0.430) (0.425) (0.485) (0.375)
Distributions from net realized gain on investments ....... none (0.123) (0.195) (0.091) (0.030)
--------------------------------------------------------------
Total dividends and distributions ......................... (0.218) (0.553) (0.620) (0.576) (0.405)
--------------------------------------------------------------
Net asset value, end of period .............................. $10.020 $10.360 $11.150 $11.050 $10.860
==============================================================
Total return(1) ............................................. (1.17%) (2.27%) 6.72% 7.21% 0.01%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $899 $1,502 $321 $89 $120
Ratio of expenses to average net assets ................... 1.73% 1.77% 1.90% 1.85% 1.78%
Ratio of net investment income to average net assets ...... 4.39% 3.94% 3.85% 4.43% 4.48%
Portfolio turnover ........................................ 84% 48% 63% 42% 45%
</TABLE>
- ----------------------
(1) 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.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
31
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free USA Intermediate Fund A Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/29/00(2) 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $10.270 $10.710 $10.460 $10.320 $10.410 $10.320
Income (loss) from investment operations:
Net investment income ..................................... 0.228 0.478 0.501 0.524 0.550 0.550
Net realized and unrealized gain (loss) on investments .... (0.200) (0.440) 0.250 0.140 (0.090) 0.090
---------------------------------------------------------------------
Total from investment operations .......................... 0.028 0.038 0.751 0.664 0.460 0.640
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income ...................... (0.228) (0.478) (0.501) (0.524) (0.550) (0.550)
---------------------------------------------------------------------
Total dividends ........................................... (0.228) (0.478) (0.501) (0.524) (0.550) (0.550)
---------------------------------------------------------------------
Net asset value, end of period .............................. $10.070 $10.270 $10.710 $10.460 $10.320 $10.410
=====================================================================
Total return(1) ............................................. 0.28% 0.29% 7.34% 6.57% 4.52% 6.43%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $22,512 $25,186 $22,562 $21,635 $22,617 $20,492
Ratio of expenses to average net assets ................... 0.78% 0.79% 0.67% 0.43% 0.25% 0.25%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ......... 0.92% 0.96% 1.33% 1.02% 0.95% 1.07%
Ratio of net investment income to average net assets ...... 4.65% 4.47% 4.73% 5.03% 5.29% 5.37%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ......................................... 4.37% 4.25% 4.07% 4.44% 4.59% 4.55%
Portfolio turnover ........................................ 234% 109% 104% 34% 15% 63%
</TABLE>
- ----------------------
(1) 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.
(2) Ratios have been annualized and total return has not been annualized.
See accompanying notes
32
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free USA Intermediate Fund B Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
2/29/00(2) 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.270 $10.710 $10.460 $10.320 $10.410 $10.320
Income (loss) from investment operations:
Net investment income .................................... 0.185 0.387 0.411 0.436 0.460 0.460
Net realized and unrealized gain (loss) on investments ... (0.200) (0.440) 0.250 0.140 (0.090) 0.090
---------------------------------------------------------------------
Total from investment operations ......................... (0.015) (0.053) 0.661 0.576 0.370 0.550
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income ..................... (0.185) (0.387) (0.411) (0.436) (0.460) (0.460)
---------------------------------------------------------------------
Total dividends .......................................... (0.185) (0.387) (0.411) (0.436) (0.460) (0.460)
---------------------------------------------------------------------
Net asset value, end of period ............................. $10.070 $10.270 $10.710 $10.460 $10.320 $10.410
=====================================================================
Total return(1) ............................................ (0.14%) (0.56%) 6.43% 5.67% 3.63% 5.53%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $2,204 $2,195 $1,933 $1,832 $1,490 $949
Ratio of expenses to average net assets .................. 1.63% 1.64% 1.52% 1.28% 1.10% 1.10%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........ 1.77% 1.81% 2.18% 1.87% 1.80% 1.92%
Ratio of net investment income to average net assets ..... 3.80% 3.62% 3.88% 4.18% 4.44% 4.52%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ........................................ 3.52% 3.40% 3.22% 3.59% 3.74% 3.70%
Portfolio turnover ....................................... 234% 109% 104% 34% 15% 63%
</TABLE>
- ----------------------
(1) 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.
(2) Ratios have been annualized and total return has not been annualized.
See accompanying notes
33
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free USA Intermediate Fund C Class
- ---------------------------------------------------------------------------------------------------------------------------
Six Months Period
Ended Year Ended 11/29/95(2) to
2/29/00(3) 8/31/99 8/31/98 8/31/97 8/31/96
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.270 $10.710 $10.460 $10.320 $10.480
Income (loss) from investment operations:
Net investment income ................................... 0.185 0.387 0.411 0.436 0.350
Net realized and unrealized gain (loss) on investments .. (0.200) (0.440) 0.250 0.140 (0.160)
-------------------------------------------------------------
Total from investment operations ........................ (0.015) (0.053) 0.661 0.576 0.190
-------------------------------------------------------------
Less dividends:
Dividends from net investment income .................... (0.185) (0.387) (0.411) (0.436) (0.350)
-------------------------------------------------------------
Total dividends ......................................... (0.185) (0.387) (0.411) (0.436) (0.350)
-------------------------------------------------------------
Net asset value, end of period ............................ $10.070 $10.270 $10.710 $10.460 $10.320
=============================================================
Total return(1) ........................................... (0.14%) (0.56%) 6.43% 5.67% 1.84%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $2,679 $3,310 $1,996 $1,426 $193
Ratio of expenses to average net assets ................. 1.63% 1.64% 1.52% 1.28% 1.10%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 1.77% 1.81% 2.18% 1.87% 1.80%
Ratio of net investment income to average net assets .... 3.80% 3.62% 3.88% 4.18% 4.44%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ....................................... 3.52% 3.40% 3.22% 3.59% 3.74%
Portfolio turnover ...................................... 234% 109% 104% 34% 15%
</TABLE>
- ----------------------
(1) 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.
(2) Date of commencement of trading; ratios have been annualized and total
return has not been annualized.
(3) Ratios have been annualized and total return has not been annualized.
See accompanying notes
34
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware National High-Yield Municipal Bond Fund A Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Year Period
Ended Ended Months Ended 8/1/96 to Year Ended
2/29/00(5) 8/31/99 Ended 12/31/97(3) 12/31/96(4) 7/31/96 7/31/95
(Unaudited) 8/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.340 $10.800 $10.720 $10.400 $10.190 $10.170 $10.170
Income (loss) from investment operations:
Net investment income .................................... 0.279 0.557 0.398 0.648 0.260 0.630 0.650
Net realized and unrealized gain (loss) on investments ... (0.610) (0.435) 0.115 0.390 0.210 0.140 0.040
-----------------------------------------------------------------------
Total from investment operations ......................... (0.331) 0.122 0.513 1.038 0.470 0.770 0.690
-----------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.279) (0.557) (0.398) (0.647) (0.260) (0.630) (0.650)
Distributions from net realized gain on investments ...... none (0.025) (0.035) (0.071) none (0.120) (0.040)
-----------------------------------------------------------------------
Total dividends and distributions ........................ (0.279) (0.582) (0.433) (0.718) (0.260) (0.750) (0.690)
-----------------------------------------------------------------------
Net asset value, end of period ............................. $ 9.730 $10.340 $10.800 $10.720 $10.400 $10.190 $10.170
=======================================================================
Total return(1) ............................................ (3.23%) 1.08% 4.87% 10.32% 4.52% 7.78% 7.16%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $79,632 $86,013 $69,606 $55,458 $59,105 $63,460 $66,357
Ratio of expenses to average net assets .................. 1.00% 1.00% 0.92%(2) 0.84% 0.87%(2) 0.85% 0.79%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........ 1.32% 1.22% 1.12%(2) 1.12% 1.07%(2) 0.96% 0.90%
Ratio of net investment income to average net assets ..... 5.61% 5.18% 5.52%(2) 6.15% 6.06%(2) 6.10% 6.45%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ........................................ 5.29% 4.96% 5.32%(2) 5.87% 5.86%(2) 5.99% 6.34%
Portfolio turnover ....................................... 65% 33% 43% 45% 7% 0% 8%
</TABLE>
- ----------------------
(1) 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.
(2) Annualized.
(3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(4) On November 6, 1996, the Fund's shareholders approved a change of investment
adviser from IFG Asset Management Services, Inc. to Voyageur Fund Managers,
Inc.
(5) Ratios have been annualized and total return has not been annualized.
See accompanying notes
35
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware National High-Yield Municipal Bond Fund B Class
- ----------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Year Period
Ended Ended Months Ended 12/18/96 to
2/29/00(5) 8/31/99 Ended 12/31/97(3) 12/31/96(4)
(Unaudited) 8/31/98
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.360 $10.820 $10.730 $10.400 $10.370
Income (loss) from investment operations:
Net investment income .................................... 0.241 0.476 0.348 0.534 0.010
Net realized and unrealized gain (loss) on investments ... (0.610) (0.435) 0.122 0.433 0.030
---------------------------------------------------------------
Total from investment operations ......................... (0.369) 0.041 0.470 0.967 0.040
---------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ..................... (0.241) (0.476) (0.345) (0.566) (0.010)
Distributions from net realized gain on investments ...... none (0.025) (0.035) (0.071) none
---------------------------------------------------------------
Total dividends and distributions ........................ (0.241) (0.501) (0.380) (0.637) (0.010)
---------------------------------------------------------------
Net asset value, end of period ............................. $ 9.750 $10.360 $10.820 $10.730 $10.400
===============================================================
Total return(1) ............................................ (3.67%) 0.42% 4.44% 9.57% 0.43%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $19,927 $21,423 $10,620 $3,573 $88
Ratio of expenses to average net assets .................. 1.75% 1.75% 1.67%(2) 1.56% 1.45%(2)
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ................ 2.07% 1.97% 1.87%(2) 1.84% 1.66%(2)
Ratio of net investment income to average net assets ..... 4.86% 4.43% 4.77%(2) 5.43% 4.65%(2)
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly ..... 4.54% 4.21% 4.57%(2) 5.15% 4.44%(2)
Portfolio turnover ....................................... 65% 33% 43% 45% 7%
</TABLE>
- ----------------------
(1) 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.
(2) Annualized
(3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
(4) Commencement of operations.
(5) Ratios have been annualized and total return has not been annualized.
See accompanying notes
36
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware National High-Yield Municipal Bond Fund C Class
- --------------------------------------------------------------------------------------------------------------
Eight
Six Months Year Months Period
Ended Ended Ended 5/26/97(3) to
2/29/00(4) 8/31/99 8/31/98 12/31/97
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.370 $10.830 $10.740 $10.440
Income (loss) from investment operations:
Net investment income ................................... 0.241 0.476 0.348 0.315
Net realized and unrealized gain (loss) on investments .. (0.610) (0.435) 0.122 0.391
------------------------------------------------
Total from investment operations ........................ (0.369) 0.041 0.470 0.706
------------------------------------------------
Less dividends and distributions:
Dividends from net investment income .................... (0.241) (0.476) (0.345) (0.335)
Distributions from net realized gain on investments ..... none (0.025) (0.035) (0.071)
------------------------------------------------
Total dividends and distributions ....................... (0.241) (0.501) (0.380) (0.406)
------------------------------------------------
Net asset value, end of period ............................ $ 9.760 $10.370 $10.830 $10.740
================================================
Total return(1) ........................................... (3.58%) 0.32% 4.44% 6.88%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $10,567 $10,267 $4,690 $1,220
Ratio of expenses to average net assets ................. 1.75% 1.75% 1.67%(2) 1.62%(2)
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ............... 2.07% 1.97% 1.87%(2) 1.90%(2)
Ratio of net investment income to average net assets .... 4.86% 4.43% 4.77%(2) 5.37%(2)
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly .... 4.54% 4.21% 4.57%(2) 5.09%(2)
Portfolio turnover ...................................... 65% 33% 43% 45%
</TABLE>
- ----------------------
(1) 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.
(2) Annualized
(3) Commencement of operations.
(4) Ratios have been annualized and total return has not been annualized.
See accompanying notes
37
<PAGE>
Notes to Financial Statements
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Delaware Group Tax-Free Fund (the "Company"), is registered as an
open-end investment company under the Investment Company Act of 1940 (as
amended). The Company is organized as a Delaware business trust and offers three
portfolios, the Delaware Tax-Free USA Fund ("Tax-Free USA Fund"), the Delaware
Tax-Free Insured Fund ("Tax-Free Insured Fund"), and the Delaware Tax-Free USA
Intermediate Fund ("Tax-Free USA Intermediate Fund"). Delaware National
High-Yield Municipal Bond Fund ("National High-Yield Municipal Bond Fund"), is a
series of Voyageur Mutual Funds which is registered under the Investment Company
Act of 1940 (as amended) as an open-end management investment company and is
organized as a Delaware business trust. Each of the Funds is a non-diversified
fund. These financial statements and related notes pertain to the Tax-Free USA
Fund, Tax-Free Insured Fund, Tax-Free USA Intermediate Fund and National
High-Yield Municipal Bond Fund (each referred to as a "Fund" or, collectively,
as the "Funds"). The Funds each offer three classes of shares. The A Class
carries a front-end sales charge of 3.75% for the Tax-Free USA Fund, Tax-Free
Insured Fund and National High-Yield Municipal Bond Fund, and 2.75% for the
Tax-Free USA Intermediate Fund. The B Class carries a back-end deferred sales
charge. The C Class carries a level load deferred sales charge.
The investment objective of the Tax-Free USA Fund, the Tax-Free Insured Fund and
the Tax-Free USA Intermediate Fund is to seek as high a level of current
interest income exempt from federal income tax as is available from municipal
obligations as consistent with prudent investment management and preservation of
capital.
The investment objective of the National High-Yield Municipal Bond Fund is to
seek a high level of current income exempt from federal income tax through
investing primarily in a portfolio of medium and lower grade municipal
obligations.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. 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 Funds' Board
of Trustees.
Federal Income Taxes - Each Fund intends to 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.
<PAGE>
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Funds on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
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. The Funds declare dividends from net investment income
daily and pay them monthly. Capital gains, if any, are distributed annually.
Certain expenses of the Funds are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. In
addition, the Funds may receive earnings credits from its custodian which are
used to offset custody fees when positive balances are maintained. The expenses
paid under the above arrangements are included in their respective captions in
the Statement of Operations with the corresponding offset shown as "expenses
paid indirectly". The amount of these expenses for the six months ended February
29, 2000 were approximately:
"Soft Dollar" Earnings
Expenses Credits
------------ --------
Tax-Free USA Fund ............................. $11,374 $76,106
Tax-Free Insured Fund ......................... 1,645 10,537
Tax-Free USA Intermediate Fund ................ 680 19,723
National High-Yield Municipal Bond Fund ....... 1,315 --
38
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Funds
pay Delaware Management Company ("DMC") the investment manager of the Funds, an
annual fee which is calculated daily at the rate of 0.55% on the first $500
million of average daily net assets of the Fund, 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 for the Tax-Free USA Fund and National High-Yield
Municipal Bond Fund, 0.50% on the first $500 million of average daily net assets
of the Fund, 0.475% 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 for the
Tax-Free Insured Fund and Tax-Free USA Intermediate Fund.
DMC has elected voluntarily to waive its fee and reimburse the Tax-Free USA
Intermediate Fund to the extent that the annual operating expenses, exclusive of
12b-1 plan expenses, taxes, brokerage commissions and extraordinary expenses,
exceed 0.60% of average daily net assets through October 31, 2000. DMC has
elected to waive their fee and reimburse the National High-Yield Municipal Bond
Fund to the extent that annual operating expenses exclusive of 12b-1 plan
expenses, taxes, brokerage commissions and extraordinary expenses, exceed 0.75%
of average daily net assets through October 31, 2000.
The Funds have engaged Delaware Service Company, Inc. ("DSC") an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting 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.
At February 29, 2000, the Funds had payables to affiliates as follows:
Tax-Free Tax-Free
USA Fund Insured Fund
-------- ------------
Investment management
fees and other expenses
payable to DMC ................................. $ 4,669 $22,168
Dividend disbursing, transfer
agent fees accounting fees and
other expenses payable to DSC .................. $22,896 $ 4,402
Distribution fee and other expenses
payable to DDLP ................................ $24,063 $ 3,130
Tax-Free National
USA High-Yield
Intermediate Municipal
Fund Bond Fund
------------ ----------
Investment management
fees and other expenses
payable to DMC ................................. $8,394 $19,010
Dividend disbursing, transfer
agent fees accounting fees and
other expenses payable to DSC .................. $5,061 $ 9,244
Distribution fee and other expenses
payable to DDLP ................................ $1,102 $ 4,993
<PAGE>
Pursuant to the Distribution Agreement, the Funds pay 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 USA
Fund and the Tax-Free Insured Fund, 0.30% of the average daily net assets of the
A Class for the Tax-Free USA Intermediate Fund, 0.25% of the average daily net
assets of the A Class for the National High-Yield Municipal Bond Fund and 1.00%
of the average daily net assets of the B and C Classes for all Funds.
For the six months ended February 29, 2000, DDLP commissions earned on sales of
the Class A shares for each Fund were as follows:
National
Tax-Free USA High-Yield
Tax-Free Tax-Free Intermediate Municipal
USA Fund Insured Fund Fund Bond Fund
-------- ------------ ------------ ----------
$12,929 $2,906 $2,135 $6,445
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Funds. These officers, trustees and employees are paid no compensation by
the Funds.
3. Investments
During the six months ended February 29, 2000, the Funds had purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments as follows:
Tax-Free Tax-Free
USA Fund Insured Fund
------------ ------------
Purchases ................................. $142,002,013 $29,975,874
Sales ..................................... 170,284,508 31,885,937
Tax-Free National
USA High-Yield
Intermediate Municipal
Fund Bond Fund
------------ -----------
Purchases ................................. $33,834,661 $36,546,576
Sales ..................................... 34,743,618 37,805,535
At February 29, 2000, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each Fund were
as follows:
Tax-Free Tax-Free
USA Fund Insured Fund
------------ ------------
Cost of investments ....................... $467,719,951 $69,334,897
Unrealized appreciation ................... $ 20,147,423 $ 2,208,922
Unrealized depreciation ................... $(16,199,605) $ (877,460)
------------ -----------
Net unrealized appreciation ............... $ 3,947,818 $ 1,331,462
============ ===========
39
<PAGE>
Notes to Financial Statements (continued)
3. Investments (continued)
Tax-Free National
USA High-Yield
Intermediate Municipal
Fund Bond Fund
-------------- ------------
Cost of investments ....................... $29,586,028 $117,306,892
=========== ============
Unrealized appreciation ................... $ 222,102 $ 1,760,108
Unrealized depreciation ................... (256,713) (7,217,358)
----------- ------------
Net unrealized
appreciation/depreciation ............... $ (34,609) $ (5,457,250)
=========== ============
For federal income tax purposes, the Tax-Free USA Intermediate Fund had
accumulated capital losses at February 29, 2000 of $606,585 which may be carried
forward and applied against future capital gains. The capital loss carryforward
expires in 2003.
4. Capital Shares
Transactions in capital shares were as follows:
Tax-Free USA Fund
-------------------------
Six Months Year
Ended Ended
2/29/00 8/31/99
(Unaudited)
Shares sold:
A Class ..................................... 5,031,997 18,931,632
B Class ..................................... 280,029 719,424
C Class ..................................... 51,387 156,302
Shares issued upon reinvestment of
distributions from net investment income
and net realized gain on investments:
A Class ..................................... 643,190 1,367,786
B Class ..................................... 39,395 82,291
C Class ..................................... 4,674 8,411
---------- -----------
6,050,672 21,265,846
---------- -----------
Shares repurchased:
A Class ..................................... (8,097,757) (25,331,800)
B Class ..................................... (770,375) (776,396)
C Class ..................................... (149,620) (49,118)
---------- -----------
(9,017,752) (26,157,314)
---------- -----------
Net decrease .................................. (2,967,080) (4,891,468)
========== ===========
<PAGE>
Transactions in capital shares were as follows:
Tax-Free Insured Fund
-----------------------
Six Months Year
Ended Ended
2/29/00 8/31/99
(Unaudited)
Shares sold:
A Class ..................................... 421,287 517,882
B Class ..................................... 56,124 13,084
C Class ..................................... 29,160 134,955
Shares issued upon reinvestment of
distributions from net investment
income and net realized gain
on investments:
A Class ..................................... 87,302 218,421
B Class ..................................... 5,969 13,084
C Class ..................................... 2,660 4,718
-------- ---------
602,502 1,037,302
-------- ---------
Shares repurchased:
A Class ..................................... (787,363) (791,126)
B Class ..................................... (96,345) (59,433)
C Class ..................................... (87,039) (23,455)
-------- ---------
(970,747) (874,014)
-------- ---------
Net increase (decrease) ....................... (368,245) 163,288
======== =========
Tax-Free USA Intermediate Fund
------------------------------
Six Months Year
Ended Ended
2/29/00 8/31/99
(Unaudited)
Shares sold:
A Class ..................................... 429,237 832,658
B Class ..................................... 115,321 83,273
C Class ..................................... 13,464 197,336
Shares issued upon reinvestment of
distributions from net investment
income and net realized gain
on investments:
A Class ..................................... 34,920 63,937
B Class ..................................... 2,277 5,264
C Class ..................................... 3,670 6,845
-------- ---------
598,889 1,189,313
-------- ---------
Shares repurchased:
A Class ..................................... (679,991) (552,340)
B Class ..................................... (112,341) (55,453)
C Class ..................................... (73,235) (68,440)
-------- ---------
(865,567) (676,233)
-------- ---------
Net increase (decrease) ....................... (266,678) 513,080
======== =========
40
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
4. Capital Shares (continued)
Transactions in capital shares were as follows:
National High-Yield Municipal
Bond Fund
-----------------------------
Six Months Year
Ended Ended
2/29/00 8/31/99
(Unaudited)
Shares sold:
A Class ....................................... 1,032,035 2,603,990
B Class ....................................... 499,037 1,182,472
C Class ....................................... 386,050 683,365
Shares issued upon reinvestment of
distributions from net investment
income and net realized gain
on investments:
A Class ....................................... 141,566 224,884
B Class ....................................... 28,434 40,109
C Class ....................................... 16,942 23,840
---------- ----------
2,104,064 4,758,660
---------- ----------
Shares repurchased:
A Class ....................................... (1,305,646) (957,179)
B Class ....................................... (551,073) (137,289)
C Class ....................................... (309,871) (150,648)
---------- ----------
(2,166,590) (1,245,116)
---------- ----------
Net increase (decrease) ......................... (62,526) 3,513,544
========== ==========
<PAGE>
5. Lines of Credit
Effective October 8, 1999, the Funds, along with certain other funds in the
Delaware Investments Family of Funds (the "Participants"), participate in a
$683,500,000 revolving line of credit facility to be used for temporary or
emergency purposes as an additional source of liquidity to fund redemptions of
investor shares. The Participants are charged an annual commitment fee, which is
allocated across the Participants on the basis of each Funds' allocation of the
entire facility. The Participants may borrow up to a maximum of one third of
their net assets under the agreement.
Prior to October 8, 1999, the Funds had committed lines of credit for the
following amounts:
Tax-Free USA Fund .............................................. $19,500,000
Tax-Free Insured Fund .......................................... 2,400,000
Tax-Free USA Intermediate Fund ................................. 800,000
National High-Yield Municipal Bond Fund ........................ 3,000,000
No amounts were outstanding at February 29, 2000, or at any time during the
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 markets may
fluctuate for other reasons and there is no assurance that the insurance company
will meet its obligations. These insured securities have been identified in the
Statements of Net Assets.
The National High-Yield Municipal Bond Fund may invest in high-yield
fixed-income securities which carry ratings of BB or lower by S&P and/or Ba or
lower by Moody's. Investments in these higher yielding securities may be
accompanied by a greater degree of credit risk than higher rated securities.
Additionally, lower rated securities may be more susceptible to adverse economic
and competitive industry conditions than investment grade securities.
<PAGE>
DELAWARE(SM)
INVESTMENTS
=====================
Philadelphia o London
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
This semi-annual report is for the information of Delaware Tax-Free USA Fund,
Delaware Tax-Free Insured Fund, Delaware Tax-Free USA Intermediate Fund and
Delaware National High-Yield Municipal Bond Fund shareholders, but it may be
used with prospective investors when preceded or accompanied by a current
Prospectus for Delaware Tax-Free USA Fund, Delaware Tax-Free Insured Fund,
Delaware Tax-Free USA Intermediate Fund and Delaware National High-Yield
Municipal Bond 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. The figures in this
report represent past results which are not a guarantee of future results. The
return and principal value of an investment in each Fund will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
<PAGE>
BOARD OF TRUSTEES
Wayne A. Stork
Chairman
Delaware Investments Family of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman,
Citadel Constructors, Inc.
King of Prussia, PA
David K. Downes
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA
John H. Durham
Private Investor
Horsham, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Former Treasurer, National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
Charles E. Peck
Retired
Fredericksburg, VA
Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN
AFFILIATED OFFICERS
Charles E. Haldeman, Jr.
President and Chief Executive Officer
Delaware Management Holdings, Inc.
Philadelphia, PA
Richard J. Flannery
Executive Vice President and
General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
Bruce D. Barton
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
Investment Manager
Delaware Management Company
Philadelphia, PA
International Affiliate
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia, PA
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, PA
1818 Market Street
Philadelphia, PA 19103-3682
(2942) Printed in the USA
SA-011 [2/00] PP 4/00 (J5757)
