<PAGE>
For Tax-Exempt Income
Tax-Free Arizona Funds
Tax-Free California Funds
Tax-Free Colorado Fund
Tax-Free New Mexico Fund
Tax-Free Utah Fund
service and guidance
professional management
(photo of illustration from Tax-Exempt Income Brochure)
goals
1998
Semi-Annual
Report
Tax-Free Arizona Fund
Tax-Free Arizona Insured Fund
Tax-Free California Fund
Tax-Free California Insured Fund
DELAWARE(SM)
INVESTMENTS
- -----------------------
Philadelphia * London
<PAGE>
(various photos demonstrating service and guidance,
professional management and goals)
professional
management
professional management
MORE THAN 69 YEARS
of investment experience has taught us
that disciplined strategies and prudent risk
management are a sound approach to any
market environment.
goals
goals
WHATEVER YOUR GOALS,
the years ahead will be shaped by choices
you make today. Delaware offers many
options that can be an appropriate part of a
sound investment plan.
service and
guidance
service and guidance
DELAWARE BELIEVES THAT THE GUIDANCE
of a professional financial adviser is vital to your
long-term success. We are committed to providing
you and your adviser with the highest quality
information and service.
<PAGE>
A Tradition of sound investing
commitment
A Commitment
To Our Investors
(photo of keyboard)
(photo of glasses, pen and keyboard)
Delaware Investments has a tradition of money management that dates back to
1929. We have a long and distinguished history of helping individuals and
institutions - including some of America's largest pension funds - reach their
financial goals.
Headquartered in Philadelphia, a block from the nations' oldest stock
exchange, the Delaware organization established its first mutual fund in 1938.
Delaware International Advisers Ltd., our international affiliate, was
established in 1990 and is headquartered in London.
Delaware Investments offers a full range of mutual funds. We also manage
investments for variable annuity products, unit investment trusts and
closed-end funds, and offer retirement plan services for individuals and
businesses.
Delaware manages more than $42 billion in mutual fund assets and
institutional advisory accounts for more than half-a-million investors. We're
part of a global financial service and investment management business owned by
Lincoln Financial Group, whose subsidiaries manage more than $120 billion in
assets.
Table of Contents
LETTER TO SHAREHOLDERS Page 2
PORTFOLIO MANAGER'S REVIEW Page 4
Tax-Free Arizona Funds Page 5
Tax-Free California Funds Page 6
Tax-Free Colorado Fund Page 8
Tax-Free New Mexico Fund Page 9
Tax-Free Utah Fund Page 10
PERFORMANCE SUMMARY Page 11
STATEMENTS OF NET ASSETS Page 14
FINANCIAL HIGHLIGHTS Page 30
tax-exempt income
<PAGE>
for
tax-exempt
income
2
July 20, 1998
Dear Shareholder:
WE ARE DELIGHTED TO REPORT THAT EACH of Delaware Investments' western state
municipal bond funds outperformed its respective peer group average for the
first half of 1998, as shown below.*
Robust economic growth from the Rockies to the Pacific coast
invigorated municipal bond markets in Arizona, California, Colorado, New
Mexico and Utah. During the period, each Fund's portfolio manager focused on
bonds with attractive yields. We took advantage of what we believed were the
most lucrative investment opportunities in each state.
The five states in this report form the backbone of the nation's
burgeoning high technology industry. Increases in commerce and employment in
each state bolstered tax revenues and generated budget surpluses.
Municipalities in three states - California, Colorado and Arizona
significantly increased the amount of municipal bonds they issued this year.
New issuance declined in New Mexico and Utah.
DURING THE PERIOD, EACH FUND'S PORTFOLIO MANAGER FOCUSED ON BONDS WITH
ATTRACTIVE YIELDS. WE TOOK ADVANTAGE OF WHAT WE BELIEVED WERE THE MOST LUCRATIVE
INVESTMENT OPPORTUNITIES IN EACH STATE.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1998
- --------------------------------------------------------------------------------
<S> <C>
Tax-Free Arizona Fund A Class +3.19%
Tax-Free Arizona Insured Fund A Class +2.36%
Lipper Arizona Muni Debt Fund Average (39 Funds) +2.32%
- --------------------------------------------------------------------------------
Tax-Free California Fund A Class +2.98%
Lipper California Fund Average (103 Funds) +2.28%
Tax-Free California Insured Fund A Class +3.01%
Lipper California Insured Fund Average (26 Funds) +2.28%
- --------------------------------------------------------------------------------
Tax-Free Colorado Fund A Class +3.11%
Lipper Colorado Municipal Debt Fund Average (26 Funds) +2.26%
- --------------------------------------------------------------------------------
Tax Free New Mexico Fund A Class +3.43%
Tax-Free Utah Fund A Class +2.82%
Lipper Other States Municipal Debt Fund Average (74 Funds) +2.32%
- --------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +2.69%
Lehman Brothers Insured Municipal Bond Index +2.69%
</TABLE>
All results shown above are based on net asset value and assume reinvestment
of distributions. For complete performance for all Classes, see pages 11 to
13. The Lehman Brothers Municipal Bond Index and Lehman Brothers Insured
Municipal Bond Index are unmanaged. Performance of other Fund Classes varies
due to different fees and expenses. Past performance does not guarantee future
results.
*Tax-Free California Fund ranked 5th out of 107 mutual funds in Lipper's
California municipal debt category for the six months ended 6/30/98. The Fund
ranked, 2nd of 100 funds, 1st of 89 funds and 3rd out of 85 funds for
one-year, three-year and lifetime periods ended 6/30/98. Rankings are based on
total return at net asset value. Expense limitations were in effect for the
times shown. Rankings would have been lower without the limitations.
<PAGE>
for
tax-exempt
income
3
In California, Colorado and Arizona, population migration and
demographic trends increased funding requirements for schools, homes,
hospitals, and roads.
During the period, inflation as measured by the Consumer Price Index
rose a scant 0.7%. This allowed the Federal Reserve Board to maintain its
interest rate target at 5.5%.
The U.S. economy has benefited from what Federal Reserve Board
chairman Alan Greenspan termed the "virtuous cycle." He explained that low
inflation has reduced interest rates and stimulated more investment and
consumption.
On the following pages, Senior Portfolio Manager Andrew M. McCullagh,
Jr., provides an overview of the municipal bond market. He also explains each
Fund's strategy and performance during the fiscal period.
In addition to providing an attractive level of current income that is
exempt from both federal and state income taxes, we believe municipal bond
funds can help to diversify an investment portfolio that may be too heavily
weighted toward equities.
Thank you for turning to Delaware Investments for your income goals.
We look forward to reporting to you again.
Sincerely,
/s/ Wayne A. Stork
- ------------------
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
- -------------------
Jeffrey J. Nick
President and Chief Executive Officer
PORTFOLIO HIGHLIGHTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
JUNE 30, 1998
Average Effective Average Effective Average
Maturity Duration Quality
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax-Free Arizona Fund 10.2 years 7.2 years AA
Tax-Free Arizona Insured Fund 6.7 years 5.8 years AAA
Tax-Free California Fund 13.8 years 9.0 years AA
Tax-Free California Insured Fund 9.6 years 6.6 years AAA
Tax-Free Colorado Fund 8.9 years 6.5 years A
Tax-Free New Mexico Fund 12.7 years 7.9 years AA
Tax-Free Utah Fund 8.6 years 7.1 years AA
</TABLE>
<PAGE>
for
tax-exempt
income
4
Portfolio Manager's Review
BY ANDREW M. MCCULLAGH, JR.
Vice President/ Senior Portfolio Manager
Municipal bonds did not rally as much as Treasuries during the first half of
fiscal 1998 primarily because of a huge increase in state bond supplies. The
yield on 30-year U.S. Treasury bonds fell to 5.65% as of June 30, the lowest
level in a generation.
Still, real interest rates after inflation remain high. If one
subtracts the U.S. Consumer Price Index (1.7%) from 10-year Treasury bond
yields, the pre-tax yield is nearly 4%, the highest level since late 1994.
Given the probable tempering effects of the Asian slump on the U.S.
economy, the Federal Reserve Board is likely to maintain its current interest
rate policy, in our view. This made a solid case for bonds' income and total
return potential, especially for tax-sensitive investors seeking to diversify
their portfolios.
Medium-quality, long-term general obligation municipal bonds in most
western states provided taxable equivalent yields more than 9% as of June 30
for investors in the 39.6% federal tax bracket. After factoring out inflation,
long-term municipal bonds provided an attractive annualized real yield of
7.5%. For highly taxed investors, that compares to an after-inflation,
after-tax yield of 1.59% for Treasuries. Of course, municipal bonds are not
guaranteed by the U.S. government like Treasuries.
GRAPHIC TABLE
YIELD SUMMARY
CURRENT A CLASS 30-DAY SEC YIELD+
- ----------------------------------------
June 30, 1998
- ----------------------------------------
Tax-Free Arizona Fund 4.54%
Tax-Free Arizona Insured Fund 3.81%
Tax-Free California Fund 4.88%
Tax-Free California Insured Fund 3.88%
Tax-Free Colorado Fund 4.20%
Tax-Free New Mexico Fund 4.22%
Tax-Free Utah Fund 4.09%
+For A Class shares based on Securities and Exchange Commission guidelines.
Current 30-day SEC yields for B Class shares are as follows: Tax-Free Arizona
Fund 3.97%, Tax-Free Arizona Insured Fund 3.21%, Tax-Free California Fund
4.30%, Tax-Free California Insured Fund 3.28%, Tax-Free Colorado Fund 3.61%,
Tax-Free New Mexico Fund 3.63%, Tax-Free Utah Fund 3.50%. Current 30-day SEC
yields for C Class shares are as follows: Tax-Free Arizona Fund 3.95%,
Tax-Free Arizona Insured Fund 3.21%, Tax-Free California Fund 4.31%, Tax-Free
California Insured Fund 3.30%, Tax-Free Colorado Fund 3.61%, Tax-Free New
Mexico Fund 3.63%.
<PAGE>
for
tax-exempt
income
5
The major problem facing the tax-exempt market has been a temporary
gusher of new supply as municipalities seek to refinance their obligations.
Among some states covered in this report, supplies were up as much as 80% from
year ago levels.
Municipal bonds also underperformed Treasuries during the first half
of fiscal 1998 as foreign investors sought U.S. Treasuries as a safe haven
when volatility rocked Asian stock and bond markets. Foreigners generally
don't buy our state and local debt because they don't qualify for the tax
breaks municipal bonds provide.
SINCE JANUARY, WE POSITIONED EACH OF THE FUNDS TO BENEFIT FROM DECLINING
LONG-TERM INTEREST RATES.
Since January, we positioned each of the Funds to benefit from
declining long-term interest rates. Lower quality bonds tended to outperform
bonds with AAA ratings during the first half of 1998 as a strong economy
helped municipalities meet their obligations and led to selected credit
upgrades.
Each of the municipal bond funds in this report focuses on bonds with
maturities of between five and 15 years. We believe this allows us to maximize
income and total return potential while reducing potential price risk.
TAX-FREE ARIZONA FUND
Tax-Free Arizona Fund provided a robust total return of +3.19% (A Class shares
at net asset value with distributions reinvested) for the six months ended
June 30, 1998. Our results for the period ranked among the top 10% of mutual
funds investing in Arizona Securities, according to Lipper Analytical
Services.* Your Fund also outperformed the unmanaged Lehman Brothers Municipal
Bond Index, as shown on page 2.
We believe the Fund's strong performance is largely due to our
value-oriented approach to Arizona's municipal bond market. We did not target
specific sectors, but employed a "bottom-up" approach to the state's municipal
bond market. We sought specific bonds we believed had attractive total return
potential. Our sector positioning was a secondary factor affecting our
results.
As of June 30, your Fund's average effective duration (a measure of a
bond's sensitivity to interest rate changes) stood at 7.2 years, virtually
unchanged from the beginning of the year. We believe the Federal Reserve Board
will maintain its short-term interest rate target at current levels for the
balance of fiscal 1998.
*Tax-Free Arizona Fund ranked 4th out of 39 mutual funds in Lipper's Arizona
municipal debt category for the six months ended 6/30/98. The Fund ranked 2nd of
39 funds, 1st of 32 funds, and 1st out of 29 funds for the one-year, three-year
and lifetime periods ended 6/30/98. Rankings are based on total return at net
asset value. Expense limitations were in effect for the times shown. Rankings
would have been lower without the limitations.
<PAGE>
for
tax-exempt
income
6
TAX-FREE ARIZONA
INSURED FUND
Tax-Free Arizona Insured Fund provided a total return of +2.36% (A Class
shares with distributions reinvested) for the six months ended June 30, 1998.
The Fund outperformed its Lipper peer group average as shown on page 2*. Our
returns were modestly lower than the unmanaged Lehman Brothers Municipal Bond
Index.
Since the spread between high and low credit quality issues narrowed
during the period, many high quality Arizona bonds were trading at a premium
which made it more difficult to employ our value strategy.
We sought to lessen potential bond market volatility by reducing the
Fund's duration by almost two years to 5.8 years as of June 30. Duration
measures a bond's sensitivity to interest rate changes.
Tax-Free California Fund provided a total return of +2.98% (A Class
shares with distributions reinvested) for the six months ended June 30, 1998.
The Fund outpaced both its benchmark, the unmanaged Lehman Brothers Municipal
Bond Index, and its Lipper peer group average*, as shown on page 2.
By diversifying among California's municipal bond sectors, we took
advantage of the state's booming economy and a consolidation trend within the
health care sector.
California municipalities issued 80% more bonds during the first six
months of 1998 and was the second largest issuer of municipal bonds after New
York State. Investor demand was high, as the state's income tax rates remained
among the nation's highest.
<TABLE>
<CAPTION>
TAX-FREE ARIZONA FUNDS' CREDIT QUALITY
- --------------------------------------------------------------------------------
JUNE 30, 1998
Tax-Free Arizona Fund Tax-Free Arizona Insured Fund
- --------------------------------------------------------------------------------
<S> <C> <C>
AAA 44.2% 100%
AA 9.9% 0%
A 18.1% 0%
BBB 16.7% 0%
BB & Unrated 11.1% 0%
</TABLE>
Approximately 9.28% of the income generated by Tax-Free Arizona Fund and 0.41%
of the income generated by Tax-Free Arizona Insured Fund for the six months
ended June 30, 1998, was subject to the federal alternative minimum tax.
*Tax-Free Arizona Insured Fund ranked 14th out of 39 mutual funds in Lipper's
Arizona municipal debt category for the six months ended 6/30/98. The Fund
ranked 15th of 39 funds, 11th of 32 funds, 5th of 15 funds and 3rd out of 9
funds for the one-year, three-year, five-year and lifetime periods ended
6/30/98. Rankings are based on total return at net asset value. Expense
limitations were in effect for the times shown. Rankings would have been lower
without the limitations.
<PAGE>
for
tax-exempt
income
7
To maintain the Fund's income potential during a period of declining
bond yields, we increased our position in hospital bonds from approximately
16% at the beginning of the year to 20.5% as of June 30. Hospital bonds
generally offer higher income than other types of municipal bonds due to their
perceived higher risk. Because of intense competition within the sector, we
invest only in hospitals that have shown they can increase revenues over time.
TAX-FREE CALIFORNIA
INSURED FUND
Tax-Free California Insured Fund's total return ranked 1st out of 26 funds
specializing in insured California bonds* for the six months ended June 30,
1998.
For the first half of fiscal 1998, Tax-Free California Insured Fund
provided a total return of +3.01% (Class A shares at net asset value with
distributions reinvested) - outpacing its benchmark Lehman Brothers Insured
Municipal Bond Index, as shown on page 2.
We attribute the Fund's results primarily to our positioning in
non-callable bonds. Given the low interest rate environment during the first
half of the year, many bonds without call protection were refinanced at
substantially lower yields. We anticipated this at the beginning of the
period, and our strategy helped to maintain the Fund's income payout and total
return potential.
We slightly increased your Fund's housing bond allocation to
approximately 25% of the portfolio's net assets as of June 30, 1998. We
believe this sector offered additional income potential with less potential
price volatility.
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUNDS' CREDIT QUALITY
- --------------------------------------------------------------------------------
JUNE 30, 1998
Tax-Free California Fund Tax-Free California Insured Fund
- --------------------------------------------------------------------------------
<S> <C> <C>
AAA 35.9% 100%
AA 5.1% 0%
A 27.4% 0%
BBB 13.4% 0%
BB & Unrated 18.2% 0%
</TABLE>
Approximately 15.53% of the income generated by Tax-Free California Fund and
20.12% of the income generated by Tax-Free California Insured Fund for the six
months ended June 30, 1998 was subject to the federal alternative minimum tax.
*Tax-Free California Insured Fund ranked 1st out of 26 mutual funds in
Lipper's California insured municipal debt category for the six months ended
6/30/98. The Fund ranked 1st of 26 funds, 4th of 25 funds, 8th of 13 funds and
8th out of 8 funds for the one-year, three-year, five-year and lifetime
periods ended 6/30/98. Rankings are based on total return at net asset value.
Expense limitations were in effect for the times shown. Rankings would have
been lower without the limitations.
<PAGE>
for
tax-exempt
income
8
TAX-FREE COLORADO FUND
Tax-Free Colorado Fund's results for the first half of fiscal 1998
ranked 1st out of 26 mutual funds investing primarily in Colorado securities,
according to Lipper Analytical Services.* The Fund provided a total return of
+3.11% (Class A shares at net asset value with distributions reinvested) for
the six months ended June 30, 1998.
The Fund also outpaced its unmanaged benchmark - the Lehman Brothers
Municipal Bond Index - for the period, as shown on page 2.
We attribute our superior results to a sharp rise in prices of bonds
issued by Colorado hospitals, your Fund's largest sector weighting. We also
believe these securities continue to have strong income and total return
potential. As of June 30, hospital bonds represented 29.6% of Tax-Free
Colorado Fund's net assets.
Consolidation in the health care industry is creating attractive
income and total return opportunities as hospitals strive to be more
cost-efficient. We seek hospitals that have shown the ability to expand
revenues and increase profits, and we were fortunate to have owned bond issues
that benefited from industry merger activity.
Once known primarily for its oil and ski resort industries, Colorado
has diversified its economy in the past decade to emerge as the transportation
and communications hub of the Rocky Mountain region.
Home building in Colorado accelerated during the first half of 1998,
and despite an increase in mortgage prepayment activity during the period, the
housing bond component of your Fund's portfolio (19.2% of net assets as of
June 30) performed well. We focused on shorter term bonds, which provided most
of the income potential of longer term bonds with less interest rate risk. We
tend to invest in bonds that finance multifamily housing complexes. For the
balance of 1998, these bonds appear to offer less refinancing risk than bonds
issued for single-family home development.
WE ATTRIBUTE OUR SUPERIOR RESULTS TO A SHARP RISE IN PRICES OF BONDS ISSUED BY
COLORADO HOSPITALS, YOUR FUND'S LARGEST SECTOR WEIGHTING.
*Tax-Free Colorado Fund ranked 1st out of 26 mutual funds in Lipper's Colorado
municipal debt category for the six months ended 6/30/98. The Fund ranked 1st
of 26 funds, 2nd of 21 funds, 1st of 6 funds for the one-year, five-year and
10-year periods ended 6/30/98. Rankings are based on total return at net asset
value. Expense limitations were in effect for the times shown. Rankings would
have been lower without the limitations.
Effective August 24, 1998, Andrew M. McCullagh, Jr. assumed sole management
responsibility for Tax-Free New Mexico Fund and Tax-Free Utah Fund. Mr.
McCullagh had been co-manager of these Funds with Thor Raarup during the first
half of fiscal 1998.
<PAGE>
for
tax-exempt
income
9
<TABLE>
<CAPTION>
CREDIT QUALITY - TAX-FREE COLORADO, TAX-FREE NEW MEXICO AND TAX-FREE UTAH FUNDS
- --------------------------------------------------------------------------------
JUNE 30, 1998
Tax-Free Tax-Free Tax-Free
Colorado Fund New Mexico Fund Utah Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA 17.1% 43.0% 58.6%
AA 17.7 9.2 11.3
A 16.9 23.8 13.7
BBB 28.4 5.8 5.4
BB & Unrated 19.9 18.2 11.0
</TABLE>
None of the income generated by Tax-Free Colorado Fund for the six months
ended June 30, 1998 was subject to the alternative minimum tax. Approximately
10.19% of the income generated by Tax-Free New Mexico Fund and 12.20% of the
income generated by Tax-free Utah Fund was subject to the alternative minimum
tax for the six months ended June 30, 1998.
TAX-FREE NEW MEXICO FUND
We are delighted to report that Tax-Free New Mexico Fund's total
return of +3.43% (for A Class shares at net asset value with distributions
reinvested) ranked 1st out of 74 single-state mutual funds for the six months
ended June 30, 1998.*
Our results for the period were more than 100 basis points higher than
the Fund's peer group average and higher than the Fund's unmanaged benchmark -
the Lehman Brothers Municipal Bond Index, as shown on page 2.
Since January we have replaced some better quality bonds with
securities of a slightly reduced quality. New Mexico's strong economy has
substantially increased tax revenues and, in our opinion, reduced the risks
associated with investing in the state's medium quality investment grade and
unrated bonds.
By slightly lengthening the Fund's duration (a measurement of a bond's
price sensitivity to interest rates) during the first half of 1998, we took
advantage of declining interest rates. The Fund's duration of 7.9 years as of
June 30, was slightly longer than that of our peers, and we believe this
allowed the Fund to provide superior results.
Through the end of June, New Mexico issued 20% fewer municipal bonds
than a year earlier as refinancing activity declined. Total issuance of just
$691 million was among the lowest in the country, helping to bolster bond
prices as investor demand remained steady. We anticipate that bond issuance in
New Mexico will remain relatively light through the end of 1998.
*Tax-Free New Mexico Fund ranked 1st out of 74 mutual funds in Lipper's Other
States Municipal Debt category for the six months ended 6/30/98. The Fund
ranked 3rd of 74 funds, 2nd of 60 funds, 2nd of 20 funds and 2nd of 19 funds
for the one-year, three-year, five-year and lifetime periods ended 6/30/98.
Rankings are based on total return at net asset value. Expense limitations
were in effect for the times shown. Rankings would have been lower without
the limitations.
<PAGE>
for
tax-exempt
income
10
TAX-FREE UTAH FUND
Tax-Free Utah Fund provided a total return of +2.82% (for A Class shares at net
asset value with distributions reinvested) for the first half of fiscal 1998.
The Fund's results for the six-month, one-year, three and five-year periods
ended June 30, 1998 each ranked within the top 10% of its peer group, as
measured by Lipper Analytical Services.*
In our opinion, the Fund's portfolio structure - a mathematical
underpinning of average coupon, call date and maturity - allowed Tax-Free Utah
Fund to provide strong results for the first half. The Fund outpaced the
returns of its unmanaged benchmark, the Lehman Brothers Municipal Bond Index,
as shown on page 2.
As of June 30, your Fund's duration (a measure of a bond's sensitivity
to interest rates) stood at 7.1 years, virtually the same as at the beginning
of the year. We believe the Federal Reserve Board can hold the line on
interest rates for the balance of fiscal 1998.
Since January, we have slightly increased your Fund's allocation to
higher education bonds. As of June 30, this sector accounted for about one
quarter of the portfolio's net assets as shown on page 25.
We believe that Utah's continual influx of new residents, relatively
high birth rate and robust job growth can increase state tax revenues in the
coming years. The outlook for Salt Lake County, site of the 2000 Winter
Olympics, appears particularly attractive. Conservative fiscal policies have
helped the county end each of the last five fiscal years with net operating
budget surpluses.
GLOSSARY
- -------------------------------
(photo of keyboard)
General Obligation Bonds
Municipal bonds backed by the full faith and credit of
a municipality. General Obligation (GO) bonds are repaid with general tax
revenue.
Revenue Bonds
Bonds issued to finance public works and supported directly from
the revenues of a project. For example, tolls collected from motorist using a
bridge can be applied to paying off a bond.
Duration
The most common measure of a bond's sensitivity to interest rates. It
indicates the approximate change in a bond's price given a 1% movement in
interest rates.
*Tax-Free Utah Fund ranked 7th out of 74 mutual funds in Lipper's Other States
Municipal Debt category for the six months ended 6/30/98. The Fund ranked 7th
of 74 funds, 5th of 60 funds, 1st of 23 funds and 1st of 19 funds for the
one-year, three-year, five-year and lifetime periods ended 6/30/98. Rankings
are based on total return at net asset value. Expense limitations were in
effect for the times shown. Ranking would have been lower without the
limitations.
<PAGE>
for
tax-exempt
income
11
Performance Summary
<TABLE>
<CAPTION>
TAX-FREE ARIZONA FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH JUNE 30, 1998
Lifetime One Year
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A (Est. 3/2/95)
Excluding Sales Charge +9.59% +9.58%
Including Sales Charge +8.34% +5.47%
- --------------------------------------------------------------------------------
Class B (Est. 6/29/95)
Excluding Sales Charge +8.24% +8.77%
Including Sales Charge +7.38% +4.77%
- --------------------------------------------------------------------------------
Class C (Est. 5/13/95)
Excluding Sales Charge +8.40% +8.85%
Including Sales Charge +8.40% +7.85%
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE ARIZONA INSURED FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH JUNE 30, 1998
Lifetime Five Years One Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A (Est. 4/1/91)
Excluding Sales Charge +7.95% +5.93% +8.16%
Including Sales Charge +7.38% +5.12% +4.13%
- --------------------------------------------------------------------------------
Class B (Est. 3/10/95)
Excluding Sales Charge +7.17% +7.34%
Including Sales Charge +6.39% +3.34%
- --------------------------------------------------------------------------------
Class C (Est. 5/26/94)
Excluding Sales Charge +6.70% +7.34%
Including Sales Charge +6.70% +6.34%
</TABLE>
All performance includes reinvestment of distributions and applicable sales
charge as described below. Return and share value will fluctuate so that
shares when redeemed may be worth more or less than the original cost. Past
performance is not a guarantee of future results. Performance for Class B and
C shares excluding sales charge assumes either the investment was not redeemed
or that contingent sales charges did not apply.
Returns reflect voluntary expense limitations in effect at the time. 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 deferred sales
charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If shares are
redeemed within 12 months, a 1% contingent deferred sales charge applies.
<PAGE>
for
tax-exempt
income
12
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH JUNE 30, 1998
Lifetime One Year
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A (Est. 3/2/95)
Excluding Sales Charge +9.45% +11.16%
Including Sales Charge +8.20% +7.00%
- --------------------------------------------------------------------------------
Class B (Est. 8/23/95)
Excluding Sales Charge +9.76% +10.34%
Including Sales Charge *8.87% +6.34%
- --------------------------------------------------------------------------------
Class C (Est. 4/9/96)
Excluding Sales Charge +9.85% +10.33%
Including Sales Charge +9.85% +9.33%
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA INSURED FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH JUNE 30, 1998
Lifetime Five Years One Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A (Est. 10/15/92)
Excluding Sales Charge +7.34% +5.74% +9.74%
Including Sales Charge +6.62% +4.94% +5.64%
- --------------------------------------------------------------------------------
Class B (Est. 3/2/94)
Excluding Sales Charge +5.62% +9.09%
Including Sales Charge +5.24% +5.09%
- --------------------------------------------------------------------------------
Class C (Est. 4/12/95)
Excluding Sales Charge +6.78% +8.97%
Including Sales Charge +6.78% +7.97%
</TABLE>
Please see page 11 for important additional information. All
performance includes reinvestment of distributions and applicable
sales charges as described on page 11. Past performance is not a
guarantee of future results.
<PAGE>
for
tax-exempt
income
13
TAX-FREE COLORADO FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH JUNE 30, 1998
Lifetime Ten Years Five Years One Year
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Est. 4/23/87)
Excluding Sales Charge +8.37% +8.42% +6.68% +10.61%
Including Sales Charge +8.00% +8.01% +5.87% +6.50%
- ----------------------------------------------------------------------------------------------------------
Class B (Est. 3/22/95)
Excluding Sales Charge +8.02% +9.77%
Including Sales Charge +7.25% +5.77%
- ----------------------------------------------------------------------------------------------------------
Class C (Est. 5/6/94)
Excluding Sales Charge +7.44% +9.86%
Including Sales Charge +7.44% +8.86%
</TABLE>
TAX-FREE NEW MEXICO FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH JUNE 30, 1998
Lifetime Five Years One Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A (Est. 10/5/92)
Excluding Sales Charge +7.77% +6.59% +9.76%
Including Sales Charge +7.05% +5.77% +5.68%
- -----------------------------------------------------------------------------------------------------------
Class B (Est. 3/3/94)
Excluding Sales Charge +6.04% +8.93%
Including Sales Charge +5.66% +4.93%
- -----------------------------------------------------------------------------------------------------------
Class C (Est. 5/7/96)
Excluding Sales Charge +8.62% +8.81%
Including Sales Charge +8.62% +7.81%
</TABLE>
TAX-FREE UTAH FUND
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH JUNE 30, 1998
Lifetime Five Years One Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A (Est. 10/5/92)
Excluding Sales Charge +8.01% +6.60% +9.51%
Including Sales Charge +7.29% +5.79% +5.36%
- -----------------------------------------------------------------------------------------------------------
Class B (Est. 5/27/95)
Excluding Sales Charge +6.71% +8.68%
Including Sales Charge +5.86% +4.68%
</TABLE>
Please see page 11 for important additional information. All
performance includes reinvestment of distributions and applicable
sales charges as described on page 11. Past performance is not a
guarantee of future results.
<PAGE>
14 for tax-exempt income
Financial Statements
VOYAGEUR MUTUAL FUNDS, INC.
DELAWARE-VOYAGEUR TAX-FREE ARIZONA FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
MUNICIPAL BONDS - 95.17%
GENERAL OBLIGATION BONDS - 18.27%
Eagle Mountain Community Facility District
6.50% 7/1/21................................... $1,010,000 $1,112,040
Maricopa County Chandler Unified School District
# 80 (FGIC) 6.00% 7/1/13........................ 100,000 108,636
Maricopa County Osborn Unified School District #8
(FGIC) 5.875% 7/1/14............................ 300,000 325,104
Maricopa County Tempe Unified School District #40
(FGIC) 6.00% 7/1/11............................. 100,000 108,850
Maricopa County U.S.D. #40 - Glendale
6.30% 7/1/11.................................... 500,000 545,790
Pima County Flowing Wells U.S.D. #8
5.90% 7/1/13.................................... 500,000 539,200
Tucson Arizona 5.375% 7/1/20 250,000 256,535
----------
2,996,155
----------
HIGHER EDUCATION REVENUE BONDS - 4.47%
University of Arizona Revenue 4.875% 6/1/16...... 750,000 733,748
----------
733,748
----------
HOSPITAL REVENUE BONDS - 8.54%
Maricopa County, Arizona Hospital Revenue
(Sun Health Corp.) 6.125% 4/1/18................ 600,000 637,542
Show Low Arizona Industrial Development Authority
Hospital Revenue Navapache Regional Medical
Center Series A 5.50% 12/1/18................... 750,000 763,958
----------
1,401,500
----------
HOUSING REVENUE BONDS - 21.83%
Maricopa County, Arizona Industrial Development
Authority Multifamily Housing Revenue
Pines at Camelback Apartments Project A
5.45% 5/1/28.................................... 750,000 753,180
Peoria Casa Del Rio Multifamily Housing
7.30% 2/20/28................................... 500,000 554,400
Phoenix Industrial Development Authority Chris
Ridge 6.80% 11/1/25............................. 125,000 132,000
Pima County Arizona IDA Revenue Series A
7.25% 7/1/25.................................... 725,000 794,491
Pima County Arizona Multifamily Revenue Willowick
Apartments Project 5.50% 3/1/28................. 500,000 504,655
Tempe Multifamily Mortgage Revenue Ida
6.125% 6/1/10................................... 200,000 213,074
Tucson Industrial Development Authority Los
Portales Apartment (GNMA)
5.90% 12/20/31.................................. 600,000 629,574
----------
3,581,374
----------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 8.25%
Coconimo County, Arizona Pcr Nevada Power Co.
6.375% 10/1/36.................................. $1,250,000 $ 1,352,925
-----------
1,352,925
-----------
LEASE/CERTIFICATION OF PARTICIPATION - 0.65%
University Of Arizona Certificate Of Participation
6.00% 7/15/23................................... 100,000 107,117
-----------
107,117
-----------
POLLUTION CONTROL REVENUE BONDS - 4.71%
Maricopa County, Arizona Pollution Control
5.75% 11/1/22................................... 750,000 772,613
-----------
772,613
-----------
UTILITY REVENUE BONDS - 4.90%
Puerto Rico Electric Power Authority Power Revenue
Series DD (FSA) 4.50% 7/1/19..................... 750,000 702,525
Salt River Project Series C 5.50% 1/1/28......... 100,000 101,293
-----------
803,818
-----------
WATER & SEWER BONDS - 14.75%
Arizona Water Infrastructure Finance Authority
Water Quality Financial Assistance Series A
5.00% 7/1/17.................................... 750,000 743,640
Gilbert Water & Wastewater Revenue
(FGIC) 6.50% 7/1/22............................. 100,000 110,494
Gilbert Water & Wastewater System
Revenue-Connection Development Fee
6.875% 4/1/16................................... 1,000,000 1,045,220
Tucson Water Revenue Refunding Series A
5.75% 7/1/18.................................... 500,000 519,975
----------
2,419,329
----------
OTHER REVENUE BONDS - 8.80%
Scottsdale Municipal Property Corporation Lease (FGIC)
6.25% 11/1/14................................... 100,000 107,891
Virgin Islands Public Finance Authority Revenue
Reference Senior Lien Series A
5.50% 10/1/22................................... 750,000 748,926
Yavapai County, Arizona Industrial Development
Authority Residential Care Facilities-
Margaret T Morris Center-A (GNMA)
5.40% 2/20/38................................... 585,000 585,989
1,442,806
-----------
Total Municipal Bonds (cost $14,930,953) 15,611,385
-----------
<PAGE>
for tax-exempt income 15
TAX-FREE ARIZONA FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
--------- -------
SHORT TERM INVESTMENTS - 3.04%
Norwest Advantage Municipal Money
Market Fund..................................... 499,303 $ 499,303
-----------
Total Short Term Investments (cost $499,303)..... 499,303
-----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 98.21%
(cost $15,430,256)*............................. $16,110,688
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES
- 1.79%......................................... 292,859
-----------
NET ASSETS APPLICABLE TO 1,463,367 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00%.......... $16,403,547
===========
NET ASSET VALUE - TAX-FREE ARIZONA FUND A CLASS
($11,456,987 / 1,021,979 shares)................ $11.21
======
NET ASSET VALUE - TAX-FREE ARIZONA FUND B CLASS
($4,340,169/ 387,383 shares).................... $11.20
======
NET ASSET VALUE - TAX-FREE ARIZONA FUND C CLASS
($606,391 / 54,005 shares)...................... $11.23
======
- ---------------------------------
Summary of Abbreviations:
FGIC-Insured by the Financial Guaranty Insurance Company
FSA -Insured by the Financial Security Assurance
GNMA-Insured by the Government National Mortgage Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock, $.01 par value, 100,000,000,000 shares authorized
to the Fund with 10,000,000,000 shares allocated to Tax Free
Arizona A Class, 10,000,000,000 shares allocated to Tax Free
Arizona Fund B Class and 10,000,000,000 shares allocated to
Tax Free Arizona Fund C Class.................... $15,413,503
Accumulated net realized gain on investments...... 309,612
Net unrealized appreciation of investments........ 680,432
-----------
Total net assets.................................. $16,403,547
===========
NET ASSET VALUE AND OFFERING PRICE FOR VOYAGEUR
TAX-FREE FLORIDA FUND A CLASS:
Net asset value per share (A).................... $11.21
Sales charge (3.75% of offering price or 3.93% of amount
invested per share (B).......................... 0.44
------
Offering Price................................... $11.65
======
- --------------------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000 or
more for Tax Free Florida Intermediate Fund Class A.
See accompanying notes
<PAGE>
VOYAGEUR INSURED FUNDS, INC.
DELAWARE-VOYAGEUR
TAX-FREE ARIZONA INSURED FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS - 99.68%
GENERAL OBLIGATION BONDS - 37.51%
Cave Creek Unified School District #93, Inverse
Floater (FGIC) 6.97% 7/1/11..................... $1,500,000 $1,625,265
Chandler Refunding (FGIC) 7.00% 7/1/12........... 1,000,000 1,084,580
Cochise County Unified School District (FGIC)
7.50% 7/1/10.................................... 1,000,000 1,265,970
Glendale Unified School District #205
Inverse Floater 6.37% 7/1/112,600,0002,903,134
Maricopa County, Arizona Unified School
District #93 Cave Creek (FGIC)
3.75% 7/1/11.................................... 1,500,000 1,500,000
Maricopa County Chandler Refunding #80 (FGIC)
5.80% 7/1/12.................................... 1,000,000 1,066,530
Maricopa County Chandler Refunding #80 GO (FGIC)
5.85% 7/1/13.................................... 2,200,000 2,352,064
Maricopa County Chandler Unified School District
#80 (FGIC) 6.00% 7/1/13......................... 2,400,000 2,607,264
Maricopa County Fountain Hills Unified School
District #98 (AMBAC) 6.625% 7/1/10.............. 1,000,000 1,075,920
Maricopa County Gilbert Unified School District
#41 (FSA) 6.25% 7/1/15.......................... 1,250,000 1,403,000
Maricopa County Kyrene Unified School District #28
(FGIC) 5.90% 7/1/10............................. 2,000,000 2,133,600
Maricopa County Madison Unified School District
#38 (MBIA) 5.80% 7/1/15......................... 3,150,000 3,367,634
Maricopa County Osborn Unified School District #8
(FGIC) 5.875% 7/1/14............................ 3,500,000 3,792,880
Maricopa County Peoria Unified School District #11
(AMBAC) 7.00% 7/1/10............................ 1,000,000 1,084,870
Maricopa County Peoria Unified School District #11
(AMBAC) 6.10% 7/1/10............................ 2,000,000 2,180,500
Maricopa County Queens Creek Unified School
District #95 (AMBAC) 5.70% 7/1/14............... 4,440,000 4,717,500
Maricopa Creighton Elementary Unified School
District #114 Series 91 (FGIC)
6.50% 7/1/08.................................... 1,000,000 1,162,950
Mohave County Unified School District #1 Lake
Havasu (FGIC) 5.90% 7/1/15...................... 5,000,000 5,395,450
Peoria, Arizona (MBIA) 5.70% 7/1/11.............. 1,000,000 1,056,020
Phoenix, Arizona (MBIA) 6.375% 7/1/13............ 2,000,000 2,179,660
Pima County, Arizona Unified School
District #1 Tucson (FGIC) 5.375% 7/1/13......... 6,000,000 6,249,540
Pima County Marana Unified School District #6
(FGIC) 5.75% 7/1/12............................. 6,350,000 6,734,238
<PAGE>
16 for tax-exempt income
TAX-FREE ARIZONA INSURED FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
GENERAL OBLIGATION BONDS (CONTINUED)
Pinal County Apache Junction Unified School
District #43 (FGIC) 5.85% 7/1/15................ $2,000,000 $2,151,620
Santa Cruz County Nogales Unified School District
#1 (AMBAC) 6.10% 7/1/14......................... 1,250,000 1,378,013
Tucson, Arizona (FGIC) 6.10% 7/1/12.............. 5,030,000 5,412,532
Yuma, Arizona (AMBAC) 6.125% 7/1/12.............. 3,000,000 3,288,810
------------
69,169,544
------------
HIGHER EDUCATION REVENUE BONDS - 8.29%
Arizona State University System (MBIA)
6.125% 7/1/15................................... 1,500,000 1,592,340
Glendale Industrial Development Authority
(Connie Lee) 5.875% 7/1/15...................... 3,000,000 3,226,140
Glendale Industrial Development Authority
(Connie Lee) 5.625% 7/1/20...................... 1,500,000 1,563,870
Glendale Industrial Development Authority
Midwestern University Series A (Connie Lee)
6.00% 5/15/26................................... 2,700,000 2,905,740
University Of Arizona (AMBAC) 6.25% 6/1/11....... 3,000,000 3,256,530
University of Arizona Revenue (FSA)
4.875% 6/1/16................................... 2,810,000 2,749,107
------------
15,293,727
------------
HOSPITAL REVENUE BONDS - 14.59%
Arizona Health Facility Authority Phoenix Baptist
Hospital & Medical Center (MBIA)
6.25% 9/1/11.................................... 2,000,000 2,176,460
Maricopa County Hospital District #1 (FGIC)
6.125% 6/1/15................................... 5,500,000 5,962,110
Maricopa County Industrial Development Authority
Baptist Hospital (MBIA) 5.50% 9/1/13............ 3,080,000 3,219,524
Maricopa County Industrial Development Authority
Baptist Hospital (MBIA) 5.50% 9/1/16............ 1,000,000 1,037,030
Mohave County Industrial Development Authority
Baptist Hospital (MBIA) 5.75% 9/1/26............ 1,100,000 1,163,173
Mohave County Industrial Development Authority,
Chris/Silver Ridge (GNMA)
6.375% 11/1/31.................................. 1,300,000 1,423,864
Phoenix, Arizona Industrial Development Authority
Hospital Revenue-John C. Lincoln Health-Series B
5.75% 12/1/16................................... 4,110,000 4,415,907
Pima County, Arizona Development Authority
Revenue (Healthpartners-Series A)
5.625% 4/1/14................................... 1,000,000 1,068,500
Pima County Tucson Medical Center (MBIA)
6.375% 4/1/12................................... 1,000,000 1,083,910
Pima Individual Health Care (MBIA)
6.75% 7/1/10.................................... 1,000,000 1,086,460
Scottsdale, Arizona Industrial Development
Authority Hospital Revenue (AMBAC)
3.75% 9/1/12.................................... 1,250,000 1,250,000
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
HOSPITAL REVENUE BONDS (CONTINUED)
Scottsdale Industrial Development Authority
Hospital Revenue, Inverse Floater (AMBAC)
6.87% 9/1/12.................................... $1,250,000 $ 1,457,050
University of Arizona Medical Center (MBIA)
6.25% 7/1/10.................................... 1,445,000 1,567,709
-----------
26,911,697
-----------
HOUSING REVENUE BONDS - 4.98%
Chandler Industrial Development Authority
Multifamily Housing (GNMA)
5.90% 7/20/15................................... 1,060,000 1,103,237
Maricopa County, Arizona Industrial Development
Authority Multifamily Housing Revenue Villas De
Merced Apartment Project 5.45% 12/20/27......... 535,000 536,573
Maricopa County, Arizona Industrial Development
Authority Multifamily Housing Revenue Villas De
Merced Apartments Project
5.50% 12/20/37.................................. 570,000 572,149
Pima County, Arizona IDA Revenue Series A
7.25% 7/1/25.................................... 1,000,000 1,095,850
Tucson Industrial Development Authority Los
Portales Apartment (GNMA)
5.90% 12/20/31.................................. 3,670,000 3,850,894
Yuma, Arizona Industrial Development Authority
Multifamily Revenue Government National
Mortgage Association Regency Apartments A
5.50% 12/20/32.................................. 2,000,000 2,022,000
-----------
9,180,703
-----------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 1.13%
Maricopa County Stadium District (MBIA)
5.50% 7/1/13.................................... 2,000,000 2,084,640
-----------
2,084,640
-----------
LEASE/CERTIFICATES OF PARTICIPATION - 7.11%
Oro Valley Common Trust Funds Partnership (MBIA)
5.75% 7/1/11.................................... 1,000,000 1,083,080
Oro Valley Common Trust Funds Partnership (MBIA)
5.75% 7/1/17.................................... 1,000,000 1,070,930
Peoria, Arizona Municipal Development Authority
Municipal Securities Trust 5.183% 7/1/10........ 5,500,000 5,684,965
Pima County Community College District (AMBAC)
6.40% 7/1/07.................................... 1,000,000 1,064,450
Scottsdale Municipal Property Corporation Lease
(FGIC) 6.25% 11/1/14............................ 3,900,000 4,207,749
-----------
13,111,174
-----------
POWER AUTHORITY REVENUE BONDS - 3.73%
Puerto Rico Electric Power Authority Power Revenue
Series DD (FSA) 4.50% 7/1/19.................... 2,750,000 2,575,925
Salt River Agricultural Improvement & Power
Project (AMBAC) 6.50% 1/1/22.................... 2,000,000 2,153,440
Salt River Agricultural Improvement & Power
Project (FGIC) 6.25% 1/1/19..................... 2,000,000 2,140,620
-----------
6,869,985
-----------
<PAGE>
for tax-exempt income 17
TAX-FREE ARIZONA INSURED FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 5.47%
Glendale Educational Facilities American Graduate
School (Connie Lee) 6.75% 7/1/09-05............ $ 750,000 $867,893
Glendale Educational Facilities American Graduate
School (Connie Lee) 7.00% 7/1/14-05............ 1,000,000 1,172,160
Maricopa County Paradise Valley Elementary School
District #69 (MBIA) 6.40% 7/1/10-01............ 3,000,000 3,254,040
Phoenix, Arizona Street & Highway Revenue (FGIC)
6.50% 7/1/09-02................................ 2,000,000 2,203,420
Pima County Sewer Revenue 6.75% 7/1/15-01....... 1,380,000 1,496,030
Resh-Elliot Park State University (MBIA)
6.75% 7/1/11-01................................ 1,000,000 1,094,440
-----------
10,087,983
-----------
TRANSPORTATION REVENUE BONDS - 3.83%
Chandler, Arizona Street & Highway Revenue,
Inverse Floater (MBIA) 3.75% 7/1/15............ 1,000,000 1,000,000
Chandler Street & Highway Revenue, Inverse Floater
(MBIA) 5.62% 7/1/15............................ 1,000,000 1,033,390
Tucson Airport Authority Revenue (MBIA)
5.70% 6/1/13................................... 4,750,000 5,024,123
-----------
7,057,513
-----------
UTILITY REVENUE BONDS - 8.96%
Mesa, Arizona Utility Systems Revenue (FGIC)
5.25% 7/1/16................................... 16,250,000 16,521,212
-----------
16,521,212
-----------
WATER & SEWER REVENUE BONDS - 4.08%
Apache Junction, Arizona Water Utilities-Series A
5.80% 7/1/17................................... 1,215,000 1,304,667
Chandler Water & Sewer Revenue (FGIC)
7.00% 7/1/12................................... 1,000,000 1,084,580
Gilbert Water & Waste Water Revenue
(FGIC) 6.50% 7/1/12............................ 1,000,000 1,116,040
Gilbert Water & Waste Water Revenue
(FGIC) 6.50% 7/1/22............................ 2,650,000 2,928,091
Pima County Special Water Improvement District
(FGIC) 6.20% 1/1/11............................ 1,000,000 1,082,050
------------
7,515,428
------------
Total Municipal Bonds (cost $170,360,795)....... 183,803,606
------------
TOTAL MARKET VALUE OF SECURITIES - 99.68%
(cost $170,360,744)............................. $183,803,606
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - .32%...................... 597,526
------------
NET ASSETS APPLICABLE TO 16,073,999 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00%......... $184,401,132
============
<PAGE>
MARKET
VALUE
------
NET ASSET VALUE - TAX FREE ARIZONA INSURED A CLASS
($179,220,238 / 15,622,295 shares)............... $11.47
======
NET ASSET VALUE - TAX FREE ARIZONA INSURED B CLASS
($4,424,734 / 385,805 shares).................... $11.47
======
NET ASSET VALUE - TAX FREE ARIZONA INSURED C CLASS
($756,160 / 65,899 shares)....................... $11.47
======
- ------------------------
* 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 Indemnity Corporation
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
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 JUNE 30, 1998:
Common Stock, $.01 par value, 10,000,000,000 shares authorized to
the Fund with 1,000,000,000 shares allocated to Tax Free Arizona Insured
Fund A Class, 1,000,000,000 shares allocated to Tax Free Arizona
Insured Fund B Class and 1,000,000,000 shares allocated to Tax Free
Arizona Insured Fund C Class.................... $174,001,945
Undistributed net investment income.............. 224
Accumulated net realized loss on investments..... (3,043,848)
Net unrealized appreciation of investments....... 13,442,811
------------
Total Net Assets................................. $184,401,132
============
NET ASSET VALUE AND OFFERING PRICE FOR TAX FREE ARIZONA
INSURED FUND A CLASS:
Net asset value per share (A).................... $11.47
Sales charge (3.75% of offering price or 3.92% of
amount invested per share) (B).................. 0.45
------
Offering price................................... $11.92
======
- -------------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000 or
more for Tax Free Arizona Insured Fund Class A.
See accompanying notes.
<PAGE>
18 for tax-exempt income
VOYAGEUR MUTUAL FUNDS
DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS - 102.23%
GENERAL OBLIGATION - 1.51%
California State Veterans Bonds - Series BH
5.40% 12/1/15 (FSA)............................. $ 150,000 $ 152,418
Tulare Earlimart Elementary School District (AMBAC)
6.70% 8/1/21.................................... 50,000 61,478
----------
213,896
----------
HOSPITAL REVENUE BONDS - 20.54%
Antelope Valley California Health Care District
Series A 5.20% 1/1/17........................... 300,000 303,099
Berkeley Alta Bates Healthcare
6.55% 12/1/22................................... 100,000 111,574
California Health Facilities Finance Authority
Revenue Sacramento Medical A (CMI)
5.25% 5/1/16.................................... 745,000 744,084
California Health Facilities-Valleycare Hospital
5.50% 5/1/20.................................... 250,000 252,618
Mendocino Coast Health Care District
5.875% 2/1/20................................... 100,000 104,497
North Kern-South Tulare, California Hospital
District Health Facility Revenue
6.00% 4/1/20.................................... 250,000 260,833
Sierra View Local Health Care District
California Revenue 5.25% 7/1/18................. 1,000,000 980,590
Stockton, California Health Facilities-
Dameron Hospital Association-Series A
5.70% 12/1/14................................... 100,000 103,384
Valleycare Hospital California Health Facilities
Finance Authority Revenue 6.75% 6/1/15.......... 40,000 43,578
----------
2,904,257
----------
HOUSING REVENUE BONDS - 19.22%
California Housing Financing Agency Home Mortgage
Revenue Series 96H (FHA) 6.25% 8/1/27........... 95,000 102,121
California Housing Financing Agency Home Mortgage
Revenue Series 96K (MBIA) 6.15% 8/1/16.......... 450,000 482,432
California Housing Finance Agency Single Family
(MBIA) 6.00% 8/1/20............................. 100,000 106,020
California Statewide Communities Development
Authority 5.25% 5/15/25......................... 750,000 757,988
Fresno, California Multifamily Housing Revenue
GNMA-Woodlands Apartments Project-A (GNMA)
6.65% 5/20/17................................... 100,000 111,980
Rancho Cucamonga Redevelopment Housing Set Aside
5.25% 9/1/26.................................... 100,000 100,697
San Marcos, California Redevelopment Agency
Tax Allocation Affordable Housing Project-Series A
5.65% 10/1/28................................... 500,000 503,670
San Marcos, California Redevelopment Agency Tax
Allocation Affordable Housing Project-Series A
6.00% 10/1/27................................... 530,000 552,838
----------
2,717,746
----------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
LEASE/CERTIFICATES OF PARTICIPATION - 10.67%
Alameda City Hall Redevelopment
6.20% 5/1/25.................................... $ 50,000 $ 52,953
Bakersfield, California Certificates of
Participation Convention Center Expansion
Project (MBIA) 5.80% 4/1/17..................... 350,000 373,289
California State Public Works 6.375% 10/1/19..... 50,000 56,680
California Public Works Board Lease Revenue
5.625% 3/1/19................................... 190,000 198,843
California State Public Works-California State
University-Series C 5.40% 10/1/22............... 300,000 302,235
Hayward Civic Center Project (MBIA)
5.25% 8/1/26.................................... 100,000 100,695
Rancho Mirage Joint Power Financing Authority
Eisenhower Medical Center (MBIA)
5.375% 7/1/22................................... 100,000 101,366
San Jose Convention Center Finance Authority
Revenue 6.375% 9/1/13........................... 100,000 107,032
Santa Monica Parking Authority Lease Revenue
6.375% 7/1/16................................... 100,000 108,829
Shafter Powers Finance Lease Revenue
6.05% 1/1/17.................................... 100,000 106,065
----------
1,507,987
----------
SCHOOL AUTHORITY/DISTRICT REVENUE BONDS - 9.32%
Burlingame, California School District
5.60% 7/15/21................................... 230,000 241,385
California State University Revenue and Colleges
Hayward Foundation Auxillary Organization
(MBIA) 5.25% 8/1/25............................. 500,000 503,735
Long Beach, California HBR Revenue
5.375% 5/15/20.................................. 250,000 251,995
Los Alamitos Unified School District Series 90-1
6.25% 8/15/23................................... 50,000 52,901
Ontario, California Community Facilities District
No 5 Special Tax Freeway Interchange Project
6.375% 9/1/17................................... 250,000 267,435
----------
1,317,451
----------
OTHER REVENUE BONDS - 40.97%
Los Angeles California Housing Authority Multifamily
Housing Revenue The Palms Apartments
Series E 5.30% 7/1/18........................... 500,000 500,430
California Pollution Control Authority Facilities
Revenue (Mobil Oil Project)
5.50% 12/1/29................................... 500,000 509,090
Carson Redevelopment Agency Revenue
6.375% 10/1/16.................................. 100,000 106,605
Davis Unified School District Community Facilities
District-Special Tax (MBIA) 5.50% 8/15/26....... 100,000 102,806
Dixon Redevelopment Agency 6.00% 9/1/24.......... 50,000 51,522
<PAGE>
for tax-exempt income 19
TAX-FREE CALIFORNIA FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
---------- -------
MUNICIPAL BONDS (CONTINUED)
OTHER REVENUE BONDS (CONTINUED)
Escondido, California Impt Bd Act 1915
5.625% 9/2/18................................... $500,000 $ 492,550
Foothill/ Eastern Transportation Corridor Agency
California Toll Road Revenue Series 95A
6.00% 1/1/34.................................... 100,000 105,924
La Quinta, California Redevelopment Agency Tax
Allocation-Redevelopment Area Project
Number 1 (AMBAC) 5.20% 9/1/28................... 500,000 495,450
Moreno Valley, California School District-
5.60% 3/1/17.................................... 100,000 103,951
Puerto Rico Public Buildings Authority Revenue
Guaranteed Government Facilities-Series B
5.25% 7/1/21.................................... 250,000 252,075
Rancho Mirage, California Improvement Board
6.10% 9/2/11.................................... 500,000 515,710
Sacramento County, California Special Tax Reference-
Community Facilities District Number 1
5.70% 12/1/20................................... 500,000 491,895
Sacramento Municipal Utility District K Defeasable
CA (AMBAC) 5.25% 7/1/24......................... 100,000 102,436
San Jacinto, California Water Improvement
Project Authority 5.50% 10/1/18................. 250,000 259,003
San Joaquin Hills, California Transportation
Corridor Agency Toll Road Revenue
5.25% 1/15/30................................... 300,000 300,234
Santa Ana, California Financing Authority
Revenue Inner City Commuter C
5.60% 9/1/19.................................... 600,000 602,064
Suisun City, California Public Financing Authority
Tax Allocation, Suisun City Redevelopment Project
Series A 5.20% 10/1/28.......................... 105,000 103,261
West Basin, California Municipal Water District
Revenue-Certificate of Participation Refunding-
1992 Series A 5.50% 8/1/22...................... 200,000 206,524
Whittier, California Redevelopment Agency
Tax Allocation-Whittier Blvd.
5.75% 11/1/28................................... 500,000 492,190
-----------
5,793,720
-----------
Total Municipal Bonds (cost $14,010,564) 14,455,057
-----------
NUMBER OF
SHARES
---------
SHORT TERM INVESTMENTS - 0.73%
Norwest Advantage Municipal Money
Market Fund..................................... 102,512 102,512
-----------
Total Short Term Investments (cost $102,512)..... 102,512
-----------
<PAGE>
MARKET
VALUE
--------
TOTAL MARKET VALUE OF SECURITIES - 102.96%
(cost $14,113,076).............................. $14,557,569
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (2.96%).......................... (418,918)
-----------
NET ASSETS APPLICABLE TO 1,272,917 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00%.......... $14,138,651
===========
NET ASSET VALUE - TAX FREE CALIFORNIA FUND A CLASS
($5,308,536/ 478,854 shares).................... $11.09
======
NET ASSET VALUE - TAX FREE CALIFORNIA FUND B CLASS
($8,105,722/ 728,753 shares).................... $11.12
======
NET ASSET VALUE - TAX FREE CALIFORNIA FUND C CLASS
($724,393/ 65,310 shares)....................... $11.09
======
- -------------------------------
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
CMI - Insured by California Mortgage Insurance
FHA - Insured by the Federal Housing Authority
FSA - Insured by the Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common Stock, $.01 par value, 100,000,000,000 shares authorized to the
Fund with 10,000,000,000 shares allocated to Tax Free California
Fund A Class 10,000,000,000 shares allocated to Tax Free
California B Class and 10,000,000,000 shares allocated to Tax Free
California Fund C Class......................... $13,673,534
Accumulated net realized gain on investments..... 20,624
Net unrealized appreciation of investments....... 444,493
-----------
Total Net Assets................................. $14,138,651
-----------
NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE CALIFORNIA
FUND A CLASS:
Net asset value per share (A).................... $11.09
Sales charge (3.75% of offering price or 3.88%
of amount invested per share) (B)............... 0.43
------
Offering price................................... $11.52
======
- ---------------------------
(A) Net asset value per share 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 for Tax Free Florida Insured Fund Class A.
See accompanying notes
<PAGE>
20 for tax-exempt income
VOYAGEUR INVESTMENT TRUST
DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA INSURED FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
MUNICIPAL BONDS - 97.93%
GENERAL OBLIGATION BONDS - 3.40%
Fairfield Public Finance Authority Revenue
(FGIC) 6.25% 7/1/14.............................. $1,000,000 $1,098,430
----------
$1,098,430
----------
HIGHER EDUCATION REVENUE BONDS - 6.91%
California State University Auxiliary Revenue
(MBIA) 6.25% 8/1/20.............................. 1,000,000 1,127,200
University of California Board of Regents
(MBIA) 6.375% 9/1/24............................. 1,000,000 1,106,130
----------
2,233,330
----------
HOSPITAL REVENUE BONDS - 6.72%
California Health Facilities-Catholic Healthcare
West (MBIA) 6.00% 7/1/17......................... 1,000,000 1,090,420
California Health Facilities-San Diego Hospital
(MBIA) 6.20% 8/1/12.............................. 1,000,000 1,082,720
----------
2,173,140
----------
HOUSING REVENUE BONDS - 24.94%
California Housing Finance Agency 1994 Series E
(MBIA) 6.75% 8/1/26.............................. 1,000,000 1,090,780
California Housing Finance Agency Home Mortgage
Revenue Series 96E (MBIA) 6.05% 8/1/16........... 1,000,000 1,063,390
California Housing Financing Agency Home Mortgage
Revenue Series 96K (MBIA) 6.15% 8/1/16........... 1,100,000 1,179,277
California Housing Finance Agency Revenue Series F
(MBIA) 6.00% 8/1/17.............................. 1,000,000 1,063,910
California Housing Finance Agency Single Family
(MBIA) 6.00% 8/1/20.............................. 1,000,000 1,060,200
California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue (AMBAC)
7.95% 12/1/24.................................... 1,295,000 1,482,516
Fresno, California Multifamily Housing Revenue
GNMA-Woodlands Apartments Project-A (GNMA)
6.65% 5/20/17.................................... 1,000,000 1,119,800
----------
8,059,873
----------
LEASE/CERTIFICATES OF PARTICIPATION - 22.48%
Bakersfield, California Certificates of Participation
Convention Center Expansion Project (MBIA)
5.80% 4/1/17.................................... 1,000,000 1,066,540
Inland Empire Solid Waste Authority (FSA)
6.00% 8/1/16.................................... 1,500,000 1,619,940
Ontario Redevelopment Cimarron Project (MBIA)
6.25% 8/1/15.................................... 1,000,000 1,078,260
San Luis Obispo Capital Revenue (AMBAC)
6.375% 6/1/14................................... 1,000,000 1,102,250
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
LEASE/CERTIFICATES OF PARTICIPATION (CONTINUED)
Santa Barbara Water Revenue (AMBAC)
6.70% 4/1/27.................................... $1,000,000 $ 1,094,990
Santa Clara Finance Authority (AMBAC)
7.75% 11/15/11.................................. 1,000,000 1,303,460
-----------
7,265,440
-----------
SCHOOL AUTHORITY/DISTRICT REVENUE BONDS - 7.02%
Redwood City, California Elementary School District
(FGIC) 5.00% 8/1/16............................. 1,000,000 1,008,270
Walnut Valley, California School District-Series
A (MBIA) 7.20% 2/1/16........................... 1,000,000 1,260,640
----------
2,268,910
----------
TRANSPORTATION REVENUE BONDS - 6.45%
San Francisco City & County International Airport
Revenue (FGIC) 6.00% 5/1/14..................... 1,000,000 1,084,760
San Francisco City & County International Airport
Revenue, AMT Special Facilities Lease-SFO Fuel-A
(AMBAC) 5.25% 1/1/21............................ 1,000,000 998,680
----------
2,083,440
----------
WATER & SEWER REVENUE BONDS - 3.41%
Calaveras County Water District Revenue
(AMBAC) 6.125% 9/1/17........................... 1,000,000 1,101,270
----------
1,101,270
----------
OTHER REVENUE BONDS - 16.60%
Groveland/Tuolumne Financing Authority California
Revenue - Groveland Capital Facilities (FSA)
5.00% 4/1/26.................................... 1,000,000 976,460
Los Angeles County Transportation Commission Sales
Tax Revenue (MBIA) 6.25% 7/1/13................. 1,000,000 1,098,430
Rancho Water District Finance Revenue
(FGIC) 5.90% 11/1/15............................ 1,000,000 1,089,050
San Francisco City & County Redevelopment Agency
Hotel Tax Revenue (FSA) 6.75% 7/1/25............ 1,000,000 1,134,500
Santa Clara North Bayshore (AMBAC)
5.75% 7/1/14.................................... 1,000,000 1,064,530
-----------
5,362,970
-----------
Total Municipal Bonds (cost $29,102,983)......... 31,646,803
-----------
NUMBER OF
SHARES
----------
SHORT TERM INVESTMENTS - .50%
Norwest Advantage Municipal Money
Market Fund..................................... 162,045 $ 162,045
-----------
Total Short Term Investments (cost $162,045)..... 162,045
-----------
<PAGE>
for tax-exempt income 21
TAX-FREE CALIFORNIA INSURED FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
VALUE
------
TOTAL MARKET VALUE OF SECURITIES - 98.43%
(cost $29,265,028).............................. $31,808,848
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.57%...................... 506,762
-----------
NET ASSETS APPLICABLE TO 2,923,302 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00%.......... 32,315,610
===========
NET ASSET VALUE - TAX FREE CALIFORNIA INSURED A CLASS
($25,319,089 / 2,290,373 shares)................ $11.05
======
NET ASSET VALUE - TAX FREE CALIFORNIA INSURED B CLASS
($6,539,640 / 591,447 shares)................... $11.06
======
NET ASSET VALUE - TAX FREE CALIFORNIA INSURED C CLASS
($456,881 / 41,482 shares)...................... $11.01
======
- ------------------------
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
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 JUNE 30, 1998:
Common Stock, $.01 par value, 10,000,000,000 shares authorized to the
Fund with 1,000,000,000 shares allocated to Tax Free California Insured
Fund A Class, 1,000,000,000 shares allocated to Tax Free California
Insured Fund B Class and 1,000,000,000 shares allocated to
Tax Free California Insured Fund C Class........ $30,199,388
Accumulated net realized loss on investments..... (427,598)
Net unrealized appreciation of investments....... 2,543,820
-----------
Total Net Assets................................. $32,315,610
===========
NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE
CALIFORNIA INSURED FUND A CLASS:
Net asset value per share (A).................... $11.05
Sales charge (3.75% of offering price or 3.89% of
amount invested per share) (B).................. 0.43
------
Offering price................................... $11.48
======
- -------------------
(A) Net asset value per share illustrated is the estimated amount which would
be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000 or
more for Tax Free California Insured Fund Class A.
See accompanying notes
<PAGE>
VOYAGEUR MUTUAL FUNDS II, INC.
DELAWARE-VOYAGEUR TAX-FREE COLORADO FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS - 99.49%
GENERAL OBLIGATION BONDS - 16.51%
Arapahoe, Colorado Water & Sanitation Series 1995A
6.00% 12/1/15................................... $8,010,000 $ 8,439,656
Arapahoe, Colorado Water & Sanitation Series 1995A
6.15% 12/1/19................................... 10,075,000 10,661,466
Boulder Valley School District #RE-2 Series A
6.30% 12/1/13................................... 3,000,000 3,364,350
Boulder Valley School District #RE-2 Series A
6.30% 12/1/14................................... 5,000,000 5,607,250
Eagles Nest Metropolitan District Limited Tax
6.50% 11/15/17.................................. 6,575,000 7,022,100
El Paso County School District #20,
Inverse Floater 3.75% 12/15/14.................. 1,250,000 1,250,000
El Paso County School District #20,
Inverse Floater 7.27% 12/15/14.................. 1,250,000 1,369,888
Highlands Ranch Metropolitan School District #2,
Inverse Floater 3.75% 6/15/16................... 1,850,000 1,850,000
Highlands Ranch Metropolitan School District #2,
Inverse Floater 6.17% 6/15/16................... 1,850,000 1,865,096
Highlands Ranch Metropolitan School District #3
5.125% 12/1/12.................................. 1,000,000 997,420
Highlands Ranch Metropolitan School District #4
6.00% 12/1/15................................... 4,200,000 4,679,052
Interstate South Metropolitan District
6.00% 12/1/20................................... 8,755,000 9,202,205
Jefferson County Metropolitan District-Section 14,
Series A 6.20% 12/1/13.......................... 2,250,000 2,441,093
Montezuma County School District #RE 4A-Delores
7.00% 12/1/19................................... 1,500,000 1,729,020
-----------
60,478,596
-----------
HIGHER EDUCATION REVENUE BONDS - 4.79%
Colorado Post Secondary Education Auraria Fund
Project (FGIC) 6.00% 9/1/15..................... 1,000,000 1,078,750
Colorado Post Secondary Education Facilities
Authority 3.75% 3/1/16.......................... 3,350,000 3,350,000
Colorado Post Secondary Education Facilities
Authority, Inverse Floater 8.17% 3/1/16......... 3,350,000 3,747,310
Colorado Post Secondary Education Ocean Journey
Project 8.375% 12/1/26.......................... 8,000,000 9,376,960
-----------
17,553,020
-----------
HOSPITAL REVENUE BONDS - 29.58%
Boulder County, Colorado Hospital Revenue
Development-Longmont UTD Hospital
5.60% 12/1/27................................... 6,765,000 6,844,151
Boulder County Hospital Revenue Longmont United
Project 5.875% 12/1/20.......................... 3,250,000 3,360,825
Colorado Health Facilities Authority Covenant
Retirement 6.75% 12/1/25........................ 4,150,000 4,649,328
Colorado Health Facilities Authority Covenant
Retirement 6.75% 12/1/15........................ 1,750,000 1,961,715
<PAGE>
22 for tax-exempt income
TAX-FREE COLORADO FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
HOSPITAL REVENUE BONDS (CONTINUED)
Colorado Health Facilities Authority National
Benevolent Association 5.25% 2/1/28 .................. $ 2,000,000 $ 1,947,200
Colorado Health Facilities Authority National
Benevolent Series A 6.90% 6/1/15 ..................... 1,085,000 1,219,453
Colorado Health Facilities Authority National Jewish
Medical & Research Center 5.375% 1/1/16 .............. 2,000,000 1,992,120
Colorado Health Facilities Authority National Jewish
Medical & Research Center 5.375% 1/1/23 .............. 6,945,000 6,865,688
Colorado Health Facilities Authority National Jewish
Medical & Research Center 5.375% 1/1/28 .............. 3,230,000 3,180,646
Colorado Health Facilities Authority Parkview
Hospital 6.00% 9/1/16 ................................ 4,000,000 4,260,360
Colorado Health Facilities Authority Parkview
Hospital 6.125% 9/1/25 ............................... 7,750,000 8,289,478
Colorado Health Facilities Authority Revenue,
Baptist Home Association Series A
6.375% 8/15/24 ....................................... 3,250,000 3,494,985
Colorado Health Facilities Authority Revenue
Combination Certificate Municipal Securities Trust
5.23% 10/1/26 ........................................ 6,750,000 6,791,985
Colorado Health Facilities Authority Revenue Hospital-
Steamboat Springs Health 5.75% 9/15/22 ............... 5,000,000 5,098,750
Colorado Health Facilities Authority Revenue
National Benevolent Association-A
5.25% 1/1/27 ......................................... 1,325,000 1,290,603
Colorado Health Facilities Authority Rocky Mountain
Adventist Healthcare 6.625% 2/1/22 ................... 5,885,000 6,322,432
Colorado Health Facilities Authority Rocky Mountain
Adventist Healthcare 6.625% 2/1/13 ................... 13,000,000 13,966,290
Colorado Health Facilities Authority Vail Valley
Medical Center Revenue 6.50% 1/15/13 ................. 2,400,000 2,615,664
Colorado Health Facilities Authority Vail Valley
Medical Center Revenue 6.60% 1/15/20 ................. 6,500,000 7,116,135
Colorado Springs Memorial Hospital
(MBIA) 6.00% 12/15/24 ................................ 8,000,000 8,717,440
Denver, Colorado Health & Hospital Revenue
5.375% 12/1/18 ....................................... 1,000,000 993,200
Denver, Colorado Health & Hospital Revenue
5.375% 12/1/28 ....................................... 3,000,000 2,953,440
University Of Colorado Hospital Revenue
(AMBAC) 6.40% 11/15/22 ............................... 4,000,000 4,427,160
------------
108,359,048
------------
HOUSING REVENUE BONDS - 19.23%
Adams County, Colorado Housing Authority Mortgage
Revenue-Aztec Villa Apartments Project
5.85% 12/1/27 ....................................... 1,825,000 1,897,288
Adams County Housing Authority Greenbrias Project
6.75% 7/1/21 ........................................ 1,730,000 1,875,441
Aurora Single Family Mortgage Revenue
7.30% 5/1/10 ........................................ 7,900,000 8,583,192
Colorado Housing Finance Authority Multifamily
Housing Mortgage-B-3 5.65% 10/1/28 ................... 3,880,000 4,018,671
</TABLE>
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
HOSPITAL REVENUE BONDS (CONTINUED)
Colorado Housing Finance Authority Multifamily
Industrial Mortgage-C-3 5.70% 10/1/21.............. $3,205,000 $ 3,257,338
Colorado Housing Finance Authority Multifamily
Series A-3 (FHA) 5.85% 10/1/28 .................... 4,000,000 4,224,960
Colorado Housing Finance Authority Multifamily
Series A-3 6.25% 10/1/26 .......................... 8,530,000 9,172,906
Colorado Housing Finance Authority Multifamily
Series C-3 6.10% 10/1/28 .......................... 4,120,000 4,404,280
Colorado Housing Finance Authority Single Family
Housing Project Series C-2 7.45% 6/1/17 ........... 810,000 889,259
Colorado Housing Finance Authority Single Family
Housing Series A-2 7.15% 11/1/14 .................. 1,510,000 1,721,294
Colorado Housing Finance Authority Single Family
Housing Series A-3 7.45% 11/1/27 .................. 2,500,000 2,824,750
Colorado Housing Finance Authority Single Family
Housing Series C-2 7.10% 5/1/15 ................... 1,260,000 1,430,087
Colorado Housing Finance Authority Single Family
Mortgage (FHA) 7.50% 11/1/24....................... 2,510,000 2,745,513
Colorado State Single Family Housing Authority
Senior Revenue 7.10% 6/1/14 ....................... 980,000 1,109,742
Eaglebend, Colorado Affordable Housing Corporate
Multifamily Revenue Housing Project
Series A 6.20% 7/1/12 ............................ 1,000,000 1,063,070
Eaglebend, Colorado Affordable Housing Corporate
Multifamily Revenue Housing Project
Series A 6.40% 7/1/17 ............................ 1,000,000 1,067,510
Eaglebend, Colorado Affordable Housing Corporate
Multifamily Revenue Housing Project
Series A 6.45% 7/1/21 ............................ 1,000,000 1,067,340
Englewood Multifamily Marks Apartments Series
96 6.65% 12/1/26 ................................. 5,700,000 6,184,044
Englewood Multifamily Marks Apartments Series B
6.00% 12/15/18 ................................... 8,950,000 9,229,598
Pueblo County Single Family Mortgage Revenue Series
1994A (GNMA) 7.05% 11/1/27 ........................ 3,320,000 3,664,583
-----------
70,430,866
-----------
LEASE/CERTIFICATES OF PARTICIPATION - 5.42%
Conejos & Alamosa Counties, Colorado School
District No. Re Certificates of Participation
6.50% 4/1/11 ..................................... 1,780,000 1,875,461
Greeley Building Authority 6.10% 8/15/16 ........... 2,600,000 2,783,456
Jefferson County, Colorado Certificates of
Participation 5.23% 12/1/09 ....................... 10,000,000 10,542,800
Pueblo County School District Pueblo Certificate of
Participation 5.36% 12/1/10 ....................... 4,440,000 4,653,164
----------
19,854,881
----------
<PAGE>
for tax-exempt income 23
TAX-FREE COLORADO FUND
STATEMENT OF NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
POWER AUTHORITY REVENUE BONDS - 3.12%
Platte River Power Authority Series BB
6.125% 6/1/14 ................................. $ 5,000,000 $ 5,290,350
Puerto Rico Electric Power Authority Series EE
4.75% 7/1/24 .................................. 6,500,000 6,120,855
------------
11,411,205
------------
*PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 0.50%
Auraria Higher Education Center Fee (AMBAC)
6.50% 5/1/12-01 .............................. 1,715,000 1,828,310
------------
1,828,310
------------
SCHOOL AUTHORITY/DISTRICT REVENUE BONDS - 1.67%
Arapahoe County, Colorado School District
Municipal Securities Trust 5.13% 12/15/15 ...... 6,000,000 6,109,680
------------
6,109,680
------------
TRANSPORTATION REVENUE BONDS - 6.74%
Arapahoe County Capital Improvement
E-470 7.00% 8/31/26 ........................... 10,000,000 11,902,200
Arapahoe County Vehicle Reg E-470 (MBIA)
6.15% 8/31/26 ................................. 8,530,000 9,440,322
Denver City & County Airport Revenue (MBIA)
5.60% 11/15/20 ................................ 2,300,000 2,386,296
Puerto Rico Commonwealth Highway & Transportation
Authority Revenue, Series A- (MBIA)
5.00% 7/1/38 .................................. 1,000,000 976,330
------------
24,705,148
------------
WATER & SEWER REVENUE BONDS - 1.49%
Centennial County Water & Sanitary District
Revenue (LOC - Swiss Bank)
6.00% 12/1/15 ................................. 4,000,000 4,368,440
Westminster Water & Sewer Utility Revenue
(AMBAC) 6.25% 12/1/14 ......................... 1,000,000 1,093,450
------------
5,461,890
------------
OTHER REVENUE BONDS - 10.44%
Aurora Saddle Rock Golf Course
6.20% 12/1/15 ................................. 2,000,000 2,118,940
GVR Metropolitan District Series A
6.00% 12/1/15 ................................. 7,075,000 7,519,876
GVR Metropolitan District Series A
6.125% 12/1/19 ................................ 4,725,000 5,016,202
Lowry, Colorado Economic Redevelopment Authority
7.50% 12/1/10 ................................. 13,700,000 15,587,038
Lowry Economic Redevelopment Authority Colorado
Revenue Series A 7.00% 12/1/10 ................. 1,400,000 1,409,324
Pueblo Urban Renewal Authority Jr Lien
6.625% 12/1/19 ................................ 2,155,000 2,334,318
Pueblo Urban Renewal Authority Revenue (AMBAC)
6.15% 12/1/19 ................................. 1,685,000 1,802,579
South Suburban District Golf and Ice Arena
Facility 6.00% 11/1/15 ........................ 2,330,000 2,448,620
------------
38,236,897
------------
Total Municipal Bonds (cost $337,348,817) ....... 364,429,541
------------
<PAGE>
MARKET
VALUE
----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 99.49%
(cost $337,348,818) ................................. $364,429,541
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.51% 1,866,943
------------
NET ASSETS APPLICABLE TO 31,983,988 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ............... 366,296,484
============
NET ASSET VALUE - TAX FREE COLORADO FUND A CLASS
($354,807,243 / 30,980,938 shares) .................. $11.45
======
NET ASSET VALUE - TAX FREE COLORADO FUND B CLASS
($9,569,492 / 835,477 shares) ....................... $11.45
======
NET ASSET VALUE - TAX FREE COLORADO FUND C CLASS
($1,919,749 / 167,573 shares) ....................... $11.46
======
- ----------------
* 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 Indemnity Corporation
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
GNMA - Insured by the Government National Mortgage Association
LOC - Swiss Bank - Letter of Credit by Swiss Bank of New York
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock, $.01 par value, 10,000,000,000 shares authorized
to the Fund with 1,000,000,000 shares allocated to Tax-Free Colorado
Fund A Class, 1,000,000,000 shares allocated to Tax-Free Colorado
Fund B Class, and 1,000,000,000 shares allocated to Tax-Free
Colorado Fund C Class ................................. $ 342,876,612
Accumulated net realized loss on investments............ (3,660,851)
Net unrealized appreciation of investments.............. 27,080,723
-------------
Total Net Assets ....................................... $ 366,296,484
=============
NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE
COLORADO FUND A CLASS:
Net asset value per share (A)........................... $11.45
Sales charge (3.75% of offering price or 3.93% of
amount invested per share) (B)......................... 0.45
------
Offering price.......................................... $11.90
======
- ----------------
(A) Net asset value per share illustrated is the estimated amount which would
be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of $100,000
or more for Tax Free Colorado Fund Class A.
See accompanying notes.
<PAGE>
24 for tax-exempt income
VOYAGEUR INVESTMENT TRUST
DELAWARE-VOYAGEUR TAX-FREE NEW MEXICO FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
MUNICIPAL BONDS - 97.00%
General Obligation Bonds - 3.96%
Puerto Rico Commonwealth Public Improvement
4.50% 7/1/23 .................................. $1,000,000 $ 914,450
----------
914,450
----------
HIGHER EDUCATION REVENUE BONDS - 9.99%
New Mexico Education Assistance Foundation
6.65% 11/1/25 ................................. 1,000,000 1,085,080
New Mexico State University 5.00% 4/1/98 ........ 100,000 99,032
University of New Mexico Technical Development
Lease Revenue 6.55% 8/15/25 .................... 1,000,000 1,123,030
----------
2,307,142
----------
Hospital Revenue Bonds - 4.73%
State Hospital Equipment Memorial Medical Center
Project 6.40% 6/1/16 .......................... 1,000,000 1,093,630
----------
1,093,630
----------
HOUSING REVENUE BONDS - 31.28%
Carlsbad, New Mexico Housing Multifamily Revenue-
Colonial Hillcrest 7.375% 8/1/27 ............... 1,000,000 1,077,790
New Mexico Mortgage Finance Authority
Series 1994B 6.75% 7/1/25 ...................... 1,000,000 1,145,290
New Mexico Mortgage Finance Authority
Series 1994F 6.95% 1/1/26 ...................... 1,000,000 1,141,950
New Mexico Mortgage Finance Authority
Series 1996G 6.85% 1/1/21 ...................... 1,500,000 1,733,864
Santa Fe Single Family Mortgage Revenue
6.20% 11/1/16 ................................. 1,000,000 1,065,010
Southeastern New Mexico Affordable Housing
Reference-Housing-Casa Hermosa Apartments
7.25% 12/1/27 ................................. 1,000,000 1,064,070
----------
7,227,974
----------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 6.99%
Las Cruses Solid Waste Authority 6.00% 6/1/16 ... 500,000 525,875
Lordsburg Pollution Control 6.50% 4/1/13 ........ 1,000,000 1,089,360
----------
1,615,235
----------
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
MUNICIPAL BONDS (CONTINUED)
UTILITY REVENUE BONDS- 9.41%
Farmington Pollution Control Revenue
6.375% 4/1/22 ................................. $ 1,000,000 $ 1,086,960
Los Alamos Utility System Revenue 1994A
(FSA) 6.00% 7/1/15 ............................ 1,000,000 1,086,110
-----------
2,173,070
-----------
WATER & SEWER REVENUE BONDS - 4.65%
Rio Rancho Water & Wastewater Revenue (FSA)
6.00% 5/15/22 ................................. 1,000,000 1,073,650
-----------
1,073,650
-----------
OTHER REVENUE BONDS - 25.99%
Albuquerque Special Assessment #223
6.45% 1/1/15 .................................. 780,000 781,560
Bernalillo County, New Mexico Gross Receipts Tax
Revenue 5.25% 4/1/27 .......................... 1,000,000 1,036,260
Dona Ana County Tax Reference & Improvement
6.00% 6/1/19 .................................. 1,000,000 1,092,940
Puerto Rico Municipal Financing Agency
5.50% 7/2/21 .................................. 750,000 781,395
Santa Fe, New Mexico Municipal Record Complex Net
Revenue 5.625% 12/1/23 ........................ 1,000,000 983,340
Truth or Consequences Gross Tax Receipts
6.30% 7/1/16 .................................. 1,000,000 1,080,620
Virgin Islands Public Finance Authority Revenue
Reference Senior Lien Series A
5.50% 10/1/22 ................................. 250,000 249,643
-----------
6,005,758
-----------
Total Municipal Bonds (cost $20,740,274) ........ 22,410,909
-----------
NUMBER OF
SHARES
----------
SHORT TERM INVESTMENTS - 1.45%
Norwest Advantage Municipal Money Market Fund.... 335,682 335,682
-------
Total Short Term Investments (cost $335,682)..... 335,682
-------
<PAGE>
for tax-exempt income 25
TAX-FREE NEW MEXICO FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
MARKET
VALUE
-------
Total Market Value of Securities Owned
(cost of $21,075,956) - 98.45% ...................... $22,746,591
Receivables and Other Assets Net of Liabilities - 1.55% 358,650
-----------
Net Assets Applicable to 2,029,142 Shares
($.01 par value) outstanding - 100.00% ............... 23,105,241
===========
Net Asset Value - Tax-Free New Mexico Fund A Class
($21,160,357 / 1,858,456 shares) ............... $ 11.39
Net Asset Value - Tax-Free New Mexico Fund B Class =========
($1,585,772 / 139,157 shares) .................. $ 11.40
Net Asset Value - Tax-Free New Mexico Fund C Class =========
($359,112 / 31,529 shares) ..................... $ 11.39
=========
- -----------------
Summary of Abbreviations:
FSA - Insured by the Financial Security Assurance
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock, $.01 par value, unlimited shares
authorized to Tax-free New Mexico Fund ............... $ 21,982,000
Accumulated net realized loss on investments .......... (547,394)
Net unrealized appreciation of investments ............ 1,670,635
-----------
Total net assets ...................................... 23,105,241
===========
NET ASSET VALUE AND OFFERING PRICE FOR TAX FREE
NEW MEXICO FUND A CLASS
Net asset value per share (A) ......................... $ 11.39
Sales charge (3.75% of offering price or 3.86% of amount
invested per share) (B) .............................. 0.44
---------
Offering Price ......................................... $ 11.83
=========
- -----------
(A) Net asset value per share illustrated is the estimate amount which would
be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of
$100,000 or more for Tax Free New Mexico Fund Class A.
See accompanying notes.
<PAGE>
VOYAGEUR INVESTMENT TRUST
DELAWARE-VOYAGEUR TAX-FREE UTAH FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
MUNICIPAL BONDS - 99.20%
GENERAL OBLIGATION BONDS - 24.00%
Iron County School District (MBIA)
6.50% 1/15/13 ................................... $100,000 $112,400
Nebo, Utah School District 6.00% 6/15/18 .......... 200,000 215,547
Provo, Utah City School District 6.25% 6/15/13 .... 100,000 109,185
Puerto Rico Aqueduct & Sewer Authority
5.00% 7/1/15 .................................... 150,000 149,150
Puerto Rico Commonwealth Public Improvement
4.50% 7/1/23 .................................... 150,000 137,168
Salt Lake County Service Area # 1
6.00% 12/15/12 .................................. 100,000 105,634
--------
829,084
--------
HIGHER EDUCATION REVENUE BONDS - 24.73%
Salt Lake County, Utah College-Westminster
College Project 5.75% 10/1/27 .................... 160,000 163,083
Southern Utah University Board of Regents (AMBAC)
6.35% 5/1/10 .................................... 150,000 165,943
Southern Utah University Pavilion Student Fee
6.30% 6/1/16 .................................... 390,000 418,774
Utah State Board of Regents (MBIA)
5.875% 7/1/21 ................................... 100,000 106,515
--------
854,315
--------
HOUSING REVENUE BONDS - 25.13%
Clearfield City, Utah Multifamily Revenue
Housing-Mortgage-Federal Housing Authority
Oakstone Apartments-A 5.75% 11/1/27 .............. 150,000 152,609
Salt Lake City Multifamily Housing Authority
6.00% 4/1/25 .................................... 100,000 103,421
Salt Lake County Housing Authority Multifamily
Bridgeside (FHA) 6.30% 11/1/28 ................... 270,000 287,248
Utah Housing Finance Authority Single Family
Mortgage Revenue Series 1992D-1
6.70% 7/1/12 .................................... 85,000 90,604
Utah Housing Finance Authority Single Family
Mortgage Revenue Series 1994C
6.30% 7/1/16 .................................... 20,000 21,424
Utah Housing Finance Multifamily Cottonwood
Project (FNMA) 6.30% 7/1/15 ...................... 200,000 212,822
--------
868,128
--------
LEASE/CERTIFICATE OF PARTICIPATION - 12.95%
Salt Lake City Municipal Building Authority Lease
Revenue Series A 6.375% 10/1/12 .................. 100,000 109,312
Weber County, Utah Municipal Building Authority
Lease Revenue 5.75% 12/15/19175,000181,745
West Valley City, Utah Municipal Building
Authority Lease Revenue 5.125% 1/15/18 ........... $ 50,000 $ 50,167
West Valley City, Utah Municipal Building Authority
Lease Revenue 6.00% 1/15/10 ...................... 100,000 106,078
--------
447,302
--------
<PAGE>
26 for tax-exempt income
TAX-FREE UTAH FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------
MUNICIPAL BONDS (CONTINUED)
*PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 6.25%
Utah State Board of Regents (AMBAC)
6.30% 6/1/12 - 02 ................................ 100,000 108,633
Weber State University Board of Regents (MBIA)
6.25% 4/1/10 - 02 ................................ 100,000 107,297
----------
215,930
----------
WATER & SEWER REVENUE BONDS - 6.14%
White City Water District Revenue
5.90% 2/1/22 ..................................... 200,000 212,270
----------
212,270
----------
Total Municipal Bonds (cost $3,205,882) ............ 3,427,029
----------
TOTAL MARKET VALUE OF SECURITIES - 99.20%
(cost $3,205,882) ................................ 3,427,029
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES - 0.80%................................ 27,789
----------
NET ASSETS APPLICABLE TO 303,910 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% ............ $3,454,818
==========
NET ASSET VALUE - TAX-FREE UTAH A CLASS
($2,853,897/251,058 shares) ...................... $ 11.37
==========
NET ASSET VALUE - TAX-FREE UTAH B CLASS
($600,921/52,852 shares) ......................... $ 11.37
==========
- ----------
*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 Indemnity Corporation
FHA - Insured by the Federal Housing Administration
FNMA - Insured by the Federal National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common Stock, $.01 par value, 10,000,000,000 shares authorized
to the Fund with 1,000,000,000 shares allocated to Tax-Free
Utah Fund A Class and 1,000,000,000 shares allocated to
TAX-FREE UTAH FUND B CLASS ................................ $ 3,242,319
ACCUMULATED NET REALIZED LOSS ON INVESTMENTS ............... (8,648)
NET UNREALIZED APPRECIATION OF INVESTMENTS ................. 221,147
-----------
TOTAL NET ASSETS ........................................... $ 3,454,818
===========
NET ASSET VALUE AND OFFERING PRICE FOR TAX FREE UTAH
FUND A CLASS:
Net asset value per share (A) ............................. $ 11.37
Sales charge (3.75% of offering price or 3.87% of
amount invested per share) (B) ........................... 0.44
---------
Offering price ............................................. $ 11.81
=========
- ------------
(A) Net asset value per share illustrated is the estimated amount which would
be paid upon the redemption or repurchase of shares.
(B) See Purchasing Shares in the current Prospectus for purchases of
$100,000 or more for Tax Free Utah Fund Class A.
See accompanying notes.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
TAX-FREE
UTAH FUND
-----------
ASSETS:
Investments at market (cost $3,205,882) ........... $3,427,029
Receivable for securities sold .................... 819,971
Interest receivable ............................... 49,173
Subscriptions receivable .......................... 11
Other assets ...................................... 12,016
----------
Total assets ...................................... 4,308,200
==========
LIABILITIES:
Payable for securities purchased .................. 796,990
Other accounts payable and accrued expenses ....... 56,392
----------
Total liabilities ................................. 853,382
----------
Total Net Assets .................................. 3,454,818
==========
See accompanying notes
<PAGE>
for tax-exempt income 27
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE
TAX-FREE ARIZONA TAX-FREE CALIFORNIA TAX-FREE TAX-FREE TAX-FREE
ARIZONA INSURED CALIFORNIA INSURED COLORADO NEW MEXICO UTAH
FUND FUND FUND FUND FUND FUND FUND
--------- ---------- -------- -------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ............................. $ 425,616 $5,140,612 $321,394 $922,433 $ 10,503,223 $627,179 $ 104,439
--------- ---------- -------- -------- ------------ -------- ---------
425,616 5,140,612 321,394 922,433 10,503,223 627,179 104,439
--------- ---------- -------- -------- ------------ -------- ---------
EXPENSES:
Management fees ...................... 38,773 463,730 30,272 81,465 917,115 54,201 9,235
Dividend disbursing and transfer agent
fees and expenses ................ 2,486 44,940 6,147 6,446 144,114 10,599 1,536
Distribution expense ................. 35,699 249,480 42,703 66,931 498,083 33,007 6,774
Registration fees .................... 6,166 2,790 4,404 1,080 6,786 5,050 585
Reports and statements to shareholders 3,113 19,800 6,174 9,540 27,669 7,664 1,770
Accounting and Administration ........ 3,770 55,860 2,912 10,128 93,195 5,267 1,019
Professional fees .................... -- 11,300 165 3,798 8,484 1,812 120
Custodian fees and expenses .......... 1,584 10,410 1,800 2,400 5,595 3,488 637
Directors' fees ...................... 336 3,900 298 1,290 4,615 355 273
Other ................................ 3,228 20,125 1,754 -- 53,884 9,961 1,662
--------- ---------- -------- -------- ------------ -------- ---------
95,155 882,335 96,629 183,078 1,759,540 131,404 23,611
Less expenses absorbed by Delaware
Management Company, Inc. ......... (42,164) (84,110) (56,601) (1,086) (225,825) (18,266) (7,889)
--------- ---------- -------- -------- ------------ -------- ---------
52,991 798,225 40,028 181,992 1,533,715 113,138 15,722
NET INVESTMENT INCOME ................ 372,625 4,342,387 281,366 740,441 8,969,508 514,041 88,717
--------- ---------- -------- -------- ------------ -------- ---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments ..... 155,750 584,755 22,458 155,188 1,106,276 71,066 28,618
Net change in unrealized appreciation/
depreciation of investments ...... (62,828) (510,354) 24,076 66,636 1,371,640 128,516 (17,269)
--------- ---------- -------- -------- ------------ -------- ---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ................... 92,922 74,401 46,534 221,824 2,477,916 199,582 11,349
--------- ---------- -------- -------- ------------ -------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................. $ 465,547 $4,416,788 $327,900 $962,265 $ 11,447,424 $713,623 $ 100,066
========= ========== ======== ======== ============ ======== =========
</TABLE>
See accompanying notes
<PAGE>
28 for tax-exempt income
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE ARIZONA FUND TAX-FREE ARIZONA INSURED FUND
--------------------------------- ----------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED
(UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ...................... $ 372,625 $ 736,908 $ 4,342,387 $ 9,751,316
Net realized gain on investments ........... 155,750 174,893 584,755 2,190,476
Net change in unrealized appreciation/
depreciation of investments ............ (62,828) 437,873 (510,354) 4,860,331
------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations .............. 465,547 1,349,674 4,416,788 16,802,123
------------- ------------- ------------- -------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class ................................ (280,145) (558,716) (4,254,910) (9,694,062)
B Class ................................ (82,947) (170,145) (79,215) (146,915)
C Class ................................ (10,034) (8,986) (13,576) (22,575)
Excess distribution of net realized gain:
A Class ................................ -- -- -- --
B Class ................................ -- -- -- --
C Class ................................ -- -- -- --
Net realized gain from security transaction:
A Class ................................ -- (14,835) -- --
B Class ................................ -- (5,249) -- --
C Class ................................ -- (446) -- --
------------- ------------- ------------- -------------
(373,126) (758,377) (4,347,701) (9,863,552)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ................................ 1,595,981 1,713,483 3,850,770 8,703,489
B Class ................................ 819,540 1,398,191 1,164,471 1,626,775
C Class ................................ 269,346 294,389 100,022 260,791
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and net realized
gain on security transactions:
A Class ................................ 138,309 318,925 1,788,417 4,127,147
B Class ................................ 40,223 93,785 43,022 80,590
C Class ................................ 2,200 1,725 8,078 14,987
------------- ------------- ------------- -------------
2,865,599 3,820,498 6,954,780 14,813,779
------------- ------------- ------------- -------------
Cost of shares repurchased:
A Class ................................ (1,261,692) (1,297,760) (12,970,044) (42,377,224)
B Class ................................ (251,735) (1,423,141) (442,137) (1,306,416)
C Class ................................ (371) -- (28,725) (172,902)
------------- ------------- ------------- -------------
(1,513,798) (2,720,901) (13,440,906) (43,856,542)
------------- ------------- ------------- -------------
Increase (decrease) in net assets derived
from capital share transactions ........ 1,351,801 1,099,597 (6,486,126) (29,042,763)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE)
IN NET ASSETS .......................... 1,444,222 1,690,894 (6,417,039) (22,104,192)
NET ASSETS:
Beginning of period ........................ 14,959,325 13,268,431 190,818,171 212,922,363
------------- ------------- ------------- -------------
End of period .............................. $ 16,403,547 $ 14,959,325 $ 184,401,132 $ 190,818,171
============= ============= ============= =============
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND TAX-FREE CALIFORNIA INSURED FUND
------------------------------- --------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED
(UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ...................... $ 281,366 $ 251,678 $ 740,441 $ 1,660,243
Net realized gain on investments ........... 22,458 28,148 155,188 654,098
Net change in unrealized appreciation/
depreciation of investments ............ 24,076 362,074 66,636 902,169
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations .............. 327,900 641,900 962,265 3,216,510
------------ ------------ ------------ ------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class ................................ (121,574) (114,672) (602,458) (1,392,469)
B Class ................................ (155,701) (132,136) (128,627) (281,777)
C Class ................................ (4,091) (5,490) (9,356) (4,187)
Excess distribution of net realized gain:
A Class ................................ -- (11,448) -- --
B Class ................................ -- (17,988) -- --
C Class ................................ -- (547) -- --
Net realized gain from security transaction:
A Class ................................ -- -- -- --
B Class ................................ -- -- -- --
C Class ................................ -- -- -- --
------------ ------------ ------------ ------------
(281,366) (282,281) (740,441) (1,678,433)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ................................ 1,226,232 3,495,750 862,002 1,433,773
B Class ................................ 2,626,580 4,742,287 361,553 663,450
C Class ................................ 610,869 88,101 6,263 411,903
Net asset value of shares issued upon
reinvestment of dividends from net
investment income and net realized
gain on security transactions:
A Class ................................ 82,800 83,762 250,398 600,374
B Class ................................ 43,677 41,269 44,743 115,298
C Class ................................ 3,367 6,496 1,938 3,770
------------ ------------ ------------ ------------
4,593,525 8,457,665 1,526,897 3,228,568
------------ ------------ ------------ ------------
Cost of shares repurchased:
A Class ................................ (406,669) (553,808) (2,891,310) (6,896,123)
B Class ................................ (164,614) (79,383) (539,477) (1,165,654)
C Class ................................ -- (86,695) (30,386) --
------------ ------------ ------------ ------------
(571,283) (719,886) (3,461,173) (8,061,777)
------------ ------------ ------------ ------------
Increase (decrease) in net assets derived
from capital share transactions ........ 4,022,242 7,737,779 (1,934,276) (4,833,209)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS .......................... 4,068,776 8,097,398 (1,712,452) (3,295,132)
NET ASSETS:
Beginning of period ........................ 10,069,875 1,972,477 34,028,062 37,323,194
------------ ------------ ------------ ------------
End of period .............................. $ 14,138,651 $ 10,069,875 $ 32,315,610 $ 34,028,062
============ ============ ============ ============
</TABLE>
See accompanying notes
<PAGE>
for tax-exempt income 29
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE COLORADO FUND TAX-FREE NEW MEXICO FUND TAX-FREE UTAH FUND
-------------------------- ------------------------- ----------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED
(UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ................................ $ 8,969,508 $ 18,751,211 $ 514,041 $ 1,021,240 $ 88,717 $ 197,470
Net realized gain on investments ..................... 1,106,276 4,504,945 71,066 272,561 28,618 57,047
Net change in unrealized appreciation/depreciation
of investments ................................... 1,371,640 15,302,638 128,516 651,320 (17,269) 111,041
------------ ------------ ----------- ----------- ---------- -----------
Net increase in net assets resulting from operations . 11,447,424 38,558,794 713,623 1,945,121 100,066 365,558
------------ ------------ ----------- ----------- ---------- -----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class .......................................... (8,753,214) (18,996,568) (482,226) (994,922) (76,767) (178,847)
B Class .......................................... (177,825) (263,048) (25,173) (38,815) (11,950) (20,903)
C Class .......................................... (38,470) (73,064) (6,643) (12,451) -- --
------------ ------------ ----------- ----------- ---------- -----------
(8,969,509) (19,332,680) (514,042) (1,046,188) (88,717) (199,750)
------------ ------------ ----------- ----------- ---------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .......................................... 15,683,343 24,861,682 2,651,125 1,142,996 104,319 199,784
B Class .......................................... 1,712,288 3,577,245 493,283 316,181 32,104 133,701
C Class .......................................... 421,562 556,067 35,066 96,958 -- --
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on security transactions:
A Class .......................................... 5,622,399 12,735,946 260,964 546,725 23,903 61,141
B Class .......................................... 137,254 223,373 15,082 22,585 8,923 18,642
C Class .......................................... 33,642 68,964 6,232 12,667 -- --
------------ ------------ ----------- ----------- ---------- -----------
23,610,488 42,023,277 3,461,752 2,138,112 169,249 413,268
------------ ------------ ----------- ----------- ---------- -----------
Cost of shares repurchased:
A Class .......................................... (26,900,727) (56,711,281) (894,522) (3,709,704) (506,429) (1,040,871)
B Class .......................................... (134,469) (535,127) (6) (109,361) -- (15,563)
C Class .......................................... (244,845) (537,497) -- (148,298) -- --
------------ ------------ ----------- ----------- ---------- -----------
(27,280,041) (57,783,905) (894,528) (3,967,363) (506,429) (1,056,434)
------------ ------------ ----------- ----------- ---------- -----------
Increase (decrease) in net assets derived from capital
share transactions ............................... (3,669,553) (15,760,628) 2,567,224 (1,829,251) (337,180) (643,166)
------------ ------------ ----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS ................ (1,191,638) 3,465,486 2,766,805 (930,318) (325,831) (477,358)
NET ASSETS:
Beginning of period .................................. 367,488,122 364,022,636 20,338,436 21,268,754 3,780,649 4,258,007
------------ ------------ ----------- ----------- ---------- -----------
End of period ........................................ $366,296,484 $367,488,122 $23,105,241 $20,338,436 $3,454,818 $ 3,780,649
============ ============ =========== =========== ========== ===========
</TABLE>
See accompanying notes
<PAGE>
30 for tax-exempt income
Financial Highlights
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>
TAX-FREE ARIZONA FUND - CLASS A
------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR FROM
6/30/98 ENDED 3/2/95(2)TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period ......... $11.140 $10.700 $10.750 $10.000
Income from investment operations:
Net investment income ........................ 0.273 0.589 0.580 0.460
Net realized and unrealized gain
(loss) from investments ...................... 0.070 0.455 (0.010) 0.840
------- ------- ------- -------
Net change in net assets from
investment operations ........................ 0.343 1.044 0.570 1.300
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ......... (0.273) (0.589) (0.580) (0.460)
Distributions from net realized gain
on security transactions ..................... - (0.015) (0.040) (0.090)
------- ------- ------- -------
Total dividends and distributions ............ (0.273) (0.604) (0.620) (0.550)
------- ------- ------- -------
Net asset value, end of period ............... $11.210 $11.140 $10.700 $10.750
======= ======= ======= =======
Total Return(3)............................... 3.19% 10.07% 5.48% 13.27%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ...... $11,457 $10,916 $ 9,755 $ 6,225
Ratio of expenses to average net assets ...... 0.47 0.48% 0.46% 0.52%(4)
Ratio of expenses to average net assets prior
to expense limitation ........................ 1.02% 1.08% 1.25% 1.25%(4)
Ratio of net investment income to
average net assets ........................... 5.07% 5.42% 5.43% 5.19%(4)
Ratio of net investment income to average
net assets prior to expense limitation ....... 4.52% 4.82% 4.64% 4.46%(4)
Portfolio turnover ........................... 118% 39% 70% 38%
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
TAX-FREE ARIZONA FUND - CLASS B
------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR FROM
6/30/98 ENDED 6/29/95(2) TO
UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period ......... $11.140 $10.690 $10.740 $ 10.300
Income from investment operations:
Net investment income ........................ 0.238 0.502 0.510 0.260
Net realized and unrealized gain
(loss) from investments ...................... 0.061 0.469 (0.010) 0.530
------- ------- ------- --------
Net change in net assets from
investment operations ........................ 0.299 0.971 0.500 0.790
------- ------- ------- --------
Less dividends and distributions:
Dividends from net investment income ......... (0.239) (0.506) (0.510) (0.260)
Distributions from net realized gain
on security transactions ..................... - (0.015) (0.040) (0.090)
------- ------- ------- --------
Total dividends and distributions ............ (0.239) (0.521) (0.550) (0.350)
------- ------- ------- --------
Net asset value, end of period ............... $11.200 $11.140 $10.690 $ 10.740
======= ======= ======= ========
Total Return(3)............................... 2.71% 9.34% 4.84% 7.74%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ...... $ 4,340 $ 3,711 $ 3,491 $ 1,629
Ratio of expenses to average net assets ...... 1.22% 1.22% 1.11% 0.99%(4)
Ratio of expenses to average net assets prior
to expense limitation ........................ 1.77% 1.82% 2.00% 2.00%(4)
Ratio of net investment income to
average net assets ........................... 4.32% 4.68% 4.77% 4.60%(4)
Ratio of net investment income to average
net assets prior to expense limitation ....... 3.77% 4.08% 3.88% 3.59%(4)
Portfolio turnover ........................... 118% 39% 70% 38%
</TABLE>
- ----------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 31
Financial Highlights (Continued)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE ARIZONA FUND - CLASS C
----------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 5/13/95(2) TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................................ $11.160 $ 10.710 $ 10.760 $10.200
Income from investment operations:
Net investment income ..................................................... 0.235 0.534 0.500 0.300
Net realized and unrealized gain (loss) from investments .................. 0.078 0.437 (0.010) 0.650
------- -------- -------- -------
Net change in net assets from investment operations ....................... 0.313 0.971 0.490 0.950
------- -------- -------- -------
Less dividends and distributions:
Dividends from net investment income ...................................... (0.243) (0.506) (0.500) (0.300)
Distributions from net realized gain on security transactions ............. -- (0.015) (0.040) (0.090)
------- -------- -------- -------
Total dividends and distributions ......................................... (0.243) (0.521) (0.540) (0.390)
------- -------- -------- -------
Net asset value, end of period .................................................. $11.230 $ 11.160 $ 10.710 $10.760
======= ======== ======== =======
Total Return(3).................................................................. 2.80% 9.32% 4.70% 9.43%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................................... $ 54 $ 332 $ 23 $ 27
Ratio of expenses to average net assets ................................... 1.22% 1.23% 1.21% 1.20%(4)
Ratio of expenses to average net assets prior to expense limitation ....... 1.77% 1.83% 2.00% 2.00%(4)
Ratio of net investment income to average net assets ...................... 4.32% 4.67% 4.68% 4.65%(4)
Ratio of net investment income to average net assets prior to
expense limitation........................................................ 3.77% 4.07% 3.89% 3.85%(4)
Portfolio turnover ........................................................ 118% 39% 70% 38%
</TABLE>
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
32 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE ARIZONA INSURED FUND - CLASS A
----------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/98 YEAR ENDED
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 11.470 $ 11.060 $ 11.150 $ 9.860 $11.310 $ 10.710
Income from investment operations:
Net investment income ......................... 0.267 0.548 0.530 0.540 0.550 0.580
Net realized and unrealized gain
(loss) from investments ...................... 0.001 0.416 (0.090) 1.310 (1.370) 0.740
-------- -------- -------- -------- ------- --------
Net change in net assets from
investment operations ........................ 0.268 0.964 0.440 1.850 (0.820) 1.320
-------- -------- -------- -------- ------- --------
Less dividends and distributions:
Dividends from net investment income .......... (0.268) (0.554) (0.530) (0.560) (0.530) (0.580)
Distributions from net realized gain
on security transactions ..................... - - - - (0.040) (0.140)
In excess of net realized gains ............... - - - - (0.060) -
-------- -------- -------- -------- ------- --------
Total dividends and distributions ............. (0.268) (0.554) (0.530) (0.560) (0.630) (0.720)
-------- -------- -------- -------- ------- --------
Net asset value, end of period .................. $ 11.470 $ 11.470 $ 11.060 $ 11.150 $ 9.860 $ 11.310
======== ======== ======== ======== ======= ========
Total Return(3) ................................. 2.36% 8.96% 4.09% 19.10% (7.41%) 12.64%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................ $179,220 $186,485 $209,258 $238,114 $231,736 $263,312
Ratio of expenses to average
net assets ................................... 0.84% 0.84% 0.82% 0.69% 0.72% 0.59%
Ratio of expenses to average net
assets prior to expense limitation ........... 0.93% 0.89% 0.95% 0.95% 0.92% 1.03%
Ratio of net investment income to
average net assets ........................... 4.70% 4.92% 4.89% 5.07% 5.20% 5.00%
Ratio of net investment income to
average net assets prior to
expense limitation ........................... 4.61% 4.87% 4.76% 4.81% 5.00% 4.56%
Portfolio turnover ............................ 20% 42% 42% 42% 25% 33%
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
TAX-FREE ARIZONA INSURED FUND - CLASS B
---------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 3/10/95(2) TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........... $11.460 $11.050 $11.140 $10.440
Income from investment operations:
Net investment income ........................ 0.224 0.455 0.450 0.380
Net realized and unrealized gain
(loss) from investments ..................... 0.011 0.414 (0.090) 0.690
------- ------- ------- -------
Net change in net assets from
investment operations ....................... 0.235 0.869 0.360 1.070
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ......... (0.225) (0.459) (0.450) (0.370)
Distributions from net realized gain
on security transactions .................... - - - -
In excess of net realized gains .............. - - - -
------- ------- ------- -------
Total dividends and distributions ............ (0.225) (0.459) (0.450) (0.370)
------- ------- ------- -------
Net asset value, end of period ................. $11.470 $11.460 $11.050 $11.140
======= ======= ======= =======
Total Return(3) ................................ 2.07% 8.06% 3.32% 10.36%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ............................... $ 4,425 $ 3,657 $ 3,110 $ 2,048
Ratio of expenses to average
net assets .................................. 1.59% 1.65% 1.59% 1.33%(4)
Ratio of expenses to average net
assets prior to expense limitation .......... 1.68% 1.70% 1.70% 1.60%(4)
Ratio of net investment income to
average net assets .......................... 3.95% 4.11% 4.11% 4.08%(4)
Ratio of net investment income to
average net assets prior to
expense limitation .......................... 3.86% 4.06% 4.00% 3.81%(4)
Portfolio turnover ........................... 20% 42% 42% 42%
</TABLE>
(1) Ratios have been annualized and the total returns have not been nnualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 33
FINANCIAL HIGHLIGHTS (CONTINUED)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE ARIZONA INSURED FUND - CLASS C
----------------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 5/26/94(2) TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................................... $ 11.470 $ 11.060 $ 11.150 $ 9.860 $ 10.480
Income from investment operations:
Net investment income ................................................ 0.225 0.456 0.430 0.450 0.270
Net realized and unrealized gain (loss) from investments ............. -- 0.414 (0.090) 1.310 (0.560)
--------- --------- --------- --------- --------
Net change in net assets from investment operations .................. 0.225 0.870 0.340 1.760 (0.290)
--------- --------- --------- --------- --------
Less dividends and distributions:
Dividends from net investment income ................................. (0.225) (0.460) (0.430) (0.470) (0.250)
Distributions from net realized gain on security transactions ........ -- -- -- -- (0.040)
In excess of net realized gains ...................................... -- -- -- -- (0.040)
--------- --------- --------- --------- --------
Total dividends and distributions .................................... (0.225) (0.460) (0.430) (0.470) (0.330)
--------- --------- --------- --------- --------
Net asset value, end of period ........................................... $ 11.470 $ 11.470 $ 11.060 $ 11.150 $ 9.860
========= ========= ========= ========= ========
Total Return(3) .......................................................... 1.98% 8.05% 3.18% 18.10% (2.84%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .............................. $ 756 $ 675 $ 554 $ 541 $ 326
Ratio of expenses to average net assets .............................. 1.59% 1.65% 1.70% 1.54% 1.50%(4)
Ratio of expenses to average net assets prior to expense limitation... 1.68% 1.70% 1.70% 1.69% 1.71%(4)
Ratio of net investment income to average net assets ................. 3.95% 4.11% 4.01% 4.18% 4.10%(4)
Ratio of net investment income to average net assets
prior to expense limitation ........................................ 3.86% 4.06% 4.01% 4.03% 3.89%(4)
Portfolio turnover ................................................... 20% 42% 42% 42% 25%
</TABLE>
- ------------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
34 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND - CLASS A
--------------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 3/2/95(2) TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.050 $10.430 $10.640 $10.000
Income from investment operations:
Net investment income 0.290 0.590 0.600 0.470
Net realized and unrealized gain
(loss) from investments 0.036 0.665 (0.180) 0.700
------- -------- ------- -------
Net change in net assets from
investment operations 0.326 1.255 0.420 1.170
------- -------- ------- -------
Less dividends and distributions:
Dividends from net investment income (0.286) (0.595) (0.600) (0.470)
Distributions from net realized
gain on security transactions - (0.040) (0.030) (0.060)
------- -------- ------- -------
Total dividends and distributions (0.286) (0.635) (0.630) (0.530)
------- -------- ------- -------
Net asset value, end of period $11.090 $11.050 $10.430 $10.640
======= ======== ======= =======
Total Return(3) 2.98% 12.43% 4.21% 11.97%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 5,309 $ 4,385 $ 1,218 $ 1,012
Ratio of expenses to average net assets 0.22% 0.13% 0.27% 0.46%(4)
Ratio of expenses to average net assets
prior to expense limitation 1.16% 1.19% 1.25% 1.22%(4)
Ratio of net investment income to
average net assets 5.13% 5.32% 5.71% 5.57%(4)
Ratio of net investment income to
average net assets prior
to expense limitation 4.19% 4.26% 4.73% 4.81%(4)
Portfolio turnover 68% 17% 8% 40%
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND - CLASS B
--------------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 8/23/95(2) TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.080 $10.440 $10.650 $ 9.960
Income from investment operations:
Net investment income 0.245 0.520 0.560 0.200
Net realized and unrealized gain
(loss) from investments 0.040 0.688 (0.180) 0.740
-------- -------- -------- -------
Net change in net assets from
investment operations 0.285 1.208 0.380 0.940
-------- -------- -------- -------
Less dividends and distributions:
Dividends from net investment income (0.245) (0.528) (0.560) (0.190)
Distributions from net realized
gain on security transactions 0.000 (0.040) (0.030) (0.060)
-------- -------- -------- -------
Total dividends and distributions (0.245) (0.568) (0.590) (0.250)
-------- -------- -------- -------
Net asset value, end of period $11.120 $11.080 $10.440 $10.650
======== ======== ======== =======
Total Return(3) 2.58% 11.91% 3.77% 9.52%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $ 8,106 $ 5,576 $ 660 $ 128
Ratio of expenses to average net assets 0.97% 0.80% 0.50% 0.60%(4)
Ratio of expenses to average net assets
prior to expense limitation 1.91% 1.86% 2.00% 1.93%(4)
Ratio of net investment income to
average net assets 4.38% 4.65% 5.34% 5.33%(4)
Ratio of net investment income to
average net assets prior
to expense limitation 3.44% 3.59% 3.84 4.00%(4)
Portfolio turnover 68% 17% 8% 40%
</TABLE>
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 35
FINANCIAL HIGHLIGHTS (CONTINUED)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND - CLASS C
------------------------------------------------
SIX MONTHS PERIOD
ENDED YEAR FROM
6/30/98 ENDED 4/9/96(2) TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96
<S> <C> <C> <C>
Net asset value, beginning of period ................................ $ 11.050 $ 10.420 $ 10.070
Income from investment operations:
Net investment income ............................................. 0.260 0.487 0.370
Net realized and unrealized gain (loss) from investments .......... 0.025 0.696 0.380
--------- -------- --------
Net change in net assets from investment operations ............... 0.285 1.183 0.750
--------- -------- --------
Less dividends and distributions:
Dividends from net investment income .............................. (0.245) (0.513) (0.370)
Distributions from net realized gain on security transactions ..... -- (0.040) (0.030)
--------- -------- --------
Total dividends and distributions ................................. (0.245) (0.553) (0.400)
--------- -------- --------
Net asset value, end of period ...................................... $ 11.090 $ 11.050 $ 10.420
========= ======== ========
Total Return(3) ..................................................... 2.60% 11.69% 7.58%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ........................... $ 724 $ 109 $ 94
Ratio of expenses to average net assets ........................... 0.97% 0.87% 0.78%(4)
Ratio of expenses to average net assets prior to expense limitation 1.91% 1.93% 2.00%(4)
Ratio of net investment income to average net assets .............. 4.38% 4.58% 5.13%(4)
Ratio of net investment income to average net assets prior
to expense limitation ............................................ 3.44% 3.52% 3.91%(4)
Portfolio turnover ................................................ 68% 17% 8%
</TABLE>
- ---------------
(1) Ratios have been annualized and the total returns have not been
annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
36 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA INSURED FUND CLASS A
--------------------------------------------------------------------------
SIX MONTHS TWO MONTHS YEAR
ENDED 6/30/98 YEAR ENDE ENDED ENDED
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................... $ 10.980 $ 10.500 $ 10.650 $ 9.330 $ 9.510 $ 11.080
Income from investment operations:
Net investment income .............................. 0.257 0.513 0.520 0.530 0.100 0.550
Net realized and unrealized gain (loss)
from investments ................................. 0.070 0.486 (0.150) 1.340 (0.180) (1.520)
--------- --------- --------- -------- -------- ---------
Net change in net assets from investment operations 0.327 0.999 0.370 1.870 (0.080) (0.970)
--------- --------- --------- -------- -------- ---------
Less dividends and distributions:
Dividends from net investment income ............... (0.257) (0.519) (0.520) (0.550) (0.090) (0.540)
Distributions from net realized gain on
security transactions ............................ -- -- -- -- (0.010) (0.060)
--------- --------- --------- -------- -------- ---------
Total dividends and distributions .................. (0.257) (0.519) (0.520) (0.550) (0.100) (0.600)
--------- --------- --------- -------- -------- ---------
Net asset value, end of period ......................... $ 11.050 $ 10.980 $ 10.500 $ 10.650 $ 9.330 $ 9.510
========= ========= ========= ======== ======== =========
Total Return(3) ....................................... 3.01% 9.78% 3.63% 20.51% (0.84%) (8.97%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $ 25,319 $ 26,923 $ 30,551 $ 33,860 $27,99(4) $ 27,282
Ratio of expenses to average net assets ............ 0.96% 0.99% 0.82% 0.70% 0.10%(4) 0.20%
Ratio of expenses to average net assets prior to
expense limitation ............................... 0.96% 1.02% 1.01% 1.02% 1.24%(4) 1.25%
Ratio of net investment income to average net assets 4.71% 4.85% 5.05% 5.23% 6.30%(4) 5.37%
Ratio of net investment income to average net assets
prior to expense limitation ...................... 4.71% 4.82% 4.86% 4.91% 5.16%(4) 4.32%
Portfolio turnover ................................. 41% 63% 55% 107% 7% 18%
</TABLE>
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 37
FINANCIAL HIGHLIGHTS (CONTINUED)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA INSURED FUND CLASS B
-----------------------------------------------------------------------------
SIX MONTHS TWO PERIOD
ENDED MONTHS FROM
6/30/98 YEAR ENDED ENDED 3/1/94(2) TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94 10/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ................... $10.990 $10.500 $10.650 $9.330 $9.510 $10.680
Income from investment operations:
Net investment income ................. 0.217 0.457 0.480 0.500 0.080 0.310
Net realized and unrealized gain
(loss) from investments ............. 0.069 0.495 (0.150) 1.330 (0.170) (1.160)
------- ------- ------- ------ ------- -------
Net change in net assets from
investment operations ............... 0.286 0.952 0.330 1.830 (0.090) (0.850)
------- ------- ------- ------ ------- -------
Less dividends and distributions:
Dividends from net
investment income. .................. (0.216) (0.462) (0.480) (0.510) (0.080) (0.300)
Distributions from net realized gain
on security transactions ............ - - - - (0.010) (0.020)
------- ------- ------- ------ ------- -------
Total dividends and distributions ..... (0.216) (0.462) (0.480) (0.510) (0.090) (0.320)
------- ------- ------- ------ ------- -------
Net asset value, end of period $11.060 $10.990 $10.500 $10.650 $9.330 $9.510
======= ======= ======= ====== ======= =======
Total Return(3) ......................... 2.63% 9.29% 3.22% 20.01% (0.92%) (7.93%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ....................... $6,540 $6,629 $6,717 $6,029 $2,219 $1,427
Ratio of expenses to average
net assets .......................... 1.71% 1.53% 1.21% 1.10% 0.57%(4) 0.73%(4)
Ratio of expenses to average net
assets prior to expense limitation .. 1.71% 1.56% 1.76% 1.75% 1.94%(4) 1.95%(4)
Ratio of net investment income to
average net assets .................. 3.96% 4.31% 4.64% 4.75% 5.54%(4) 4.82%(4)
Ratio of net investment income to
average net assets prior to
expense limitation .................. 3.96% 4.28% 4.09% 4.10% 4.17%(4) 3.60%(4)
Portfolio turnover .................... 41% 63% 55% 107% 7% 18%
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA INSURED FUND CLASS C
-------------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 4/12/952 TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ................. $10.940 $10.460 $10.650 $10.190
Income from investment operations:
Net investment income ............... 0.215 0.485 0.440 0.250
Net realized and unrealized gain
(loss) from investments ........... 0.071 0.432 (0.190) 0.530
------- ------- ------- -------
Net change in net assets from
investment operations ............. 0.286 0.917 0.250 0.780
------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income. ................ (0.216) (0.437) (0.440) (0.320)
Distributions from net realized gain
on security transactions .......... - - - -
------- ------- ------- -------
Total dividends and distributions ... (0.216) (0.437) (0.440) (0.320)
------- ------- ------- -------
Net asset value, end of period $11.010 $10.940 $10.460 $10.650
======= ======= ======= =======
Total Return(3) ....................... 2.64% 8.98% 2.47% 7.77%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ..................... $457 $476 $55 $53
Ratio of expenses to average
net assets ........................ 1.71% 1.71% 1.58% 1.53%(4)
Ratio of expenses to average net
assets prior to expense limitation 1.71% 1.74% 1.77% 1.77%(4)
Ratio of net investment income to
average net assets ................ 3.96% 4.13% 4.02% 4.25%(4)
Ratio of net investment income to
average net assets prior to
expense limitation ................ 3.96% 4.10% 3.83% 4.01%(4)
Portfolio turnover .................. 41% 63% 55% 107%
</TABLE>
- -----------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
38 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE COLORADO FUND CLASS A
--------------------------------------------------------------------
SIX MONTHS YEAR
ENDED 6/30/98 ENDED
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................... $ 11.380 $ 10.780 $ 10.900 $ 9.530 $ 11.100 $ 10.570
Income from investment operations:
Net investment income .............................. 0.283 0.574 0.560 0.540 0.550 0.560
Net realized and unrealized gain (loss)
from investments ................................. 0.070 0.618 (0.130) 1.380 (1.540) 0.850
-------- --------- -------- -------- -------- --------
Net change in net assets from investment operations 0.353 1.192 0.430 1.920 (0.990) 1.410
-------- --------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income ............... (0.283) (0.592) (0.550) (0.550) (0.540) (0.560)
Distributions from net realized gain on
security transactions ............................ -- -- -- -- (0.040) (0.320)
-------- --------- -------- -------- -------- --------
Total dividends and distributions .................. (0.283) (0.592) (0.550) (0.550) (0.580) (0.880)
-------- --------- -------- -------- -------- --------
Net asset value, end of period ......................... $ 11.450 $ 11.380 $ 10.780 $ 10.900 $ 9.530 $ 11.100
======== ========= ======== ======== ======== ========
Total Return(3) ........................................ 3.11% 11.40% 4.08% 20.54% (9.12%) 13.72%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $354,807 $ 367,488 $358,328 $357,993 $354,138 $399,218
Ratio of expenses to average net assets ............ 0.82% 0.81% 0.78% 0.76% 0.66% 0.75%
Ratio of expenses to average net assets prior to
expense limitation ............................... 0.94% 0.86% 0.91% 0.93% 0.72% 0.75%
Ratio of net investment income to average net assets 4.95% 5.25% 5.27% 5.18% 5.35% 4.97%
Ratio of net investment income to average net assets
prior to expense limitation ...................... 4.83% 5.20% 5.14% 5.01% 5.29% 4.97%
Portfolio turnover ................................. 43% 54% 40% 82% 69% 59%
</TABLE>
(1) Ratios have been annualized and the total returns have not been
annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 39
Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
TAX-FREE COLORADO FUND CLASS B
--------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 3/22/95(2)TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.380 $10.780 $10.900 $10.250
Income from investment operations:
Net investment income .................. 0.237 0.483 0.470 0.350
Net realized and unrealized gain (loss)
from investments ...................... 0.073 0.616 (0.130) 0.650
------- ------- ------- -------
Net change in net assets from
investment operations ................. 0.310 1.099 0.340 1.000
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ... (0.240) (0.499) (0.460) (0.350)
Distributions from net realized gain on
security transactions ................. -- -- -- --
------- ------- ------- -------
Total dividends and distributions ...... (0.240) (0.499) (0.460) (0.350)
------- ------- ------- -------
Net asset value, end of period .......... $11.450 $11.380 $10.780 $10.900
======= ======= ======= =======
Total Return(3) ......................... 2.73% 10.47% 3.25% 9.96%
Ratios and supplemental data:
Net assets, end of period (000 omitted). $ 9,569 $ 7,798 $ 4,172 $ 1,643
Ratio of expenses to average net assets. 1.57% 1.62% 1.58% 1.39%(4)
Ratio of expenses to average net assets.
prior to expense limitation ........... 1.69% 1.67% 1.65% 1.60%(4)
Ratio of net investment income to average
net assets ............................ 4.20% 4.44% 4.45% 3.96%(4)
Ratio of net investment income to average
net assets prior to expense limitation. 4.08% 4.39% 4.38% 3.75%(4)
Portfolio turnover ..................... 43% 54% 40% 82%
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
TAX-FREE COLORADO FUND CLASS C
--------------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 5/6/94(2)TO
(UNAUDITED)(1) 12/31/97(5)12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.380 $10.780 $10.900 $ 9.530 $10.210
Income from investment operations:
Net investment income .................. 0.238 0.484 0.460 0.450 0.290
Net realized and unrealized gain (loss)
from investments ...................... 0.082 0.615 (0.130) 1.370 (0.670)
------- ------- ------- ------- -------
Net change in net assets from
investment operations ................. 0.320 1.099 0.330 1.820 (0.380)
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ... (0.240) (0.499) (0.450) (0.450) (0.270)
Distributions from net realized gain on
security transactions ................. -- -- -- -- (0.030)
------- ------- ------- ------- -------
Total dividends and distributions ...... (0.240) (0.499) (0.450) (0.450) (0.300)
------- ------- ------- ------- -------
Net asset value, end of period .......... $11.460 $11.380 $10.780 $10.900 $ 9.530
======= ======= ======= ======= =======
Total Return(3) ......................... 2.82% 10.47% 3.17% 19.44% (3.75%)
Ratios and supplemental data:
Net assets, end of period (000 omitted). 1,920 $ 1,697 $ 1,522 $ 1,042 $ 465
Ratio of expenses to average net assets. 1.57% 1.64% 1.66% 1.66% 1.80%(4)
Ratio of expenses to average net assets.
prior to expense limitation ........... 1.69% 1.69% 1.66% 1.66% 1.81%(4)
Ratio of net investment income to average
net assets ............................ 4.20% 4.42% 4.40% 4.20% 4.23%(4)
Ratio of net investment income to average
net assets prior to expense limitation. 4.08% 4.37% 4.40% 4.20% 4.22%(4)
Portfolio turnover ..................... 43% 54% 40% 82% 69%
</TABLE>
- -------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
40 for tax-exempt income
Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
TAX-FREE NEW MEXICO FUND CLASS A
-------------------------------------------------------------------------------
SIX MONTHS YEAR TWO MONTHS YEAR
ENDED ENDED ENDED ENDED
6/30/98 12/31/97(5) 12/31/96 12/31/95 12/31/94 10/31/94
(UNAUDITED)(1)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $11.280 $10.790 $10.890 $ 9.590 $ 9.770 $10.920
Income from investment operations:
Net investment income ....................... 0.275 0.547 0.540 0.520 0.110 0.560
Net realized and unrealized gain
(loss) from investments .................... 0.109 0.503 (0.110) 1.330 (0.200) (1.160)
------- ------- ------- ------ ------- ------
Net change in net assets from
investment operations ...................... 0.384 1.050 0.430 1.850 (0.090) (0.600)
------- ------- ------- ------ ------- ------
Less dividends and distributions:
Dividends from net investment income ........ (0.274) (0.560) (0.530) (0.550) (0.090) (0.550)
Distributions from net realized gain on
security transactions ...................... -- -- -- -- -- --
------- ------- ------- ------ ------- -------
Total dividends and distributions ........... (0.274) (0.560) (0.530) (0.550) (0.090) (0.550)
------- ------- ------- ------ ------- -------
Net asset value, end of period .................. $11.390 $11.280 $10.790 10.890 $ 9.590 $ 9.770
======= ======= ======= ====== ======= =======
Total Return(3) ................................. 3.43% 10.01% 4.13% 19.64% (0.90%) (5.56%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..... $21,160 $18,959 $20,133 $21,402 $19,706 $23,096
Ratio of expenses to average net assets ..... 1.00% 0.99% 0.88% 0.87% 0.06%(4) 0.29%
Ratio of expenses to average net assets prior
to expense limitation ...................... 1.08% 1.04% 1.07% 1.09% 1.25%(4) 1.16%
Ratio of net investment income to average
net assets ................................. 4.83% 5.00% 5.06% 5.07% 6.38%(4) 5.26%
Ratio of net investment income to average
net assets prior to expense limitation ..... 4.75% 4.95% 4.87% 4.85% 5.19%(4) 4.39%
Portfolio turnover .......................... 22% 28% 42% 55% 2% 22%
</TABLE>
- -------------
(1) Ratios have been annualized and the total returns have not been
annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 41
Financial Highlights (Continued)
Selected data for each share of the Series outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>
TAX-FREE NEW MEXICO FUND CLASS B
------------------------------------------------------------------------------
SIX MONTHS TWO MONTHS PERIOD
ENDED YEAR ENDED ENDED FROM
6/30/98 12/31/97(5) 12/31/96 12/31/95 12/31/94 3/1/94(2)TO
(UNAUDITED)(1) 10/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $11.290 $10.790 $10.890 $ 9.590 $ 9.770 $10.690
Income from investment operations:
Net investment income ......................... 0.223 0.465 0.460 0.460 0.090 0.310
Net realized and unrealized gain (loss)
from investments ............................. 0.119 0.508 (0.110) 1.320 (0.190) (0.930)
------- ------- ------- ------- ------- -------
Net change in net assets from
investment operations ........................ 0.342 0.973 0.350 1.780 (0.100) (0.620)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .......... (0.232) (0.473) (0.450) (0.480) (0.080) (0.300)
Distributions from net realized gain on
security transactions ........................ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions ............. (0.232) (0.473) (0.450) (0.480) (0.080) (0.300)
------- ------- ------- ------- ------- -------
Net asset value, end of period ................. $11.400 $11.290 $10.790 $10.890 $ 9.590 $ 9.770
======= ======= ======= ======= ======= =======
Total Return(3) ................................ 3.04% 9.24% 3.39% 18.84% (0.98%) (5.84%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ....... $ 1,586 $ 1,065 $ 794 $ 605 $ 272 $ 264
Ratio of expenses to average net assets ....... 1.75% 1.76% 1.61% 1.53% 0.75%(4) 0.98%(4)
Ratio of expenses to average net assets prior
to expense limitation ........................ 1.83% 1.81% 1.82% 1.83% 2.00%(4) 1.86%(4)
Ratio of net investment income to average
net assets ................................... 4.08% 4.23% 4.31% 4.33% 5.60%(4) 4.57%(4)
Ratio of net investment income to average
net assets prior to expense limitation ....... 4.00% 4.18% 4.10% 4.03% 4.35%(4) 3.69%(4)
Portfolio turnover ............................ 22% 28% 42% 55% 2% 22%
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
TAX-FREEE NEW MEXICO FUND CLASS C
--------------------------------------
SIX MONTHS YEAR PERIOD
ENDED ENDED FROM
6/30/98 12/31/97(5) 5/7/96(2)TO
(UNAUDITED)(1) 12/31/96
<S> <C> <C> <C>
Net asset value, beginning of period ........... $11.280 $10.790 $10.410
Income from investment operations:
Net investment income ......................... 0.229 0.459 0.280
Net realized and unrealized gain (loss)
from investments ............................. 0.113 0.495 0.370
------- ------- -------
Net change in net assets from
investment operations ........................ 0.342 0.954 0.650
------- ------- -------
Less dividends and distributions:
Dividends from net investment income .......... (0.232) (0.464) (0.270)
Distributions from net realized gain on
security transactions ........................ -- -- --
------- ------- -------
Total dividends and distributions ............. (0.232) (0.464) (0.270)
------- ------- -------
Net asset value, end of period ................. $11.390 $11.280 $10.790
======= ======= =======
Total Return(3) ................................ 3.04% 9.06% 6.30%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ....... $ 359 $ 315 $ 341
Ratio of expenses to average net assets ....... 1.75% 1.84% 1.74%(4)
Ratio of expenses to average net assets prior
to expense limitation ........................ 1.83% 1.89% 1.83%(4)
Ratio of net investment income to average
net assets ................................... 4.08% 4.15% 4.21%(4)
Ratio of net investment income to average
net assets prior to expense limitation ....... 4.00% 4.10% 4.12%(4)
Portfolio turnover ............................ 22% 28% 42%
</TABLE>
- ------------
(1) Ratios have been annualized and the total returns have not been
annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
42 for tax-exempt income
Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>
TAX-FREE UTAH FUND CLASS A
------------------------------------------------------------------------------------
SIX MONTHS TWO
ENDED MONTHS YEAR
6/30/98 YEAR ENDED ENDED ENDED
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94 10/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $11.330 $10.840 $11.040 $ 9.800 $ 9.940 $11.070
Income from investment operations:
Net investment income ................ 0.280 0.565 0.550 0.590 0.100 0.600
Net realized and unrealized gain
(loss) from investments ............. 0.040 0.495 (0.200) 1.240 (0.150) (1.070)
------- ------- ------- ------- ------- -------
Net change in net assets from
investment operations ............... 0.320 1.060 0.350 1.830 (0.050) (0.470)
------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income ................... (0.280) (0.570) (0.550) (0.590) (0.090) (0.600)
Distributions from net realized gain
on security transactions ............ -- -- -- -- -- (0.060)
------- ------- ------- ------- ------- -------
Total dividends and distributions .... (0.280) (0.570) (0.550) (0.590) (0.090) (0.660)
------- ------- ------- ------- ------- -------
Net asset value, end of period......... $11.370 $11.330 $10.840 $11.040 $ 9.800 $ 9.940
======= ======= ======= ======= ======= =======
Total Return(3) ....................... 2.82% 10.08% 3.35% 19.06% (0.41%) (4.50%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ....................... $ 2,854 $ 3,223 $ 3,861 $ 4,142 $ 3,728 $ 4,054
Ratio of expenses to average
net assets .......................... 0.73% 0.69% 0.68% 0.38% 0.11%(4) 0.10%
Ratio of expenses to average
net assets prior to expense
limitation .......................... 1.16% 3.12% 1.25% 1.25% 1.14%(4) 1.25%
Ratio of net investment income to
average net assets .................. 4.92% 5.10% 5.14% 5.51% 6.38%(4) 5.64%
Ratio of net investment income to
average net assets prior to expense
limitation .......................... 4.49% 2.67% 4.57% 4.64% 5.35%(4) 4.49%
Portfolio turnover ................... 51% 39% 39% 35% 0% 3%
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
TAX-FREE UTAH FUND CLASS B
--------------------------------------------------
SIX MONTHS PERIOD
ENDED FROM
6/30/98 YEAR ENDED 5/27/95(2)TO
(UNAUDITED)(1) 12/31/97(5) 12/31/96 12/31/95
<S> <C> <C> <C> <C>
Net asset value, beginning of period... $11.330 $10.830 $11.040 $10.630
Income from investment operations:
Net investment income ................ 0.235 0.464 0.470 0.300
Net realized and unrealized gain
(loss) from investments ............. 0.040 0.515 (0.210) 0.390
------- ------- ------- -------
Net change in net assets from
investment operations ............... 0.275 0.979 0.260 0.690
------- ------- ------- -------
Less dividends and distributions:
Dividends from net
investment income ................... (0.235) (0.479) (0.470) (0.280)
Distributions from net realized gain
on security transactions ............ -- -- -- --
------- ------- ------- -------
Total dividends and distributions .... (0.235) (0.479) (0.470) (0.280)
------- ------- ------- -------
Net asset value, end of period......... $11.370 $11.330 $10.830 $11.040
======= ======= ======= =======
Total Return(3) ....................... 2.45% 9.28% 2.47% 6.60%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ....................... $ 601 $ 558 $ 397 $ 363
Ratio of expenses to average
net assets .......................... 1.48% 1.50% 1.46% 0.92%(4)
Ratio of expenses to average
net assets prior to expense
limitation .......................... 1.91% 3.93% 2.00% 2.00%(4)
Ratio of net investment income to
average net assets .................. 4.18% 4.29% 4.34% 4.74%(4)
Ratio of net investment income to
average net assets prior to expense
limitation .......................... 3.75% 1.86% 1.86% 3.66%(4)
Portfolio turnover ................... 51% 39% 39% 35%
</TABLE>
(1) Ratios have been annualized and the total returns have not been
annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
for tax-exempt income 43
Notes to Financial Statements
June 30, 1998 (Unaudited)
Delaware-Voyageur Tax-Free Arizona Fund (formerly Voyageur Arizona Tax Free
Fund) ("Tax-Free Arizona Fund"), a series of the Voyageur Tax Free Funds,
Inc., Delaware-Voyageur Tax-Free Arizona Insured Fund (formerly Arizona
Insured Tax-Free Fund)("Tax-Free Arizona Insured Fund"), a series of the
Voyageur Insured Funds, Inc. Delaware-Voyageur Tax-Free California Fund
(formerly Voyageur California Tax Free Fund)("Tax-Free California Fund"), a
series of the Voyageur Mutual Funds, Inc., and Delaware-Voyageur Tax-Free
Colorado Fund (formerly Voyageur Colorado Tax Free Fund)("Tax-Free Colorado
Fund"), a series of the Voyageur Mutual Funds II, Inc., are registered under
the Investment Company Act of 1940 (as amended) as open-end management
investment companies. Tax-Free Arizona Insured Fund, and Tax-Free Colorado
Fund are registered as diversified. Tax-Free Arizona Fund and Tax-Free
California Fund are registered as non-diversified. Delaware-Voyageur Tax-Free
California Insured Fund (formerly California Insured Tax Free Fund)("Tax-Free
California Insured Fund"), Delaware-Voyageur Tax-Free New Mexico Fund
(formerly Voyageur New Mexico Tax Free)("Tax-Free New Mexico Fund"), and
Delaware-Voyageur Tax-Free Utah Fund (formerly Voyageur Utah Tax Free
Fund)("Tax-Free Utah Fund"), series of the Voyageur Investment Trust, are
Massachusetts business trusts registered under the Investment Company Act of
1940 (as amended) as open-end management investment companies. Tax-Free New
Mexico Fund and Tax-Free Utah Fund are registered as diversified. Tax-Free
California Insured Fund is registered as non-diversified.
Tax-Free Arizona Fund, Tax-Free Arizona Insured Fund, Tax-Free California
Fund, Tax-Free California Insured Fund, Tax-Free Colorado Fund, Tax-Free New
Mexico Fund and Tax-Free Utah Fund, referred to separately as "Fund" or
collectively as "Funds" seek high current income free from both federal and
state income taxes by investing in investment grade municipal bonds. The Funds
each offer 3 classes of shares. The A class carries a front-end sales charge
of 3.75%. The B class carries a back-end deferred sales charge. The C class
carries a level load deferred sales charge.
1. Fund Reorganization
On April 30, 1997, Lincoln National Corporation ("LNC") acquired Voyageur Fund
Manager Inc.'s ("Voyageur") parent, Dougherty Financial Group, Inc. ("DFG")
pursuant to an agreement and plan of merger dated January 15, 1997, in which
LNC would acquire DFG including the mutual fund investment advisory business
of DFG conducted by Voyageur. Upon completion of the acquisition, Delaware
Management Company, Inc. ("DMC") became the investment adviser to the Funds,
Delaware Distributors, L.P. ("DDLP") became the distributor for the Funds,
Delaware Service Company, Inc. ("DSC") became the transfer,
dividend-disbursing, shareholder servicing and accounting service and
administration agent for the Funds.
2. 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 Fund's
Board of Directors.
<PAGE>
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.
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.
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 accreted 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.
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.
3. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays DMC the Investment Manager of each Fund, an annual fee, which is
calculated daily on the average daily net assets of each Fund.
DMC has elected to waive their fees and reimburse each Fund to the extent that
annual operating expenses exclusive of distribution expenses, taxes, interest,
brokerage commissions and extraordinary expenses, do not exceed the following
percentages of average daily net assets through December 31, 1998.
The management fee rates, waiver rates and total expenses absorbed by DMC for
the six months ended June 30, 1998 are as follows:
MANAGEMENT OPERATING EXPENSE
FEE AS A LIMITATION AS A
PERCENTAGE OF PERCENTAGE OF
AVERAGE DAILY AVERAGE DAILY EXPENSES
NET ASSETS NET ASSETS ABSORBED
(PER ANNUM) (PER ANNUM) BY DMC
----------- ----------- ------
Tax-Free Arizona Fund .......... 0.50% 0.25% $ 42,164
Tax-Free Arizona Insured Fund .. 0.50% 0.66% $ 84,110
Tax-Free California Fund ....... 0.50% 0.00% $ 56,601
Tax-Free California Insured Fund 0.50% 0.75% $ 1,086
Tax-Free Colorado Fund ......... 0.50% 0.62% $225,825
Tax-Free New Mexico Fund ....... 0.50% 0.75% $ 18,266
Tax-Free Utah Fund ............. 0.50% 0.60% $ 7,889
<PAGE>
44 for tax-exempt income
Notes to Financial Statements (Continued)
The Funds have engaged DSC, an affiliate of DMC, to serve as dividend
disbursing, transfer agent and accounting and administration agent for each
the Fund. For the six months ended June 30, 1998, the amounts expensed for each
Fund were as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE
TAX-FREE ARIZONA TAX-FREE CALIFORNIA TAX-FREE NEW TAX-FREE
ARIZONA INSURED CALIFORNIA INSURED COLORADO MEXICO UTAH
FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend disbursing, Transfer agent
fees and other expenses............. $2,486 $44,940 $6,147 $ 6,446 $144,114 $10,599 $1,536
Accounting and administration fees... 3,770 55,860 2,912 10,128 93,195 5,267 1,019
</TABLE>
On June 30, 1998, the Funds had payable to affiliates as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE
TAX-FREE ARIZONA TAX-FREE CALIFORNIA TAX-FREE NEW TAX-FREE
ARIZONA INSURED CALIFORNIA INSURED COLORADO MEXICO UTAH
FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment Management fee payable to DMC ... -- $173,246 -- $ 27,311 $333,206 $ 15,627 --
Dividend disbursing, transfer agent fees,
accounting fees and other expenses
payable to DSC ............................ $ 2,848 $ 19,212 $ 2,543 $ 3,673 $ 39,877 $ 2,687 $ 656
Other expenses payable to DMC and affiliates $ 6,669 $ 50,646 $ 7,645 $ 11,447 $101,326 $ 3,036 $ 1,591
</TABLE>
Pursuant to the Distribution Agreement, the Funds pay DDLP, the Distributor
and an affiliate of DMC, an annual fee not to exceed 0.25% of the average
daily net assets of the A Class and 1.00% of the average daily net assets of
the B and C Class for each Series.
For the six months ended June 30, 1998, DDLP earned commissions on sales of
the Fund A Class shares for each Fund as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE
TAX-FREE ARIZONA TAX-FREE CALIFORNIA TAX-FREE NEW TAX-FREE
ARIZONA INSURED CALIFORNIA INSURED COLORADO MEXICO UTAH
FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$3,944 $15,365 $1,996 $2,622 $37,300 $7,677 $517
</TABLE>
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation
by the Fund.
<PAGE>
4. Investments
During the six months ended June 30, 1998, the Fund made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments for each Fund as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE
TAX-FREE ARIZONA TAX-FREE CALIFORNIA TAX-FREE NEW TAX-FREE
ARIZONA INSURED CALIFORNIA INSURED COLORADO MEXICO UTAH
FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases.............................. 9,704,498 18,693,383 9,693,669 6,600,806 77,559,566 4,539,580 930,299
Sales.................................. 8,907,930 25,888,946 4,078,709 8,231,419 79,893,362 2,331,335 1,288,681
</TABLE>
At June 30, 1998, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for each Fund were as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE
TAX-FREE ARIZONA TAX-FREE CALIFORNIA TAX-FREE NEW TAX-FREE
ARIZONA INSURED CALIFORNIA INSURED COLORADO MEXICO UTAH
FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Cost of Investments.................... $15,430,256 $170,360,795 $14,113,076 $29,265,028 $337,348,818 $21,075,956 $3,205,882
Aggregate unrealized appreciation...... 685,203 13,471,169 463,426 2,543,820 27,156,207 1,684,758 221,147
Aggregate unrealized depreciation...... 4,771 28,358 18,933 - 75,484 14,123 -
Net unrealized appreciation............ 680,432 13,442,811 444,493 2,543,820 27,080,723 1,670,635 221,147
</TABLE>
For federal income tax purposes, as of December 31, 1997, Tax-Free Arizona
Insured Fund had a capital loss carryover of $5,819,078 that will expire in
2003 through 2004, Tax-Free California Insured Fund had a capital loss
carryover of $582,786 that will expire in 2003 through 2004, Tax-Free Colorado
Fund had a capital loss carryover of $9,191,756 that will expire in 2003
through 2004, Tax-Free New Mexico Fund had a capital loss carryover of
$891,021 that will expire in 2001 through 2004, and Tax-Free Utah Fund had a
capital loss carryover of $94,313 that will expire in 2001 through 2004.
<PAGE>
for tax-exempt income 45
Notes to Financial Statements (Continued)
5. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA FUND ARIZONA INSURED FUND CALIFORNIA FUND CALIFORNIA INSURED FUND
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED
(UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97
Shares sold:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A Class........................ 142,471 158,751 335,866 778,637 111,002 325,158 78,397 135,140
B Class........................ 73,131 130,063 101,651 146,974 236,344 443,601 32,807 62,442
C Class........................ 24,084 27,479 8,805 23,129 55,167 8,190 572 37,910
</TABLE>
Shares issued upon reinvestment of dividends from net investment income and
net realized gains from security transactions:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A Class........................ 12,343 29,507 155,741 369,681 7,483 7,845 22,701 56,507
B Class........................ 3,581 8,686 3,751 7,217 3,933 3,798 4,054 10,856
C Class........................ 196 159 704 1,342 304 611 176 355
------- ------- ------- --------- -------- ------- ------- -------
255,806 354,645 606,518 1,326,980 414,233 789,203 138,707 303,210
------- ------- ------- --------- -------- ------- ------- -------
Shares repurchased:
A Class........................ (113,557) (120,327) (1,130,416) (3,811,075) (36,667) (52,777) (261,926) (650,095)
B Class........................ (22,558) (132,059) (38,616) (116,629) (14,751) (7,430) (48,891) (109,515)
C Class........................ (33) - (2,495) (15,711) - (7,965) (2,770) -
------- ------- ------- --------- -------- ------- ------- -------
(136,148) (252,386) (1,171,527) (3,943,415) (51,418) (68,172) (313,587) (759,610)
------- ------- ------- --------- ------- ------- ------- -------
Net Increase (Decrease) 119,658 102,259 (565,009) (2,616,435) 362,815 721,031 (174,880) (456,400)
======= ======= ======= ========= ======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE
COLORADO FUND NEW MEXICO FUND UTAH FUND
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED ENDED 6/30/98 ENDED
(UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97
Shares sold:
<S> <C> <C> <C> <C> <C> <C>
A Class............. 1,372,993 2,280,831 233,473 104,678 9,174 18,541
B Class............. 149,825 326,460 43,437 28,562 2,834 12,225
C Class............. 36,877 50,877 3,082 8,900 - -
</TABLE>
Shares issued upon reinvestment of dividends from net investment income and
net realized gains from security transactions:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
A Class................. 491,243 1,164,027 23,011 49,974 2,106 5,592
B Class................. 11,993 20,340 1,329 2,060 786 1,701
C Class................. 2,939 6,297 549 1,159 - -
--------- --------- ------- ------- ------ ------
2,065,870 3,848,832 304,881 195,333 14,900 38,059
--------- --------- ------- ------- ------ ------
Shares repurchased:
A Class................. (2,352,637) (5,214,040) (79,019) (339,101) (44,704) (95,952)
B Class................. (11,757) (48,522) (1) (9,814) - (1,374)
C Class................. (21,419) (49,216) 0 (13,780) - -
--------- --------- ------- ------- ------ ------
(2,385,813) (5,311,778) (79,020) (362,695) (44,704) (97,326)
--------- --------- ------- ------- ------ ------
Net Increase (Decrease).. (319,943) (1,462,946) 225,861 (167,362) (29,804) (59,267)
========= ========= ======= ======= ====== ======
</TABLE>
6. Credit and Market Risk
The Funds Concentrated their investments in securities mainly issued by each
specific states' municipalities. The value of these investments may be
adversely affected by new legislation within the state, regional or local
economic conditions, and differing levels of supply and demand for municipal
bonds. Many municipalities insure repayment for their obligations. Although
bond insurance reduces the risk of loss due to default by an issuer, such
bonds remain subject to the risk that market value may fluctuate for other
reasons and there is no assurance that the insurance company will meet its
obligations. These securities have been identified in the Statement of Net
Assets.
<PAGE>
This Semi-annual report is for the information of Tax-Free Arizona Funds,
Tax-Free California Funds, Tax-Free Colorado Fund, Tax-Free New Mexico Fund
and Tax-Free Utah Fund shareholders, but it may be used with prospective
investors when preceded or accompanied by a current Prospectus for any of
these Funds, which sets forth details about charges, expenses, investment
objectives and operating policies of each Fund. You should read the prospectus
carefully before you invest. Summary investment results are documented in each
Fund's current Statement of Additional Information. The figures in this report
represent past performance which are not a guarantee of future results. The
return and principal value of an investment in the Funds will fluctuate so
that shares, when redeemed, may be worth more or less than their original
cost.
Investment Manager
Delaware Management Company
Philadelphia
National Distributor
Delaware Distributors, L.P.
Philadelphia
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
(PHOTO OF GLOBES)
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawarefunds.com
Be sure to consult your financial adviser when making investments. Mutual
funds can be a valuable part of your financial plan; however, shares of the
Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank or any
credit union, and involve investment risk, including the possible loss of the
principal amount invested. Shares of the Fund are not bank or credit union
deposits.
(c) Delaware Distributors, L.P.
Printed in the USA
on recycled paper
(956)
SA-ACCNU[6/98]PP8/98
