<PAGE>
FOR TAX-EXEMPT INCOME
Delaware Tax-Free Arizona Funds
Delaware Tax-Free California Funds
Delaware Tax-Free Colorado Fund
Delaware Tax-Free New Mexico Fund
service and guidance
professional management
1999
Annual Report
goals
Delaware Tax-Free Arizona Fund
Delaware Tax-Free Arizona Insured Fund
Delaware Tax-Free California Fund
Delaware Tax-Free California Insured Fund
Delaware Tax-Free Colorado Fund
Delaware Tax-Free New Mexico Fund
DELAWARE (SM)
INVESTMENTS
- -------------
Philadelphia o London
<PAGE>
A TRADITION OF SOUND INVESTING
commitment
A Commitment
To Our Investors
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 nation's 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 annuities and closed-end funds as well as offer a wide
range of retirement plan services for individuals and businesses.
Delaware Investments manages approximately $47 billion in mutual fund assets
and institutional advisory accounts for more than half-a-million investors.
Complete information on any fund offered by Delaware Investments can be found in
each fund's current prospectus. Prospectuses for all funds offered by Delaware
Investments are available from your financial adviser. Please read the
prospectus carefully before you invest or send money.
Investment Objectives
Each Tax-Free Fund and each Insured Fund seeks as high a level of current income
exempt from federal income tax and from the personal income tax, if any, of a
Fund's particular state, as is consistent with preservation of capital.
Table of Contents
LETTER TO SHAREHOLDERS Page 1
PORTFOLIO MANAGER'S REVIEW Page 3
DELAWARE TAX-FREE ARIZONA FUNDS Page 5
DELAWARE TAX-FREE CALIFORNIA FUNDS Page 7
DELAWARE TAX-FREE COLORADO FUND Page 9
DELAWARE TAX-FREE NEW MEXICO FUND Page 10
PERFORMANCE SUMMARY Page 11
STATEMENTS OF NET ASSETS Page 17
FINANCIAL HIGHLIGHTS Page 32
tax-exempt
income
tradition
<PAGE>
THIS ANNUAL REPORT IS FOR THE INFORMATION OF DELAWARE TAX-FREE Arizona Fund,
Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free California Fund,
Delaware Tax-Free California Insured Fund, Delaware Tax-Free Colorado Fund and
Delaware Tax-Free New Mexico Fund shareholders, but it may be used with
prospective investors when preceded or accompanied by a current Prospectus,
which sets forth details about charges, expenses, investment objectives and
operating policies of each Fund. You should read the prospectus carefully before
you invest. The figures in this report represent past results which are not a
guarantee of future results. The return and principal value of an investment in
each Fund will fluctuate so that shares, when redeemed, may be worth more or
less than their original cost.
Board of Trustees
WAYNE A. STORK
Chairman
Delaware Investments Family of Funds
Philadelphia, PA
WALTER P. BABICH
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
DAVID K. DOWNES
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA
JOHN H. DURHAM
Partner, Complete Care Services
Horsham, PA
ANTHONY D. KNERR
Consultant, Anthony Knerr & Associates
New York, NY
ANN R. LEVEN
Treasurer, National Gallery of Art
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
CHARLES E. PECK
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
<PAGE>
JAN L. YEOMANS
Vice President and Treasurer
3M Corporation
St. Paul, Minnesota
Affiliated Officers
RICHARD J. FLANNERY
Executive Vice President and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
BRUCE D. BARTON
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
ERIC E. MILLER
Senior Vice President, Secretary
and Deputy General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
directors
& officers
INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
<PAGE>
September 7, 1999
for tax-exempt
income
1
Dear Shareholder:
IT'S BEEN A DIFFICULT YEAR FOR MUNICIPAL bond investors as the financial
landscape has changed several times. Conditions varied from worldwide economic
uncertainty to record-high stock market levels, leaving municipal bonds
struggling to stay in the ballgame.
At the opening of our fiscal year, nations from around the globe faced
financial difficulties threatening the stability of the global economy.
Investors all over the world flocked toward the safety of U.S.
Treasuries--considered by many to be the world's safest investment. As demand
for Treasury securities increased, so did their prices, driving yields down.
As the flight toward quality ensued, municipal bond prices remained
relatively stable, a positive situation considering that many other fixed income
alternatives suffered substantial declines. Still, the combination of decreased
demand for municipal bonds and record high levels of supply caused municipal
bonds to sell at very attractive values relative to Treasuries. These values
drew non-traditional municipal bond investors toward the attractive yields
municipal bonds offered compared to Treasuries.
These investors included those who are not eligible for the tax advantages
that municipal bonds offer--that is, non-U.S. residents, life insurance
companies or pension plans. Demand from these new players helped municipal bond
prices remain stable amid global turbulence.
Stability returned to equity markets in late autumn after the Federal
Reserve Board
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------
AS OF AUGUST 31, 1999
One Year 3 Years
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Delaware Tax-Free Arizona Fund Class A -1.09% +5.92%
Delaware Tax-Free Arizona Insured Fund Class A -0.36% +5.34%
Lipper Arizona Municipal Debt Fund Average (38 Funds) -0.96% +5.14%
- ------------------------------------------------------------------------------------------
Delaware Tax-Free California Fund Class A -1.53% +6.74%
Lipper California Municipal Debt Fund Average (106 Funds) -1.49% +5.52%
- ------------------------------------------------------------------------------------------
Delaware Tax-Free California Insured Fund Class A -1.97% +5.45%
Lipper California Insured Municipal Debt Fund Average (23 Funds) -1.45% +5.10%
- ------------------------------------------------------------------------------------------
Delaware Tax-Free Colorado Fund Class A -1.69% +5.88%
Lipper Colorado Municipal Debt Fund Average (27 Funds) -1.18% +5.14%
- ------------------------------------------------------------------------------------------
Delaware Tax-Free New Mexico Fund Class A -1.17% +5.74%
Lipper Other States Municipal Debt Fund Average (77 Funds) -0.92% +4.93%
- ------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +0.50% +6.05%
Lehman Brothers Insured Municipal Bond Index -0.29% +6.01%
- ------------------------------------------------------------------------------------------
</TABLE>
The results shown above are based on net asset value and assume reinvestment of
distributions. For complete performance for all classes, see pages 11 to 16. The
Lipper categories represent the average returns of municipal bond funds with
similar investment objectives.The Lehman Brothers Municipal Bond Index and
Lehman Brothers Insured Municipal Bond Index are unmanaged and include no
management fees or expenses. You cannot invest directly in any index.
Performance of other fund classes vary due to different fees and expenses. Past
performance does not guarantee future results.
<PAGE>
for tax-exempt
income
2
lowered the federal funds rate three times. Investors ventured back into other
types of investments including stocks and, to a small degree, municipal bonds.
Municipal bonds outperformed Treasuries until the spring of 1999 (Source:
Bloomberg Business News).
The yield difference between municipal bonds and Treasuries moved more in
line with historical levels during the early spring, reducing municipal bonds
attractiveness to non-traditional investors. As a result, many moved their
assets to higher yielding investment vehicles, reducing municipal demand and
pushing prices lower. As a result of lower demand and fears of increasing
inflation, municipal yields rose proportionally with Treasuries throughout much
of spring and early summer.
To curb potential inflation, the Federal Reserve Board raised the federal
funds rate (the rate banks charge each other for overnight lending) on June 30,
and then again on August 24.
Investors seemed reassured when fears of inflation were calmed after the
second rate increase. Municipal bond prices began to rise.
The municipal bond market was thrown a few curve balls over the past few
months but now looks as if it may be ready to step back up to the plate. Bond
yields have been on the rise, particularly in the last few days of the fiscal
period. 30-year AAA general obligation municipal bond yields have increased from
4.86% on August 31, 1998 to 5.52% on August 31, 1999 (Source: Municipal Market
Data). As a result, retail investors have recently returned to the market,
showing a renewed interest in the municipal bond arena.
On the following pages, Andrew M. McCullagh Jr., Senior Portfolio Manager
for Delaware Investments tax-free funds for southwestern states, discusses in
further detail the performance of each Fund over the past year. We strongly urge
you to review his commentary.
We see the coming year as a time to be cautiously optimistic. Investors
appear much more interested in municipal bonds recently, which could contribute
to attractive municipal bond performance as we move into fiscal 2000. As you and
your financial adviser work together to review your investment portfolio,
remember that municipal bonds can provide solid opportunities for tax-advantaged
investing. State and locally issued bonds can provide an attractive level of
current income that is exempt from both federal and state income taxes for
residents of states where the bonds are issued.
Thank you for your continued confidence in Delaware Investments. We look
forward to reporting to you again this winter.
Sincerely,
/s/ WAYNE A. STORK
- --------------------------------------
WAYNE A. STORK
Chairman,
Delaware Investments Family of Funds
/s/ DAVID K. DOWNES
- --------------------------------------
DAVID K. DOWNES
President and Chief Executive Officer,
Delaware Investments Family of Funds
discipline
INVESTORS APPEAR
MUCH MORE
INTERESTED IN
MUNICIPAL BONDS
RECENTLY, WHICH
COULD CONTRIBUTE
TO ATTRACTIVE
MUNICIPAL BOND
PERFORMANCE AS
WE MOVE INTO
FISCAL 2000.
<PAGE>
for tax-exempt
income
3
Portfolio Manager's Review
BY ANDREW M. MCCULLAGH JR.
Vice President / Senior Portfolio Manager
September 7, 1999
FLUCTUATING INTEREST RATES OVER THE past year have increased volatility in the
bond markets. In the fall of 1998, responding to strains on the global economy,
the Federal Reserve Board lowered short-term interest rates three times. This
led to strong performance in the municipal bond arena over the winter.
As winter came to an end, however, economic indicators hinted at
inflationary conditions on the horizon. Municipal bond yields rose and prices
fell as investors sought to preserve capital through very safe investments, like
U.S. Treasuries. In an attempt to thwart inflation, the Fed raised the federal
funds rate for the first time on June 30 and then once more on August 24. This
sequence of interest rate hikes pushed bond yields even higher, hampering
short-term bond fund performance, particularly for funds with longer durations,
like Delaware Tax-Free Arizona Fund and Delaware Tax-Free California Fund.
Duration is a common measure of a bond or bond fund's sensitivity to interest
rates. The longer the duration, the more the bond's price will change for a
given increase or decrease in interest rates.
In our opinion, municipal bonds have not performed as well as anticipated
over the past year for a number of reasons.
o Municipal Bond Supply--Although municipal bond supply has dropped dramatically
so far in 1999, there remains a bond surplus in the market. In 1998, $285
billion worth of municipal bonds were issued in the nation--the second largest
annual volume in the market's history (Source: The Bond Buyer).
o The Popularity of Equities--Continuing economic expansion over the past nine
years has led to attractive stock market returns. Many investors have sought
these riskier investments, sometimes at the risk of not maintaining a
well-diversified portfolio.
The bond market staged a comeback late in our fiscal period, although not early
market
overview
<PAGE>
for tax-exempt
income
4
enough to have a significant impact on our fiscal period performance. We expect
the coming months to provide a more stable interest rate environment, one that
favors our current positioning.
As always, we strive to seek a high level of current income free of federal
and state income taxes for residents of the state where the bond is issued. We
utilize the following strategies for each Fund:
o A bottom-up research-intensive strategy--We start by evaluating specific bonds
rather than focusing on bond sectors and
o A value-oriented focus--We strive to select specific bonds that we believe are
selling below fair market value and that we anticipate will increase in credit
quality.
MUNICIPALS REMAIN AN ATTRACTIVE VALUE
For most of the year, state and locally issued municipal bonds offered extremely
attractive income compared to Treasuries. This means that municipal bond
investors were able to earn almost the same income as Treasury investors--with
the added benefit of federal income tax exemption. Unlike Treasury securities,
the interest and principal payments on municipal bonds are not guaranteed by the
federal government.
During the first half of fiscal 1999, global economic uncertainty and foreign
credit problems caused investors to flock to the safety and liquidity of U.S.
Treasuries. As a result, Treasury prices rose, pushing bond yields to record
lows. Municipal bond yields fell, too, but not to the extent that Treasuries
did.
<PAGE>
MUNICIPAL BONDS OFFER GOOD VALUE COMPARED TO TREASURIES
Income potential after taxes, August 31, 1999
Aug. '89 0.85 Sep. '94 0.81
Sep. '89 0.87 Oct. '94 0.82
Oct. '89 0.90 Nov. '94 0.84
Nov. '89 0.87 Dec. '94 0.84
Dec. '89 0.86 Jan. '95 0.81
Jan. '90 0.83 Feb. '95 0.80
Feb. '90 0.82 Mar. '95 0.80
Mar. '90 0.83 Apr. '95 0.82
Apr. '90 0.82 May '95 0.85
May '90 0.82 Jun. '95 0.89
Jun. '90 0.85 Jul. '95 0.86
Jul. '90 0.83 Aug. '95 0.88
Aug. '90 0.81 Sep. '95 0.90
Sep. '90 0.81 Oct. '95 0.88
Oct. '90 0.81 Nov. '95 0.87
Nov. '90 0.82 Dec. '95 0.88
Dec. '90 0.85 Jan. '96 0.87
Jan. '91 0.84 Feb. '96 0.84
Feb. '91 0.84 Mar. '96 0.86
Mar. '91 0.84 Apr. '96 0.84
Apr. '91 0.83 May '96 0.84
May '91 0.82 Jun. '96 0.83
Jun. '91 0.83 Jul. '96 0.82
Jul. '91 0.82 Aug. '96 0.81
Aug. '91 0.83 Sep. '96 0.80
Sep. '91 0.85 Oct. '96 0.83
Oct. '91 0.83 Nov. '96 0.84
Nov. '91 0.83 Dec. '96 0.82
Dec. '91 0.87 Jan. '97 0.82
Jan. '92 0.84 Feb. '97 0.81
Feb. '92 0.83 Mar. '97 0.81
Mar. '92 0.83 Apr. '97 0.81
Apr. '92 0.81 May '97 0.80
May '92 0.82 Jun. '97 0.80
Jun. '92 0.80 Jul. '97 0.82
Jul. '92 0.79 Aug. '97 0.81
Aug. '92 0.82 Sep. '97 0.82
Sep. '92 0.84 Oct. '97 0.85
Oct. '92 0.85 Nov. '97 0.86
Nov. '92 0.82 Dec. '97 0.85
Dec. '92 0.83 Jan. '98 0.86
Jan. '93 0.83 Feb. '98 0.86
Feb. '93 0.80 Mar. '98 0.87
Mar. '93 0.84 Apr. '98 0.87
Apr. '93 0.82 May '98 0.87
May '93 0.82 Jun. '98 0.90
Jun. '93 0.82 Jul. '98 0.89
Jul. '93 0.84 Aug. '98 0.94
Aug. '93 0.87 Sep. '98 0.97
Sep. '93 0.86 Oct. '98 0.96
Oct. '93 0.87 Nov. '98 0.96
Nov. '93 0.86 Dec. '98 0.97
Dec. '93 0.82 Jan. '99 0.95
Jan. '94 0.83 Feb. '99 0.89
Feb. '94 0.84 Mar. '99 0.88
Mar. '94 0.87 Apr. '99 0.87
Apr. '94 0.84 May '99 0.86
May '94 0.81 Jun. '99 0.87
Jun. '94 0.83 Jul. '99 0.86
Jul. '94 0.82 Aug. '99 0.89
Aug. '94 0.82
Municipal bonds
typically offer
about 84% of the
income that is
offered by
comparable
Treasury securities
(Source: Municipal
Market Data).
The above chart shows the percentage of income that the average 30-year
AAA-rated general obligation bond provided compared to a 30-year U.S. Treasury
bond. At the end of our fiscal period a 30-year AAA rated Municipal bond
provided 89% of the income available on a comparable maturity treasury. Unlike
Treasuries, the U.S. government does not guarantee principal and interest of
municipal bonds. Municipal bonds have historically had annual default rates of
less than 2%. Source: Municipal Market Data
<PAGE>
for tax-exempt
income
5
We were able to take advantage of unique buying opportunities during this
time as the gap between yields on municipal bonds and yields on taxable
fixed-income securities narrowed significantly. Traditionally, municipal bonds
have yielded about 84% of the income available from 30-year U.S. Treasuries. In
October 1998, municipal bond yields peaked at 98% of Treasury yields.
As of August 31, 1999 municipal bonds offered 89% of the income of government
issued bonds (as shown on page 4).
Because municipal bonds were selling at a considerable discount to Treasuries
throughout much of the year, we were able to purchase new securities at what we
considered very attractive prices, enabling us to reposition the Funds'
portfolios for the remainder of calendar 1999. We chose to focus on municipal
bonds with the following features:
o Longer duration--We expect that over the next few months interest rates will
either remain stable or increase only slightly. Although bonds with longer
durations can be more volatile in the short term, they have the potential to
provide attractive returns over the long haul.
o Call protection--This provision ensures that the issuer of the bond cannot
redeem the bond until a specified time. This means a bond purchaser, like us,
can collect the specified bond yield until we choose to sell the bond or the
stated call date occurs.
On the pages that follow we will take a closer look at the Funds in the
context of their individual state.
DELAWARE TAX-FREE
ARIZONA FUNDS
The Arizona state economy continued to grow throughout the past year. Arizona is
projected to remain the second fastest-growing state in the nation through 2003.
The state boasts a diverse and expanding economy with rapid population and
employment growth, a strong credit rating and moderately low debt (Source:
Standard & Poor's).
Unemployment was at a scant 3.9% at the end of 1998 well below the national
average (Source: Arizona's Economy--Eller Graduate School of Management). Job
growth is at the highest rate in the nation, increasing by 4.7% in 1998. This
economic expansion--along with an increased need for schools, roads and housing
(Source: Standard & Poor's)--sets an attractive stage for Arizona municipal bond
investors as we move into the latter part of calendar 1999.
The performance of Arizona's bond market, in tandem with other municipal
tax-free
arizona
<PAGE>
for tax-exempt
income
6
bond markets across the nation, did not keep pace with the state's economic
growth.
Municipal bond performance in general suffered over the second half of the
Funds' fiscal year as the threat of inflation loomed on the horizon.
In early winter, as interest rates were stabilizing, we substantially
lengthened Delaware Tax-Free Arizona Fund's duration. Duration is a common
measure of a bond or bond fund's sensitivity to interest rates. The longer the
duration, the more the bond's price will change for a given increase or decrease
in interest rates. Our goal was to increase the Fund's income potential to the
greatest extent possible, as is consistent with the preservation of capital.
As we reported in March, this strategy was successful for most of the winter
when interest rates remained stable. Fears of inflation late this winter,
coupled with rising interest rates this past summer, created turbulence for
municipal bonds, particularly for funds like Delaware Tax-Free Arizona Fund that
were long in duration. Delaware Tax-Free Arizona Fund's average duration was
10.3 years as of August 31, 1999.
Currently, the average duration of the funds in the Arizona Municipal Debt
Funds category is shorter than the duration of Tax-Free Arizona Fund. Because of
this, when interest rates went up, our bond prices declined more than mutual
funds that were shorter in duration. Funds with a longer average duration
should, in our opinion, perform well over the coming year as we expect
DELAWARE TAX-FREE ARIZONA FUNDS' PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
AUGUST 31, 1999
Delaware Tax-Free Delaware Tax-Free
CREDIT QUALITY Arizona Fund Arizona Insured Fund
- --------------------------------------------------------------------------------
AAA 46% 100%
AA 6% 0%
A 14% 0%
BBB 17% 0%
BB & Unrated 17% 0%
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
Weighted Average Effective Maturity 18.6 years 11.6 years
Weighted Average Maturity 25.4 years 18.7 years
Average Duration 10.3 years 7.5 years
Average Coupon 5.76% 5.90%
Number of Securities 28 72
AMT Income* 7.24% 0.77%
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield**
Class A 4.71% (4.46%) 4.11% (4.11%)
Class B 4.14% (3.88%) 3.52% (3.52%)
Class C 4.13% (3.87%) 3.52% (3.52%)
- --------------------------------------------------------------------------------
* Amount of income subject to the federal alternative minimum tax for the
twelve months ended August 31, 1999.
** Calculated according to Securities Exchange Commission Guidelines. An expense
limitation for each Fund was in effect for the period shown. Some yields
would have been lower without the limitation. Yields prior to expense
limitation are shown in parentheses. See page 50 for additional information.
Past performance is not a guarantee of future results.
<PAGE>
for tax-exempt
income
7
long-term interest rates to remain stable or increase only slightly.
In order to remain consistent with the Fund's more conservative investment
objectives, we maintain a shorter duration for Delaware Tax-Free Arizona Insured
Fund than for Tax-Free Arizona Fund. Because the Delaware Tax-Free Arizona
Insured Fund's duration is shorter than the average of its peers, the Fund was
able to preserve capital to a greater extent than its category average. That is,
the Fund was not as adversely affected by the rise in interest rates as funds
that were longer in duration. The average duration of Delaware Tax-Free Arizona
Insured Fund was 7.5 years as of August 31, 1999.
Hospital revenue bonds accounted for the largest sector weightings in each of
the Funds' portfolios at the end of the period. We have been able to capitalize
on a consolidation trend within the healthcare sector but we plan to decrease
our holdings in this arena as the healthcare industry reaches what we believe to
be an impending threshold for consolidation. As of August 31, 1999 hospital
revenue bonds accounted for 37% of Delaware Tax-Free Arizona Fund's portfolio
and 24% of Delaware Tax-Free Arizona Insured Fund's portfolio.
DELAWARE TAX-FREE
CALIFORNIA FUNDS
Conservative budgeting over the past few years has left California in a very
strong economic position that bodes well for its ability to meet principal and
interest payments. Standard & Poor's has recently upgraded the state's credit
rating--from stable to positive. Because of California's healthy economic
outlook and its high resident tax rate, we believe there is strong investor
demand for California municipal bonds.
Rising interest rates over the past few months have hurt municipal bond
performance, particularly for bonds with longer maturities or duration. For both
of Delaware's Tax-Free California Funds, we have maintained an average duration
that is longer than the average of each Fund's respective peer group. As a
result, Delaware Tax-Free California Fund slightly underperformed the average of
the California Municipal Debt funds and Delaware Tax-Free California Insured
Fund underperformed the average of the California Insured Municipal Debt funds.
Long-term performance, however, remains strongly positive for each Fund.
BECAUSE OF
CALIFORNIA'S
HEALTHY ECONOMIC
OUTLOOK AND ITS
HIGH RESIDENT
TAX RATE, WE
BELIEVE THERE IS
STRONG INVESTOR
DEMAND FOR
CALIFORNIA
MUNICIPAL BONDS.
tax-free
california
<PAGE>
for tax-exempt
income
8
California has a very diverse economy and, therefore, a large and diverse
universe of municipal bonds to choose from. The largest sector holding in each
of these Funds was single-family housing bonds. As of August 31, 1999, we held
16.5% of Delaware Tax-Free California Fund's portfolio and 19% of Delaware
Tax-Free California Insured Fund's portfolio in housing bonds.
Delaware Tax-Free California Fund was able to preserve capital to a greater
extent than Delaware Tax-Free California Insured Fund over the past year. This
is because insured and other high quality bonds that Tax-Free California Insured
Fund invests in did not perform as well as bonds of slightly lower quality.
Tax-Free California Fund, which is not as restricted as the Tax-Free California
Insured Fund and can hold a mix of both very high quality and slightly lower
quality bonds, was able to benefit from that flexibility. There are a number of
reasons why better quality bonds underperformed:
o There were more high quality insured bonds available, somewhat saturating the
market and making lower rated bonds more attractive to investors.
o Non-rated California municipal bonds were improving in quality.
o A strong economy reduces concern about municipalities being unable to repay
their debts, giving investors greater comfort when seeking the higher yields
provided by lower rated municipals.
Remaining consistent with our conservative investment approach, Delaware
Tax-Free California Insured Fund focused solely on bonds rated AAA, the highest
quality rating available, according to Standard and Poor's.
DELAWARE TAX-FREE CALIFORNIA FUNDS' PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
AUGUST 31, 1999
Delaware Tax-Free Delaware Tax-Free
CREDIT QUALITY California Fund California Insured Fund
- --------------------------------------------------------------------------------
AAA 29% 100%
AA 10% 0%
A 13% 0%
BBB 32% 0%
BB & Unrated 16% 0%
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
Weighted Average Effective Maturity 24.8 years 15.7 years
Weighted Average Maturity 25.5 years 21.5 years
Average Duration 12.7 years 9.0 years
Average Coupon 5.53% 5.91%
Number of Securities 39 28
AMT Income* 11.52% 18.46%
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield**
Class A 5.06% (4.57%) 4.37% (4.22%)
Class B 4.49% (3.98%) 3.78% (3.64%)
Class C 4.50% (3.99%) 3.80% (3.65%)
- --------------------------------------------------------------------------------
* Amount of income subject to the federal alternative minimum tax for the
twelve months ended August 31, 1999.
** Calculated according to Securities Exchange Commission Guidelines. An expense
limitation for each Fund was in effect for the period shown. Some yields
would have been lower without the limitation. Yields prior to expense
limitation are shown in parentheses. See page 50 for additional information.
Past performance is not a guarantee of future results.
<PAGE>
for tax-exempt
income
9
DELAWARE TAX-FREE
COLORADO FUND
Colorado's robust economy helped fuel a growth rate that was twice the national
rate. The third fastest growing state in the nation, Colorado exhibits strong
personal income growth, large job gains and healthy residential construction.
We maintained a strong focus on high quality investment-grade bonds in the
Tax-Free Colorado Fund. It is our opinion, that for most of the year, bonds of
slightly lower credit quality did not offer enough additional income potential
to offset the added risks of investing in lower rated securities. As of August
31, 1999, 79% of the bonds in Delaware Tax-Free Colorado Fund's portfolio were
rated BBB or higher by Standard & Poor's. Toward the end of the fiscal year, we
began to see the difference in yield between higher rated bonds and lower rated
bonds move toward a more traditional relationship. If this trend continues, we
may consider increasing our holdings of bonds of slightly lower quality that we
believe have attractive income potential.
Hospital revenue bonds have been a strong focus for this Fund over the past
few years. Historically, hospital and other medical bonds tend to perform well
during a healthy economy. Recently, however, this has not been the case. As the
U.S. government scales back funding for medical programs, hospital revenues have
begun to decline. For this reason, over the past few months we have reduced our
exposure to these securities. As of August 31, 1999, we held 25% of Delaware
Tax-Free Colorado Fund's portfolio in hospital revenue bonds.
tax-free
colorado
DELAWARE TAX-FREE COLORADO AND DELAWARE TAX-FREE NEW MEXICO FUNDS'
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
AUGUST 31, 1999
Delaware Tax-Free Delaware Tax-Free
CREDIT QUALITY Colorado Fund New Mexico Fund
- --------------------------------------------------------------------------------
AAA 17% 29%
AA 12% 17%
A 23% 22%
BBB 28% 20%
BB & Unrated 20% 12%
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
Weighted Average Effective Maturity 14.6 years 16.1 years
Weighted Average Maturity 21.0 years 22.3 years
Average Duration 8.9 years 9.0 years
Average Coupon 5.92% 6.12%
Number of Securities 89 24
AMT Income* 0.00% 7.69%
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield**
Class A 4.58% (4.58%) 4.68% (4.68%)
Class B 4.00% (4.00%) 4.10% (4.10%)
Class C 3.99% (3.99%) 4.11% (4.11%)
- --------------------------------------------------------------------------------
* Amount of income subject to the federal alternative minimum tax for the
twelve months ended August 31, 1999.
** Calculated according to Securities Exchange Commission Guidelines. An expense
limitation for each Fund was in effect for the period shown. Some yields
would have been lower without the limitation. Yields prior to expense
limitation are shown in parentheses. See page 50 for additional information.
Past performance is not a guarantee of future results.
<PAGE>
for tax-exempt
income
10
Delaware Tax-Free Colorado Fund was not able to preserve capital to the
extent of its peers in the Colorado Municipal Debt Funds average for the
one-year period ended August 31, 1999 (as shown on page 1). This was a result of
lower performance in the high-quality bond arena and our positioning in
healthcare revenue bonds. We plan to decrease our exposure to healthcare issues
even further over the next few months, a move we expect will boost the Fund's
performance as we diversify the Fund's portfolio.
DELAWARE TAX-FREE NEW MEXICO FUND
Over the past decade, we have seen retail, manufacturing and technology
companies move into New Mexico, leading to broader economic diversification. A
modest growth rate across the state has enabled New Mexico to maintain a
comfortable level of economic stability.
Historically, however, this area of our nation has relied heavily on revenues
from commodity mining. Weakness in the natural resource sector has created
pockets of economic weakness across the state. Copper prices are at record lows,
causing lay-offs and reduced prosperity in the southwestern portion of the
state. In the southeast, where oil and gas production account for a large
percentage of employment, the area suffered as gas and oil prices plummeted last
year. Over the past few months oil prices have begun to creep up to more
traditional levels, pointing to what we expect to be a slow recovery.
Due mostly to the fact that New Mexico's economy is vastly different than
economies in other U.S. states, the Fund did not perform as well as its peer
group in the Lipper Other States Municipal Debt Fund average (as shown on page
1).
New Mexico has experienced healthy population growth during the past few
decades, outpacing national levels (Source: Moody's Analysis). As a result, an
increase in residential dwellings has led us to focus on large single- and
multi-family housing bonds. As of August 31, 1999, we held over 25% of the
Fund's portfolio in housing issues.
OUTLOOK
Over the next few months, we expect conditions for municipal bond investors to
improve as higher interest rates might lead to slower economic growth and stem
inflation. Stock market volatility has caused some investors to take another
look at the potential benefits of bonds, including municipal bond mutual funds.
Lower municipal bond supply in 1999 has enabled the market to better absorb
the high volume of municipal bonds issued in 1998. This should, in our opinion,
allow for greater capital appreciation potential if supply remains steady or
declines further in the future.
We think there is some risk of inflation in the near future, but we believe
that interest rates should remain relatively stable or increase only slightly in
the near future. We believe fixed income securities, including municipal bonds,
should perform well in this environment over the next few months.
outlook
<PAGE>
for tax-exempt
income
11
Performance Summary
DELAWARE TAX-FREE ARIZONA FUND
GROWTH OF A $10,000 INVESTMENT
MARCH 2, 1995 (FUND INCEPTION) TO AUGUST 31, 1999
Delaware Tax-Free Lehman Brothers
Arizona Fund A Municipal Bond Index
Mar. '95 9625 10000
May. '95 10115 10331
Aug. '95 10151 10469
Nov. '95 10794 10866
Feb. '96 10867 10978
May. '96 10769 10803
Aug. '96 11045 11017
Nov. '96 11527 11505
Feb. '97 11587 11583
May. '97 11725 11698
Aug. '97 12084 12036
Nov. '97 12394 12329
Feb. '98 12812 12642
May. '98 12971 12795
Aug. '98 13228 13077
Nov. '98 13412 13287
Feb. '99 13529 13419
May. '99 13493 13400
Aug. '99 13085 13148
Chart assumes $10,000 invested on March 2, 1995, and includes the effect of a
3.75% sales charge and the reinvestment of distributions. Performance of other
Fund classes will vary due to differing charges and expenses. Past performance
does not guarantee future results.
The Lehman Brothers Municipal Bond Index tracks approximately 15,000 municipal
bonds with a rating of Baa or higher.
DELAWARE TAX-FREE ARIZONA FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 3/2/95)
Excluding Sales Charge +7.17% -1.09%
Including Sales Charge +6.26% -4.82%
- --------------------------------------------------------------------------------
Class B (Est. 6/29/95)
Excluding Sales Charge +5.82% -1.74%
Including Sales Charge +5.42% -5.47%
- --------------------------------------------------------------------------------
Class C (Est. 5/13/95)
Excluding Sales Charge +5.99% -1.82%
Including Sales Charge +5.99% -2.76%
All performance includes reinvestment of distributions and, where indicated,
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 B and Class C shares excluding sales charge assumes either the
investment was not redeemed or that contingent sales charges did not apply.
Returns reflect a voluntary expense limitation in effect at the time. Returns
would have been lower without the limitation.
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 fee 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
DELAWARE TAX-FREE ARIZONA INSURED FUND
GROWTH OF A $10,000 INVESTMENT
APRIL 1, 1991 (FUND INCEPTION) TO AUGUST 31, 1999
Delaware Tax-Free Lehman Brothers Insured
Arizona Insured Fund A Municipal Bond
Period End Market Value
Apr. 1 '91 9625 10000
Apr. 30 '91 9680 10137
May '91 9853 10236
Jun. '91 9843 10213
Jul. '91 9970 10340
Aug. '91 10088 10479
Sep. '91 10296 10619
Oct. '91 10396 10719
Nov. '91 10446 10734
Dec. '91 10584 10979
Jan. '92 10602 11012
Feb. '92 10598 11009
Mar. '92 10614 11009
Apr. '92 10692 11106
May '92 10854 11237
Jun. '92 11028 11439
Jul. '92 11371 11835
Aug. '92 11199 11687
Sep. '92 11289 11744
Oct. '92 11207 11609
Nov. '92 11491 11875
Dec. '92 11627 12003
Jan. '93 11730 12136
Feb. '93 12118 12629
Mar. '93 12123 12476
Apr. '93 12281 12622
May '93 12319 12704
Jun. '93 12568 12919
Jul. '93 12650 12946
Aug. '93 12902 13224
Sep. '93 12973 13379
Oct. '93 13020 13396
Nov. '93 12862 13271
Dec. '93 13101 13566
Jan. '94 13355 13724
Feb. '94 13007 13341
Mar. '94 12433 12715
Apr. '94 12303 12845
May '94 12443 12970
Jun. '94 12369 12874
Jul. '94 12606 13143
Aug. '94 12628 13160
Sep. '94 12398 12943
Oct. '94 12129 12680
Nov. '94 11799 12450
Dec. '94 12130 12755
Jan. '95 12546 13179
Feb. '95 13050 13585
Mar. '95 13182 13736
Apr. '95 13189 13748
May '95 13611 14211
Jun. '95 13492 14055
Jul. '95 13564 14167
Aug. '95 13737 14359
Sep. '95 13899 14458
Oct. '95 14086 14703
Nov. '95 14324 14968
Dec. '95 14446 15122
Jan. '96 14557 15233
Feb. '96 14470 15111
Mar. '96 14226 14890
Apr. '96 14205 14840
May '96 14196 14832
<PAGE>
Delaware Tax-Free Lehman Brothers Insured
Arizona Insured Fund A Municipal Bond
Period End Market Value
Jun. '96 14308 15006
Jul. '96 14460 15144
Aug. '96 14491 15138
Sep. '96 14657 15360
Oct. '96 14838 15541
Nov. '96 15100 15848
Dec. '96 15038 15765
Jan. '97 15057 15787
Feb. '97 15199 15932
Mar. '97 14971 15695
Apr. '97 15087 15835
May '97 15327 16083
Jun. '97 15489 16255
Jul. '97 15958 16755
Aug. '97 15758 16562
Sep. '97 15950 16774
Oct. '97 16041 16886
Nov. '97 16106 16994
Dec. '97 16367 17273
Jan. '98 16561 17465
Feb. '98 16541 17452
Mar. '98 16529 17459
Apr. '98 16465 17365
May '98 16688 17667
Jun. '98 16754 17740
Jul. '98 16789 17777
Aug. '98 17002 18086
Sep. '98 17201 18334
Oct. '98 17206 18325
Nov. '98 17286 18395
Dec. '98 17304 18428
Jan. '99 17477 18653
Feb. '99 17396 18546
Mar. '99 17428 18583
Apr. '99 17450 18619
May '99 17332 18483
Jun. '99 17080 18181
Jul. '99 17116 18238
Aug. '99 16940 18034
Chart assumes $10,000 invested on April 1, 1991, and includes the effect of a
3.75% sales charge and the reinvestment of distributions. Performance of other
Fund classes will vary due to differing charges and expenses. Past performance
does not guarantee future results.
The Lehman Brothers Insured Municipal Bond Index tracks approximately 5100
municipal bonds that are backed by an issuer and have a rating of BBB or higher.
DELAWARE TAX-FREE ARIZONA INSURED FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Lifetime Five Years One Year
Class A (Est. 4/1/91)
Excluding Sales Charge +6.95% +6.06% -0.36%
Including Sales Charge +6.47% +5.25% -4.10%
- --------------------------------------------------------------------------------
Class B (Est. 3/10/95)
Excluding Sales Charge +5.30% -1.11%
Including Sales Charge +4.93% -4.92%
- --------------------------------------------------------------------------------
Class C (Est. 5/26/94)
Excluding Sales Charge +5.22% +5.20% -1.20%
Including Sales Charge +5.22% +5.20% -2.15%
All performance includes reinvestment of distributions and, where indicated,
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 B and Class C shares excluding sales charge assumes either the
investment was not redeemed or that contingent sales charges did not apply.
Returns reflect a voluntary expense limitation in effect at the time. Returns
would have been lower without the limitation.
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 fee 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
13
DELAWARE TAX-FREE CALIFORNIA FUND
GROWTH OF A $10,000 INVESTMENT
MARCH 2, 1995 (FUND INCEPTION) TO AUGUST 31, 1999
Lehman Brothers Delaware Tax-Free
Municipal Bond Index California Fund A
Mar. '95 10000 9625
May. '95 10331 10038
Aug. '95 10469 9989
Nov. '95 10866 10598
Feb. '96 10978 10746
May. '96 10803 10477
Aug. '96 11017 10711
Nov. '96 11505 11251
Feb. '97 11583 11294
May. '97 11698 11536
Aug. '97 12036 11921
Nov. '97 12329 12328
Feb. '98 12642 12694
May. '98 12795 12857
Aug. '98 13077 13187
Nov. '98 13287 13447
Feb. '99 13419 13558
May. '99 13400 13517
Aug. '99 13148 12984
Chart assumes $10,000 invested on March 2, 1995, and includes the effect of a
3.75% sales charge and the reinvestment of distributions. Performance of other
Fund classes will vary due to differing charges and expenses. Past performance
does not guarantee future results.
The Lehman Brothers Municipal Bond Index tracks approximately 15,000 municipal
bonds with a rating of Baa or higher.
DELAWARE TAX-FREE CALIFORNIA FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 3/2/95)
Excluding Sales Charge +7.02% -1.53%
Including Sales Charge +6.12% -5.25%
- --------------------------------------------------------------------------------
Class B (Est. 8/23/95)
Excluding Sales Charge +6.73% -2.35%
Including Sales Charge +6.32% -6.08%
- --------------------------------------------------------------------------------
Class C (Est. 4/9/96)
Excluding Sales Charge +6.26% -2.26%
Including Sales Charge +6.26% -3.20%
All performance includes reinvestment of distributions and, where indicated,
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 B and Class C shares excluding sales charge assumes either the
investment was not redeemed or that contingent sales charges did not apply.
Returns reflect a voluntary expense limitation in effect at the time. Returns
would have been lower without the limitation.
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 fee 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
14
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
GROWTH OF A $10,000 INVESTMENT
OCTOBER 15, 1992 (FUND INCEPTION) TO AUGUST 31, 1999
Delaware Tax-Free Lehman Brothers Insured
California Fund A Municipal Bond Index
Period End Market Value
Oct. 15 '92 9625 10000
Oct. 31 '92 9644 9885
Nov. '92 9994 10111
Dec. '92 10123 10221
Jan. '93 10226 10334
Feb. '93 10554 10754
Mar. '93 10587 10623
Apr. '93 10708 10748
May '93 10750 10818
Jun. '93 10902 11000
Jul. '93 10915 11024
Aug. '93 11128 11261
Sep. '93 11281 11392
Oct. '93 11312 11407
Nov. '93 11210 11300
Dec. '93 11277 11552
Jan. '94 11503 11686
Feb. '94 11181 11360
Mar. '94 10720 10827
Apr. '94 10425 10937
May '94 10571 11044
Jun. '94 10504 10962
Jul. '94 10746 11191
Aug. '94 10787 11206
Sep. '94 10569 11021
Oct. '94 10297 10797
Nov. '94 10002 10601
Dec. '94 10211 10861
Jan. '95 10636 11222
Feb. '95 11106 11567
Mar. '95 11212 11696
Apr. '95 11206 11706
May '95 11581 12101
Jun. '95 11374 11968
Jul. '95 11415 12063
Aug. '95 11535 12226
Sep. '95 11701 12311
Oct. '95 11890 12520
Nov. '95 12138 12745
Dec. '95 12306 12877
Jan. '96 12394 12971
2/29/96 12269 12867
Mar. '96 12039 12679
Apr. '96 11984 12636
May '96 11976 12630
Jun. '96 12086 12777
Jul. '96 12197 12895
Aug. '96 12224 12890
Sep. '96 12407 13079
Oct. '96 12590 13234
Nov. '96 12797 13494
<PAGE>
Delaware Tax-Free Lehman Brothers Insured
California Fund A Municipal Bond Index
Dec. '96 12752 13424
Jan. '97 12755 13443
Feb. '97 12891 13567
Mar. '97 12698 13364
Apr. '97 12824 13483
May '97 13012 13695
Jun. '97 13126 13842
Jul. '97 13577 14267
Aug. '97 13431 14102
Sep. '97 13610 14283
Oct. '97 13688 14379
Nov. '97 13792 14471
Dec. '97 13983 14708
Jan. '98 14166 14871
Feb. '98 14171 14861
Mar. '98 14183 14867
Apr. '98 14111 14787
May '98 14321 15044
Jun. '98 14405 15105
Jul. '98 14434 15137
Aug. '98 14623 15401
Sep. '98 14837 15612
Oct. '98 14826 15604
Nov. '98 14871 15663
Dec. '98 14859 15691
Jan. '99 15022 15883
Feb. '99 14943 15792
Mar. '99 14981 15824
Apr. '99 14970 15854
May '99 14835 15738
Jun. '99 14579 15482
Jul. '99 14566 15530
Aug. '99 14335 15356
Chart assumes $10,000 invested on October 15, 1992, and includes the effect of a
3.75% sales charge and the reinvestment of distributions. Performance of other
Fund classes will vary due to differing charges and expenses. Past performance
does not guarantee future results.
The Lehman Brothers Insured Municipal Bond Index tracks approximately 5100
municipal bonds that are backed by an issuer and have a rating of BBB or higher.
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Lifetime Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 10/15/92)
Excluding Sales Charge +5.98% +5.86% -1.97%
Including Sales Charge +5.39% +5.06% -5.61%
- --------------------------------------------------------------------------------
Class B (Est. 3/1/94)
Excluding Sales Charge +4.13% +5.28% -2.70%
Including Sales Charge +3.98% +4.95% -6.44%
- --------------------------------------------------------------------------------
Class C (Est. 4/12/95)
Excluding Sales Charge +4.61% -2.70%
Including Sales Charge +4.61% -3.64%
All performance includes reinvestment of distributions and, where indicated,
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 B and Class C shares excluding sales charge assumes either the
investment was not redeemed or that contingent sales charges did not apply.
Returns reflect a voluntary expense limitation in effect at the time. Returns
would have been lower without the limitation.
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 fee 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
15
DELAWARE TAX-FREE COLORADO FUND
GROWTH OF A $10,000 INVESTMENT
SEPTEMBER 1, 1988 TO AUGUST 31, 1999
Delaware Tax-Free Lehman Brothers Insured
California Fund A Municipal Bond Index
Aug. '89 10000 9624
Nov. '89 10269 9810
Feb. '90 10397 9945
May. '90 10550 10105
Aug. '90 10643 10242
Nov. '90 11060 10485
Feb. '91 11356 10799
May. '91 11613 10998
Aug. '91 11898 11275
Nov. '91 12195 11544
Feb. '92 12490 11787
May. '92 12754 12049
Aug. '92 13197 12446
Nov. '92 13418 12780
Feb. '93 14209 13492
May. '93 14280 13673
Aug. '93 14840 14322
Nov. '93 14906 14518
Feb. '94 14996 14535
May. '94 14633 13916
Aug. '94 14861 14030
Nov. '94 14123 13064
Feb. '95 15278 14399
May. '95 15966 15120
Aug. '95 16179 15201
Nov. '95 16792 15927
Feb. '96 16966 16081
May. '96 16695 15789
Aug. '96 17026 16148
Nov. '96 17779 16821
Feb. '97 17900 16932
May. '97 18077 17157
Aug. '97 18600 17763
Nov. '97 19053 18369
Feb. '98 19536 18948
May. '98 19773 19161
Aug. '98 20208 19501
Nov. '98 20533 19789
Feb. '99 20737 19929
May. '99 20708 19813
Aug. '99 20319 19169
Chart assumes $10,000 invested on September 1, 1989, and includes the effect of
a 3.75% sales charge and the reinvestment of distributions. Performance of other
Fund classes will vary due to differing charges and expenses. Past performance
does not guarantee future results.
The Lehman Brothers Municipal Bond Index tracks approximately 15,000 municipal
bonds with a rating of Baa or higher.
DELAWARE TAX-FREE COLORADO FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Lifetime Ten Years Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 4/23/87)
Excluding Sales Charge +7.52% +7.16% +6.45% -1.69%
Including Sales Charge +7.19% +6.75% +5.63% -5.39%
- --------------------------------------------------------------------------------
Class B (Est. 3/22/95)
Excluding Sales Charge +5.58% -2.34%
Including Sales Charge +5.20% -6.09%
- --------------------------------------------------------------------------------
Class C (Est. 5/6/94)
Excluding Sales Charge +5.51% +5.58% -2.42%
Including Sales Charge +5.51% +5.58% -3.36%
All performance includes reinvestment of distributions and, where indicated,
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 B and Class C shares excluding sales charge assumes either the
investment was not redeemed or that contingent sales charges did not apply.
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 fee 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
16
DELAWARE TAX-FREE NEW MEXICO FUND
GROWTH OF A $10,000 INVESTMENT
OCTOBER 5, 1992 (FUND INCEPTION) TO AUGUST 31, 1999
Delaware Tax-Free Lehman Brothers Insured
California Fund A Municipal Bond Index
Oct. '92 10000 9625
Nov. '92 10179 9810
Feb. '93 10779 10334
May. '93 10833 10574
Aug. '93 11258 11020
Nov. '93 11308 11006
Feb. '94 11376 11226
May. '94 11100 10822
Aug. '94 11274 11032
Nov. '94 10714 10160
Feb. '95 11590 11245
May. '95 12112 11738
Aug. '95 12273 11790
Nov. '95 12739 12342
Feb. '96 12870 12427
May. '96 12665 12233
Aug. '96 12916 12505
Nov. '96 13487 13032
Feb. '97 13579 13132
May. '97 13714 13294
Aug. '97 14110 13715
Nov. '97 14454 14064
Feb. '98 14820 14480
May. '98 15000 14678
Aug. '98 15330 14959
Nov. '98 15576 15095
Feb. '99 15731 15180
May. '99 15709 15168
Aug. '99 15414 14783
Chart assumes $10,000 invested on October 5, 1992, and includes the effect of a
3.75% sales charge and the reinvestment of distributions. Performance of other
Fund classes will vary due to differing charges and expenses. Past performance
does not guarantee future results.
The Lehman Brothers Municipal Bond Index tracks approximately 15,000 municipal
bonds with a rating of Baa or higher.
DELAWARE TAX-FREE NEW MEXICO FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999
Lifetime Five Years One Year
- --------------------------------------------------------------------------------
Class A (Est. 10/5/92)
Excluding Sales Charge +6.43% +6.04% -1.17%
Including Sales Charge +5.85% +5.24% -4.91%
- --------------------------------------------------------------------------------
Class B (Est. 3/3/94)
Excluding Sales Charge +4.59% +5.28% -1.91%
Including Sales Charge +4.44% +4.95% -5.68%
- --------------------------------------------------------------------------------
Class C (Est. 5/7/96)
Excluding Sales Charge +5.27% -1.99%
Including Sales Charge +5.27% -2.94%
All performance includes reinvestment of distributions and, where indicated,
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 B and Class C shares excluding sales charge assumes either the
investment was not redeemed or that contingent sales charges did not apply.
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 fee 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 17
FINANCIAL STATEMENTS
VOYAGER MUTUAL FUNDS, INC. - DELAWARE TAX-FREE ARIZONA FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS - 98.61%
GENERAL OBLIGATION BONDS - 10.14%
Eagle Mountain Community Facility District
6.50% 7/1/21 ....................................... $1,010,000 $1,064,257
Maricopa County Unified School District #40
(Glendale) 6.30% 7/1/11 ............................ 500,000 534,390
Via Linda Community Facilities (Scottsdale, Arizona)
5.75% 7/15/23 ...................................... 1,155,000 1,087,860
----------
2,686,507
----------
HOSPITALS REVENUE BONDS - 36.74%
Maricopa County, Arizona Hospital Revenue
(Sun Health Corp.) 5.30% 4/1/29 .................... 1,000,000 894,730
Maricopa County, Arizona Hospital Revenue
(Sun Health Corp.) 6.125% 4/1/18 ................... 600,000 615,918
Maricopa County, Arizona Industrial Development
Authority Hospital Facilities Revenue (Mayo
Clinic Hospital) 5.25% 11/15/37 .................... 500,000 454,340
Maricopa County, Arizona Industrial Development
Authority Hospital Facilities Revenue
(Pennington Gardens)
Series A 6.30% 9/20/38 ............................. 1,715,000 1,776,689
Mesa, Arizona Individual Development Authority
Revenue (Discovery Health Systems) Series A-1
5.625% 1/1/29 ...................................... 2,000,000 1,970,160
Mesa, Arizona Individual Development Authority
Revenue (Lutheran Health Systems) Series A-1
5.00% 10/1/19 ...................................... 1,250,000 1,150,950
Show Low, Arizona Industrial Development Authority
Hospital Revenue (Navapache Regional Medical
Center) Series A 5.50% 12/1/17 ..................... 2,000,000 1,957,020
Winslow, Arizona Industrial Development Authority
Hospital Revenue (Winslow Memorial Hospital Project)
5.50% 6/1/22 ....................................... 1,000,000 917,430
----------
9,737,237
----------
HOUSING REVENUE BONDS - 28.88%
Maricopa County, Arizona Industrial Development
Authority Multifamily Family Housing Revenue
(Pines at Camelback Apartments Project A)
5.45% 5/1/28 ....................................... 750,000 716,490
Maricopa County, Arizona Industrial Development
Authority Multifamily Housing Revenue (Villas
De Merced Apartment Project)
5.45% 12/20/27 ..................................... 535,000 506,939
Peoria Casa Del Rio Multi Family Housing
7.30% 2/20/28 ...................................... 500,000 535,145
Pima County, Arizona Industrial Development
Series A 7.25% 7/1/25 .............................. 725,000 768,986
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MUNICIPAL BONDS (CONTINUED)
HOUSING REVENUE BONDS (CONTINUED)
Pima County, Arizona Industrial Development
Authority Multifamily Revenue Housing
(Nova and Villa Projects) 5.125% 12/20/18 ....... $ 1,780,000 $ 1,670,886
Pima County, Arizona Industrial Development
Authority Multifamily Revenue Housing
(Willowick Apartments Project)
5.50% 3/1/28 .................................... 500,000 479,205
Pima County, Arizona Industrial Development
Authority Singlefamily Revenue Housing
Series A 5.20% 5/1/31 ........................... 2,000,000 1,818,740
Tucson Industrial Development Authority
(Los Portales Apartment)
5.90% 12/20/31 (GNMA) ........................... 600,000 606,354
Yavapai County, Arizona Industrial Development
Authority Residential Care Facilities
(Margaret T Morris Center) Series A
5.40% 2/20/38 (GNMA) ............................ 585,000 549,964
-----------
7,652,709
-----------
LEASE/CERTIFICATES OF PARTICIPATION - 6.84%
Guadalupe, Arizona Municipal Property Revenue
5.30% 7/1/18 .................................... 905,000 839,804
Sedona, Arizona Partner Series 1999
5.75% 7/1/16 .................................... 1,000,000 971,580
-----------
1,811,384
-----------
POLLUTION CONTROL REVENUE BONDS - 7.56%
Coconimo County, Arizona (Nevada Power)
6.375% 10/1/36 .................................. 1,250,000 1,288,537
Maricopa County, Arizona
5.75% 11/1/22 ................................... 750,000 714,922
-----------
2,003,459
-----------
WATER AND SEWER REVENUE BONDS - 5.76%
Gilbert Water & Waste Water System Revenue
(Connection Development Fee)
6.875% 4/1/16 ................................... 1,000,000 1,020,110
Tucson, Arizona Water Revenue Refunding Series A
5.75% 7/1/18 .................................... 500,000 506,670
-----------
1,526,780
-----------
OTHER REVENUE BONDS - 2.69%
Virgin Islands, Public Finance Authority Revenue
(Senior Lien) Series A 5.50% 10/1/22 ............ 750,000 712,403
-----------
712,403
-----------
Total Municipal Bonds (cost $26,760,153) ........... 26,130,479
-----------
<PAGE>
18 for tax-exempt income
DELAWARE TAX-FREE ARIZONA FUND
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER OF MARKET
SHARES VALUE
---------- ------------
SHORT-TERM INVESTMENTS - 4.62%
Norwest Advantage Municipal Money Market Fund .... 1,224,896 $ 1,224,896
------------
Total Short-Term Investments
(cost $1,224,896) ............................. 1,224,896
------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 103.23%
(Cost $27,985,049) ........................................... $ 27,355,375
Liabilities Net of Receivables and Other Assets - (3.23%) ....... (856,284)
------------
Net Assets Applicable to 2,534,650 Shares
($0.01 par value) Outstanding - 100.00% ...................... $ 26,499,091
============
Net Asset Value - Tax-Free Arizona Fund A Class
($18,586,183 / 1,777,822 shares) ............................. $ 10.45
============
Net Asset Value - Tax-Free Arizona Fund B Class
($5,955,719 / 569,969 shares) ................................ $ 10.45
============
Net Asset Value - Tax-Free Arizona Fund C Class
($1,957,189 / 186,859 shares) ................................ $ 10.47
============
COMPONENTS OF NET ASSETS AT AUGUST, 31 1999:
Common stock, $0.01 par value, 100,000,000,000 shares authorized
to the Fund with 10,000,000,000 shares allocated to Tax-Free
Arizona Fund 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 ................... $ 27,192,999
Accumulated net realized loss on investments .................... (64,234)
Net unrealized depreciation of investments ...................... (629,674)
------------
Total Net Assets ................................................ $ 26,499,091
============
- ------------
Summary of Abbreviations:
GNMA - Insured by the Government National Mortgage Association
NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE
ARIZONA FUND A CLASS
Net asset value A Class (A) ..................................... $10.45
Sales charge (3.75% of offering price or 3.92% of amount invested
per share) (B) ............................................... 0.41
------
Offering price .................................................. $10.86
======
- ----------------------
(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 Arizona Fund A Class.
See accompanying notes
<PAGE>
VOYAGEUR INSURED FUNDS, INC.
DELAWARE TAX-FREE ARIZONA INSURED FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS - 99.38%
GENERAL OBLIGATION BONDS - 27.49%
**Cave Creek Unified School District #93
7.02% 7/1/11 (FGIC) ............................... $ 1,500,000 $ 1,528,845
Chandler Refunding 7.00% 7/1/12 (FGIC) ............. 1,000,000 1,047,860
Cochise County Unified School District
7.50% 7/1/10 (FGIC) ............................... 1,000,000 1,206,050
**Glendale Unified School District #205
7.22% 7/1/11 (FGIC) ............................... 2,600,000 2,710,578
Maricopa County Chandler Unified School District #80
5.80% 7/1/12 (FGIC) ............................... 635,000 657,638
5.85% 7/1/13 (FGIC) ............................... 1,380,000 1,433,903
Maricopa County Creighton Elementary Unified School
District #114 Series 91
6.50% 7/1/08 (FGIC) ............................... 1,000,000 1,114,230
Maricopa County Gilbert Unified School District #41
6.25% 7/1/15 (FSA) ................................ 1,250,000 1,327,325
Maricopa County Kyrene Unified School District #28
5.90% 7/1/10 (FGIC) ............................... 2,000,000 2,075,340
Maricopa County Madison Unified School
District #38 5.80% 7/1/15 (MBIA) .................. 3,150,000 3,235,050
Maricopa County Osborn Unified School District #8
5.88% 7/1/14 (FGIC) ............................... 3,500,000 3,646,405
Maricopa County Peoria Unified School District #11
6.10% 7/1/10 (AMBAC) .............................. 2,000,000 2,108,040
7.00% 7/1/10 (AMBAC) .............................. 1,000,000 1,050,190
Maricopa County Queens Creek Unified School
District #95 5.70% 7/1/14 (AMBAC) ................. 4,440,000 4,549,357
Mohave County Unified School District #1
(Lake Havasu) 5.90% 7/1/15 (FGIC) ................. 5,000,000 5,169,750
Peoria 5.70% 7/1/11(MBIA) .......................... 1,000,000 1,028,090
Phoenix, Arizona 6.375% 7/1/13 (MBIA) .............. 2,000,000 2,115,540
Pima County Marana Unified School District #6
5.75% 7/1/12 (FGIC) ............................... 1,485,000 1,528,228
**Pima County, Tucson Unified School District #1,
7.02% 7/1/13 (FGIC) ............................... 3,000,000 3,042,720
Pinal County Apache Junction Unified School
District #43 5.85% 7/1/15 (FGIC) .................. 2,000,000 2,060,940
Tucson, Arizona 6.10% 7/1/12 (FGIC) ................ 4,890,000 5,138,705
-----------
47,774,784
-----------
HIGHER EDUCATION REVENUE BONDS - 5.74%
Arizona State University System 6.125%
7/1/15 (MBIA) ..................................... 1,500,000 1,553,250
Glendale, Arizona Industrial Development Authority
Educational Facilities
(American Graduate School International)
5.625% 7/1/20 (Connie Lee) ........................ 1,500,000 1,505,040
5.875% 7/1/15 (Connie Lee) ........................ 3,000,000 3,082,020
Glendale, Arizona Industrial Development Authority
(Midwestern University) Series A
6.00% 5/15/26 (Connie Lee) ........................ 630,000 654,576
<PAGE>
for tax-exempt income 19
DELAWARE TAX-FREE ARIZONA INSURED FUND
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS (CONTINUED)
HIGHER EDUCATION REVENUE BONDS (CONTINUED)
University Of Arizona 6.25% 6/1/11 (AMBAC) ........ $ 3,000,000 $ 3,183,750
-----------
9,978,636
-----------
HOSPITAL REVENUE BONDS - 23.65%
Arizona Health Facilities Hospital Revenue
4.75% 10/1/30 (AMBAC) ............................. 7,500,000 6,343,200
Maricopa County Hospital District #1
6.125% 6/1/15 (FGIC) .............................. 5,500,000 5,756,410
Maricopa County Industrial Development Authority
(Baptist Hospital)
5.50% 9/1/13 (MBIA) ............................... 3,080,000 3,113,726
5.50% 9/1/16 (MBIA) ............................... 1,000,000 1,000,640
Maricopa County Industrial Development Authority
(Pennington Gardens) Series A
6.30% 9/20/38 (GNMA) (FHA) ........................ 2,000,000 2,071,940
Mesa, Arizona Individual Development Authority
5.625% 1/1/29 (MBIA) .............................. 10,000,000 9,850,800
Mesa, Arizona Individual Development Authority
Revenue (Lutheran Health Systems) Series A-1
5.00% 10/1/19 (MBIA) .............................. 1,500,000 1,381,140
Mohave County Industrial Development Authority
(Baptist Hospital) 5.75% 9/1/26 (MBIA) ............ 1,100,000 1,106,127
Mohave County Industrial Development Authority
(Chris/Silver Ridge)
6.375% 11/1/31 (GNMA) ............................. 1,300,000 1,352,936
Phoenix, Arizona Industrial Development Authority
Hospital Revenue (John C. Lincoln Health)
Series B 5.75% 12/1/16 (Connie Lee) ............... 4,110,000 4,144,401
Pima County Tucson Medical Center
6.375% 4/1/12 (MBIA) .............................. 1,000,000 1,060,430
Pima Individual Health Care
6.75% 7/1/10 (MBIA) ............................... 1,000,000 1,060,500
**Scottsdale, Arizona Industrial Development
Authority (Scottsdale Memorial Hospital)
7.22% 9/1/12 (AMBAC) .............................. 1,250,000 1,323,913
University of Arizona Medical Center
6.25% 7/1/10 (MBIA) ............................... 1,445,000 1,539,604
-----------
41,105,767
-----------
HOUSING REVENUE BONDS - 7.93%
Chandler Industrial Development Authority
Multifamily Housing 5.90% 7/20/15 (GNMA) .......... 1,060,000 1,073,080
Maricopa County, Arizona Industrial Development
Authority Multifamily Housing Revenue
(Villas De Merced Apartments Project)
5.50% 12/20/37 (GNMA) ............................. 1,145,000 1,080,594
Maricopa County, Arizona (Metro Gardens -
Mesa Ridge Project) 5.15% 7/1/29 (MBIA) ........... 2,850,000 2,599,656
Pima County, Arizona Industrial Development
Authority Revenue Series A
7.25% 7/1/25 (MBIA) ............................... 1,000,000 1,060,670
Pima County, Arizona Industrial Development
Authority Multifamily Housing Revenue
(Hacienda Project)
7.00% 12/20/31 (GNMA) ............................. 1,290,000 1,413,995
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS (CONTINUED)
HIGHER EDUCATION REVENUE BONDS (CONTINUED)
Pima County, Arizona Industrial Development
Authority Multifamily Housing Revenue
(Nova and Villa Projects)
5.20% 12/20/31 (GNMA) ............................. $ 1,000,000 $ 919,590
Tucson Industrial Development Authority
(Los Portales Apartment)
5.90% 12/20/31 (GNMA) ............................. 3,670,000 3,708,865
Yuma, Arizona Industrial Development Authority
Multifamily Revenue (Government
National Mortgage Association Regency Apartments A)
5.50% 12/20/32 (MBIA) ............................. 2,000,000 1,920,300
-----------
13,776,750
-----------
LEASE/CERTIFICATES OF PARTICIPATION - 3.53%
Oro Valley Common Trust Funds Partnership
5.75% 7/1/11 (MBIA) ............................... 1,000,000 1,055,300
5.75% 7/1/17 (MBIA) ............................... 1,000,000 1,013,100
Scottsdale Municipal Property Corporation Lease
6.25% 11/1/14 (FGIC) .............................. 3,900,000 4,066,062
-----------
6,134,462
-----------
POWER AUTHORITY REVENUE BONDS - 8.48%
Guam Power Authority Series A 5.00%
10/1/24 (AMBAC) ................................... 1,000,000 912,110
Mesa, Arizona Utility Systems Revenue
5.25% 7/1/16 (FGIC) ............................... 12,000,000 11,749,800
Salt River Agricultural Improvement & Power Project
6.25% 1/1/19 (FGIC) ............................... 2,000,000 2,082,600
-----------
14,744,510
-----------
*PRE-REFUNDED/ESCROWED TO MATURITY - 8.77%
Arizona Health Facilities Authority Hospital Systems
(Phoenix Baptist Hospital & Medical Center)
6.25% 9/1/11 (Escrowed to Maturity)
(MBIA) ............................................ 2,000,000 2,114,680
Glendale, Arizona Development Authority
Educational Facilities
(American Graduate School International)
7.00% 7/1/14-05 (Connie Lee) ...................... 1,000,000 1,127,960
Maricopa County Paradise Valley Elementary School
District #69 6.40% 7/1/10-01 (MBIA) ............... 3,000,000 3,174,720
Phoenix, Arizona Street & Highway Project
6.50% 7/1/09-02 (AMBAC) ........................... 2,000,000 2,152,960
Pima County, Arizona Unified School District #6
Series A 5.75% 7/1/12-03 (FGIC) ................... 20,000 21,177
Salt River Agricultural Improvement & Power
Project 6.50% 1/1/22-01 (AMBAC) ................... 2,000,000 2,099,980
Santa Cruz County Nogales Unified School District #1
6.10% 7/1/14-04 (AMBAC) ........................... 1,250,000 1,336,950
Yuma, Arizona 6.125% 7/1/12-03 (AMBAC) ............. 3,000,000 3,207,840
-----------
15,236,267
-----------
TRANSPORTATION REVENUE BONDS - 8.16%
**Chandler Street & Highway Revenue
6.47% 7/1/15 (MBIA) ............................... 1,000,000 936,810
Phoenix, Arizona Civic Improvement Airport Revenue
Senior Lien (Series A) 5.00% 7/1/25 (FSA) ......... 3,500,000 3,197,005
<PAGE>
20 FOR TAX-EXEMPT INCOME
DELAWARE TAX-FREE ARIZONA INSURED FUND
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS (CONTINUED)
TRANSPORTATION REVENUE BONDS (CONTINUED)
Puerto Rico Commonwealth Highway and
Transportation Authority Revenue, Series A
5.00% 7/1/38 (MBIA) ............................. $ 5,800,000 $ 5,184,098
Tucson Airport Authority Revenue
5.70% 6/1/13 (MBIA) ............................. 4,750,000 4,870,935
------------
14,188,848
------------
WATER & SEWER REVENUE BONDS - 2.85%
Chandler Water and Sewer Revenue
7.00% 7/1/12 (FGIC) ............................. 1,000,000 1,047,860
Gilbert Water And Waste Water Revenue
6.50% 7/1/12 (FGIC) ............................. 1,000,000 1,084,400
6.50% 7/1/22 (FGIC) ............................. 2,650,000 2,828,716
------------
4,960,976
------------
OTHER REVENUE BONDS - 2.78%
Maricopa County Stadium District
5.50% 7/1/13 (MBIA) ............................. 2,000,000 2,021,660
**Peoria Municipal Development Facility Revenue
6.62% 7/1/10 (MBIA) ............................. 2,750,000 2,803,295
------------
4,824,955
------------
Total Municipal Bonds (cost $168,614,031) ........ 172,725,955
------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 99.38%
(Cost $168,614,031) .......................................... $ 172,725,955
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.62% ....... 1,074,604
--------------
NET ASSETS APPLICABLE TO 15,819,944 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $ 173,800,559
==============
NET ASSET VALUE - TAX-FREE ARIZONA INSURED FUND A CLASS
($166,368,093 / 15,143,427 SHARES) ........................... $10.99
======
NET ASSET VALUE - TAX-FREE ARIZONA INSURED B FUND CLASS
($6,059,442 / 551,610 SHARES) ................................ $10.99
======
NET ASSET VALUE - TAX-FREE ARIZONA INSURED C FUND CLASS
($1,373,024 / 124,907 SHARES) ................................ $10.99
======
COMPONENTS OF NET ASSETS AT AUGUST 31, 1999:
Common stock, $0.01 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 ................................. $ 171,203,934
Accumulated net realized loss on investments .................. (1,515,299)
Net unrealized appreciation of investments .................... 4,111,924
-------------
Total Net Assets .............................................. $ 173,800,559
=============
- -------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floaters represent a security that pays interest at rates that
increase (decrease) with a decrease (increase) in a specific index. Interest
rates disclosed are in effect as of August 31, 1999.
<PAGE>
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
FHA - Insured by the Federal Housing Administration
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
NET ASSET VALUE AND OFFERING PRICE FOR
TAX-FREE ARIZONA INSURED FUND A CLASS
Net asset value A Class (A) ....................................... $ 10.99
Sales charge (3.75% of offering price or 3.91% of
amount invested per share) (B) ................................. 0.43
------
Offering price .................................................... $ 11.42
======
- ----------------------
(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 Arizona Insured Fund A Class.
See accompanying notes
VOYAGEUR INSURED FUNDS, INC.
DELAWARE TAX-FREE ARIZONA INSURED FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
ASSETS:
Investments at market .............................. $172,725,955
Interest receivable ................................ 2,258,270
Subscriptions receivable ........................... 15,575
Receivable for securities sold ..................... 9,489,306
Other assets ....................................... 167
-----------
Total Assets .................................... $184,489,273
-----------
Liabilities:
Liquidations payable ............................... 299,452
Dividends payable .................................. 204,937
Payable for securities purchased ................... 9,767,500
Other liabilities and accrued expenses ............. 416,825
-----------
Total Liabilities ............................... 10,688,714
-----------
TOTAL NET ASSETS ................................... $173,800,559
===========
Investments at cost ................................ $168,614,031
===========
See accompanying notes
<PAGE>
for tax-exempt income 21
VOYAGEUR MUTUAL FUNDS, INC.
DELAWARE TAX-FREE CALIFORNIA FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS - 100.72%
Higher Education Revenue Bonds - 8.62%
<S> <C>
California Educational (University Southern California)
5.50% 10/1/27 ........................................ $ 1,000,000 $ 980,330
San Francisco State University
5.20% 7/1/19 ......................................... 1,000,000 939,850
San Francisco State University Auxiliary Organization
5.25% 7/1/32 ......................................... 2,000,000 1,814,840
-----------
3,735,020
-----------
HOSPITAL REVENUE BONDS - 9.47%
California Health Facilities Finance Authority
Revenue (Northern California Presbyterian)
5.40% 7/1/28 ......................................... 500,000 458,410
San Benito, California Health Care Revenue
5.45% 10/1/28 ........................................ 2,500,000 2,251,775
Sierra View Local Health Care District California Revenue
5.25% 7/1/18 ......................................... 1,500,000 1,391,520
-----------
4,101,705
-----------
HOUSING REVENUE BONDS - 23.87%
Abag Finance Authority of California
5.80% 10/1/19 ........................................ 875,000 868,805
California Rural Home Revenue
5.30% 6/1/19 (AMT) ................................... 1,750,000 1,665,527
Chula Vista, California Multi Housing Revenue
5.30% 7/1/32 ......................................... 1,000,000 942,550
Fairfield, California Housing Authority
5.625% 9/1/23 ........................................ 1,000,000 945,350
Monterey County, California Housing Revenue
5.00% 7/1/19 ......................................... 2,260,000 2,050,905
Riverside California Multifamily Bridgecare
5.60% 5/1/32 ......................................... 2,865,000 2,864,742
San Marcos, California Redevelopment Agency
Tax Allocation Affordable Housing Project -
Series A
5.65% 10/1/28 ........................................ 500,000 470,160
6.00% 10/1/27 ........................................ 530,000 531,161
-----------
10,339,200
-----------
LEASE/CERTIFICATES OF PARTICIPATION - 28.90%
California Statewide Community Development
Authority Partnership
5.375% 4/1/17 ........................................ 4,000,000 3,714,120
Del Mar, California School District
5.25% 9/1/29 ......................................... 2,000,000 1,879,540
Duarte, California Certificates of Participation
5.25% 4/1/24 ......................................... 1,865,000 1,670,909
Orange County, California Water Distribution
Certificate of Participation Series A
5.25% 8/15/22 ........................................ 2,000,000 1,902,700
San Diego, California Certificate of Participation
5.70% 2/1/28 ......................................... 1,500,000 1,421,325
6.25% 9/1/29 ......................................... 1,000,000 1,000,830
</TABLE>
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS (CONTINUED)
LEASE/CERTIFICATES OF PARTICIPATION (CONTINUED)
Soledad Unified School District Financing Project
5.30% 5/1/19 ...................................... $ 1,000,000 $ 932,840
-----------
12,522,264
-----------
POLLUTION CONTROL REVENUE BONDS - 1.11%
California Pollution Control Authority Facilities
Revenue (Mobil Oil Project)
5.50% 12/1/29 ..................................... 500,000 479,365
-----------
479,365
-----------
SCHOOL DISTRICT REVENUE BONDS - 3.59%
Golden West Schools Financing
5.80% 2/1/21 ...................................... 500,000 518,710
5.80% 2/1/23 ...................................... 500,000 518,245
5.80% 2/1/24 ...................................... 500,000 517,935
-----------
1,554,890
-----------
TRANSPORTATION REVENUE BONDS - 5.58%
Foothill/Eastern Corridor Agency California Toll
Road Revenue 5.75% 1/15/40 ........................ 2,050,000 1,957,340
Port Redwood City, California 5.40% 6/1/19 ........... 500,000 461,705
-----------
2,419,045
-----------
OTHER REVENUE BONDS - 19.58%
El Monte, California Public Authority Tax Allocation
Special Term (Multiple Redevelopment Project)
5.80% 6/1/28 ...................................... 880,000 827,077
Escondido, California Improvement Bond Act 1915
5.625% 9/2/18 ..................................... 500,000 475,115
La Mirada, California Redevelopment Agency Special
Tax Ref-Community Facilities District Number 89-1
5.70% 10/1/20 ..................................... 500,000 481,585
Lake Elisnore, California Public Financing Authority
5.50% 9/1/30 ...................................... 1,000,000 931,320
5.80% 9/2/15 ...................................... 1,125,000 1,063,406
Rancho Mirage, California Improvement Board
6.10% 9/2/11 ...................................... 495,000 506,697
Sacramento County, California Special Tax
(Community Facilities District Number 1)
5.70% 12/1/20 ..................................... 500,000 484,400
Santa Ana, California Financing Authority
Revenue (Inner City Commuter C)
5.60% 9/1/19 ...................................... 600,000 565,608
Santa Clara, California Redevelopment Agency
(Bayshore North Project) Series A
5.50% 6/1/23 ...................................... 2,245,000 2,212,605
Turlock Public Funding, California 5.45% 9/1/24 ...... 500,000 466,455
Whittier, California Redevelopment Agency
Tax Allocation (Whittier Boulevard)
5.75% 11/1/28 ..................................... 500,000 467,865
-----------
8,482,133
-----------
Total Municipal Bonds (cost $45,680,600) ............. 43,633,622
-----------
<PAGE>
22 for tax-exempt income
DELAWARE TAX-FREE CALIFORNIA FUND
STATEMENT OF NET ASSETS (CONTINUED)
NUMBER OF MARKET
SHARES VALUE
---------- -----------
SHORT-TERM INVESTMENTS - 5.29%
Dreyfus Tax-Exempt Cash Management Inc. ............ 126,691 $ 126,691
Norwest Advantage Municipal Money Market Fund ...... 2,166,351 2,166,351
----------
Total Short-Term Investments (cost $2,293,042) ..... 2,293,042
----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 106.01%
(Cost $47,973,642) ........................................... $ 45,926,664
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (6.01%) ....... (2,604,493)
------------
NET ASSETS APPLICABLE TO 4,126,094 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $ 43,322,171
============
NET ASSET VALUE - TAX-FREE CALIFORNIA FUND A CLASS
($24,514,769 / 2,337,388 SHARES) ............................. $10.49
======
NET ASSET VALUE - TAX-FREE CALIFORNIA FUND B CLASS
($13,675,840 / 1,299,901 SHARES) ............................. $10.52
======
NET ASSET VALUE - TAX-FREE CALIFORNIA FUND C CLASS
($5,131,562 / 488,805 SHARES) ................................ $10.50
======
COMPONENTS OF NET ASSETS AT AUGUST 31,1999:
Common stock, $0.01 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 Fund B Class and
10,000,000,000 shares allocated to Tax-Free California
Fund C Class ................................................. $ 45,553,017
Undistributed net investment income ............................. 380
Accumulated net realized loss on investments .................... (184,248)
Net unrealized depreciation of investments ...................... (2,046,978)
------------
Total Net Assets ................................................ $ 43,322,171
============
- ----------------------
Summary of Abbreviations:
AMT - Bonds subject to Alternative Minimum Tax
NET ASSET VALUE AND OFFERING PRICE FOR
TAX-FREE CALIFORNIA FUND A CLASS
Net asset value A Class (A) ....................................... $10.49
Sales charge (3.75% of offering price or 3.91% of
amount invested per share) (B) ................................. 0.41
------
Offering price .................................................... $10.90
======
- ----------------------
(A) Net asset value per share illustrated is the estimated amount which would
be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current prospectus for purchases of $100,000
or more for Tax-Free California Fund A Class.
See accompanying notes
<PAGE>
VOYAGEUR INVESTMENT TRUST
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS - 99.30%
General Obligation Bonds - 2.83%
Whittier, California Elementary School District
5.00% 8/1/23 (FGIC) ................................. $1,000,000 $ 912,820
----------
912,820
----------
HIGHER EDUCATION REVENUE BONDS - 5.80%
San Francisco State University Foundation
5.25% 7/1/32 (MBIA) ................................. 2,000,000 1,869,700
----------
1,869,700
----------
HOSPITAL REVENUE BONDS - 6.52%
California Health Facilities - Catholic Healthcare West
6.00% 7/1/17 (MBIA) ................................. 1,000,000 1,040,890
California Health Facilities - San Diego Hospital
6.20% 8/1/12 (MBIA) ................................. 1,000,000 1,058,910
----------
2,099,800
----------
HOUSING REVENUE BONDS - 23.00%
California Housing Finance Agency Home Mortgage
Revenue Series E 6.05% 8/1/16 (MBIA) ................ 1,000,000 1,020,390
California Housing Finance Agency Home Mortgage
Revenue Series K 6.15% 8/1/16 (MBIA) ................ 1,100,000 1,131,823
California Housing Finance Agency Revenue Series E
6.75% 8/1/26 (MBIA) ................................. 1,000,000 1,046,700
California Housing Finance Agency Revenue Series F
6.00% 8/1/17 (MBIA) ................................. 1,000,000 1,023,940
California Housing Finance Agency Single Family
Mortgage 6.00% 8/1/20 (AMT) ......................... 935,000 955,841
California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue
7.95% 12/1/24 (AMBAC) ............................... 1,055,000 1,159,413
Fresno, California Multifamily Housing Revenue
GNMA (Woodlands Apartments Project) A
6.65% 5/20/17 (GNMA) ................................ 1,000,000 1,073,820
----------
7,411,927
----------
LEASE/CERTIFICATES OF PARTICIPATION - 21.70%
Bakersfield, California Certificates of Participation
(Convention Center Expansion Project)
5.80% 4/1/17 (MBIA) ................................. 1,000,000 1,026,430
Inland Empire Solid Waste Authority
6.00% 8/1/16 (FSA) .................................. 1,500,000 1,555,395
Ontario Redevelopment Cimarron Project
6.25% 8/1/15 (MBIA) ................................. 1,000,000 1,048,790
San Luis Obispo, California Capital Revenue
6.375% 6/1/14 (AMBAC) ............................... 1,000,000 1,062,640
Santa Barbara, California Water Revenue
6.70% 4/1/27 (AMBAC) ................................ 1,000,000 1,060,950
Santa Clara, California Finance Authority
7.75% 11/15/11 (AMBAC) .............................. 1,000,000 1,237,370
----------
6,991,575
----------
<PAGE>
for tax-exempt income 23
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
STATEMENT OF NET ASSETS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -----------
MUNICIPAL BONDS (Continued)
POLLUTION CONTROL REVENUE BONDS - 6.79%
California Pollution Revenue
5.45% 9/1/29 (MBIA) ............................... $ 2,250,000 $ 2,188,485
-----------
2,188,485
-----------
TRANSPORTATION REVENUE BONDS - 14.38%
Alameda Corridor Transportation Authority California
Senior Lein Series A 5.00% 10/1/29 (MBIA) ......... 1,000,000 899,800
Foothill/Eastern Corridor Agency Toll Road Revenue
5.125% 1/15/19 (MBIA) ............................. 2,000,000 1,892,960
San Francisco Airport Revenue 5.00%
5/1/23 (FGIC) ..................................... 1,000,000 902,400
San Francisco, California City & County
International Airport Revenue (AMT Special
Facilities Lease-SFO Fuel-A)
5.25% 1/1/21 (AMBAC) .............................. 1,000,000 937,750
-----------
4,632,910
-----------
WATER & SEWER REVENUE BONDS - 6.05%
Calaveras County Water District Revenue
6.125% 9/1/17 (AMBAC) ............................. 1,000,000 1,049,210
San Diego Facilities Sewer Revenue
5.00% 5/15/29 (FGIC) .............................. 1,000,000 900,241
-----------
1,949,451
-----------
OTHER REVENUE BONDS - 12.23%
Del Mar, California School District
5.25% 9/1/29 (AMBAC) .............................. 2,000,000 1,879,540
Rancho Water District Finance Revenue
5.90% 11/1/15 (FGIC) .............................. 1,000,000 1,041,270
Santa Clara, California Bayshore North Project
5.75% 7/1/14 (AMBAC) .............................. 1,000,000 1,020,140
-----------
3,940,950
-----------
Total Municipal Bonds (cost $31,680,004) ............. 31,997,618
-----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 99.30%
(Cost $31,680,004) ......................................... $ 31,997,618
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.70% ....... 223,949
--------------
NET ASSETS APPLICABLE TO 3,090,293 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% .................... $ 32,221,567
==============
NET ASSET VALUE - TAX-FREE CALIFORNIA INSURED FUND A CLASS
($25,041,817 / 2,401,641 SHARES) ........................... $10.43
======
NET ASSET VALUE - TAX-FREE CALIFORNIA INSURED FUND B CLASS
($6,588,208 / 631,709 SHARES) .............................. $10.43
======
NET ASSET VALUE - TAX-FREE CALIFORNIA INSURED FUND C CLASS
($591,542 / 56,943 SHARES) ................................. $10.39
======
<PAGE>
COMPONENTS OF NET ASSETS AT AUGUST 31, 1999:
Common stock, $0.01 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 ...................... $32,101,141
Accumulated net realized loss on investments ..................... (197,188)
Net unrealized appreciation of investments ....................... 317,614
-----------
Total Net Assets ................................................. $32,221,567
===========
- ----------------------
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Bonds subject to Alternative Minimum Tax
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
NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE
CALIFORNIA INSURED FUND A CLASS
Net asset value A Class (A) ............................................ $10.43
Sales charge (3.75% of offering price or 3.93% of amount invested
per share) (B) ...................................................... 0.41
------
Offering price ......................................................... $10.84
======
- ----------------------
(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 California Insured Fund A Class.
See accompanying notes
VOYAGEUR INVESTMENT TRUST
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments at market .............................. $31,997,618
Interest receivable ................................ 392,667
Subscriptions receivable ........................... 29,858
Receivable for securities sold ..................... 2,372,138
Other assets ....................................... 38,371
-----------
Total Assets .................................... $34,830,652
-----------
LIABILITIES:
Liquidations payable ............................... 125,747
Dividends payable .................................. 33,915
Payable for securities purchased ................... 2,244,375
Other liabilities and accrued expenses ............. 205,048
-----------
Total Liabilities ............................... 2,609,085
-----------
Total Net Assets ................................... $32,221,567
===========
Investments at cost ................................ $31,680,004
===========
See accompanying notes
<PAGE>
24 for tax-exempt income
Voyageur Mutual Funds II, Inc.
Delaware Tax-Free Colorado Fund
Statement of Net Assets
August 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 99.35%
GENERAL OBLIGATION BONDS - 19.89%
Arapahoe, Colorado Water & Sanitation
Series 1995A 6.00% 12/1/15 ........................ $8,010,000 $ 8,323,351
Series 1995A 6.15% 12/1/19 ........................ 10,075,000 10,493,314
**Arapahoe County, Colorado School District
# 5 Cherry Creek 6.47% 12/15/15 ................. 3,000,000 2,835,660
Broomfield Colorado 4.75% 12/15/99 .............. 4,600,000 4,612,834
Central Platte Metropolitan District Colorado
5.20% 12/1/17 ................................... 7,950,000 7,433,568
E-470 Business Metropolitan District Colorado
5.125% 12/1/17 .................................. 2,500,000 2,316,650
Eagles Nest Metropolitan District Limited Tax
6.50% 11/15/17 .................................. 6,495,000 6,852,095
**El Paso County School District # 20
7.27% 12/15/14 .................................. 1,250,000 1,268,913
GVR Metropolitan District Series A
6.00% 12/1/15 ................................... 7,075,000 7,377,315
6.125% 12/1/19 .................................. 4,725,000 4,933,940
Highlands Metropolitan District # 3
5.30% 12/1/19 ................................... 1,500,000 1,407,795
**Highlands Ranch Metropolitan School District # 2
6.17% 6/15/16 ................................... 1,850,000 1,639,230
Interstate South Metropolitan District
6.00% 12/1/20 ................................... 8,755,000 8,936,491
Jefferson County Metropolitan District - Section 14,
Series A 6.20% 12/1/13 .......................... 2,250,000 2,371,950
-----------
70,803,106
-----------
HIGHER EDUCATION REVENUE BONDS - 4.52%
Colorado Educational & Cultural Facilities
6.50% 7/15/12 ................................... 1,975,000 1,942,748
6.50% 7/15/24 ................................... 5,145,000 4,966,469
**Colorado Post Secondary Education Facilities
Authority 8.17% 3/1/16 .......................... 3,350,000 3,541,821
Colorado Springs, Colorado Revenue
(Colorado College Project) 5.375% 6/1/32 ........ 6,070,000 5,642,854
-----------
16,093,892
-----------
HOSPITAL REVENUE BONDS - 24.94%
Boulder County, Colorado Hospital Revenue
Development (Longmont United Hospital)
5.60% 12/1/27 ................................... 6,765,000 6,217,914
Boulder County, Colorado Hospital Revenue
(Longmont United Project)
5.875% 12/1/20 .................................. 3,250,000 3,155,685
Colorado Health Facilities Authority
(Covenant Retirement) 6.75% 12/1/25 ............. 4,150,000 4,424,564
Colorado Health Facilities Authority
(National Jewish Medical & Research Center)
5.375% 1/1/23 ................................... 5,445,000 4,833,145
5.375% 1/1/28 ................................... 3,230,000 2,818,143
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
HOSPITAL REVENUE BONDS (CONTINUED)
Colorado Health Facilities Authority
(Parkview Hospital)
6.00% 9/1/16 ................................... $4,000,000 $ 4,010,040
6.125% 9/1/25 .................................. 7,750,000 7,665,525
**Colorado Health Facilities Authority Revenue
6.67% 10/1/26 .................................. 3,375,000 2,902,196
Colorado Health Facilities Authority Revenue
(National Benevolent Association)
5.25% 2/1/28 ................................... 3,700,000 3,202,054
Colorado Health Facilities Authority Revenue
(National Benevolent Association) Series A
5.25% 1/1/27 ................................... 1,330,000 1,153,549
6.38% 8/15/24 .................................. 3,250,000 3,323,093
6.90% 6/1/15 ................................... 1,085,000 1,162,502
Colorado Health Facilities Authority Revenue
(National Jewish Medical & Research Center)
Series B 5.375% 1/1/29 ........................ 1,820,000 1,595,940
Colorado Health Facilities Authority Revenue
(Steamboat Springs Health)
5.75% 9/15/22 .................................. 6,000,000 5,439,660
Colorado Health Facilities Authority
(Rocky Mountain Adventist Healthcare)
6.625% 2/1/13 .................................. 15,000,000 14,776,650
6.625% 2/1/22 .................................. 5,885,000 5,712,981
Colorado Health Facilities Authority
(Vail Valley Medical Center Revenue)
6.50% 1/15/13 .................................. 2,400,000 2,513,160
6.60% 1/15/20 .................................. 6,500,000 6,802,445
Colorado Health Facilities Revenue
(Parkview Medical Center Income Project)
5.25% 9/1/18 ................................... 1,500,000 1,348,395
5.30% 9/1/25 ................................... 1,500,000 1,316,295
Denver, Colorado Health & Hospital Revenue
5.375% 12/1/28 ................................. 5,000,000 4,421,300
-----------
88,795,236
-----------
HOUSING REVENUE BONDS - 14.77%
Adams County, Colorado Housing Authority Mortgage
Revenue (Aztec Villa Apartments Project)
5.85% 12/1/27 .................................. 1,825,000 1,817,299
Adams County Housing Authority (Greenbriar Project)
6.75% 7/1/21 ................................... 1,730,000 1,803,404
Aurora Colorado Housing Revenue
5.60% 7/1/19 ................................... 2,635,000 2,573,157
5.70% 7/1/23 ................................... 1,535,000 1,492,020
Boulder County, Colorado Housing Authority
Revenue 4.75% 12/1/28 .......................... 2,500,000 2,182,850
Colorado Housing Finance Authority
5.20% 10/1/30 .................................. 1,710,000 1,586,076
<PAGE>
for tax-exempt income 25
DELAWARE TAX-FREE COLORADO FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (Continued)
Housing Revenue Bonds (Continued)
Colorado Housing Finance Authority Multifamily
Series A-3 5.85% 10/1/28 (FHA) .................... $4,000,000 $ 4,058,320
Series A-3 6.25% 10/1/26 .......................... 8,530,000 8,833,242
Series B-3 5.65% 10/1/28 .......................... 3,880,000 3,857,845
Series C-3 6.10% 10/1/28 .......................... 4,120,000 4,238,532
Colorado State - Single Family Housing Authority
Senior Revenue 7.10% 6/1/14 ....................... 15,000 16,028
Eaglebend, Colorado Affordable Housing Corporate
Multifamily Revenue Housing Project
Series A 6.20% 7/1/12 ............................. 1,000,000 1,025,030
Series A 6.40% 7/1/17 ............................. 1,000,000 1,024,790
Series A 6.45% 7/1/21 ............................. 1,000,000 1,026,220
Englewood Multifamily (Marks Apartments)
Series B 6.00% 12/15/18 ........................... 8,525,000 8,604,027
Series 96 6.65% 12/1/26 ........................... 5,700,000 5,947,380
Pueblo County Single Family Mortgage Revenue Series
1994A 7.05% 11/1/27 (GNMA) ........................ 2,415,000 2,500,974
-----------
52,587,194
-----------
LEASE/CERTIFICATES OF PARTICIPATION - 3.91%
Colorado Post Secondary Education (Auraria
Foundation Project) 6.00% 9/1/15 (FSA) ........... 1,000,000 1,043,360
Conejos & Alamosa Counties, Colorado School
District Certificates of Participation
6.50% 4/1/11 ...................................... 1,700,000 1,741,701
Greeley Building Authority 6.10% 8/15/16 ............ 2,600,000 2,635,802
**Jefferson County, Colorado Certificates
of Participation
6.67% 12/1/09 (MBIA) .............................. 5,000,000 5,197,100
**Pueblo County, Colorado School District # 60,
Pueblo Certificates of Participation
6.92% 12/1/10 (MBIA) .............................. 2,220,000 2,306,824
Westminster Colorado 5.625% 9/1/19 .................. 1,000,000 991,090
-----------
13,915,877
-----------
POWER AUTHORITY REVENUE BONDS - 2.38%
Platte River Power Authority Series BB
6.125% 6/1/14 ..................................... 5,000,000 5,191,750
Puerto Rico Electric Power Authority Power
Series DD 5.00% 7/1/28 ............................ 3,680,000 3,274,464
------------
8,466,214
------------
Transportation Revenue Bonds - 8.62%
Arapahoe County Vehicle Reg E-470
6.15% 8/31/26 (MBIA) .............................. 8,530,000 8,962,471
Denver, Colorado City & County Airport
5.00% 11/15/25 .................................... 4,500,000 4,034,385
E-470 Public Highway Authority Colorado Revenue
Series A 4.75% 9/1/23 ............................. 6,000,000 5,127,120
Series A 5.00% 9/1/21 ............................. 8,950,000 8,118,098
Series A 5.00% 9/1/26 ............................. 5,000,000 4,457,650
-----------
30,699,724
-----------
<PAGE>
MUNICIPAL BONDS (Continued)
UTILITY REVENUE BONDS - 2.50%
Colorado Springs, Colorado Utilities Revenue
Series A 5.00% 11/15/27 .......................... $10,000,000 $ 8,907,600
------------
8,907,600
------------
WATER AND SEWER REVENUE BONDS - 3.34%
Centennial County Water and Sanitary District
Revenue 6.00% 12/1/15 (LOC - Swiss Bank) ......... 4,000,000 4,201,800
Colorado Educational & Cultural Facilities
Authority (Aspen Foundation)
Series A 6.125% 7/1/12 ........................... 605,000 597,280
Series A 6.50% 7/1/24 ............................ 1,710,000 1,664,651
Erie, Colorado Water Enterprise Revenue
5.00% 12/1/23 .................................... 5,000,000 4,393,900
Westminster Water & Sewer Utility Revenue
6.25% 12/1/14 (AMBAC) ............................ 1,000,000 1,053,180
------------
11,910,811
------------
OTHER REVENUE BONDS - 14.48%
Aspen Colorado Sales Tax Revenue
5.40% 11/1/19 .................................... 1,500,000 1,439,415
Aurora (Saddle Rock Golf Course)
6.20% 12/1/15 .................................... 2,000,000 2,032,820
Colorado Educational Authority Revenue
(Alexander Dawson School)
5.30% 2/15/29 (MBIA) ............................. 4,500,000 4,232,205
Colorado Educational & Cultural Facilities Authority
Revenue (Auraria Foundation Colorado)
4.75% 9/1/28 ..................................... 6,000,000 5,083,740
Colorado Post Secondary Education
(Ocean Journey Project) 8.375% 12/1/26 ........... 8,000,000 9,155,280
Lowry, Colorado Economic Redevelopment Authority
7.50% 12/1/10 .................................... 13,700,000 15,475,928
Lowry, Colorado Economic Redevelopment Authority
Colorado Revenue Series A 7.00% 12/1/10 .......... 1,400,000 1,540,182
Metropolitan Football Stadium Series A
*4.93% 1/1/08 (MBIA) .............................. 4,000,000 2,638,360
*5.03% 1/1/09 (MBIA) .............................. 4,000,000 2,489,280
*5.22% 1/1/11 (MBIA) .............................. 3,700,000 2,034,519
*5.33% 1/1/12 (MBIA) .............................. 1,750,000 900,813
Pueblo Urban Renewal Authority Junior Lien
6.625% 12/1/19 ................................... 2,110,000 2,205,203
South Suburban District (Golf & Ice Arena Facility)
6.00% 11/1/15 .................................... 2,330,000 2,333,029
------------
51,560,774
------------
Total Municipal Bonds (cost $351,791,502) .......... 353,740,428
------------
<PAGE>
26 for tax-exempt income
DELAWARE TAX-FREE COLORADO FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 99.35%
(COST $351,791,502) .......................................... $353,740,428
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.65% ........ 2,305,553
------------
NET ASSETS APPLICABLE TO 33,017,350 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% ...................... $356,045,981
============
NET ASSET VALUE - TAX-FREE COLORADO FUND A CLASS
($338,184,417 / 31,361,674 SHARES) ........................... $10.78
======
NET ASSET VALUE - TAX-FREE COLORADO FUND B CLASS
($13,530,048 / 1,254,310 SHARES) ............................. $10.79
======
NET ASSET VALUE - TAX-FREE COLORADO FUND C CLASS
($4,331,516 / 401,366 SHARES) ................................ $10.79
======
COMPONENTS OF NET ASSETS AT AUGUST 31, 1999:
Common stock, $0.01 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 ................................. $355,006,907
Accumulated net realized loss on investments ................... (909,852)
Net unrealized appreciation of investments ..................... 1,948,926
------------
Total Net Assets ............................................... $356,045,981
============
- ----------------------
*Zero Coupon Bond - The interest rate shown is the effective yield as of
August 31, 1999.
**Inverse Floaters represent a security that pays interest at rates that
increase(decrease) with a decrease(increase) in a specific index. Interest
rates disclosed are in effect as of August 31, 1999.
- ----------------------
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
FHA - Insured by the Federal Housing Authority
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
LOC - Swiss Bank - Letter of Credit by the Swiss Bank of New York
MBIA - Insured by the Municipal Bond Insurance Association
NET ASSET VALUE AND OFFERING PRICE FOR
TAX-FREE COLORADO FUND A CLASS
Net asset value A Class (A) .................................... $10.78
Sales charge (3.75% of offering price or 3.90% of amount
invested per share)(B) ......................................... 0.42
------
Offering price ................................................. $11.20
======
----------------------
(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 Colorado Fund A Class.
See accompanying notes
<PAGE>
VOYAGEUR INVESTMENT TRUST
DELAWARE TAX-FREE NEW MEXICO FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.74%
GENERAL OBLIGATION BONDS - 4.59%
Bernanillo County, New Mexico 4.50% 8/1/18 ............ $1,260,000 $1,088,942
----------
1,088,942
----------
HIGHER EDUCATION REVENUE BONDS - 8.32%
New Mexico Education Assistance Foundation
6.65% 11/1/25 ...................................... 1,000,000 1,027,470
Santa Fe, New Mexico Educational Facilities Revenue
5.50% 3/1/24 ....................................... 1,000,000 947,280
----------
1,974,750
----------
HOSPITAL REVENUE BONDS - 10.07%
New Mexico State Hospital Equipment Council
Hospital Revenue 5.50% 6/2/28 ...................... 1,500,000 1,350,525
State Hospital Equipment Memorial Medical Center
Project 6.40% 6/1/16 ............................... 1,000,000 1,039,890
----------
2,390,415
----------
HOUSING REVENUE BONDS - 27.02%
Carlsbad, New Mexico Housing Multifamily Revenue
(Colonial Hillcrest) 7.375% 8/1/27 ................. 1,000,000 1,028,660
New Mexico Mortgage Finance Authority
Series 1994B 6.75% 7/1/25 .......................... 1,000,000 1,079,900
Series 1994F 6.95% 1/1/26 .......................... 1,000,000 1,091,640
Series 1996G 6.85% 1/1/21 .......................... 1,500,000 1,628,535
Santa Fe Single Family Mortgage Revenue
6.20% 11/1/16 ...................................... 575,000 587,426
Southeastern New Mexico Affordable Housing
(Casa Hermosa Apartments) 7.25% 12/1/27 ............ 1,000,000 997,690
----------
6,413,851
----------
POLLUTION CONTROL REVENUE BONDS - 8.86%
Farmington, New Mexico Pollution Control
Public Service Company Project ACA-CBI
6.375% 4/1/22 ...................................... 1,000,000 1,046,980
Lordsburg Pollution Control Revenue
6.50% 4/1/13 ....................................... 1,000,000 1,055,510
----------
2,102,490
----------
*Pre-Refunded Bonds - 9.17%
Dona Ana County Tax Reference & Improvement
6.00% 6/1/19-03 .................................... 1,000,000 1,070,520
University of New Mexico Technical Development
Lease Revenue 6.55% 8/15/25-04 ..................... 1,000,000 1,107,020
----------
2,177,540
----------
Utility Revenue Bonds - 4.42%
Los Alamos Utility System Revenue 1994A
6.00% 7/1/15 (FSA) ................................. 1,000,000 1,049,500
----------
1,049,500
----------
Other Revenue Bonds - 26.29%
Albuquerque, New Mexico Gross Receipts Tax Revenue
4.75% 7/1/22 ....................................... 1,000,000 865,700
Albuquerque Special Assessment #223
6.45% 1/1/15 ....................................... 635,000 636,461
<PAGE>
for tax-exempt income 27
DELAWARE TAX-FREE NEW MEXICO FUND
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- --------------------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
OTHER REVENUE BONDS (CONTINUED)
Bernalillo County, New Mexico Gross Receipts Tax
Revenue 5.25% 4/1/27 ............................. $1,000,000 $ 949,010
Las Cruses Solid Waste Authority Environmental
Services 6.00% 6/1/16 ............................ 500,000 506,235
Puerto Rico Public Finance
(Series A) 5.00% 6/1/26 .......................... 1,500,000 1,339,680
Santa Fe, New Mexico Municipal Record Complex Net
Revenue 5.625% 12/1/23 ........................... 1,000,000 910,800
Truth Or Consequences Gross Tax Receipts
6.30% 7/1/16 ..................................... 1,000,000 1,033,450
-----------
6,241,336
-----------
Total Municipal Bonds (cost $23,160,482) 23,438,824
-----------
TOTAL MARKET VALUE OF SECURITIES OWNED
(Cost $23,160,482) - 98.74% ................................... $23,438,824
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.26% .......... 298,610
-----------
NET ASSETS APPLICABLE TO 2,200,310 SHARES
($0.01 PAR VALUE) OUTSTANDING - 100.00% ....................... $23,737,434
===========
NET ASSET VALUE - TAX-FREE NEW MEXICO FUND A CLASS
($20,732,383 / 1,921,988 SHARES) .............................. $10.79
======
NET ASSET VALUE - TAX-FREE NEW MEXICO FUND B CLASS
($2,623,849 / 242,991 SHARES) ................................. $10.80
======
NET ASSET VALUE - TAX-FREE NEW MEXICO FUND C CLASS
($381,202 / 35,331 SHARES) .................................... $10.79
======
COMPONENTS OF NET ASSETS AT AUGUST 31, 1999:
Common stock, $0.01 par value, unlimited shares
authorized to the Tax-Free New Mexico Fund .................... $23,919,985
Accumulated net realized loss on investments .................. (460,893)
Net unrealized appreciation of investments .................... 278,342
-----------
Total Net Assets ................................................. $23,737,434
===========
- ----------------------
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
- ----------------------
Summary of Abbreviations:
FSA - Insured by Financial Security Assurance
NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE NEW MEXICO
FUND A CLASS
Net asset value per share (A) ......................................... $10.79
Sales charge (3.75% of offering price or 3.89% of
amount invested per share) (B) ..................................... 0.42
------
Offering price ........................................................ $11.21
======
- ----------------------
(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 New Mexico Fund A Class.
See accompanying notes
<PAGE>
28 for tax-exempt income
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR VOYAGEUR VOYAGEUR VOYAGEUR VOYAGEUR
MUTUAL INSURED MUTUAL INVESTMENT MUTUAL INVESTMENT
FUNDS, INC. FUNDS, INC. FUNDS, INC. TRUST FUNDS II, INC. TRUST
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest ...................................... $ 1,198,575 $10,128,592 $ 1,804,436 $ 1,936,773 $ 21,537,209 $ 1,392,806
----------- ----------- ----------- ----------- ------------ -----------
EXPENSES:
Management fees ............................... 113,916 918,346 177,540 175,920 1,927,364 126,495
Dividend disbursing and transfer agent
fees and expenses ............................ 18,812 116,347 26,282 32,300 251,020 22,672
Distribution expense .......................... 103,117 510,030 192,128 144,223 1,054,815 79,881
Registration fees ............................. 10,200 7,395 5,050 6,550 200 2,700
Reports and statements to shareholders ........ 3,800 31,000 4,430 8,190 41,123 2,200
Accounting and administration ................. 7,707 70,200 12,878 14,200 135,013 9,480
Professional fees ............................. 7,725 16,200 8,850 22,000 26,637 4,700
Custodian fees and expenses ................... 3,350 12,408 5,200 3,300 16,000 950
Directors' fees ............................... 1,421 3,400 1,859 750 8,852 1,873
Taxes (other than taxes on income) ............ 2,600 18,064 280 4,900 12,250 650
Other ......................................... 15,759 24,738 3,678 28,210 48,111 13,022
----------- ----------- ----------- ----------- ------------ -----------
288,407 1,728,128 438,175 440,543 3,521,385 264,623
Less expenses absorbed or waived .............. (107,944) -- (216,947) (39,033) -- (5,031)
Less expenses paid indirectly ................. (503) (4,223) (787) (811) (8,616) (558)
----------- ----------- ----------- ----------- ------------ -----------
Total operating expenses
(before interest expense) .................... 179,960 1,723,905 220,441 400,699 3,512,769 259,034
Interest Expense .............................. 539 4,602 20 3,189 15,814 366
----------- ----------- ----------- ----------- ------------ -----------
Total expenses ................................ 180,499 1,728,507 220,461 403,888 3,528,583 259,400
----------- ----------- ----------- ----------- ------------ -----------
Net Investment Income ......................... 1,018,076 8,400,085 1,583,975 1,532,885 18,008,626 1,133,406
----------- ----------- ----------- ----------- ------------ -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments .................................. (29,459) 1,231,358 (153,896) 224,505 2,194,583 79,785
Net change in unrealized
appreciation/depreciation
of investments ............................... (1,463,852) (10,348,205) (2,720,093) (2,466,054) (26,520,859) 1,525,343)
----------- ----------- ----------- ----------- ------------ -----------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS .......................... (1,493,311) (9,116,847) (2,873,989) (2,241,549) (24,326,276) (1,445,558)
----------- ----------- ----------- ----------- ------------ -----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..................... $ (475,235) $ (716,762) $(1,290,014) $ (708,664) $ (6,317,650) $ (312,152)
=========== =========== =========== =========== ============ ===========
</TABLE>
See accompanying notes
<PAGE>
for tax-exempt income 29
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR MUTUAL FUNDS, INC. VOYAGEUR INSURED FUNDS, INC.
TAX-FREE ARIZONA FUND TAX-FREE ARIZONA INSURED FUND
------------------------------------ -------------------------------------
YEAR EIGHT MONTHS YEAR YEAR EIGHT MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97
------------ ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ............................... $ 1,018,076 $509,703 $736,908 $8,400,085 $5,780,759 $9,751,316
Net realized gain (loss) on investments ............. (29,459) 155,402 174,893 1,231,358 881,946 2,190,476
Net change in unrealized appreciation/
depreciation of investments ........................ (1,463,852) 90,918 437,873 (10,348,205) 506,964 4,860,331
----------- ----------- ----------- ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations .......................... (475,235) 756,023 1,349,674 (716,762) 7,169,669 16,802,123
----------- ----------- ----------- ------------ ------------ ------------
ISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class .......................................... (749,961) (379,267) (558,716) (8,137,700) (5,658,934) (9,694,062)
B Class .......................................... (224,287) (115,992) (170,145) (219,824) (109,233) (146,915)
C Class .......................................... (43,828) (14,444) (8,986) (42,785) (17,906) (22,575)
Net realized gain on investments:
A Class .......................................... (131,098) (107,048) (14,835) -- -- --
B Class .......................................... (51,618) (42,698) (5,249) -- -- --
C Class .......................................... (6,493) (5,585) (446) -- -- --
----------- ----------- ----------- ------------ ------------ ------------
(1,207,285) (665,034) (758,377) (8,400,309) (5,786,073) (9,863,552)
----------- ----------- ----------- ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .......................................... 11,402,727 2,294,187 1,713,483 13,298,123 5,611,502 8,703,489
B Class .......................................... 1,743,609 1,591,094 1,398,191 2,565,318 1,473,923 1,626,775
C Class .......................................... 1,548,540 289,341 294,389 1,011,175 109,022 260,791
Netasset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
A Class .......................................... 537,599 263,816 318,925 3,531,111 2,372,653 4,127,147
B Class .......................................... 138,997 82,739 93,785 124,743 59,207 80,590
C Class .......................................... 24,670 7,823 1,725 31,272 10,470 14,987
----------- ----------- ----------- ------------ ------------ ------------
15,396,142 4,529,000 3,820,498 20,561,742 9,636,777 14,813,779
----------- ----------- ----------- ------------ ------------ ------------
Cost of shares repurchased:
A Class .......................................... (4,355,710) (1,364,588) (1,297,760) (21,041,194) (16,505,481) (42,377,224)
B Class .......................................... (473,276) (453,826) (1,423,141) (1,098,285) (444,337) (1,306,416)
C Class .......................................... (146,074) (371) -- (219,748) (173,611) (172,902)
----------- ----------- ----------- ------------ ------------ ------------
.................................................... (4,975,060) (1,818,785) (2,720,901) (22,359,227) (17,123,429) (43,856,542)
----------- ----------- ----------- ------------ ------------ ------------
Increase (decrease) in net assets derived
from capital share transactions .................... 10,421,082 2,710,215 1,099,597 (1,797,485) (7,486,652) (29,042,763)
----------- --------- -------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ............... 8,738,562 2,801,204 1,690,894 (10,914,556) (6,103,056) (22,104,192)
NET ASSETS:
Beginning of period ................................. 17,760,529 14,959,325 13,268,431 184,715,115 190,818,171 212,922,363
----------- ----------- ----------- ------------ ------------ ------------
End of period ....................................... $26,499,091 $17,760,529 $14,959,325 $173,800,559 $184,715,115 $190,818,171
=========== =-========= =========== ============ ============ ============
</TABLE>
See accompanying notes
<PAGE>
30 for tax-exempt income
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR MUTUAL FUNDS, INC. VOYAGEUR INVESTMENT TRUST
TAX-FREE CALIFORNIA FUND TAX-FREE CALIFORNIA INSURED FUND
----------------------------------- ----------------------------------------
YEAR EIGHT MONTHS YEAR YEAR EIGHT MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97
-------- ------------ -------- ------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ................................ $1,583,975 $410,389 $251,678 $1,532,885 $990,891 $1,660,243
Net realized gain (loss) on investments .............. (153,896) 29,399 28,148 224,505 161,093 654,098
Net change in unrealized appreciation/depreciation
of investments ..................................... (2,720,093) 252,698 362,074 (2,466,054) 306,484 902,169
----------- ---------- ---------- ---------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations .................................... (1,290,014) 692,486 641,900 (708,664) 1,458,468 3,216,510
----------- ---------- ---------- ---------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class ........................................... (980,018) (185,500) (114,672) (1,251,911) (806,070) (1,392,469)
B Class ........................................... (482,470) (216,553) (132,136) (261,992) (172,316) (281,777)
C Class ........................................... (119,973) (9,470) (5,490) (18,982) (12,505) (4,187)
Net realized gain on investments:
A Class ........................................... (33,213) -- (11,448) -- -- --
B Class ........................................... (21,093) -- (17,988) -- -- --
C Class ........................................... (3,610) -- (547) -- -- --
----------- ---------- ---------- ---------- ----------- ----------
(1,640,377) (411,523) (282,281) (1,532,885) (990,891) (1,678,433)
----------- ---------- ---------- ---------- ----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ........................................... 16,534,979 7,665,910 3,495,750 3,134,581 4,379,503 1,433,773
B Class ........................................... 7,123,662 3,442,847 4,742,287 1,604,122 436,113 663,450
C Class ........................................... 5,165,216 647,866 88,101 165,394 112,596 411,903
Net asset value of shares issued upon
reinvestment of distributions from net
investment income and net realized gain
on investments:
A Class ........................................... 695,651 123,356 83,762 475,385 333,066 600,374
B Class ........................................... 186,395 59,437 41,269 92,112 59,832 115,298
C Class ........................................... 73,254 6,823 6,496 4,050 2,457 3,770
----------- ---------- ---------- ---------- ----------- ----------
29,779,157 11,946,239 8,457,665 5,475,644 5,323,567 3,228,568
----------- ---------- ---------- ---------- ----------- ----------
Cost of shares repurchased:
A Class ........................................... (2,615,126) (716,972) (553,808) (5,406,160) (3,431,124) (6,896,123)
B Class ........................................... (1,691,031) (244,052) (79,383) (1,228,041) (626,734) (1,165,654)
C Class ........................................... (556,491) -- (86,695) (3,129) (136,546) --
----------- ---------- ---------- ---------- ----------- ----------
(4,862,648) (961,024) (719,886) (6,637,330) (4,194,404) (8,061,777)
----------- ---------- ---------- ---------- ----------- ----------
Increase (decrease) in net assets derived
from capital share transactions .................... 24,916,509 10,985,215 7,737,779 (1,161,686) 1,129,163 (4,833,209)
----------- ---------- ---------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ................ 21,986,118 11,266,178 8,097,398 (3,403,235) 1,596,740 (3,295,132)
NET ASSETS:
Beginning of period .................................. 21,336,053 10,069,875 1,972,477 35,624,802 34,028,062 37,323,194
----------- ---------- ---------- ---------- ----------- ----------
End of period ........................................$43,322,171 $21,336,053 $10,069,875 $32,221,567 $35,624,802 $34,028,062
=========== ========== ========== ========== =========== ==========
</TABLE>
See accompanying notes
<PAGE>
for tax-exempt income 31
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR MUTUAL FUNDS II, INC. VOYAGEUR INVESTMENT TRUST
TAX-FREE COLORADO FUND TAX-FREE NEW MEXICO FUND
----------------------------------- -----------------------------------------
YEAR EIGHT MONTHS YEAR YEAR EIGHT MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97
---------- ------------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ............................... $18,008,626 $11,994,585 $18,751,211 $1,133,406 $697,922 $1,021,240
Net realized gain (loss) on investments ............. 2,194,583 1,633,238 4,504,945 79,785 77,783 272,561
Net change in unrealized appreciation/depreciation
of investments .................................... (26,520,859) 2,760,702 15,302,638 (1,525,343) 261,566 651,320
----------- ---------- ---------- ---------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations ................................... (6,317,650) 16,388,525 38,558,794 (312,152) 1,037,271 1,945,121
----------- ---------- ---------- ---------- ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class .......................................... (17,362,714) (11,694,571) (18,996,568) (1,030,059) (651,989) (994,922)
B Class .......................................... (515,419) (248,074) (263,048) (87,267) (36,725) (38,815)
C Class .......................................... (130,493) (51,940) (73,064) (16,080) (9,208) (12,451)
Net realized gain on investments:
A Class .......................................... -- -- -- -- -- --
B Class .......................................... -- -- -- -- -- --
C Class .......................................... -- -- -- -- -- --
----------- ----------- ----------- ---------- ----------- ----------
(18,008,626) (11,994,585) (19,332,680) (1,133,406) (697,922) (1,046,188)
----------- ----------- ----------- ---------- ----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .......................................... 40,867,433 20,124,058 24,861,682 3,548,401 2,755,802 1,142,996
B Class .......................................... 4,975,757 2,827,447 3,577,245 1,146,134 672,097 316,181
C Class .......................................... 3,101,825 653,282 556,067 127,550 65,066 96,958
Net asset value of shares issued upon reinvestment
of distributions from net investment income and
net realized gain on investments:
A Class .......................................... 11,025,848 7,480,101 12,735,946 529,912 348,247 546,725
B Class .......................................... 376,661 187,098 223,373 54,162 21,510 22,585
C Class .......................................... 102,368 45,159 68,964 15,431 8,588 12,667
----------- ----------- ----------- ---------- ----------- ----------
60,449,892 31,317,145 42,023,277 5,421,590 3,871,310 2,138,112
----------- ----------- ----------- ---------- ----------- ----------
Cost of shares repurchased:
A Class .......................................... (47,655,352) (32,727,131) (56,711,281) (3,225,423) (1,217,766) (3,709,704)
B Class .......................................... (1,657,829) (200,239) (535,127) (212,757) (6) (109,361)
C Class .......................................... (685,845) (350,446) (537,497) (131,741) -- (148,298)
----------- ----------- ----------- ---------- ----------- ----------
(49,999,026) (33,277,816) (57,783,905) (3,569,921) (1,217,772) (3,967,363)
----------- ----------- ----------- ---------- ----------- ----------
Increase (decrease) in net assets derived from
capital share transactions ........................ 10,450,866 (1,960,671) (15,760,628) 1,851,669 2,653,538 (1,829,251)
----------- ----------- ----------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ............... (13,875,410) 2,433,269 3,465,486 406,111 2,992,887 (930,318)
NET ASSETS:
Beginning of period ................................. 369,921,391 367,488,122 364,022,636 23,331,323 20,338,436 21,268,754
----------- ----------- ----------- ---------- ----------- ----------
End of period .......................................$356,045,981 $369,921,391 $367,488,122 $23,737,434 $23,331,323 $20,338,436
=========== =========== =========== ========== =========== ==========
</TABLE>
See accompanying notes
<PAGE>
32 for tax-exempt income
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR MUTUAL FUNDS, INC.
TAX-FREE ARIZONA FUND A CLASS
---------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 3/2/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95
--------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $11.210 $11.140 $10.700 $10.750 $10.000
Income (loss) from investment operations:
Net investment income ....................................... 0.538 0.376 0.589 0.580 0.460
Net realized and unrealized gain (loss) on investments ...... (0.645) 0.170 0.455 (0.010) 0.840
------- ------- ------- ------- -------
Total from investment operations ............................ (0.107) 0.546 1.044 0.570 1.300
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................ (0.538) (0.376) (0.589) (0.580) (0.460)
Distributions from net realized gain on investments ......... (0.115) (0.100) (0.015) (0.040) (0.090)
------- ------- ------- ------- -------
Total dividends and distributions ........................... (0.653) (0.476) (0.604) (0.620) (0.550)
------- ------- ------- ------- -------
Net asset value, end of period ................................. $10.450 $11.210 $11.140 $10.700 $10.750
======= ======= ======= ======= =======
Total Return(3) ................................................ (1.09%) 4.99% 10.07% 5.48% 13.27%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................... $18,586 $12,177 $10,916 $9,755 $6,225
Ratio of expenses to average net assets ..................... 0.60% 0.49% 0.48% 0.46% 0.52%(4)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........... 1.10% 1.07% 1.08% 1.25% 1.25%(4)
Ratio of net investment income to average net assets ........ 4.88% 5.03% 5.42% 5.43% 5.19%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly ... 4.38% 4.45% 4.82% 4.64% 4.46%(4)
Portfolio turnover .......................................... 68% 96% 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 33
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR MUTUAL FUNDS, INC.
TAX-FREE ARIZONA FUND B CLASS
---------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 6/29/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95
--------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $11.200 $11.140 $10.690 $10.740 $10.300
Income (loss) from investment operations:
Net investment income ....................................... 0.456 0.319 0.502 0.510 0.260
Net realized and unrealized gain (loss) on investments ...... (0.635) 0.160 0.469 (0.010) 0.530
------- ------- ------- ------- -------
Total from investment operations ............................ (0.179) 0.479 0.971 0.500 0.790
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................ (0.456) (0.319) (0.506) (0.510) (0.260)
Distributions from net realized gain on investments ......... (0.115) (0.100) (0.015) (0.040) (0.090)
------- ------- ------- ------- -------
Total dividends and distributions ........................... (0.571) (0.419) (0.521) (0.550) (0.350)
------- ------- ------- ------- -------
Net asset value, end of period ................................. $10.450 $11.200 $11.140 $10.690 $10.740
======= ======= ======= ======= =======
Total Return(3) ................................................ (1.74%) 4.38% 9.34% 4.84% 7.74%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................... $5,956 $4,952 $3,711 $3,491 $1,629
Ratio of expenses to average net assets ..................... 1.35% 1.23% 1.22% 1.11% 0.99%(4)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........... 1.85% 1.81% 1.82% 2.00% 2.00%(4)
Ratio of net investment income to average net assets ........ 4.13% 4.29% 4.68% 4.77% 4.60%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly .. 3.63% 3.71% 4.08% 3.88% 3.59%(4)
Portfolio turnover .......................................... 68% 96% 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>
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>
VOYAGEUR MUTUAL FUNDS, INC.
TAX-FREE ARIZONA FUND C CLASS
---------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 5/13/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95
--------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $11.230 $11.160 $10.710 $10.760 $10.200
Income (loss) from investment operations:
Net investment income ....................................... 0.456 0.313 0.534 0.500 0.300
Net realized and unrealized gain (loss) on investments ...... (0.645) 0.176 0.437 (0.010) 0.650
------- ------- ------- ------- -------
Total from investment operations ............................ (0.189) 0.489 0.971 0.490 0.950
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................ (0.456) (0.319) (0.506) (0.500) (0.300)
Distributions from net realized gain on investments ......... (0.115) (0.100) (0.015) (0.040) (0.090)
------- ------- ------- ------- -------
Total dividends and distributions ........................... (0.571) (0.419) (0.521) (0.540) (0.390)
------- ------- ------- ------- -------
Net asset value, end of period ................................. $10.470 $11.230 $11.160 $10.710 $10.760
======= ======= ======= ======= =======
Total Return(3) ................................................ (1.82%) 4.46% 9.32% 4.70% 9.43%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................... $1,957 $632 $332 $23 $27
Ratio of expenses to average net assets ..................... 1.35% 1.23% 1.23% 1.21% 1.20%(4)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........... 1.85% 1.81% 1.83% 2.00% 2.00%(4)
Ratio of net investment income to average net assets ........ 4.13% 4.29% 4.67% 4.68% 4.65%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly .. 3.63% 3.71% 4.07% 3.89% 3.85%(4)
Portfolio turnover .......................................... 68% 96% 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 35
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR INSURED FUNDS, INC.
TAX-FREE ARIZONA INSURED FUND A CLASS
----------------------------------------------------------------------
EIGHT
YEAR MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95 12/31/94
--------- ---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $11.550 $11.470 $11.060 $11.150 $9.860 $11.310
Income (loss) from investment operations:
Net investment income ................................... 0.528 0.358 0.548 0.530 0.540 0.550
Net realized and unrealized gain (loss) on investments .. (0.560) 0.080 0.416 (0.090) 1.310 (1.370)
------- ------- ------- ------- ------- ------
Total from investment operations ........................ (0.032) 0.438 0.964 0.440 1.850 (0.820)
------- ------- ------- ------- ------- ------
Less dividends and distributions:
Dividends from net investment income .................... (0.528) (0.358) (0.554) (0.530) (0.560) (0.530)
Distributions from net realized gain on investments ..... -- -- -- -- -- (0.040)
In excess of net realized gains ......................... -- -- -- -- -- (0.060)
------- ------- ------- ------- ------- ------
Total dividends and distributions ....................... (0.528) (0.358) (0.554) (0.530) (0.560) (0.630)
------- ------- ------- ------- ------- ------
Net asset value, end of period ............................. $10.990 $11.550 $11.470 $11.060 $11.150 $9.860
======= ======= ======= ======= ======= ======
Total Return(2) (0.36%) 3.88% 8.96% 4.09% 19.10% (7.41%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $166,368 $179,306 $186,485 $209,258 $238,114 $231,736
Ratio of expenses to average net assets ................. 0.91% 0.84% 0.84% 0.82% 0.69% 0.72%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 0.91% 0.91% 0.89% 0.95% 0.95% 0.92%
Ratio of net investment income to average net assets .... 4.60% 4.68% 4.92% 4.89% 5.07% 5.20%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ........................................ 4.60% 4.61% 4.87% 4.76% 4.81% 5.00%
Portfolio turnover ...................................... 29% 21% 42% 42% 42% 25%
</TABLE>
- ----------------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge
(3) 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>
VOYAGEUR INSURED FUNDS, INC.
TAX-FREE ARIZONA INSURED FUND B CLASS
------------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 3/10/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95
--------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $11.550 $11.460 $11.050 $11.140 $10.440
Income (loss) from investment operations:
Net investment income ....................................... 0.441 0.300 0.455 0.450 0.380
Net realized and unrealized gain (loss) on investments ...... (0.560) 0.091 0.414 (0.090) 0.690
------- ------- ------- ------- -------
Total from investment operations ............................ (0.119) 0.391 0.869 0.360 1.070
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................ (0.441) (0.301) (0.459) (0.450) (0.370)
Distributions from net realized gain on investments ......... -- -- -- -- --
In excess of net realized gains ............................. -- -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ........................... (0.441) (0.301) (0.459) (0.450) (0.370)
------- ------- ------- ------- -------
Net asset value, end of period ................................. $10.990 $11.550 $11.460 $11.050 $11.140
======= ======= ======= ======= =======
Total Return(3) ................................................ (1.11%) 3.46% 8.06% 3.32% 10.36%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................... $6,059 $4,782 $3,657 $3,110 $2,048
Ratio of expenses to average net assets ..................... 1.66% 1.59% 1.65% 1.59% 1.33%(4)
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly ........ 1.66% 1.66% 1.70% 1.70% 1.60%(4)
Ratio of net investment income to average net assets ........ 3.85% 3.93% 4.11% 4.11% 4.08%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly .. 3.85% 3.86% 4.06% 4.00% 3.81%4
Portfolio turnover .......................................... 29% 21% 42% 42% 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>
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>
VOYAGEUR INSURED FUNDS, INC.
TAX-FREE ARIZONA INSURED FUND C CLASS
----------------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR YEAR 5/26/94(2)
ENDED ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/975 12/31/96 12/31/95 12/31/94
--------- ---------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $11.560 $11.470 $11.060 $11.150 $9.860 $10.480
Income (loss) from investment operations:
Net investment income .................................. 0.441 0.301 0.456 0.430 0.450 0.270
Net realized and unrealized gain (loss) on investments . (0.570) 0.090 0.414 (0.090) 1.310 (0.560)
------- ------- ------- ------- ------- ------
Total from investment operations ....................... (0.129) 0.391 0.870 0.340 1.760 (0.290)
------- ------- ------- ------- ------- ------
Less dividends and distributions:
Dividends from net investment income ................... (0.441) (0.301) (0.460) (0.430) (0.470) (0.250)
Distributions from net realized gain on investments .... -- -- -- -- -- (0.040)
In excess of net realized gains ........................ -- -- -- -- -- (0.040)
------- ------- ------- ------- ------- ------
Total dividends and distributions ...................... (0.441) (0.301) (0.460) (0.430) (0.470) (0.330)
------- ------- ------- ------- ------- ------
Net asset value, end of period ............................ $10.990 $11.560 $11.470 $11.060 $11.150 $9.860
======= ======= ======= ======= ======= ======
Total Return(3) (1.20%) 3.46% 8.05% 3.18% 18.10% (2.84%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $1,373 $627 $675 $554 $541 $326
Ratio of expenses to average net assets ................ 1.66% 1.59% 1.65% 1.70% 1.54% 1.50%(4)
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly ... 1.66% 1.66% 1.70% 1.70% 1.69% 1.71%(4)
Ratio of net investment income to average net assets ... 3.85% 3.93% 4.11% 4.01% 4.18% 4.10%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ...................................... 3.85% 3.86% 4.06% 4.01% 4.03% 3.89%(4)
Portfolio turnover ..................................... 29% 21% 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>
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>
VOYAGEUR MUTUAL FUNDS, INC.
TAX-FREE CALIFORNIA FUND A CLASS
------------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 3/10/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95
--------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $11.220 $11.050 $10.430 $10.640 $10.000
Income (loss) from investment operations:
Net investment income ....................................... 0.556 0.387 0.590 0.600 0.470
Net realized and unrealized gain (loss) on investments ...... (0.709) 0.163 0.665 (0.180) 0.700
------- ------- ------- ------- -------
Total from investment operations ............................ (0.153) 0.550 1.255 0.420 1.170
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................ (0.554) (0.380) (0.595) (0.600) (0.470)
Distributions from net realized gain on investments ......... (0.023) -- (0.040) (0.030) (0.060)
------- ------- ------- ------- -------
Total dividends and distributions ........................... (0.577) (0.380) (0.635) (0.630) (0.530)
------- ------- ------- ------- -------
Net asset value, end of period ................................. $10.490 $11.220 $11.050 $10.430 $10.640
======= ======= ======= ======= =======
Total Return(3)................................................. (1.53%) 5.07% 12.43% 4.21% 11.97%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................... $24,515 $11,600 $4,385 $1,218 $1,012
Ratio of expenses to average net assets ..................... 0.33% 0.22% 0.13% 0.27% 0.46%(4)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........... 0.97% 1.07% 1.19% 1.25% 1.22%(4)
Ratio of net investment income to average net assets ........ 4.95% 5.00% 5.32% 5.71% 5.57%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly .. 4.31% 4.15% 4.26% 4.73% 4.81%(4)
Portfolio turnover .......................................... 123% 62% 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 39
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR MUTUAL FUNDS, INC.
TAX-FREE CALIFORNIA FUND B CLASS
------------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 8/23/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95
--------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.260 $11.080 $10.440 $10.650 $9.960
Income (loss) from investment operations:
Net investment income 0.470 0.319 0.520 0.560 0.200
Net realized and unrealized gain (loss) on investments (0.717) 0.186 0.688 (0.180) 0.740
------- ------- ------- ------- -------
Total from investment operations (0.247) 0.505 1.208 0.380 0.940
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income (0.470) (0.325) (0.528) (0.560) (0.190)
Distributions from net realized gain on investments (0.023) -- (0.040) (0.030) (0.060)
------- ------- ------- ------- -------
Total dividends and distributions (0.493) (0.325) (0.568) (0.590) (0.250)
------- ------- ------- ------- -------
Net asset value, end of period $10.520 $11.260 $11.080 $10.440 $10.650
======= ======= ======= ======= =======
Total Return(3) (2.35%) 4.62% 11.91% 3.77% 9.52%
Ratios and supplemental data:
Net assets, end of period (000 omitted) $13,676 $8,962 $5,576 $660 $128
Ratio of expenses to average net assets 1.08% 0.97% 0.80% 0.50% 0.60%(4)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly 1.72% 1.82% 1.86% 2.00% 1.93%(4)
Ratio of net investment income to average net assets 4.20% 4.27% 4.65% 5.34% 5.33%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.56% 3.42% 3.59% 3.84% 4.00%(4)
Portfolio turnover 123% 62% 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>
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>
VOYAGEUR MUTUAL FUNDS, INC.
TAX-FREE CALIFORNIA FUND C CLASS
-------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR 4/9/96(2)
ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96
--------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........................... $11.230 $11.050 $10.420 $10.070
Income (loss) from investment operations:
Net investment income ....................................... 0.470 0.335 0.487 0.370
Net realized and unrealized gain (loss) on investments ...... (0.707) 0.170 0.696 0.380
------- ------- ------- -------
Total from investment operations ............................ (0.237) 0.505 1.183 0.750
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ........................ (0.470) (0.325) (0.513) (0.370)
Distributions from net realized gain on investments ......... (0.023) -- (0.040) (0.030)
------- ------- ------- -------
Total dividends and distributions ........................... (0.493) (0.325) (0.553) (0.400)
------- ------- ------- -------
Net asset value, end of period ................................. $10.500 $11.230 $11.050 $10.420
======= ======= ======= =======
Total Return(3) ................................................ (2.26%) 4.64% 11.69% 7.58%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................... $5,132 $774 $109 $94
Ratio of expenses to average net assets ..................... 1.08% 0.97% 0.87% 0.78%(4)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........... 1.72% 1.82% 1.93% 2.00%(4)
Ratio of net investment income to average net assets ........ 4.20% 4.27% 4.58% 5.13%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly .. 3.56% 3.42% 3.52% 3.91%(4)
Portfolio turnover .......................................... 123% 62% 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>
for tax-exempt income 41
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR INVESTMENT TRUST
TAX-FREE CALIFORNIA INSURED FUND A CLASS
----------------------------------------------------------------------------------
EIGHT TWO
YEAR MONTHS YEAR YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98(1) 12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94
--------- ---------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $11.130 $10.980 $10.500 $10.650 $9.330 $9.510 $11.080
Income (loss) from investment operations:
Net investment income ...................... 0.497 0.345 0.513 0.520 0.530 0.100 0.550
Net realized and unrealized gain (loss)
on investments ........................... (0.700) 0.150 0.486 (0.150) 1.340 (0.180) (1.520)
------- ------- ------- ------- ------- ------ ------
Total from investment operations ........... (0.203) 0.495 0.999 0.370 1.870 (0.080) (0.970)
------- ------- ------- ------- ------- ------ ------
Less dividends and distributions:
Dividends from net investment income ....... (0.497) (0.345) (0.519) (0.520) (0.550) (0.090) (0.540)
Distributions from net realized gain
on investments ........................... -- -- -- -- -- (0.010) (0.060)
------- ------- ------- ------- ------- ------ ------
Total dividends and distributions .......... (0.497) (0.345) (0.519) (0.520) (0.550) (0.100) (0.600)
------- ------- ------- ------- ------- ------ ------
Net asset value, end of period ................ $10.430 $11.130 $10.980 $10.500 $10.650 $9.330 $9.510
======= ======= ======= ======= ======= ====== ======
Total Return(2) ............................... (1.97%) 4.58% 9.78% 3.63% 20.51% (0.84%) (8.97%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .... $25,042 $28,577 $26,923 $30,551 $33,860 $27,994 $27,282
Ratio of expenses to average net assets .... 0.99% 0.94% 0.99% 0.82% 0.70% 0.10%(3) 0.20%
Ratio of expenses to average net assets
prior to expense limitation and expenses
paid indirectly .......................... 1.10% 0.94% 1.02% 1.01% 1.02% 1.24%(3) 1.25%
Ratio of net investment income to average
net assets ............................... 4.51% 4.69% 4.85% 5.05% 5.23% 6.30%(3) 5.37%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly ............. 4.40% 4.69% 4.82% 4.86% 4.91% 5.16%(3) 4.32%
Portfolio turnover ......................... 114% 44% 63% 55% 107% 7% 18%
</TABLE>
- ----------------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(3) Annualized.
(4) 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>
VOYAGEUR INVESTMENT TRUST
TAX-FREE CALIFORNIA INSURED FUND B CLASS
-----------------------------------------------------------------------------------
EIGHT TWO PRIOR FROM
YEAR MONTHS YEAR YEAR YEAR MONTHS 3/1/94(2)
ENDED ENDED ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94 10/31/94
--------- ---------- ----------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $11.130 $10.990 $10.500 $10.650 $9.330 $9.510 $10.680
Income (loss) from investment operations:
Net investment income ...................... 0.414 0.290 0.457 0.480 0.500 0.080 0.310
Net realized and unrealized gain (loss)
on investments ........................... (0.700) 0.140 0.495 (0.150) 1.330 (0.170) (1.160)
------- ------- ------- ------- ------- ------ ------
Total from investment operations ........... (0.286) 0.430 0.952 0.330 1.830 (0.090) (0.850)
------- ------- ------- ------- ------- ------ ------
Less dividends and distributions:
Dividends from net investment income ....... (0.414) (0.290) (0.462) (0.480) (0.510) (0.080) (0.300)
Distributions from net realized gain
on investments ........................... -- -- -- -- -- (0.010) (0.020)
------- ------- ------- ------- ------- ------ ------
Total dividends and distributions .......... (0.414) (0.290) (0.462) (0.480) (0.510) (0.090) (0.320)
------- ------- ------- ------- ------- ------ ------
Net asset value, end of period ................ $10.430 $11.130 $10.990 $10.500 $10.650 $9.330 $9.510
======= ======= ======= ======= ======= ====== ======
Total Return(3) ............................... (2.70%) 3.96% 9.29% 3.22% 20.01% (0.92%) (7.93%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) .... $6,588 $6,588 $6,629 $6,717 $6,029 $2,219 $1,427
Ratio of expenses to average net assets .... 1.74% 1.69% 1.53% 1.21% 1.10% 0.57%(4) 0.73%(4)
Ratio of expenses to average net assets
prior to expense limitation and expenses
paid indirectly .......................... 1.85% 1.69% 1.56% 1.76% 1.75% 1.94%(4) 1.95%(4)
Ratio of net investment income to average
net assets ............................... 3.76% 3.94% 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
and expenses paid indirectly ............. 3.65% 3.94% 4.28% 4.09% 4.10% 4.17%(4) 3.60%(4)
Portfolio turnover ......................... 114% 44% 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 43
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR INVESTMENT TRUST
TAX-FREE CALIFORNIA INSURED FUND C CLASS
-------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 4/12/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/975 12/31/96 12/31/95
--------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $11.090 $10.940 $10.460 $10.650 $10.190
Income (loss) from investment operations:
Net investment income .................................... 0.414 0.289 0.485 0.440 0.250
Net realized and unrealized gain (loss) on investments ... (0.700) 0.151 0.432 (0.190) 0.530
------- ------- ------- ------- -------
Total from investment operations ......................... (0.286) 0.440 0.917 0.250 0.780
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income ..................... (0.414) (0.290) (0.437) (0.440) (0.320)
Distributions from net realized gain on investments ...... -- -- -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ........................ (0.414) (0.290) (0.437) (0.440) (0.320)
------- ------- ------- ------- -------
Net asset value, end of period .............................. $10.390 $11.090 $10.940 $10.460 $10.650
======= ======= ======= ======= =======
Total Return(3) ............................................. (2.70%) 4.08% 8.98% 2.47% 7.77%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $592 $461 $476 $55 $53
Ratio of expenses to average net assets .................. 1.74% 1.69% 1.71% 1.58% 1.53%(4)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ........ 1.85% 1.69% 1.74% 1.77% 1.77%(4)
Ratio of net investment income to average net assets ..... 3.76% 3.94% 4.13% 4.02% 4.25%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly 3.65% 3.94% 4.10% 3.83% 4.01%(4)
Portfolio turnover ....................................... 114% 44% 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>
44 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR MUTUAL FUNDS II, INC.
TAX-FREE COLORADO FUND A CLASS
----------------------------------------------------------------------
EIGHT
YEAR MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95 12/31/94
--------- ---------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........................ $11.510 $11.380 $10.780 $10.900 $9.530 $11.100
Income (loss) from investment operations:
Net investment income .................................... 0.552 0.376 0.574 0.560 0.540 0.550
Net realized and unrealized gain (loss) on investments ... (0.730) 0.130 0.618 (0.130) 1.380 (1.540)
------- ------- ------- ------- ------- ------
Total from investment operations ......................... (0.178) 0.506 1.192 0.430 1.920 (0.990)
------- ------- ------- ------- ------- ------
Less dividends and distributions:
Dividends from net investment income ..................... (0.552) (0.376) (0.592) (0.550) (0.550) (0.540)
Distributions from net realized gain on investments ...... -- -- -- -- -- (0.040)
------- ------- ------- ------- ------- ------
Total dividends and distributions ........................ (0.552) (0.376) (0.592) (0.550) (0.550) (0.580)
------- ------- ------- ------- ------- ------
Net asset value, end of period .............................. $10.780 $11.510 $11.380 $10.780 $10.900 $9.530
======= ======= ======= ======= ======= ======
Total Return(2) ............................................. (1.69%) 4.51% 11.40% 4.08% 20.54% (9.12%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..................$338,184 $357,127 $357,993 $358,328 $392,815 $354,138
Ratio of expenses to average net assets .................. 0.91% 0.83% 0.81% 0.78% 0.76% 0.66%
Ratio of expenses to average net assets
prior to expense limitation and expenses paid indirectly 0.91% 0.92% 0.86% 0.91% 0.93% 0.72%
Ratio of net investment income to average net assets ..... 4.86% 4.93% 5.25% 5.27% 5.18% 5.35%
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ........................................ 4.86% 4.84% 5.20% 5.14% 5.01% 5.29%
Portfolio turnover ....................................... 55% 36% 54% 40% 82% 69%
</TABLE>
- ----------------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
(3) 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 45
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR MUTUAL FUNDS II, INC.
TAX-FREE COLORADO FUND B CLASS
------------------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR 3/22/95(2)
ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95
--------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $11.510 $11.380 $10.780 $10.900 $10.250
Income (loss) from investment operations:
Net investment income ................................... 0.466 0.319 0.483 0.470 0.350
Net realized and unrealized gain (loss) on investments .. (0.719) 0.130 0.616 (0.130) 0.650
------- ------- ------- ------- -------
Total from investment operations ........................ (0.253) 0.449 1.099 0.340 1.000
------- ------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .................... (0.467) (0.319) (0.499) (0.460) (0.350)
Distributions from net realized gain on investments ..... -- -- -- -- --
Total dividends and distributions ....................... (0.467) (0.319) (0.499) (0.460) (0.350)
------- ------- ------- ------- -------
Net asset value, end of period ............................. $10.790 $11.510 $11.380 $10.780 $10.900
======= ======= ======= ======= =======
Total Return(3) ............................................ (2.34%) 3.99% 10.47% 3.25% 9.96%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $13,530 $10,726 $7,798 $4,172 $1,643
Ratio of expenses to average net assets ................. 1.66% 1.58% 1.62% 1.58% 1.39%(4)
Ratio of expenses to average net assets
prior to expense limitation and expenses
paid indirectly ....................................... 1.66% 1.67% 1.67% 1.65% 1.60%(4)
Ratio of net investment income to average net assets .... 4.11% 4.18% 4.44% 4.45% 3.96%(4)
Ratio of net investment income to average net
assets prior to expense limitation and
expenses paid indirectly ............................. 4.11% 4.09% 4.39% 4.38% 3.75%(4)
Portfolio turnover ...................................... 55% 36% 54% 40% 82%
</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>
46 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR MUTUAL FUNDS II, INC.
TAX-FREE COLORADO FUND C CLASS
------------------------------------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR YEAR YEAR 5/6/94(2)
ENDED ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94
--------- ---------- ----------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .....................$11.520 $11.380 $10.780 $10.900 $9.530 $10.210
Income (loss) from investment operations:
Net investment income ................................. 0.463 0.319 0.484 0.460 0.450 0.290
Net realized and unrealized gain (loss)
on investments ...................................... (0.726) 0.140 0.615 (0.130) 1.370 (0.670)
------- ------- ------- ------- ------- ------
Total from investment operations ...................... (0.263) 0.459 1.099 0.330 1.820 (0.380)
------- ------- ------- ------- ------- ------
Less dividends and distributions:
Dividends from net investment income .................. (0.467) (0.319) (0.499) (0.450) (0.450) (0.270)
Distributions from net realized gain on investments ... -- -- -- -- -- (0.030)
------- ------- ------- ------- ------- ------
Total dividends and distributions ..................... (0.467) (0.319) (0.499) (0.450) (0.450) (0.300)
------- ------- ------- ------- ------- ------
Net asset value, end of period ...........................$10.790 $11.520 $11.380 $10.780 $10.900 $9.530
======= ======= ======= ======= ======= ======
Total Return(3) .......................................... (2.42%) 4.08% 10.47% 3.17% 19.44% (3.75%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $4,332 $2,068 $1,697 $1,522 $1,042 $465
Ratio of expenses to average net assets ............... 1.66% 1.58% 1.64% 1.66% 1.66% 1.80%(4)
Ratio of expenses to average net assets prior
to expense limitation and expenses paid indirectly .. 1.66% 1.67% 1.69% 1.66% 1.66% 1.81%(4)
Ratio of net investment income to average net assets .. 4.11% 4.18% 4.42% 4.40% 4.20% 4.23%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses
paid indirectly ..................................... 4.11% 4.09% 4.37% 4.40% 4.20% 4.22%(4)
Portfolio turnover 55% 36% 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>
for tax-exempt income 47
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR INVESTMENT TRUST
TAX-FREE NEW MEXICO FUND A CLASS
-----------------------------------------------------------------------------------
EIGHT TWO
YEAR MONTHS YEAR YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98(1) 12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94
--------- ---------- ----------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $11.450 $11.280 $10.790 $10.890 $9.590 $9.770 $10.920
Income (loss) from investment operations:
Net investment income ....................... 0.537 0.364 0.547 0.540 0.520 0.110 0.560
Net realized and unrealized gain (loss)
on investments ............................ (0.660) 0.171 0.503 (0.110) 1.330 (0.200) (1.160)
------- ------- ------- ------- ------- ------ ------
Total from investment operations ............ (0.123) 0.535 1.050 0.430 1.850 (0.090) (0.600)
------- ------- ------- ------- ------- ------ ------
Less dividends and distributions:
Dividends from net investment income ........ (0.537) (0.365) (0.560) (0.530) (0.550) (0.090) (0.550)
Distributions from net realized gain
on investments ............................ -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------ ------
Total dividends and distributions ........... (0.537) (0.365) (0.560) (0.530) (0.550) (0.090) (0.550)
------- ------- ------- ------- ------- ------ ------
Net asset value, end of period ................. $10.790 $11.450 $11.280 $10.790 $10.890 $9.590 $9.770
======= ======= ======= ======= ======= ====== ======
Total Return(2) ................................ (1.17%) 4.81% 10.01% 4.13% 19.64% (0.90%) (5.56%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..... $20,732 $21,155 $18,959 $20,133 $21,402 $19,706 $23,096
Ratio of expenses to average net assets ..... 0.99% 1.00% 0.99% 0.88% 0.87% 0.06%(3) 0.29%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly .................. 1.01% 1.15% 1.04% 1.07% 1.09% 1.25%(3) 1.16%
Ratio of net investment income to average
net assets ................................ 4.75% 4.81% 5.00% 5.06% 5.07% 6.38%(3) 5.26%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .............. 4.73% 4.66% 4.95% 4.87% 4.85% 5.19%(3) 4.39%
Portfolio turnover .......................... 37% 20% 28% 42% 55% 2% 23%
</TABLE>
- ----------------------
1 Ratios have been annualized and the total returns have not been annualized.
2 Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset
value and does not reflect the impact of a sales charge.
3 Annualized.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
See accompanying notes
<PAGE>
48 for tax-exempt income
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR INVESTMENT TRUST
TAX-FREE NEW MEXICO FUND B CLASS
-----------------------------------------------------------------------------------
EIGHT TWO PERIOD FROM
YEAR MONTHS YEAR YEAR YEAR MONTHS 3/3/94(2)
ENDED ENDED ENDED ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 12/31/95 12/31/94 10/31/94
--------- ---------- ----------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $11.460 $11.290 $10.790 $10.890 $9.590 $9.770 $10.690
Income (loss) from investment operations:
Net investment income ....................... 0.453 0.309 0.465 0.460 0.460 0.090 0.310
Net realized and unrealized gain (loss)
on investments ............................ (0.661) 0.169 0.508 (0.110) 1.320 (0.190) (0.930)
------- ------- ------- ------- ------- ------ ------
Total from investment operations ............ (0.208) 0.478 0.973 0.350 1.780 (0.100) (0.620)
------- ------- ------- ------- ------- ------ ------
Less dividends and distributions:
Dividends from net investment income ........ (0.452) (0.308) (0.473) (0.450) (0.480) (0.080) (0.300)
Distributions from net realized gain on
investments ............................... -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------ ------
Total dividends and distributions ........... (0.452) (0.308) (0.473) (0.450) (0.480) (0.080) (0.300)
------- ------- ------- ------- ------- ------ ------
Net asset value, end of period ................. $10.800 $11.460 $11.290 $10.790 $10.890 $9.590 $9.770
======= ======= ======= ======= ======= ====== ======
Total Return(3) ................................ (1.91%) 4.29% 9.24% 3.39% 18.84% (0.98%) (5.84%)
Ratios and supplemental data:
Net assets, end of period (000 omitted) ..... $2,624 $1,782 $1,065 $794 $605 $272 $264
Ratio of expenses to average net assets ..... 1.74% 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 and
expenses paid indirectly .................. 1.76% 1.90% 1.81% 1.82% 1.83% 2.00%(4) 1.86%(4)
Ratio of net investment income to
average net assets ........................ 4.00% 4.06% 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
and expenses paid indirectly .............. 3.98% 3.91% 4.18% 4.10% 4.03% 4.35%(4) 3.69%(4)
Portfolio turnover .......................... 37% 20% 28% 42% 55% 2% 23%
</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 49
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
VOYAGEUR INVESTMENT TRUST
TAX-FREE NEW MEXICO FUND C CLASS
-----------------------------------------------
EIGHT PERIOD FROM
YEAR MONTHS YEAR 5/7/96(2)
ENDED ENDED ENDED TO
8/31/99 8/31/98(1) 12/31/97(5) 12/31/96
------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................. $11.460 $11.280 $10.790 $10.410
Income (loss) from investment operations:
Net investment income ......................................... 0.452 0.305 0.459 0.280
Net realized and unrealized gain (loss) on investments ........ (0.670) 0.183 0.495 0.370
------- ------- ------- -------
Total from investment operations .............................. (0.218) 0.488 0.954 0.650
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income .......................... (0.452) (0.308) (0.464) (0.270)
Distributions from net realized gain on investments ........... -- -- -- --
------- ------- ------- -------
Total dividends and distributions ............................. (0.452) (0.308) (0.464) (0.270)
------- ------- ------- -------
Net asset value, end of period ................................... $10.790 $11.460 $11.280 $10.790
======= ======= ======= =======
Total Return(3) .................................................. (1.99%) 4.38% 9.06% 6.30%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ....................... $381 $394 $315 $341
Ratio of expenses to average net assets ....................... 1.74% 1.75% 1.84% 1.74%(4)
Ratio of expenses to average net assets
prior to expense limitation and expenses
paid indirectly ............................................ 1.76% 1.90% 1.89% 1.83%(4)
Ratio of net investment income to average net assets .......... 4.00% 4.06% 4.15% 4.21%(4)
Ratio of net investment income to average net assets
prior to expense limitation and expenses paid indirectly ... 3.98% 3.91% 4.10% 4.12%(4)
Portfolio turnover ............................................ 37% 20% 28% 42%
- ----------------------
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.
</TABLE>
See accompanying notes
<PAGE>
50 for tax-exempt income
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1999
- --------------------------------------------------------------------------------
Delaware Tax-Free Arizona ("Tax-Free Arizona Fund") and Delaware Tax-Free
California ("Tax-Free California Fund"), series of Voyageur Mutual Funds, Inc.,
Delaware Tax-Free Arizona Insured Fund ("Tax-Free Arizona Insured Fund"), a
series of Voyageur Insured Funds, Inc., and Delaware Tax-Free Colorado Fund
("Tax-Free Colorado Fund"), a series of Voyageur Mutual Funds II, Inc., are
Delaware Business Trusts 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
Tax-Free California Insured Fund ("Tax-Free California Insured Fund") and
Delaware Tax-Free New Mexico Fund ("Tax-Free New Mexico Fund"), series of
Voyageur Investment Trust, are Maryland corporations registered under the
Investment Company Act of 1940 (as amended) as open-end management investment
companies. Tax-Free New Mexico Fund is 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 and Tax-Free New Mexico
Fund (referred to separately as a "Fund" or collectively as the "Funds") seek a
high level of 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. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Money market instruments having less than 60 days to maturity are
valued at amortized cost which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Funds' Board
of Directors.
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.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Interest income is recorded on the accrual basis. Original issue discounts and
market premiums are amortized to interest income over the lives of the
respective securities. The Funds declare dividends from net investment income
daily and pay them monthly. Capital gains, if any, are distributed annually.
<PAGE>
Certain expenses of the Funds are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses for the year ended August 31, 1999 were approximately:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
$503 $4,223 $787 $811 $8,616 $558
</TABLE>
The expenses paid under the above arrangements are included in their respective
expense captions on the Statement of Operations with the corresponding expense
offset shown as "Expenses paid indirectly".
2. Investment Management and Other Transactions with Affiliates
Commencing April 1, 1999, and in accordance with the terms of the Investment
Management Agreement, the Funds pay Delaware Management Company ("DMC"), the
Investment Manager of the Funds, an annual fee which is calculated daily at the
rate of 0.55% on the first $500 million of average daily net assets of the fund,
0.50% on the next $500 million, 0.45% on the next $1,500 million and 0.425% on
the average daily net assets in excess of $2,500 million for the Tax-Free
Arizona, Tax-Free California, Tax-Free Colorado, and the Tax Free New Mexico
Funds; and 0.50% on the first $500 million of average daily net assets of the
fund, 0.475% on the next $500 million, 0.45% on the next $1,500 million and
0.425% in excess of $2,500 million for the Tax-Free Arizona Insured Fund and the
Tax-Free California Insured Fund. Prior to April 1, 1999, each Fund paid DMC an
annual fee calculated at the rate of 0.50% of average daily net assets.
DMC has elected to waive its fees and reimburse each Fund to the extent that
annual operating expenses, exclusive of distribution expenses, taxes, interest,
brokerage commissions and extraordinary expenses, exceed the following
percentages of average daily net assets through December 31, 1999. The waiver
rates are as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operating expense limitation
as a percentage of average
daily net asset (per annum)................. 0.50%* 0.70%* 0.25%* 0.75% 0.75%* 0.75%
</TABLE>
* Prior to July 1, 1999, expense limitations were 0.35% and 0.10% for the
Tax-Free Arizona Fund and the Tax-Free California Fund, respectively. Prior to
January 1, 1999, expense limitations were 0.25%, 0.66%, 0.00%, and 0.62% for the
Tax-Free Arizona Fund, Tax-Free Arizona Insured Fund, Tax-Free California Fund,
and the Tax-Free Colorado Funds, respectively.
<PAGE>
for tax-exempt income 51
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. Investment Management and Other Transactions with Affiliates (Continued)
The Funds have engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting and
administration services. Each Fund pays DSC a monthly fee based on number of
shareholder accounts, shareholder transactions and average net assets, subject
to certain minimums.
On August 31, 1999, the Funds had payables to affiliates as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment Management Fee Payable To DMC .......... $-- $49,077 $-- $ 4,745 $66,677 $ 3,620
Dividend Disbursing, Transfer Agent Fees,
Accounting Fees And Other Expenses Payable
To DSC ......................................... 3,006 17,592 4,815 3,871 36,956 3,160
Other Expenses Payable to DMC And Affiliates....... 3,371 22,594 17,560 12,938 48,660 2,826
</TABLE>
Pursuant to the Distribution Agreement, the Funds pay Delaware Distributors,
L.P. ("DDLP"), the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.25% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Classes for each Fund.
For the year ended August 31, 1999, 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 TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$14,670 $26,477 $22,071 $7,369 $77,134 $13,824
</TABLE>
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Funds. These officers, directors and employees are paid no compensation
by the Funds.
3. Investments
During the year ended August 31, 1999, the Funds made purchases and sales of
investment securities other than U.S. government securities and temporary cash
investments as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Purchases.............................. $24,992,193 $52,500,087 $64,677,330 $37,139,069 $216,469,622 $10,718,640
Sales ................................. 14,643,651 56,837,982 41,796,261 38,211,486 204,257,660 8,908,922
</TABLE>
At August 31, 1999, 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 TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cost of Investments.......................... $27,999,719 $168,616,026 $47,973,642 $31,680,004 $351,819,924 $23,160,482
=========== ============ =========== =========== ============ ===========
Aggregate Unrealized Appreciation............ $207,047 $6,485,130 $35,455 $999,552 $ 11,266,102 $ 844,595
Aggregate Unrealized (Depreciation).......... (851,391) (2,375,201) (2,082,433) (681,938) (9,345,598) (566,253)
----------- ------------ ----------- ----------- ------------ -----------
Net Unrealized Appreciation (Depreciation)... $ (644,344) $ 4,109,929 $ (2,046,978)$ 317,614 $ 1,920,504 $ 278,342
=========== ============ =========== =========== ============ ===========
</TABLE>
<PAGE>
For federal income tax purposes the Funds had capital loss carryforwards of the
following amounts:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA CALIFORNIA COLORADO NEW MEXICO
INSURED FUND INSURED FUND FUND FUND
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Expires 2002 $ -- $ -- $ -- $161,295
Expires 2003 1,513,304 197,188 48,864 277,128
Expires 2004 -- -- 832,567 22,469
Expires 2007 -- -- -- --
--------- ------- -------- --------
1,513,304 $197,188 $881,431 $460,892
========= ======== ======== ========
</TABLE>
<PAGE>
52 for tax-exempt income
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. Capital Stock
Transactions in capital stock shares were as follows:
<TABLE>
<CAPTION>
TAX-FREE ARIZONA FUND TAX-FREE ARIZONA INSURED FUND
----------------------------------- ----------------------------------
EIGHT EIGHT
YEAR MONTHS YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class ........................................ 1,047,440 204,834 158,751 1,153,449 489,440 778,637
B Class ........................................ 158,996 142,024 130,063 224,304 128,628 146,974
C Class ........................................ 141,433 25,868 27,479 87,589 9,588 23,129
Shares issued upon reinvestment of distributions from net investment income and
net realized gain on investments:
A Class ........................................ 49,046 23,556 29,507 308,344 206,605 369,681
B Class ........................................ 12,651 7,389 8,686 10,909 5,160 7,217
C Class ........................................ 2,263 698 159 2,747 912 1,342
--------- ------- ------- --------- ------- ---------
1,411,829 404,369 354,645 1,787,342 840,333 1,326,980
--------- ------- ------- --------- ------- ---------
Shares repurchased:
A Class ........................................ (405,027) (121,649) (120,327) (1,836,808) (1,438,707) (3,811,075)
B Class ........................................ (43,718) (40,602) (132,059) (97,602) (38,808) (116,629)
C Class ........................................ (13,128) (33) -- (19,695) (15,119) (15,711)
--------- ------- ------- --------- ------- ---------
(461,873) (162,284) (252,386) (1,954,105) (1,492,634) (3,943,415)
--------- ------- ------- --------- ------- ---------
Net Increase (Decrease) ........................... 949,956 242,085 102,259 (166,763) (652,301) (2,616,435)
========= ======= ======= ========= ======= =========
TAX-FREE CALIFORNIA FUND TAX-FREE CALIFORNIA INSURED FUND
----------------------------------- --------------------------------------
EIGHT EIGHT
YEAR MONTHS YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97
------- ------- -------- ------- ------- --------
Shares sold:
A Class ........................................ 1,479,618 689,801 325,158 282,890 396,502 135,140
B Class ........................................ 638,576 309,443 443,601 145,203 39,549 62,442
C Class ........................................ 463,063 58,498 8,190 15,326 10,226 37,910
Shares issued upon reinvestment of distributions from net investment income and
net realized gain on investments:
A Class ........................................ 62,783 11,126 7,845 43,195 30,176 56,507
B Class ........................................ 16,717 5,345 3,798 8,368 5,418 10,856
C Class ........................................ 6,677 615 611 371 223 355
--------- --------- ------- ------- ------- -------
2,667,434 1,074,828 789,203 495,353 482,094 303,210
--------- --------- ------- ------- ------- -------
Shares repurchased:
A Class ........................................ (238,419) (64,555) (52,777) (491,489) (310,834) (650,095)
B Class ........................................ (151,565) (21,844) (7,430) (113,530) (56,776) (109,515)
C Class ........................................ (49,887) -- (7,965) (283) (12,424) --
--------- --------- ------- ------- ------- -------
(439,871) (86,399) (68,172) (605,302) (380,034) (759,610)
--------- --------- ------- ------- ------- -------
Net Increase (Decrease) 2,227,563 988,429 721,031 (109,949) 102,060 (456,400)
========= ========= ======= ======= ======= =======
</TABLE>
<PAGE>
for tax-exempt income 53
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. Capital Stock (Continued)
<TABLE>
<CAPTION>
TAX-FREE COLORADO FUND TAX-FREE NEW MEXICO FUND
----------------------------------- ---------------------------------
EIGHT EIGHT
YEAR MONTHS YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class ........................................ 3,566,953 1,760,189 2,280,831 314,287 242,673 104,678
B Class ........................................ 436,017 247,293 326,460 101,556 59,162 28,562
C Class ........................................ 272,821 57,114 50,877 11,230 5,720 8,900
Shares issued upon reinvestment of distributions from
net investment income and net realized gain
on investments:
A Class 970,397 653,195 1,164,027 46,834 30,674 49,974
B Class 33,206 16,342 20,340 4,816 1,892 2,060
C Class 9,040 3,944 6,297 1,367 756 1,159
--------- --------- --------- ------- ------- -------
5,288,434 2,738,077 3,848,832 480,090 340,877 195,333
--------- --------- --------- ------- ------- -------
Shares repurchased:
A Class (4,197,362) (2,861,037) (5,214,040) (286,039) (107,432) (339,101)
B Class (146,477) (17,487) (48,522) (18,826) (1) (9,814)
C Class (60,096) (30,633) (49,216) (11,640) -- (13,780)
--------- --------- --------- ------- ------- -------
(4,403,935) (2,909,157) (5,311,778) (316,505) (107,433) (362,695)
--------- --------- --------- ------- ------- -------
Net Increase (Decrease) 884,499 (171,080) (1,462,946) 163,585 233,444 (167,362)
======= ======== ========== ======= ======= ========
</TABLE>
5. Lines of Credit
The Funds have committed lines of credit for the following amounts:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ---------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
$800,000 $9,900,000 $500,000 $1,800,000 $18,500,000 $1,000,000
</TABLE>
No amounts were outstanding at August 31, 1999, or at anytime during the period.
6. Credit and Market Risk
The Funds concentrate their investments in securities mainly issued by each
specific state's 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 Statements of Net Assets.
<PAGE>
7. Tax Information (Unaudited)
The information set forth is for each Fund's fiscal year as required by federal
laws. Shareholders, however, must report distributions on a calendar year basis
for income tax purposes, which may include distributions for portions of two
fiscal years of a fund. Accordingly, the information needed by shareholders for
income tax purposes will be sent to them in early 2000. Please consult your tax
advisor for proper treatment of this information.
For the fiscal year ended August 31, 1999, each Fund designates as long term
capital gains, ordinary income and tax-exempt income distributions paid during
the year as follows:
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
ARIZONA ARIZONA CALIFORNIA CALIFORNIA COLORADO NEW MEXICO
FUND INSURED FUND FUND INSURED FUND FUND FUND
-------- ------------ ---------- ------------ -------- -----------
<S> <C> <C>
Long Term Capital Gains Distributions 8% -- 1% -- -- --
Ordinary Income Distributions 8% -- 3% -- -- --
Tax-Exempt Income Distributions 84% 100% 96% 100% 100% 100%
Total Distributions 100% 100% 100% 100% 100% 100%
</TABLE>
<PAGE>
54 for tax-exempt income
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
VOYAGEUR MUTUAL FUNDS, INC. - DELAWARE TAX-FREE ARIZONA FUND
VOYAGEUR INSURED FUNDS, INC. - DELAWARE TAX-FREE ARIZONA INSURED FUND
VOYAGEUR MUTUAL FUNDS, INC. - DELAWARE TAX-FREE CALIFORNIA FUND
VOYAGEUR INVESTMENT TRUST - DELAWARE TAX-FREE CALIFORNIA INSURED FUND
VOYAGEUR MUTUAL FUNDS II, INC. - DELAWARE TAX-FREE COLORADO FUND
VOYAGEUR INVESTMENT TRUST - DELAWARE TAX-FREE NEW MEXICO FUND
We have audited the accompanying statements of net assets of Delaware Tax-Free
Arizona Fund, Delaware Tax-Free Arizona Insured Fund, Delaware Tax-Free
California Fund, Delaware Tax-Free California Insured Fund, Delaware Tax-Free
Colorado Fund and Delaware Tax-Free New Mexico Fund (the "Funds") and the
statements of assets and liabilities for the Delaware Tax-Free Arizona Insured
Fund and Delaware Tax-Free California Insured Fund as of August 31, 1999, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the periods indicated therein, and the
financial highlights for each of the periods presented from January 1, 1997
through August 31, 1999. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the periods presented through December 31,
1996 were audited by other auditors whose reports thereon dated February 14,
1997 expressed unqualified opinions on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1999, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds at August 31, 1999, the results of their operations for
the year then ended, the changes in their net assets for each of the periods
indicated therein, and their financial highlights for each of the periods
presented from January 1, 1997 through August 31, 1999, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
-----------------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
October 1, 1999
<PAGE>
for tax-exempt income 55
Proxy Results (Unaudited)
Voyageur Investment Trust shareholders voted on the following proposals at the
annual meeting of shareholders on December 4, 1998, and the Voyageur Mutual
Funds Inc., the Voyageur Insured Funds, Inc. and the Voyageur Mutual Funds II,
Inc., shareholders voted at the annual meeting of shareholders on March 17,
1999, or as adjourned. The description of each proposal and number of shares
voted are as follows:
1. To elect the Voyageur Investment Trust Board of Directors.
SHARES SHARES VOTED
VOTED WITHHELD
FOR AUTHORITY ABSTAIN
---------------------------------------
Wayne A. Stork .................... 3,085,021 172,729 --
Jeffrey J. Nick* .................. 3,085,021 172,729 --
Walter P. Babich .................. 3,085,021 172,729 --
Anthony D. Knerr .................. 3,088,226 169,524 --
Ann R. Leven ...................... 3,088,226 169,524 --
W. Thacher Longstreth ............. 3,088,226 169,524 --
Thomas F. Madison ................. 3,088,226 169,524 --
Charles E. Peck ................... 3,088,226 169,524 --
To elect the Voyageur Mutual Funds, Inc. Board of Directors.
SHARES SHARES VOTED
VOTED WITHHELD
FOR AUTHORITY ABSTAIN
---------------------------------------
Jeffrey J. Nick* .................. 23,375,980 933,942 --
Walter P. Babich .................. 23,375,739 934,183 --
Anthony D. Knerr .................. 23,481,657 828,265 --
Ann R. Leven ...................... 23,479,947 829,975 --
Thomas F. Madison ................. 23,485,349 824,573 --
Charles E. Peck ................... 23,485,349 824,573 --
Wayne A. Stork .................... 23,485,349 824,573 --
Jan L. Yeomans .................... 23,485,349 824,573 --
To elect the Voyageur Insured Funds, Inc. Board of Directors.
SHARES SHARES VOTED
VOTED WITHHELD
FOR AUTHORITY ABSTAIN
---------------------------------------
Jeffrey J. Nick* .................. 29,291,395 2,217,863 --
Walter P. Babich .................. 29,291,706 2,217,552 --
Anthony D. Knerr .................. 29,305,876 2,203,382 --
Ann R. Leven ...................... 29,306,599 2,202,659 --
Thomas F. Madison ................. 29,315,936 2,193,322 --
Charles E. Peck ................... 29,315,936 2,193,322 --
Wayne A. Stork .................... 29,316,807 2,192,451 --
Jan L. Yeomans .................... 29,316,807 2,192,451 --
To elect the Voyageur Mutual Funds II, Inc. Board of Directors.
SHARES SHARES VOTED
VOTED WITHHELD
FOR AUTHORITY ABSTAIN
---------------------------------------
Jeffrey J. Nick* .................. 21,649,361 1,620,328 --
Walter P. Babich .................. 21,646,997 1,622,692 --
Anthony D. Knerr .................. 21,651,031 1,618,658 --
Ann R. Leven ...................... 21,657,387 1,612,302 --
Thomas F. Madison ................. 21,657,045 1,612,644 --
Charles E. Peck ................... 21,657,387 1,612,302 --
Wayne A. Stork .................... 21,658,468 1,611,221 --
Jan L. Yeomans .................... 21,658,468 1,611,221 --
*Mr. Nick resigned from the Board of Directors (or Trustees for the Company)
on June 4, 1999.
<PAGE>
2. To approve the redesignation of the investment objective from fundamental to
non-fundamental.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund ............. 917,952 312,317 66,965
Tax-Free Arizona Insured Fund ..... 9,251,133 672,608 1,035,587
Tax-Free California Fund .......... 1,549,729 51,568 117,080
Tax-Free California Insured Fund .. 1,427,583 67,738 130,241
Tax-Free Colorado Fund ............ 17,080,891 1,898,067 1,754,205
Tax-Free New Mexico Fund .......... 1,037,257 45,640 76,685
3. To approve a change in the Fund's fundamental policy concerning
diversification of investments.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Insured Fund ..... 9,369,220 601,589 988,519
Tax-Free California Insured Fund .. 1,459,966 68,369 97,228
Tax-Free Colorado Fund ............ 17,491,956 1,620,261 1,620,947
4. To approve standardized fundamental investment restrictions (proposal
involves separate votes on seven sub-proposals 3A-3G)
4A. To adopt a new fundamental investment restriction concerning concentration
of the investments in the same industry.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund ............. 1,163,695 64,743 68,796
Tax-Free Arizona Insured Fund ..... 9,508,895 457,131 993,302
Tax-Free California Fund .......... 1,563,513 11,321 143,545
Tax-Free California Insured Fund .. 1,459,966 68,369 97,228
Tax-Free Colorado Fund ............ 17,606,135 1,480,975 1,646,055
Tax-Free New Mexico Fund .......... 1,462,091 50,068 113,403
4B. To adopt a new fundamental investment restriction concerning borrowing money
and issuing senior securities.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund ............. 909,109 307,721 80,405
Tax-Free Arizona Insured Fund ..... 9,364,997 583,103 1,011,228
Tax-Free California Fund .......... 1,547,694 21,925 148,758
Tax-Free California Insured Fund .. 1,423,707 60,377 141,479
Tax-Free Colorado Fund ............ 17,248,371 1,794,467 1,690,325
Tax-Free New Mexico Fund .......... 1,038,463 45,793 75,327
4C. To adopt a new fundamental investment restriction concerning underwriting.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund ............. 1,125,563 87,883 83,789
Tax-Free Arizona Insured Fund ..... 9,396,067 493,728 1,069,533
Tax-Free California Fund .......... 1,555,852 15,523 147,004
Tax-Free California Insured Fund .. 1,429,889 57,550 138,124
Tax-Free Colorado Fund ............ 17,416,766 1,641,882 1,674,515
Tax-Free New Mexico Fund .......... 1,041,423 50,251 67,909
<PAGE>
56 for tax-exempt income
PROXY RESULTS (CONTINUED)
4D. To adopt a new fundamental investment restriction concerning investments in
real estate.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund 929,973 312,195 55,068
Tax-Free Arizona Insured Fund 9,316,726 566,912 1,075,690
Tax-Free California Fund 1,544,347 25,273 148,758
Tax-Free California Insured Fund 1,421,669 59,739 144,154
Tax-Free Colorado Fund 17,319,600 1,750,962 1,662,602
Tax-Free New Mexico Fund 1,039,157 55,033 65,393
4E. To adopt a new fundamental investment restriction concerning investments in
commodities.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund 927,439 314,383 55,413
Tax-Free Arizona Insured Fund 9,271,429 647,026 1,040,873
Tax-Free California Fund 1,526,809 33,606 157,963
Tax-Free California Insured Fund 1,410,743 66,271 148,548
Tax-Free Colorado Fund 17,006,891 2,010,862 1,715,411
Tax-Free New Mexico Fund 1,045,670 49,096 64,817
4F. To adopt a new fundamental investment restriction concerning lending by the
Fund.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund 1,175,265 73,850 48,120
Tax-Free Arizona Insured Fund 9,260,617 707,780 990,932
Tax-Free California Fund 1,543,352 26,715 148,311
Tax-Free California Insured Fund 1,425,814 57,541 142,208
Tax-Free Colorado Fund 17,023,030 1,818,169 1,891,966
Tax-Free New Mexico Fund 1,041,139 53,052 65,393
4G. To reclassify all current fundamental investment restrictions as
non-fundamental.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund 910,420 314,296 72,520
Tax-Free Arizona Insured Fund 9,163,708 704,274 1,091,346
Tax-Free California Fund 1,547,569 37,566 133,242
Tax-Free California Insured Fund 1,358,952 65,952 200,659
Tax-Free Colorado Fund 16,905,735 1,929,318 1,898,110
Tax-Free New Mexico Fund 1,029,915 60,279 69,388
5. To approve a new investment management agreement with Delaware Management
Company for the Funds.
FOR AGAINST ABSTAIN
--------------------------------------
Tax-Free Arizona Fund 1,122,092 99,391 72,752
Tax-Free Arizona Insured Fund 10,647,778 716,063 1,033,069
Tax-Free California Fund 1,526,718 21,701 169,959
Tax-Free California Insured Fund 1,402,562 61,530 161,469
Tax-Free Colorado Fund 17,178,078 1,892,219 1,662,867
Tax-Free New Mexico Fund 1,004,954 67,695 86,933
<PAGE>
6. To ratify the selection of Ernst & Young LLP, as the independent auditors
for Voyageur Investment Trust.
FOR AGAINST ABSTAIN
----------------------------------
3,048,345 42,606 166,797
To ratify the selection of Ernst & Young LLP, as the independent auditors
for Voyageur Mutual Funds, Inc.
FOR AGAINST ABSTAIN
----------------------------------
23,192,942 243,342 873,624
To ratify the selection of Ernst & Young LLP, as the independent auditors
for Voyageur Insured Funds, Inc.
FOR AGAINST ABSTAIN
----------------------------------
28,810,216 369,512 2,329,526
To ratify the selection of Ernst & Young LLP, as the independent auditors
for Voyageur Mutual Funds II, Inc.
FOR AGAINST ABSTAIN
----------------------------------
21,791,504 266,097 1,212,085
7. To approve the restructuring of Voyageur Investment Trust from a
Massachusetts Business Trust into a Maryland Corporation.
FOR AGAINST ABSTAIN
----------------------------------
2,469,857 68,396 246,892
To approve the restructuring of Voyageur Mutual Funds, Inc. from a
Minnesota Corporation into a Delaware Business Trust and the dissolution of
the Minnesota Corporation.
FOR AGAINST ABSTAIN
----------------------------------
18,642,505 933,974 1,312,086
To approve the restructuring of Voyageur Insured Funds, Inc. from a
Minnesota Corporation into a Delaware Business Trust and the dissolution of
the Minnesota Corporation.
FOR AGAINST ABSTAIN
----------------------------------
22,707,761 2,602,149 2,903,902
To approve the restructuring of Voyageur Mutual Funds II, Inc. from a
Minnesota Corporation into a Delaware Business Trust and the dissolution of
the Minnesota Corporation.
FOR AGAINST ABSTAIN
----------------------------------
18,048,080 1,050,648 1,634,436
<PAGE>
When used with prospective investors, this report must be preceded or
accompanied by a current Prospectus for the Funds and the Delaware Investments
Performance Update for the most recently completed calendar quarter. For a
prospectus of any other mutual fund from Delaware Investments, contact your
financial adviser or Delaware.
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
(2218)
AR-WEST[8/99]PPL10/99
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 Funds 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 Funds are not bank or credit union deposits.
(C) Delaware Distributors, L.P.
