<PAGE>
DELAWARE(SM) Delaware Tax-Free Arizona Funds
INVESTMENTS Delaware Tax-Free California Funds
=========== Delaware Tax-Free Colorado Fund
Delaware Tax-Free New Mexico Fund
Tax-Exempt Income
[GRAPHIC OMITTED]
[TAX-EXEMPT INCOME ARTWORK]
2000 SEMI-ANNUAL REPORT
<PAGE>
A TRADITION OF SOUND INVESTING SINCE 1929
TABLE OF CONTENTS
Letter to Shareholders 1
Portfolio
Management Review 3
Performance Summary
Delaware Tax-Free
Arizona Fund 7
Delaware Tax-Free
Arizona Insured Fund 8
Delaware Tax-Free
California Fund 9
Delaware Tax-Free
California Insured Fund 10
Delaware Tax-Free
Colorado Fund 11
Delaware Tax-Free
New Mexico Fund 12
Financial Statements
Statements of
Net Assets 13
Statements of
Operations 27
Statements of Changes
in Net Assets 28
Financial Highlights 31
Notes to Financial
Statements 49
<PAGE>
A Commitment To Our Investors
Experienced
[] Our seasoned investment professionals average more than 15 years'
experience.
[] For over 70 years, we have managed money in a variety of investment styles
that have weathered a full range of economic and market environments. We
opened our first mutual fund in 1938.
Disciplined
[] We follow strict investment policies and clear buy/sell guidelines.
[] We strive to balance risk and reward in order to provide conservative
investment alternatives within any given asset class.
Consistent
[] We believe consistent processes are the best way to seek consistent
investment performance.
[] Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage
approximately $47 billion in assets as of December 31, 1999.
Comprehensive
[] We offer over 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (24 single-state funds)
o International equity o International fixed-income
o Balanced
[] Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
Dear Shareholder
"MUNICIPAL BONDS WEATHERED THE TURBULENCE IN THE FIXED-INCOME ARENA SOMEWHAT
BETTER THAN U.S. TREASURY SECURITIES DURING THE PAST SIX MONTHS."
March 22, 2000
Recap of Events -- Economic activity in the United States continues to move
along ahead of expectations. An improving global economic outlook continued to
reduce demand for U.S. government debt over the last six months, pushing U.S.
bond prices lower and yields significantly higher.
The booming stock market, however, did heighten inflationary concerns during our
fiscal period. The Federal Reserve responded by following up their interest rate
increase on June 30, 1999, with four additional quarter-point increases through
March 21, 2000. As of this writing, the Federal funds target rate on overnight
loans between banks, stands at 6.0%, its highest level in five years. The
Federal Reserve's actions have been directed at slowing the economy and
pre-empting inflation before it takes root.
Municipal bonds weathered the turbulence in the fixed-income arena somewhat
better than U.S. Treasury securities during the past six months. Municipal bond
yields steadily increased throughout this time period, but municipal bond prices
fluctuated less than U.S. Treasury securities (Source: Bloomberg). As of
February 29, 2000, the 30-year U.S. Treasury bond yield stood at 6.15%, while
30-year U.S. AAA-rated general obligation municipal bonds closed at 5.90%. For
investors in the 28% tax bracket, a 5.90% tax-free yield would be equivalent to
an 8.19% yield on a taxable investment, a yield that surpasses that of the
30-year Treasury.*
Delaware's Municipal Bond Funds for Arizona, California, Colorado and New Mexico
- -- Though higher yields meant attractive income potential, municipal bonds in
general, like most fixed-income securities, lost value for the six months ended
February 29, 2000. These Funds were no exception--all six Funds were down for
the last six months. Please see the Portfolio Management Review for a discussion
of each Fund's performance.
Market Outlook -- We believe fixed-income investments play an important role in
well-balanced portfolios, even as stocks continue to capture more attention and
a larger share of investors' assets. Looking forward, we believe bonds may
remain in the shadow of stocks as long as economic growth continues in 2000.
However, tax-exempt municipal bonds, which your Funds hold, remain popular with
investors for good reason. They offer a wide range of benefits, including:
[] Attractive current income that is free from federal,** and in some cases,
state and local taxes;
*The U.S. government does not guarantee principal and interest of municipal
bonds, unlike Treasuries. Municipal bonds have historically had annual default
rates of less than 2%.
**A portion of the income from tax-exempt funds may be subject to the
alternative minimum tax.
1
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[ARTWORK OMITTED]
[TAX-EXEMPT INCOME ARTWORK]
[] A high likelihood that interest and principal payments will be made as
scheduled;
[] A wide range of choices to meet your investment objectives with regard to
investment quality, maturity, type of bond and geographical location.
We realize that the past six months have been difficult for fixed-income
investors. We applaud you for remaining committed to your investment plan and
thank you for your continued confidence in Delaware Investments.
Sincerely,
/s/Wayne A. Stork /s/David K. Downes
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Delaware Investments
Family of Funds Family of Funds
Average Total Returns
For Period Ended February 29, 2000 Six Months
- --------------------------------------------------------------------------------
Delaware Tax-Free Arizona Fund Class A -3.82%
- --------------------------------------------------------------------------------
Delaware Tax-Free Arizona Insured Fund Class A -1.16%
- --------------------------------------------------------------------------------
Lipper Arizona Municipal Debt Fund Average (39 funds) -1.50%
- --------------------------------------------------------------------------------
Delaware Tax-Free California Fund Class A -4.28%
- --------------------------------------------------------------------------------
Lipper California Municipal Debt Fund Average (110 funds) -1.40%
- --------------------------------------------------------------------------------
Delaware Tax-Free California Insured Fund Class A -0.48%
- --------------------------------------------------------------------------------
Lipper California Insured Municipal Debt Fund Average (23 funds) -0.70%
- --------------------------------------------------------------------------------
Delaware Tax-Free Colorado Fund Class A -3.07%
- --------------------------------------------------------------------------------
Lipper Colorado Municipal Debt Fund Average (27 funds) -1.59%
- --------------------------------------------------------------------------------
Delaware Tax-Free New Mexico Fund Class A -1.83%
- --------------------------------------------------------------------------------
Lipper Other States Municipal Debt Fund Average (75 funds) -1.28%
Lehman Brothers Municipal Bond Index -0.24%
Lehman Brothers Insured Municipal Bond Index -0.21%
- --------------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of distributions. Performance information for
all Fund classes can be found on pages 7 through 12. The Lipper categories
represent the average returns of municipal bond funds with similar investment
objectives tracked by Lipper Analytical. (Source: Lipper Analytical Services,
Inc.)
The unmanaged Lehman Brothers Indexes are composed of bonds with a variety of
quality ratings from many states. You cannot invest directly in an index. Past
performance does not guarantee future results.
2
<PAGE>
PORTFOLIO MANAGEMENT REVIEW
Andrew M. McCullagh
Senior Portfolio Manager
March 22, 2000
Delaware Tax-Free
Arizona Fund
Portfolio Characteristics
February 29, 2000
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield*
Before Expense Limitation 5.30%
After Expense Limitation 5.62%
- --------------------------------------------------------------------------------
Average Effective Duration 9.5 years
- --------------------------------------------------------------------------------
Average Effective Maturity** 22.0 years
- --------------------------------------------------------------------------------
*For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yield as of 2/29/00 for Class B shares was
4.76% before the expense limitation and 5.09% after the limitation. For Class C
shares the 30-day SEC yield was 4.74% before the expense limitation and 5.07%
after the limitation. Duration is a common measure of a bond or bond fund's
sensitivity to interest rates.
Delaware Tax-Free
Arizona Insured Fund
Portfolio Characteristics
February 29, 2000
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield* 4.57%
- --------------------------------------------------------------------------------
Average Effective Duration 8.2 years
- --------------------------------------------------------------------------------
Average Effective Maturity** 14.8 years
- --------------------------------------------------------------------------------
*For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yields as of 2/29/00 for Class B and C
shares were both 4.00%.
**Average effective maturity is the average time remaining until scheduled
repayment by issuers of portfolio securities.
<PAGE>
The Funds' Results
Over the last six months, we have witnessed a combination of market events that
have pushed municipal bond yields higher and prices lower. Concerns related to
year 2000 computer issues helped reduce the amount of municipal bonds being
issued. Most municipalities issued bonds earlier in the year and sat out the end
of the year. In addition, investors' interest in municipal bonds was somewhat
weak compared to their intense attention to the equity markets.
In spite of the reduced supply of new bonds at year-end, the total supply of
municipal bonds was ample and that gave us the opportunity to select bonds that
we believe have solid credit ratings and the potential for future price
appreciation. Based on value measures, the relationship of municipal bonds to
Treasury bonds vacillated throughout the year. In our view, municipal bonds
offered better relative value for much of the time.
Portfolio Highlights
Delaware Tax-Free Arizona Fund and Delaware Tax-Free Arizona
Insured Fund
The Arizona state economy continued to grow throughout the last six months.
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: Arizona's Economy - Eller Graduate School of Management).
The job growth rate in Arizona is currently the highest in the nation as of
February 2000 (Source: Bloomberg). This economic expansion, along with an
increasing need for schools, roads and housing, sets an attractive stage for
Arizona municipal bond investors throughout the year 2000.
Throughout the first half of fiscal 2000, we lengthened Delaware Tax-Free
Arizona Fund's duration. As of February 29, 2000, the Fund's duration was 9.5
years. 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 as is consistent with
preservation of capital. Funds with a longer average duration should, in our
opinion, perform well over the coming year. Even though we may experience
short-term interest rate increases in the next six months, we expect overall
long-term interest rates to stabilize or decline as compared to the last few
months, when interest rates reached a high of 6.75% on January 18, 2000.
3
<PAGE>
Delaware Tax-Free
California Fund
Portfolio Characteristics
February 29, 2000
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield*
Before Expense Limitation 5.01%
After Expense Limitation 5.55%
- --------------------------------------------------------------------------------
Average Effective Duration 11.4 years
- --------------------------------------------------------------------------------
Average Effective Maturity** 22.0 years
- --------------------------------------------------------------------------------
*For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yield as of 2/29/00 for Class B shares was
4.44% before the expense limitation and 5.00% after the limitation. For Class C
shares the 30-day SEC yield was 4.46% before the expense limitation and 5.01%
after the limitation. Duration is a common measure of a bond fund's sensitivity
to interest rates.
Delaware Tax-Free
California Insured Fund
Portfolio Characteristics
February 29, 2000
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield*
Before Expense Limitation 4.48%
After Expense Limitation 4.67%
- --------------------------------------------------------------------------------
Average Effective Duration 8.7 years
- --------------------------------------------------------------------------------
Average Effective Maturity** 15.1 years
- --------------------------------------------------------------------------------
*For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yield as of 2/29/00 for Class B shares
was 3.90% before the expense limitation and 4.10% after the limitaion. For
Class C shares the 30-day SEC yield was 3.93% before the expense limitaion and
4.12% after the limitaion.
**Average effective maturity is the average time remaining
until scheduled repayment by issuers of portfolio securities.
<PAGE>
In order to remain consistent with Delaware Tax-Free Arizona Insured Fund's
investment objectives, we maintained a shorter duration for this Fund than for
Delaware Tax-Free Arizona Fund. Because Delaware Tax-Free Arizona Insured Fund's
duration was shorter, the Fund was less affected by the rise in interest rates
than funds with a longer duration. The average duration of Delaware Tax-Free
Arizona Insured Fund was 8.2 years as of February 29, 2000.
Hospital revenue bonds accounted for the largest sector weightings in Delaware
Tax-Free Arizona Insured Fund's portfolio at the end of the period. We have been
able to capitalize on a consolidation trend within the healthcare sector, but
only in the insured fund category. As of February 29, 2000, AAA hospital revenue
bonds accounted for 24% of Delaware Tax-Free Arizona Insured Fund's portfolio.
In the Delaware Tax-Free Arizona Fund, single family housing bonds accounted for
29% of the Fund's portfolio, its largest sector allocation.
Delaware Tax-Free California Fund and Delaware Tax-Free California Insured Fund
Conservative budgeting over the past few years has left California in a very
strong economic position. Moody's, Standard & Poor's and Fitch IBCA have
recently upgraded the state's credit rating to AA3, AA- and AA, respectively.
Because of California's positive economic outlook and its high resident tax
rate, there is strong investor demand for California municipal bonds.
California has a diverse economy and, therefore, has a large and diverse
universe of municipal bonds. The largest sector holding in the Delaware Tax-Free
California Fund was Lease/Certificates of Participation. Delaware Tax-Free
California Insured Fund's largest sector was single-family housing bonds. As of
February 29, 2000, we held 30% of the Delaware Tax-Free California Fund's
portfolio in Lease/Certificates of Participation and 28% of Delaware Tax-Free
California Insured Fund's portfolio in single-family housing bonds.
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.
4
<PAGE>
Delaware Tax-Free
Colorado Fund
Portfolio Characteristics
February 29, 2000
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield* 5.14%
- --------------------------------------------------------------------------------
Average Effective Duration 9.3 years
- --------------------------------------------------------------------------------
Average Effective Maturity** 17.0 years
- --------------------------------------------------------------------------------
*For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yield as of 2/29/00 for Class B shares was
4.60% and for Class C shares was 4.59%. Duration is a common measure of a bond
or bond fund's sensitivity to interest rates.
Delaware Tax-Free
New Mexico Fund
Portfolio Characteristics
February 29, 2000
- --------------------------------------------------------------------------------
Current 30-Day SEC Yield* 5.21%
- --------------------------------------------------------------------------------
Average Effective Duration 9.3 years
- --------------------------------------------------------------------------------
Average Effective Maturity** 17.4 years
- --------------------------------------------------------------------------------
*For Class A shares measured according to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC yields as of 2/29/00 for Class B and C
shares were both 4.66%.
**Average effective maturity is the average time remaining until scheduled
repayment by issuers of portfolio securities.
<PAGE>
We maintained a strong focus on high-quality, investment-grade bonds in the
Delaware Tax-Free Colorado Fund. In our opinion, 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 February
29, 2000, 80.5% of the bonds in Delaware Tax-Free Colorado Fund's portfolio were
rated BBB or higher by Standard & Poor's. Toward the end of 1999 and into the
beginning of 2000, 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, but still investment grade 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 cuts 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.
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 natural resources and 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 southeastern portion of the state, where oil and gas
production account for a large percentage of employment, the area suffered as
gas and oil prices plummeted in early 1999. Over the past few months, however,
oil prices have soared, pointing to what we expect to be a gradual but continual
recovery.
New Mexico has experienced healthy population growth during the past few
decades, outpacing national levels (Source: Bloomberg). As a result, an increase
in residential dwellings has led us to focus on large single- and multi-family
housing bonds. As of February 29, 2000, we held over 28% of the Fund's portfolio
in housing issues.
5
<PAGE>
"REGARDLESS OF MARKET CONDITIONS, MUNICIPAL BOND FUNDS HAVE THE POTENTIAL TO
OFFER VALUABLE ASSET ALLOCATION BENEFITS WITHOUT ADDING TO YOUR TAXABLE
INVESTMENT INCOME."*
[GRAPHIC OMITTED]
[TAX-EXEMPT INCOME ARTWORK]
Outlook
The U.S. seems to be the engine of growth for the entire world at this time. We
believe strong forward momentum for the U.S. economy is likely to result in
solid growth for the remainder of this year. We don't think this will create an
inflationary environment if labor productivity continues to increase.
The Federal Reserve has been on a path of increasing short-term interest rates.
From June, 1999 through March, 2000, there have been five one-quarter point
increases in short-term interest rates. Clearly, the Federal Reserve's goal is
to slow the pace of the U.S. economic climate to what it believes is a
non-inflationary rate of growth.
We have seen some slowdown in the economy and the equity markets, as evidenced
by the decline in the Dow Jones Industrial Average, which is down -12.56% for
the six-month period ended February 29, 2000. We think longer term
bonds--including municipal bonds--could potentially increase in price if the
equity market remains subdued.
Regardless of market conditions, municipal bond funds have the potential to
offer valuable asset allocation benefits without adding to your taxable
investment income.* In our view, investors seeking to diversify their portfolios
with generally less volatile investments will continue to find attractive
opportunities in municipal bonds and municipal bond funds in the years to come.
*A portion of the income from tax-exempt funds may be subject to the alternative
minimum tax.
6
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FUND BASICS
FUND OBJECTIVE
Seeks as high a level of current income exempt from federal income tax and from
Arizona personal income tax, as is consistent with preservation of capital.
Total Fund Assets
$20.96 million
Number of Holdings
20
Fund Start Date
March 2, 1995
Your Fund Manager
Andrew M. McCullagh joined Delaware Investments in 1997,
after holding investment management positions at Kirchner, Moore & Co. He holds
a bachelor's degree from Washington College and a graduate certificate in public
finance from the University of Michigan.
NASDAQ Symbols
Class A DVAAX
Class B DVATX
Class C DVAZX
<PAGE>
DELAWARE TAX-FREE ARIZONA
FUND PERFORMANCE
Average Total Returns
Through February 29, 2000 Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 3/2/95)
Excluding Sales Charge +5.61% -6.94%
Including Sales Charge +4.80% -10.42%
- --------------------------------------------------------------------------------
Class B (Est. 6/29/95)
Excluding Sales Charge +4.21% -7.65%
Including Sales Charge +3.86% -11.18%
- --------------------------------------------------------------------------------
Class C (Est. 5/13/95)
Excluding Sales Charge +4.42% -7.63%
Including Sales Charge +4.42% -8.51%
- --------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Returns and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.
Class A shares have a 3.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Tax-Free Arizona
Fund during the period. Performance would have been lower if the expense
limitation was not in effect.
7
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<TABLE>
<CAPTION>
FUND BASICS DELAWARE TAX-FREE ARIZONA INSURED
FUND PERFORMANCE
<S> <C> <C> <C>
Fund Objective
Seeks as high a level of current Average Total Returns
income exempt from federal Through February 29, 2000 Lifetime Five Years One Year
income tax and from Arizona -----------------------------------------------------------------------------
personal income tax, as Class A (Est. 4/1/91)
is consistent with preservation Excluding Sales Charge +6.41% +5.11% -3.71%
of capital. Including Sales Charge +5.96% +4.31% -7.32%
-----------------------------------------------------------------------------
Total Fund Assets Class B (Est. 3/10/95)
$151.84 million Excluding Sales Charge +4.44% -4.44%
Including Sales Charge +4.10% -8.11%
Number of Holdings -----------------------------------------------------------------------------
65 Class C (Est. 5/26/94)
Excluding Sales Charge +4.50% +4.28% -4.43%
Fund Start Date Including Sales Charge +4.50% +4.28% -5.35%
April 1, 1991 -----------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
Your Fund Manager as noted below. Returns and share values will fluctuate so that shares, when
Andrew M. McCullagh redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charge assume either that contingent sales charges did
NASDAQ Symbols not apply or the investment was not redeemed. Past performance is not a
Class A VAZIX guarantee of future results.
Class B DVABX
Class C DVACX Class A shares have a 3.75% maximum front-end sales charge and a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within 12 months, a
1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Tax-Free Arizona Insured Fund
during the period. Performance would have been lower if the expense limitation was not in
effect.
</TABLE>
(Tax-Exempt Income Artwork)
8
<PAGE>
<TABLE>
<CAPTION>
FUND BASICS DELAWARE TAX-FREE CALIFORNIA
FUND PERFORMANCE
<S> <C> <C>
Average Total Returns
Fund Objective Through February 29, 2000 Lifetime One Year
Seeks as high a level of current --------------------------------------------------------------------------------
income exempt from federal Class A (Est. 3/2/95)
income tax and from California Excluding Sales Charge +5.38% -8.29%
personal income tax, as is Including Sales Charge +4.57% -11.75%
consistent with preservation --------------------------------------------------------------------------------
of capital. Class B (Est. 8/23/95)
Excluding Sales Charge +4.86% -8.96%
Total Fund Assets Including Sales Charge +4.49% -12.44%
$39.45 million --------------------------------------------------------------------------------
Class C (Est. 4/9/96)
Number of Holdings Excluding Sales Charge +4.16% -8.97%
38 Including Sales Charge +4.16% -9.84%
--------------------------------------------------------------------------------
Fund Start Date Returns reflect reinvestment of distributions and any applicable sales charges
March 2, 1995 as noted below. Returns and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
Your Fund Manager results excluding sales charge assume either that contingent sales charges did
Andrew M. McCullagh not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.
NASDAQ Symbols
Class A DVTAX Class A shares have a 3.75% maximum front-end sales charge and a 12b-1 fee.
Class B DVTFX
Class C DVFTX Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within 12
months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Tax-Free California
Fund during the period. Performance would have been lower if the expense limitation
was not in effect.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
FUND BASICS DELAWARE TAX-FREE CALIFORNIA INSURED
FUND PERFORMANCE
<S> <C> <C> <C>
Fund Objective Average Total Returns
Seeks as high a level of current Through February 29, 2000 Lifetime Five Years One Year
income exempt from federal ---------------------------------------------------------------------------------
income tax and from California Class A (Est. 10/15/92)
personal income tax, as is Excluding Sales Charge +5.50% +5.13% -4.49%
consistent with preservation Including Sales Charge +4.95% +4.33% -8.05%
of capital. ---------------------------------------------------------------------------------
Class B (Est. 3/1/94)
Total Fund Assets Excluding Sales Charge +3.65% +4.55% -5.20%
$29.85 million Including Sales Charge +3.52% +4.21% -8.84%
---------------------------------------------------------------------------------
Number of Holdings Class C (Est. 4/12/95)
25 Excluding Sales Charge +3.95% -5.22%
Including Sales Charge +3.95% -6.13%
Fund Start Date ---------------------------------------------------------------------------------
October 15, 1992 Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Returns and share values will fluctuate so that shares, when
Your Fund Manager redeemed, may be worth more or less than their original cost. Class B and C
Andrew M. McCullagh results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
NASDAQ Symbols guarantee of future results.
Class A VCINX
Class B DVNBX Class A shares have a 3.75% maximum front-end sales charge and a 12b-1 fee.
Class C DVNCX
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Tax-Free
California Insured Fund during the period. Performance would have been lower if
the expense limitation was not in effect.
</TABLE>
(Tax-Exempt Income Artwork)
10
<PAGE>
<TABLE>
<CAPTION>
FUND BASICS DELAWARE TAX-FREE COLORADO
FUND PERFORMANCE
<S> <C> <C> <C> <C>
Average Total Returns
Fund Objective Through February 29, 2000 Lifetime 10 Years Five Years One Year
Seeks as high a level of current ------------------------------------------------------------------------------------
income exempt from federal Class A (Est. 4/23/87)
income tax and from Colorado Excluding Sales Charge +6.96% +6.47% +5.23% -6.73%
personal income tax, as is Including Sales Charge +6.64% +6.06% +4.42% -10.25%
consistent with preservation ------------------------------------------------------------------------------------
of capital. Class B (Est. 3/22/95)
Excluding Sales Charge +4.26% -7.42%
Total Fund Assets Including Sales Charge +3.92% -10.97%
$317.91 million ------------------------------------------------------------------------------------
Class C (Est. 5/6/94)
Number of Holdings Excluding Sales Charge +4.40% +4.39% -7.43%
85 Including Sales Charge +4.40% +4.39% -8.31%
------------------------------------------------------------------------------------
Fund Start Date
April 23, 1987 Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Returns and share values will fluctuate so that shares, when
Your Fund Manager redeemed, may be worth more or less than their original cost. Class B and C
Andrew M. McCullagh results excluding sales charge assume either that contingent sales charges did
not apply or the investment was not redeemed. Past performance is not a
NASDAQ Symbols guarantee of future results.
Class A VCTFX
Class B DVBTX Class A shares have a 3.75% maximum front-end sales charge and a 12b-1 fee.
Class C DVCTX
Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a deferred sales
charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If shares are
redeemed within 12 months, a 1% contingent deferred sales charge applies.
</TABLE>
11
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<TABLE>
<CAPTION>
FUND BASICS DELAWARE TAX-FREE NEW MEXICO
FUND PERFORMANCE
<S> <C> <C> <C> <C>
Average Total Returns
Fund Objective Through February 29, 2000 Lifetime Five Years One Year
Seeks as high a level of current -------------------------------------------------------------------------------
income exempt from federal Class A (Est. 10/5/92)
income tax and from New Mexico Excluding Sales Charge +5.73% +5.23% -4.36%
personal income tax, as is Including Sales Charge +5.18% +4.43% -7.93%
consistent with preservation of -------------------------------------------------------------------------------
capital. Class B (Est. 3/3/94)
Excluding Sales Charge +3.81% +4.48% -5.07%
Total Fund Assets Including Sales Charge +3.68% +4.14% -8.71%
$22.05 million -------------------------------------------------------------------------------
Class C (Est. 5/7/96)
Number of Holdings Excluding Sales Charge +3.96% -5.16%
25 Including Sales Charge +3.96% -6.07%
Fund Start Date Returns reflect reinvestment of distributions and any applicable sales charges
October 15, 1992 as noted below. Returns and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
Your Fund Manager results excluding sales charge assume either that contingent sales charges did
Andrew M. McCullagh not apply or the investment was not redeemed. Past performance is not a
guarantee of future results.
NASDAQ Symbols
Class A VNMTX Class A shares have a 3.75% maximum front-end sales charge and a 12b-1 fee.
Class B DVWBX
Class C DVWCX Class B shares do not have a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
</TABLE>
(Tax-Exempt Income Artwork)
12
Statement of Net Assets
DELAWARE TAX-FREE ARIZONA FUND
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 98.47%
General Obligation Bonds - 9.75%
Eagle Mountain Community Facility District
6.50% 7/1/21 ................................... $1,010,000 $1,040,684
Via Linda Community Facilities
(Scottsdale, Arizona) 5.75% 7/15/23 ............ 1,155,000 1,001,835
---------
2,042,519
---------
Hospitals Revenue Bonds - 12.06%
Maricopa County, Arizona Hospital Revenue
(Sun Health Corp.) 5.30% 4/1/29 ................ 1,000,000 753,310
Show Low, Arizona Industrial Development
Authority Hospital Revenue (Navapache
Regional Medical Center) Series A
5.50% 12/1/17 .................................. 1,100,000 1,019,513
Winslow, Arizona Industrial Development
Authority Hospital Revenue (Winslow
Memorial Hospital Project)
5.50% 6/1/22 ................................... 1,000,000 755,350
---------
2,528,173
---------
Housing Revenue Bonds - 28.92%
Maricopa County, Arizona Industrial
Development Authority Single Family
Housing Revenue 6.625% 7/1/21
(GNMA/FNMA) .................................... 1,000,000 1,016,690
Peoria Casa Del Rio Multi Family Housing
7.30% 2/20/28 .................................. 500,000 526,830
Pima County, Arizona Industrial Development
Series A 7.25% 7/1/25 .......................... 500,000 523,590
Pima County, Arizona Industrial Development
Authority Multifamily Revenue Housing
(Willowick Apartments Project)
5.50% 3/1/28 ................................... 500,000 452,825
Pima County, Arizona Industrial Development
Authority Singlefamily Revenue Housing
6.10% 5/1/31 (GNMA/FNMA) ....................... 1,500,000 1,455,135
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Pima County, Arizona Industrial Development
Authority Singlefamily Revenue Housing
Series A 5.20% 5/1/31 .......................... $2,000,000 $1,700,560
Tucson Industrial Development Authority
(Los Portales Apartment) 5.90% 12/20/31
(GNMA) ......................................... 400,000 384,988
---------
6,060,618
---------
Lease/Certificates of Participation - 8.13%
Guadalupe, Arizona Municipal Property
Revenue 5.30% 7/1/18 ........................... 905,000 757,232
Sedona, Arizona Partner Series 1999
5.75% 7/1/16 ................................... 1,000,000 947,270
---------
1,704,502
---------
Pollution Contol Revenue Bonds - 8.62%
Coconimo County, Arizona (Nevada Power)
6.375% 10/1/36 ................................. 1,250,000 1,154,987
Maricopa County, Arizona
5.75% 11/1/22 .................................. 750,000 652,560
---------
1,807,547
---------
Territorial Revenue Bonds - 12.57%
Virgin Islands, Public Finance Authority
Revenue (Senior Lien) Series A
5.50% 10/1/22 .................................. 750,000 673,958
6.125% 10/1/29 ................................. 2,000,000 1,961,080
---------
2,635,038
---------
Other Revenue Bonds - 18.42%
ABSL 1999-A A 7.25% 7/1/18 ........................ 2,960,817 2,897,899
Arizona Student Loan Acquisition Authority
Revenue Series B 6.15% 5/1/29 .................. 1,000,000 961,950
---------
3,859,849
---------
Total Municipal Bonds
(cost $22,161,571) ............................. 20,638,246
----------
13
<PAGE>
Statement of Net Assets (continued)
Delaware Tax-Free Arizona Fund
- --------------------------------------------------------------------------------
Total Market Value of Securities - 98.47%
(cost $22,161,571) ............................. $20,638,246
Receivables and Other Assets
Net of Liabilities - 1.53% ..................... 320,473
----------
Net Assets Applicable to 2,143,828
Shares Outstanding - 100.00% ................... $20,958,719
----------
Net Asset Value - Delaware Tax-Free Arizona Fund
A Class ($14,317,588 / 1,464,551 shares) ....... $9.78
Net Asset Value - Delaware Tax-Free Arizona Fund
B Class ($4,982,006 / 509,898 shares) .......... $9.77
Net Asset Value - Delaware Tax-Free Arizona Fund
C Class ($1,659,125 / 169,379 shares) .......... $9.80
Summary of Abbreviations:
FNMA - Insured by the Federal National Mortgage Association
GNMA - Insured by the Government National Mortgage Association
Components of Net Assets at February 29, 2000:
Shares of Beneficial Interest (unlimited
authorization - no par) ........................ $23,325,028
Accumulated net realized loss on investments ...... (842,984)
Net unrealized depreciation of investments ........ (1,523,325)
----------
Total net assets .................................. $20,958,719
----------
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Arizona Fund
Net asset value A Class (A) ....................... $9.78
Sales charge (3.75% of offering price or
3.89% of amount invested per share) (B) ........ 0.38
----------
Offering price .................................... $10.16
----------
- ----------------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See current prospectus for purchases of $100,000 or more.
See accompanying notes
14
<PAGE>
Statement of Net Assets (continued)
DELAWARE TAX-FREE ARIZONA INSURED FUND
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 99.04%
General Obligation Bonds - 22.90%
Chandler Refunding
7.00% 7/1/12 (FGIC) ............................ $ 805,000 $ 835,848
Cochise County Unified School District
7.50% 7/1/10 (FGIC) ............................ 1,000,000 1,165,340
Maricopa County Chandler Unified
School District #80
5.80% 7/1/12 (FGIC) ............................ 135,000 137,633
5.85% 7/1/13 (FGIC) ............................ 1,380,000 1,412,057
Maricopa County Creighton Elementary
Unified School District #114 Series 91
6.50% 7/1/8 (FGIC) ............................. 1,000,000 1,084,760
Maricopa County Madison Unified School
District #38 5.80% 7/1/15 (MBIA) ............... 3,150,000 3,160,017
Maricopa County Osborn Unified School
District #8 5.88% 7/1/14 (FGIC) ................ 2,000,000 2,037,360
Maricopa County Peoria Unified
School District #11
7.00% 7/1/10 (AMBAC) ........................... 1,000,000 1,035,050
5.50% 7/1/15 (FGIC) ............................ 4,300,000 4,199,638
Maricopa County Queens Creek
Unified School District #95
5.70% 7/1/14 (AMBAC) ........................... 4,440,000 4,455,407
Maricopa County School District #3 Tempe
Elementary Series E
5.70% 7/1/16 (FGIC) ............................ 1,025,000 1,021,679
Mohave County Unified School District #1
(Lake Havasu) 5.90% 7/1/15 (FGIC) .............. 5,000,000 5,048,600
Phoenix, Arizona 6.375% 7/1/13 (MBIA) ............. 2,000,000 2,089,360
Pinal County Apache Junction Unified School
District #43 5.85% 7/1/15 (FGIC) ............... 2,000,000 2,012,900
Tucson, Arizona 6.10% 7/1/12 (FGIC) ............... 4,890,000 5,075,429
----------
34,771,078
----------
Higher Education Revenue Bonds - 6.11%
Arizona State University System
6.125% 7/1/15 (MBIA) ........................... 1,500,000 1,518,930
Glendale, Arizona Industrial Development
Authority Educational Facilities
(American Graduate School International)
5.625 7/1/20 (Connie Lee) ...................... 1,000,000 958,460
5.875% 7/1/15 (Connie Lee) ..................... 3,000,000 3,027,240
Glendale, Arizona Industrial Development
Authority (Midwestern University) Series A
6.00% 5/15/26 (Connie Lee) ..................... 630,000 629,105
University of Arizona
6.25% 6/1/11 (AMBAC) ........................... 3,000,000 3,133,410
----------
9,267,145
----------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds - 23.70%
Arizona Health Facilities Hospital Revenue
(Northern Arizona Healthcare)
4.75% 10/1/30 (AMBAC) .......................... $ 6,500,000 $ 5,205,524
Maricopa County Industrial Development
Authority (Baptist Hospital)
5.50% 9/1/13 (MBIA) ............................ 3,080,000 3,014,026
5.50% 9/1/16 (MBIA) ............................ 1,000,000 958,180
Maricopa County Industrial Development
Authority (Pennington Gardens) Series A
6.30% 9/20/38 (GNMA) ........................... 3,715,000 3,688,215
Mesa, Arizona Industrial Development
Authority (Discovery Health)
5.625% 1/1/29 (MBIA) ........................... 14,000,000 13,083,420
Mesa, Arizona Industrial Development
Authority Revenue (Lutheran Health Systems)
Series A-1 5.00% 10/1/19 (MBIA) ................ 1,250,000 1,116,150
Mohave County Industrial Development
Authority (Chris/Silver Ridge)
6.375% 11/1/31 (GNMA) .......................... 1,300,000 1,307,501
Phoenix, Arizona Industrial Development
Authority Hospital Revenue (John C.
Lincoln Health) Series B
5.75% 12/1/16 (Connie Lee) ..................... 4,110,000 4,018,922
Pima County Tucson Medical Center
6.375% 4/1/12 (MBIA) ........................... 1,000,000 1,045,420
Pima Industrial Development Authority
Health Care (St Mary & St Joseph
Hospitals) 6.75% 7/1/10 (MBIA) ................. 1,000,000 1,043,220
University of Arizona Medical Center
6.25% 7/1/10 (MBIA) ............................ 1,445,000 1,509,216
----------
35,989,794
----------
Housing Revenue Bonds - 13.10%
Chandler Industrial Development Authority
Multifamily Housing (Hacienda Apartments)
5.90% 7/20/15 (GNMA) ........................... 1,060,000 1,061,897
Maricopa County, Arizona Industrial
Development Authority Multifamily
Housing Revenue (Villas De Merced
Apartments Project)
5.50% 12/20/37 (MBIA) .......................... 1,145,000 1,012,833
Maricopa County, Arizona Industrial
Development Authority Multifamily Housing
Revenue (Whispering Palms Apartments)
5.90% 7/1/29 (MBIA) ............................ 1,205,000 1,157,872
Maricopa County, Arizona Industrial
Development (Metro Gardens-Mesa Ridge
Project) 5.15% 7/1/29 (MBIA) ................... 2,600,000 2,233,322
15
<PAGE>
Statement of Net Assets (continued)
Delaware Tax-Free Arizona Principal Market
Insured Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Pima County, Arizona Industrial Development
Authority Multifamily Housing Revenue
(La Hacienda Project)
7.00% 12/20/31 (GNMA) .......................... $ 1,290,000 $ 1,380,365
Pima County, Arizona Industrial Development
Authority Multifamily Housing Revenue
(Nova and Villa Projects)
5.20% 12/20/31 (GNMA) .......................... 1,780,000 1,594,649
5.20% 12/20/31 (GNMA) .......................... 1,000,000 863,770
Pima County, Arizona Industrial Development
Authority Multifamily Housing Revenue
(Sunbriar Apartments Project)
7.25% 7/1/25 (MBIA) ............................ 1,225,000 1,282,796
Phoenix, Arizona Industrial Development
Authority Multifamily Housing Revenue
(Ventana Palms Apartments)
6.20% 10/1/34 (MBIA) ........................... 940,000 925,468
6.15% 10/1/29 (MBIA) ........................... 510,000 505,165
Tucson Industrial Development Authority
(Los Portales Apartment)
5.90% 12/20/31 (GNMA) .......................... 3,870,000 3,724,759
Yuma, Arizona Industrial Development
Authority Multifamily Revenue
6.10% 9/20/19 (GNMA) ........................... 2,340,000 2,337,262
Yuma, Arizona Industrial Development
Authority Multifamily Revenue
(Regency Apartments)
5.50% 12/20/32 (GNMA) .......................... 2,000,000 1,812,400
----------
19,892,558
----------
Lease/Certificates of Participation -- 5.16%
Oro Valley Certificate of Paticipation
5.75% 7/1/11 (MBIA) ............................ 1,000,000 1,028,170
5.75% 7/1/17 (MBIA) ............................ 1,000,000 989,110
Scottsdale Municipal Property Corporation
Lease 6.25% 11/1/14 (FGIC) ..................... 3,900,000 3,962,478
University of Arizona Parking & Student
Housing Certificate of Participation
5.75% 6/1/19 (AMBAC) ........................... 1,925,000 1,861,783
----------
7,841,541
----------
Power Authority Revenue Bonds -- 8.70%
Mesa, Arizona Utility Systems Revenue
5.25% 7/1/16 (FGIC) ............................ 12,000,000 11,188,560
Salt River Agricultural Improvement & Power
Project 6.25% 1/1/19 (FGIC) .................... 2,000,000 2,027,560
----------
13,216,120
----------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-refunded / Escrowed to Maturity - 9.50%
Arizona Health Facilities Authority Hospital
Systems (Phoenix Baptist Hospital &
Medical Center) 6.25% 9/1/11 (Escrowed
to Maturity) (MBIA) ............................ $ 2,000,000 $ 2,086,400
Chandler Refunding
7.00% 7/1/12-01 (FGIC) ......................... 195,000 202,985
Glendale, Arizona Industrial Development
Authority Educational Facilities (American
Graduate School International)
7.00% 7/1/14-05 (Connie Lee) ................... 1,000,000 1,099,640
Maricopa County Hospital District #1
6.125% 6/1/15-04 (FGIC) ........................ 5,500,000 5,797,495
Maricopa County Paradise Valley
Elementary School District #69
6.40% 7/1/10-01 (MBIA) ......................... 3,000,000 3,128,190
Phoenix, Arizona Street & Highway Project
6.50% 7/1/9-02 (AMBAC) ......................... 2,000,000 2,112,880
----------
14,427,590
----------
Transportation Revenue Bonds -5.32%
Phoenix, Arizona Civic Improvement Airport
Revenue Senior Lien (Series A)
5.00% 7/1/25 (FSA) ............................. 1,000,000 847,940
Puerto Rico Commonwealth Highway and
Transportation Authority Revenue,
Series A 5.00% 7/1/38 (MBIA) ................... 5,800,000 4,872,986
Tucson Airport Authority Revenue
5.70% 6/1/13 (MBIA) ............................ 2,350,000 2,357,143
----------
8,078,069
----------
Water & Sewer Revenue Bonds -3.20%
Chandler Water & Sewer Revenue
7.00% 7/1/12 (FGIC) ............................ 1,000,000 1,032,050
Gilbert Water & Waste Water Revenue
6.50% 7/1/12 (FGIC) ............................ 1,000,000 1,062,510
6.50% 7/1/22 (FGIC) ............................ 2,650,000 2,764,242
----------
4,858,802
----------
Other Revenue Bonds -1.35%
Maricopa County Stadium District
5.50% 7/1/13 (MBIA) ............................ 1,150,000 1,136,016
Prescott Valley Arizona Property Corporate
Municipal Facilities Revenue
5.125% 1/1/18 (FGIC) ........................... 1,000,000 910,010
----------
2,046,026
----------
Total Municipal Bonds
(cost $151,870,955) ............................ 150,388,723
-----------
16
<PAGE>
Statement of Net Assets (continued)
Delaware Tax-Free Arizona Number Market
Insured Fund of Shares Value
- --------------------------------------------------------------------------------
Short-Term Investments - 0.24%
Wells Fargo National Tax-Free Money
Market Fund ....................................... 365,042 $ 365,042
------------
Total Short-Term Investments
(cost $365,042) ................................... 365,042
------------
Total Market Value of Securities - 99.28%
(cost $152,235,997) ............................... $150,753,765
------------
Receivables and Other Assets
Net of Liabilities - 0.72% ........................ 1,090,693
------------
Net Assets Applicable to 14,320,099
Shares Outstanding - 100.00% ...................... $151,844,458
============
Net Asset Value - Delaware Tax-Free Arizona
Insured Fund A Class
($144,312,461 / 13,609,827 shares) ................ $10.60
------
Net Asset Value - Delaware Tax-Free Arizona
Insured Fund B Class
($6,128,789 / 578,023 shares) ..................... $10.60
------
Net Asset Value - Tax-Free Arizona
Insured Fund C Class
($1,403,208 / 132,249 shares) ..................... $10.61
------
- ---------------
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
<PAGE>
- --------------------------------------------------------------------------------
Components of Net Assets at February 29, 2000:
Shares of Beneficial Interest (unlimited
authorization - no par) ................................... $155,169,103
Accumulated net realized loss
on investments ............................................ (1,842,413)
Net unrealized depreciation of investments ................... (1,482,232)
------------
Total Net Assets ............................................. $151,844,458
============
Net Asset Value and Offering Price Per Share -
Delaware Tax-Free Arizona Insured Fund
Net asset value A Class (A) .................................. $10.60
Sales charge (3.75% of offering price or
3.87% of amount invested per share) (B) ................... $0.41
------
Offering price ............................................... $11.01
======
- -----------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See current prospectus for purchases of $100,000 or more.
See accompanying notes.
17
<PAGE>
Statement of Net Assets (continued)
DELAWARE TAX-FREE CALIFORNIA FUND
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 98.27%
Higher Education Revenue Bonds - 8.32%
California Education (University Southern
California) 5.50% 10/1/27 ........................ $1,000,000 $ 934,210
San Francisco State University
5.20% 7/1/19 ..................................... 1,000,000 873,230
San Francisco State University Auxiliary
Organization 5.25% 7/1/32 ........................ 1,750,000 1,477,140
----------
3,284,580
----------
Hospital Revenue Bonds - 8.09%
San Benito, California Health Care Revenue
5.45% 10/1/28 .................................... 2,500,000 1,858,175
Sierra View Local Health Care District
California Revenue 5.25% 7/1/18 .................. 1,500,000 1,334,775
----------
3,192,950
----------
Housing Revenue Bonds - 21.97%
Abag Finance Authority of California
5.80% 10/1/19 .................................... 875,000 840,368
California Rural Home Revenue
5.30% 6/1/19 (AMT) ............................... 1,750,000 1,599,658
Chula Vista, California Multi Housing
Revenue 5.30% 7/1/32 ............................. 1,000,000 883,870
Fairfield, California Housing Authority
5.625% 9/1/23 .................................... 1,000,000 870,470
Monterey County, California Housing
Revenue 5.00% 7/1/19 ............................. 2,260,000 1,963,307
San Marcos, California Redevelopment
Agency Tax Allocation Affordable Housing
Project Series A 6.00% 10/1/27 ................... 530,000 510,634
Stanton, California Multifamily Revenue
5.625% 8/1/29 .................................... 2,000,000 2,000,600
----------
8,668,907
----------
Lease/Certificates of Participation - 29.54%
California State Public Works Board Lease
Revenue 5.75% 11/1/24 ............................ 1,000,000 976,740
California Statewide Community Development
Authority Partnership 5.375% 4/1/17 .............. 4,000,000 3,285,400
Del Mar, California School District
5.25% 9/1/29 ..................................... 1,000,000 899,390
Duarte, California Certificates of Participation
5.25% 4/1/24 ..................................... 1,865,000 1,575,384
Orange County, California Water Distribution
Certificate of Participation
Series A 5.25% 8/15/22 ........................... 2,000,000 1,817,440
San Diego, California Certificate of
Participation 5.70% 2/1/28 ....................... 1,500,000 1,306,125
6.25% 9/1/29 ..................................... 1,000,000 944,890
Soledad Unified School District Financing
Project 5.30% 5/1/19 ............................. 1,000,000 850,380
----------
11,655,749
----------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Other Revenue Bonds - 15.86%
El Monte, California Public Authority
Tax Allocation Special Term (Multiple
Redevelopment Project) 5.75% 6/1/28 ................ $880,000 $ 741,101
Escondido, California Improvement Bond
Act 1915 5.625% 9/2/18 ............................. 500,000 449,735
La Mirada, California Redevelopment
Agency Special Tax (Community Facilities
District Number 89-1) 5.70% 10/1/20 ................ 500,000 437,780
Lake Elisnore, California Public Financing
Authority 5.50% 9/1/30 ............................. 1,000,000 814,530
5.80% 9/2/15 ....................................... 1,125,000 1,041,941
Sacramento County, California Special Tax
(Community Facilities District Number 1)
5.70% 12/1/20 ...................................... 500,000 433,950
San Diego, California Redevelopment
Agency 6.40% 9/1/25 ................................ 1,000,000 962,380
Santa Ana, California Financing Authority
Revenue (Inner City Commuter C)
5.60% 9/1/19 ....................................... 600,000 526,824
Turlock Public Funding, California
5.45% 9/1/24 ....................................... 500,000 415,040
Whittier, California Redevelopment Agency
Tax Allocation (Whittier Boulevard)
5.75% 11/1/28 ...................................... 500,000 434,160
----------
6,257,441
----------
Pollution Control Revenue Bonds - 4.66%
California Pollution Control Authority
Facilities Revenue (Mobil Oil Project)
5.50% 12/1/29 ...................................... 500,000 448,330
California Pollution Revenue
5.45% 9/1/29 ....................................... 1,500,000 1,388,490
----------
1,836,820
----------
School District Revenue Bonds - 3.56%
Golden West Schools Financing Revenue
5.80% 2/1/21 ....................................... 400,000 402,392
5.80% 2/1/23 ....................................... 500,000 501,230
5.80% 2/1/24 ....................................... 500,000 500,615
----------
1,404,237
----------
Transportation Revenue Bonds - 6.27%
Foothill/Eastern Corridor Agency Toll
Road Revenue 5.38% 1/15/14 ......................... 1,000,000 991,740
Long Beach, California Harbor Revenue
6.00% 5/15/11 ...................................... 1,000,000 1,057,600
Port Redwood City, California
5.40% 6/1/19 ....................................... 500,000 422,835
----------
2,472,175
----------
Total Municipal Bonds
(cost $42,853,185) ................................. 38,772,859
----------
18
<PAGE>
Statement of Net Assets (continued)
Delaware Tax-Free
California Fund
- --------------------------------------------------------------------------------
Total Market Value of Securities - 98.27%
(cost $42,853,185) ......................................... $38,772,859
Receivables and Other Assets
Net of Liabilities - 1.73% ................................. 680,584
-----------
Net Assets Applicable to 4,033,754
Shares Outstanding - 100.00% ............................... $39,453,443
===========
Net Asset Value - Delaware Tax-Free California Fund A Class
($22,869,038 / 2,340,768 shares) ........................... $9.77
-----
Net Asset Value - Delaware Tax-Free California Fund B Class
($12,744,066 / 1,300,273 shares) ........................... $9.80
-----
Net Asset Value - Delaware Tax-Free California Fund C Class
($3,840,339 / 392,713 shares) .............................. $9.78
-----
Summary of Abbreviations:
AMT - Bonds subject to Alternative Minimum Tax
Components of Net Assets at February 29, 2000:
Shares of beneficial interest (unlimited
authorization - no par) .................................... $44,636,593
Distributions in excess of net
investment income .......................................... (742)
Accumulated net realized loss
on investments ............................................. (1,102,082)
Net unrealized depreciation
of investments ............................................. (4,080,326)
-----------
Total net assets .............................................. $39,453,443
===========
<PAGE>
Net Asset Value and Offering Price Per Share -
Delaware Tax-Free California Fund
Net asset value A Class (A) ................................... $9.77
Sales charge (3.75% of offering price or
3.89% of amount invested per share) (B) .................... 0.38
------
Offering price ................................................ $10.15
======
- -----------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See current prospectus for purchases of $100,000 or more.
See accompanying notes
19
<PAGE>
Statement of Net Assets (continued)
DELAWARE TAX-FREE CALIFORNIA INSURED FUND
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 98.68%
General Obligation Bonds - 3.20%
Puerto Rico Municipal Finance Agency
Series A 5.50% 8/1/23 (FSA) ...................... $1,000,000 $ 955,620
----------
955,620
----------
Hospital Revenue Bonds - 12.04%
California Health Facilities (San Diego
Hospital) 6.20% 8/1/12 (MBIA) .................... 1,000,000 1,046,970
California State Public Works Board
Department Health Services Series A
5.625% 11/1/19 (MBIA) ............................ 1,280,000 1,246,502
Oakland, California (Harrison Foundation)
Series B 6.00% 1/1/29 (AMBAC) .................... 1,300,000 1,301,781
----------
3,595,253
----------
Housing Revenue Bonds - 27.57%
California Housing Finance Agency
Home Mortgage Revenue
Series E 6.05% 8/1/16 (MBIA) ..................... 1,000,000 1,004,300
California Housing Finance Agency
Home Mortgage Revenue
Series K 6.15% 8/1/16 (MBIA) ..................... 1,100,000 1,115,774
California Housing Finance Agency Revenue
Series E 6.75% 8/1/26 (MBIA) ..................... 1,000,000 1,029,900
California Housing Finance Agency Revenue
Series F 6.00% 8/1/17 (MBIA) ..................... 1,000,000 1,007,060
California Housing Finance Agency Single
Family Mortgage 6.00% 8/1/20 (AMT) ............... 900,000 889,515
California Rural Home Mortgage Finance
Authority Single Family Mortgage Revenue
7.95% 12/1/24 (AMBAC) ............................ 985,000 1,064,007
Fresno, California Multifamily Housing
Revenue (Woodlands Apartments
Project) 6.65% 5/20/17 (GNMA) .................... 1,000,000 1,050,370
Ventura County, California Multifamily
Housing Revenue (Glen Oaks Apartments)
Series A 6.35% 7/20/34 (GNMA) .................... 1,057,000 1,069,843
----------
8,230,769
----------
Lease/Certificates of Participation - 26.56%
Del Mar, California School District
5.25% 9/1/29 (AMBAC) ............................. 2,000,000 1,798,780
Placer County Water Agency Capital
Improvement Projects
5.50% 7/1/29 (AMBAC) ............................. 2,000,000 1,865,180
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Lease/Certificates of Participation (continued)
San Diego, California Convention Center
Expansion Series A
5.25% 4/1/11 (AMBAC) ............................. $2,000,000 $ 2,007,960
Santa Barbara, California Water Revenue
Certificate of Participation
6.70% 4/1/27 (AMBAC) ............................. 1,000,000 1,045,490
Santa Clara, California Finance Authority
7.75% 11/15/11 (AMBAC) ........................... 1,000,000 1,212,460
-----------
7,929,870
-----------
Pollution Control Revenue Bonds - 1.55%
California Pollution Revenue
5.45% 9/1/29 (MBIA) .............................. 500,000 462,830
-----------
462,830
-----------
*Pre-Refunded Bonds - 5.36%
Inland Empire Solid Waste Authority
6.00% 8/1/19-06 (FSA) ............................ 1,500,000 1,600,635
-----------
1,600,635
-----------
Transportation Revenue Bonds - 5.73%
Alameda Corridor Transportation Authority
California Senior Lien Series A
5.00% 10/1/29 (MBIA) ............................. 1,000,000 853,480
San Francisco Airport Revenue
5.00% 5/1/23 (FGIC) .............................. 1,000,000 855,770
-----------
1,709,250
-----------
Water & Sewer Revenue Bonds - 6.86%
Calaveras County Water District Revenue
6.125% 9/1/17 (AMBAC) ............................ 1,000,000 1,028,690
Rancho Water District Finance Revenue
5.90% 11/1/15 (FGIC) ............................. 1,000,000 1,020,260
-----------
2,048,950
-----------
Other Revenue Bonds - 9.81%
Culver City, California Redevelopment
Finance Authority (Tax Allocation)
Series A 5.60% 11/1/25 (FSA) ..................... 2,000,000 1,893,240
Ontario Redevelopment Cimarron Project
6.25% 8/1/15 (MBIA) .............................. 1,000,000 1,034,170
-----------
2,927,410
-----------
Total Municipal Bonds
(Cost $29,426,216) ................................ $29,460,587
-----------
20
<PAGE>
Statement of Net Assets (continued)
Delaware Tax-Free California
Insured Fund
- --------------------------------------------------------------------------------
Total Market Value of Securities - 98.68%
(cost $29,426,216) ........................................ $29,460,587
-----------
Receivables and Other Assets
Net of Liabilities - 1.32% ................................ 392,718
-----------
Net Assets Applicable to 2,945,635
Shares Outstanding - 100.00% .............................. $29,853,305
===========
Net Asset Value - Delaware Tax-Free California Insured Fund
A Class ($22,973,523 / 2,266,785 shares) .................. $10.13
------
Net Asset Value - Delaware Tax-Free California Insured Fund
B Class ($6,453,586 / 636,631 shares) ..................... $10.14
------
Net Asset Value - Delaware Tax-Free California Insured Fund
C Class ($426,196 / 42,219 shares) ........................ $10.09
------
- -----------------
* For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
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
Components of Net Assets at February 29, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ................................... $30,611,051
Accumulated net realized loss
on investments ............................................ (792,117)
Net unrealized appreciation
of investments ............................................ 34,371
-----------
Total net assets ............................................. $29,853,305
===========
<PAGE>
- --------------------------------------------------------------------------------
Net Asset Value and Offering Price Per Share -
Delaware Tax-Free California Insured Fund
Net asset value per share A Class (A) ........................ $10.13
Sales charge (3.75% of offering price or
3.85% of amount invested per share) (B) ................... 0.39
------
Offering price ............................................... $10.52
======
- ------------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See current prospectus for purchases of $100,000 or more.
See accompanying notes
21
<PAGE>
Statement of Net Assets (continued)
DELAWARE TAX-FREE COLORADO FUND
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 98.87%
General Obligation Bonds - 20.46%
Arapahoe, Colorado Water & Sanitation
District Arapahoe County
Series 1995A 6.00% 12/1/15 ..................... $ 8,010,000 $ 8,122,701
Series 1995A 6.15% 12/1/19 ..................... 10,075,000 10,144,718
Arapahoe County, Colorado School District #5
Cherry Creek 5.50% 12/15/19 .................... 2,250,000 2,155,635
Central Platte Valley Metropolitan District
5.20% 12/1/17 .................................. 7,950,000 7,172,172
Eagles Nest Metropolitan District
6.50% 11/15/17 ................................. 6,350,000 6,628,194
E-470 Business Metropolitan District
5.125% 12/1/17 ................................. 2,500,000 2,198,300
Galleria Metropolitan District
7.25%12/1/09 ................................... 1,130,000 1,119,728
Highlands Ranch Metropolitan District #3
5.30% 12/1/19 .................................. 1,500,000 1,316,220
Interlocken Metropolitan District
5.625% 12/15/16 ................................ 1,750,000 1,682,783
5.625% 12/15/16 ................................ 7,000,000 6,731,130
5.75% 12/15/19 ................................. 7,000,000 6,774,600
Interstate South Metropolitan District
6.00% 12/1/20 .................................. 8,755,000 8,661,934
Jefferson County Metropolitan District
Section 14 Series A 6.20% 12/1/13 .............. 2,250,000 2,320,425
----------
65,028,540
----------
Higher Education Revenue Bonds - 1.63%
Colorado Springs, Colorado Revenue
(Colorado College Project)
5.375% 6/1/32 .................................. 5,820,000 5,189,985
----------
5,189,985
----------
Hospital Revenue Bonds - 22.16%
Boulder County, Colorado Hospital Revenue
Development (Longmont United Hospital)
5.60% 12/1/27 .................................. 6,765,000 5,474,576
Boulder County, Colorado Hospital Revenue
(Longmont United Project)
5.875% 12/1/20 ................................. 3,000,000 2,597,760
Colorado Health Facilities Authority
(Baptist Home Association) Series A
6.375% 8/15/24 ................................. 3,250,000 2,836,373
Colorado Health Facilities Authority
(Covenant Retirement) 6.75% 12/1/25 ............ 4,150,000 4,094,598
Colorado Health Facilities Authority
(National Benevolent Association)
5.25% 2/1/28 ................................... 3,700,000 2,688,346
Colorado Health Facilities Authority
(National Benevolent Association) Series A
5.25% 1/1/27 ................................... 1,330,000 970,634
6.90% 6/1/15 ................................... 1,085,000 1,088,515
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds (continued)
Colorado Health Facilities Authority
(National Jewish Medical & Research Center)
5.375% 1/1/23 ................................... $ 4,945,000 $ 4,367,523
5.375% 1/1/28 ................................... 3,230,000 2,739,395
5.375% 1/1/29 ................................... 1,820,000 1,548,401
Colorado Health Facilities Authority
(Parkview Hospital)
6.00% 9/1/16 .................................... 4,000,000 3,658,160
6.125% 9/1/25 ................................... 7,750,000 6,828,370
Colorado Health Facilities Authority
(Parkview Medical Center Income Project)
5.25% 9/1/18 .................................... 1,500,000 1,199,955
Colorado Health Facilities Authority
(Rocky Mountain Adventist Healthcare)
6.625% 2/1/13 ................................... 15,000,000 13,290,749
6.625% 2/1/22 ................................... 5,885,000 4,995,600
Colorado Health Facilities Authority
(Steamboat Springs Health)
5.75% 9/15/22 ................................... 1,900,000 1,504,762
Colorado Health Facilities Authority
(Vail Valley Medical Center Revenue)
6.50% 1/15/13 ................................... 2,150,000 2,196,247
6.60% 1/15/20 ................................... 7,500,000 7,631,475
Denver, Colorado Health & Hospital Revenue
5.375% 12/1/27 .................................. 1,000,000 749,670
----------
70,461,109
----------
Housing Revenue Bonds - 17.40%
Adams County, Colorado Housing Authority
Mortgage Revenue (Aztec Villa Apartments
Project) 5.85% 12/1/27 .......................... 1,825,000 1,733,768
Adams County Housing Authority Mortgage
Revenue (Greenbriar Project)
6.75% 7/1/21 .................................... 1,730,000 1,771,780
Aurora Housing Authority Multifamily Revenue
5.60% 07/1/19 ................................... 2,635,000 2,437,085
5.70% 07/1/23 ................................... 1,535,000 1,421,272
Boulder County, Colorado Housing Authority
Revenue 4.75% 12/1/28 ........................... 2,500,000 2,048,450
Burlingame, Colorado Multifamily Housing
Revenue 6.00% 11/1/29 ........................... 2,500,000 2,425,700
Colorado Housing & Finance Authority
5.20% 10/1/30 ................................... 1,710,000 1,492,505
6.05% 10/1/32 ................................... 1,535,000 1,494,476
6.15% 10/1/41 ................................... 1,590,000 1,541,282
Colorado Housing & Finance Authority
Series A-3 5.85% 10/1/28 (FHA) .................. 4,000,000 3,813,400
Series A-3 6.25% 10/1/26 ........................ 8,530,000 8,637,222
Series B-3 5.65% 10/1/28 ........................ 3,880,000 3,639,983
Series C-3 6.10% 10/1/28 ........................ 4,120,000 4,144,308
22
<PAGE>
Statement of Net Assets (continued)
Principal Market
Delaware Tax-Free Colorado Fund Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Eaglebend Affordable Housing Corporation
Multifamily Revenue
Series A 6.20% 07/1/12 .......................... $ 1,000,000 $ 970,590
Series A 6.40% 07/1/17 .......................... 1,000,000 954,630
Series A 6.45% 07/1/21 .......................... 1,000,000 950,010
Englewood Colorado Multifamily
(Marks Apartments)
Series B 6.00% 12/15/18 ......................... 8,295,000 8,138,473
Series 96 6.65% 12/1/26 ......................... 5,700,000 5,553,453
Pueblo County Single Family Mortgage
Revenue Series 1994A
7.05% 11/1/27 (GNMA) ............................ 2,115,000 2,161,953
----------
55,330,340
----------
Lease/Certificates of Participation - 2.38%
Broomfield, Colorado Certificate of
Participation 6.00% 12/1/29 ..................... 1,750,000 1,747,393
Colorado Educational & Cultural Facilities
Authority Revenue (Aspen Foundation
Colorado) 6.50% 7/1/24 .......................... 1,710,000 1,555,125
Conejos & Alamosa Counties, Colorado School
District Region 11 6.50% 4/1/11 ................. 1,700,000 1,676,200
Greeley Building Authority Certificates of
Participation 6.10% 8/15/16 ..................... 2,600,000 2,589,210
----------
7,567,928
----------
Power Authority Revenue Bonds - 2.57%
Platte River Power Authority Power Revenue
Series BB 6.125% 6/1/14 ......................... 5,000,000 5,095,550
Puerto Rico Electric Power Authority Power
Revenue Series DD 5.00% 7/1/28 .................. 3,680,000 3,085,202
----------
8,180,752
----------
Territorial Revenue Bonds - 3.08%
Virgin Islands Public Finance Authority
Revenue 6.125% 10/1/29 .......................... 10,000,000 9,805,400
----------
9,805,400
----------
Transportation Revenue Bonds - 6.46%
Arapahoe County Colorado Capital
Improvement Trust Highway Revenue
6.15% 08/31/26 (MBIA) ........................... 8,530,000 8,552,349
Denver, Colorado City & County Airport
5.00% 11/15/25 .................................. 4,500,000 3,784,635
Denver, Colorado City & County Airport
Series E 5.50% 11/15/25 ......................... 890,000 823,223
E-470 Public Highway Authority
Series A 5.00% 09/1/21 .......................... 5,180,000 4,469,304
Series A 5.00% 09/1/26 .......................... 3,400,000 2,864,704
----------
20,494,215
----------
Utility Revenue Bonds - 2.66%
Colorado Springs, Colorado Utilities Revenue
Series A 5.00% 11/15/00 ......................... 10,000,000 8,466,700
----------
8,466,700
----------
<PAGE>
Principal Market
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds (continued)
Water & Sewer Revenue Bonds - 2.59%
Centennial Water & Sanitation District
Water & Sewer Revenue 6.00% 12/1/15
(LOC - Swiss Bank) .............................. $ 3,000,000 $ 3,046,020
Erie, Colorado Water Enterprise Revenue
5.00% 12/1/23 ................................... 5,000,000 4,129,700
Westminster, Colorado Water & Wastewater
Utility Enterprise Revenue
6.25% 12/1/14 (AMBAC) ........................... 1,000,000 1,022,890
------------
8,198,610
------------
Other Revenue Bonds - 17.48%
Aurora Golf Course Enterprise System
Revenue (Saddle Rock Golf Course)
6.20% 12/1/15 ................................... 2,000,000 2,002,640
Colorado Educational & Cultural Facilities
Authority 6.75% 6/1/29 .......................... 2,000,000 1,945,100
Colorado Educational & Cultural Facility
Authority (Alexander Dawson School)
5.30% 2/15/29 (MBIA) ............................ 1,500,000 1,339,635
Colorado Educational & Cultural Facilities
Authority (Aspen) 6.125% 7/1/12 ................. 605,000 568,809
Colorado Educational & Cultural Facilities
Authority (Auraria Foundation)
4.75% 9/1/28 .................................... 6,000,000 4,836,300
Colorado Educational & Cultural Facilities
Authority
6.50% 7/15/12 ................................... 1,975,000 1,852,096
6.50% 7/15/24 ................................... 5,145,000 4,641,202
7.00% 11/1/29 ................................... 1,000,000 976,690
Colorado Post Secondary Education
(Ocean Journey Project)
8.375% 12/1/26 .................................. 8,000,000 8,828,080
Lowry, Colorado Economic Redevelopment
Authority Colorado Revenue
Series A 7.00% 12/1/10 .......................... 1,400,000 1,485,708
Lowry Economic Redevelopment Authority
Revenue 7.50% 12/1/10 ........................... 13,700,000 14,912,587
Metropolitan Football Stadium District
Sales Tax Revenue
*Series A 5.44% 1/1/08 ............................ 3,925,000 2,549,248
*Series A 5.44% 1/1/09 ............................ 4,000,000 2,448,080
*Series A 5.62% 1/1/11 ............................ 3,600,000 1,948,608
*Series A 5.69% 1/1/12 ............................ 1,750,000 887,863
Pueblo Urban Renewal Authority Tax
Increment Revenue 6.625% 12/1/19 ................ 2,060,000 2,091,992
South Suburban Park & Recreation District
(Golf & Ice Arena Facility)
6.60% 11/1/15 ................................... 2,330,000 2,267,579
------------
55,582,217
------------
Total Municipal Bonds
(cost $326,408,801) ............................. $314,305,796
------------
23
<PAGE>
Statement of Net Assets (continued)
Delaware Tax-Free Colorado Fund
- --------------------------------------------------------------------------------
Total Market Value of Securities - 98.87%
(cost $326,408,801) ........................................ $314,305,796
Receivables and Other Assets
Net of Liabilities - 1.13% ................................. 3,602,560
------------
Net Assets Applicable to 31,217,811
Shares Outstanding - 100.00% ............................... $317,908,356
============
Net Asset Value - Delaware Tax-Free Colorado Fund A Class
($300,389,472 / 29,498,390 shares) ......................... $10.18
------
Net Asset Value - Delaware Tax-Free Colorado Fund B Class
($13,047,035 / 1,280,701 shares) ........................... $10.19
------
Net Asset Value - Delaware Tax-Free Colorado Fund C Class
($4,471,849 / 438,720 shares) .............................. $10.19
------
- -------------------
* Zero coupon bond - The interest rate shown is the effective yield as of
February 29, 2000
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
FHA - Insured by the Federal Housing Authority
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
Components of Net Assets at February 29, 2000:
Shares of beneficial interest (unlimited
authorization - no par) .................................... $336,453,685
Accumulated net realized loss
on investments ............................................. (6,442,324)
Net unrealized depreciation
of investments ............................................. (12,103,005)
------------
Total net assets .............................................. $317,908,356
============
<PAGE>
Net Asset Value and Offering Price Per Share -
Delaware Tax-Free Colorado Fund
Net asset value A Class (A) ................................... $10.18
Sales charge (3.75% of offering price or 3.93%
of amount invested per share) (B) .......................... 0.40
------
Offering price ................................................ $10.58
======
- ------------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See current prospectus for purchases of $100,000.
See accompanying notes
24
<PAGE>
Statement of Net Assets (continued)
DELAWARE TAX-FREE NEW MEXICO FUND
Principal Market
February 29, 2000 (Unaudited) Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds - 97.93%
Higher Education Revenue Bonds - 10.07%
Santa Fe Education Facilities Revenue
(St. John's College) 5.50% 3/1/24 ........... $ 1,000,000 $ 894,510
University of New Mexico Revenue
6.00% 6/1/25 (MBIA) ......................... 1,000,000 1,002,480
University of New Mexico Technical
Development Lease Revenue
6.55% 8/15/25 ............................... 300,000 323,904
-----------
2,220,894
-----------
Hospital Revenue Bonds - 9.55%
New Mexico State Hospital Equipment
Council Hospital Revenue 5.50% 6/2/28 ....... 1,500,000 1,149,360
State Hospital Equipment Memorial
Medical Center Project 6.40% 6/1/16 ......... 1,000,000 957,110
-----------
2,106,470
-----------
Housing Revenue Bonds - 28.24%
Carlsbad,New Mexico Housing Multifamily
Revenue (Colonial Hillcrest)
7.375% 8/1/27 ............................... 1,000,000 969,680
New Mexico Mortgage Finance Authority
Series 1994B 6.75% 7/1/25 ................... 1,000,000 1,071,040
Series 1994F 6.95% 1/1/26 ................... 1,000,000 1,075,560
Series 1996G 6.85% 1/1/21 ................... 1,500,000 1,618,515
Santa Fe Single Family Mortgage Revenue
6.20% 11/1/16 ............................... 575,000 578,381
Southeastern New Mexico Affordable
Housing (Casa Hermosa Apartments)
7.25% 12/1/27 ............................... 1,000,000 913,110
-----------
6,226,286
-----------
Pollution Control Revenue Bonds - 9.22%
Farmington, New Mexico Polution Control
Public Service Company Project
ACA-CBI 6.375% 4/1/22 ....................... 1,000,000 1,007,120
Lordsburg Pollution Control 6.50% 4/1/13 ....... 1,000,000 1,025,500
-----------
2,032,620
-----------
<PAGE>
Municipal Bonds (continued)
*Pre-refunded Bonds - 4.58%
New Mexico Education Assistance
Foundation 6.65% 11/1/25-04 ................. $ 1,000,000 $ 1,010,360
-----------
1,010,360
-----------
Territorial Revenue Bonds - 3.81%
Puerto Rico Public Finance Commonwealth
Appropriations Series A 5.00% 6/1/26 ........ 1,000,000 839,680
-----------
839,680
-----------
Utility Revenue Bond - 4.58%
Los Alamos Utility System Revenue
1994A 6.00% 7/1/15 (FSA) .................... 1,000,000 1,010,370
-----------
1,010,370
-----------
Waste Disposal Revenue Bonds - 2.27%
Las Cruses Solid Waste Authority
6.00% 6/1/16 ................................ 500,000 500,390
-----------
500,390
-----------
Other Revenue Bonds - 25.61%
Albeuquerque, New Mexico Gross Receipts
Tax Revenue 5.00% 7/1/18 .................... 605,000 536,393
Albuquerque, New Mexico Gross Reciepts
Tax Revenue Series C 4.75% 7/1/22 ........... 1,000,000 832,200
Albuquerque Special Assessment
#223 6.45% 1/1/15 ........................... 625,000 625,450
Bernalillo County, New Mexico Gross
Receipts Tax Revenue 5.25% 4/1/27 ........... 1,000,000 893,190
Bernalillo Gross Tax 5.25% 10/1/26 ............. 1,000,000 896,050
Truth or Consequences Gross Tax Receipts
6.30% 7/1/16 ................................ 1,000,000 1,014,450
Santa Fe, New Mexico Municipal Record
Complex Net Revenue
5.625% 12/1/23 .............................. 1,000,000 848,920
-----------
5,646,653
-----------
Total Municipal Bonds
(cost $22,269,227) .......................... $21,593,723
===========
25
<PAGE>
Statement of Net Assets (continued)
Delaware Tax-Free Number Market
New Mexico Fund of Shares Value
- --------------------------------------------------------------------------------
Short-Term Investments - 0.87%
Wells Fargo National Tax-Free
Money Market Fund ............................... 192,354 $ 192,354
-----------
Total Short-Term Investments
(cost $192,354) ................................. 192,354
===========
Total Market Value of Securities - 98.80%
(cost $22,461,581) .............................. $21,786,077
Receivables and Other Assets
Net of Liabilities - 1.20% ...................... 264,527
-----------
Net Assets Applicable to 2,136,316
Shares Outstanding - 100% ....................... $22,050,604
===========
Net Asset Value - Delaware Tax-Free New Mexico Fund
A Class ($19,076,007 / 1,848,366 shares) ........ $10.32
------
Net Asset Value - Delaware Tax-Free New Mexico Fund
B Class ($2,529,405 / 244,824 shares) ........... $10.33
------
Net Asset Value - Delaware Tax-Free New Mexico Fund
C Class ($445,192 / 43,126 shares) .............. $10.32
------
- ----------------------
* 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
MBIA - Insured by the Municipal Bond Insurance Association
Components Of Net Assets At February 29, 2000:
Shares of benefical interest (unlimited
authorization - no par) ......................... $ 23,244,011
Accumulated net realized loss
on investments .................................. (517,903)
Net unrealized depreciation
of investments .................................. (675,504)
------------
Total net assets ................................... $ 22,050,604
============
Net Asset Value and Offering Price Per Share -
Delaware Tax-Free New Mexico Fund
Net asset value A Class (A) ........................ $10.32
Sales charge (3.75% of offering price or
3.88% of amount invested per share) (B) ......... 0.40
------
Offering price ..................................... $10.72
======
- ------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See current prospectus for purchases of $100,000 or more.
See accompanying notes
26
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Delaware Delaware Delaware Delaware Delaware Delaware
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Six Months Ended Arizona Arizona California California Colorado New Mexico
February 29, 2000 (Unaudited) Fund Insured Fund Fund Insured Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Interest .......................................... $ 750,715 $4,752,540 $1,189,341 $883,514 $10,407,584 $ 701,430
Expenses:
Management fees ................................... 66,616 405,051 110,266 74,857 921,084 61,968
Dividend disbursing and transfer agent
fees and expenses .............................. 13,837 45,000 16,500 20,970 129,000 11,965
Distribution expense .............................. 57,521 231,026 117,271 64,466 486,522 39,337
Registration fees ................................. 3,000 4,000 3,870 3,000 1,200 1,150
Reports and statements
to shareholders ................................ 2,200 21,000 4,800 8,600 45,000 400
Accounting and administration ..................... 4,700 39,000 10,800 10,700 91,800 5,550
Professional fees ................................. 3,121 8,000 6,600 12,154 31,000 1,365
Custodian fees and expenses ....................... 1,175 8,750 1,800 3,000 8,000 700
Trustees' fees .................................... 350 1,600 930 300 1,200 600
Taxes (other than taxes on income) ................ 1,100 9,600 1,080 6,200 12,900 325
Other ............................................. 279 30,670 2,185 346 14,769 260
----------- ----------- ----------- --------- ------------ ---------
153,899 803,697 276,102 204,593 1,742,475 123,620
Less expenses absorbed or waived .................. (35,525) (1,217) (108,307) (27,217) (3,530) --
Less expenses paid indirectly ..................... (279) (1,866) (461) (346) (3,857) (260)
----------- ----------- ----------- --------- ------------ ---------
Total operating expenses
(before interest expense) ...................... 118,095 800,614 167,334 177,030 1,735,088 123,360
Interest expense .................................. 582 3,170 463 899 7,387 402
----------- ----------- ----------- --------- ------------ ---------
Total expenses .................................... 118,677 803,784 167,797 177,929 1,742,475 123,762
----------- ----------- ----------- --------- ------------ ---------
Net Investment Income ............................. 632,038 3,948,756 1,021,544 705,585 8,665,109 577,668
----------- ----------- ----------- --------- ------------ ---------
Net Realized and Unrealized Gain
(Loss) on Investments:
Net realized loss on investments .................. (778,750) (327,114) (917,834) (594,929) (5,532,472) (57,010)
Net change in unrealized appreciation/
depreciation of investments .................... (893,651) (5,594,156) (2,033,348) (283,243) (14,051,931) (953,846)
----------- ----------- ----------- --------- ------------ ---------
Net Realized and Unrealized Loss
on Investments ................................. (1,672,401) (5,921,270) (2,951,182) (878,172) (19,584,403) (1,010,856)
----------- ----------- ----------- --------- ------------ ---------
Net Decrease in Net Assets
Resulting from Operations ...................... ($1,040,363) ($1,972,514) ($1,929,638) ($172,587) ($10,919,294) ($433,188)
=========== =========== =========== ========= ============ =========
</TABLE>
See accompanying notes
27
<PAGE>
Statements Of Changes In Net Assets
<TABLE>
<CAPTION>
Delaware Delaware
Tax-Free Arizona Fund Tax-Free Arizona Insured Fund
- ------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/29/00 8/31/99 2/29/00 8/31/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income ................... $ 632,038 $ 1,018,076 $ 3,948,756 $ 8,400,085
Net realized gain (loss)
on investments ....................... (778,750) (29,459) (327,114) 1,231,358
Net change in unrealized appreciation/
depreciation of investments .......... (893,651) (1,463,852) (5,594,156) (10,348,205)
----------------------------------------------------------------
Net decrease in net assets
resulting from operations ............ (1,040,363) (475,235) (1,972,514) (716,762)
----------------------------------------------------------------
Distributions to Shareholders from:
Net investment income:
A Class .............................. (461,442) (749,961) (3,792,263) (8,137,700)
B Class .............................. (128,216) (224,287) (127,751) (219,824)
C Class .............................. (42,380) (43,828) (28,742) (42,785)
Net realized gain on investment:
A Class .............................. -- (131,098) -- --
B Class .............................. -- (51,618) -- --
C Class .............................. -- (6,493) -- --
----------------------------------------------------------------
(632,038) (1,207,285) (3,948,756) (8,400,310)
----------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class .............................. 3,458,224 11,402,727 3,458,210 13,298,123
B Class .............................. 237,833 1,743,609 638,826 2,565,318
C Class .............................. 36,202 1,548,540 320,457 1,011,175
Netasset value of shares issued upon
reinvestment of distributions from net
investment income and net realized
gain on investments:
A Class .............................. 265,528 537,599 1,666,207 3,531,111
B Class .............................. 54,770 138,997 69,766 124,743
C Class .............................. 29,278 24,670 22,562 31,272
----------------------------------------------------------------
4,081,835 15,396,142 6,176,028 20,561,742
----------------------------------------------------------------
Cost of shares repurchased:
A Class .............................. (6,817,225) (4,355,710) (21,523,900) (21,041,194)
B Class .............................. (892,679) (473,276) (421,084) (1,098,285)
C Class .............................. (239,902) (146,074) (265,875) (219,748)
----------------------------------------------------------------
(7,949,806) (4,975,060) (22,210,859) (22,359,227)
----------------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions ...... (3,867,971) 10,421,082 (16,034,831) (1,797,485)
----------------------------------------------------------------
Net Increase (Decrease)
in Net Assets ........................ (5,540,372) 8,738,562 (21,956,101) (10,914,556)
Net Assets:
Beginning of period ..................... 26,499,091 17,760,529 173,800,559 184,715,115
----------------------------------------------------------------
End of period ........................... $ 20,958,719 $ 26,499,091 $ 151,844,458 $ 173,800,559
================================================================
</TABLE>
See accompanying notes
28
<PAGE>
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Delaware Delaware
Tax-Free California Fund Tax-Free California Insured Fund
- ------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/29/00 8/31/99 2/29/00 8/31/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income ................... $ 1,021,544 $ 1,583,975 $ 705,585 $ 1,532,885
Net realized gain (loss)
on investments ....................... (917,834) (153,896) (594,929) 224,505
Net change in unrealized appreciation/
depreciation of investments .......... (2,033,348) (2,720,093) (283,243) (2,466,054)
----------------------------------------------------------------
Net decrease in net assets
resulting from operations ............ (1,929,638) (1,290,014) (172,587) (708,664)
----------------------------------------------------------------
Distributions to Shareholders from:
Net investment income:
A Class .............................. (601,374) (980,018) (557,031) (1,251,911)
B Class .............................. (311,085) (482,470) (137,520) (261,992)
C Class .............................. (110,207) (119,973) (11,034) (18,982)
Net realized gain on investment:
A Class .............................. -- (33,213) -- --
B Class .............................. -- (21,093) -- --
C Class .............................. -- (3,610) -- --
----------------------------------------------------------------
(1,022,666) (1,640,377) (705,585) (1,532,885)
----------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class .............................. 7,095,360 16,534,979 3,526,517 3,134,581
B Class .............................. 1,740,128 7,123,662 608,233 1,604,122
C Class .............................. 327,207 5,165,216 -- 165,394
Netasset value of shares issued upon
reinvestment of distributions from
net investment income and net
realized gain on investments:
A Class .............................. 382,969 695,651 227,888 475,385
B Class .............................. 117,520 186,395 53,989 92,112
C Class .............................. 77,392 73,254 2,348 4,050
----------------------------------------------------------------
9,740,576 29,779,157 4,418,975 5,475,644
----------------------------------------------------------------
Cost of shares repurchased:
A Class .............................. (7,486,909) (2,615,126) (5,154,964) (5,406,160)
B Class .............................. (1,827,253) (1,691,031) (603,797) (1,228,041)
C Class .............................. (1,342,838) (556,491) (150,304) (3,129)
----------------------------------------------------------------
(10,657,000) (4,862,648) (5,909,065) (6,637,330)
----------------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions ...... (916,424) 24,916,509 (1,490,090) (1,161,686)
----------------------------------------------------------------
Net Increase (Decrease)
in Net Assets ........................ (3,868,728) 21,986,118 (2,368,262) (3,403,235)
Net Assets:
Beginning of period ..................... 43,322,171 21,336,053 32,221,567 35,624,802
----------------------------------------------------------------
End of period ........................... $ 39,453,443 $ 43,322,171 $ 29,853,305 $ 32,221,567
================================================================
</TABLE>
See accompanying notes
29
<PAGE>
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Delaware Delaware
Tax-Free Colorado Fund Tax-Free New Mexico Fund
- ------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
2/29/00 8/31/98 2/29/00 8/31/99
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
from Operations:
Net investment income ................... $ 8,665,109 $18,008,626 $577,668 $1,133,406
Net realized gain (loss)
on investments ....................... (5,532,472) 2,194,583 (57,010) 79,785
Net change in unrealized appreciation/
depreciation of investments .......... (14,051,931) (26,520,859) (953,846) (1,525,343)
----------------------------------------------------------------
Net decrease in net assets
resulting from operations ............ (10,919,294) (6,317,650) (433,188) (312,152)
----------------------------------------------------------------
Distributions to Shareholders from:
Net investment income:
A Class .............................. (8,264,961) (17,362,714) (511,505) (1,030,059)
B Class .............................. (298,803) (515,419) (56,858) (87,267)
C Class .............................. (101,345) (130,493) (9,305) (16,080)
Net realized gain on investment:
A Class .............................. -- -- -- --
B Class .............................. -- -- -- --
C Class .............................. -- -- -- --
----------------------------------------------------------------
(8,665,109) (18,008,626) (577,668) (1,133,406)
----------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class .............................. 9,412,274 40,867,433 1,264,529 3,548,401
B Class .............................. 1,279,384 4,975,757 271,376 1,146,134
C Class .............................. 1,028,275 3,101,825 124,102 127,550
Net asset value of shares issued upon
reinvestment of distributions from
net investment income and net
realized gain on investments:
A Class .............................. 5,253,590 11,025,848 264,187 529,912
B Class .............................. 216,356 376,661 40,062 54,162
C Class .............................. 81,729 102,368 8,722 15,431
----------------------------------------------------------------
17,271,608 60,449,892 1,972,978 5,421,590
----------------------------------------------------------------
Cost of shares repurchased:
A Class .............................. (33,918,782) (47,655,352) (2,307,537) (3,225,423)
B Class .............................. (1,203,418) (1,657,829) (290,915) (212,757)
C Class .............................. (702,630) (685,845) (50,500) (131,741)
----------------------------------------------------------------
(35,824,830) (49,999,026) (2,648,952) (3,569,921)
----------------------------------------------------------------
Increase (decrease) in net assets derived
from capital share transactions ...... (18,553,222) 10,450,866 (675,974) 1,851,669
----------------------------------------------------------------
Net Increase (Decrease)
in Net Assets ........................ (38,137,625) (13,875,410) (1,686,830) 406,111
Net Assets:
Beginning of period ..................... 356,045,981 369,921,391 23,737,434 23,331,323
----------------------------------------------------------------
End of period ........................... $317,908,356 $356,045,981 $22,050,604 $23,737,434
================================================================
</TABLE>
See accompanying notes
30
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Arizona Fund A Class
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 3/2/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.450 $11.210 $11.140 $10.700 $10.750 $10.000
Income from investment operations:
Net investment income .............................. 0.273 0.538 0.376 0.589 0.580 0.460
Net realized and unrealized gain (loss)
on investments .................................. (0.670) (0.645) 0.170 0.455 (0.010) 0.840
---------------------------------------------------------------------
Total from investment operations ................... (0.397) (0.107) 0.546 1.044 0.570 1.300
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.273) (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 .................. (0.273) (0.653) (0.476) (0.604) (0.620) (0.550)
---------------------------------------------------------------------
Net asset value, end of period ........................ $ 9.780 $10.450 $11.210 $11.140 $10.700 $10.750
=====================================================================
Total return(3) ....................................... (3.82%) (1.09%) 4.99% 10.07% 5.48% 13.27%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $14,318 $18,586 $12,177 $10,916 $9,755 $6,225
Ratio of expenses to average
net assets ...................................... 0.75% 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 ........................ 1.05% 1.10% 1.07% 1.08% 1.25% 1.25%(4)
Ratio of net investment income
to average net assets ........................... 5.46% 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 .................... 5.16% 4.38% 4.45% 4.82% 4.64% 4.46%(4)
Portfolio turnover ................................. 111% 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
31
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Arizona Fund B Class
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 6/29/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.450 $11.200 $11.140 $10.690 $10.740 $10.300
Income from investment operations:
Net investment income .............................. 0.236 0.456 0.319 0.502 0.510 0.260
Net realized and unrealized gain (loss)
on investments .................................. (0.680) (0.635) 0.160 0.469 (0.010) 0.530
--------------------------------------------------------------------
Total from investment operations ................... (0.444) (0.179) 0.479 0.971 0.500 0.790
--------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.236) (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 .................. (0.236) (0.571) (0.419) (0.521) (0.550) (0.350)
--------------------------------------------------------------------
Net asset value, end of period ........................ $ 9.770 $10.450 $11.200 $11.140 $10.690 $10.740
====================================================================
Total return(3) ....................................... (4.27%) (1.74%) 4.38% 9.34% 4.84% 7.74%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $4,982 $5,956 $4,952 $3,711 $3,491 $1,629
Ratio of expenses to average
net assets ...................................... 1.50% 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 .................... 1.80% 1.85% 1.81% 1.82% 2.00% 2.00%(4)
Ratio of net investment income to
average net assets .............................. 4.71% 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 .................... 4.41% 3.63% 3.71% 4.08% 3.88% 3.59%(4)
Portfolio turnover ................................. 111% 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
32
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Arizona Fund C Class
- -------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 5/13/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.470 $11.230 $11.160 $10.710 $10.760 $10.200
Income from investment operations:
Net investment income .............................. 0.235 0.456 0.313 0.534 0.500 0.300
Net realized and unrealized gain
(loss) on investments ........................... (0.670) (0.645) 0.176 0.437 (0.010) 0.650
------------------------------------------------------------------
Total from investment operations ................... (0.435) (0.189) 0.489 0.971 0.490 0.950
------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.235) (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 .................. (0.235) (0.571) (0.419) (0.521) (0.540) (0.390)
------------------------------------------------------------------
Net asset value, end of period ........................ $9.800 $10.470 $11.230 $11.160 $10.710 $10.760
==================================================================
Total return(3) ....................................... (4.17%) (1.82%) 4.46% 9.32% 4.70% 9.43%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $1,659 $1,957 $632 $332 $23 $27
Ratio of expenses to average
net assets ...................................... 1.50% 1.35% 1.23% 1.23% 1.21% 1.20%(4)
Ratio of expenses to average net
assets prior to expense limitation
andexpenses paid indirectly ..................... 1.80% 1.85% 1.81% 1.83% 2.00% 2.00%(4)
Ratio of net investment income
to average net assets ........................... 4.71% 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 .................... 4.41% 3.63% 3.71% 4.07% 3.89% 3.85%(4)
Portfolio turnover ................................. 111% 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
33
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Arizona Insured Fund A Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.990 $11.550 $11.470 $11.060 $11.150 $ 9.860
Income from investment operations:
Net investment income .............................. 0.262 0.528 0.358 0.548 0.530 0.540
Net realized and unrealized gain (loss)
on investments .................................. (0.390) (0.560) 0.080 0.416 (0.090) 1.310
---------------------------------------------------------------------
Total from investment operations ................... (0.128) (0.032) 0.438 0.964 0.440 1.850
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.262) (0.528) (0.358) (0.554) (0.530) (0.560)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.262) (0.528) (0.358) (0.554) (0.530) (0.560)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.600 $10.990 $11.550 $11.470 $11.060 $11.150
=====================================================================
Total return(2) ....................................... (1.16%) (0.36%) 3.88% 8.96% 4.09% 19.10%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $144,312 $166,368 $179,306 $186,485 $209,258 $238,114
Ratio of expenses to average
net assets ...................................... 0.95% 0.91% 0.84% 0.84% 0.82% 0.69%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................ 0.95% 0.91% 0.91% 0.89% 0.95% 0.95%
Ratio of net investment income to
average net assets .............................. 4.90% 4.60% 4.68% 4.92% 4.89% 5.07%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .................... 4.90% 4.60% 4.61% 4.87% 4.76% 4.81%
Portfolio turnover ................................. 73% 29% 21% 42% 42% 42%
</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
34
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Arizona Fund Insured B Class
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 3/10/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.990 $11.550 $11.460 $11.050 $11.140 $10.440
Income from investment operations:
Net investment income .............................. 0.222 0.441 0.300 0.455 0.450 0.380
Net realized and unrealized gain (loss)
on investments .................................. (0.390) (0.560) 0.091 0.414 (0.090) 0.690
---------------------------------------------------------------------
Total from investment operations ................... (0.168) (0.119) 0.391 0.869 0.360 1.070
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.222) (0.441) (0.301) (0.459) (0.450) (0.370)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.222) (0.441) (0.301) (0.459) (0.450) (0.370)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.600 $10.990 $11.550 $11.460 $11.050 $11.140
=====================================================================
Total return(3) ....................................... (1.53%) (1.11%) 3.46% 8.06% 3.32% 10.36%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $6,129 $6,059 $4,782 $3,657 $3,110 $2,048
Ratio of expenses to average
net assets ...................................... 1.70% 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 .................... 1.70% 1.66% 1.66% 1.70% 1.70% 1.60%(4)
Ratio of net investment income to
average net assets .............................. 4.15% 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 .................... 4.15% 3.85% 3.86% 4.06% 4.00% 3.81%(4)
Portfolio turnover ................................. 73% 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
35
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Arizona Insured Fund C Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.990 $11.560 $11.470 $11.060 $11.150 $ 9.860
Income from investment operations:
Net investment income .............................. 0.222 0.441 0.301 0.456 0.430 0.450
Net realized and unrealized gain
(loss) on investments ........................... (0.380) (0.570) 0.090 0.414 (0.090) 1.310
---------------------------------------------------------------------
Total from investment operations ................... (0.158) (0.129) 0.391 0.870 0.340 1.760
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.222) (0.441) (0.301) (0.460) (0.430) (0.470)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.222) (0.441) (0.301) (0.460) (0.430) (0.470)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.610 $10.990 $11.560 $11.470 $11.060 $11.150
=====================================================================
Total return(2) ....................................... (1.44%) (1.20%) 3.46% 8.05% 3.18% 18.10%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $1,403 $1,373 $627 $675 $554 $541
Ratio of expenses to average
net assets ...................................... 1.70% 1.66% 1.59% 1.65% 1.70% 1.54%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................ 1.70% 1.66% 1.66% 1.70% 1.70% 1.69%
Ratio of net investment income to
average net assets .............................. 4.15% 3.85% 3.93% 4.11% 4.01% 4.18%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .................... 4.15% 3.85% 3.86% 4.06% 4.01% 4.03%
Portfolio turnover ................................. 73% 29% 21% 42% 42% 42%
</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
36
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free California Fund A Class
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 3/2/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.490 $11.220 $11.050 $10.430 $10.640 $10.000
Income from investment operations:
Net investment income .............................. 0.273 0.556 0.387 0.590 0.600 0.470
Net realized and unrealized gain
(loss) on investments ........................... (0.720) (0.709) 0.163 0.665 (0.180) 0.700
---------------------------------------------------------------------
Total from investment operations ................... (0.447) (0.153) 0.550 1.255 0.420 1.170
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.273) (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 .................. (0.273) (0.577) (0.380) (0.635) (0.630) (0.530)
---------------------------------------------------------------------
Net asset value, end of period ........................ $ 9.770 $10.490 $11.220 $11.050 $10.430 $10.640
=====================================================================
Total return(3) ....................................... (4.28%) (1.53%) 5.07% 12.43% 4.21% 11.97%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $22,869 $24,515 $11,600 $4,385 $1,218 $1,012
Ratio of expenses to average
net assets ...................................... 0.50% 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 ........................ 1.04% 0.97% 1.07% 1.19% 1.25% 1.22%(4)
Ratio of net investment income to
average net assets .............................. 5.46% 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 .................... 4.92% 4.31% 4.15% 4.26% 4.73% 4.81%(4)
Portfolio turnover ................................. 55% 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
37
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free California Fund B Class
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 8/23/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.520 $11.260 $11.080 $10.440 $10.650 $ 9.960
Income from investment operations:
Net investment income .............................. 0.235 0.470 0.319 0.520 0.560 0.200
Net realized and unrealized gain
(loss) on investments ........................... (0.719) (0.717) 0.186 0.688 (0.180) 0.740
---------------------------------------------------------------------
Total from investment operations ................... (0.484) (0.247) 0.505 1.208 0.380 0.940
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.236) (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 .................. (0.236) (0.493) (0.325) (0.568) (0.590) (0.250)
---------------------------------------------------------------------
Net asset value, end of period ........................ $ 9.800 $10.520 $11.260 $11.080 $10.440 $10.650
=====================================================================
Total return(3) ....................................... (4.63%) (2.35%) 4.62% 11.91% 3.77% 9.52%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $12,744 $13,676 $8,962 $5,576 $660 $128
Ratio of expenses to average
net assets ...................................... 1.25% 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 ........................ 1.79% 1.72% 1.82% 1.86% 2.00% 1.93%(4)
Ratio of net investment income to
average net assets .............................. 4.71% 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 .................... 4.17% 3.56% 3.42% 3.59% 3.84% 4.00%(4)
Portfolio turnover ................................. 55% 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
38
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free California Fund C Class
- --------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Period
Ended Ended Ended Ended 4/9/96(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) to 12/31/96
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.500 $11.230 $11.050 $10.420 $10.070
Income from investment operations:
Net investment income .............................. 0.235 0.470 0.335 0.487 0.370
Net realized and unrealized gain
(loss) on investments ........................... (0.719) (0.707) 0.170 0.696 0.380
---------------------------------------------------------
Total from investment operations ................... (0.484) (0.237) 0.505 1.183 0.750
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.236) (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 .................. (0.236) (0.493) (0.325) (0.553) (0.400)
---------------------------------------------------------
Net asset value, end of period ........................ $ 9.780 $10.500 $11.230 $11.050 $10.420
=========================================================
Total return(3) ....................................... (4.63%) (2.26%) 4.64% 11.69% 7.58%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $3,840 $5,132 $774 $109 $94
Ratio of expenses to average
net assets ...................................... 1.25% 1.08% 0.97% 0.87% 0.78%(4)
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................ 1.79% 1.72% 1.82% 1.93% 2.00%(4)
Ratio of net investment income to
average net assets .............................. 4.71% 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 .................... 4.17% 3.56% 3.42% 3.52% 3.91%(4)
Portfolio turnover ................................. 55% 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
39
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free California Insured Fund A Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.430 $11.130 $10.980 $10.500 $10.650 $ 9.330
Income from investment operations:
Net investment income .............................. 0.248 0.497 0.345 0.513 0.520 0.530
Net realized and unrealized gain
(loss) on investments ........................... (0.300) (0.700) 0.150 0.486 (0.150) 1.340
---------------------------------------------------------------------
Total from investment operations ................... (0.052) (0.203) 0.495 0.999 0.370 1.870
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.248) (0.497) (0.345) (0.519) (0.520) (0.550)
Distributions from net realized
gain on investments ............................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.248) (0.497) (0.345) (0.519) (0.520) (0.550)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.130 $10.430 $11.130 $10.980 $10.500 $10.650
=====================================================================
Total return(2) ....................................... (0.48%) (1.97%) 4.58% 9.78% 3.63% 20.51%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $22,973 $25,042 $28,577 $26,923 $30,551 $33,860
Ratio of expenses to average
net assets ...................................... 1.00% 0.99% 0.94% 0.99% 0.82% 0.70%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................ 1.19% 1.10% 0.94% 1.02% 1.01% 1.02%
Ratio of net investment income to
average net assets .............................. 4.88% 4.51% 4.69% 4.85% 5.05% 5.23%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .................... 4.69% 4.40% 4.69% 4.82% 4.86% 4.91%
Portfolio turnover ................................. 93% 114% 44% 63% 55% 107%
</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
40
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free California Insured Fund B Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.430 $11.130 $10.990 $10.500 $10.650 $ 9.330
Income from investment operations:
Net investment income .............................. 0.210 0.414 0.290 0.457 0.480 0.500
Net realized and unrealized gain
(loss) on investments ........................... (0.290) (0.700) 0.140 0.495 (0.150) 1.330
---------------------------------------------------------------------
Total from investment operations ................... (0.080) (0.286) 0.430 0.952 0.330 1.830
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.210) (0.414) (0.290) (0.462) (0.480) (0.510)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.210) (0.414) (0.290) (0.462) (0.480) (0.510)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.140 $10.430 $11.130 $10.990 $10.500 $10.650
=====================================================================
Total return(2) ....................................... (0.75%) (2.70%) 3.96% 9.29% 3.22% 20.01%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $6,454 $6,588 $6,588 $6,629 $6,717 $6,029
Ratio of expenses to average
net assets ...................................... 1.75% 1.74% 1.69% 1.53% 1.21% 1.10%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................ 1.94% 1.85% 1.69% 1.56% 1.76% 1.75%
Ratio of net investment income to
average net assets .............................. 4.13% 3.76% 3.94% 4.31% 4.64% 4.75%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .................... 3.94% 3.65% 3.94% 4.28% 4.09% 4.10%
Portfolio turnover ................................. 93% 114% 44% 63% 55% 107%
</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
41
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free California Insured Fund C Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 4/12/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.390 $11.090 $10.940 $10.460 $10.650 $10.190
Income from investment operations:
Net investment income .............................. 0.210 0.414 0.289 0.485 0.440 0.250
Net realized and unrealized gain
(loss) on investments ........................... (0.300) (0.700) 0.151 0.432 (0.190) 0.530
---------------------------------------------------------------------
Total from investment operations ................... (0.090) (0.286) 0.440 0.917 0.250 0.780
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.210) (0.414) (0.290) (0.437) (0.440) (0.320)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.210) (0.414) (0.290) (0.437) (0.440) (0.320)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.090 $10.390 $11.090 $10.940 $10.460 $10.650
=====================================================================
Total return(3) ....................................... (0.85%) (2.70%) 4.08% 8.98% 2.47% 7.77%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $426 $592 $461 $476 $55 $53
Ratio of expenses to average
net assets ...................................... 1.75% 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 ........................ 1.94% 1.85% 1.69% 1.74% 1.77% 1.77%(4)
Ratio of net investment income to
average net assets .............................. 4.13% 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 .................... 3.94% 3.65% 3.94% 4.10% 3.83% 4.01%(4)
Portfolio turnover ................................. 93% 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
42
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Colorado Fund A Class
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.780 $11.510 $11.380 $10.780 $10.900 $ 9.530
Income from investment operations:
Net investment income .............................. 0.270 0.552 0.376 0.574 0.560 0.540
Net realized and unrealized gain
(loss) on investments ........................... (0.600) (0.730) 0.130 0.618 (0.130) 1.380
---------------------------------------------------------------------
Total from investment operations ................... (0.330) (0.178) 0.506 1.192 0.430 1.920
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.270) (0.552) (0.376) (0.592) (0.550) (0.550)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.270) (0.552) (0.376) (0.592) (0.550) (0.550)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.180 $10.780 $11.510 $11.380 $10.780 $10.900
=====================================================================
Total return(2) ....................................... (3.07%) (1.69%) 4.51% 11.40% 4.08% 20.54%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $300,389 $338,184 $357,127 $357,993 $358,328 $392,815
Ratio of expenses to average
net assets ...................................... 1.00% 0.91% 0.83% 0.81% 0.78% 0.76%
Ratio of expenses to average net assets
prior to expense limitation
and expenses paid indirectly .................... 1.00% 0.91% 0.92% 0.86% 0.91% 0.93%
Ratio of net investment income to
average net assets .............................. 5.22% 4.86% 4.93% 5.25% 5.27% 5.18%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .................... 5.22% 4.86% 4.84% 5.20% 5.14% 5.01%
Portfolio turnover ................................. 68% 55% 36% 54% 40% 82%
</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
43
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Colorado Fund B Class
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Period
Ended Ended Ended Ended Ended 3/22/95(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) 12/31/96 to 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.790 $11.510 $11.380 $10.780 $10.900 $10.250
Income from investment operations:
Net investment income .............................. 0.231 0.466 0.319 0.483 0.470 0.350
Net realized and unrealized gain
(loss) on investments ........................... (0.600) (0.719) 0.130 0.616 (0.130) 0.650
---------------------------------------------------------------------
Total from investment operations ................... (0.369) (0.253) 0.449 1.099 0.340 1.000
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.231) (0.467) (0.319) (0.499) (0.460) (0.350)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.231) (0.467) (0.319) (0.499) (0.460) (0.350)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.190 $10.790 $11.510 $11.380 $10.780 $10.900
=====================================================================
Total return(3) ....................................... (3.43%) (2.34%) 3.99% 10.47% 3.25% 9.96%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $13,047 $13,530 $10,726 $7,798 $4,172 $1,643
Ratio of expenses to average
net assets ...................................... 1.75% 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 ........................ 1.75% 1.66% 1.67% 1.67% 1.65% 1.60%(4)
Ratio of net investment income to
average net assets .............................. 4.47% 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 .................... 4.47% 4.11% 4.09% 4.39% 4.38% 3.75%(4)
Portfolio turnover ................................. 68% 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
44
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free Colorado Fund C Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.790 $11.520 $11.380 $10.780 $10.900 $ 9.530
Income from investment operations:
Net investment income .............................. 0.231 0.463 0.319 0.484 0.460 0.450
Net realized and unrealized gain
(loss) on investments ........................... (0.600) (0.726) 0.140 0.615 (0.130) 1.370
---------------------------------------------------------------------
Total from investment operations ................... (0.369) (0.263) 0.459 1.099 0.330 1.820
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.231) (0.467) (0.319) (0.499) (0.450) (0.450)
Distributions from net realized
gain on investments ............................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.231) (0.467) (0.319) (0.499) (0.450) (0.450)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.190 $10.790 $11.520 $11.380 $10.780 $10.900
=====================================================================
Total return(2) ....................................... (3.43%) (2.42%) 4.08% 10.47% 3.17% 19.44%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $4,472 $4,332 $2,068 $1,697 $1,522 $1,042
Ratio of expenses to average
net assets ...................................... 1.75% 1.66% 1.58% 1.64% 1.66% 1.66%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................ 1.75% 1.66% 1.67% 1.69% 1.66% 1.66%
Ratio of net investment income to
average net assets .............................. 4.47% 4.11% 4.18% 4.42% 4.40% 4.20%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .................... 4.47% 4.11% 4.09% 4.37% 4.40% 4.20%
Portfolio turnover ................................. 68% 55% 36% 54% 40% 82%
</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
45
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free New Mexico Fund A Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.790 $11.450 $11.280 $10.790 $10.890 $ 9.590
Income from investment operations:
Net investment income .............................. 0.273 0.537 0.364 0.547 0.540 0.520
Net realized and unrealized gain
(loss) on investments ........................... (0.470) (0.660) 0.171 0.503 (0.110) 1.330
---------------------------------------------------------------------
Total from investment operations ................... (0.197) (0.123) 0.535 1.050 0.430 1.850
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.273) (0.537) (0.365) (0.560) (0.530) (0.550)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.273) (0.537) (0.365) (0.560) (0.530) (0.550)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.320 $10.790 $11.450 $11.280 $10.790 $10.890
=====================================================================
Total return(2) ....................................... (1.83%) (1.17%) 4.81% 10.01% 4.13% 19.64%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $19,076 $20,732 $21,155 $18,959 $20,133 $21,402
Ratio of expenses to average
net assets ...................................... 1.00% 0.99% 1.00% 0.99% 0.88% 0.87%
Ratio of expenses to average net assets
prior to expense limitation and
expenses paid indirectly ........................ 1.00% 1.01% 1.15% 1.04% 1.07% 1.09%
Ratio of net investment income to
average net assets .............................. 5.22% 4.75% 4.81% 5.00% 5.06% 5.07%
Ratio of net investment income to average
net assets prior to expense limitation
and expenses paid indirectly .................... 5.22% 4.73% 4.66% 4.95% 4.87% 4.85%
Portfolio turnover ................................. 35% 37% 20% 28% 42% 55%
</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
46
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free New Mexico Fund B Class
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.800 $11.460 $11.290 $10.790 $10.890 $ 9.590
Income from investment operations:
Net investment income .............................. 0.234 0.453 0.309 0.465 0.460 0.460
Net realized and unrealized gain
(loss) on investments ........................... (0.470) (0.661) 0.169 0.508 (0.110) 1.320
---------------------------------------------------------------------
Total from investment operations ................... (0.237) (0.208) 0.478 0.973 0.350 1.780
---------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.234) (0.452) (0.308) (0.473) (0.450) (0.480)
Distributions from net realized gain
on investments .................................. -- -- -- -- -- --
---------------------------------------------------------------------
Total dividends and distributions .................. (0.234) (0.452) (0.308) (0.473) (0.450) (0.480)
---------------------------------------------------------------------
Net asset value, end of period ........................ $10.330 $10.800 $11.460 $11.290 $10.790 $10.890
=====================================================================
Total return(2) ....................................... (2.19%) (1.91%) 4.29% 9.24% 3.39% 18.84%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $2,529 $2,624 $1,782 $1,065 $794 $605
Ratio of expenses to average
net assets ...................................... 1.75% 1.74% 1.75% 1.76% 1.61% 1.53%
Ratio of expenses to average
net assets prior to expense
limitation and expenses
paid indirectly ................................. 1.75% 1.76% 1.90% 1.81% 1.82% 1.83%
Ratio of net investment income
to average net assets ........................... 4.47% 4.00% 4.06% 4.23% 4.31% 4.33%
Ratio of net investment income
to average net assets prior to
expense limitation and expenses
paid indirectly ................................. 4.47% 3.98% 3.91% 4.18% 4.10% 4.03%
Portfolio turnover ................................. 35% 37% 20% 28% 42% 55%
</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
47
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period was as follows: Delaware Tax-Free New Mexico Fund C Class
- --------------------------------------------------------------------------------------------------------------------------
Six Months Year Eight Months Year Period
Ended Ended Ended Ended 5/7/96(2)
2/29/00(1) 8/31/99 8/31/98(1) 12/31/97(5) to 12/31/96
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $10.790 $11.460 $11.280 $10.790 $10.410
Income from investment operations:
Net investment income .............................. 0.234 0.452 0.305 0.459 0.280
Net realized and unrealized gain
(loss) on investments ........................... (0.470) (0.670) 0.183 0.495 0.370
---------------------------------------------------------
Total from investment operations ................... (0.236) (0.218) 0.488 0.954 0.650
---------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ............... (0.234) (0.452) (0.308) (0.464) (0.270)
Distributions from net realized gain
on investments .................................. -- -- -- -- --
---------------------------------------------------------
Total dividends and distributions .................. (0.234) (0.452) (0.308) (0.464) (0.270)
---------------------------------------------------------
Net asset value, end of period ........................ $10.320 $10.790 $11.460 $11.280 $10.790
=========================================================
Total return(3) ....................................... (2.20%) (1.99%) 4.38% 9.06% 6.30%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ................................... $445 $381 $394 $315 $341
Ratio of expenses to average
net assets ...................................... 1.75% 1.74% 1.75% 1.84% 1.74%(4)
Ratio of expenses to average net
assets prior to expense
limitation and expenses
paid indirectly ................................. 1.75% 1.76% 1.90% 1.89% 1.83%(4)
Ratio of net investment income to
average net assets .............................. 4.47% 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 ........................ 4.47% 3.98% 3.91% 4.10% 4.12%(4)
Portfolio turnover ................................. 35% 37% 20% 28% 42%
</TABLE>
- -------------------
(1) Ratios have been annualized and the total returns have not been annualized.
(2) Commencement of operations.
(3) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(4) Annualized.
(5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc. as the Fund's investment manager.
See accompanying notes
48
<PAGE>
Notes to Financial Statements
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Delaware Tax-Free Arizona Fund ("Tax-Free Arizona Fund") and Delaware Tax-Free
California Fund ("Tax-Free California Fund"), series of Voyageur Mutual Funds,
Delaware Tax-Free Arizona Insured Fund ("Tax-Free Arizona Insured Fund"), a
series of Voyageur Insured Funds, and Delaware Tax-Free Colorado Fund ("Tax-Free
Colorado Fund"), a series of Voyageur Mutual Funds II, 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 Massachusetts Business Trusts 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 Trustees.
Federal Income Taxes - Each Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles.
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.
49
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies (continued)
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 six months ended February 29, 2000 were
approximately:
<TABLE>
<CAPTION>
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Arizona Insured California California Insured Colorado New Mexico
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$279 $1,866 $461 $346 $3,857 $260
</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
In accordance with the terms of the Investment Management Agreement, the Funds
pay Delaware Management Company ("DMC"), the Investment Manager of each Fund, an
annual fee, which is calculated daily on the net assets of each Fund.
The following are the management fees as a percentage of average daily net
assets per Fund:
<TABLE>
<CAPTION>
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Arizona Insured California California Insured Colorado New Mexico
Fund Fund Fund Fund Fund Fund
-------- --------------- ---------- ------------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
On the first $500 million ............... 0.55% 0.50% 0.55% 0.50% 0.55% 0.55%
On the next $500 million ................ 0.50% 0.475% 0.50% 0.475% 0.50% 0.50%
On the next $1.5 billion ................ 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%
In excess of $2.5 billion ............... 0.425% 0.425% 0.425% 0.425% 0.425% 0.425%
</TABLE>
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, do not exceed the following
percentages of average daily net assets through October 31, 2000. The waiver
rates are as follows:
<TABLE>
<CAPTION>
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Arizona Insured California California Insured Colorado New Mexico
Fund Fund Fund Fund Fund Fund
-------- --------------- ---------- ------------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operating expense limitation as a
percentage of average daily net
assets (per annum) ................... 0.50% 0.70% 0.25% 0.75% 0.75% 0.75%
</TABLE>
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.
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.
On February 29, 2000, the Funds had payables to affiliates as follows:
<TABLE>
<CAPTION>
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Arizona Insured California California Insured Colorado New Mexico
Fund Fund Fund Fund Fund Fund
-------- --------------- ---------- ------------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment management and other expenses
payable to DMC ....................... $3,990 $12,245 $684 $1,624 $15,058 $1,804
Dividend disbursing, transfer agent fees,
accounting fees and other expenses
payable to DSC ....................... 2,431 17,565 4,625 3,308 38,212 2,605
Distribution and other expenses payable
to DDLP .............................. 604 41,733 864 634 8,122 485
</TABLE>
50
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates (continued)
For the six months ended February 29, 2000, 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 Insured California California Insured Colorado New Mexico
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$3,136 $15,943 $2,128 $397 $22,936 $2,008
</TABLE>
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Funds. These officers, trustees and employees are paid no compensation by
the Funds.
3. Investments
During the six months ended February 29, 2000, the Funds 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 Insured California California Insured Colorado New Mexico
Fund Fund Fund Fund Fund Fund
-------- --------------- ---------- ------------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Purchases ..................... $13,162,227 $58,444,618 $10,858,930 $14,018,719 $110,720,869 $3,939,627
Sales ......................... 16,943,592 74,885,358 12,771,761 15,678,408 130,830,329 4,776,105
</TABLE>
At February 29, 2000, 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 Insured California California Insured Colorado New Mexico
Fund Fund Fund Fund Fund Fund
-------- --------------- ---------- ------------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cost of Investments ........... $22,161,571 $152,235,997 $42,853,185 $29,426,216 $326,408,801 $22,461,581
Aggregate unrealized
appreciation ............... 49,590 2,753,646 54,096 617,210 4,794,661 410,642
Aggregate unrealized
depreciation ............... (1,572,915) (4,235,878) (4,134,422) (582,839) (16,897,666) (1,086,146)
Net unrealized
appreciation ............... ($1,523,325) ($1,482,232) ($4,080,326) $34,371 ($12,103,005) ($675,504)
</TABLE>
For federal income tax purposes the Funds had capital loss carryforwards of the
following amounts:
<TABLE>
<CAPTION>
Tax-Free Arizona Tax-Free California Tax-Free Tax-Free
Insured Fund Insured Fund Colorado Fund New Mexico 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 2005 ........ - - - -
-----------------------------------------------------------------------
$1,513,304 $197,188 $881,431 $460,892
=======================================================================
</TABLE>
51
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
4. Capital Shares
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Tax-Free Tax-Free Tax-Free
Arizona Fund Arizona Insured Fund California Fund
------------------------- ------------------------- ---------------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
2/29/00 8/31/99 2/29/00 8/31/99 2/29/00 08/31/99
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class ....................... 346,660 1,047,440 321,389 1,153,449 714,799 1,479,618
B Class ....................... 23,384 158,996 59,376 224,304 172,118 638,576
C Class ....................... 3,680 141,433 30,072 87,589 32,345 463,063
Shares issued upon reinvestment
of distributions from net
investment income and
net realized gain
on investments:
A Class ....................... 26,493 49,046 155,847 308,344 38,309 62,783
B Class ....................... 5,473 12,651 6,528 10,909 11,733 16,717
C Class ....................... 2,925 2,263 2,111 2,747 7,737 6,677
-------- -------- ---------- ---------- ---------- --------
408,615 1,411,829 575,323 1,787,342 977,041 2,667,434
-------- -------- ---------- ---------- ---------- --------
Shares repurchased:
A Class ....................... (686,424) (405,027) (2,010,836) (749,728) (238,419)
B Class ....................... (88,928) (43,718) (39,491) (97,602) (183,479) (151,565)
C Class ....................... (24,085) (13,128) (24,841) (19,695) (136,174) (49,887)
-------- -------- ---------- ---------- ---------- --------
(799,437) (461,873) (2,075,168) (1,954,105) (1,069,381) (439,871)
-------- -------- ---------- ---------- ---------- --------
Net Increase (Decrease) ....... (390,822) 949,956 (1,499,845) (166,763) (92,340) 2,227,563
======== ======= ========== ======== ======= =========
</TABLE>
<TABLE>
<CAPTION>
Tax-Free Tax-Free Tax-Free
California Insured Fund Colorado Fund New Mexico Fund
------------------------ ------------------------- ---------------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
2/29/00 8/31/99 2/29/00 8/31/99 2/29/00 08/31/99
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class ....................... 346,590 282,890 900,770 3,566,953 120,664 314,287
B Class ....................... 59,163 145,203 122,118 436,017 25,580 101,556
C Class ....................... 0 15,326 97,550 272,821 11,824 11,230
Shares issued upon reinvestment
of distributions from net
investment income and
net realized gain
on investments:
A Class ....................... 22,436 43,195 506,962 970,397 25,262 46,834
B Class ....................... 5,316 8,368 20,886 33,206 3,827 4,816
C Class ....................... 232 371 7,891 9,040 835 1,367
-------- -------- ---------- ---------- ---------- --------
433,737 495,353 1,656,177 5,288,434 187,992 480,090
-------- -------- ---------- ---------- ---------- --------
Shares repurchased:
A Class ....................... (503,882) (491,489) (3,271,016) (219,548) (286,039)
B Class ....................... (59,557) (113,530) (116,613) (146,477) (27,574) (18,826)
C Class ....................... (14,956) (283) (68,087) (60,096) (4,864) (11,640)
-------- -------- ---------- ---------- ---------- --------
(578,395) (605,302) (3,455,716) (4,403,935) (251,986) (316,505)
-------- -------- ---------- ---------- ---------- --------
Net Increase (Decrease) ....... (144,658) (109,949) (1,799,539) 884,499 (63,994) 163,585
======== ======== ========== ======= ======= =======
</TABLE>
52
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
5. Lines of Credit
Effective October 8, 1999, the Funds, along with certain other funds in the
Delaware Investments Family of Funds (the "Participants"), participate in a
$683,500,000 revolving line of credit facility to be used for temporary or
emergency purposes as an additional source of liquidity to fund redemptions of
investor shares. The Participants are charged an annual commitment fee, which is
allocated across the Participants on the basis of each Fund's allocation of the
entire facility. The Participants may borrow up to a maximum of one third of
their net assets under the agreement.
Prior to October 8, 1999, the Funds had committed lines of credit for the
following amounts:
<TABLE>
<CAPTION>
Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free
Arizona Arizona Insured California California Insured Colorado New Mexico
Fund Fund Fund 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>
The Funds had no amounts outstanding at February 29, 2000, or at any time during
the fiscal year.
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>
DELAWARE(SM) For Shareholders
INVESTMENTS 1.800.523.1918
- ---------------------
Philadelphia o London For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This semi-annual report is for the information of Delaware Tax-Free 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 for
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 and the Delaware
Investments Performance Update for the most recently completed calendar quarter.
The prospectus sets forth details about charges, expenses, investment objectives
and operating policies of each Fund. You should read the prospectus carefully
before you invest. The figures in this report represent past results which are
not a guarantee of future results. The return and principal value of an
investment in each Fund will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, PA
Chairman
Delaware Investments Family of Funds Janet L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, MN
Board Chairman, National Distributor
Citadel Constructors, Inc. Delaware Distributors, L.P.
King of Prussia, PA Philadelphia, PA
AFFILIATED OFFICERS
David K. Downes Shareholder Servicing, Dividend
President and Chief Executive Officer Charles E. Haldeman, Jr. Disbursing and Transfer Agent
Delaware Investments Family of Funds President and Chief Executive Officer Delaware Service Company, Inc.
Philadelphia, PA Delaware Management Holdings, Inc Philadelphia, PA
Philadelphia, PA
John H. Durham 1818 Market Street
Private Investor Richard J. Flannery Philadelphia, PA 19103-3682
Horsham, PA Executive Vice President and
General Counsel
Anthony D. Knerr Delaware Investments Family of Funds
Consultant, Anthony Knerr & Associates Philadelphia, PA
New York, NY
Bruce D. Barton
Ann R. Leven President and Chief Executive Officer
Former Treasurer, National Gallery of Art Delaware Distributors, L.P.
Washington, DC Philadelphia, PA
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(2903) Printed in the USA
SA-WEST [02/00]PP 04/00 (J5747)
