<PAGE>
For Tax-Exempt Income
DELAWARE-VOYAGEUR
Tax-Free California Funds
1997
Semi-Annual Report
professional management
service and guidance
goals
Tax-Free California Fund
Tax-Free California Insured Fund
DELAWARE
GROUP
========
<PAGE>
- -------------------------------------------------------------------------------
JULY 22, 1997
Dear Shareholder:
I am pleased to present the first shareholder report of the Tax-Free
California Funds since the Voyageur funds joined the Delaware family on April
30, 1997.
On behalf of all of us here in Philadelphia, I welcome you to an
organization of experienced financial professionals dedicated to helping you
reach your investment goals. Delaware has managed municipal bond investments
for more than 20 years and pioneered the concept of single-state, tax-exempt
funds.
I am delighted to report that during this transition period, each
California Fund's performance was competitive with its unmanaged benchmark,
as shown on page 8. Andrew M. McCullagh Jr.,
the Funds' portfolio manager under Voyageur, continues to oversee both Funds
from his office in Colorado.
IN THE COMING YEARS, WE BELIEVE IT WILL BECOME
MORE IMPORTANT THAN EVER TO CONSIDER THE
IMPACT OF TAXES ON THE PERFORMANCE OF AN
INVESTMENT PORTFOLIO.
We view the municipal bond market's long-term prospects as very
attractive, particularly in a state with an economy as robust and diverse as
California's. Municipal bond prices have generally been stronger than U.S.
Treasuries* during 1997, despite federal tax changes in Washington and a
modest tightening of monetary policy by the Federal Reserve Board.
As our nation's leaders grapple with tax issues and states take on a
greater fiscal responsibility for managing social and public works programs,
we believe it will become more important than ever to consider the impact of
taxes on the performance of an investment portfolio.
Tax-Exempt Income
*The principle and interest of U.S. Treasury securities are guaranteed by the
U.S. government. California municipal bonds may or may not be guaranteed by the
state, a private insurer or local government entity.
2 1 9 9 7 s e m i - a n n u a l r e p o r t
<PAGE>
When Delaware offered its first municipal bond fund in 1977, federal
taxpayers were able to take many more deductions on their tax returns than they
can take today. Among these were:
* Interest on student and consumer loans,
* More extensive job-related moving expenses,
* Sales and gasoline taxes; and,
* A portion of dividend income.
In our opinion, the income from municipal bonds and the tax-free
compounding of such income over time has the potential to help investors
reach their financial goals more quickly.
On the pages that follow, Mr. McCullagh reviews each Fund's
performance and outlines his approach for the coming months. We look forward
to reporting to you again in 1998 and serving your needs for many years to
come.
Sincerely,
/s/ Wayne A Stork
- ------------------------------
Wayne A. Stork
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Your Funds' Portfolio Manager
ANDREW M. McCULLAGH JR.
Andrew M. McCullagh Jr. has more than 23 years of experience in municipal bond
trading, underwritng and portfolio management. He holds a graduate certificate
in public finance from the University of Michigan and a bachelor's degree
in economics from Washington College in Maryland.
1 9 9 7 s e m i - a n n u a l r e p o r t 3
<PAGE>
Performance Review
Delaware-Voyageur's California municipal bond funds provided relatively
attractive total returns during the first half of fiscal 1997 despite
substantial interest rate volatility and renewed efforts in Washington to cut
income taxes.
Nationwide, our country's output of goods and services grew at a
robust 5.9% pace in the first quarter. This prompted the Federal Reserve to
raise its target for short-term interest rates by a modest 25 basis points
(0.25%) to 5.5% in an effort to forestall inflation.
As the second calendar quarter of 1997 progressed, the bond market
welcomed news of possible slower U.S. economic growth. By the end of June,
long-term U.S. Treasury bonds yielded 6.78%, compared to more than 7% just a
few months earlier.
In managing each Fund's portfolio, we seek to achieve good structure - a
prudent combination of average coupon, call date and effective maturity that
represent the mathematical underpinnings of the portfolio. By managing duration
as market conditions warranted, we sought to maximize each Fund's income and
total return potential.
With a population of 30 million and a per capita income ranked 12th
nationwide, California exhibits characteristics we believe are attractive to
income-oriented investors. California's growth and demographic makeup generate a
substantial need for public financing in many areas, including housing,
transportation, education and health care. These sectors represented a
substantial portion of both Funds' portfolios as of June 30.
LONG-TERM CALIFORNIA BOND PRICES HAVE RISEN
MODESTLY, SLIGHTLY REDUCING YIELDS
- -------------------------------------------------------------------------------
DECEMBER 31, 1996 VS. JUNE 30, 1997
M
Dec. 31, 1996 June 30, 1997
A 3 months 3.33% 3.4%
6 months 3.53% 3.55%
T 1yr 3.73% 3.78%
2yr 3.98% 4.05%
U 3yr 4.18% 4.26%
4yr 4.33% 4.41%
R 5yr 4.43% 4.51%
7yr 4.63% 4.67%
I 10yr 4.93% 4.91%
15yr 5.37% 5.27%
T 20yr 5.51% 5.41%
30yr 5.57% 5.47%
Y Yield
_____ California General Obligation Bonds, December 31, 1996
- ----- California General Obligation Bonds, June 30, 1997
- -------------------------------------------------------------------------------
Source: Bloomberg Business News
4 1 9 9 7 s e m i - a n n u a l r e p o r t
<PAGE>
Between December and June, the supply of new municipal bonds in
California declined by a sharp 26.4%, from $13.5 billion to $9.9 billion,
according to THE BOND BUYER, a trade publication. California's drop contrasted
with a modest 6% increase in the amount of new bonds issued elsewhere in the
nation. For California investors, the reduction in new bonds coming to market
helped boost bond prices since demand for tax-exempt securities remained steady.
When the bond market weakened in April, the Funds' management saw an
opportunity to modestly extend Tax-Free California and Tax-Free California
Insured's duration to increase income potential. Between December31, 1996, and
June 30, yields on California general obligation bonds increased modestly for
intermediate-term bonds and declined for very long-term bonds, as shown in the
yield chart on page 4.
TAX-FREE CALIFORNIA FUND
STRATEGIC POSITIONING
AND OUTLOOK
For the first half of fiscal 1997, Tax-Free California Fund outperformed its
unmanaged benchmark, the Lehman Brothers Municipal Bond Index. The Fund provided
a robust total return of +4.16% for the six months ended June 30 (capital change
for Class A shares plus reinvested dividends at net asset value).
The Fund has been consistently managed with both total return and
tax-exempt income potential in mind. Since December, the bond market's
volatility has provided us with an opportunity to increase yield while making
only modest modifications to the portfolio's duration (sensitivity to
interest rates) and overall quality.
TAX-FREE CALIFORNIA FUND
PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION
- -------------------------------------------------------------------------------
Certificates of Participation (COPs) 19.2%
Power Authority 1.9%
Hospitals 9.9%
Transportation 6.7%
Other Revenue Bonds 16.8%
Housing 13.8%
Water/Sewer 3.9%
Pollution Control 9.6%
General Obligation 3.0%
Education 15.3%
- -------------------------------------------------------------------------------
Average Effective Maturity 17.8 years
Average Effective Duration 9.8 years
Average Quality AA-
Thirty-Day Current SEC Yield* 5.09%
*For Class A Shares based on Securities and Exchange Commission guidelines. SEC
yields for B and C classes were 4.69% and 4.53%.
Approximately 17.4% of the income generated by Tax-Free California Fund for the
six months ended June 30, 1997, was subject to the alternative minimum tax.
1 9 9 7 s e m i - a n n u a l r e p o r t 5
<PAGE>
While we continue to invest in the highest rated California bonds,
during the first half of fiscal 1997 we, by design, slightly lowered the average
quality of the portfolio from AA to AA-. This allowed the Fund to benefit from
the superior income potential available from investment grade bonds of
moderately high quality.
Also, by purchasing a limited quantity of bonds rated BBB+ and BBB- and
some unrated bonds, the Fund was able to provide superior total return. We were
assisted by a reduced supply of new issues and California's improving economy.
TAX-FREE CALIFORNIA
INSURED FUND
STRATEGIC POSITIONING
AND OUTLOOK
Tax-Free California Insured Fund provided a total return of +3.04% for
the six months ended June 30, 1997 (capital change for Class A shares plus
reinvested dividends at net asset value).
To help preserve principal, the Fund invests exclusively in bonds
that are insured by one of the major municipal bond insurance companies and
are rated AAA by Moody's and/or Standard & Poor's. As of June 30, about half
of your Fund's net assets were invested in a combination of municipal lease
bonds and housing bonds. Since 1996, we have reduced our weighting in COPs,
or certificates of participation (a share in a lease agreement made by a
government entity), and increased our weighting in hospitals, a sector we
believe was somewhat undervalued.
Since December our emphasis has been on bonds with discount coupons,
good call protection and long maturities. We believe our pursuit of this
strategy allowed the
TAX-FREE CALIFORNIA INSURED FUND
PORTFOLIO HIGHLIGHTS AND ASSET ALLOCATION
- -------------------------------------------------------------------------------
General Obligation 3%
Power Authority 2.7%
Hospitals 8.8%
Certificates of Participation (COPs) 31.2%
Housing 23.6%
Water/Sewer 3%
Transportation 3%
Higher Education 6.1%
Cash 1.2%
Other Revenue Bonds 17.4%
- -------------------------------------------------------------------------------
Average Effective Maturity 12.8 years
Average Effective Duration 8.1 years
Average Quality AAA
Thirty-Day Current SEC Yield* 4.57%
*For Class A Shares based on Securities and Exchange Commission guidelines. SEC
yields for B and C classes were 4.32% and 4.01%.
Approximately 17.9% of the income generated by Tax-Free California Insured
Fund for the six months ended June 30, 1997, was subject to the alternative
minimum tax.
6 1 9 9 7 s e m i - a n n u a l r e p o r t
<PAGE>
Fund to perform well, on a risk-adjusted basis, despite 1997's volatile interest
rate environment. We manage the Fund with both total return and dividend yield
in mind.
CALIFORNIA'S OUTPUT OF GOODS AND SERVICES
RECENTLY REACHED $1 TRILLION -- THE FIRST TIME
ANY STATE HAS ACHIEVED THIS MAGNITUDE OF
ECONOMIC ACTIVITY.
To augment the Fund's income potential, we have been selling lower yield
bonds with limited call protection and replacing them with bonds rated AAA that
also have longer call protection. In our opinion, this may help the Fund pay a
higher dividend over longer periods of time while maintaining the highest level
of quality.
SUMMARY OUTLOOK
We are optimistic demand for California municipal bonds among high tax bracket
investors will remain stable in the coming months. The top state income tax rate
for individuals is a steep 9.3% of annual income. A median income household pays
an average 8% of annual income for state taxes, which we believe increases the
attractiveness of tax-exempt income alternatives.
In California and across the U.S., inflation appears to be benign.
Despite a strong U.S. economy, the Federal Reserve Board has been able to
effectively control consumer price increases. Should interest rates remain
stable or decline for the balance of 1997, municipal bond investments could
potentially provide an attractive real rate of return.
We believe the long-term outlook for California's economy and bond
market is bright. Municipalities will continue to need capital from private
investors to meet the needs of a growing population in the nation's largest
state, presenting investors with many income opportunities. California's bonds
are rated A by S&P and the state had a $648 million budget surplus in its
1996-1997 fiscal year on revenues of $48.4 billion.
CALIFORNIA AT A GLANCE
- ------------------------------------------------------
Data as of June 30, 1997
- ------------------------------------------------------
General Obligation Bond Rating A
Budget Surplus $648 million
Per Capita Income $25,144
Population 30 million
Range of Individual Income Tax Rates 1% to 9.3%
Top Tax Bracket $31,700
Unemployment Rate 6.3%
SOURCES: BLOOMBERG BUSINESS NEWS, CATO INSTITUTE
(Illustration of State of California)
1 9 9 7 s e m i - a n n u a l r e p o r t 7
<PAGE>
From a recessionary low point in late 1993 through March 1997,
California's economy had created more than 1 million new jobs. Another milestone
is that the state's output of goods and services recently reached $1 trillion -
the first time any state has achieved this magnitude of economic activity - a
level that's double the total output of Canada.
A consensus of economists expect California to add jobs at a faster pace
than the rest of the nation through 1998. Most economists believe the state's
unemployment rate will drop to 6% by the end of 1997 while personal income is
expected to grow by more than 6% per year. In our opinion, the data clearly show
that California has not only recovered from the downsizing of the defense
sector, but enjoys a growing tax base that bodes well for its bond market.
Andrew M. McCullagh Jr.
VICE PRESIDENT
SENIOR PORTFOLIO MANAGER
July 22, 1997
Performance Summary
COMPARATIVE TOTAL RETURNS FOR THE SIX MONTHS ENDED JUNE 30, 1997*
Tax-Free California Fund A +4.16%
Lehman Brothers Municipal Bond Index +3.20%
Tax-Free California Insured Fund A +3.04%
Lehman Brothers Insured Municipal Bond Index +3.12%
*TOTAL RETURN BASED ON CHANGE IN NET ASSET VALUE WITH DISTRIBUTIONS
REINVESTED. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. PERFORMANCE
OF OTHER FUND CLASSES VARIES DUE TO DIFFERENT CHARGES AND EXPENSES. SEE PAGES
16 AND 18 FOR SIX-MONTH RETURNS FOR B AND C CLASSES. THE UNMANAGED INDEXES
SHOWN ABOVE INCLUDE TAX-EXEMPT BONDS FROM MANY STATES AND ASSUME NO
MANAGEMENT FEES OR EXPENSES.
8 1 9 9 7 s e m i - a n n u a l r e p o r t
<PAGE>
performance
TAX-FREE CALIFORNIA FUND
Average Annual Return Through June 30, 1997
LIFETIME ONE YEAR
- --------------------------------------------------------------------------------
Class A (Est. 3/2/95)
Excluding Sales Charge +8.73% +10.30%
Including Sales Charge +6.96% +6.13%
- --------------------------------------------------------------------------------
Class B (Est. 8/23/95)
Excluding Sales Charge +9.46% +9.92%
Including Sales Charge +7.45% +5.92%
- --------------------------------------------------------------------------------
Class C (Est. 4/9/96)
Excluding Sales Charge +9.46% +9.49%
Including Sales Charge +9.46% +8.49%
TAX-FREE CALIFORNIA INSURED FUND
Average Annual Return Through June 30, 1997
LIFETIME ONE YEAR
- --------------------------------------------------------------------------------
Class A (Est. 10/15/92)
Excluding Sales Charge +6.84% +8.60%
Including Sales Charge +5.97% +4.50%
- --------------------------------------------------------------------------------
Class B (Est. 3/2/94)
Excluding Sales Charge +4.60% +8.14%
Including Sales Charge +3.80% +4.14%
- --------------------------------------------------------------------------------
Class C (Est. 4/12/95)
Excluding Sales Charge +5.81% +7.40%
Including Sales Charge +5.81% +6.40%
ALL PERFORMANCE INCLUDES REINVESTMENT OF DISTRIBUTIONS AND APPLICABLE SALES
CHARGES AS DESCRIBED BELOW. RETURN AND SHARE VALUE WILL FLUCTUATE SO THAT SHARES
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. PAST PERFORMANCE
IS NOT A GUARANTEE OF FUTURE RESULTS. PERFORMANCE FOR CLASS B AND C SHARES
"EXCLUDING SALES CHARGE" ASSUMES THE INVESTMENT WAS NOT REDEEMED. RETURNS
REFLECT A VOLUNTARY EXPENSE LIMITATION IN EFFECT AT THE TIME. RETURNS WOULD HAVE
BEEN LOWER WITHOUT THE LIMITATION.
CLASS A SHARES HAVE A 3.75% MAXIMUM FRONT-END SALES CHARGE. BOTH FUNDS HAVE A
12B-1 FEE.
CLASS B SHARES DO NOT CARRY 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.
1 9 9 7 s e m i - a n n u a l r e p o r t 9
<PAGE>
Financial Statements
DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA FUND
STATEMENT OF NET ASSETS -- JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------
<S> <C> <C>
MUNICIPAL BONDS - 100.54%
GENERAL OBLIGATION BONDS - 3.05%
Puerto Rico Aqueduct & Sewer Authority
5.00% 07/01/15 ............................... $100,000 $ 94,224
Tulare Earlimart Elementary School District
6.70% 08/01/21 (AMBAC) ....................... 50,000 58,100
--------
152,324
--------
HIGHER EDUCATION REVENUE BONDS - 4.82%
California Public Works Board Lease Revenue-
5.63% 03/01/19 ............................... 190,000 189,394
Various Community Colleges
Los Alamitos Unified School District Series 90-1
6.25% 08/15/23 ............................... 50,000 51,047
--------
240,441
--------
HOSPITAL REVENUE BONDS - 9.93%
Berkeley Alta Bates Healthcare
6.55% 12/01/22 ............................... 100,000 103,668
California Health Facilities Finance Authority
Revenue-5.50% 05/01/20 ....................... 250,000 242,500
Valleycare Hospital California Health Facilities
Finance Authority Revenue
6.75% 06/01/15 ............................... 45,000 48,771
Mendocino Coast Health Care District
5.88% 02/01/20 ............................... 100,000 100,659
--------
495,598
--------
HOUSING REVENUE BONDS - 13.78%
California Housing Finance Agency Single Family
6.00% 08/01/20 ............................... 100,000 101,243
California Housing Financing Agency
Home Mortgage Revenue Series 96H
6.25% 08/01/27 (FHA) ......................... 95,000 97,127
California Housing Financing Agency
Home Mortgage Revenue Series 96K
6.15% 08/01/16 (MBIA) ........................ 50,000 51,702
Fresno, California, Multifamily Housing Revenue
GNMA-Woodlands Apartments Project-A
6.65% 05/20/17 ............................... 100,000 106,737
Puerto Rico Public Buildings Authority Revenue
Guaranteed Government Facilities-Series B
5.25% 07/01/21 ............................... 250,000 235,758
Rancho Cucamonga Redevelopment Housing
Set Aside 5.25% 09/01/26 (MBIA) ............... 100,000 94,990
--------
687,557
--------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
LEASE/CERTIFICATES OF
PARTICIPATION - 19.25%
Alameda City Hall Redevelopment
6.20% 05/01/25 .................................... $ 50,000 $ 51,397
Bakersfield, California Certificates of Participation
Convention Center Expansion Project
5.80% 04/01/17 .................................... 350,000 354,995
California State Public Works
6.38% 10/01/19 .................................... 50,000 53,694
Hayward Civic Center Project
5.25% 08/01/26 (MBIA) ............................. 100,000 94,316
Rancho Mirage Joint Power Financing Authority
Eisenhower Medical Center
5.38% 07/01/22 (MBIA) ............................. 100,000 96,992
San Jose Convention Center Finance
Authority Revenue 6.38% 09/01/13 ................... 100,000 103,561
Santa Monica Parking Authority Lease Revenue
6.38% 07/01/16 .................................... 100,000 104,434
Shafter Powers Finance Lease Revenue
6.05% 01/01/17 .................................... 100,000 100,906
-------
960,295
-------
POLLUTION CONTROL REVENUE BONDS - 9.67%
California Pollution Control Authority Facilities
Revenue (Mobil Oil Project)
5.50% 12/01/29 .................................... 500,000 482,405
-------
482,405
-------
POWER AUTHORITY REVENUE BONDS - 1.92%
Sacramento Utility Electric Revenue
5.25% 07/01/24 .................................... 100,000 95,827
-------
95,827
-------
SCHOOL AUTHORITY/DISTRICT
REVENUE BONDS - 10.56%
Albany, California United School District-Series D
5.50% 08/01/18 .................................... 200,000 199,248
Burlingame, California School District
5.60% 07/15/21 .................................... 230,000 229,092
Moreno Valley Unified School District
5.60% 03/01/17 .................................... 100,000 98,469
-------
526,809
-------
</TABLE>
10 1997 semi-annual report
<PAGE>
DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA FUND
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
TRANSPORTATION REVENUE BONDS - 6.79%
Foothill/ Eastern Transportation Corridor Agency
California Toll Road Revenue Series 95A
6.00% 01/01/34 .............................. $ 100,000 $ 100,935
Long Beach, California HBR Revenue
5.38% 05/15/20 .............................. 250,000 238,135
----------
339,070
----------
WATER AND SEWER REVENUE BONDS - 3.93%
West Basin, California Municipal Water District
Revenue-Certificate Participation Refunding-
1992 Series A 5.50% 08/01/22 ................. 200,000 195,992
----------
195,992
----------
OTHER REVENUE BONDS - 16.84%
Anaheim, California Public Authority Lease
Revenue-Public Improvements Project-Series A
5.00% 09/01/27 .............................. 100,000 91,168
Carson Redevelopment Agency Revenue
6.38% 10/01/16 .............................. 100,000 102,460
Davis Unified School District Community
Facilities District-Special Tax
5.50% 08/15/26 (MBIA) ....................... 100,000 97,862
Dixon Redevelopment Agency
6.00% 09/01/24 .............................. 50,000 49,011
Rancho Mirage Improvement Board
6.10% 09/02/11 .............................. 500,000 499,475
----------
839,976
----------
Total Municipal Bonds (cost $4,923,091) ....... 5,016,294
----------
SHORT TERM INVESTMENTS - 7.08%
Norwest Advantage Municipal Money
Market Fund .................................. 353,206 353,206
----------
Total Short Term Investments
(cost $353,206) ............................. 353,206
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
MARKET
VALUE
----------
<S> <C>
TOTAL MARKET VALUE OF SECURITIES OWNED - 107.62%
(cost $5,276,297)** ............................ $5,369,500
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (7.62%) ......................... (380,216)
----------
NET ASSETS APPLICABLE TO 472,433 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00%........... $4,989,284
==========
NET ASSET VALUE - TAX FREE CALIFORNIA FUND A CLASS
($2,054,953 / 194,891 shares) .................. $10.54
======
NET ASSET VALUE - TAX FREE CALIFORNIA FUND B CLASS
($2,815,534 / 266,275 shares) .................. $10.57
======
NET ASSET VALUE - TAX FREE CALIFORNIA FUND C CLASS
($118,797 / 11,267 shares) ..................... $10.54
======
- ----------------
**Also cost for federal tax purposes.
AMBAC - Insured by the AMBAC Indemnity Corporation
FHA - Insured by the Federal Housing Authority
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1997:
Common Stock, $.01 par value, 100,000,000,000
shares authorized to the Fund with 10,000,000,000
shares allocated to Tax Free California Fund A Class
10,000,000,000 shares allocated to Tax Free
California Fund B Class 10,000,000,000 shares
allocated to Tax Free California Fund C Class ... $ 4,880,187
Accumulated overdistributed net investment income (4,231)
Accumulated net realized gain on investments ..... 20,125
Net unrealized gain on investments ............... 93,203
-----------
Total Net Assets ................................. $ 4,989,284
===========
</TABLE>
See accompanying notes
1997 semi-annual report 11
<PAGE>
DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA INSURED FUND
STATEMENT OF NET ASSETS - JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------------
<S> <C> <C>
MUNICIPAL BONDS - 98.85%
GENERAL OBLIGATION BONDS - 3.00%
Fairfield Public Finance Authority Revenue
6.25% 07/01/14 (FGIC) ............................. $1,000,000 $1,051,930
----------
1,051,930
----------
HIGHER EDUCATION REVENUE BONDS - 6.06%
California State University Auziliary Revenue
6.25% 08/01/20 (MBIA) ............................. 1,000,000 1,060,310
University of California Board of Regents
6.38% 09/01/24 (MBIA) ............................. 1,000,000 1,057,180
----------
2,117,490
----------
HOSPITALS REVENUE BONDS - 8.80%
California Health Facilities - San Diego Hospital
6.20% 08/01/12 (MBIA) ............................. 1,000,000 1,049,480
California Health Facilities-Catholic Healthcare West
6.00% 07/01/17 (MBIA) ............................. 1,000,000 1,032,500
Tri City California Hospital District Series A
5.63% 02/15/17 (MBIA) ............................. 1,000,000 996,980
----------
3,078,960
----------
HOUSING REVENUE BONDS - 23.64%
California Housing Finance Agency 1994 Series E
6.75% 08/01/26 (MBIA) ............................. 1,000,000 1,067,480
California Housing Finance Agency Revenue Series F
6.00% 08/01/17 (MBIA) ............................. 1,000,000 1,025,010
California Housing Finance Agency Single Family
6.00% 08/01/20 .................................... 1,000,000 1,012,430
California Housing Finance Agency Home
Mortgage Revenue Series 96E
6.05% 08/01/16 (MBIA) ............................. 1,000,000 1,018,710
California Housing Financing Agency Home
Mortgage Revenue Series 96K
6.15% 08/01/16 (MBIA) ............................. 1,500,000 1,551,060
California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue
7.95% 12/01/24 (AMBAC) ............................ 1,345,000 1,523,468
Fresno, California, Multifamily Housing Revenue
GNMA-Woodlands Apartments Project-A
6.65% 05/20/17 .................................... 1,000,000 1,067,370
----------
8,265,528
----------
LEASE/CERTIFICATES OF PARTICIPATION - 31.24%
Bakersfield, California Certificates of Participation
Convention Center Expansion Project
5.80% 04/01/17 .................................... 1,000,000 1,014,270
California Public Works Board Lease Revenue
Series 96A 5.50% 01/01/17 (AMBAC) .................. 1,000,000 988,220
Contra Costa - Merrithew Memorial Hospital Project
5.50% 11/01/22 (MBIA) ............................. 1,000,000 981,150
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
-------------------------------------
<S> <C> <C>
MUNICIPAL BONDS (CONTINUED)
LEASE/CERTIFICATES OF PARTICIPATION (CONTINUED)
Hayward Civic Center Project
5.25% 08/01/26 (MBIA) ............................. $ 1,000,000 $ 943,160
Inland Empire Solid Waste Authority
6.00% 08/01/16 (FSA) .............................. 2,500,000 2,560,825
Ontario Redevelopment Cimarron Project
6.25% 08/01/15 (MBIA) ............................. 1,000,000 1,046,480
San Luis Obispo Capital Revenue
6.38% 06/01/14 (AMBAC) ............................ 1,000,000 1,056,550
Santa Barbara Water Revenue
6.70% 04/01/27 (AMBAC) ............................ 1,000,000 1,080,120
Santa Clara Finance Authority
7.75% 11/15/11 (AMBAC) ............................ 1,000,000 1,252,240
----------
10,923,015
----------
POWER AUTHORITY REVENUE BONDS - 2.74%
Sacramento Municipal Utility District K Defeasable CA
5.25% 07/01/24 .................................... 1,000,000 958,270
----------
958,270
----------
TRANSPORTATION REVENUE BONDS - 2.95%
San Francisco City & County International Airport
Revenue 6.00% 05/01/14 (FGIC) ...................... 1,000,000 1,031,360
----------
1,031,360
----------
WATER AND SEWER REVENUE BONDS - 3.00%
Calaveras County Water District Revenue
6.13% 09/01/17 (AMBAC) ............................ 1,000,000 1,048,060
----------
1,048,060
----------
OTHER REVENUE BONDS - 17.42%
Anaheim, California Public Authority Lease
Revenue-Public Improvements Project-Series A
5.00% 09/01/27 .................................... 1,000,000 911,680
Clayton, California Redevelopment Agency Tax
Allocation Revenue (Clayton Redevelopment Project
Area-A) 5.38% 08/01/20 ............................ 1,000,000 971,000
Los Angeles County Transportation Commission
Sales Tax Revenue
6.25% 07/01/13 (MBIA) ............................. 1,000,000 1,054,910
Rancho Water District Finance Revenue
5.90% 11/01/15 (FGIC) ............................. 1,000,000 1,031,100
San Francisco City & County Redevelopment
Agency Hotel Tax Revenue
6.75% 07/01/25 (FSA) .............................. 1,000,000 1,103,880
Santa Clara North Bayshore
5.75% 07/01/14 (AMBAC) ............................ 1,000,000 1,017,250
----------
6,089,820
----------
Total Municipal Bonds (cost $33,028,995) ............ 34,564,433
----------
</TABLE>
12 1997 semi-annual report
<PAGE>
DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA INSURED FUND
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
MARKET
VALUE
-----------------
<S> <C>
TOTAL MARKET VALUE OF SECURITIES OWNED - 98.85%
(cost $33,028,995)* ................................ $ 34,564,433
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES - 1.15% ............................... 400,660
-------------
NET ASSESTS APPLICABLE TO 3,313,071 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00%.............. $34,965,093
=============
NET ASSET VALUE - TAX FREE CALIFORNIA INSURED A CLASS
($28,288,250 / 2,680,433 shares) .................. $10.55
======
NET ASSET VALUE - TAX FREE CALIFORNIA INSURED B CLASS
($6,583,047 / 623,715 shares) ..................... $10.55
======
NET ASSET VALUE - TAX FREE CALIFORNIA INSURED C CLASS
($93,796 / 8,923 shares) .......................... $10.51
======
- ---------------------------------
*Also cost for federal tax purposes.
AMBAC - Insured by the AMBAC Indemnity Corporation
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by the Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1997
Common Stock, $.01 par value, unlimited shares
authorized to the Tax-Free California Insured Fund . $ 34,441,805
Accumulated overdistributed net investment income ... (8,969)
Accumulated net realized loss on investments ........ (1,003,181)
Net unrealized appreciation of investments .......... 1,535,438
-------------
Total net assets .................................... $ 34,965,093
=============
</TABLE>
See accompanying notes
THE DELAWARE-VOYAGEUR FUNDS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE TAX-FREE
CALIFORNIA CALIFORNIA
FUND INSURED FUND
-------------------------------------
<S> <C> <C>
ASSETS:
Investments at market ..................... $ 5,369,500 $34,564,433
Cash ...................................... 3,422 --
Interest receivable ....................... 64,458 698,692
Subscriptions receivable .................. 16,355 4,814
Receivable for securities sold ............ 489,833 1,989,094
Other assets .............................. 1,788 --
----------- -----------
Total assets ............................. 5,945,356 37,257,033
----------- -----------
LIABILITIES:
Liquidations payable ...................... -- 23,055
Payable for securities purchased .......... 941,889 1,957,018
Other accounts payable and accrued
expenses ................................. 14,183 311,867
----------- -----------
Total liabilities ......................... 956,072 2,291,940
----------- -----------
TOTAL NET ASSETS .......................... $ 4,989,284 $34,965,093
=========== ===========
Investments at cost ....................... $ 5,276,297 $33,028,995
=========== ===========
</TABLE>
See accompanying notes
1997 semi-annual report 13
<PAGE>
THE DELAWARE-VOYAGEUR FUNDS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
TAX-FREE TAX-FREE
CALIFORNIA CALIFORNIA
FUND INSURED FUND
---- ------------
INVESTMENT INCOME:
<S> <C> <C>
Interest ........................................................... $ 81,033 $ 1,065,229
----------- -----------
81,033 1,065,229
----------- -----------
EXPENSES:
Management fees .................................................... 7,378 89,469
Dividend disbursing, transfer agent and custodian fees and expenses 5,324 34,724
Distribution expense ............................................... 8,855 69,313
Registration fees .................................................. 451 3,067
Reports and statements to shareholders ............................. 453 5,780
Accounting fees and salaries ....................................... 297 3,424
Professional fees .................................................. 1,220 3,215
Directors' fees .................................................... 100 478
Other .............................................................. 600 2,034
----------- -----------
24,678 211,504
Less expenses waived or absorbed by Delaware Management Company, Inc (19,336) (18,972)
----------- -----------
Total net expenses ................................................. 5,342 192,532
----------- -----------
NET INVESTMENT INCOME .............................................. 75,691 872,697
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments: .................................. 20,125 233,703
Net change in unrealized appreciation (depreciation) of investments: 34,860 (39,577)
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............. 54,985 194,126
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............... $ 130,676 $ 1,066,823
=========== ===========
</TABLE>
See accompanying notes
14 1997 semi-annual report
<PAGE>
THE DELAWARE-VOYAGEUR FUNDS
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND TAX-FREE CALIFORNIA INSURED FUND
--------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
6/30/97 12/31/96 6/30/97 12/31/96
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ................................ $ 75,691 $ 82,955 $ 872,697 $ 1,911,564
Net realized gain (loss) on investments .............. 20,125 6,790 233,703 (58,669)
Net change in unrealized appreciation (depreciation)
of investments ...................................... 34,860 (5,178) (39,577) (562,705)
---------- ---------- ----------- -----------
Net increase in net assets
resulting from operations ........................... 130,676 84,567 1,066,823 1,290,190
---------- ---------- ----------- -----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class ............................................. (46,434) (65,255) (747,379) (1,598,282)
B Class ............................................. (31,474) (15,447) (150,722) (292,092)
C Class ............................................. (2,634) (2,008) (1,755) (3,096)
Net realized gain from security transactions:
A Class ............................................. 0 (4,321) 0 0
B Class ............................................. 0 (2,191) 0 0
C Class ............................................. 0 (278) 0 0
---------- ---------- ----------- -----------
(80,542) (89,500) (899,856) (1,893,470)
---------- ---------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ............................................. 1,250,893 1,024,962 826,928 4,431,420
B Class ............................................. 2,145,935 525,960 304,047 1,008,305
C Class ............................................. 30,894 90,000 36,823 601,996
Net asset value of shares issued upon reinvestment
of dividends from net investment income and net
realized gain on security transactions:
A Class ............................................. 35,273 52,929 335,091 618,501
B Class ............................................. 3,638 427 66,374 101,866
C Class ............................................. 3,152 1,646 1,857 2,265
---------- ---------- ----------- -----------
3,469,785 1,695,924 1,571,120 6,764,353
---------- ---------- ----------- -----------
Cost of shares repurchased:
A Class ............................................. (472,614) (858,534) (3,553,681) (7,836,755)
B Class ............................................. (19,928) 0 (542,507) (336,230)
C Class ............................................. (10,570) 0 0 (607,218)
---------- ---------- ----------- -----------
(503,112) (858,534) (4,096,188) (8,780,203)
---------- ---------- ----------- -----------
Increase (decrease) in net assets derived from capital
share transactions .................................. 2,966,673 837,390 (2,525,068) (2,015,850)
---------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS ................ 3,016,807 832,457 (2,358,101) (2,619,130)
NET ASSETS:
Beginning of year .................................... 1,972,477 1,140,020 37,323,194 39,942,324
---------- ---------- ----------- -----------
End of year .......................................... $4,989,284 $1,972,477 $34,965,093 $37,323,194
---------- ---------- ----------- -----------
</TABLE>
See accompanying notes
1 9 9 7 s e m i - a n n u a l r e p o r t 15
<PAGE>
THE DELAWARE-VOYAGEUR TAX-FREE CALIFORNIA FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
was as follows:
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND-A CLASS TAX-FREE CALIFORNIA FUND-B CLASS
-----------------------------------------------------------------------------
SIX MONTHS YEAR PERIOD FROM SIX MONTHS YEAR PERIOD FROM
ENDED ENDED 3/3/95(1) TO ENDED ENDED 8/23/95(1) TO
6/30/97 12/31/96 12/31/95 6/30/97 12/31/96 12/31/95
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $10.43 $10.64 $10.00 $10.44 $10.65 $9.96
Income from investment operations:
Net investment income .................... 0.27 0.60 0.47 0.25 0.56 0.20
Net realized and unrealized gain
(loss) from investments ................. 0.13 (0.18) 0.70 0.14 (0.18) 0.74
------ ------ ------ ------ ------ ------
Net change in net assets from
investment operations ................... 0.40 0.42 1.17 0.39 0.38 0.94
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income(2) .. (0.29) (0.60) (0.47) (0.26) (0.56) (0.19)
Distributions from net realized gain
on security transactions ................ - (0.03) (0.06) - (0.03) (0.06)
------ ------ ------ ------ ------ ------
Total dividends and distributions ........ (0.29) (0.63) (0.53) (0.26) (0.59) (0.25)
------ ------ ------ ------ ------ ------
Net asset value, end of period ............ $10.54 $10.43 $10.64 $10.57 $10.44 $10.65
====== ====== ====== ====== ====== ======
Total Return(3) .......................... 4.16% 4.21% 11.97% 4.05% 3.77% 9.52%
Ratios and supplemental data:
Net assets, end of period (000 omitted)... $2,055 $1,218 $1,012 $2,816 $660 $128
Ratio of expenses to average
net assets(4) .......................... 0.07%(5) 0.27% 0.46%(5) 0.68%(5) 0.50% 0.60%(5)
Ratio of expenses to average net assets
prior to expense limitation ............. 1.32%(5) 1.25% 1.22%(5) 2.07%(5) 2.00% 1.93%(5)
Ratio of net investment income to
average net assets ...................... 5.40%(5) 5.71% 5.57%(5) 4.79%(5) 5.34% 5.33%(5)
Ratio of net investment income to average
net assets prior to expense limitation .. 4.15%(5) 4.73% 4.81%(5) 3.40%(5) 3.84% 4.00%(5)
Portfolio turnover ....................... 45.81%(5) 7.87% 39.51% 45.81%(5) 7.87% 39.51%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND - C CLASS
----------------------------------
SIX MONTHS PERIOD FROM
ENDED 4/9/96(1) TO
6/30/97 12/31/96
(UNAUDITED)
<S> <C> <C>
Net asset value, beginning of period ...... $10.42 $10.07
Income from investment operations:
Net investment income .................... 0.22 0.37
Net realized and unrealized gain
(loss) from investments ................. 0.15 0.38
------ ------
Net change in net assets from
investment operations ................... 0.37 0.75
------ ------
Less dividends and distributions:
Dividends from net investment income2 .... (0.25) (0.37)
Distributions from net realized gain
on security transactions ................ -- (0.03)
------ ------
Total dividends and distributions ........ (0.25) (0.40)
------ ------
Net asset value, end of period ............ $10.54 $10.42
====== ======
Total Return(3) .......................... 3.86% 7.58%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .. $119 $94
Ratio of expenses to average
net assets4 ............................ 0.82%(5) 0.78%(5)
Ratio of expenses to average net assets
prior to expense limitation ............. 2.07%(5) 2.00%(5)
Ratio of net investment income to
average net assets ...................... 4.65%(5) 5.13%(5)
Ratio of net investment income to average
net assets prior to expense limitation .. 3.40%(5) 3.91%(5)
Portfolio turnover ....................... 45.81%(5) 7.87%
</TABLE>
- ------------------------
(1) Commencement of Operations
(2) For federal income tax purposes, all of the net investment income
distributions were derived from interest on securities exempt from federal
income tax. For the period ended December 31, 1995, $.01 per Class A Share
of the distributions from net investment income were subject to state income
tax.
(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) For the years ended December 31, 1995 and 1996, the expense ratio reflects
the effect of gross expenses attributable to earnings credits on uninvested
cash balances received by the Fund. Prior period expense ratios have not
been adjusted.
(5) Annualized.
16 1 9 9 7 s e m i - a n n u a l r e p o r t
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
was as follows:
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA INSURED FUND - A CLASS
---------------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR TWO MONTHS YEAR YEAR PERIOD FROM
ENDED ENDED ENDED ENDED ENDED ENDED 10/15/92(1) TO
6/30/97 12/31/96 12/31/95 12/31/94 10/31/94 10/31/93 10/31/92
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $10.50 $10.65 $9.33 $9.51 $11.08 $10.02 $10.00
Income from investment operations:
Net investment income .................... 0.24 0.52 0.53 0.10 0.55 0.60 --
Net realized and unrealized gain
(loss) from investments ................. 0.06 (0.15) 1.34 (0.18) (1.52) 1.11 0.02
------ ------ ----- ----- ------ ------ ------
Net increase (decrease) in net assets from
investment operations ................... 0.30 0.37 1.87 (0.08) (0.97) 1.71 0.02
------ ------ ----- ----- ------ ------ ------
Less dividends and distributions:
Dividends from net
investment income(2) ................... (0.25) (0.52) (0.55) (0.09) (0.54) (0.60) --
Distributions from net realized gain
on security transactions ................ -- -- -- (0.01) (0.06) (0.05) --
------ ------ ----- ----- ------ ------ ------
Total dividends and distributions ........ (0.25) (0.52) (0.55) (0.10) (0.60) (0.65) --
------ ------ ----- ----- ------ ------ ------
Net asset value, end of period ............ $10.55 $10.50 $10.65 $9.33 $9.51 $11.08 $10.02
====== ====== ====== ===== ====== ====== ======
Total Return(3) .......................... 3.04% 3.63% 20.51% (0.84%) (8.97%) 17.29% 0.20%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) .......................... $28,288 $30,551 $33,860 $27,994 $27,282 $12,509 $2,056
Ratio of expenses to average
net assets(4) .......................... 0.98%(5) 0.82% 0.70% 0.10%(5) 0.20% 0.00% 0.00%
Ratio of expenses to average net assets
prior to expense limitation ............. 1.05%(5) 1.01% 1.02% 1.24%(5) 1.25% 1.25% 0.00%
Ratio of net investment income to
average net assets ...................... 4.98%(5) 5.05% 5.23% 6.30%(5) 5.37% 5.26% 0.00%
Ratio of net investment income to
average net assets prior to
expense limitation ...................... 4.91%(5) 4.86% 4.91% 5.16%(5) 4.32% 4.01% 0.00%
Portfolio turnover ....................... 61.23%(5) 54.52% 107.45% 7.28%(5) 18.34% 24.19% 7.31%
</TABLE>
- ---------------------
(1) Commencement of Operations.
(2) For federal income tax purposes, all of the net investment income
distributions were derived from interest on securities exempt from federal
income tax. For the period ended December 31, 1995, $.01 per Class A Share
of the distributions from net investment income were subject to state income
tax.
(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) For the years ended December 31, 1995 and 1996, the expense ratio reflects
the effect of gross expenses attributable to earnings credits on uninvested
cash balances received by the Fund. Prior period expense ratios have not
been adjusted.
(5) Annualized.
1 9 9 7 s e m i - a n n u a l r e p o r t 17
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each period
was as follows:
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA INSURED FUND - B CLASS
---------------------------------------------------------------------
SIX MONTHS YEAR YEAR TWO MONTHS PERIOD FROM
ENDED ENDED ENDED ENDED 3/1/94(1) TO
6/30/97 12/31/96 12/31/95 12/31/94 10/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....... $10.50 $10.65 $9.33 $9.51 $10.68
Income from investment operations:
Net investment income ..................... 0.23 0.48 0.50 0.08 0.31
Net realized and unrealized gain
(loss) from investments .................. 0.05 (0.15) 1.33 (0.17) (1.16)
------ ------ ----- ----- ------
Net increase (decrease) in net assets from
investment operations .................... 0.28 0.33 1.83 (0.09) (0.85)
------ ------ ----- ----- ------
Less dividends and distributions:
Dividends from net
investment income(2) .................... (0.23) (0.48) (0.51) (0.08) (0.30)
Distributions from net realized gain
on security transactions ................. -- -- -- (0.01) (0.02)
------ ------ ----- ----- ------
Total dividends and distributions .......... (0.23) (0.48) (0.51) (0.09) (0.32)
------ ------ ----- ----- ------
Net asset value, end of period ............. $10.55 $10.50 $10.65 $9.33 $9.51
====== ====== ====== ===== ======
Total Return(3) ........................... 2.81% 3.22% 20.01% (0.92%) (7.93%)
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ........................... $6,583 $6,717 $6,029 $2,219 $1,427
Ratio of expenses to average
net assets(4) ........................... 1.43%(5) 1.21% 1.10% 0.57%(5) 0.73%(5)
Ratio of expenses to average net assets
prior to expense limitation .............. 1.80%(5) 1.76% 1.75% 1.94%(5) 1.95%(5)
Ratio of net investment income to
average net assets ....................... 4.53%(5) 4.64% 4.75% 5.54%(5) 4.82%(5)
Ratio of net investment income to
average net assets prior to
expense limitation ....................... 4.16%(5) 4.09% 4.10% 4.17%(5) 3.60%(5)
Portfolio turnover ........................ 61.23%(5) 54.52% 107.45% 7.28% 18.34%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA INSURED FUND - C CLASS
------------------------------------------
SIX MONTHS YEAR PERIOD FROM
ENDED ENDED 4/12/95(1) TO
6/30/97 12/31/96 12/31/95
(UNAUDITED)
<S> <C> <C> <C>
Net asset value, beginning of period ....... $10.46 $10.65 $10.19
Income from investment operations:
Net investment income ..................... 0.23 0.44 0.25
Net realized and unrealized gain
(loss) from investments .................. 0.03 (0.19) 0.53
------ ------ ------
Net increase (decrease) in net assets from
investment operations .................... 0.26 0.25 0.78
------ ------ ------
Less dividends and distributions:
Dividends from net
investment income(2) .................... (0.21) (0.44) (0.32)
Distributions from net realized gain
on security transactions ................. - - -
------ ------ ------
Total dividends and distributions .......... (0.21) (0.44) (0.32)
------ ------ ------
Net asset value, end of period ............. $10.51 $10.46 $10.65
====== ====== ======
Total Return(3) ........................... 2.65% 2.47% 7.77%
Ratios and supplemental data:
Net assets, end of period
(000 omitted) ........................... $94 $55 $53
Ratio of expenses to average
net assets(4) ........................... 1.73%(5) 1.58% 1.53%(5)
Ratio of expenses to average net assets
prior to expense limitation1.............. 1.80%(5) 1.77% 1.77%(5)
Ratio of net investment income to
average net assets ....................... 4.23%(5) 4.02% 4.25%(5)
Ratio of net investment income to
average net assets prior to
expense limitation ....................... 4.16%(5) 3.83% 4.01%(5)
Portfolio turnover ........................ 61.23%(5) 54.52% 107.45%
</TABLE>
- ----------------------
(1) Commencement of Operations
(2) For federal income tax purposes, all of the net investment income
distributions were derived from interest on securities exempt from federal
income tax. For the period ended December 31, 1995, $.01 per Class A Share
of the distributions from net investment income were subject to state income
tax.
(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) For the years ended December 31, 1995 and 1996, the expense ratio reflects
the effect of gross expenses attributable to earnings credits on uninvested
cash balances received by the Fund. Prior period expense ratios have not
been adjusted.
(5) Annualized.
18 1 9 9 7 s e m i - a n n u a l r e p o r t
<PAGE>
THE DELAWARE-VOYAGEUR FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
Delaware-Voyageur Tax-Free California Fund (formerly Voyageur California Tax
Free Fund)("Tax-Free California Fund"), a series of the Voyageur Mutual
Funds, Inc. is registered under the Investment Company Act of 1940 (as
amended) as a non-diversified, open-end management investment company.
Delaware-Voyageur Tax-Free California Insured Fund (formerly California
Insured Tax Free Fund)("Tax-Free California Insured Fund"), a series of the
Voyageur Investment Trust, Inc., a Massachusetts business trust registered
under the Investment Company Act of 1940 (as amended) as a diversified,
open-end management investment company. Tax-Free California Fund seeks high
current income free from both federal and state income taxes by investing in
investment grade municipal bonds. Tax-Free California Insured Fund seeks high
current income free from both federal and state income taxes with the added
safety of an insured portfolio by investing in insured municipal bonds.
Tax-Free California Fund and Tax-Free California Insured Fund (each referred
to as a "Fund" or collectively as the "Funds") each offer three classes of
shares.
1. Fund Reorganization
On April 30, 1997, Lincoln National Corporation ("LNC") acquired Voyageur
Fund Manager Inc.'s ("Voyageur") parent, Dougherty Financial Group, Inc.
("DFG") pursuant to an agreement and plan of merger dated January 15, 1997,
in which LNC would acquire DFG including the mutual fund investment advisory
business of DFG conducted by Voyageur. Upon completion of the acquisition,
Delaware Management Company, Inc. ("DMC") became the investment adviser to
the Funds, Delaware Distributors, L.P. ("DDLP") became the distributor for
the Funds, Delaware Service Company, Inc. ("DSC") became the transfer,
dividend-disbursing, shareholder servicing agent and accounting service agent
for the Funds.
2. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Funds.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of
such securities. Money market instruments having less than 60 days to
maturity are valued at amortized cost which approximates market value. Other
securities and assets for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the
direction of the Fund's Board of Directors.
Federal Income Taxes - Each Fund intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has been
made in the financial statements. Income and capital gain distributions are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles.
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Funds on the basis of daily net assets of each class. Distribution
expenses relating to a specific class are charged directly to that class.
Other - Expenses common to all Funds within the Delaware-Voyageur 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 are
accreted to interest income over the lives of the respective securities. The
Funds declare dividends from net investment income daily and pay them
monthly. Capital gains are distributed annually.
<PAGE>
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
3. Investment Management and Other Transactions with Affiliates
Commencing May 1, 1997, and in accordance with the terms of the Investment
Management Agreement, the Fund pays DMC the Investment Manager of each Fund,
an annual fee, which is calculated daily on the average daily net assets of
each Fund. The management fee rates are as follows:
Tax-Free Tax-Free California
California Fund Insured Fund
--------------- ------------
Management fee as a
percentage of average
daily net assets
(per annum)................. 0.50% 0.50%
DMC has elected to waive their fees and reimburse each Fund to the extent
that annual operating expenses exclusive of 12b-1 distribution fees, taxes,
interest, brokerage commissions and extraordinary expenses, exceed 0.05% and
0.73% of average daily net assets for Tax-Free California Fund and Tax-Free
California Insured Fund, respectively, through December 31, 1997. Total
expenses absorbed by DMC for the two month period ended June 30, 1997 are as
follows:
Tax-Free Tax-Free California
California Fund Insured Fund
--------------- ------------
Total expenses
absorbed by DMC.............. $7,837 -
Prior to May 1, 1997, the Funds had an investment advisory and management
agreement with Voyageur. Voyageur received a fee for its investment advisory and
management services based on the average daily net assets of each Fund at an
annual rate of .50%. During the period January 1, 1997 to April 30, 1997,
Voyageur waived $10,565 and $8,628 of the Tax-Free California Fund and Tax-Free
California Insured Fund, respectively.
Commencing May 1, 1997, the Funds have engaged DSC, an affiliate of DMC, to
serve as dividend disbursing, transfer agent and accounting services agent for
the Fund. For the two month period ended June 30, 1997, the amounts expensed for
each Fund were as follows:
Tax-Free Tax-Free California
California Fund Insured Fund
--------------- ------------
Dividend disbursing,
transfer agent fees and
other expenses .............. $1,671 $12,033
Accounting fees .............. $ 217 $ 2,424
1997 semi-annual report 19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Prior to May 1, 1997, the Funds paid a fee to Voyageur for acting as the
Fund's dividend disbursing, administrative and accounting services agent.
Each Fund is also responsible for reimbursing Voyageur's out-of-pocket
expense in connection with the performance of dividend-disbursing,
administrative and accounting services.
On June 30, 1997, the Funds had payables to affiliates as follows:
Tax-Free Tax-Free California
California Fund Insured Fund
--------------- ------------
Investment Management fee
payable to DMC................. $1,983 $14,673
Dividend disbursing, transfer
agent fees, accounting fees
and other expenses
payable to DSC................. $ 573 $ 2,391
Other expenses payable to
DMC and affiliates............. $1,411 $ 6,073
Commencing May 1, 1997, and pursuant to the Distribution Agreement, the Funds
pay DDLP, the Distributor and an affiliate of DMC, an annual fee not to
exceed 0.25% of the average daily net assets of the A Class and 1.00% of the
average daily net assets of the B and C Class for each Series. For the period
May 1, 1997 to June 30, 1997, DDLP voluntarily waived $0, $788, $0 for the
Tax-Free California Fund Class A, Class B and Class C Shares, respectively,
and $0, $3,483, $0 for the Tax-Free California Insured Fund Class A, Class B
and Class C Shares, respectively. For the two month period ended June 30,
1997, DDLP earned commissions on sales of the Fund A Class shares for each
Fund as follows:
Tax-Free Tax-Free California
California Fund Insured Fund
--------------- ------------
$1,043 $1,649
Prior to May 1, 1997 each class of shares had a Distribution Agreement with
Voyageur Fund Distributors, Inc. ("VFD"). Under the plan the Funds paid VFD a
fee at an annual rate of 0.25% of the average daily net assets of the Class A
Shares and 1.00% of the average daily net assets of the Class B and C Shares.
For the period January 1, 1997 to April 30, 1997, VFD voluntarily waived $0,
$146, $0 for the Tax-Free California Fund Class A, Class B and Class C
Shares, respectively, and $0, $6,861, $0 for the Tax-Free California Insured
Fund Class A, Class B and Class C Shares, respectively.
Certain officers of DMC, DSC and DDLP are officers, directors and/or
employees of the Fund. These officers, directors and employees are paid no
compensation by the Fund.
<PAGE>
4. Investments
During the period ended June 30, 1997, the Fund made purchases and sales of
investment securities other than U.S. government securities and temporary
cash investments for each Fund as follows:
Tax-Free Tax-Free California
California Fund Insured Fund
--------------- ------------
Purchases.................. $3,522,751 $10,813,415
Sales ..................... 636,251 13,051,372
At June 30, 1997, the aggregate unrealized appreciation (depreciation) of
securities for federal income tax purposes for each Fund were as follows:
Tax-Free Tax-Free California
California Fund Insured Fund
--------------- ------------
Aggregate unrealized
appreciation.............. $103,997 1,554,762
Aggregate unrealized
depreciation.............. 10,794 19,324
Net unrealized
appreciation.............. 93,203 1,535,438
For federal income tax purposes, the Tax-Free California Insured Fund had a
capital loss carryover at December 31, 1996, of $1,236,884 that will expire
in 2003 and 2004.
20 1997 semi-annual report
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. Capital Stock
<TABLE>
<CAPTION>
TAX-FREE CALIFORNIA FUND TAX-FREE CALIFORNIA INSURED FUND
------------------------ --------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
6/30/97 12/31/96 6/30/97 12/31/96
(Unaudited) (Unaudited)
----------- --------- ----------- --------
<S> <C> <C> <C> <C>
Shares sold:
A Class ............................ 120,047 100,004 79,066 425,361
B Class ............................ 204,601 51,200 29,243 96,511
C Class ............................ 2,962 8,843* 3,506 58,503
Shares issued upon reinvestment of
dividends from net investment income
and net realized gains from
security transactions:
A Class ............................ 3,381 5,108 31,979 59,647
B Class ............................ 345 41 6,333 9,821
C Class ............................ 302 160* 178 219
------- ------- ------- -------
331,638 165,356 150,305 650,062
------- ------- ------- -------
Shares repurchased:
A Class ............................ (45,345) (83,419) (340,262) (754,776)
B Class ............................ (1,931) 0 (51,555) (32,711)
C Class ............................ (1,000) 0* 0 (58,503)
------- ------- ------- -------
(48,276) (83,419) (391,817) (845,990)
------- ------- ------- -------
Net Increase (Decrease) ............. 283,362 81,937 (241,512) (195,928)
------- ------- ------- -------
- ----------------------
* For the period from April 9, 1996 (commencement of operations) to December 31, 1996.
</TABLE>
6. Concentration of Credit Risk
The Funds concentrate their investments in securities mainly issued by
California municipalities. The value of these investments may be adversely
affected by new legislation within the state, regional or local economic
conditions, and differing levels of supply and demand for municipal bonds. Many
municipalities insure repayment for their obligations. Although bond insurance
reduces the risk of loss due to default by an issuer, such bonds remain subject
to the risk that market value may fluctuate for other reasons and there is no
assurance that the insurance company will meet its obligations. These securities
have been identified in the Statement of Net Assets.
The Funds may invest up to 15% of its total assets in illiquid securities
which may include securities with contractual restrictions on resale,
securities exempt from registration under Rule 144A of the Securities Act of
1933, as amended, and other securities which may not be readily marketable. The
relative illiquidity of some of these securities may adversely affect the Fund's
ability to dispose of such securities in a timely manner and at a fair price
when it is necessary to liquidate such securities. These securities, if any,
have been denoted in the Statement of Net Assets.
1997 semi-annual report 21
<PAGE>
VOYAGEUR FUNDS
SHAREHOLDER MEETING RESULTS
- --------------------------------------------------------------------------------
A meeting of the funds' shareholders was held on April 11, 1997. The matters
submitted to a vote of shareholders were the election of new directors and
the approval of a new investment management agreement. Whenever there is a
change in control of an investment manager, the Investment Company Act of
1940 requires shareholders to vote on a new investment management agreement.
TAX-FREE CALIFORNIA FUND
<TABLE>
<CAPTION>
NUMBER OF VOTES
------------------------------------------
FOR AGAINST / WITHHELD ABSTENTIONS
------------------------------------------
<S> <C> <C> <C>
Walter P. Babich............................................ 127,379 - -
Anthony D. Knerr............................................ 127,379 - -
Ann R. Leven................................................ 127,379 - -
W. Thacher Longstreth....................................... 127,379 - -
Thomas F. Madison........................................... 127,379 - -
Jeffrey J. Nick............................................. 127,379 - -
Charles E. Peck............................................. 127,379 - -
Wayne A. Stork ............................................. 127,379 - -
Approval of New Investment Management Agreement............. 125,276 - 2,103
</TABLE>
TAX-FREE CALIFORNIA INSURED FUND
<TABLE>
<CAPTION>
NUMBER OF VOTES
-------------------------------------------------------
FOR AGAINST / WITHHELD ABSTENTIONS
-------------------------------------------------------
<S> <C> <C> <C>
Walter P. Babich ........................................... 2,427,720 18,357 --
Anthony D. Knerr ........................................... 2,427,720 18,357 --
Ann R. Leven ............................................... 2,427,720 18,357 --
W. Thacher Longstreth ...................................... 2,424,515 21,562 --
Thomas F. Madison .......................................... 2,427,720 18,357 --
Jeffrey J. Nick ............................................ 2,427,720 18,357 --
Charles E. Peck ............................................ 2,427,720 18,357 --
Wayne A. Stork ............................................. 2,427,720 18,357 --
Approval of New Investment Management Agreement ............ 2,160,899 53,091 232,087
</TABLE>
22 1997 semi-annual report
<PAGE>
DELAWARE GROUP OF FUNDS
FOR GROWTH OF CAPITAL
Aggressive Growth Fund
Trend Fund
DelCap Fund
Small Cap Value Fund
U.S. Growth Fund
Growth Stock Fund
Tax Efficient Equity Fund
FOR TOTAL RETURN
Quantum Fund
Blue Chip Fund
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
Delaware Fund
FOR INTERNATIONAL DIVERSIFICATION
Emerging Markets Fund
New Pacific Fund
World Growth Fund
International Equity Fund
Global Assets Fund
Global Bond Fund
FOR CURRENT INCOME
Delchester Fund
Strategic Income Fund
U.S. Government Fund
Delaware-Voyageur
U.S. Government Securities Fund
Limited-Term Government Fund
FOR TAX-EXEMPT CURRENT INCOME
National High Yield Municipal Bond Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
State Tax-Exempt Funds*
MONEY MARKET FUNDS
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
* Available for the following states: AZ, CA, CO, FL, ID, IA, KS, MN, MO, ND,
NJ, NM, NY, OH, OR, PA, UT, WA, WI. Insured and intermediate bond funds are
available in selected states.
funds
Complete information on any Delaware Group fund can be found in each Fund's
current prospectus. Prospectuses for all Delaware Group funds are available
from your financial adviser. Please read the prospectus carefully before you
invest or send money.
<PAGE>
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF TAX-FREE CALIFORNIA FUNDS'
SHAREHOLDERS, BUT IT MAY BE USED WITH PROSPECTIVE INVESTORS WHEN PRECEDED OR
ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE TAX-FREE CALIFORNIA FUNDS, WHICH
SET FORTH DETAILS ABOUT CHARGES, EXPENSES, INVESTMENT OBJECTIVES AND
OPERATING POLICIES OF THE FUNDS. YOU SHOULD READ THE PROSPECTUS CAREFULLY
BEFORE YOU INVEST. SUMMARY INVESTMENT RESULTS ARE DOCUMENTED IN THE FUNDS'
CURRENT STATEMENT OF ADDITIONAL INFORMATION. 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 THE FUNDS WILL FLUCTUATE SO
THAT SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
INVESTMENT MANAGER
Delaware Management Company, Inc.
Philadelphia
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia
SHAREHOLDER SERVICING, DIVIDEND DISBURSING AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
FOR SHAREHOLDERS
1.800.523.1918
FOR SECURITIES DEALERS
1.800.362.7500
FOR FINANCIAL INSTITUTIONS
REPRESENTATIVES
1.800.659.2265
Be sure to consult your financial adviser when making investments. Mutual
funds can be a valuable part of your financial plan; however, shares of the
Funds are not FDIC or NCUSIF insured, are not guaranteed by any bank or any
credit union, and involve investment risk, including the possible loss of the
principal amount invested. Shares of the Funds are not bank or credit union
deposits.
DELAWARE
GROUP
========
PHILADELPHIA o LONDON
Copy Rights Delaware Distributors, L.P.
Printed in the USA on
recycled paper
(139)
SA-VOYCA [--] PP8/97
