VOYAGEUR INVESTMENT TRUST, N-30D, 1998-03-03

VOYAGEUR INVESTMENT TRUST
N-30D, 1998-03-03

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<PAGE>

For Tax-Exempt Income

DELAWARE-VOYAGEUR
Tax-Free Missouri Insured Fund
Tax-Free Iowa Fund
Tax-Free Wisconsin Fund
Tax-Free Kansas Fund

service and guidance

professional management

1997
Annual
Report

goals

(Various photos demonstrating service and guidance, professional
management and goals)

[LOGO]

<PAGE>

A TRADITION OF SOUND INVESTING

commitment

A Commitment
To Our Investors

Delaware Investments has a tradition of money management that dates back to
1929. We have a long and distinguished history of helping individuals and
institutions - including some of America's largest pension funds - reach their
financial goals.
Headquartered in Philadelphia, a block from the nation's oldest stock
exchange, the Delaware organization established its first mutual fund was
established in 1938. Delaware International Advisers Ltd., our international
affiliate, was established in 1990 and is headquartered in London.
Delaware Investments offers a full range of mutual funds. We also
manage investments for variable annuity products, unit investment trusts and
closed-end funds, and offer retirement plan services for individuals and
businesses.
Delaware manages more than $40 billion in mutual fund assets and
institutional advisory accounts for more than half-a-million investors. We're
part of a global financial service and investment management business owned
by Lincoln National Corporation, whose subsidiaries manage more than $120
billion in assets.

(Photo of keyboard)

(Photo of illustration from Tax-Exempt Income Brochure)

Fund Objectives

Tax-Free Missouri Insured Fund
To provide a high level of current income exempt from federal and Missouri
state personal income taxes, consistent with preservation of capital.

Tax-Free Iowa Fund
To provide a high level of current income exempt from federal and Iowa state
personal income taxes, consistent with preservation of capital.

Tax-Free Wisconsin Fund
To provide a high level of current income exempt from federal and Wisconsin
state personal income taxes, consistent with preservation of capital.

Tax-Free Kansas Fund
To provide a high level of current income exempt from federal and Kansas
state personal income taxes, consistent with preservation of capital.

tax-exempt
income

<PAGE>

January 17, 1998

for tax-exempt
income
1

Dear Shareholder:
Delaware-Voyageur municipal bond funds in America's heartland provided
competitive results during fiscal 1997, a year when the bond market benefited
from a healthy U.S. economy and the lowest inflation in more than a decade.
Each of the four funds discussed in this report outpaced the average
of their peers for fiscal 1997, as shown below. We are especially pleased to
report that Tax-Free Kansas Fund ranked #1 among Kansas municipal bond funds
for the 12-month, three-year, five-year and lifetime periods ended December
31, 1997, according to Lipper Analytical Services.
Since joining the Delaware family in May, Elizabeth H. Howell, the
Funds' portfolio manager under Voyageur, has continued to oversee each
portfolio from her office in Minneapolis. In conjunction with her investment
research, she periodically visits Missouri, Iowa, Wisconsin and Kansas.
Fiscal 1997 was a banner year for municipal bonds.

Among the favorable developments during the period were:

* Passage of the Taxpayer Relief Act in July. This lifted the specter of
proposed federal tax legislation that could have made municipal bonds a
less attractive investment option.

* Rising tax revenues. Thanks to strong job growth and corporate profits
many states, including the four discussed in this report, posted budget
surpluses last year.

* Steady investor demand. Although the amount of new bonds issued in most
states increased in 1997, a steady stream of investors helped support
higher bond prices.

Fiscal 1997 was a banner year for municipal bonds.

Total Return
- ---------------------------------------------------------------------------------------------
12 Months Ended December 31, 1997
- ---------------------------------------------------------------------------------------------

<S> <C>
Missouri Insured Fund A Class +9.43%
Lipper Missouri Municipal Debt Fund Average (22 funds) +8.61%
Lehman Brothers Insured Municipal Bond Index +9.58%
- ---------------------------------------------------------------------------------------------
Tax-Free Iowa Fund A Class +9.49%
Tax-Free Wisconsin Fund A Class +9.07%
Lipper Other States Municipal Debt Fund Average (67 funds) +8.44%
- ---------------------------------------------------------------------------------------------
Tax-Free Kansas Fund A Class +10.06%
Lipper Kansas Municipal Debt Fund Average (9 funds) +7.84%
Lehman Brothers Municipal Bond Index +9.19%
- ---------------------------------------------------------------------------------------------
</TABLE>

All performance shown above is at 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 as shown
on pages 9 to 11. The unmanaged Lehman Brothers Indexes are composed of bonds
with a variety of quality ratings from many states.

+ Tax-Free Kansas Fund A Class ranked #1 out of 9, 7, 5 and 5 Kansas
municipal bond funds, respectively, for the one-, three- and five-year and
lifetime periods ended 12/31/97. It began operating on 11/30/92. Rankings
are based on total return at net asset value. An expense limitation was in
effect at the time. Rankings would have been lower without the limitation.

<PAGE>

for tax-exempt
income
2

Your Funds participated in the robust income and total return
potential of the municipal bond market in 1997. We believe we did well
because our Funds had relatively longer durations than our peers. We also
went an extra mile to analyze bonds issued for many communities and public
projects.
We view the municipal bond market's long-term prospects as
attractive, especially since the IRS and many states still tax income at a
higher rate than capital gains. While the Taxpayer Relief Act offered many
potential benefits to aggressive equity investors, it provided few breaks to
income-oriented investors. Municipal bonds remain one of the few investments
that can provide investors with monthly income potential without increasing
their federal income tax bill.

In our view, the income from municipal bonds and the tax-free
compounding of such income over time has the potential to help heavily taxed
investors reach their financial goals more quickly.
We thank you for being among the investors who have expressed
confidence in Delaware. On the pages that follow,
Ms. Howell reviews each Fund's performance in 1997 and outlines her approach
for the coming year. We hope you find our new annual report format
informative.

Sincerely,
/s/ Wayne A. Stork
- -------------------------------
Wayne A. Stork
Chairman

/s/ Jeffrey J. Nick
- -------------------------------------
Jeffrey J. Nick
President and Chief Executive Officer

Municipal bonds remain one of the few investements that can provide investors
with monthly income potential without increasing their tax bill.

Your Funds' Portfolio Manager
Prior to joining the Delaware-Voyageur family, Elizabeth H. Howell had
managed municipal bond funds at Voyageur Asset Management for six years. She
has more than 13 years experience that includes serving as a fixed-income
portfolio manager at Windsor Financial Group. She also held investment
management positions at Lommis Sayles & Co. and Eaton Vance Management. Ms.
Howell has an MBA from Babson College.

<PAGE>

for tax-exempt
income

Portfolio Manager's Review

Delaware-Voyageur's municipal bond funds in four Plains states provided
attractive total returns during fiscal 1997 despite substantial interest rate
volatility and renewed efforts in Washington D.C. to cut income taxes.
Passage of the Taxpayer Relief Act this past summer marked a turning
point for the market because it removed a major uncertainty for many
investors. By retaining high income tax rates on bond interest and dividends,
Washington reinforced the value of municipal bonds as a way to potentially
increase investment income without the pain of income tax rates as high as
39.6%.
During 1997, increased demand for municipal bonds from both
individual investors and institutions led to higher bond prices even as the
supply of newly issued municipal securities rose 19.2% to $220.5 billion,
according to The Bond Buyer, a trade publication. Many communities took
advantage of falling interest rates to refinance debt.
In managing each Fund, we sought to achieve good structure - a
prudent combination of average coupon, call date, and effective maturity that
represent each portfolio's mathematical underpinnings. Longer-than-average
durations in each Fund helped us benefit from rising bond prices when
interest rates fell sharply during the second half.

(Photo of Keyboard)

Tax-Free Missouri
Insured Fund Strategic
Positioning and Outlook

Missouri Insured Fund provided a total return of +9.43% for the 12 months
ended December 31, 1997 (for Class A shares at net asset value with
distributions reinvested). This outpaced the average of your Fund's peers and
nearly matched the return of the unmanaged Lehman Brothers Insured Bond Index
as shown on page 1.

strategy

Generally, we focused on bonds that were selling at a discount to their face
value, with good call protection features and long maturities.

Tax-Free Missouri Insured Fund
Portfolio Highlights and Asset Mix
- -------------------------------------------------------
December 31, 1997

Housing 16.8%
Water/Sewer 3.9%
Pre-Refunded Bonds 15.7%
Industrial Development 1.8%
Utility 3.9%
Other Revenue Bonds 8.1%
Cash 1.2%
Hospitals 23.4%
Power Authority 9.6%
Higher Education 3.3%
General Obligation 12.3%

Average Effective Maturity 9.3 years
Average Effective Duration 6.9 years
Average Quality AAA
30-Day Current SEC Yield* 4.04%

Approximately 19.0% of the income generated by Missouri Insured Fund during
fiscal 1997 was subject to the alternative minimum tax.

* For Class A shares based on Securities and Exchange Commission guidelines.
Thirty day SEC yields for B and C classes was 3.45%.

<PAGE>

for tax-exempt
income
4

The Fund offered a very favorable risk profile relative to the return
we were able to generate. The Insured Fund invests primarily in bonds that are
rated Aaa by Moody's Investors Services or AAA Standard & Poor's.
Compared to a year ago, we increased our allocation to housing bonds
from 2% to nearly 17% as of December 31, 1997. Most of the increase occurred
during the first half as we sought to take advantage of market volatility.
Housing bonds, because of the risk of prepayment from underlying mortgages,
tend to yield more than bonds with similar ratings and maturities from other
sectors. Most of your Fund's holdings in this sector at the start of fiscal
1998 were bonds that finance multifamily dwellings. These bonds tend to have
lower levels of refinancing activity than single-family home mortgages, and
better potential total return characteristics.
In 1997, we focused on bonds selling at less than their face value
(discount bonds), bonds with good call protection features and long
maturities. This enabled us to do well relative to both our benchmark and our
peers despite a volatile interest rate environment. Another positive factor
affecting our performance was that the supply of new Missouri municipal
securities fell 12.7% during 1997 (from $3.1 billion to $2.7 billion) while
investor demand remained steady, leading to higher bond prices, according to
The Bond Buyer.
We believe Missouri exhibits credit characteristics attractive to
income-oriented investors. Missouri's general obligation bonds carry a very
high quality rating of AAA and the state had a $197 million budget surplus in
1997. Missouri's unemployment rate was just 3.9% in 1997, lower than the
national average of 4.7%. Personal income in the state grew at a healthy 5.8%
rate last year, driven by growth in services, manufacturing and agriculture.

missouri

Tax Free Iowa Fund
Portfolio Highlights and Asset Mix
- -------------------------------------------------------------------------------
December 31, 1997

Guam Bonds 5.0%
US Virgin Island Bonds 4.6%
Other Revenue Bonds 17.7%
Water/Sewer 11.3%
Higher Education 1.6%
Cash 1.1%
Iowa Industrial Development 19.7%
Puerto Rico Bonds* 39.0%

*Includes power authority, higher education, hospital, transportation, utility,
housing and other revenue sectors within Puerto Rico.

Approximately 6.3% of the income generated by Tax-Free Iowa Fund during fiscal
1997 was subject to the alternative minimum tax.

Average Effective Maturity 7.9 years
Average Effective Duration 6.9 years
Average Quality AA
30-Day Current SEC Yield* 4.09%
- ------------------------------------------------------------------------------
*For Class A shares based on Securities and Exchange Commission guidelines.
The 30-day SEC yield for B and C classes was 3.50%.

<PAGE>

for tax-exempt
income
5

Tax-Free Iowa Fund
Strategic Positioning
and Outlook
Tax-Free Iowa Fund provided a robust total return of +9.49% for the 12 months
ended December 31, 1997 (for Class A shares at net asset value with
distributions reinvested). This outpaced the returns of the unmanaged Lehman
Brothers Municipal Bond Index as well as the average of our peers, as shown
on page 1.

(Photo of glasses, pen and keyboard)

The Iowa economy was healthy in 1997, and the financial condition of
most Iowa municipalities was good. The state had the 3rd highest growth rate
per capita in income in the nation in 1997, (7.2%), helping fuel demand for
municipal bonds. Iowa is first in corn, soybean and grain production, and
this past autumn farmers harvested the third biggest corn crop ever.
An issue the state will face in the year ahead is how financial
problems in Asia will affect demand for U.S. agricultural products. Nearly
one-quarter of America's hogs are raised in Iowa, and Japan, the largest
importer of U.S. pork, remains mired in an economic recession. Currency
devaluations along the Pacific Rim will also make it more expensive for many
emerging countries to buy U.S. grain.
From a municipal bond perspective, we believe Iowa is likely to
remain in solid financial shape in 1998. The state's economy is diverse and
the credit quality of most municipalities appears excellent.
Only a few issuers in the state offer bonds that are exempt from both
federal and state income taxes - the type of securities we seek for your
Fund's portfolio. Overall, the amount of new municipal bonds issued in the
state rose 19% to $1.3 billion in 1997, according to The Bond Buyer. Still,
this amount was modest given the size of the state's economy and investor
demand.
The Fund's largest holding as of December 31, 1997 was a bond issue
for the Iowa Finance Authority Underground Storage Tank (18.5% of net
assets). We purchased it at a discount to face value, and during the second
half of fiscal 1997 it rose substantially in price, providing income while
contributing to your Fund's total return.
Limited supply of double tax-exempt bonds in Iowa has prompted us to
invest a substantial portion of the Fund's net assets (48.6% as of December
31) in investment grade tax-exempt territorial bond issues of Puerto Rico,
Guam and the U.S. Virgin Islands. Income from these bonds is not taxable to
Iowa residents, or residents of any U.S. state. Territorial bonds provide an
additional element of diversification and liquidity for the Fund and help us
meet our income, duration and yield objectives.
As opportunities arise, we will prudently increase our positioning in
Iowa securities when we can find attractively priced securities that are
exempt from both federal and state personal income taxes. Investor demand is
likely to remain high, however, as individual income tax rates in the state
range as high as 8.98%

Tax-Free Wisconsin Fund
Strategic Positioning
and Outlook
For the 12 months ended December 31, 1997, Tax-Free Wisconsin Fund provided a
total return of +9.07% (for Class A shares at net asset value with
distributions reinvested). This nearly matched the returns of the unmanaged
Lehman Brothers Municipal Bond Index and was more than the average of our
peers, as shown on page 1.

iowa

<PAGE>

for tax-exempt
income
6

In 1997, the supply of new municipal bonds in Wisconsin dropped 2.7%
to $3.8 billion, helping support bond prices, according to The Bond Buyer.
Investor demand remained steady.
Wisconsin's economy is diverse and generally less cyclical than the
economies on the east and west coasts. Dominant sectors include dairy farming,
services and manufacturing, forestry and tourism. State taxes withheld from
wages grew at a 9.9% annual rate in 1997, according to Wisconsin's Department
of Revenue.
The credit quality of most Wisconsin municipalities is excellent and
they had a $327 million budget surplus in 1997. Wisconsin's general
obligation bonds have a high credit rating of AA. However, only a few select
issuers in the state offer bonds that are exempt from both federal and state
personal income taxes - the type of bonds we seek for your Fund's portfolio.
At year's end about one-third of your Fund's net assets were invested
in unrated bonds. This reflects the fact that many Wisconsin issues finance
small municipal projects that are too small to make it economically feasible
to seek a rating from Moody's Investors Services or Standard & Poor's.
We carefully evaluate each issue to determine creditworthiness. Those
that are deemed satisfactory often carry a higher-than-average coupon, which
we believe can increase your Fund's income potential.
Wisconsin's unrated bonds also tend to be less sensitive to
short-term interest rate movements, appreciating less during bond market
rallies like the ones that occurred in May and June. Conversely, these bonds
also tend to fluctuate less in price when the bond market is weak, which may
help preserve principal. Our approach to managing the portfolio is to balance
bonds that produce an above-average interest rate with bonds that are rated
and, in our opinion, can contribute to the Fund's total return.

Wisconsin residents' earnings from interest and dividends grew at a rapid
10.5% pace in 1997, an indicator of potential demand for municipal bonds.

wisconsin

Tax-Free Wisconsin Fund
Portfolio Highlights and Asset Mix
- -----------------------------------------------------------------------
December 31, 1997

Pre-Refunded Bonds 6.0%
Higher Education 2.5%
Industrial Development 18.8%
Other Revenue Bonds 16.4%
Cash 5.7%
Hospitals 4.4%
Power Authority 4.7%
Certificates of participation 14.9%
Housing 23.7%
Water/Sewer 2.9%

Approximately 22.3% of the income generated by Tax-Free Wisconsin Fund during
fiscal 1997 was subject to the alternative minimum tax.

Average Effective Maturity 9.6 years
Average Effective Duration 7.3 years
Average Quality AA
30-Day Current SEC Yield* 4.15%
*For Class A shares based on Securities and Exchange Commission guidelines.
Thirty-day SEC yields for B and C classes were 3.57% and 3.56% respectively.

<PAGE>

for tax-exempt
income
7

In our opinion, the prospects for Wisconsin's economy and municipal
bond market are bright. Per capita income and the state's growth rate are
above-average. Residents' earnings from interest and dividends grew at a rapid
10.5% pace in 1997, an indicator of potential demand for municipal securities.
During the 1990s, Gov. Tommy Thompson has reduced the state's income,
capital gains, property and inheritance taxes without negatively affecting
state revenues. Still, Wisconsin's state income tax rate can be as high as
6.93%.

Tax-Free Kansas Fund
Strategic Positioning
and Outlook
Tax-Free Kansas Fund provided an exceptional total return of +10.06% for the
12 months ended December 31, 1997 (for Class A shares at net asset value with
distributions reinvested). This was significantly more than the returns of
both the unmanaged Lehman Brothers Municipal Bond Index and the average of
our peers as shown on page 1.
The Fund invests primarily in rated, investment-grade securities.
Generally, the supply of Kansas bonds is light (only $1.5 billion in new
bonds were issued in 1997, an 18.9% increase from a year earlier). The vast
majority of the issues that come to market receive high quality ratings from
Moody's Investors Services or Standard & Poor's. The Fund reflects the high
credit quality that characterizes the state.
During the year, one of our largest weightings was in general
obligation bonds (G.O.). In Kansas, these bonds are typically backed by
property taxes rather than a single project that depends on a single revenue
stream, increasing the attractiveness of G.O.s for income-oriented investors.
Two factors enabled the Fund to do well in fiscal 1997 - high credit
quality and good portfolio structure. In our opinion, we had a prudent mix of
average coupon, call date and maturity. As interest rates fell during the
year, the prices of bonds in your Fund's portfolio generally rose. We believe
also provided an attractive level of income on a tax-adjusted basis.

kansas

Tax-Free Kansas Fund
Portfolio Highlights and Asset Mix
- --------------------------------------------------------------------------
December 31, 1997

Housing 23.9%
Water/Sewer 15.2%
Cash 3.2%
Higher Education 11.3%
Other Revenue Bonds 9.1%
Hospitals 11.7%
Public Power Authority 3.5%
General Obligation 22.1%

Approximately 15.8% of the income generated by Tax-Free Kansas Fund during
fiscal 1997 was subject to the alternative minimum tax.

Average Effective Maturity 7.5 years
Average Effective Duration 6.2 years
Average Quality AA
30-Day Current SEC Yield* 4.25%

*For Class A shares based on Securities and Exchange Commission guidelines.
Thirty-day SEC yields for B and C classes were 3.66% and 3.67% respectively.

<PAGE>

for tax-exempt
income
8

During the second half, we reduced our weighting in hospital bonds
and increased our holdings of housing bonds, primarily in the multifamily
sector. We believe housing bonds can perform well in the coming months.
Overall, we remain optimistic about the state's small but growing
bond market. Kansas' population of 2.6 million has an above-average
per-capita income. Kansas' unemployment rate dropped to 3.6% in 1997, the
lowest rate since 1979, U.S. government figures show.
Given the state's relatively high top individual income tax rate of
7.75% (for single taxpayers with just $30,000 in taxable income), we believe
that many Kansans will continue to seek sources of tax-exempt income.

Summary Outlook
Even though the municipal bond market rallied substantially in 1997, we still
believe selected bonds offer solid income opportunities and relatively
moderate credit risk.
Still, we'd like to offer a note of caution for the year ahead. U.S.
job growth has continued at a brisk pace while the labor force participation
rate - the proportion of people who have or are looking for a job - reached a
record level of more than 67% of working age Americans in December.
While this trend has served to boost state tax revenues and reduce
social expenses, it suggests that the Federal Reserve Board needs to remain
vigilant to prevent consumer prices from rising too much. We believe the Fed
is up to the task and that yields on long-term U.S. Treasury bonds can
potentially fall to as low as 5% in 1998.

Elizabeth H. Howell
Vice President/ Senior Portfolio Manager
January 17, 1998

outlook

A Harvest of Income Opportunities
A Comparison of Taxable Equivalent Yields

30-Year Municipal Bonds Rated AA
Missouri (insured bonds) 9.03%
Iowa 9.25%
Wisconsin 8.33%
Kansas 8.81%
30-Year US Treasuries 5.92%

Yields as of 12/31/97. Municipal bonds vary in quality and unlike U.S.
Treasuries are not guaranteed by the U.S. government. This illustration is
not intended to reflect the current 30-day SEC yield of any Delaware-Voyageur
municipal bond fund. SOURCE: Bloomberg Business News.

The chart to the left shows how much an investor in the highest federal tax
bracket (39.6%) residing in each state would have to earn from a taxable
investment to match the income potential of long-term municipal bonds in each
respective state.

<PAGE>

for tax-exempt
income
9

TAX-FREE MISSOURI INSURED FUND
Growth of a $10,000 Investment
November 2, 1992 to December 31, 1997

Lehman Brothers Lipper Missouri Municipal
Tax-Free Missouri Insured Municipal Debt Fund Average
Fund A Class Bond Index (22 funds)
----------------- ----------------- -------------------------
<S> <C> <C> <C>
Nov. '92 $ 9,625 $10,000 $10,000
Dec. '92 $ 9,625 $10,339 $10,000
Mar. '93 $10,103 $10,747 $10,419
Jun. '93 $10,398 $11,128 $10,774
Sept. '93 $10,858 $11,525 $11,152
Dec. '93 $11,008 $11,686 $11,296
Mar. '94 $10,343 $10,953 $10,604
Jun. '94 $10,251 $11,098 $10,647
Sept. '94 $10,271 $11,149 $10,666
Dec. '94 $10,015 $10,988 $10,459
Mar. '95 $10,891 $11,832 $11,227
Jun. '95 $11,159 $12,107 $11,461
Sept. '95 $11,455 $12,454 $11,727
Dec. '95 $12,014 $13,026 $12,248
Mar. '96 $11,726 $12,827 $12,009
Jun. '96 $11,782 $12,926 $12,077
Sept. '96 $12,108 $13,231 $12,351
Dec. '96 $12,424 $13,580 $12,627
Mar. '97 $12,381 $13,520 $12,589
Jun. '97 $12,813 $14,003 $12,998
Sept. '97 $13,213 $14,119 $13,372
Dec. '97 $13,580 $14,879 $13,719

</TABLE>

Chart assumes a $10,000 investment on November 2, 1992, a 3.75% front-end
sales charge and reinvestment of distributions. Performance of other Fund
classes differs because of different charges and expenses. Past performance
does not guarantee future results.

TAX-FREE Missouri Insured Fund
- --------------------------------------------------------------------------------------------------
Average Annual Returns Through December 31, 1997

Lifetime Five Years One Year
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A (Est. 11/2/92)
Excluding Sales Charge +7.13% +7.15% +9.43%
Including Sales Charge +6.34% +6.34% +5.36%
- --------------------------------------------------------------------------------------------------
Class B (Est. 3/12/94)
Excluding Sales Charge +6.01% +8.66%
Including Sales Charge +5.34% +4.66%
- --------------------------------------------------------------------------------------------------
Class C (Est. 11/11/95)
Excluding Sales Charge +6.15% +8.49%
Including Sales Charge +6.15% +7.49%

</TABLE>

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 either contingent sales charges did
not apply or 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 and 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.
<PAGE>

for tax-exempt
income
10

Tax-Free Iowa and Wisconsin Funds
Growth of a $10,000 Investment
September 1, 1993 to December 31, 1997
<TABLE>
<CAPTION>

Lipper Other States Tax-Free Tax-Free Lehman Brothers
Municipal Debt Fund Iowa Fund Wisconsin Fund Municipal
Average (67 Funds) A Class A Class Bond Index
------------------- --------- -------------- ---------------
<S> <C> <C> <C> <C>
Sept. 1 '93 $10,000 $ 9,625 $ 9,625 $10,000
Dec. 31 '93 $10,107 $ 9,795 $ 9,787 $10,140
Mar. 31 '94 $ 9,582 $ 9,225 $ 9,357 $ 9,584
Jun. 30 '94 $ 9,625 $ 9,202 $ 9,208 $ 9,689
Sept. 30 '94 $ 9,677 $ 9,130 $ 9,226 $ 9,756
Dec. 31 '94 $ 9,473 $ 8,785 $ 8,972 $ 9,616
Mar. 31 '95 $10,139 $ 9,546 $ 9,692 $10,296
Jun. 30 '95 $10,314 $ 9,772 $ 9,867 $10,544
Sept. 30 '95 $10,568 $ 9,982 $10,122 $10,847
Dec. 31 '95 $11,028 $10,612 $10,564 $11,295
Mar. 31 '96 $10,843 $10,202 $10,365 $11,159
Jun. 30 '96 $10,922 $10,258 $10,415 $11,244
Sept. 30 '96 $11,166 $10,603 $10,644 $11,502
Dec. 31 '96 $11,414 $10,884 $10,932 $11,795
Mar. 31 '97 $11,390 $10,804 $10,903 $11,768
Jun. 30 '97 $11,760 $11,264 $11,258 $12,174
Sept. 30 '97 $12,074 $11,602 $11,584 $12,539
Dec. 31 '97 $12,386 $11,904 $11,909 $12,879

</TABLE>

Chart assumes a $10,000 investment on September 1, 1993, a 3.75% front-end
sales charge and reinvestment of distributions. Performance of other Fund
classes differs because of different charges and expenses. Past performance
does not guarantee future results.

Tax-Free Iowa Fund
- --------------------------------------------------------------------------------
Average Annual Returns Through December 31, 1997

Lifetime One Year
Class A (Est. 9/1/93)
Excluding Sales Charge +5.14% +9.49%
Including Sales Charge +4.22% +5.43%
- --------------------------------------------------------------------------------
Class B (Est. 3/24/95)
Excluding Sales Charge +7.55% +8.75%
Including Sales Charge +6.59% +4.75%
- --------------------------------------------------------------------------------
Class C (Est. 1/4/95)
Excluding Sales Charge +9.74% +8.68%
Including Sales Charge +9.74% +7.68%

Tax-Free Wisconsin Fund
Average Annual Returns Through December 31, 1997

Lifetime One Year
- --------------------------------------------------------------------------------
Class A (Est. 9/1/93)
Excluding Sales Charge +5.15% +9.07%
Including Sales Charge +4.23% +4.93%
- --------------------------------------------------------------------------------
Class B (Est. 4/22/95)
Excluding Sales Charge +6.74% +8.27%
Including Sales Charge +5.74% +4.27%
- --------------------------------------------------------------------------------
Class C (Est. 3/28/95)
Excluding Sales Charge +6.84% +8.16%
Including Sales Charge +6.84% +7.16%

Please see page 8 for important additional information. All performance
includes reinvestment of distributions and applicable sales charges as
described on page 8. Past performance is not a guarantee of future results.

<PAGE>

for tax-exempt
income
11

Tax-Free Kansas Fund A Class
Growth of a $10,000 Investment
November 2, 1992 to December 31, 1997

Lipper Kansas
Municipal Debt Lehman Brothers Tax-Free
Fund Average Municipal Kansas Fund
(5 funds) Bond Index A Class
-------------- --------------- -----------
<S> <C> <C> <C>
Nov. 2 '92 $10,000 $10,000 $ 9,625
Mar. 31 '93 $10,413 $10,371 $10,264
Jun. 30 '93 $10,767 $10,711 $10,534
Sept. 30 '93 $11,118 $11,073 $10,947
Dec.31 '93 $11,277 $11,228 $11,104
Mar. 31 '94 $10,768 $10,612 $10,704
Jun. 30 '94 $10,811 $10,729 $10,547
Sept. 30 '94 $10,850 $10,803 $10,306
Dec. 31 '94 $10,625 $10,648 $11,141
Mar. 31 '95 $11,342 $11,401 $11,390
Jun. 30 '95 $11,554 $11,575 $11,724
Sept. 30 '95 $11,846 $12,011 $12,277
Dec. 31 '95 $12,331 $12,507 $11,989
Mar. 31 '96 $12,103 $12,356 $12,094
Jun. 30 '96 $12,214 $12,451 $12,094
Sept. 30 '96 $12,481 $12,736 $12,412
Dec. 31 '96 $12,732 $13,061 $12,697
Mar. 31 '97 $12,713 $13,030 $12,635
Jun. 30 '97 $13,123 $13,480 $13,087
Sept. 30 '97 $13,453 $13,885 $13,534
Dec. 31 '97 $13,790 $14,261 $13,959
</TABLE>

Tax-Free Kansas Fund
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average Annual Returns Through December 31, 1997

Lifetime Five Years One Year
- ----------------------------------------------------------------------------------------------
Class A (Est. 11/30/92)
Excluding Sales Charge +7.61% +7.63% +10.06%
Including Sales Charge +6.80% +6.81% +5.95%
- ----------------------------------------------------------------------------------------------
Class B (Est. 4/8/95)
Excluding Sales Charge +7.56% +9.28%
Including Sales Charge +6.59% +5.28%
- ----------------------------------------------------------------------------------------------
Class C (Est. 4/12/95)
Excluding Sales Charge +7.32% +9.17%
Including Sales Charge +7.32% +8.17%
- ----------------------------------------------------------------------------------------------
</TABLE>

Please see page 9 for important additional information. All performance
includes reinvestment of distributions and applicable sales charges as
described on page 9. Past performance is not a guarantee of future results.

<PAGE>

12 for tax-exempt income

Financial Statements
Delaware-Voyageur
Tax-Free Missouri Insured Fund
Statement Of Net Assets
December 31, 1997
Principal Market
Amount Value
Municipal Bonds - 98.80%
General Obligation Bonds - 12.34%
Clark County School District (FSA)
5.75% 3/1/15 ................................... $ 1,775,000 $ 1,864,975
Springfield School District (MBIA)
5.25% 3/1/11 ................................... 1,000,000 1,019,340
St. Charles (FSA) 5.75% 3/1/15 .................. 1,000,000 1,059,250
St. Louis County School District #8
(MBIA) 5.60% 2/15/15 ........................... 1,490,000 1,550,971
Franklin County School District
(FGIC) 5.75% 3/1/13 ............................ 1,100,000 1,159,950
West Platte School District (MBIA)
5.85% 3/1/15 ................................... 750,000 785,865
-----------
7,440,351
-----------
Higher Education Revenue Bonds - 3.31%
Missouri State Health & Education Facility
(Central Missouri State University) (AMBAC)
5.75% 10/1/25 .................................. 1,000,000 1,042,980
Missouri State Health & Education Facility
University Revenue for St. Louis University
(AMBAC) 4.75% 10/1/16 .......................... 1,000,000 955,680
-----------
1,998,660
-----------
Hospital Revenue Bonds - 23.37%
Cape Girardeau SE Missouri Hospital (MBIA)
5.25% 6/1/16 ................................... 1,000,000 1,039,600
Hannibal Health Facilities Series A (Hannibal
Regional Hospital) (FSA) 5.75% 3/1/22 ........... 1,000,000 1,057,430
Hannibal Health Facilities Series A (Hannibal
Regional Hospital) (FSA) 5.625% 3/1/12 .......... 2,500,000 2,666,100
Jackson County St. Joseph's Hospital (MBIA)
6.50% 7/1/12 ................................... 1,980,000 2,175,050
Jackson County St. Mary's Hospital (MBIA)
5.75% 7/1/24 ................................... 2,000,000 2,092,820
Missouri State Health & Education Facility
(Heartland Health Systems) (AMBAC)
6.35% 11/15/17 ................................ 1,250,000 1,365,938
Missouri State Health & Education Facility
(Children's Mercy Hospital) (MBIA)
5.65% 5/15/23 ................................. 1,000,000 1,032,080
Missouri State Health & Education Facility
(Health Midwest) (MBIA) 6.25% 2/15/22 .......... 1,000,000 1,078,830
Missouri State Health & Education Facility
(SSM Health Care) (MBIA) 6.40% 6/1/10 .......... 500,000 583,285
Missouri State Health & Education Facility
(St. Luke's Health Systems) (MBIA)
5.125% 11/15/19 ............................... 1,000,000 1,000,890
-----------
14,092,023
-----------
<PAGE>

Principal Market
Amount Value
Municipal Bonds (Continued)
Housing Revenue Bonds - 16.83%
Missouri Single Family Housing (FNMA/GNMA)
7.25% 9/1/26 ................................... $ 2,295,000 $ 2,616,828
Missouri Single Family Housing (FNMA/GNMA)
7.20% 9/1/26 ................................... 2,015,000 2,305,966
Missouri Single Family Housing (FNMA/GNMA)
7.55% 9/1/27 ................................... 1,830,000 2,114,638
Missouri Single Family Housing (FNMA/GNMA)
7.45% 9/1/27 ................................... 1,985,000 2,292,457
Missouri Single Family Housing (GNMA)
7.20% 12/1/17 .................................. 245,000 271,707
Missouri Single Family Housing (GNMA)
7.25% 12/1/20 .................................. 495,000 548,856
-----------
10,150,452
-----------
Industrial Development Revenue Bonds - 1.79%
St. Louis Municipal Finance Corporation City Lease
Revenue - City Justice Center, Series A
(AMBAC) 5.95% 2/15/16 .......................... 1,000,000 1,081,200
-----------
1,081,200
-----------
Lease/Certificate of Participation - 1.77%
Kansas City Muehlebach Hotel (FSA)
5.90% 12/1/18 .................................. 1,000,000 1,069,600
-----------
1,069,600
-----------
Power Authority Revenue Bonds - 9.62%
Sikeston Electric Revenue (MBIA) 6.00% 6/1/13 .... 1,000,000 1,130,700
Sikeston Electric Revenue (MBIA) 5.00% 6/1/22 .... 4,750,000 4,670,817
-----------
5,801,517
-----------
*Pre-Refunded/Escrowed to Maturity
Bonds - 15.74%
Greene County Single Family Mortgage Revenue
Zero Coupon (Private Mortgage Insurance)
3/1/16 (Escrowed to maturity) .................... 1,225,000 477,321
Kansas City Airport Revenue (FSA)
6.875% 9/1/14-04 ................................ 1,675,000 1,940,002
Sikeston Electric Revenue (MBIA)
6.25% 6/1/12-02 ................................. 2,000,000 2,200,700
St. Charles School District (FGIC)
6.50% 2/1/14-06 ................................. 1,250,000 1,431,200
St. Louis Municipal Finance Corporation Leasehold
Revenue (FGIC) 6.25% 2/15/12-05 .................. 1,850,000 2,068,837
Troy School District #3 Lincoln County
(MBIA ) 6.10% 3/1/14-05 ......................... 1,235,000 1,370,541
-----------
9,488,601
-----------

<PAGE>

for tax-exempt income 13

Delaware-Voyageur Tax-Free Missouri Insured Fund
Statement Of Net Assets (Continued)
Principal Market
Amount Value
Municipal Bonds (Continued)
Utility Revenue Bonds - 3.92%
Missouri Environmental Pollution Control
Revenue for St. Joseph's Light and Power Co.
(AMBAC) 5.85% 2/1/13......................... $2,200,000 $2,360,424
------------
2,360,424
------------
Water And Sewer Revenue Bonds - 3.90%
Liberty Sewer (MBIA) 6.00% 2/1/08............. 600,000 678,960
Liberty Sewer (MBIA) 6.15% 2/1/15............. 1,500,000 1,670,895
------------
2,349,855
------------
Other Revenue Bonds - 6.21%
Kansas City Municipal Assistance Bartle Hall
Convention Center (MBIA ) 5.60% 4/15/16 ..... 1,240,000 1,289,612
Missouri State Environmental-State Revolving
Fund - Branson (FSA) 6.05% 7/1/16 ........... 2,265,000 2,451,840
------------
3,741,452
------------
Total Municipal Bonds (cost of $55,107,781)... 59,574,135
------------

Total Market Value Of Securities Owned - 98.80%
(cost of $55,107,781). ...................... 59,574,135
Receivables And Other Assets
Net Of Liabilities - 1.20% ................... 722,814
------------

Net Assets Applicable To 5,577,827 Shares
($.01 Par Value) Outstanding - 100.00% $60,296,949
============

Net Asset Value - TAX-FREE Missouri Insured A Class
($48,565,374 / 4,492,331 shares). . . . . . . $10.81
============
Net Asset Value - TAX-FREE Missouri Insured B Class
($11,506,649 / 1,064,696 shares). . . . . . . $10.81
============
Net Asset Value - TAX-FREE Missouri Insured C Class
($224,926 / 20,800 shares). . . . . . . . . . . . . $10.81
============

Components Of Net Assets At December 31, 1997:
Common Stock, $.01 par value, 10,000,000,000 shares authorized
to the Fund with 1,000,000,000 shares allocated to Tax-Free
Missouri Insured Fund A Class, 1,000,000,000 shares allocated to
Tax-Free Missouri Insured Fund B Class and 1,000,000,000 shares
allocated to Tax-Free Missouri Insured Fund C Class $56,927,422
Accumulated net realized loss on investments (1,096,827)
Net unrealized appreciation on investments 4,466,354
------------
Total Net Assets. . . . . . . . . . . . . . . . . . . $60,296,949
============

------------
*For Pre-Refunded Bonds, the stated maturity is followed by the
year in which each bond is pre-refunded.

AMBAC - Insured by the AMBAC Indemnity Corporation
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association

<PAGE>

Delaware-Voyageur Tax-Free Iowa Fund
Statement Of Net Assets
December 31, 1997
Principal Market
Amount Value
Municipal Bonds - 98.84%
Higher Education Revenue Bonds - 5.80%
Puerto Rico Educational Facility Revenue -
Polytechnic University 6.50% 8/1/24 ............. $ 665,000 $ 724,770
State University of Iowa - Board Of Regents
5.30% 7/1/13 ................................... 500,000 520,345
University of North Iowa - Board Of Regents
5.30% 7/1/13 ................................... 150,000 155,432
University Of Puerto Rico Revenue (MBIA)
5.50% 6/1/15 ................................... 1,000,000 1,043,190
-----------
2,443,737
-----------
Hospital Revenue Bonds - 3.14%
Puerto Rico Hospital Revenue - Hospital Auxilio
Mutuo Obligated Group (MBIA) 6.25%
7/1/24 ......................................... 1,200,000 1,323,228
-----------
1,323,228
-----------
Housing Revenue Bonds - 2.50%
Puerto Rico Housing Bank And Finance Agency
(GNMA) 6.25% 4/1/29 ............................ 990,000 1,052,687
-----------
1,052,687
-----------
Industrial Development Revenue Bonds - 25.42%
Iowa Finance Authority - Underground Storage Tank
Revenue 5.125% 7/1/14 .......................... 7,500,000 7,767,600
Lee County Urban Renewal Revenue - Keokuk
Waste Treatment 6.40% 6/1/07 .................... 500,000 534,755
Puerto Rico Commonwealth Industrial Development
Company General Purpose Revenue Series B
5.375% 7/1/16 .................................. 1,000,000 1,014,800
Puerto Rico Port Authority Revenue, Special
Facility - American Airlines 6.25% 6/1/26 ....... 1,275,000 1,391,726
-----------
10,708,881
-----------
Power Authority Revenue Bonds - 5.36%
Puerto Rico Electric Power Authority Revenue
6.25% 7/1/17 ................................... 1,000,000 1,072,110
Puerto Rico Electric Power Authority Revenue
6.00% 7/1/14 ................................... 1,100,000 1,187,065
-----------
2,259,175
-----------
*Pre-Refunded/Escrowed To Maturity Bonds - 4.61%
Virgin Islands Public Finance Authority (Escrowed
to maturity) 7.30% 10/1/18-18 ................... 1,500,000 1,939,710
-----------
1,939,710
-----------
Transportation Revenue Bonds - 8.56%
Guam Highway (FSA) 6.30% 5/1/12 ................. 1,950,000 2,116,004
Puerto Rico Commonwealth Highway and
Transportation Revenue 5.25% 7/1/21 ............. 1,500,000 1,487,985
-----------
3,603,989
-----------
Utility Revenue Bonds - 5.11%
Puerto Rico Telephone Revenue Authority
5.50% 1/1/22 ................................... 2,120,000 2,151,863
-----------
2,151,863
-----------

<PAGE>

14 for tax-exempt income

Delaware-Voyageur Tax-Free Iowa Fund
Statement Of Net Assets (Continued)
Principal Market
Amount Value
Municipal Bonds (Continued)
Water And Sewer Revenue Bonds - 15.66%
Iowa Finance Authority - State Revolving Fund
Revenue 5.20% 5/1/23 ........................ $ 2,845,000 $ 2,846,478
Iowa Finance Authority - State Revolving Fund
Revenue 6.25% 5/1/24 ........................ 1,750,000 1,917,755
Puerto Rico Municipal Finance Authority (FSA)
6.00% 7/1/14 ................................ 1,700,000 1,834,232
-----------
6,598,465
-----------
Other Revenue Bonds - 22.68%
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 4.90% 6/1/99 .............. 50,000 50,186
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.00% 6/1/00 .............. 300,000 301,872
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.10% 6/1/01 .............. 315,000 317,722
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.20% 6/1/02 .............. 330,000 333,600
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.30% 6/1/03 .............. 345,000 349,502
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.40% 6/1/04 .............. 365,000 370,497
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.50% 6/1/05 .............. 385,000 391,526
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.60% 6/1/06 .............. 405,000 412,578
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.70% 6/1/07 .............. 425,000 433,649
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.80% 6/1/08 .............. 450,000 459,117
Bettendorf, Iowa Urban Renewal Tax Increment
Revenue - Series A 5.90% 6/1/09 .............. 800,000 816,136
Iowa Finance Authority - Correctional Facility
Revenue 5.70% 6/15/14 ....................... 2,000,000 2,124,300
Puerto Rico Public Building Authority Revenue
Series M 5.75% 7/1/15 ....................... 1,000,000 1,036,240
Puerto Rico Public Building Authority Revenue
Series M 5.50% 7/1/21 ....................... 1,100,000 1,114,795
Puerto Rico Public Building Authority Revenue
Series L 5.75% 7/1/16 ....................... 1,000,000 1,041,910
-----------
9,553,630
-----------
Total Municipal Bonds (cost of $38,842,710 ) . 41,635,365
-----------

<PAGE>

Total Market Value Of Securities Owned - 98.84%
(cost of $38,842,710) ....................................... $ 41,635,365
Receivables And Other Assets Net Of Liabilities - 1.16% ...... 489,073
------------
Net Assets Applicable To 4,186,111 Shares
($.01 Par Value) Outstanding - 100.00% ....................... $ 42,124,438
============

Net Asset Value - Tax-Free Iowa A Class
($38,342,922 / 3,810,314 shares) ............................ $ 10.06
============
Net Asset Value - Tax-Free Iowa B Class
($2,910,094/ 289,180 shares) ................................ $ 10.06
============
Net Asset Value - Tax-Free Iowa C Class
($871,422 / 86,617 shares) .................................. $ 10.06
============

Components Of Net Assets At December 31, 1997:
Common Stock, $.01 par value, 10,000,000,000 shares authorized
to the Fund with 1,000,000,000 shares allocated to Tax-Free
Iowa Fund A Class, 1,000,000,000 shares allocated to Tax-Free
Iowa Fund B Class and 1,000,000,000 shares allocated to
Tax-Free Iowa Fund C Class ................................... $ 41,180,950
Accumulated net realized loss on investments ................. (1,849,167)
Net unrealized appreciation on investments ................... 2,792,655
------------
Total Net Assets ............................................. $ 42,124,438
============

--------------
*For Pre-Refunded Bonds, the stated maturity is followed by the
year in which each bond is pre-refunded.

FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
<PAGE>

for tax-exempt income 15

Delaware-Voyageur Tax-Free Wisconsin Fund
Statement of Net Assets
December 31, 1997
Principal Market
Amount Value
Municipal Bonds - 94.26%
Higher Education Revenue Bonds - 2.54%
Madison Community Development Authority
Revenue - Edgewood College 6.25%
4/1/14 ....................................... $ 500,000 $ 529,126
Puerto Rico Educational Facility Revenue -
Polytechnic University 6.50% 8/1/24 ............ 295,000 321,515
----------
850,641
----------
Hospital Revenue Bonds - 4.38%
Puerto Rico Industrial Tourist Educational
Medical & Environmental Control Facilities
(Hospital Auxilio Mutuo Project - Series A)
5.50% 7/1/17 ................................. 500,000 522,975
Kaukauna Housing Authority Revenue -
St. Paul Home Inc. 6.10% 9/1/07 ............... 200,000 206,646
Superior Redevelopment Authority Revenue -
Superior Memorial Hospital 5.80% 5/1/10
(GNMA) ....................................... 250,000 263,190
Winnebago Housing Authority Neenah/Menasha
5.50% 10/1/15 ................................ 465,000 475,937
----------
1,468,748
----------
Housing Revenue Bonds - 23.70%
Dane County Multifamily Housing Revenue -
Forest Harbor Apartment Project 5.85%
7/1/11 ....................................... 125,000 130,190
Dane County Multifamily Housing Revenue -
Forest Harbor Apartment Project 5.90%
7/1/12 ....................................... 125,000 129,346
La Crosse Housing Authority Washburn Project
6.375% 10/1/16 ............................... 100,000 104,195
La Crosse Housing Authority Washburn Project
6.50% 10/1/26 ................................ 250,000 259,358
Milwaukee Redevelopment Authority Multifamily
Housing 6.30% 8/1/38 ......................... 1,455,000 1,529,147
New Berlin Multifamily Housing Authority
Revenue 7.125% 5/1/24 ........................ 500,000 535,090
Puerto Rico Housing Authority Single Family
Mortgage Revenue 6.85% 10/15/23 ............... 625,000 667,944
Puerto Rico Housing Bank And Finance Agency
(GNMA) 6.25% 4/1/29 .......................... 995,000 1,058,003
Superior Housing Authority - St. Francis Project
6.00% 1/20/22 (GNMA) ......................... 565,000 589,109
Superior Housing Authority - St. Francis Project
6.15% 7/20/31 (GNMA) ......................... 835,000 868,676
Waukesha Wisconsin Housing Westgrove Wood
Project 6.00% 12/1/31 (GNMA) .................. 1,500,000 1,577,130
Wauwatosa Multifamily Housing Revenue -
Harwood Place, Inc. 5.75% 12/1/08 ............. 480,000 490,819
----------
7,939,007
----------

Industrial Development Revenue Bonds - 18.82%
Hartford Community Development Authority Lease
Revenue 6.15% 12/1/09 ........................ 240,000 259,126

<PAGE>

Principal Market
Amount Value
Municipal Bonds (Continued)
Industrial Development Revenue Bonds (Continued)
Milwaukee Redevelopment Authority Revenue -
Goodwill Industries, Inc. 6.35% 10/1/09 ......... $2,000,000 $2,109,500
Omro Community Development Authority
5.875% 12/1/11 ................................. 300,000 320,157
Puerto Rico Commonwealth Industrial Development
Corporation General Purpose Revenue Series
B 5.375% 7/1/16 ................................ 1,000,000 1,014,800
Puerto Rico Industrial Medical Environmental
Revenue - PepsiCo Project 6.25% 11/15/13 ........ 1,100,000 1,209,670
Two Rivers Community Development Authority
Revenue Architectural Forest Products
6.35% 12/15/12 ................................. 250,000 257,345
West Allis Community Development Authority
Revenue - Poblocki Investments, Ltd.
5.90% 5/1/03 ................................... 1,080,000 1,134,119
----------
6,304,717
----------
Lease/Certificates of Participation - 14.89%
Cudahy Community Development Authority
Revenue 6.00% 6/1/11 ........................... 1,000,000 1,062,160
De Forest Redevelopment Lease Revenue
6.25% 2/1/18 ................................... 1,000,000 1,055,420
Little Chute Community Development Lease
Revenue 5.625% 3/1/19 .......................... 680,000 707,656
Madison Community Development Authority,
Monona Terrace Community Project
5.80% 3/1/05 ................................... 125,000 134,835
Madison Community Development Authority,
Monona Terrace Community Project
5.90% 3/1/06 ................................... 365,000 394,773
Madison Community Development Authority,
Monona Terrace Community Project
6.10% 3/1/10 ................................... 1,500,000 1,631,895
----------
4,986,739
----------
*Pre-Refunded Bonds/Escrowed to Maturity - 5.99%
Wisconsin Housing Finance Authority 6.10%
6/1/21-17 (FHA) ................................ 1,000,000 1,100,060
Virgin Islands Public Finance Authority 7.30%
10/1/18-18 (Escrowed to maturity) ............... 700,000 905,198
----------
2,005,258
----------
Power Authority Revenue Bonds - 4.67%
Puerto Rico Electric Power Authority Revenue
6.00% 7/1/14 ................................... 1,450,000 1,564,768
----------
1,564,768
----------
Special Utility Revenue Bonds - .90%
Puerto Rico Telephone Authority Revenue
5.75% 1/1/11 ................................... 285,000 302,824
----------
302,824
----------
Water and Sewer Revenue Bonds - 2.95%
Puerto Rico Commonwealth Infrastructure Financing
Authority Special Series A 5.00% 7/1/21 ......... 1,000,000 986,390
----------
986,390
----------

<PAGE>

16 for tax-exempt income

Delaware-Voyageur Tax-Free Wisconsin Fund
Statement Of Net Assets (Continued)
Principal Market
Amount Value
Municipal Bonds (Continued)
Other Revenue Bonds - 15.42%
Puerto Rico Municipal Finance Authority 6.00%
7/1/14 (FSA) ................................... $ 1,800,000 $ 1,942,128
Southeast Wisconsin Professional Baseball Park
District Lease Certificates Zero Coupon
12/15/15 (MBIA) ................................ 1,000,000 400,190
Southeast Wisconsin Professional Baseball Park
District Sales Revenue Zero Coupon
12/15/16 (MBIA) ................................ 1,115,000 420,110
Southeast Wisconsin Professional Baseball Park
District Sales Tax Revenue Zero Coupon
12/15/24 (MBIA) ................................ 1,500,000 369,360
Southeast Wisconsin Professional Baseball Park
District Sales Tax Revenue Zero Coupon
12/15/25 (MBIA) ................................ 1,250,000 292,200
Southeast Wisconsin Professional Baseball Park
District Sales Tax Revenue Zero Coupon
12/15/28 (MBIA) ................................ 3,500,000 689,465
Southeast Wisconsin Professional Baseball Park
District Sales Tax Revenue 5.80% 12/15/26
(MBIA) ......................................... 1,000,000 1,052,571
-----------
5,166,024
-----------
Total Municipal Bonds (cost $29,582,916) ........ 31,575,116
-----------
Number
of Shares

Short Term Investments - 4.84%
Norwest Advantage Municipal Money Market Fund 1,623,000 1,623,000
-----------
1,623,000
-----------
Total Short Term Investments (cost $1,623,000) 1,623,000
-----------

<PAGE>

Total Market Value of Securities Owned - 99.10%
(cost $31,205,916). . . . . . . . . . . . . . . . $33,198,116
Receivables and Other Assets Net of Liabilities - 0.90% 301,158
-----------
Net Assets Applicable to 3,347,653 Shares
($.01 Par Value) Outstanding - 100.00% $33,499,274
===========

Net Asset Value - Tax-Free Wisconsin Fund A Class
($30,878,953 / 3,085,809 shares). . . $10.01
===========
Net Asset Value - Tax-Free Wisconsin Fund B Class
($1,931,391 / 193,168 shares). . . . . . $10.00
===========

Net Asset Value - Tax-Free Wisconsin Fund C Class
($688,930 / 68,676 shares). . . . . . . . . $10.03
===========

Components of Net Assets at December 31, 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 Wisconsin Fund A Class, 10,000,000,000 shares
allocated to Tax-Free Wisconsin B Class, and 10,000,000,000
shares allocated to Tax-Free Wisconsin Fund C Class $31,945,211
Accumulated net realized loss on investments (438,137)
Net unrealized appreciation on investments 1,992,200
-----------
Total net assets. . . . . . . . . . . . . . . . . $33,499,274
===========

* For Pre-Refunded Bonds, the stated maturity is followed by the
year in which each bond is pre-refunded.

FHA - Insured by the Federal Housing Authority
FSA - Insured by the Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association

<PAGE>

for tax-exempt income 17

Delaware-Voyageur Tax-Free Kansas Fund
Statement of Net Assets
December 31, 1997

Principal Market
Amount Value
Municipal Bonds - 96.78%
General Obligation Bonds - 22.10%
Allen County Unified School District #258
6.875% 9/1/10 (AMBAC) ............................. $ 240,000 $ 291,655
Ellsworth County, Kansas - Series 1, 5.75%
9/1/17 ............................................ 250,000 265,380
Johnson County 6.125% 9/1/12 ........................ 600,000 645,114
Linn County Unified School District 5.70% 11/1/16 ... 500,000 526,860
Maize Unified School District #266 Series 1994
5.875% 9/1/12 (FSA) ............................... 250,000 263,655
Sedgwick County Renwick Unified School District
6.15% 11/1/09 (AMBAC) ............................. 250,000 278,663
Sedgwick County Unified School District #265
5.50% 10/1/13 (FSA) ............................... 250,000 259,805
Shawnee County Unified School District #437
5.25% 9/1/10 (AMBAC) .............................. 130,000 133,812
Shawnee County Unified School District #501
5.75% 2/1/11 (FGIC) ............................... 200,000 209,000
Summer County Unified School District #356
5.75% 9/1/11 (MBIA) ............................... 250,000 269,020
-----------
3,142,964
-----------
Higher Education Revenue Bonds - 11.30%
Kansas Development Finance Authority - Kansas
Board of Regents - Wichita State University
5.875% 6/1/17 (AMBAC) ............................. 300,000 316,059

Puerto Rico Educational Facility Revenue -
Polytechnic University 6.50% 8/1/24 ................. 1,185,000 1,291,508
-----------
1,607,567
-----------
Hospital Revenue Bonds - 11.66%
Kansas Development Finance Authority
Healthcare Facility Revenue For Stormont-Vail
Healthcare, Inc. 5.80% 11/15/16 (MBIA) ............. 250,000 266,180
Lawrence, KS For Lawrence Memorial Hospital
6.20% 7/1/19 ...................................... 250,000 266,015
Olathe, KS Health Facility For Evangelical Lutheran
Good Samaritan Project 6.00% 5/1/19 (AMBAC) ........ 250,000 267,878
Olathe, KS Health Facilities Rev. For Olathe
Medical Center - 94A 5.875%
9/1/16 (AMBAC) .................................... 100,000 103,375
Shawnee County Sister of Charity Leavenworth
Hospital 5.00% 12/1/23 (FSA) ....................... 250,000 246,768
Wichita,Kansas Health Care Improvement
Industrial Revenue(The Kansas Masonic
Home - Series VI) 6.25% 12/1/17 .................... 500,000 507,895
-----------
1,658,111
-----------
Housing Revenue Bonds - 23.89%
Olathe Kansas Multifamily Housing - Reference Bristol
Pointe Apartments PJ-A 5.60% 11/1/17 ............... $ 350,000 $ 356,797
Kansas State Development Finance Authority
Multifamily Revenue - Oak Ridge Park Apartments
Project - Series F 6.625% 8/1/29 ................... 1,000,000 1,061,400

<PAGE>

Principal Market
Amount Value
Municipal Bonds (Continued)
Housing Revenue Bonds (Continued)
Kansas State Multifamily Housing Park Apartments
Project 6.00% 12/1/21 (FNMA) .................... $ 600,000 $ 626,682
Kansas D.F.A. Rev for Martin Creek Multifamily
Housing Project 6.50% 8/1/24 (FHA) .............. 50,000 53,286
Olathe Multifamily Deerfield Apartments Series
1994A 6.45% 6/1/19 (FNMA) ....................... 250,000 267,353
Olathe, Kansas Multifamily Housing - Jefferson
Place Apartments Project - B 6.10% 7/1/22 ....... 1,000,000 1,032,030
-----------
3,397,548
-----------
Industrial Development Revenue Bonds - 0.37%
Wamego Pollution Control Revenue Western
Resources Inc. Project 6.00% 2/1/33 (MBIA) ...... 50,000 52,532
-----------
52,532
-----------
*Pre-Refunded/Escrowed to Maturity
Bonds 7.99%
Douglas County Lawrence Unified School District
#497 6.00% 9/1/15-03 ........................... 250,000 268,645
Jefferson County Unified School District #340
6.35% 9/1/15-04 (FSA) .......................... 250,000 279,360
Kansas City Community College Student Center
6.25% 5/15/20-02 (MBIA) ........................ 300,000 324,240
Shawnee County Unified School District #345 5.75%
9/1/11-04 (MBIA) ................................ 250,000 264,245
-----------
1,136,490
-----------
Public Power Authority Bonds- 3.51%
Puerto Rico Electric Power Authority
5.25% 7/1/21. ................................. 500,000 499,325
-----------
499,325
-----------
Transportation Revenue Bonds - 0.72%
Kansas Department of Transportation
5.375% 3/1/13................................... 100,000 102,584
-----------
102,584
-----------
Water and Sewer Revenue Bonds - 15.24%
Atchison Water & Sewer Series 96A 5.70%
9/1/11 (AMBAC) ................................ 150,000 157,949
Atchison Water & Sewer Series 96A 5.80%
9/1/12 (AMBAC) ................................ 270,000 285,989
Haysville Water & Sewer 5.80% 10/1/16 (FSA) ..... 250,000 266,545
Johnson County Water Revenue 5.25% 12/1/15 ...... 175,000 177,828
Kansas City Utility System Revenue 6.375%
9/1/23 (FGIC) ................................. 900,000 1,009,413
Kansas Development Finance Authority Water
Pollution Control Sewer Revenue
6.00% 11/1/14 ................................. 250,000 270,175
-----------
2,167,899
-----------

Total Municipal Bonds ($12,699,269) ............. 13,765,020
===========

<PAGE>

18 for tax-exempt income

Delaware-Voyageur Tax-Free Kansas Fund
Statement Of Net Assets (Continued)
Number of Market
Shares Value
Short-Term Investments - 1.96%
Norwest Advantage Municipal Money
Market Fund ...................................... 278,000 $ 278,000
------------
278,000
------------
Total Short Term Investments (cost $278,000) ...... 278,000
------------

Total Market Value of Securities Owned - 98.74%
(cost $12,977,269) .............................. 14,043,020
Receivables and Other Assets Net of
Liabilities - 1.26% . 179,822
------------
Net Assets Applicable to 1,285,447 Shares
($.01 Par Value) Outstanding - 100.00% ........... $ 14,222,842
============

Net Asset Value - Tax-Free Kansas Fund A Class
($10,662,844 / 963,984 shares) .................. $ 11.06
============

Net Asset Value - Tax-Free Kansas Fund B Class
($3,451,761 / 311,671 shares) ................... $ 11.08
============

Net Asset Value - Tax-Free Kansas Fund C Class
($108,237 / 9,792 shares) ....................... $ 11.05
============

Components of Net Assets at December 31, 1997:
Common stock, $.01 par value, unlimited shares
authorized to the Tax-Free Kansas Fund ........... $ 13,236,239
Accumulated net realized loss on investments ...... (79,148)
Net unrealized appreciation on investments ........ 1,065,751
------------
Total net assets .................................. $ 14,222,842
============

AMBAC - Insured by the AMBAC Indemnity Corporation
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by the Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association

<PAGE>

for tax-exempt income 19

The Delaware-Voyageur Funds
Statements Of Operations
Year Ended December 31, 1997
<TABLE>
<CAPTION>

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund
----------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Interest .......................................................... $ 3,411,170 $ 2,301,953 $ 1,715,466 $ 761,738
----------- ----------- ----------- -----------
Expenses:
Management fees ................................................... 298,156 207,954 148,926 66,097
Dividend disbursing and transfer agent fees and expenses .......... 66,505 58,042 34,328 16,068
Distribution expense .............................................. 171,681 93,563 77,376 49,017
Custody fees and other expenses ................................... 37,647 8,655 17,034 1,839
Registration fees ................................................. 4,061 8,536 9,639 1,943
Reports and statements to shareholders ............................ 19,723 23,714 22,197 5,249
Accounting and administration ..................................... 20,879 15,658 11,345 5,065
Professional fees ................................................. 16,912 12,191 14,090 13,671
Directors' fees ................................................... 1,702 1,333 1,086 723
----------- ----------- ----------- -----------
637,266 429,646 336,021 159,672
Less expenses absorbed or waived .................................. (14,788) (23,043) (23,481) (25,092)
----------- ----------- ----------- -----------
Total Expenses .................................................... 622,478 406,603 312,540 134,580
----------- ----------- ----------- -----------
Net Investment Income ............................................. 2,788,692 1,895,350 1,402,926 627,158
----------- ----------- ----------- -----------
Net Realized And Unrealized Gain (Loss) On Investments:
Net realized gain (loss) on investments: .......................... 176,623 (58,844) 190,944 127,741
Net change in unrealized appreciation/depreciation: ............... 2,344,920 1,936,561 1,023,956 513,267
----------- ----------- ----------- -----------

Net Realized And Unrealized Gain (Loss) On Investments: ........... 2,521,543 1,877,717 1,214,900 641,008
----------- ----------- ----------- -----------
Net Increase In Net Assets Resulting From Operations .............. $ 5,310,235 $ 3,773,067 $ 2,617,826 $ 1,268,166
=========== =========== =========== ===========

Net Asset Value And Price Per Share - A Class:
Net asset value A Class (A) ...................................... $ 10.81 $ 10.06 $ 10.01 $ 11.06
Sales Charge (3.75% of offering price or 3.90%, 3.88%, 3.90%
and 3.89% of the amount invested per share for Tax-Free
Missouri Insured Fund, Tax-Free Iowa Fund, Tax-Free Wisconsin
Fund, and Tax-Free Kansas Fund, respectively) (B) ........... 0.42 0.39 0.39 0.43
----------- ----------- ----------- -----------
Offering price .................................................... $ 11.23 $ 10.45 $ 10.40 $ 11.49
=========== =========== =========== ===========
</TABLE>

(A) Net asset value per share, as illustrated, is the estimated amount
which would be paid upon redemption or repurchase of shares.
(B) See Buying Shares in the current Prospectus for purchases of
$100,000 or more.

See accompanying notes

<PAGE>

20 for tax-exempt income

The Delaware-Voyageur Funds
Statements Of Changes In Net Assets
<TABLE>
<CAPTION>

Tax-Free Missouri Insured Fund Tax-Free Iowa Fund
Year Ended Year Ended Year Ended 6/4/96*
12/31/97 12/31/96 12/31/97 to 12/31/96
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>

Increase In Net Assets From Operations:
Net investment income ................... $ 2,788,692 $ 2,877,421 $ 1,895,350 $ 2,019,520
Net realized gain (loss) on investments . 176,623 (523,769) (58,844) (201,680)
Net change in unrealized appreciation/
depreciation ...................... 2,344,920 (403,336) 1,936,561 (803,926)
------------ ------------ ------------ ------------

Net increase in net assets
resulting from operations ......... 5,310,235 1,950,316 3,773,067 1,013,914
------------ ------------ ------------ ------------

Distributions To Shareholders From:
Net investment income:
A Class ............................... (2,362,959) (2,454,463) (1,786,140) (1,953,806)
B Class ............................... (458,482) (376,995) (84,786) (48,161)
C Class ............................... (7,784) (5,509) (27,910) (22,832)
------------ ------------ ------------ ------------
(2,829,225) (2,836,967) (1,898,836) (2,024,799)
------------ ------------ ------------ ------------

Capital Share Transactions:
Proceeds from shares sold:
A Class ............................... 2,768,917 5,650,060 3,470,467 5,783,953
B Class ............................... 2,097,849 4,705,880 1,320,305 791,024
C Class ............................... 100,000 156,103 247,082 262,735

Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
A Class ............................... 1,353,277 1,297,141 1,211,605 1,284,358
B Class ............................... 349,671 250,807 64,063 37,397
C Class ............................... 5,484 3,283 10,869 4,155
------------ ------------ ------------ ------------
6,675,198 12,063,274 6,324,391 8,163,622
------------ ------------ ------------ ------------

Cost of shares repurchased:
A Class ............................... (6,861,721) (7,034,424) (8,103,037) (8,405,045)
B Class ............................... (1,840,881) (655,723) (232,768) --
C Class ............................... (42,129) (27,281) (90,968) (49,832)
------------ ------------ ------------ ------------
(8,744,731) (7,717,428) (8,426,773) (8,454,877)
------------ ------------ ------------ ------------

Increase (decrease) in net assets derived
from capital share transactions ....... (2,069,533) 4,345,846 (2,102,382) (291,255)
------------ ------------ ------------ ------------

Net Increase (Decrease) In Net Assets ... 411,477 3,459,195 (228,151) (1,302,140)

Net Assets:
Beginning of year ....................... 59,885,472 56,426,277 42,352,589 43,654,729
------------ ------------ ------------ ------------

End of year ............................. $ 60,296,949 $ 59,885,472 $ 42,124,438 $42,352,589
============ ============ ============ ===========

</TABLE>

<PAGE>

Tax-Free Wisconsin Fund Tax-Free Kansas Fund
Year Ended Year Ended Year Ended Year Ended
12/31/97 12/31/96 12/31/97 12/31/96
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>

Increase In Net Assets From Operations:
Net investment income ................... $ 1,402,926 $ 1,376,191 $ 627,158 $ 584,317
Net realized gain (loss) on investments . 190,944 88,723 127,741 (75,990)
Net change in unrealized appreciation/
depreciation ...................... 1,023,956 (417,975) 513,267 (87,456)
------------ ------------ ------------ ------------

Net increase in net assets
resulting from operations ......... 2,617,826 1,046,939 1,268,166 420,871
------------ ------------ ------------ ------------

Distributions To Shareholders From:
Net investment income:
A Class ............................... (1,354,012) (1,309,246) (506,768) (513,198)
B Class ............................... (65,438) (40,094) (123,076) (68,183)
C Class ............................... (26,356) (13,973) (4,201) (2,305)
------------ ------------ ------------ ------------
(1,445,806) (1,363,313) (634,045) (583,686)
------------ ------------ ------------ ------------

Capital Share Transactions:
Proceeds from shares sold:
A Class ............................... 7,121,843 4,977,290 1,225,439 1,557,809
B Class ............................... 505,833 596,712 948,070 1,735,044
C Class ............................... 347,276 557,261 74,506 78,467

Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
A Class ............................... 758,408 758,119 297,771 276,442
B Class ............................... 42,097 25,436 83,728 33,834
C Class ............................... 24,405 11,846 4,294 2,036
------------ ------------ ------------ ------------
8,799,862 6,926,664 2,633,808 3,683,632
------------ ------------ ------------ ------------

Cost of shares repurchased:
A Class ............................... (6,376,585) (3,573,034) (1,511,541) (2,165,871)
B Class ............................... (20,571) (4,141) (135,792) (50,509)
C Class ............................... (262,082) (92,971) (66,004) (30,130)
------------ ------------ ------------ ------------
(6,659,238) (3,670,146) (1,713,337) (2,246,510)
------------ ------------ ------------ ------------

Increase (decrease) in net assets derived
from capital share transactions ....... 2,140,624 3,256,518 920,471 1,437,122
------------ ------------ ------------ ------------

Net Increase (Decrease) In Net Assets ... 3,312,644 2,940,144 1,554,592 1,274,307

Net Assets:
Beginning of year ....................... 30,186,630 27,246,486 12,668,250 11,393,943
------------ ------------ ------------ ------------

End of year ............................. $ 33,499,274 $ 30,186,630 $ 14,222,842 $ 12,668,250
============ ============ ============ ============

</TABLE>

See accompanying notes

- ---------------
* Commencement of Operations.

<PAGE>

for tax-exempt income 21

The Delaware-Voyageur Funds
Financial Highlights

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Insured Fund - Class A
------------------------------------------------------------------------------------
Two
Year ended Year ended Year ended months ended Year ended Period from(1)
12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94 11/2/92 to
10/31/93

<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.370 $10.540 $9.270 $9.370 $10.820 $10.000

Income from investment operations:
Net investment income 0.504 0.520 0.520 0.100 0.550 0.550
Net realized and unrealized gain (loss)
from investments 0.446 (0.180) 1.290 (0.110) (1.430) 0.890
------- ------- ------ ------ ------- -------
Total from investment operations 0.950 0.340 1.810 (0.010) (0.880) 1.440
------- ------- ------ ------ ------- -------

Less dividends and distributions:
Dividends from net investment income (0.510) (0.510) (0.540) (0.090) (0.540) (0.550)
Distributions from net realized gain on
security transactions -- -- -- -- (0.030) (0.070)
------- ------- ------ ------ ------- -------
Total dividends and distributions (0.510) (0.510) (0.540) (0.090) (0.570) (0.620)
------- ------- ------ ------ ------- -------
Net asset value, end of period $10.810 $10.370 $10.540 $9.270 $9.370 $10.820
======= ======= ======= ====== ====== =======

Total Return(2). . . . . . . 9.43% 3.41% 19.96% (0.07%) (8.28%) 14.74%

Ratios and supplemental data:
Net assets, end of period (000 omitted) $48,565 $49,301 $50,211 $37,790 $37,384 $30,270
Ratio of expenses to average net assets 0.91% 0.71% 0.50% 0.11%(3) 0.15% 0.00%
Ratio of expenses to average net assets
prior to expense limitation 0.93% 1.03% 1.07% 1.12%(3) 1.13% 1.25%3
Ratio of net investment income to average
net assets 4.81% 5.05% 5.25% 6.00%(3) 5.39% 4.82%(3)
Ratio of net investment income to average
net assets prior to expense limitation 4.79% 4.73% 4.68% 4.99%(3) 4.41% 3.57%(3)
Portfolio turnover 12% 28% 31% 8% 32% 76%
</TABLE>

- -------------------
1 Commencement of operations.
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 sale charge.
3 Annualized.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.

<PAGE>

22 for tax-exempt income

Financial Highlights (Continued)

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Insured Fund - Class B
----------------------------------------
Two Period
Year Year Year Months from
Ended Ended Ended Ended 3/12/94(1) to
12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $10.370 $10.540 $ 9.270 $9.370 $10.300

Income from investment operations:
Net investment income 0.425 0.460 0.480 0.080 0.330
Net realized and unrealized gain
(loss) from investments 0.451 (0.180) 1.280 (0.100) (0.940)
------- ------- ------- ------ -------
Total from investment operations ........... 0.876 0.280 1.760 (0.020) (0.610)
------- ------- ------- ------ -------

Less dividends and distributions:
Dividends from net investment income (0.436) (0.450) (0.490) (0.080) (0.320)
Distributions from net realized gain
on security transactions ................. -- -- -- -- --
------- ------- ------- ------ -------
Total dividends and distributions .......... (0.436) (0.450) (0.490) (0.080) (0.320)
------- ------- ------- ------ -------
Net asset value, end of period ................. $10.810 $10.370 $10.540 $9.270 $ 9.370
======= ======= ======= ====== =======

Total Return(2)................................. 8.66% 2.93% 19.18% (0.14%) (6.16%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) .... $11,507 $10,432 $6,195 $2,742 $1,701
Ratio of expenses to average net assets .... 1.61% 1.29% 0.97% 0.60%(3) 0.49%(3)
Ratio of expenses to average net assets
prior to expense limitation .............. 1.63% 1.78% 1.81% 1.84%(3) 1.83%(3)
Ratio of net investment income to
average net assets ....................... 4.11% 4.46% 4.70% 5.32%(3) 4.89%(3)
Ratio of net investment income to average
net assets prior to expense limitation ... 4.09% 3.97% 3.86% 4.08%(3) 3.55%(3)
Portfolio turnover ......................... 12% 28% 31% 8% 32%

</TABLE>

<PAGE>

Tax-Free Missouri Insured Fund - Class C
----------------------------------------
Period
Year Year from
Ended Ended 11/11/95(1) to
12/31/97(4) 12/31/96 12/31/95

<S> <C> <C> <C>
Net asset value, beginning of period ........... $10.370 $10.540 $10.360

Income from investment operations:
Net investment income 0.405 0.430 0.060
Net realized and unrealized gain
(loss) from investments 0.455 (0.180) 0.170
------- ------- -------
Total from investment operations ........... 0.860 0.250 0.230
------- ------- -------

Less dividends and distributions:
Dividends from net investment income (0.420) (0.420) (0.050)
Distributions from net realized gain
on security transactions ................. -- -- --
------ ------ -------
Total dividends and distributions .......... (0.420) (0.420) (0.050)
------- ------- -------
Net asset value, end of period ................. $10.810 $10.370 $10.540
======= ======= =======

Total Return(2)................................. 8.49% 2.48% 2.24%

Ratios and supplemental data:
Net assets, end of period (000 omitted) .... $225 $152 $20
Ratio of expenses to average net assets .... 1.74% 1.62% 1.22%(3)
Ratio of expenses to average net assets
prior to expense limitation .............. 1.76% 1.78% 1.55%(3)
Ratio of net investment income to
average net assets ....................... 3.98% 4.10% 4.09%(3)
Ratio of net investment income to average
net assets prior to expense limitation ... 3.96% 3.94% 3.76%(3)
Portfolio turnover ......................... 12% 28% 31%

</TABLE>

1 Commencement of operations.
2 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
3 Annualized.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.

<PAGE>

for tax-exempt income 23

Financial Highlights (Continued)

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax-Free Iowa Fund - Class A
-------------------------------------------------------------------------------
Year ended Year ended Year ended Four months ended Year ended
12/31/97(3) 12/31/96 12/31/95 12/31/94 8/31/94
------------ ---------- ---------- ----------------- ----------

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $9.620 $9.830 $8.560 $9.260 $10.000
Income from investment operations:
Net investment income...................... 0.449 0.440 0.450 0.170 0.490
Net realized and unrealized gain (loss) from
investments ............................... 0.440 (0.210) 1.290 (0.720) (0.740)
------- ------ ------ ------ -------
Total from investment operations............... 0.889 0.230 1.740 (0.550) (0.250)
------- ------ ------ ------ -------
Less dividends and distributions:
Dividends from net investment income....... (0.449) (0.440) (0.470) (0.150) (0.490)
Distributions from net realized gain on
security transactions...................... -- -- -- -- --
------- ------ ------ ------ -------
Total dividends and distributions.......... (0.449) (0.440) (0.470) (0.150) (0.490)
------- ------ ------ ------ -------
Net asset value, end of period ................ $10.060 $9.620 $9.830 $8.560 $ 9.260
======= ====== ====== ====== =======

Total Return(1)................................ 9.49% 2.56% 20.80% (5.86%) (2.67%)

Ratios and supplemental data:
Net assets, end of period (000 omitted).... $38,343 $40,037 $42,374 $32,373 $38,669
Ratio of expenses to average net assets.... 0.91% 0.92% 0.72% 0.11%(2) 0.12%
Ratio of expenses to average net assets
prior to expense limitation ........... 0.97% 1.06% 1.06% 1.25%(2) 1.25%
Ratio of net investment income to average
net assets ............................ 4.62% 4.68% 4.88% 5.71%(2) 4.89%
Ratio of net investment income to average
net assets prior to expense limitation 4.56% 4.54% 4.54% 4.57%(2) 3.76%
Portfolio turnover ........................ 14% 14% 21% 7% 119%
</TABLE>

1 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
2 Annualized.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
<PAGE>

24 for tax-exempt income

Financial Highlights (Continued)

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax-Free Iowa Fund - Class B Tax-Free Iowa Fund - Class C
---------------------------- ----------------------------
Period from Period from
Year Year 3/24/95(1) Year Year 1/4/95(1)
ended ended to ended ended to
12/31/97(4) 12/31/96 12/31/95 12/31/97(4) 12/31/96 12/31/95
----------- -------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $ 9.610 $9.830 $9.180 $ 9.610 $9.830 $8.550

Income from investment operations:
Net investment income ................................ 0.366 0.380 0.310 0.360 0.360 0.370
Net realized and unrealized gain (loss) from
investments ...................................... 0.457 (0.220) 0.640 0.456 (0.220) 1.280
------- ------ ------ ------- ------ ------
Total from investment operations ..................... 0.823 0.160 0.950 0.816 0.140 1.650
------- ------ ------ ------- ------ ------
Less dividends and distributions:
Dividends from net investment income ................. (0.373) (0.380) (0.300) (0.366) (0.360) (0.370)
Distributions from net realized gain on
security transactions............................. -- -- -- -- -- --
------- ------ ------ ------- ------ ------
Total dividends and distributions .................... (0.373) (0.380) (0.300) (0.366) (0.360) (0.370)
------- ------ ------ ------- ------ ------
Net asset value, end of period ........................... $10.060 $9.610 $9.830 $10.060 $9.610 $9.830
======= ====== ====== ======= ====== ======

Total Return(2)........................................... 8.75% 1.76% 10.62% 8.68% 1.56% 19.66%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............. $2,910 $1,645 $819 $871 $670 $462
Ratio of expenses to average net assets .............. 1.67% 1.61% 1.28%(3) 1.74% 1.75% 1.61%(3)
Ratio of expenses to average net assets prior
to expense limitation ............................ 1.73% 1.81% 1.65%(3) 1.80% 1.81% 1.72%(3)
Ratio of net investment income to average net assets . 3.86% 3.97% 4.06%(3) 3.79% 3.82% 3.74%(3)
Ratio of net investment income to average net assets
prior to expense limitation ...................... 3.80% 3.77% 3.69%(3) 3.73% 3.76% 3.63%(3)
Portfolio turnover ................................... 14% 14% 21% 14% 14% 21%
</TABLE>
- ---------------
1 Commencement of operations.
2 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
3 Annualized.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.

<PAGE>

for tax-exempt income 25

Financial Highlights (Continued)

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax -Free Wisconsin Fund - Class A
----------------------------------------------------------------------------
Year ended Year ended Year ended Four months ended Year ended
12/31/97(3) 12/31/96 12/31/95 12/31/94 8/31/94

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $9.640 $9.780 $8.740 $9.280 $10.000
------ ------ ------ ------ -------
Income from investment operations:
Net investment income ................... 0.466 0.460 0.480 0.160 0.490
Net realized and unrealized gain (loss)
from investments ....................... 0.383 (0.140) 1.040 (0.550) (0.720)
------ ------ ------ ------ -------

Total from investment operations ........ 0.849 0.320 1.520 (0.390) (0.230)
------ ------ ------ ------ -------

Less dividends and distributions:
Dividends from net investment income .... (0.479) (0.460) (0.480) (0.150) (0.490)
Distributions from net realized gain on
security transactions -- -- -- -- --
------ ------ ------ ------ -------
Total dividends and distributions ....... (0.479) (0.460) (0.480) (0.150) (0.490)
------ ------ ------ ------ -------
Net asset value, end of period .............. $10.010 $9.640 $9.780 $8.740 $9.280
======= ====== ====== ====== =======

Total Return1 .............................. 9.07% 3.49% 17.74% (4.12%) (2.40%)

Ratios and supplemental data:
Net assets, end of period (000 omitted) . $30,879 $28,292 $26,449 $20,167 $16,093
Ratio of expenses to average net assets . 0.99% 0.98% 0.88% 0.08%2 0.04%
Ratio of expenses to average net assets
prior to expense limitation ............ 1.07% 1.09% 1.09% 1.25%2 1.25%
Ratio of net investment income to
average net assets .................... 4.76% 4.90% 5.05% 5.54%2 4.89%
Ratio of net investment income to average
net assets prior to expense limitation 4.68% 4.79% 4.84% 4.37%2 3.68%
Portfolio turnover ...................... 30% 38% 12% 20% 86%

</TABLE>

2 Annualized.

3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
<PAGE>

26 for tax-exempt income

Financial Highlights (Continued)

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax-Free Wisconsin Fund - Class B Tax-Free Wisconsin Fund - Class C

Year Year 4/22/95(1) Year Year 3/28/95(1)
Year ended ended to ended ended to
12/31/97(4) 12/31/96 12/31/95 12/31/97(4) 12/31/96 12/31/95

<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $9.630 $9.770 $9.390 $9.660 $9.790 $9.340

Income from investment operations:
Net investment income.............................. 0.395 0.410 0.280 0.380 0.390 0.300
Net realized and unrealized gain (loss)
from investments ................................ 0.382 (0.140) 0.370 0.390 (0.130) 0.440
------- ------ ------ ------- ------ ------
Total from investment operations................... 0.777 0.270 0.650 0.770 0.260 0.740
------- ------ ------ ------- ------ ------

Less dividends and distributions:
Dividends from net investment income............... (0.407) (0.410) (0.270) (0.400) (0.390) (0.290)
Distributions from net realized gain on
security transactions .......................... -- -- -- -- -- --
------- ------ ------ ------- ------ ------
Total dividends and distributions.................. (0.407) (0.410) (0.270) (0.400) (0.390) (0.290)
------- ------ ------ ------- ------ ------
Net asset value, end of period......................... $10.000 $9.630 $9.770 $10.030 $9.660 $9.790
======= ====== ====== ======= ====== ======

Total Return(2)........................................ 8.27% 2.84% 7.08% 8.16% 2.74% 8.06%

Ratios and supplemental data:
Net assets, end of period (000 omitted)............ $1,931 $1,339 $725 $689 $555 $73
Ratio of expenses to average net assets............ 1.72% 1.66% 1.45%(3) 1.81% 1.75% 1.77%(3)
Ratio of expenses to average net assets
prior to expense limitation .................... 1.80% 1.85% 1.70%(3) 1.89% 1.83% 1.77%(3)
Ratio of net investment income to average
net assets...................................... 4.03% 4.37% 4.31%(3) 3.94% 4.12% 4.04%(3)
Ratio of net investment income to average
net assets prior to expense limitation ......... 3.95% 4.18% 4.06%(3) 3.86% 4.04% 4.04%(3)
Portfolio turnover................................. 30% 38% 12% 30% 38% 12%
</TABLE>
- -----------
1 Commencement of operations.
2 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
3 Annualized.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
<PAGE>

for tax-exempt income 27

Financial Highlights (Continued)

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax-Free Kansas Fund - Class A
----------------------------------------------------------------------------------
Two Period From
Year ended Year ended Year ended months ended Year ended 11/30/92(1)
12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94 to 10/31/93
------- ------- ------ ------------ --------- ------------

<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $10.560 $10.730 $9.500 $9.630 $10.850 $10.000

Income from investment operations:
Net investment income ..................... 0.526 0.520 0.560 0.090 0.570 0.560
Net realized and unrealized gain (loss)
from investments ................. 0.506 (0.170) 1.220 (0.130) (1.210) 0.850
------- ------- ------ ------ ------- -------
Total from investment operations .......... 1.032 0.350 1.780 (0.040) (0.640) 1.410
------- ------- ------ ------ ------- -------

Less dividends and distributions:
Dividends from net investment income ...... (0.532) (0.520) (0.550) (0.090) (0.570) (0.560)
Distributions from net realized gain on
security transactions (0.010)
------- ------- ------ ------ ------- -------
Total dividends and distributions ......... (0.532) (0.520) (0.550) (0.090) (0.580) (0.560)
------- ------- ------ ------ ------- -------
Net asset value, end of period ................ $11.060 $10.560 $10.730 $9.500 $9.630 $10.850
======= ======= ======= ====== ======= =======

Total Return(2)................................ 10.06% 3.43% 19.13% (0.38%) (6.10%) 14.49%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ... $10,663 $10,176 $10,677 $7,355 $6,469 $2,057
Ratio of expenses to average net assets ... 0.84% 0.83% 0.37% 0.01%3 0.06% 0.00%
Ratio of expenses to average net assets
prior to expense limitation ............. 1.03% 1.21% 1.11% 1.25%3 1.25% 1.25%(3)
Ratio of net investment income to
average net assets ...................... 4.92% 4.97% 5.32% 5.88%3 5.30% 5.26%(3)
Ratio of net investment income to average
net assets prior to expense limitation .. 4.73% 4.59% 4.58% 4.64%3 4.11% 4.01%(3)
Portfolio turnover ........................ 30% 56% 19% 0% 38% 28%
</TABLE>

- -------------
1 Commencement of operations.
2 Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
3 Annualized.
4 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.

<PAGE>

28 for tax-exempt income

Financial Highlights (Continued)

Selected data for each share of the Fund outstanding throughout each
period were as follows:
<TABLE>
<CAPTION>

Tax-Free Kansas Fund - Class B Tax-Free Kansas Fund - Class C
------------------------------ ------------------------------

Year Year 4/8/95(1) Year Year 4/12/95(1)
ended ended to ended ended to
12/31/97(4) 12/31/96 12/31/95 12/31/97(4) 12/31/96 12/31/95

<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.570 $10.740 $10.190 $10.550 $10.720 $10.200

Income from investment operations:
Net investment income .................................. 0.440 0.450 0.340 0.439 0.430 0.320
Net realized and unrealized gain (loss)
from investments ................................... 0.516 (0.170) 0.540 0.504 (0.170) 0.510
------- ------- ------- ------- ------- -------
Total from investment operations ....................... 0.956 0.280 0.880 0.943 0.260 0.830
------- ------- ------- ------- ------- -------

Less dividends and distributions:
Dividends from net investment income ................... (0.446) (0.450) (0.330) (0.443) (0.430) (0.310)
Distributions from net realized gain
on security transactions ............................ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total dividends and distributions ...................... (0.446) (0.450) (0.330) (0.443) (0.430) (0.310)
------- ------- ------- ------- ------- -------
Net asset value, end of period ............................. $11.080 $10.570 $10.740 $11.050 $10.550 $10.720
======= ======= ======= ======= ======= =======

Total Return(2)............................................. 9.28% 2.69% 8.76% 9.17% 2.52% 8.29%

Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $3,452 $2,402 $677 $108 $90 $40
Ratio of expenses to average net assets ................ 1.61% 1.61% 0.94% 31.64% 1.77% 1.27%(3)
Ratio of expenses to average net assets prior to \
expense limitation ................................. 1.80% 2.00% 1.68%3 1.83% 2.00% 1.79%(3)
Ratio of net investment income to average net assets ... 4.15% 4.16% 4.63%3 4.12% 4.02% 4.21%(3)
Ratio of net investment income to average net
assets prior to expense limitation ................. 3.96% 3.77% 3.89%3 3.93% 3.79% 3.69%(3)
Portfolio turnover ..................................... 30% 56% 19% 30% 56% 19%

</TABLE>

for tax-exempt income 29

The Delaware-Voyageur Funds
Notes to Financial Statements
December 31, 1997

Delaware-Voyageur Tax-Free Missouri Insured Fund (formerly Voyageur Missouri
Insured Tax Free Fund)("Tax-Free Missouri Insured Fund") a series of the
Voyageur Investment Trust, Delaware-Voyageur Tax-Free Iowa Fund (formerly
Voyageur Iowa Tax Free Fund)("Tax-Free Iowa Fund") and Delaware-Voyageur
Tax-Free Wisconsin Fund (formerly Voyageur Wisconsin Tax Free)("Tax-Free
Wisconsin Fund"), series of the Voyageur Mutual Funds, Inc., and
Delaware-Voyageur Tax-Free Kansas Fund (formerly Voyageur Kansas Tax Free
Fund)("Tax-Free Kansas Fund"), a series of the Voyageur Investment Trust,
(each referred to as a "Fund" or collectively as the "Funds") are registered
under the Investment Company Act of 1940 (as amended) as non-diversified,
open-end management investment companies. Tax-Free Missouri 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.
The Tax-Free Iowa Fund and the Tax-Free Wisconsin Fund seek high current
income free from both federal and state income taxes by investing in
investment grade municipal bonds. The Tax-Free Kansas Fund seeks high current
income free from both federal and state income taxes and local intangibles tax
by investing in investment grade municipal bonds. The Funds each offer 3
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 acquired 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, and 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 Funds'
Board of Directors.

Federal Income Taxes - Each fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes has been made in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles.

Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
the Funds on the basis of daily net assets of each class. Distribution
expenses relating to a specific class are charged directly to that class.

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 and market
premium 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 are distributed annually.

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>

3. Investment Management and Other Transactions with Affiliates
Commencing May 1, 1997, and in accordance with the terms of the Investment
Management Agreement, the Funds pay DMC, the Investment Manager of each Fund,
an annual fee, which is calculated daily based on the net assets of each Fund.
The management fee rates are as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund
<S> <C> <C> <C> <C>
Management fee as a percentage of average
daily net assets (per annum) 0.50% 0.50% 0.50% 0.50%

</TABLE>

DMC has elected to waive their fees and reimburse each Fund to the extent that
annual operating expenses exclusive of taxes, interest, brokerage commissions,
distribution expenses and extraordinary expenses, exceed 0.66%, 0.67%, 0.75%,
0.58% of average daily net assets for the Tax-Free Missouri Insured Fund,
Tax-Free Iowa Fund, Tax-Free Wisconsin Fund and Tax-Free Kansas Fund,
respectively, through December 31, 1997. Total expenses absorbed by DMC for
the period ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund
<S> <C> <C> <C> <C>
Total expenses absorbed by DMC $14,788 $17,107 $21,575 $22,355
</TABLE>

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 $5,936, $1,906 and $2,737 of the Tax-Free Iowa Fund, Tax-Free
Wisconsin Fund and Tax-Free Kansas Fund, respectively.

Notes to Financial Statements (Continued)
<PAGE>

30 for tax-exempt income

3. Investment Management and Other Transactions with Affiliates (Continued)

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 period ended December 31, 1997 the amounts expensed for each
Fund were as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund
<S> <C> <C> <C> <C>
Dividend disbursing, transfer agent
fees and other expenses $23,955 $26,576 $14,059 $6,588
Accounting and administration fees $20,879 $15,658 $11,345 $5,065
</TABLE>

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 was also responsible for reimbursing Voyageur's out-of-pocket expense in
connection with the performance of these services.

On December 31, 1997, the Funds had payables to affiliates as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund

<S> <C> <C> <C> <C>
Investment Management fee payable to DMC $49,619 $26,630 $9,088 $3,727
Dividend disbursing, transfer agent fees,
accounting fees and other
expenses payable to DSC $ 4,576 $ 4,181 $2,433 $1,042
</TABLE>

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 Fund. For the eight month
period ended December 31, 1997, DDLP earned commissions on sales of the Fund A
Class shares for each Fund as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund
<S> <C> <C> <C> <C>
$4,413 $9,571 $7,095 $2,875
</TABLE>

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.
<PAGE>

Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Funds. These officers, directors and employees are paid no compensation
by the Funds.

4. Investments

During the period ended December 31, 1997, the Funds made purchases and sales
of investment securities other than U.S. government securities and temporary
cash investments for each Fund as follows:
<TABLE>
<CAPTION>

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund

<S> <C> <C> <C> <C>
Purchases. . . . . . . . . . . . . $7,457,137 $5,782,956 $10,160,037 $4,540,250
Sales. . . . . . . . . . . . . . . $9,179,603 $7,943,680 $ 8,794,792 $3,979,686

</TABLE>
At December 31, 1997, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each Fund
were as follows:

Tax-Free Missouri Tax-Free Tax-Free Tax-Free
Insured Fund Iowa Fund Wisconsin Fund Kansas Fund
<S> <C> <C> <C> <C>
Cost of Investments. . . . . . . . . . . $55,107,781 $38,842,710 $31,220,541 $12,699,269
Aggregate unrealized appreciation $ 4,466,354 $ 2,792,655 $ 1,977,575 $ 1,065,751
Aggregate unrealized depreciation . $ 0 $ 0 $ 0 $ 0
Net unrealized appreciation. . $ 4,466,354 $ 2,792,655 $ 1,977,575 $ 1,065,751
</TABLE>

For federal income tax purposes, as of December 31, 1997, Tax-Free Missouri
Insured Fund had a capital loss carryover of $1,072,466 that will expire in
2002 through 2004, Tax-Free Iowa Fund had a capital loss carryover of
$1,658,076 that will expire in 2001 through 2005, Tax-Free Wisconsin Fund had
a capital loss carryover of $423,512 that will expire in 2001 through 2003,
and Tax-Free Kansas Fund had a capital loss carryover of $79,148 that will
expire in 2003 and 2004.
<PAGE>

for tax-exempt income 31

Notes to Financial Statements (Continued)

5. Capital Stock
<TABLE>
<CAPTION>

Tax-Free Missouri Insured Fund Tax-Free Iowa Fund
------------------------------ ------------------

Year ended Year ended Year ended Year ended
12/31/97 12/31/96 12/31/97 12/31/96
<S> <C> <C> <C> <C>
Shares sold:
A Class......................... 265,509 551,980 355,433 609,767
B Class......................... 200,996 458,267 135,405 83,915
C Class......................... 9,719 15,011 25,201 27,546

Shares issued upon reinvestment of
dividends from net investment
income and net realized gains
from security transactions:
A Class......................... 129,146 126,576 124,468 135,685
B Class......................... 33,377 24,527 6,562 3,959
C Class......................... 521 322 1,110 441
------- --------- ------- -------
639,268 1,176,683 648,179 861,313
======= ========= ======= =======

Shares repurchased:
A Class......................... (656,405) (689,056) (833,421) (890,441)
B Class......................... (175,978) (64,463) (23,960) 0
C Class......................... (4,070) (2,635) (9,438) (5,230)
------- --------- ------- -------
(836,453) (756,154) (866,819) (895,671)
------- --------- ------- -------

Net Increase (Decrease)............. (197,185) 420,529 (218,640) (34,358)
======== ======= ======== =======
</TABLE>

<PAGE>

Tax-Free Wisconsin Fund Tax-Free Kansas Fund
----------------------- --------------------
Year ended Year ended Year ended Year ended
12/31/97 12/31/96 12/31/97 12/31/96
<S> <C> <C> <C> <C>
Shares sold:
A Class......................... 729,711 526,332 114,412 148,964
B Class......................... 51,892 62,678 89,151 165,725
C Class......................... 35,931 58,385 6,942 7,541

Shares issued upon reinvestment of
dividends from net investment
income and net realized gains
from security transactions:
A Class......................... 78,038 79,482 27,906 26,440
B Class......................... 4,328 2,671 7,813 3,238
C Class......................... 2,504 1,244 404 195
------- ------- ------- -------

902,404 730,792 246,628 352,103
------- ------- ------- -------

Shares repurchased:
A Class......................... (657,954) (374,467) (142,361) (206,595)
B Class......................... (2,138) (431) (12,598) (4,714)
C Class......................... (27,203) (9,635) (6,119) (2,863)
------- ------- ------- -------
(687,295) (384,533) (161,078) (214,172)
------- ------- ------- -------

Net Increase (Decrease)............. (215,109) 346,259 85,550 137,931
======== ======= ====== =======

</TABLE>

6. Credit and Market Risks
The Funds concentrate their investments in securities mainly issued in each
specific states' municipalities. The value of these investments may be
adversely affected by new legislation within the state, regional or local
economic conditions, and differing levels of supply and demand for municipal
bonds. Many municipalities insure repayment for their obligations. Although
bond insurance reduces the risk of loss due to default by an issuer, such
bonds remain subject to the risk that market value may fluctuate for other
reasons and there is no assurance that the insurance company will meet its
obligations. These securities have been identified in the statement of Net
Assets.

<PAGE>

32 for tax-exempt income

Delaware-Voyageur Funds
Report of Independent Auditors

To the Shareholders and Board of Directors
Voyageur Investment Trust - Delaware-Voyageur Tax-Free Missouri Insured Fund
Voyageur Mutual Funds, Inc. - Delaware-Voyageur Tax-Free Iowa Fund
Voyageur Mutual Funds, Inc. - Delaware-Voyageur Tax-Free Wisconsin Fund
Voyageur Investment Trust - Delaware-Voyageur Tax-Free Kansas Fund

We have audited the accompanying statements of net assets of Tax-Free Missouri
Insured Fund, Tax-Free Iowa Fund, Tax-Free Wisconsin Fund, and Tax-Free Kansas
Fund, (the "Funds") as of December 31, 1997, and the related statements of
operations, the statements of changes in net assets and the financial
highlights for the year then ended. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits. The statements of changes in net assets for
the year ended December 31, 1996 and the financial highlights for the periods
presented through December 31, 1996 were audited by other auditors whose
reports thereon dated February 14, 1997 expressed unqualified opinions on
those statements and financial highlights.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1997, by corres pondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the 1997 financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
respective Funds at December 31, 1997, and the results of their operations,
the changes in their net assets and their financial highlights for the year
then ended, in conformity with generally accepted accounting principles.

/s/ Ernst & Young

Philadelphia, Pennsylvania
February 16, 1998

<PAGE>

This annual report is for the information of Tax-Free Missouri Insured Fund,
Tax-Free Iowa Fund, Tax-Free Wisconsin Fund and Tax-Free Kansas Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for Tax-Free Missouri Insured Fund,
Tax-Free Iowa Fund, Tax-Free Wisconsin Fund, and Tax-Free Kansas Fund, which
sets forth details about charges, expenses, investment objectives and
operating policies of each Fund. You should read the prospectus carefully
before you invest. Summary investment results are documented in the Fund's
current Statement of Additional Information. The figures in this report repres
ent past results which are not a guarantee of future results. The return and
principal value of an investment in the Fund will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost.

Board of Directors
Wayne A. Stork
Chairman
Delaware Investments Family of Funds
Philadelphia, PA

Jeffrey J. Nick
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA

Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA

Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY

Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC

W. Thacher Longstreth
City Councilman
Philadelphia, PA

Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN

Charles E. Peck
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA

Affiliated Officers

David K. Downes
Executive Vice President, Chief Financial Officer
and Chief Operating Officer
Delaware Investments Family of Funds
Philadelphia, PA

George M. Chamberlain, Jr.
Senior Vice President, Secretary
and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA

Bruce D. Barton
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA

(Photo of globes)

<PAGE>

directors
& officers

Investment Manager
Delaware Management Company, Inc.
Philadelphia, Pennsylvania

International Affiliate
Delaware International Advisers Ltd.
London, England

National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania

Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania

1818 Market Street
Philadelphia, PA 19103-3682

<PAGE>
(Photo of globes)

This report must be preceded or accompanied by a current Prospectus for
Tax-Free Missouri Insured Fund, Tax-Free Iowa Fund, Tax-Free Wisconsin Fund
or Tax-Free Kansas Fund and the Delaware Investments Performance Update for
the most recently completed calendar quarter. For a prospectus of any other
mutual fund from Delaware Investments, contact your financial adviser or
Delaware.

For Shareholders
1.800.523.1918

For Securities Dealers
1.800.362.7500

For Financial Institutions
Representatives Only
1.800.659.2265

[LOGO]

Be sure to consult your financial adviser when making investments. Mutual
funds can be a valuable part of your financial plan; however, shares of the
Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank or any
credit union, and involve investment risk, including the possible loss of the
principal amount invested. Shares of the Fund are not bank or credit union
deposits.

Copy Rights Delaware Distributors, L.P.

Printed in the USA
on recycled paper

(505)
AR-IKMW[12/97]TKO2/98