-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BjexXr3ckq+GRXVBaZaJwKNtWPuYBn4Y+bq1o/Lv1W6c4+JYRUEYsTUggOUwL74d 0U/Ijgw3mpC8bt0sJrWbxw== 0000950116-98-001815.txt : 19980901 0000950116-98-001815.hdr.sgml : 19980901 ACCESSION NUMBER: 0000950116-98-001815 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980831 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR INVESTMENT TRUST CENTRAL INDEX KEY: 0000879342 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06411 FILM NUMBER: 98701622 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 44502-4115 BUSINESS PHONE: 6123767118 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 44502-4115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR TAX FREE FUNDS INC CENTRAL INDEX KEY: 0000733362 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03910 FILM NUMBER: 98701623 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6123767000 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH STREET STREET 2: SUITE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR MINNESOTA TAX FREE FUNDS INC DATE OF NAME CHANGE: 19910226 FORMER COMPANY: FORMER CONFORMED NAME: DOUBLE EXEMPT FLEX FUND INC DATE OF NAME CHANGE: 19900131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR MUTUAL FUNDS INC CENTRAL INDEX KEY: 0000906236 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411756458 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07742 FILM NUMBER: 98701624 BUSINESS ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4115 BUSINESS PHONE: 6123767129 MAIL ADDRESS: STREET 1: 90 SOUTH SEVENTH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-4115 N-30D 1 For Tax-Exempt Income Tax-Free Idaho Fund Tax-Free Iowa Fund Tax-Free Kansas Fund Tax-Free Missouri Insured Fund Tax-Free North Dakota Fund Tax-Free Oregon Insured Fund Tax-Free Washington Insured Fund Tax-Free Wisconsin Fund service and guidance professional management goals 1998 Semi-Annual Report DELAWARE(SM) INVESTMENTS - ----------------------- Philadelph o London (photo of illustration from Tax-Exempt Income Brochure) A TRADITION OF SOUND INVESTING commitment A Commitment To Our Investors Delaware Investments has a tradition of money management that dates back to 1929. We have a long and distinguished history of helping individuals and institutions - including some of America's largest pension funds - reach their financial goals. Headquartered in Philadelphia, a block from the nation's oldest stock exchange, the Delaware organization established its first mutual fund in 1938. Delaware International Advisers Ltd., our international affiliate, was established in 1990 and is headquartered in London. Delaware Investments offers a full range of mutual funds. We also manage investments for variable annuity products, unit investment trusts and closed-end funds, and offer retirement plan services for individuals and businesses. Delaware manages more than $42 billion in mutual fund assets and institutional advisory accounts for more than half-a-million investors. We're part of a global financial service and investment management business owned by Lincoln Financial Group, whose subsidiaries manage more than $120 billion in assets. Table of Contents LETTER TO SHAREHOLDERS Page 1 PORTFOLIO MANAGER'S REVIEW Page 3 Strategic Positioning and Outlook Page 4 Tax-Free Idaho Fund Page 4 Tax-Free Iowa Fund Page 5 Tax-Free Kansas Fund Page 6 Tax-Free Missouri Insured Fund Page 6 Tax-Free North Dakota Fund Page 7 Tax-Free Oregon Insured Fund Page 8 Tax-Free Washington Insured Fund Page 9 Tax-Free Wisconsin Fund Page 10 PERFORMANCE SUMMARY Page 11 STATEMENTS OF NET ASSETS Page 14 FINANCIAL HIGHLIGHTS Page 30 tax-exempt income (photo of keyboard) (photo of glasses, pen and keyboard) for tax-exempt July 6, 1998 income 1 Dear Shareholder: IT GIVES US GREAT PLEASURE TO REPORT that Delaware Investments' single-state municipal bond funds from the Great Plains to the Pacific Coast provided competitive results for the first half of fiscal 1998. Most states had high credit ratings and benefited from a healthy U.S. economy, low inflation and rising tax revenues between January and June. Except in North Dakota and Washington, state bond supplies increased dramatically. The amount of municipal bonds coming to market during the first half of fiscal 1998 reached a torrid pace as state and local governments across America took advantage of record low interest rates to refinance old debt and start new projects. More than $146 billion in municipal bonds were issued nationwide between January and June, a 50.7% increase from a year earlier, according to The Bond Buyer, a trade publication. This huge increase gave your Funds' portfolio manager Elizabeth H. Howell ample opportunity to select new bonds for many of the Funds. However, the bonanza of new issuance was difficult for some state markets to absorb, and municipal bond prices were generally flat. In most states, income has been the dominant component of return. Still, we view the municipal debt market's current prospects as compelling, especially when viewed against taxable fixed-income alternatives. Yields on longer term municipal bonds averaged more than 90% of U.S. Treasury bond yields as of June 30, a level not seen since the ill-fated flat tax debate in Washington, D.C. two years ago. We see this as a temporary condition resulting from a large increase in bond supplies. Cash flows into municipal bond mutual funds have accelerated in recent months as some equity investors have CUMULATIVE TOTAL RETURN - -------------------------------------------------------------------------------- Six Months Ended June 30, 1998 - -------------------------------------------------------------------------------- Tax-Free Idaho Fund A Class +2.55% Tax-Free Iowa Fund A Class +2.41% Tax-Free Kansas Fund A Class +2.76% Tax-Free North Dakota Fund A Class +2.70% Tax-Free Wisconsin Fund A Class +2.19% Lehman Brothers Municipal Bond Index +2.69% - -------------------------------------------------------------------------------- Tax-Free Missouri Insured Fund A Class +2.24% Tax-Free Oregon Insured Fund A Class +2.73% Tax-Free Washington Insured Fund A Class +2.78% Lehman Brothers Insured Municipal Bond Index +2.69% - -------------------------------------------------------------------------------- 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. The unmanaged Lehman Brothers Indexes are composed of bonds with a variety of quality ratings from many states. Complete performance and sales charge information for all Funds can be found on pages 11 to 13. for tax-exempt Income 2 sought to diversify their portfolios, reduce risk and minimize their income tax burden. For the second calendar quarter of 1998, amid increased stock market volatility, the total return of the average single-state municipal bond fund - +1.34% - outpaced that of the average equity fund (-0.29%), according to Lipper Analytical Services. Such an event is unusual and illustrates the tempering effect that a municipal bond fund can have on a prudently balanced portfolio. We encourage you to review your asset allocation plan with your financial and tax advisers to see if you might benefit from increasing your position in a single-state tax-exempt fund. This past April, Americans paid more income taxes than ever, helping the federal government balance its books for the first time since 1969. In fact, since 1993 the amount of income tax paid to the Internal Revenue Service by individuals has grown at an average annual pace of 18% while personal income has grown only 6% a year, federal statistics show. Investing in state municipal bonds gives you an opportunity to take charge of your tax situation and participate in the development of the state where you reside. It is our belief that as the nation's population enters the 21st Century, more people will turn to tax-savvy investment strategies to protect and keep more of what they earn. Sincerely, WAYNE A. STORK Chairman JEFFREY J. NICK President and Chief Executive Officer discipline TAX-EQUIVALENT YIELDS EIGHT STATES VS. U.S. TREASURIES Tax-Equivalent Yields Idaho 9.29% Iowa, Kansas & Washington 8.53% Missouri 9.07% North Dakota 9.69% Oregon 9.37% Wisconsin 9.16% U.S. Treasuries 5.65% The adjacent chart shows how much an investor in the highest federal tax bracket (39.6%) would have to earn from a taxable investment to match the income potential of long-term municipal bonds in each respective state. Yields as of 6/30/98 for 30-year, medium quality general obligation and/or revenue bonds. 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 Investments mutual fund. Source: Bloomberg Business News. for tax-exempt income 3 Portfolio Manager's Review BY ELIZABETH H. HOWELL Vice President/Senior Portfolio Manager July 10, 1998 Municipal bonds did not rally as much as Treasuries during the first half of fiscal 1998 primarily because of a huge increase in state bond supplies. The yield on 30-year U.S. Treasury bonds fell to 5.65% as of June 30, the lowest level since the early 1970s. Still, real interest rates after inflation remain high. If one subtracts the U.S. Consumer Price Index (1.7%) from 10-year Treasury bond yields, the pre-tax yield is nearly 4%, the highest level since late 1994. Given the probable tempering effects of the Asian slump on the U.S. economy, the Federal Reserve Board is likely to maintain its current interest rate policy, in our view. This makes a solid case for bonds' income and total return potential, especially for tax-sensitive investors seeking to diversify their portfolios. Medium-quality, 30-year general obligation municipal bonds in most states provided a taxable equivalent yield of more than 9% as of June 30 for investors in the 39.6% federal tax bracket. After factoring out inflation, long-term municipal bonds provided an attractive annualized real yield of 7.5%. For highly taxed investors, that compares to an after-inflation, after-tax yield of 1.59% for Treasuries. The major issue facing the tax-exempt market has been a temporary excess of new supply as municipalities seek to refinance their obligations. Municipal bonds also underperformed Treasuries during the first half of fiscal 1998 as foreign investors sought U.S. Treasuries as a safe haven when volatility rocked Asian stock and bond markets. Foreigners generally don't buy our state and local debt because they don't qualify for the tax breaks municipal bonds provide. Since January, we positioned each of the Funds to benefit from declining long-term interest rates. Lower quality bonds tended to outperform bonds with AAA ratings during the first half of 1998 as a strong economy helped municipalities meet their obligations and led to selected credit upgrades. In managing each Fund, we seek good structure - an effective combination of average coupon, call date, and effective maturity that represents each portfolio's mathematical underpinnings. As interest rates fall, we believe it is important to maintain a portfolio with good call protection features. We anticipate favorable economic conditions may drive down long-term interest rates through 1999. overview (photo of keyboard) for tax-exempt income 4 STRATEGIC POSITIONING AND OUTLOOK Tax-Free Idaho Fund Tax-Free Idaho Fund provided a total return of +2.55% for the six months ended June 30, 1998 (for Class A shares at net asset value with distributions reinvested). The Fund's results for the period were higher than the +2.32% average of the Fund's 74 peers, as measured by Lipper Analytical Services. In fiscal 1998, we have kept the Fund's duration slightly longer than other comparable mutual funds. This has allowed the Fund to provide modestly higher-than-average income and capture most of the municipal market's total return potential. We have also done well since January because Tax-Free Idaho Fund held unrated bonds and bonds rated BBB. Prices of these securities rose more than those of higher quality bonds during the first half as the state's economy remained strong. Investors were attracted by relatively higher yields. Many of the bond issues available to Idaho investors are for projects in small towns. These issues are often too small to make it worthwhile to obtain credit ratings from agencies such as Moody's or Standard & Poor's. We only purchase unrated bonds that we conclude would qualify for an investment grade rating if the issuer had sought one. We attempt to balance the portfolio with unrated bonds that produce an above-average interest rate and rated bonds that can contribute to total return. As of mid-year, Idaho's unemployment rate was 4.7%, the lowest level in more than three decades. State economists expect Idaho's economy to grow faster than the national economy over the next several years. A major short-term uncertainty, however, is the high technology sector because of slumping demand and competition with Asia. We are pleased to report that your Fund's positive cash flow since January idaho
PORTFOLIO HIGHLIGHTS AND QUALITY June 30, 1998 Tax-Free Tax-Free Tax-Free Tax-Free Tax-Free North Wisconsin Idaho Fund Iowa Fund Kansas Fund Dakota Fund Fund - -------------------------------------------------------------------------------------------------------------- AAA 26.0% 26.0% 35.3% 31.9% 39.0% AA 7.2% 0% 14.1% 27.7% 6.3% A 24.0% 46.1% 9.6% 13.6% 15.9% BBB 29.6% 15.6% 15.6% 11.8% 8.8% B & Unrated 13.2% 12.3% 25.4% 15.0% 30.0% - -------------------------------------------------------------------------------------------------------------- Average Effective Maturity 8.9 years 8.3 years 9.0 years 8.7 years 10.8 years Average Effective Duration 7.1 years 6.1 years 6.5 years 6.3 years 8.1 years AMT Income* 13.39% 6.21% 18.62% 14.31% 20.53% Current 30-Day SEC Yield (A Class) 4.18% 3.82% 4.07% 4.08% 4.02% (B and C Classes) 3.60% 3.22% 3.47%** 3.49% 3.43%*** - -------------------------------------------------------------------------------------------------------------- * Percentage of income generated for the six months ended June 30, 1998 that was subject to the federal alternative minimum tax. ** 3.48% for Class C shares. ***3.41% for Class C shares. Past performance does not guarantee future results.
for tax-exempt income 5 enabled us to add bonds with strong income potential as the supply of Idaho securities increased 35% from a year ago. Overall, the state's municipalities issued $354 million in bonds for the first six months of 1998, a relatively modest amount compared to most states, according to The Bond Buyer. This makes managing an Idaho-focused portfolio more challenging than many other states. However, our strategy has produced excellent results since inception. Since January, we have modestly increased our weighting in the pollution control and higher education sectors and reduced our weighting in hospital and housing bonds. We exchanged some hospital bonds with higher coupons for discount hospital bonds that we believe offer superior total return potential. Tax-Free Iowa Fund Tax-Free Iowa Fund provided a total return of +2.41% for the six months ended June 30, 1998 (for Class A shares at net asset value with distributions reinvested). This outpaced the +2.32% average return of the Fund's 74-fund peer group for the period, as measured by Lipper Analytical Services. Between January and June, bond supplies increased 50.1% to $978 million from a year ago, according to The Bond Buyer. Since Iowa municipalities issue relatively few bonds compared to other states, this new issuance was easily absorbed by the market. We used this buying opportunity to increase the amount of your Fund's net assets invested in Iowa bonds from 51.4% at the start of fiscal 1998 to 60% as of June 30. We reduced the Fund's reliance on territorial bonds (bonds issued by Puerto Rico, Guam and the Virgin Islands). Territorial bonds, which are exempt from federal and state income taxes in all states, provide an additional element of diversification for the Fund and help us meet our income, duration and yield objectives. Few bonds are issued in Iowa, and not all are exempt from both federal and state income taxes - the type of bonds we seek for your Fund's portfolio. Economic growth in Iowa was robust during the first half of fiscal 1998. The state's unemployment rate was 2.3% as of mid-year, among the lowest in the country. In recent years, Iowa has seen a shift in growth toward domestic-oriented high technology industries, a trend we believe can continue. This summer, grain farmers were relieved to learn that Washington will permit food shipments to India and Pakistan despite the fact that the U.S. imposed economic sanctions in the wake of each country's nuclear testing. Iowa is first in corn and soybean production in the U.S. For the balance of 1998, investor demand appears likely to remain high in Iowa. As of June 30, long-term Iowa bonds yielded 92% of Treasuries, a level we believe is exceptionally attractive. iowa (photo of family on beach) for tax-exempt income 6 Tax-Free Kansas Fund Tax-Free Kansas Fund provided a relatively strong total return of +2.76% for the six months ended June 30, 1998 (for Class A shares at net asset value with distributions reinvested). This was higher than the returns of both the unmanaged Lehman Brothers Municipal Bond Index (see chart on page 1) and the average of the Fund's 74 peers (+2.32%). Bond supplies in Kansas rose a sharp 82.8% during the first half of fiscal 1998 to $1.15 billion, according to The Bond Buyer. Most of the issues that came to market were given high ratings by Moody's Investors Services or Standard & Poor's. The state's economy, while strong, has generally not been quite as robust as some neighboring states. The jobless rate was a low 3.5% as of mid-year, the lowest since 1979. Kansas grows more wheat than any other state, and wheat prices have fallen sharply amid the anticipated surge in supply. This year's rise in the U.S. dollar has made it more difficult for grain farmers to profitably export what they reap. Since January, we have increased the Fund's average duration modestly to 6.5 years in anticipation that interest rates will continue to fall through the remainder of 1998. Lower quality and unrated bonds generally provided the highest returns during the first half. Your Fund had more than one-quarter of its assets in unrated bonds during the first half of fiscal 1998. We only purchase unrated bonds that we conclude would qualify for an investment grade rating if the issuer had sought one. We attempt to balance the portfolio with unrated bonds that produce an above-average interest rate and rated bonds that can contribute to total return. As of June 30, long-term Kansas bonds yielded 92% of Treasuries, a level that in our view is compelling. We believe the relatively high income potential and limited bond supply in the state, set against a backdrop of low inflation, can help the Fund generate attractive total returns over the next six months. Tax-Free Missouri Insured Fund Missouri Insured Fund provided a total return of +2.24% for the six months ended June 30, 1998 (for Class A shares at net asset value with distributions reinvested). This was slightly less than the +2.26% total return provided by the average of 23 funds specializing in Missouri bonds. Many of these competing funds invest in lower rated uninsured bonds, which tend to offer higher yields but lack elements of safety. The Fund offered a favorable risk profile relative to the return we were able to generate. Missouri Insured Fund invests exclusively in bonds that are rated AAA by Moody's Investors Services or Standard & Poor's. One factor that affected our results was our relatively strong weighting in housing bonds. Housing bonds, because of kansas (photo of three people talking) for tax-exempt income 7 the risk of prepayment from underlying mortgages, tend to yield more than bonds from other sectors that have similar ratings and maturities. Most of Tax-Free Missouri Insured Fund's housing sector holdings at the start of fiscal 1998 were bonds that finance multifamily dwellings, which tend to have lower levels of refinancing activity than single-family home mortgages. Historically, municipal housing bonds have benefited from less prepayment activity than taxable housing bonds. Market appreciation reduced the average effective duration of Tax-Free Missouri Insured Fund by several months to 6.5 years as of June 30. The Fund's positioning is about a half a year shorter than our peers as well as the Lehman Brothers Insured Municipal Bond Index, the Fund's unmanaged benchmark. New bond supplies in Missouri rose substantially during the first six months of 1998. The state's municipalities issued more than $2.4 billion in bonds between January and June, an 83.2% percent increase from year ago levels, according to The Bond Buyer. This additional supply was difficult for the market to absorb. Much of this supply was uninsured. For the balance of the year, we believe Missouri bonds offer attractive income and total return opportunities, especially for investors in the top combined federal and state tax bracket of 43.2%. Yields on long-term Missouri bonds were 92% of 30-year U.S. Treasury bonds yields as of June 30. Tax-Free North Dakota Fund For the six months ended June 30, 1998, Tax-Free North Dakota Fund provided a total return of +2.70% (for Class A shares at net asset value with distributions reinvested). The Fund did well relative to its benchmark and peers because we positioned the portfolio for a gradual decline in interest rates. Our average duration was longer than the Lehman Brothers Municipal Bond Index for the period. This allowed us to generate an attractive level of income and participate in the bond market's spring rally. The supply of new bonds issued in North Dakota remained very limited, reflecting the state's small population - about 642,000 people. Only $371.6 million in new bonds were issued between January and June, a 15% increase from a year earlier, according to The Bond Buyer. Six of North Dakota's 10 largest employers are health care providers, state figures show. At the start of fiscal 1998 Tax-Free North Dakota Fund's single largest sector weighting was hospital bonds, including bonds issued by the St. Alexius Health System. We are attracted to health care bonds because this sector generally offers higher yields. We believe selected hospital bonds may also benefit from ratings upgrades as the industry consolidates. North Dakota's unemployment rate was just 2.0% as of mid-year, one of the lowest rates of joblessness in the country. The state's increased economic diversification of recent years is helping it weather current missouri for tax-exempt income 8 slumps in the natural resources and agricultural sectors. High quality North Dakota bonds remain the dominant element of Tax-Free North Dakota's Fund's portfolio. However, since January we have added some medium quality bonds to increase the Fund's income potential in the months ahead. Still, as of June 30, nearly 60% of Tax-Free North Dakota Fund's portfolio was invested in bonds rated AAA and AA, the two highest credit ratings available. Tax-Free Oregon Insured Fund Tax-Free Oregon Insured Fund provided an above-average total return of +2.73% for the six months ended June 30, 1998 (for Class A shares at net asset value with reinvested distributions). The Fund's performance for the period outpaced that of its unmanaged benchmark and the average of 25 funds specializing in Oregon bonds (+2.21%). Tax-Free Oregon Fund's relatively long duration and focus on insured bonds, which tend to respond more rapidly to interest rate moves than non-insured bonds, enhanced our results. Bond supplies in Oregon increased dramatically during the first half of fiscal 1998. More than $1 billion worth of Oregon bonds have been issued since January, a 75% increase from year ago levels, according to The Bond Buyer. Since Oregon has relatively high tax rates and has historically issued a relatively limited number of bonds for a state of its size, investors easily absorbed the increase. To provide an extra element of safety, the Fund invests exclusively in bonds that are insured by one of the major municipal bond insurance companies and are rated AAA by Moody's and/or Standard & Poor's rating agencies. north dakota
PORTFOLIO HIGHLIGHTS AND ASSET MIX June 30, 1998 Tax-Free Missouri Tax-Free Oregon Tax-Free Washington Insured Fund Insured Fund Insured Fund - -------------------------------------------------------------------------------------------- Housing 16.9% 3.8% 23.9% Hospital 23.9% 7.1% 13.7% General Obligation 7.8% 19.5% 16.8% Power Authority 8.4% 8.2% 8.2% Pre-Refunded 20.3% 21.8% 0 Education 3.4% 16.5% 15.1% Industrial 1.8% 0 2.1% Other Revenue Bonds 6.4% 0 0% - -------------------------------------------------------------------------------------------- Average Effective Maturity 8.7 years 9.1 years 8.6 years Average Effective Duration 6.5 years 7.4 years 6.4 years AMT Income* 18.75% 11.27% 17.38% Current 30-Day SEC Yield (A Class) 3.87% 3.90% 4.37% (B and C Classes) 3.28%** 3.30% 3.78%*** - -------------------------------------------------------------------------------------------- * Percentage of income generated for the six months ended June 30, 1998 that was subject to the federal alternative minimum tax. ** 3.27% for Class C shares. ***3.79% for Class C shares. Past performance does not guarantee future results.
for tax-exempt income 9 General obligation bonds issued by the State of Oregon were downgraded by S&P on July 7 from AA+ to AA. Since your Fund did not own any state-issued general obligation bonds at the time, we were unaffected by this change. All of our locally-issued bonds are insured, and therefore rated AAA. Our emphasis has been on bonds with discount coupons, good call projection, and long maturities. Since January, we have reduced our positioning in general obligation bonds and increased our weighting in power authority and other revenue bonds. Pursuing this strategy allowed the Fund to perform well even as investor fears concerning the possible impact of Asia's recession on Oregon's economy have grown. Although Oregon's natural resource exports such as paper have slowed, the state's economy appears to be holding up well. Strength in housing and consumer spending are offsetting weakness in factory activity, according to a June report by the Twelfth Federal Reserve District. Two-thirds of business respondents to a spring Fed survey expect overall economic activity to remain stronger in the Pacific Northwest than the rest of the nation for the balance of 1998. Tax-Free Washington Insured Fund Tax-Free Washington Insured Fund provided strong results for the first half of fiscal 1998. For the six months ended June 30, 1998, the Fund's total return was +2.78% (for Class A shares at net asset value with reinvested distributions). This was higher than the Fund's benchmark and the +2.66% average return of eight funds specializing in Washington bonds. After a surge of new issuance in 1997, new bond supplies in the State of Washington increased only marginally in the first six months of 1998. Some $2.7 billion in bonds were issued, a 2.6% increase from a year ago, according to The Bond Buyer. Washington's steady bond supply, coupled with strong investor demand helped Washington bonds outperform bonds of many other states. Tax-Free Washington Insured Fund did well relative to the Lehman Insured Municipal Bond Index and its peers because we positioned the Fund for a decline in interest rates. The Fund's duration was longer than that of its Lipper peer group during the first half. This allowed us to achieve a relatively high total rate of return as bond prices rose. Our emphasis was on bonds with discount coupons, good call projection, and long maturities. The Fund invests exclusively in bonds that are insured by one of the major municipal bond insurance companies and are rated AAA by Moody's and/or Standard & Poor's rating agencies. Since January, we have reduced our positioning in local general obligation bonds and housing bonds and increased our weighting in higher education bonds. Housing bonds, because of the risk of prepayment from underlying mortgages, tend to yield more than bonds from other sectors that have similar ratings and maturities. Given our view that interest rates will decline in the months ahead, we believed it was prudent to reduce our exposure to prepayments, especially in the single-family home segment. In our opinion, Washington's economy is likely to remain strong for the rest of 1998 even though export-oriented oregon (photo of glasses, pen and keyboard) for tax-exempt income 10 industries such as aviation, paper and high technology have been feeling the effects of slumping demand from emerging Pacific Rim markets. Asian exports make up only 9 percent of Washington's gross state product, according to a federal government report this past spring. The state's unemployment rate as of mid-year was a low 4.4%, essentially the same as the national average. Domestic industries such as housing appear to be booming. Tax-Free Wisconsin Fund For the six months ended June 30, 1998, Tax-Free Wisconsin Fund provided a total return of +2.19% (for Class A shares at net asset value with distributions reinvested). This was slightly less than the average of the Fund's 74 peers. We attribute the Fund's performance to our investments in unrated bonds that provided above-average income but did appreciate as much as high quality bonds during the first half of 1998. More than $2.4 billion worth of new bonds were issued in Wisconsin between January and June, a 33.5% increase from the prior year, according to The Bond Buyer. During the period, the credit quality of most Wisconsin municipalities was excellent. The state'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 income taxes - the type of bonds we seek for your Fund's portfolio. We used this year's increase in supply to add more Wisconsin bonds to your Fund's portfolio. Since January, we have sold some Puerto Rico territorial bonds in the higher education and industrial development sectors that had appreciated in value. These bonds amounted to about 4% of your Fund's net assets. Territorial bonds, which are exempt from both state and federal income taxes, provide an additional element of diversification for the Fund and help us meet our income, duration and yield objectives. As of June 30, about one-third of your Fund's net assets were invested in unrated bonds. This reflects the fact that many Wisconsin bonds finance 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 bonds that are deemed satisfactory often carry a higher-than-average coupon. Unrated bonds also tend to fluctuate less in price when the bond market is weak, which can help preserve principal. Our approach to managing the portfolio is to balance unrated bonds that produce an above-average interest rate with bonds that are rated and can contribute to the Fund's total return. Wisconsin's 2.7% unemployment rate as of mid-year was among the lowest in the country, and we believe the state's economic prospects remain bright. The Wisconsin Department of Revenue expects state job growth to average 2.2% this year and taper off to 1.3% in 1999. Personal income in Wisconsin is expected to rise 5.3% this year to $133.7 billion. washington wisconsin for tax-exempt income 11 Performance Summary TAX-FREE IDAHO FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime One Year - -------------------------------------------------------------------------------- Class A (Est. 1/4/95) Excluding Sales Charge +9.86% +9.28% Including Sales Charge +8.66% +5.17% - -------------------------------------------------------------------------------- Class B (Est. 3/16/95) Excluding Sales Charge +7.77% +8.53% Including Sales Charge +7.00% +4.53% - -------------------------------------------------------------------------------- Class C (Est. 1/11/95) Excluding Sales Charge +8.85% +8.48% Including Sales Charge +8.85% +7.48% TAX-FREE IOWA FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime One Year - -------------------------------------------------------------------------------- Class A (Est. 9/1/93) Excluding Sales Charge +5.12% +8.24% Including Sales Charge +4.29% +4.17% - -------------------------------------------------------------------------------- Class B (Est. 3/24/95) Excluding Sales Charge +7.02% +7.43% Including Sales Charge +6.23% +3.43% - -------------------------------------------------------------------------------- Class C (Est. 1/4/95) Excluding Sales Charge +8.93% +7.41% Including Sales Charge +8.93% +6.41% 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 voluntary expense limitations in effect at the time. Returns would have been lower without the limitations. Class A shares have a 3.75% maximum front-end sales charge. All Funds have a 12b-1 fee. Class B shares do not carry a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a deferred sales charge of up to 4% if redeemed before the end of the sixth year. Class C shares have a 1% annual distribution and service fee. If shares are redeemed within 12 months, a 1% contingent deferred sales charge applies. for tax-exempt income 12 TAX-FREE KANSAS FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 11/30/92) Excluding Sales Charge +7.43% +6.37% +9.62% Including Sales Charge +6.70% +5.57% +5.54% - -------------------------------------------------------------------------------- Class B (Est. 4/8/95) Excluding Sales Charge +7.11% +8.78% Including Sales Charge +6.31% +4.78% - -------------------------------------------------------------------------------- Class C (Est. 4/12/95) Excluding Sales Charge +6.93% +8.79% Including Sales Charge +6.93% +7.79% TAX-FREE MISSOURI INSURED FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 11/2/92) Excluding Sales Charge +6.91% +5.96% +8.37% Including Sales Charge +6.19% +5.15% +4.27% - -------------------------------------------------------------------------------- Class B (Est. 3/12/94) Excluding Sales Charge +5.73% +7.58% Including Sales Charge +5.34% +3.58% - -------------------------------------------------------------------------------- Class C (Est. 11/11/95) Excluding Sales Charge +5.70% +7.53% Including Sales Charge +5.70% +6.53% TAX-FREE NORTH DAKOTA FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime One Year - -------------------------------------------------------------------------------- Class A (Est. 4/1/91) Excluding Sales Charge +7.87% +8.65% Including Sales Charge +7.30% +4.55% - -------------------------------------------------------------------------------- Class B (Est. 5/10/94) Excluding Sales Charge +7.52% +7.90% Including Sales Charge +7.13% +3.90% - -------------------------------------------------------------------------------- Class C (Est. 7/29/95) Excluding Sales Charge +6.88% +7.82% Including Sales Charge +6.88% +6.82% Please see page 11 for important additional information. All performance includes reinvestment of distributions and applicable sales charges as described on page 11. Past performance is not a guarantee of future results. for tax-exempt income 13 TAX-FREE OREGON INSURED FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime One Year - -------------------------------------------------------------------------------- Class A (Est. 8/1/93) Excluding Sales Charge +5.90% +9.38% Including Sales Charge +5.08% +5.24% - -------------------------------------------------------------------------------- Class B (Est. 3/12/94) Excluding Sales Charge +5.71% +8.58% Including Sales Charge +5.32% +4.58% - -------------------------------------------------------------------------------- Class C (Est. 7/7/95) Excluding Sales Charge +6.64% +8.54% Including Sales Charge +6.64% +7.54% TAX-FREE WASHINGTON INSURED FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime One Year - -------------------------------------------------------------------------------- Class A (Est. 8/1/93) Excluding Sales Charge +7.28% +9.53% Including Sales Charge +6.45% +5.46% - -------------------------------------------------------------------------------- Class B (Est. 10/24/94) Excluding Sales Charge +6.90% +8.80% Including Sales Charge +5.90% +4.80% - -------------------------------------------------------------------------------- Class C (Est. 4/21/95) Excluding Sales Charge +7.21% +8.79% Including Sales Charge +7.21% +7.79% TAX-FREE WISCONSIN FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998 Lifetime One Year - -------------------------------------------------------------------------------- Class A (Est. 9/1/93) Excluding Sales Charge +5.08% +8.11% Including Sales Charge +4.25% +4.03% - -------------------------------------------------------------------------------- Class B (Est. 4/22/95) Excluding Sales Charge +6.29% +7.43% Including Sales Charge +5.46% +3.43% - -------------------------------------------------------------------------------- Class C (Est. 3/28/95) Excluding Sales Charge +6.39% +7.38% Including Sales Charge +6.39% +6.38% Please see page 11 for important additional information. All performance includes reinvestment of distributions and applicable sales charges as described on page 11. Past performance is not a guarantee of future results. 14 for tax-exempt income Financial Statements VOYAGEUR MUTUAL FUNDS, INC. DELAWARE-VOYAGEUR TAX-FREE IDAHO FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS - 98.25% GENERAL OBLIGATION BONDS - 9.32% Ada & Canyon County School District #2 5.60% 7/30/12 .................................... $1,325,000 $1,422,017 Bonner County Local Improvement District #93-1 6.20% 4/30/05 .................................... 150,000 158,262 Bonner County Local Improvement District #93-2 6.35% 4/30/06 .................................... 185,000 195,147 Bonner County Local Improvement District #93-3 6.40% 4/30/07 .................................... 195,000 205,764 Bonner County Local Improvement District #93-4 6.50% 4/30/08 .................................... 110,000 116,056 Bonner County Local Improvement District #93-5 6.50% 4/30/10 .................................... 100,000 105,505 Canyon County Independent School District #131 (MBIA) 5.50% 7/30/12 ............................. 100,000 104,298 Coeur D'Alene Local Improvement District #6 Series 1995 6.00% 7/1/09 ......................... 85,000 90,925 Coeur D'Alene Local Improvement District #6 Series 1996 6.05% 7/1/10 ......................... 90,000 95,975 Coeur D'Alene Local Improvement District #6 Series 1997 6.10% 7/1/12 ......................... 40,000 42,799 Coeur D'Alene Local Improvement District #6 Series 1998 6.10% 7/1/14 ......................... 45,000 47,880 Madison County (FSA) 5.40% 8/1/14 ................... 300,000 309,039 Puerto Rico Commonwealth 5.38% 7/1/25 ............... 1,250,000 1,262,850 Sun Valley 5.20% 8/1/09 ............................. 180,000 187,591 ---------- 4,344,108 ---------- HIGHER EDUCATION REVENUE BONDS - 6.39% Boise State University Idaho Revenue Refunding & Improvement Student Fee (FSA) 5.00% 4/1/23 ..................................... 1,000,000 987,330 Idaho State University Student Fee Bonds (MBIA) 5.80% 4/1/20 .............................. 550,000 581,702 University Of Idaho (FSA) 5.85% 4/1/11 .............. 1,300,000 1,409,395 ---------- 2,978,427 ---------- HOSPITAL REVENUE BONDS - 13.77% Idaho Health Facilities Authority Hospital Holy Cross Health System Revenue 5.00% 12/1/28 .............. 900,000 869,940 Idaho Health Facilities Authority Revenue - Bonner General Hospital 6.50% 10/1/28 ............ 1,500,000 1,566,720 Idaho Health Facilities Revenue Bannock Medical Center 6.13% 5/1/25 .............................. 1,500,000 1,593,645 Idaho Health Facilities Revenue Bannock Medical Center 6.38% 5/1/17 .............................. 1,695,000 1,861,398 PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Idaho Magic Valley Health Facilities (AMBAC) 5.63% 12/1/13 ................................. $ 500,000 $ 524,465 ----------- 6,416,168 ----------- HOUSING REVENUE BONDS - 9.90% Idaho State Housing Agency Multi-Family Place Plaza (FHA) 6.50% 12/1/36 ..................... 990,000 1,063,211 Idaho State Housing Finance Authority Single Family Series E (FHA) 6.35% 7/1/15 ............ 350,000 373,678 Idaho State Housing Finance Authority Single Family Series A1 6.85% 7/1/12 ................. 90,000 96,962 Idaho State Housing Finance Authority Single Family Housing Series G-2 6.15% 7/1/15 ........ 1,500,000 1,580,340 Idaho State Housing Finance Authority Single Family Series A (FHA) 6.10% 7/1/16 ............ 370,000 390,428 Idaho State Housing Finance Authority Single Family Series A (AMBAC) 6.05% 7/1/13 .......... 445,000 471,326 Idaho State Housing Finance Authority Single Family Series E 6.60% 7/1/11 .................. 140,000 152,438 Idaho State Housing Finance Authority Single Family Series B (FHA) 6.45% 7/1/15 ............ 200,000 214,284 Idaho State Housing Finance Authority Single Family Series C-2 6.35% 7/1/15 ................ 255,000 271,136 ----------- 4,613,803 ----------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 7.20% Idaho State Water Resource Boise Water 7.25% 12/1/21 ................................. 100,000 109,435 Meridan EDA for Hi-Micro 5.85% 8/15/11 ........... 1,250,000 1,314,088 Pocatello Development Authority Tax Increment Revenue 7.25% 12/1/08 ......................... 1,700,000 1,767,932 Puerto Rico Industrial Medical Environmental Revenue - PepsiCo Project 6.25% 11/15/13 ................................ 150,000 164,735 ----------- 3,356,190 ----------- LEASE/CERTIFICATES OF PARTICIPATION - 2.25% North Idaho College Dorm Housing - Certificates of Participation 6.45% 10/1/16 ................... 1,000,000 1,048,770 ----------- 1,048,770 ----------- POLLUTION CONTROL REVENUE BONDS - 21.54% Nez Perce County, Idaho Pollution Control Revenue Refunding - Potlatch Project 6.00% 10/1/24 .... 5,500,000 5,863,275 Power County Idaho Pollution Control Revenue FMC Project 5.63% 10/1/14 ..................... 4,050,000 4,173,809 ----------- 10,037,084 ----------- for tax-exempt income 15 TAX-FREE IDAHO FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) POWER AUTHORITY REVENUE BONDS - 3.33% PUERTO RICO ELECTRIC POWER AUTHORITY (FSA) 6.00% 7/1/16 ................................ $ 100,000 $ 108,721 Puerto Rico Electric Power Authority Series X 5.50% 7/1/25 ....................... 1,415,000 1,441,234 ----------- 1,549,955 ----------- * PRE-REFUNDED BONDS - 1.63% Gooding Lincoln Independent School District #231 6.30% 2/1/14-04 ............................. 100,000 110,589 Idaho St. Holy Cross - Alphonsus Health Facility 6.25% 12/1/22-02 ............................ 590,000 651,218 ----------- 761,807 ----------- SPECIAL UTILITY REVENUE BONDS - 0.33% Puerto Rico Telephone Revenue Authority 5.50% 1/1/22 ................................ 150,000 152,862 ----------- 152,862 ----------- TRANSPORTATION REVENUE BONDS - 0.75% Guam Highway (FSA) 6.30% 5/1/12 ................ 150,000 162,338 Puerto Rico Highway Revenue Series W 5.50% 7/1/15 ....................... 175,000 185,969 ----------- 348,307 ----------- WATER & SEWER REVENUE BONDS - 2.91% Chubbuck Water Revenue 6.35% 4/1/08 ............ 125,000 133,654 Chubbuck Water Revenue 6.40% 4/1/10 ............ 135,000 145,203 McCall Water Revenue (FSA) 5.85% 3/1/16 ........ 1,000,000 1,079,440 ----------- 1,358,297 ----------- OTHER REVENUE BONDS - 18.93% Ammon, Idaho Urban Renewal Agency Revenue 6.25% 8/1/18 ................................ 445,000 476,359 Ammon, Idaho Urban Renewal Tax Increment Revenue 5.88% 8/1/17 ................................ 350,000 368,452 Boise Urban Renewal Agency Tax Increment Revenue 6.13% 9/1/15 ................................ 2,500,000 2,674,300 Boise Urban Renewal Tax Increment Revenue 6.13% 9/1/15 ................................ 2,040,000 2,182,224 Hayden, Idaho Improvement District 95 - Special Assessment 6.30% 5/1/12 ............. 115,000 115,357 Hayden, Idaho Improvement District 95 - Special Assessment 6.35% 5/1/13 ............. 120,000 120,372 Hayden, Idaho Improvement District 95 - Special Assessment 6.40% 5/1/14 ............. 125,000 125,388 Hayden, Idaho Improvement District 95 - Assessment 6.50% 5/1/15 ..................... 125,000 125,388 Idaho State Building Authority Building Revenue Series A 4.75% 9/1/25 ....................... 1,500,000 1,438,065 Puerto Rico Public Building Authority Revenue Series M 5.50% 7/1/21 ....................... 1,175,000 1,197,478 ----------- 8,823,383 ----------- TOTAL MUNICIPAL BONDS (COST $43,166,302) ....... 45,789,161 ----------- NUMBER MARKET OF SHARES VALUE ---------------------- SHORT-TERM INVESTMENTS - 0.95% Norwest Advantage Municipal Money Market Fund ...........443,524 $ 443,524 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $443,524) ............ 443,524 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED (COST $43,609,826) - 99.20% .......................... $46,232,685 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.80% . 370,596 ----------- NET ASSETS APPLICABLE TO 4,063,495 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% .............. $46,603,281 =========== NET ASSET VALUE - TAX-FREE IDAHO FUND A CLASS ($37,642,138 / 3,281,410) ............................ $ 11.47 =========== NET ASSET VALUE - TAX-FREE IDAHO FUND B CLASS ($7,428,833 / 648,323) ............................... $ 11.46 =========== NET ASSET VALUE - TAX-FREE IDAHO FUND C CLASS ($1,532,310 / 133,762) ............................... $ 11.46 =========== COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $0.01 par value, 100,000,000,000 shares authorized to the Fund with 10,000,000,000 shares allocated to Tax-Free Idaho Fund A Class, 10,000,000,000 shares allocated to the Tax-Free Idaho Fund B Class and 10,000,000,000 shares allocated to the Tax-Free Idaho Fund C Class ........... $44,012,502 Accumulated net realized loss on investments ............ (32,080) Net unrealized appreciation of investments .............. 2,622,859 ----------- Total net assets ........................................ $46,603,281 =========== - ------------ * For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded - ---------------------- Summary of Abbreviations: AMBAC - Insured by the Ambac Indemnity Corporation FHA - Insured by the Federal Housing Authority FSA - Insured by the Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE IDAHO FUND A CLASS Net asset value A Class (A) ............................. $ 11.47 Sales charge (3.75% of offering price, or 3.92% of amount invested per share) (B) .............................. 0.45 ----------- Offering price .......................................... $ 11.92 =========== - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes 16 for tax-exempt income VOYAGEUR MUTUAL FUNDS, INC. DELAWARE-VOYAGEUR TAX-FREE IOWA FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE -------------------- MUNICIPAL BONDS - 98.30% HIGHER EDUCATION REVENUE BONDS - 5.19% Iowa Center Community College Dorm Merged Area V 5.45% 6/1/18 ........................... $ 545,000 $ 546,520 State University of Iowa - Board Of Regents 5.30% 7/1/13 ...................................... 500,000 523,745 University of North Iowa - Board Of Regents 5.30% 7/1/13 ...................................... 150,000 157,124 University Of Puerto Rico Revenue (MBIA) 5.50% 6/1/15 ...................................... 1,000,000 1,051,660 ---------- 2,279,049 ---------- HOSPITAL REVENUE BONDS - 3.00% Puerto Rico Hospital Revenue - Hospital Auxilio Mutuo Obligated Group (MBIA) 6.25% 7/1/24 ...................................... 1,200,000 1,319,988 ---------- 1,319,988 ---------- HOUSING REVENUE BONDS - 2.40% Puerto Rico Housing Bank & Finance Agency (GNMA) 6.25% 4/1/29 ...................................... 990,000 1,054,271 ---------- 1,054,271 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 19.50% Iowa Finance Authority - Underground Storage Tank Revenue 5.125% 7/1/14 ............................. 5,500,000 5,621,000 Lee County Urban Renewal Revenue - Keokuk Waste Treatment 6.40% 6/1/07 ............................ 500,000 533,125 Puerto Rico Commonwealth Industrial Development General Purpose Revenue Series B 5.375% 7/1/16 ............................ 1,000,000 1,024,590 Puerto Rico Port Authority Revenue, Special Facility - American Airlines 6.25% 6/1/26 .................... 1,275,000 1,387,315 ---------- 8,566,030 ---------- POWER AUTHORITY REVENUE BONDS - 10.68% Puerto Rico Electric Power Authority Revenue 6.00% 7/1/14 ...................................... 1,100,000 1,191,707 Puerto Rico Electric Power Authority Revenue 6.25% 7/1/17 .............................. 1,000,000 1,094,170 Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 ............................ 1,500,000 1,412,505 Virgin Islands Water & Power Authority Electric System Revenue 5.30% 7/1/18 ....................... 1,000,000 990,260 ---------- 4,688,642 ---------- * PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 6.65% Virgin Islands Public Finance Authority (Escrowed to maturity) 7.30% 10/1/18-18 ..................... 1,500,000 1,891,005 Virgin Islands Public Finance Authority Revenue Sub Lien Funded Loan Notes Series E 5.875% 10/1/18-18 ........................ 1,000,000 1,031,180 ---------- 2,922,185 ---------- PRINCIPAL MARKET AMOUNT VALUE ------------------- MUNICIPAL BONDS (CONTINUED) TRANSPORTATION REVENUE BONDS - 8.23% Guam Highway (FSA) 6.30% 5/1/12 ............. $ 1,950,000 $ 2,110,388 Puerto Rico Commonwealth Highway & Transportation Revenue 5.25% 7/1/21 ...... 1,500,000 1,504,320 ----------- 3,614,708 ----------- UTILITY REVENUE BONDS - 4.92% Puerto Rico Telephone Revenue Authority 5.50% 1/1/22 ............................. 2,120,000 2,160,450 ----------- 2,160,450 ----------- WATER & SEWER REVENUE BONDS - 14.20% Iowa Finance Authority - State Revolving Fund Revenue 5.20% 5/1/23 ..................... 2,445,000 2,466,858 Iowa Finance Authority - State Revolving Fund Revenue 6.25% 5/1/24 ..................... 1,750,000 1,917,685 Puerto Rico Municipal Finance Authority (FSA) 6.00% 7/1/14 ............................. 1,700,000 1,850,161 ----------- 6,234,704 ----------- OTHER REVENUE BONDS - 23.53% Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 4.90% 6/1/99 .......... 50,000 50,173 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.00% 6/1/00 .......... 300,000 302,148 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.10% 6/1/01 .......... 315,000 318,367 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.20% 6/1/02 .......... 330,000 334,630 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.30% 6/1/03 .......... 345,000 350,931 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.40% 6/1/04 .......... 365,000 372,362 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.50% 6/1/05 .......... 385,000 393,843 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.60% 6/1/06 .......... 405,000 415,364 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.70% 6/1/07 .......... 425,000 436,917 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.80% 6/1/08 .......... 450,000 462,560 Bettendorf, Iowa Urban Renewal Tax Increment Revenue - Series A 5.90% 6/1/09 .......... 800,000 822,232 Iowa Finance Authority Revenue - Correctional Facility Program 5.70% 6/15/14 ........... 2,000,000 2,144,600 Puerto Rico Educational Facility Revenue - Polytechnic University 6.50% 8/1/24 ...... 665,000 725,753 Puerto Rico Public Building Authority Revenue Series M 5.50% 7/1/21 .................... 1,100,000 1,121,043 Puerto Rico Public Building Authority Revenue Series M 5.75% 7/1/15 .................... 1,000,000 1,041,360 Puerto Rico Public Building Authority Revenue Series L 5.75% 7/1/16 .................... 1,000,000 1,041,960 ----------- 10,334,243 ----------- TOTAL MUNICIPAL BONDS (COST $40,377,430 ) ... 43,174,270 ----------- for tax-exempt income 17 TAX-FREE IOWA FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- NUMBER MARKET OF SHARES VALUE ------------------------ SHORT-TERM INVESTMENTS - 1.33% Norwest Advantage Municipal Money Market Fund ........ 583,192 $ 583,192 ------------ Total Short-Term Investments (cost $583,192) ......... 583,192 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 99.63% (COST $40,960,622) ................................ $ 43,757,462 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - .37% 162,225 ------------ NET ASSETS APPLICABLE TO 4,356,532 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ........... $ 43,919,687 ============ NET ASSET VALUE - TAX-FREE IOWA FUND A CLASS ($39,132,944 / 3,881,731 SHARES) .................. $ 10.08 ============ NET ASSET VALUE - TAX-FREE IOWA FUND B CLASS ($3,685,833 / 365,574 SHARES) ..................... $ 10.08 ============ NET ASSET VALUE - TAX-FREE IOWA FUND C CLASS ($1,100,910 / 109,227 SHARES) ..................... $ 10.08 ============ COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $0.01 par value/ 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax-Free Iowa Fund A Class, 1,000,000,000 shares allocated to Tax-Free Iowa Fund B Class, 1,000,000,000 shares allocated to Tax-Free Iowa Fund C Class .......................... $ 42,894,125 Accumulated net realized loss on investments ......... (1,771,278) Net unrealized appreciation of investments ........... 2,796,840 ------------ Total Net Assets ..................................... $ 43,919,687 ============ - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. - ---------------------- Summary of Abbreviations: FSA - Insured by Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE IOWA FUND A CLASS Net asset value A Class (A) $10.08 Sales charge (3.75% of offering price or 3.87% of amount invested per share) (B) $0.39 ------------ Offering price $10.47 ============ - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes VOYAGEUR INVESTMENT TRUST DELAWARE-VOYAGEUR TAX-FREE KANSAS FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE --------------------- MUNICIPAL BONDS - 97.95% GENERAL OBLIGATION BONDS - 20.89% Allen County Unified School District #258 (AMBAC) 6.875% 9/1/10 ............................... $ 240,000 $ 291,130 Ellsworth County, Kansas Series 1 5.75% 9/1/17 ......... 250,000 265,503 Johnson County 6.125% 9/1/12 ........................... 600,000 643,386 Linn County Unified School District 5.70% 11/1/16 ...... 500,000 526,670 Maize Unified School District #266 Series 1994 (FSA) 5.875% 9/1/12 ................................. 250,000 263,988 Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ........................................ 500,000 457,225 Sedgwick County Renwick Unified School District (AMBAC) 6.15% 11/1/09 ............................... 250,000 274,808 Sedgwick County Unified School District #265 (FSA) 5.50% 10/1/13 ................................. 250,000 259,450 Shawnee County Unified School District #437 (AMBAC) 5.25% 9/1/10 ................................ 130,000 134,194 Summer County Unified School District #356 (MBIA) 5.75% 9/1/11 ................................. 250,000 266,398 ---------- 3,382,752 ---------- HIGHER EDUCATION REVENUE BONDS - 9.94% Kansas Development Finance Authority - Kansas Board of Regents - Wichita State University (AMBAC) 5.875% 6/1/17 ............................... 300,000 316,578 Puerto Rico Educational Facility Revenue - Polytechnic University 6.50% 8/1/24 ................. 1,185,000 1,293,246 ---------- 1,609,824 ---------- HOSPITAL REVENUE BONDS - 11.79% Kansas Development Finance Authority Healthcare Facility Revenue For Stormont - Vail Healthcare, Inc. (MBIA) 5.80% 11/15/16 ............................... 250,000 267,028 Lawrence, Kansas For Lawrence Memorial Hospital 6.20% 7/1/19 ........................................ 250,000 265,353 Newton, Kansas Hospital Revenue - Newton Healthcare Corp. ............................. Class A 5.75% 11/15/24 .............................. 250,000 252,310 Olathe, Kansas Health Facility For Evangelical Lutheran Good Samaritan Project (AMBAC) 6.00% 5/1/19 ........................................ 250,000 267,530 Olathe, Kansas Health Facility Revenue For Olathe Medical Center Series 94A (AMBAC) 5.875% 9/1/16 ....................................... 100,000 103,388 Shawnee County Sisters of Charity Leavenworth Hospital (FSA) 5.00% 12/1/23 ........................ 250,000 243,668 Wichita, Kansas Health Care Improvement Industrial Revenue (The Kansas Masonic Home - Series VI) 6.25% 12/1/17 ..................... 500,000 509,585 ---------- 1,908,862 ---------- HOUSING REVENUE BONDS - 22.42% Garnett, Kansas Senior Housing Annual Appropriation Leasehold Revenue Garnett Housing Authority Project 5.90% 10/1/18 ............................... 810,000 815,597 18 for tax-exempt income TAX-FREE KANSAS FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Kansas D.F.A. Revenue for Martin Creek Multifamily Housing Project (FHA) 6.50% 8/1/24 .............. $ 50,000 $ 53,213 Kansas State Development Finance Authority Multifamily Revenue - Oak Ridge Park Apartments Project - Series F 6.625% 8/1/29 ................ 1,000,000 1,065,380 Olathe Multifamily Deerfield Apartments Series 1994A (FNMA) 6.45% 6/1/19 ....................... 250,000 267,408 Olathe, Kansas Multifamily Housing - Jefferson Place Apartments Project - Series B 6.10% 7/1/22 ...... 800,000 828,408 Wichita Kansas Multifamily Housing Innes Station Apartments Project II 6.25% 3/1/28 .............. 600,000 600,798 ---------- 3,630,804 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 0.32% Wamego Pollution Control Revenue Western Resources Inc. Project (MBIA) 6.00% 2/1/33 ................ 50,000 52,392 ---------- 52,392 ---------- LEASE/CERTIFICATES OF PARTICIPATION - 2.17% Linn County Kansas Certificates of Participation 7.25% 3/1/13 ...... 350,000 350,865 ---------- 350,865 ---------- * PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 10.05% Douglas County Lawrence Unified School District #497 6.00% 9/1/15-03 ............................ 250,000 267,175 Jefferson County Unified School District #340 (FSA) 6.35% 9/1/15-04 ........................... 250,000 278,860 Kansas City Community College Student Center (MBIA) 6.25% 5/15/20-02 ......................... 300,000 323,115 Kansas Development Finance Authority Water Pollution Control Sewer Revenue 6.00% 11/1/14-03 ................................ 250,000 275,243 Shawnee County Unified School District #501 (FGIC) 5.75% 2/1/11-03 .......................... 200,000 212,760 Shawnee County Unified School District #345 (MBIA) 5.75% 9/1/11-04 .......................... 250,000 270,803 ---------- 1,627,956 ---------- PUBLIC POWER REVENUE AUTHORITY BONDS - 6.01% Puerto Rico Electric Power Authority 5.25% 7/1/21 .................................... 500,000 502,895 Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 .......................... 500,000 470,835 ---------- 973,730 ---------- TRANSPORTATION REVENUE BONDS - 0.63% Kansas Department of Transportation 5.375% 3/1/13 ................................... 100,000 102,491 ---------- 102,491 ---------- WATER & SEWER REVENUE BONDS - 8.96% Haysville Water & Sewer (FSA) 5.80% 10/1/16 ........ 250,000 267,348 Johnson County Water Revenue 5.25% 12/1/15 ......... 175,000 178,533 Kansas City Utility System Revenue (FGIC) 6.375% 9/1/23 ............................ 900,000 1,005,498 ---------- 1,451,379 ---------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) OTHER REVENUE BONDS - 4.77% Virgin Islands Public Finance Authority Revenue Sub Lien Funded Loan Notes Series E 5.875% 10/1/18 ............................ $750,000 $ 773,393 ------------ 773,393 ------------ TOTAL MUNICIPAL BONDS (COST $14,806,234) .............. 15,864,448 ------------ NUMBER OF SHARES --------- SHORT-TERM INVESTMENTS - 0.69% Norwest Advantage Municipal Money Market Fund ......... 111,577 111,577 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $111,577) .......... 111,577 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 98.64% (COST $14,917,811) ................................. $ 15,976,025 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.36% 220,574 ------------ NET ASSETS APPLICABLE TO 1,459,128 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ............ $ 16,196,599 ============ NET ASSET VALUE - TAX FREE KANSAS FUND A CLASS ($12,194,132 / 1,098,893 SHARES) ................... $ 11.10 ============ NET ASSET VALUE - TAX FREE KANSAS FUND B CLASS ($3,884,747 / 349,621 SHARES) ...................... $ 11.11 ============ NET ASSET VALUE - TAX FREE KANSAS FUND C CLASS ($117,720 / 10,614 SHARES) ......................... $ 11.09 ============ COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common stock, $0.01 par value, unlimited shares authorized to the Tax-Free Kansas Fund ........ $ 15,148,266 Accumulated net realized loss on investments .......... (9,881) Net unrealized appreciation of investments ............ 1,058,214 ------------ Total net assets ...................................... $ 16,196,599 ============ - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. - ---------------------- Summary of Abbreviations: AMBAC - Insured by the Ambac Indemnity Corporation FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by the Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE KANSAS FUND A CLASS Net asset value A Class (A) ..................................... $ 11.10 Sales charge (3.75% of offering price or 3.87% of amount invested per share) (B) ............................................... 0.43 ------------ Offering price .................................................. $ 11.53 ============ - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes for tax-exempt income 19 VOYAGEUR INVESTMENT TRUST DELAWARE-VOYAGEUR TAX-FREE MISSOURI INSURED FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS - 98.61% GENERAL OBLIGATION BONDS - 7.82% Clark County School District (FSA) 5.75% 3/1/15 ........................ $ 1,775,000 $ 1,870,956 Franklin County School District (FGIC) 5.75% 3/1/13 ....................... 1,100,000 1,156,122 Springfield School District #R12 Series A (MBIA) 5.25% 3/1/11 .............. 500,000 510,500 St. Charles (FSA) 5.75% 3/1/15 ............... 1,000,000 1,056,890 ----------- 4,594,468 ----------- HIGHER EDUCATION REVENUE BONDS - 3.40% Missouri State Health & Education Facility (Central Missouri State University) (AMBAC) 5.75% 10/1/25 ..................... 1,000,000 1,044,360 Missouri State Health & Education Facility University Revenue for St. Louis University (AMBAC) 4.75% 10/1/16 ..................... 1,000,000 955,260 ----------- 1,999,620 ----------- HOSPITAL REVENUE BONDS - 23.86% Cape Girardeau SE Missouri Hospital (MBIA) 5.25% 6/1/16 ....................... 1,000,000 1,031,690 Hannibal Health Facilities Series A (Hannibal Regional Hospital) (FSA) 5.625% 3/1/12 ....................... 2,500,000 2,645,775 Hannibal Health Facilities Series A (Hannibal Regional Hospital) (FSA) 5.75% 3/1/22 ........................ 1,000,000 1,056,010 Jackson County St. Joseph's Hospital (MBIA) 6.50% 7/1/12 ....................... 1,980,000 2,154,655 Jackson County St. Mary's Hospital (MBIA) 5.75% 7/1/24 ....................... 2,000,000 2,092,380 Missouri State Health & Education Facility (Children's Mercy Hospital) (MBIA) 5.65% 5/15/23 ...................... 1,000,000 1,032,030 Missouri State Health & Education Facility (Health Midwest) (MBIA) 6.25% 2/15/22 ..... 1,000,000 1,069,120 Missouri State Health & Education Facility (Heartland Health Systems) (AMBAC) 6.35% 11/15/17 .................... 1,250,000 1,354,875 Missouri State Health & Education Facility (SSM Health Care) (MBIA) 6.40% 6/1/10 ..... 500,000 576,785 Missouri State Health & Education Facility (St. Luke's Health Systems) (MBIA) 5.125% 11/15/19 .................... 1,000,000 999,290 ----------- 14,012,610 ----------- HOUSING REVENUE BONDS - 16.86% Missouri Single Family Housing (GNMA) 7.20% 12/1/17 ...................... 230,000 254,753 PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Missouri Single Family Housing (GNMA) 7.25% 12/1/20 .......................... $ 465,000 $ 514,690 Missouri Single Family Housing (FNMA/GNMA) 7.20% 9/1/26 ...................... 2,015,000 2,305,926 Missouri Single Family Housing (FNMA/GNMA) 7.25% 9/1/26 ...................... 2,295,000 2,582,907 Missouri Single Family Housing (FNMA/GNMA) 7.45% 9/1/27 ...................... 1,865,000 2,144,172 Missouri Single Family Housing (FNMA/GNMA) 7.55% 9/1/27 ...................... 1,830,000 2,104,537 ----------- 9,906,985 ----------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 1.84% St. Louis Municipal Finance Corporation City Lease Revenue - City Justice Center, Series A (AMBAC) 5.95% 2/15/16 ................ 1,000,000 1,081,790 ----------- 1,081,790 ----------- LEASE/CERTIFICATE OF PARTICIPATION - 1.82% Kansas City Muehlebach Hotel (FSA) 5.90% 12/1/18 ........................... 1,000,000 1,069,570 ----------- 1,069,570 ----------- POWER AUTHORITY REVENUE BONDS - 8.39% Puerto Rico Electric Power Authority Power Revenue Series DD (FSA) 4.50% 7/1/19 .................. 2,750,000 2,575,925 Sikeston Electric Revenue (MBIA) 5.00% 6/1/22 .... 1,250,000 1,227,700 Sikeston Electric Revenue (MBIA) 6.00% 6/1/13 .... 1,000,000 1,127,790 ----------- 4,931,415 ----------- * PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 20.26% **Greene County Single Family Mortgage Revenue (Private Mortgage Insurance) (Escrowed to maturity) 5.175% 3/1/16 ......... 1,225,000 496,664 Kansas City Airport Revenue (FSA) 6.875% 9/1/14-04 ....................... 1,675,000 1,933,485 Sikeston Electric Revenue (MBIA) 6.25% 6/1/12-02 ....................... 2,000,000 2,193,760 St. Charles School District (FGIC) 6.50% 2/1/14-06 ....................... 1,250,000 1,430,363 St. Louis County School District #8 (MBIA) 5.60% 2/15/15-05 ...................... 1,490,000 1,609,215 St. Louis Municipal Finance Corporation Leasehold Revenue (FGIC) 6.25% 2/15/12-05 .............. 1,850,000 2,066,765 Troy School District #3 Lincoln County (MBIA) 6.10% 3/1/14-05 ....................... 1,235,000 1,369,887 West Platte School District (MBIA) 5.85% 3/1/15-05 ....................... 750,000 805,035 ----------- 11,905,174 ----------- 20 for tax-exempt income TAX-FREE MISSOURI INSURED FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) UTILITY REVENUE BONDS - 4.00% Missouri Environmental Pollution Control Revenue for St. Joseph's Light & Power Co. (AMBAC) 5.85% 2/1/13 ............................... $2,200,000 $ 2,351,360 ----------- 2,351,360 ----------- WATER & SEWER REVENUE BONDS - 3.98% Liberty Sewer (MBIA) 6.00% 2/1/08 ..................... 600,000 671,808 Liberty Sewer (MBIA) 6.15% 2/1/15 ..................... 1,500,000 1,667,580 ----------- 2,339,388 ----------- OTHER REVENUE BONDS - 6.38% Kansas City Municipal Assistance Bartle Hall Convention Center (MBIA) 5.60% 4/15/16 ............. 1,240,000 1,293,258 Missouri State Environmental - State Revolving Fund - Branson (FSA) 6.05% 7/1/16 .................. 2,265,000 2,454,739 ----------- 3,747,997 ----------- TOTAL MUNICIPAL BONDS (COST $53,703,186) .............. 57,940,377 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED - 98.61% (COST $53,703,186) ................................. $57,940,377 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.39% .............................................. 816,988 ----------- NET ASSETS APPLICABLE TO 5,442,338 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ............ $58,757,365 =========== NET ASSET VALUE - TAX FREE MISSOURI INSURED FUND A CLASS ($47,378,189 / 4,388,093 SHARES) ...... $ 10.80 =========== NET ASSET VALUE - TAX FREE MISSOURI INSURED FUND B CLASS ($11,268,629 / 1,044,010 SHARES) ........... $ 10.79 =========== NET ASSET VALUE - TAX FREE MISSOURI INSURED FUND C CLASS ($110,547 / 10,235 SHARES) ................. $ 10.80 ============ COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $0.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax-Free 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 ....................................... $ 55,466,860 Accumulated net realized loss on investments........... (946,686) Net unrealized appreciation of investments ............ 4,237,191 ------------ Total Net Assets ...................................... $ 58,757,365 ============ - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** The interest rate shown for this security is the effective yield. - ---------------------- Summary of Abbreviations: AMBAC - Insured by the Ambac Indemnity Corporation 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 NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE MISSOURI INSURED FUND A CLASS Net asset value A Class (A) ............................. $ 10.80 Sales charge (3.75% of offering price or 3.89% of amount invested per share) (B) ....................... 0.42 --------- Offering price .......................................... $ 11.22 ========= - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes VOYAGEUR TAX-FREE FUNDS, INC. DELAWARE-VOYAGEUR TAX-FREE NORTH DAKOTA FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS - 98.29% GENERAL OBLIGATION BONDS - 1.60% Grand Forks Sewer Revenue 6.70% 6/1/07 ..... $ 270,000 $ 287,037 North Dakota State Real Estate 6.00% 9/1/13 215,000 215,759 ---------- 502,796 ---------- HIGHER EDUCATION REVENUE BONDS - 3.40% Burleigh County University Facilities University of Mary Project 7.125% 12/1/11 250,000 265,308 North Dakota State University Housing & Auxiliary Facility 6.30% 4/1/07 ......... 250,000 268,430 North Dakota State University Housing & Auxiliary Facility 6.50% 4/1/12 ......... 500,000 539,970 ---------- 1,073,708 ---------- HOSPITAL REVENUE BONDS - 29.52% Bismarck Hospital Alexius Medical Center (AMBAC) 6.90% 5/1/06 .................... 500,000 542,165 Bismarck Hospital Medical Center One Inc. .. (MBIA) 7.50% 5/1/13 ..................... 250,000 261,845 Cando, ND Nursing Facility Revenue - Towner County Medical Center Project 7.125% 8/1/22 ........................... 1,000,000 1,031,740 for tax-exempt income 21 TAX-FREE NORTH DAKOTA FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Carrington, ND Health Facility Revenue for Carrington Health Center 6.25% 11/15/15 ......... $ 500,000 $ 538,760 Cass County, ND Health Facility Revenue for Catholic Health Villa - Nazareth Project 6.25% 11/15/14 .................................. 1,000,000 1,077,520 Fargo Hospital Facility St. Luke's Hospital, Series 1992 6.50% 6/1/15 ........................ 1,000,000 1,084,240 Grand Forks North Dakota Senior Housing Revenue 4000 Valley Square Project 6.25% 12/1/34 ................................... 2,000,000 2,039,700 Grand Forks United Hospital Obligated Group (MBIA) 6.125% 12/1/14 ........................... 225,000 248,252 Grand Forks United Hospital Obligated Group (MBIA) 6.25% 12/1/19 ............................ 250,000 273,890 Killdeer North Dakota Nursing Care Revenue - Hill Top Home of Comfort 6.00% 11/1/12 .......... 850,000 868,768 Valley City, North Dakota Congregate Housing Revenue (Bridgeview Estates Project) 7.25% 8/1/22 ....... 300,000 306,390 Ward County, ND Health Care Facility Revenue - Trinity Obligated Group Ser96A 6.00% 7/1/11 ............................. 1,000,000 1,049,220 ---------- 9,322,490 ---------- HOUSING REVENUE BONDS - 26.30% Grand Forks Multifamily Housing Authority Revenue - Ryan House Section 8 6.30% 3/1/22 ............... 305,000 328,024 Minot Single Family Mortgage 7.70% 8/1/10 .......... 235,000 250,249 North Dakota Housing Finance Authority Single Family Mortgage Series A 6.30% 7/1/16 ........................... 1,955,000 2,092,534 North Dakota Housing Finance Authority Single Family Mortgage 6.25% 1/1/17 ............. 2,225,000 2,378,570 North Dakota Single Housing Finance Agency Single Family Mortgage Series A (FHA) 6.75% 7/1/12 ..................... 160,000 170,435 North Dakota State Housing Finance Agency Revenue (FNMA) 6.125% 12/1/15 ........................... 500,000 533,640 North Dakota State Housing Finance Agency Revenue Multifamily (FNMA) 6.15% 12/1/17 ................ 1,300,000 1,385,865 North Dakota State Housing Finance Authority Single Family Mortgage Series A 6.95% 7/1/12 ........................... 300,000 321,456 North Dakota State Housing Finance Agency Single Family Mortgage Series E (FNMA) 6.30% 1/1/15 .................... 790,000 845,820 ---------- 8,306,593 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 1.70% Mercer County Pollution Control Otter Tail Power Company Project 6.90% 2/1/19 .................................... 500,000 537,325 ---------- 537,325 ---------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS (CONTINUED) POWER AUTHORITY REVENUE BONDS - 18.26% Mercer County Pollution Control Revenue Montana - Dakota Utilities Company Project (FGIC) 6.65% 6/1/22 ................................ $ 500,000 $ 548,730 Mercer County Pollution Control Revenue for Basin Electric Power 6.05% 1/1/19 ....................................... 1,250,000 1,359,688 Puerto Rico Electric Power Authority 5.25% 7/1/21 ....................................... 800,000 804,632 Puerto Rico Electric Power Authority Power Revenue Series DD (FSA) 4.50% 7/1/19 ............... 1,250,000 1,170,875 Puerto Rico Electric Power Authority Power Revenue Series EE 4.75% 7/1/24 ..................... 2,000,000 1,883,340 ----------- 5,767,265 ----------- * PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 1.00% Devils Lake Public School District #1 6.80% 5/1/11-99 .................................... 100,000 102,472 Fargo Park District Revenue 7.25% 11/1/11-00 ................................... 200,000 214,016 ----------- 316,488 ----------- TRANSPORTATION REVENUE BONDS - 4.89% Puerto Rico Commonwealth Highway & Transportation Authority Series Y 5.50% 7/1/26 .............................. 1,500,000 1,544,115 ----------- 1,544,115 ----------- OTHER REVENUE BONDS - 11.62% North Dakota Building Authority Revenue (FSA) 6.00% 12/1/14 ................................ 1,310,000 1,406,140 North Dakota Building Authority Revenue (FSA) 6.10% 12/1/16 ................................ 1,480,000 1,595,026 North Dakota State Municipal Bond Bank 6.25% 12/1/11 ...................................... 450,000 459,104 North Dakota State Student Loan (AMBAC) 7.00% 7/1/05 ............................... 200,000 208,972 ----------- 3,669,242 ----------- Total Municipal Bonds (cost $29,114,490) .............. 31,040,022 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED (COST $29,114,490) - 98.29% ........................ $31,040,022 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.71% ................................ 541,509 ----------- NET ASSETS APPLICABLE TO 2,782,766 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ............ $31,581,531 =========== NET ASSET VALUE - TAX-FREE NORTH DAKOTA FUND A CLASS ($30,611,590 / 2,697,295) .......................... $ 11.35 =========== NET ASSET VALUE - TAX-FREE NORTH DAKOTA FUND B CLASS ($928,188 / 81,789) ................................ $ 11.35 =========== NET ASSET VALUE - TAX-FREE NORTH DAKOTA FUND C CLASS ($41,753 / 3,682) .................................. $ 11.34 =========== 22 for tax-exempt income Tax-Free North Dakota Fund Statement of Net Assets (Continued) - -------------------------------------------------------------------------------- COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $0.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax-Free North Dakota Fund A Class, 1,000,000,000 shares allocated to the Tax-Free North Dakota Fund B Class and 1,000,000,000 shares allocated to the Tax-Free North Dakota Fund C Class.... $29,629,687 Accumulated net realized gain on investments................... 26,312 Net unrealized appreciation of investments..................... 1,925,532 ------------ Total Net Assets............................................... $31,581,531 ============ - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. - ---------------------- Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation FGIC - Insured by the Financial Guaranty Insurance Company FHA - Insured by the Federal Housing Authority FNMA - Insured by the Federal National Mortgage Association FSA - Insured by the Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE NORTH DAKOTA FUND A CLASS Net asset value A Class (A).................................... $11.35 Sales charge (3.75% of offering price or 3.88% of amount invested per share)(B) ..................................... 0.44 ------------ Offering price................................................. $11.79 ============ - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes VOYAGEUR INVESTMENT TRUST DELAWARE-VOYAGEUR TAX-FREE OREGON INSURED FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS - 97.62% GENERAL OBLIGATION BONDS - 19.49% Hermiston Water Bonds (AMBAC) 6.20% 8/1/24 ..................... $ 500,000 $ 543,855 Lane County School District #19 (Springfield) (FGIC) 6.00% 10/15/14 .................... 500,000 558,755 Lincoln County School District (FGIC) 5.25% 6/15/12 ..................... 1,450,000 1,502,490 Malheur County Jail (MBIA) 6.30% 12/1/12 .... 500,000 554,775 Multnomah County School District #3 Park Rose (FGIC) 5.50% 12/1/11 ..................... 500,000 524,380 TAX-FREE OREGON INSURED FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) GENERAL OBLIGATION BONDS (CONTINUED) North Unit Irrigation District (MBIA) 5.75% 6/1/16 ........................... $1,000,000 $1,059,790 Portland (MBIA) 5.75% 6/1/15 ..................... 500,000 523,120 Tillamook County (FGIC) 6.25% 1/1/14 ............. 250,000 275,800 ** Umatilla County Oregon School District #6R Umatilla (AMBAC) 5.196% 12/15/22 ....................... 200,000 57,030 Washington County School District (Sherwood) (FSA) #88J 6.10% 6/1/12 ....................... 300,000 327,264 ---------- 5,927,259 ---------- HIGHER EDUCATION REVENUE BONDS - 16.46% Central Oregon Community College (FGIC) 5.90% 6/1/09 ........................... 750,000 802,658 Oregon Health & Education Authority for Lewis & Clark College (MBIA) 6.125% 10/1/24 ......................... 1,055,000 1,151,142 Oregon Health & Education Authority for Reed College (MBIA) 5.375% 7/1/25 .................. 1,000,000 1,024,440 ** Oregon Health Sciences University (MBIA) 5.126% 7/1/21 .......................... 6,500,000 2,028,845 --------- 5,007,085 --------- HOSPITAL REVENUE BONDS - 7.08% Western Lane Hospital District for Sisters of St. Joseph Peace Hospital (MBIA) 5.75% 8/1/19 ........................... 1,000,000 1,062,900 Western Lane Hospital District for Sisters of St. Joseph Peace Hospital (MBIA) 5.875% 8/1/12 .......................... 1,000,000 1,089,780 --------- 2,152,680 --------- HOUSING REVENUE BONDS - 3.75% Oregon Health, Housing, Educational, and Cultural Facilities Authority for Pier Park Project (GNMA) 6.05% 4/1/18 ........................... 1,095,000 1,141,516 --------- 1,141,516 --------- LEASE/CERTIFICATES OF PARTICIPATION - 3.51% Oregon State Department Administrative Services Certificate of Participation - Series A (AMBAC) 5.80% 5/1/24 ................. 1,000,000 1,066,190 --------- 1,066,190 --------- POWER AUTHORITY REVENUE BONDS - 8.24% Central Lincoln Peoples Utility District (AMBAC) 5.75% 1/1/15 .......................... 500,000 523,000 Northern Wasco County (FGIC) 5.625% 12/1/22 ......................... 1,000,000 1,045,190 Puerto Rico Electric Power Authority Power Revenue Series DD (FSA) 4.50% 7/1/19 .................. 1,000,000 936,700 --------- 2,504,890 --------- * PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 21.79% Chemeketa Community College (FGIC) 5.80% 6/1/12-06 ........................ 1,500,000 1,654,605 Eugene Electric Revenue Series C (MBIA) 5.80% 8/1/22-04 ............... 1,250,000 1,369,350 for tax-exempt income 23 TAX-FREE OREGON INSURED FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) PRE-REFUNDED/ESCROWED TO MATURITY BONDS (CONTINUED) Lane County School District #19 (MBIA) 6.30% 10/15/14-04 .......................... $ 500,000 $ 562,675 Multnomah County School District #39 Corbett (MBIA) 6.00% 12/1/13-04 ................... 500,000 550,045 Portland Sewer System Revenue (FSA) 6.25% 6/1/15-04 ............................. 1,000,000 1,116,740 Umatilla Pendleton School District #016R (AMBAC) 6.00% 7/1/14-04 ........................... 500,000 552,490 Washington County Education Service (MBIA) 7.10% 6/1/25-05 ............................ 700,000 820,512 ----------- 6,626,417 ----------- TRANSPORTATION REVENUE BONDS - 6.83% Portland, Oregon Airport Revenue for Portland International Airport (FGIC) 5.625% 7/1/26 ........ 2,000,000 2,076,580 ----------- 2,076,580 ----------- Water & Sewer Revenue Bonds - 10.47% Beaverton Water Revenue (FSA) 6.125% 6/1/14 ............................... 500,000 542,550 Klamath Falls Water Revenue (FSA) 6.10% 6/1/14 ................................ 500,000 545,700 Salem Water & Sewer Revenue (MBIA) 5.50% 6/1/14 ............................... 1,000,000 1,046,870 Salem Water & Sewer Revenue (MBIA) 5.625% 6/1/16 .............................. 1,000,000 1,049,650 ----------- 3,184,770 ----------- Total Municipal Bonds (cost $27,361,509) ............. 29,687,387 ----------- Number of Shares --------- Short-Term Investments - 1.44% Norwest Advantage Municipal Money Market Fund ........ 437,082 437,082 ----------- Total Short-Term Investments (cost $437,082) ......... 437,082 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED (COST $27,798,591) - 99.06% ....................... $30,124,469 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.94% ............................... 286,510 ----------- NET ASSETS APPLICABLE TO 2,939,194 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ........... $30,410,979 =========== NET ASSET VALUE - TAX-FREE OREGON INSURED FUND A CLASS ($23,594,553 / 2,280,587 SHARES) ..... $ 10.35 =========== NET ASSET VALUE - TAX-FREE OREGON INSURED FUND B CLASS ($5,824,402 / 562,814 SHARES) ........ $ 10.35 =========== NET ASSET VALUE - TAX-FREE OREGON INSURED FUND C CLASS ($992,024 / 95,793 SHARES) ........... $ 10.36 =========== COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $0.01 par value, unlimited shares authorized to the Tax-Free Oregon Insured Fund.................................. $28,697,212 Accumulated net realized loss on investments..................... (612,111) Net unrealized appreciation of investments....................... 2,325,878 ------------ Total net assets $ 30,410,979 ============ - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. ** The interest rate shown for this security is the effective yield. - ---------------------- Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by the Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE OREGON INSURED FUND A CLASS Net asset value A Class (A)....................................... $10.35 Sales charge (3.75% of offering price, or 3.87% of amount invested per share)(B)......................................... 0.40 ------------ Offering price.................................................... $10.75 ============ - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes VOYAGEUR INVESTMENT TRUST DELAWARE-VOYAGEUR TAX-FREE WASHINGTON INSURED FUND STATEMENT OF NET ASSETS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE -------------------- MUNICIPAL BONDS - 90.66% GENERAL OBLIGATIONS - 16.80% Benton County Independent School District #116 (FGIC) 5.80% 12/1/10 ............................... $100,000 $108,627 Bothell (AMBAC) 5.70% 12/1/10 ......................... 75,000 80,463 Clark County School District #114 (FGIC) 6.00% 12/1/11 ............................... 75,000 81,472 Kent Washington Series A (MBIA) 6.00% 12/1/16 ............................... 100,000 109,789 King County Kent School District #415 (MBIA) 5.55% 12/1/11 ............................... 75,000 81,673 Snohomish County (MBIA) 5.90% 12/1/15.................. 75,000 79,412 24 for tax-exempt income TAX-FREE WASHINGTON INSURED FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE --------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Washington State Series 93A UTGO Utility General Obligation (FGIC) 5.75% 10/1/17 ......... $100,000 $105,114 -------- 646,550 -------- HOUSING REVENUE BONDS - 23.85% King County, Washington Housing Authority - Fred Lind Manor Project-A (GNMA) 6.672% 6/20/32 ........................... 200,000 221,602 Kitsap County Housing (GNMA) 7.10% 2/20/36 ......... 200,000 227,796 Washington State Housing Finance Commonwealth Multifamily Mortgage Revenue A (GNMA) 6.00% 7/1/30 ............................. 60,000 63,630 Washington State Housing Finance - Single Family - Series 2A (GNMA) (AMT) 6.30% 12/1/27 ...................... 180,000 192,593 Washington State Housing Single Family Mortgage Revenue (GNMA) 6.20% 12/1/22 ........... 200,000 212,104 -------- 917,725 -------- HIGHER EDUCATION REVENUE BONDS - 15.12% Washington Higher Education Pacific Lutheran College (Connie Lee) 5.70% 11/1/26 ...................... 200,000 210,832 Washington State Higher Educational Facilities Seattle University Project (AMBAC) 5.20% 5/1/28 ............................ 150,000 150,790 Washington State University: Housing & Dining System (MBIA) 6.375% 10/1/18 ............. 200,000 220,202 -------- 581,824 -------- HOSPITAL REVENUE BONDS - 13.65% University Of Washington Medical Center (FSA) 6.30% 8/15/14 ............................. 200,000 220,777 Washington State Health Care Facilities Authority Revenue Swedish Health Systems (AMBAC) 5.25% 11/15/26 .......................... 100,000 99,263 Washington State Health Care Facility Yakima Valley Memorial Hospital (Connie Lee) 5.25% 12/1/20 ...................... 100,000 100,233 Washington State Health Care Peace Health (MBIA) 5.625% 11/15/15 .......................... 100,000 104,923 -------- 525,196 -------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 2.13% University Of Washington Parking Revenue (AMBAC) 6.125% 11/1/14 .......................... 75,000 82,034 -------- 82,034 -------- POWER AUTHORITY REVENUE BONDS - 8.24% Grant County Public #2 Wanapum (MBIA) 5.875% 1/1/26 ............................ 100,000 105,156 Kittitas County Public #1 (MBIA) 5.80% 12/1/20 ............................ 100,000 105,358 Washington State Public Power #1 (MBIA) 5.75% 7/1/12 ............................. 100,000 106,648 -------- 317,162 -------- PRINCIPAL MARKET AMOUNT VALUE ---------------------- MUNICIPAL BONDS (CONTINUED) TRANSPORTATION REVENUE BONDS - 1.32% Port Tacoma Washington (AMBAC) 5.30% 12/1/17 ............................... $ 50,000 $ 50,812 ---------- 50,812 ---------- WATER & SEWER REVENUE BONDS - 9.55% Covington Water & Sewer Revenue (AMBAC) 6.00% 3/1/15 ................................ 75,000 80,244 Olympia Washington Water & Sewer (FGIC) 5.125% 11/1/17 ............................... 100,000 100,914 Seattle Metrolpolitan Sewer Revenue (FGIC) 5.70% 1/1/14 ................................. 75,000 78,766 Vancouver Water & Sewer Revenue (FGIC) 6.00% 6/1/16 ................................. 100,000 107,399 ---------- 367,323 ---------- TOTAL MUNICIPAL BONDS (COST $3,244,955 ) ............... 3,488,626 ---------- NUMBER OF SHARES --------- SHORT-TERM INVESTMENTS - 7.21% Norwest Advantage Municipal Money Market Fund .......... 277,461 277,461 ---------- TOTAL SHORT-TERM INVESTMENTS (COST $277,461) ........... 277,461 ---------- TOTAL MARKET VALUE OF SECURITIES OWNED (COST $3,522,416) - 97.87% .......................... $3,766,087 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.13% 82,111 ---------- NET ASSETS APPLICABLE TO 355,998 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ............. $3,848,198 ========== NET ASSET VALUE - TAX-FREE WASHINGTON INSURED FUND A CLASS ($2,308,064 / 213,624 SHARES) ................. $ 10.80 ========== NET ASSET VALUE - TAX-FREE WASHINGTON INSURED FUND B CLASS ($1,239,027 / 114,525 SHARES) ................. $ 10.82 ========== NET ASSET VALUE - TAX-FREE WASHINGTON INSURED FUND C CLASS ($301,107 / 27,849 SHARES) .................... $ 10.81 ========== COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common Stock, $0.01 par value, unlimited shares authorized to the Tax-Free Washington Insured Fund .. $3,685,267 Accumulated net realized loss on investments ........... (80,740) Net unrealized appreciation of investments ............. 243,671 ---------- Total net assets ....................................... $3,848,198 ========== - ---------------------- Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation AMT - Alternative Minimum Tax Connie Lee - Insured by the College Construction Insurance Association FGIC - Insured by the Financial Guaranty Insurance Company FSA - Insured by the Financial Security Assurance GNMA - Insured by the Government National Mortgage Association MBIA - Insured by the Municipal Bond Insurance Association for tax-exempt income 25 Tax-Free Washington Insured Fund Statement of Net Assets (Continued) - -------------------------------------------------------------------------------- NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE WASHINGTON INSURED FUND A CLASS Net asset value A Class (A) ....................... $10.80 Sales charge (3.75% of offering price, or 3.89% of amount invested per share)(B) ......................... 0.42 ------------ Offering price .................................... $11.22 ============ - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes Voyageur Mutual Funds, Inc. Delaware-Voyageur Tax-Free Wisconsin Fund Statement of Net Assets June 30, 1998 (Unaudited) - -------------------------------------------------------------------------------- Principal Market Amount Value ----------------------- MUNICIPAL BONDS - 97.97% GENERAL OBLIGATION BONDS - 3.57% Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ................................... $1,500,000 $1,371,675 ---------- 1,371,675 ---------- HIGHER EDUCATION REVENUE BONDS - 2.22% Madison Community Development Authority Revenue - Edgewood College 6.25% 4/1/14 .................. 500,000 530,170 Puerto Rico Educational Facility Revenue - Polytechnic University 6.50% 8/1/24 ............ 295,000 321,951 ---------- 852,121 ---------- HOSPITAL REVENUE BONDS - 2.59% Kaukauna Housing Authority Revenue - St. Paul Home Inc. 6.10% 9/1/07 ................ 200,000 206,530 Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities (Hospital Auxilio Mutuo Project - Series A) 5.50% 7/1/17 ................................... 500,000 524,815 Superior Redevelopment Authority Revenue - Superior Memorial Hospital (GNMA) 5.80% 5/1/10 .......... 250,000 262,025 ---------- 993,370 ---------- HOUSING REVENUE BONDS - 27.64% Dane County Multifamily Housing Revenue - Forest Harbor Apartment Project 5.85% 7/1/11 ................................... 125,000 130,305 Dane County Multifamily Housing Revenue - Forest Harbor Apartment Project 5.90% 7/1/12 ................................... 125,000 129,515 Green Bay Wisconsin Housing Authority Multifamily Housing Revenue - Moraine Limited - Series A (FHA) 6.15% 12/1/30 ............................ 2,500,000 2,667,700 La Crosse Housing Authority Washburn Project 6.375% 10/1/16 ................................. 100,000 104,600 TAX-FREE WISCONSIN FUND STATEMENT OF NET ASSETS (CONTINUED) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) La Crosse Housing Authority Washburn Project 6.50% 10/1/26 ................................ $ 250,000 $ 260,398 Milwaukee Redevelopment Authority Multifamily Housing 6.30% 8/1/38 ............. 1,455,000 1,534,167 New Berlin Multifamily Housing Authority Revenue 7.125% 5/1/24 ................................ 500,000 535,210 Puerto Rico Housing Authority Single Family Mortgage Revenue 6.85% 10/15/23 .............. 625,000 665,406 Puerto Rico Housing Bank And Finance Agency (GNMA) 6.25% 4/1/29 .......................... 995,000 1,059,595 Superior Housing Authority - St. Francis Project (GNMA) 6.00% 1/20/22 ......................... 565,000 590,600 Superior Housing Authority - St. Francis Project (GNMA) 6.15% 7/20/31 ......................... 835,000 870,955 Waukesha Wisconsin Housing Westgrove Wood Project (GNMA) 6.00% 12/1/31 ......................... 1,500,000 1,581,810 Wauwatosa Multifamily Housing Revenue - Harwood Place, Inc. 5.75% 12/1/08 ............ 480,000 491,611 ----------- 10,621,872 ----------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 16.41% Hartford Community Development Authority Lease Revenue 6.15% 12/1/09 ........................ 240,000 258,761 Milwaukee Redevelopment Authority Revenue - Goodwill Industries, Inc. 6.35% 10/1/09 ...... 2,000,000 2,105,220 Omro Community Development Authority 5.875% 12/1/11 ............................... 300,000 320,613 Puerto Rico Commonwealth Industrial Development General Purpose Revenue Series B 5.375% 7/1/16 ....................... 1,000,000 1,024,590 Puerto Rico Industrial Medical Environmental Revenue - PepsiCo Project 6.25% 11/15/13 ..... 1,100,000 1,208,053 Two Rivers Community Development Authority Revenue Architectural Forest Products 6.35% 12/15/12 ............................... 250,000 257,640 West Allis Community Development Authority Revenue - Poblocki Investments, Ltd. ......... 5.90% 5/1/03 ................................. 1,080,000 1,131,948 ----------- 6,306,825 ----------- LEASE/CERTIFICATES OF PARTICIPATION - 14.56% Cudahy Community Development Authority Revenue 6.00% 6/1/11 ................................. 1,000,000 1,065,840 De Forest Redevelopment Lease Revenue 6.25% 2/1/18 ................................. 1,000,000 1,058,380 Little Chute Community Development Lease Revenue 5.625% 3/1/19 ................................ 680,000 711,096 Madison Community Development Authority, Monona Terrace Community Project 5.80% 3/1/05 ....... 125,000 134,990 Madison Community Development Authority, Monona Terrace Community Project 5.90% 3/1/06 ....... 365,000 395,160 Madison Community Development Authority, Monona Terrace Community Project 6.10% 3/1/10 ....... 1,500,000 1,629,375 Redgranite Wisconsin Community Development Authority Revenue 5.85% 3/1/18 ............... 605,000 601,449 ----------- 5,596,290 ----------- 26 for tax-exempt income Tax-Free Wisconsin Fund Statement of Net Assets (Continued) - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 5.15% Virgin Islands Public Finance Authority (Escrowed to maturity) 7.30% 10/1/18 ......... $ 700,000 $ 882,469 Wisconsin Housing Finance Authority (FHA) 6.10% 6/1/21-17 ........................ 1,000,000 1,097,330 ----------- 1,979,799 ----------- POWER AUTHORITY REVENUE BONDS - 5.31% Puerto Rico Electric Power Authority Revenue 4.75% 7/1/24 ................................. 500,000 470,835 Puerto Rico Electric Power Authority Revenue 6.00% 7/1/14 ................................. 1,450,000 1,570,887 ----------- 2,041,722 ----------- SPECIAL UTILITY REVENUE BONDS - 0.78% Puerto Rico Telephone Authority Revenue 5.75% 1/1/11 ................................. 285,000 300,416 ----------- 300,416 ----------- WATER & SEWER REVENUE BONDS - 2.59% Puerto Rico Commonwealth Infrastructure Financing Authority Special Series A 5.00% 7/1/21 ...... 1,000,000 994,580 ----------- 994,580 ----------- OTHER REVENUE BONDS - 17.15% Puerto Rico Municipal Finance Authority (FSA) 6.00% 7/1/14 ........................... 1,800,000 1,958,994 **Southeast Wisconsin Professional Baseball Park District Lease Certificates (MBIA) 5.095% 12/15/15 ....................... 1,000,000 415,450 **Southeast Wisconsin Professional Baseball Park District Sales Revenue (MBIA) 5.115% 12/15/16 ....................... 1,115,000 438,897 **Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue (MBIA) 5.287% 12/15/24 ....................... 1,500,000 377,145 **Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue (MBIA) 5.287% 12/15/25 ....................... 1,250,000 298,300 **Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue (MBIA) 5.287% 12/15/28 ....................... 6,250,000 1,275,250 Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue (MBIA) 5.80% 12/15/26 ........................ 1,000,000 1,053,700 Virgin Islands Public Finance Authority Revenue Sub Lien Funded Loan Notes Series E 5.875% 10/1/18 ...................... 750,000 773,385 ----------- 6,591,121 ----------- TOTAL MUNICIPAL BONDS (COST $35,574,582) ........ 37,649,791 ----------- NUMBER MARKET OF SHARES VALUE SHORT-TERM INVESTMENTS - 0.67% Norwest Advantage Municipal Money Market Fund ....... 257,083 $ 257,083 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $257,083) ........ 257,083 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 98.64% (COST $35,831,665) ............................... $ 37,906,874 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.36% .............................. 522,320 ------------ NET ASSETS APPLICABLE TO 3,841,008 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% .......... $ 38,429,194 ============ NET ASSET VALUE - TAX-FREE WISCONSIN FUND A CLASS ($34,601,565 / 3,458,573) ........................ $ 10.00 ============ NET ASSET VALUE - TAX-FREE WISCONSIN FUND B CLASS ($2,522,798 / 252,376) ........................... $ 10.00 ============ NET ASSET VALUE - TAX-FREE WISCONSIN FUND C CLASS ($1,304,831 / 130,059) ........................... $ 10.03 ============ COMPONENTS OF NET ASSETS AT JUNE 30, 1998: Common stock, $0.01 par value, 100,000,000,000 shares authorized to the Fund with 10,000,000,000 shares allocated to Tax-Free Wisconsin Fund A Class, 10,000,000,000 shares allocated to Tax-Free Wisconsin Fund B Class, and 10,000,000,000 shares allocated to Tax-Free Wisconsin Fund C Class ..... $ 36,866,565 Accumulated net realized loss on investments ........ (512,580) Net unrealized appreciation of investments .......... 2,075,209 ------------ Total net assets .................................... $ 38,429,194 ============ - ---------------------- *For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. **The interest rate shown for this security is the effective yield. - ---------------------- Summary of Abbreviations: 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 NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE WISCONSIN FUND A CLASS Net asset value A Class (A) ......................... $10.00 Sales charge (3.75% of offering price, or 3.90% of amount invested per share)(B)............................ 0.39 ------------ Offering price....................................... $10.39 ============ - ---------------------- (A) Net asset value per share, as illustrated, is the estimated amount which would be paid upon the redemption or repurchase of shares. (B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or more. See accompanying notes for tax-exempt income 27 STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
TAX-FREE TAX-FREE TAX-FREE TAX-FREE IDAHO IOWA KANSAS MISSOURI FUND FUND FUND INSURED FUND ----------- ----------- ----------- ----------- INVESTMENT INCOME: Interest ............................. $ 1,260,464 $ 1,135,650 $ 420,214 $ 1,636,959 ----------- ----------- ----------- ----------- EXPENSES: Management fees ...................... 112,890 106,089 37,777 146,883 Distribution expense ................. 87,216 68,360 33,042 116,562 Dividend disbursing and transfer agent fees and expenses ........... 20,928 20,154 8,651 26,005 Registration fees .................... 4,250 4,448 172 420 Reports and statements to shareholders 4,229 13,878 2,921 8,010 Accounting and administration ........ 10,954 11,766 3,657 18,515 Professional fees .................... 6,824 6,480 995 6,030 Custodian fees ....................... 1,680 2,520 900 3,037 Taxes (other than taxes on income) ... 950 1,350 100 12,600 Directors' fees ...................... 564 660 305 750 Other ................................ 3,243 5,056 758 -- ----------- ----------- ----------- ----------- 253,728 240,761 89,278 338,812 Less expenses absorbed or waived ..... (17,945) (24,352) (10,135) (28,365) ----------- ----------- ----------- ----------- Total net expenses ................... 235,783 216,409 79,143 310,447 ----------- ----------- ----------- ----------- Net Investment Income ................ 1,024,681 919,241 341,071 1,326,512 ----------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investment transactions ........... (44,571) 77,889 69,352 150,143 Net change in unrealized appreciation/ depreciation of investments ....... 123,726 4,185 (7,537) (229,163) ----------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............. 79,155 82,074 61,815 (79,020) ----------- ----------- ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................... $ 1,103,836 $ 1,001,315 $ 402,886 $ 1,247,492 =========== =========== =========== ===========
[RESTUBBED]
TAX-FREE TAX-FREE TAX-FREE TAX-FREE NORTH DAKOTA OREGON WASHINGTON WISCONSIN FUND INSURED FUND INSURED FUND FUND ----------- ----------- ----------- ----------- INVESTMENT INCOME: Interest ............................. $ 923,807 $ 794,761 $ 95,940 $ 1,000,732 ----------- ----------- ----------- ----------- EXPENSES: Management fees ...................... 79,186 74,763 8,869 90,922 Distribution expense ................. 48,495 65,049 7,860 57,841 Dividend disbursing and transfer agent fees and expenses ........... 18,173 13,985 3,677 15,294 Registration fees .................... 2,086 4,250 850 1,875 Reports and statements to shareholders 10,577 3,601 2,100 7,265 Accounting and administration ........ 12,806 7,251 2,586 8,988 Professional fees .................... 6,370 869 132 5,760 Custodian fees ....................... 2,268 2,070 -- 1,169 Taxes (other than taxes on income) ... 2,400 624 104 975 Directors' fees ...................... 1,487 420 220 482 Other ................................ 1,502 5,814 -- 8,698 ----------- ----------- ----------- ----------- 185,350 178,696 26,398 199,269 Less expenses absorbed or waived ..... (23,708) (47,448) (13,181) (7,194) ----------- ----------- ----------- ----------- Total net expenses ................... 161,642 131,248 13,217 192,075 ----------- ----------- ----------- ----------- Net Investment Income ................ 762,165 663,513 82,723 808,657 ----------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investment transactions ........... 150,467 (11,500) -- (74,443) Net change in unrealized appreciation/ depreciation of investments ....... (84,969) 117,743 10,980 83,009 ----------- ----------- ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ............. 65,498 106,243 10,980 8,566 ----------- ----------- ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................... $ 827,663 $ 769,756 $ 93,703 $ 817,223 =========== =========== =========== ===========
See accompanying notes 28 for tax-exempt income STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
TAX-FREE IDAHO FUND TAX-FREE IOWA FUND ----------------------------- ----------------------------- SIX MONTHS ENDED SIX MONTHS ENDED 6/30/98 YEAR ENDED 6/30/98 YEAR ENDED (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ................... $ 1,024,681 $ 1,840,447 $ 919,241 $ 1,895,350 Net realized gain (loss) from investments ..................... (44,571) 52,973 77,889 (58,844) Net change in unrealized appreciation (depreciation) of investments ........ 123,726 1,890,831 4,185 1,936,561 ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations ............ 1,103,836 3,784,251 1,001,315 3,773,067 ------------ ------------ ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Net investment income: A Class .............................. (856,127) (1,561,674) (844,585) (1,786,140) B Class .............................. (141,466) (273,521) (56,844) (84,786) C Class .............................. (27,088) (40,080) (17,811) (27,910) ------------ ------------ ------------ ------------ (1,024,681) (1,875,275) (919,240) (1,898,836) ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class .............................. 6,782,593 8,087,405 1,901,017 3,470,467 B Class .............................. 953,204 2,019,434 783,484 1,320,305 C Class .............................. 511,022 702,551 348,077 247,082 Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class .............................. 561,261 967,219 533,231 1,211,605 B Class .............................. 87,948 155,808 41,625 64,063 C Class .............................. 21,977 34,029 9,983 10,869 ------------ ------------ ------------ ------------ 8,918,005 11,966,446 3,617,417 6,324,391 ------------ ------------ ------------ ------------ Cost of shares repurchased: A Class .............................. (3,553,039) (4,493,235) (1,716,432) (8,103,037) B Class .............................. (453,638) (611,419) (55,986) (232,768) C Class .............................. (128,220) (480,962) (131,825) (90,968) ------------ ------------ ------------ ------------ (4,134,897) (5,585,616) (1,904,243) (8,426,773) ------------ ------------ ------------ ------------ Increase (decrease) in net assets derived from capital share transactions ...... 4,783,108 6,380,830 1,713,174 (2,102,382) ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ........................ 4,862,263 8,289,806 1,795,249 (228,151) NET ASSETS: Beginning of period ..................... 41,741,018 33,451,212 42,124,438 42,352,589 ------------ ------------ ------------ ------------ End of period ........................... $ 46,603,281 $ 41,741,018 $ 43,919,687 $ 42,124,438 ============ ============ ============ ============
[RESTUBBED]
TAX-FREE KANSAS FUND TAX-FREE MISSOURI INSURED FUND ------------------------------ ----------------------------- SIX MONTHS ENDED SIX MONTHS ENDED 6/30/98 YEAR ENDED 6/30/98 YEAR ENDED (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ................... $ 341,071 $ 627,158 $ 1,326,512 $ 2,788,692 Net realized gain (loss) from investments ..................... 69,352 127,741 150,143 176,623 Net change in unrealized appreciation (depreciation) of investments ........ (7,537) 513,267 (229,163) 2,344,920 ------------ ----------- ------------ ------------ Net increase in net assets resulting from operations ............ 402,886 1,268,166 1,247,492 5,310,235 ------------ ----------- ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Net investment income: A Class .............................. (265,858) (506,768) (1,101,598) (2,362,959) B Class .............................. (73,278) (123,076) (221,307) (458,482) C Class .............................. (2,020) (4,201) (3,609) (7,784) ------------ ----------- ------------ ------------ (341,156) (634,045) (1,326,514) (2,829,225) ------------ ----------- ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class .............................. 2,162,297 1,225,439 1,258,418 2,768,917 B Class .............................. 394,384 948,070 324,960 2,097,849 C Class .............................. 32,205 74,506 30,000 100,000 Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class .............................. 140,880 297,771 570,714 1,353,277 B Class .............................. 49,065 83,728 140,596 349,671 C Class .............................. 1,985 4,294 2,492 5,484 ------------ ----------- ------------ ------------ 2,780,816 2,633,808 2,327,180 6,675,198 ------------ ----------- ------------ ------------ Cost of shares repurchased: A Class .............................. (820,134) (1,511,541) (2,956,318) (6,861,721) B Class .............................. (23,338) (135,792) (685,142) (1,840,881) C Class .............................. (25,317) (66,004) (146,282) (42,129) ------------ ----------- ------------ ------------ (868,789) (1,713,337) (3,787,742) (8,744,731) ------------ ----------- ------------ ------------ Increase (decrease) in net assets derived from capital share transactions ...... 1,912,027 920,471 (1,460,562) (2,069,533) ------------ ----------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ........................ 1,973,757 1,554,592 (1,539,584) 411,477 NET ASSETS: Beginning of period ..................... 14,222,842 12,668,250 60,296,949 59,885,472 ------------ ----------- ------------ ------------ End of period ........................... $ 16,196,599 $14,222,842 $ 58,757,365 $ 60,296,949 ============ =========== ============ ============
See accompanying notes for tax-exempt income 29 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) - --------------------------------------------------------------------------------
TAX-FREE NORTH DAKOTA FUND TAX-FREE OREGON INSURED FUND --------------------------- ----------------------------- SIX MONTHS SIX MONTHS ENDED ENDED 6/30/98 YEAR ENDED 6/30/98 YEAR ENDED (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ................... $ 762,165 $ 1,601,793 $ 663,513 $ 1,271,100 Net realized gain (loss) from investments ..................... 150,467 416,818 (11,500) 17,126 Net change in unrealized appreciation (depreciation) of investments ........ (84,969) 880,044 117,743 1,188,556 ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations ............ 857,663 2,898,655 769,756 2,476,782 ------------ ------------ ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM: Net investment income: A Class .............................. (742,787) (1,597,868) (527,792) (1,033,966) B Class .............................. (18,541) (37,856) (123,586) (224,133) C Class .............................. (837) (1,691) (12,135) (17,078) ------------ ------------ ------------ ------------ (762,165) (1,637,415) (663,513) (1,275,177) ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class .............................. 816,439 751,084 3,115,017 3,728,179 B Class .............................. 37,862 192,597 399,417 1,626,102 C Class .............................. -- -- 503,152 164,876 Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class .............................. 454,588 1,047,157 316,685 616,492 B Class .............................. 9,661 22,504 79,505 152,794 C Class .............................. 837 1,714 8,986 11,587 ------------ ------------ ------------ ------------ 1,319,387 2,015,056 4,422,762 6,300,030 ------------ ------------ ------------ ------------ COST OF SHARES REPURCHASED: A Class .............................. (1,688,346) (5,770,655) (1,989,852) (4,116,579) B Class .............................. (9,841) (61,932) (1,134,702) (326,601) C Class .............................. -- (3,000) (57,909) (25,157) ------------ ------------ ------------ ------------ (1,698,187) (5,835,587) (3,182,463) (4,468,337) ------------ ------------ ------------ ------------ Increase (decrease) in net assets derived from capital share transactions ...... (378,800) (3,820,531) 1,240,299 1,831,693 ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS ........................ (313,302) (2,559,291) 1,346,542 3,033,298 NET ASSETS: Beginning of period ..................... 31,894,833 34,454,124 29,064,437 26,031,139 ------------ ------------ ------------ ------------ End of period ........................... $ 31,581,531 $ 31,894,833 $ 30,410,979 $ 29,064,437 ============ ============ ============ ============
[RESTUBBED]
TAX-FREE WASHINGTON INSURED FUND TAX-FREE WISCONSIN FUND -------------------------------- ------------------------ SIX MONTHS ENDED SIX MONTHS ENDED 6/30/98 YEAR ENDED 6/30/98 YEAR ENDED (UNAUDITED) 12/31/97 (UNAUDITED) 12/31/97 INCREASE IN NET ASSETS FROM OPERATIONS: Net investment income ................... $ 82,723 $ 156,411 $ 808,657 $ 1,402,926 Net realized gain (loss) from investments ..................... -- 38 (74,443) 190,944 Net change in unrealized appreciation (depreciation) of investments ........ 10,980 141,117 83,009 1,023,956 ------------ ------------ ----------- ----------- Net increase in net assets resulting from operations ............ 93,703 297,566 817,223 2,617,826 ------------ ------------ ----------- ----------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income: A Class .............................. (57,710) (125,449) (745,978) (1,354,012) B Class .............................. (23,170) (30,887) (41,986) (65,438) C Class .............................. (1,843) (1,855) (20,693) (26,356) ------------ ------------ ----------- ----------- (82,723) (158,191) (808,657) (1,445,806) ------------ ------------ ----------- ----------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class .............................. 87,145 404,281 5,282,404 7,121,843 B Class .............................. 288,523 522,233 742,388 505,833 C Class .............................. 230,500 46,196 611,282 347,276 Net asset value of shares issued upon reinvestment of dividends from net investment income: A Class .............................. 26,395 63,054 374,057 758,408 B Class .............................. 13,483 19,999 24,326 42,097 C Class .............................. 1,233 913 18,102 24,405 ------------ ------------ ----------- ----------- 647,279 1,056,676 7,052,559 8,799,862 ------------ ------------ ----------- ----------- COST OF SHARES REPURCHASED: A Class .............................. (184,727) (577,974) (1,942,918) (6,376,585) B Class .............................. (29,306) (131,521) (174,851) (20,571) C Class .............................. -- -- (13,436) (262,082) ------------ ------------ ----------- ----------- (214,033) (709,495) (2,131,205) (6,659,238) ------------ ------------ ----------- ----------- Increase (decrease) in net assets derived from capital share transactions ...... 433,246 347,181 4,921,354 2,140,624 ------------ ------------ ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS ........................ 444,226 486,556 4,929,920 3,312,644 NET ASSETS: Beginning of period ..................... 3,403,972 2,917,416 33,499,274 30,186,630 ------------ ------------ ----------- ----------- End of period ........................... $ 3,848,198 $ 3,403,972 $38,429,194 $33,499,274 ============ ============ ============ ===========
See accompanying notes 30 for tax-exempt income FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE IDAHO FUND - CLASS A -------------------------------------------------- SIX MONTHS ENDED YEAR YEAR PERIOD 6/30/98(1) ENDED ENDED 1/4/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................... $ 11.450 $ 10.910 $ 11.020 $ 10.000 Income from investment operations: Net investment income ....................................... 0.268 0.551 0.580 0.600 Net realized and unrealized gain (loss) on investments ............................................. 0.020 0.552 (0.120) 1.100 ---------- -------- -------- ----------- Total from investment operations ............................ 0.288 1.103 0.460 1.700 ---------- -------- -------- ----------- Less dividends and distributions: Dividends from net investment income ........................ (0.268) (0.563) (0.570) (0.600) Distributions from net realized gain on security transactions ............................................... -- -- -- (0.080) ---------- -------- -------- ----------- Total dividends and distributions ........................... (0.268) (0.563) (0.570) (0.680) ---------- -------- -------- ----------- Net asset value, end of period ................................. $ 11.470 $ 11.450 $ 10.910 $ 11.020 ========== ======== ======== =========== Total return(3)................................................. 2.55% 10.41% 4.36% 17.48% Ratios and supplemental data: Net assets, end of period (000 omitted) ..................... $ 37,642 $ 33,788 $ 27,684 $ 13,540 Ratio of expenses to average net assets ..................... 0.91% 0.87% 0.60% 0.26%(4) Ratio of expenses to average net assets prior to expense limitation ......................................... 0.99% 1.02% 1.10% 1.25%(4) Ratio of net investment income to average net assets ........ 4.72% 4.98% 5.29% 5.24%(4) Ratio of net investment income to average net assets prior to expense limitation ......................................... 4.64% 4.83% 4.79% 4.25%(4) Portfolio turnover .......................................... 6% 19% 35% 42%
- ----------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 31 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE IDAHO FUND - CLASS B ------------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 3/16/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $11.440 $10.890 $11.010 $10.500 Income from investment operations: Net investment income .................................... 0.225 0.487 0.520 0.420 Net realized and unrealized gain (loss) on investments ....................................... 0.020 0.560 (0.130) 0.590 ------- -------- ------- ------- Total from investment operations ......................... 0.245 1.047 0.390 1.010 ------- -------- ------- ------- Less dividends and distributions: Dividends from net investment income ..................... (0.225) (0.497) (0.510) (0.420) Distributions from net realized gain on security transactions ................................ -- -- -- (0.080) ------- -------- ------- ------- Total dividends and distributions ........................ (0.225) (0.497) (0.510) (0.500) ------- -------- ------- ------- Net asset value, end of period .............................. $11.460 $11.440 $10.890 $11.010 ======= ======== ======= ======= Total return(3) ............................................. 2.17% 9.87% 3.75% 9.86% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $7,429 $6,827 $4,945 $1,977 Ratio of expenses to average net assets .................. 1.66% 1.46% 1.11% 0.79%(4) Ratio of expenses to average net assets prior to expense limitation ................................... 1.74% 1.61% 1.85% 1.90%(4) Ratio of net investment income to average net assets ..... 3.97% 4.39% 4.78% 4.68%(4) Ratio of net investment income to average net assets prior to expense limitation .......................... 3.89% 4.24% 4.04% 3.57%(4) Portfolio turnover ....................................... 6% 19% 35% 42%
TAX-FREE IDAHO FUND - CLASS C ---------------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 1/11/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $11.430 $10.900 $11.020 $10.040 Income from investment operations: Net investment income .................................... 0.231 0.459 0.500 0.500 Net realized and unrealized gain (loss) on investments ....................................... 0.025 0.549 (0.130) 1.060 ------- ------- ------- ------- Total from investment operations ......................... 0.256 1.008 0.370 1.560 ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ..................... (0.226) (0.478) (0.490) (0.500) Distributions from net realized gain on security transactions ................................ -- -- -- (0.080) ------- ------- ------- ------- Total dividends and distributions ........................ (0.226) (0.478) (0.490) (0.580) ------- ------- ------- ------- Net asset value, end of period .............................. $11.460 $11.430 $10.900 $11.020 ======= ======= ======= ======= Total return(3) ............................................. 2.26% 9.49% 3.48% 15.81% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $1,532 $1,125 $822 $789 Ratio of expenses to average net assets .................. 1.66% 1.62% 1.33% 1.05%(4) Ratio of expenses to average net assets prior to expense limitation ................................... 1.74% 1.77% 1.82% 2.00%(4) Ratio of net investment income to average net assets ..... 3.97% 4.23% 4.57% 4.48%(4) Ratio of net investment income to average net assets prior to expense limitation .......................... 3.89% 4.08% 4.08% 3.53%(4) Portfolio turnover ....................................... 6% 19% 35% 42%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 32 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE IOWA FUND - CLASS A -------------------------------------------------------------------------- SIX MONTHS ENDED YEAR YEAR YEAR FOUR MONTHS YEAR 6/30/98(1) ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97(4) 12/31/96 12/31/95 12/31/94 8/31/94 Net asset value, beginning of period ................ $10.060 $9.620 $9.830 $8.560 $9.260 $10.000 Income from investment operations: Net investment income ............................ 0.220 0.449 0.440 0.450 0.170 0.490 Net realized and unrealized gain (loss) on investments ............................... 0.020 0.440 (0.210) 1.290 (0.720) (0.740) ------- ------ ------ ------ ------ ------- Total from investment operations ................. 0.240 0.889 0.230 1.740 (0.550) (0.250) ------- ------ ------ ------ ------ ------- Less dividends and distributions: Dividends from net investment income ............. (0.220) (0.449) (0.440) (0.470) (0.150) (0.490) ------- ------ ------ ------ ------ ------- Total dividends and distributions ................ (0.220) (0.449) (0.440) (0.470) (0.150) (0.490) ------- ------ ------ ------ ------ ------- Net asset value, end of period ...................... $10.080 $10.060 $9.620 $9.830 $8.560 $9.260 ======= ======= ====== ====== ====== ======= Total return(2) ..................................... 2.41% 9.49% 2.56% 20.80% (5.86)% (2.67)% Ratios and supplemental data: Net assets, end of period (000 omitted) .......... $39,133 $38,343 $40,037 $42,374 $32,373 $38,669 Ratio of expenses to average net assets .......... 0.95% 0.91% 0.92% 0.72% 0.11%(3) 0.12% Ratio of expenses to average net assets prior to expense limitation .................. 1.07% 0.97% 1.06% 1.06% 1.25%(3) 1.25% Ratio of net investment income to average net assets ................................... 4.41% 4.62% 4.68% 4.88% 5.71%(3) 4.89% Ratio of net investment income to average net assets prior to expense limitation ....... 4.29% 4.56% 4.54% 4.54% 4.57%(3) 3.76% Portfolio turnover ............................... 16% 14% 14% 21% 7% 119%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Annualized. (4) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 33 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE IOWA FUND - CLASS B ------------------------------------------------------ SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 3/24/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $10.060 $ 9.610 $9.830 $9.180 Income from investment operations: Net investment income .................................... 0.182 0.366 0.380 0.310 Net realized and unrealized gain (loss) on investments ....................................... 0.020 0.457 (0.220) 0.640 ------- ------- ------ ------ Total from investment operations ......................... 0.202 0.823 0.160 0.950 ------- ------- ------ ------ Less dividends and distributions: Dividends from net investment income ..................... (0.182) (0.373) (0.380) (0.300) ------- ------- ------ ------ Total dividends and distributions ........................ (0.182) (0.373) (0.380) (0.300) ------- ------- ------ ------ Net asset value, end of period .............................. $10.080 $10.060 $9.610 $9.830 ======= ======= ====== ====== Total return(3) ............................................. 2.03% 8.75% 1.76% 10.62% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $3,686 $2,910 $1,645 $819 Ratio of expenses to average net assets .................. 1.70% 1.67% 1.61% 1.28%(4) Ratio of expenses to average net assets prior to expense limitation ................................... 1.82% 1.73% 1.81% 1.65%(4) Ratio of net investment income to average net assets ..... 3.64% 3.86% 3.97% 4.06%(4) Ratio of net investment income to average net assets prior to expense limitation .......................... 3.52% 3.80% 3.77% 3.69%(4) Portfolio turnover ....................................... 16% 14% 14% 21%
TAX-FREE IOWA FUND - CLASS C ---------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 1/4/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $10.060 $ 9.610 $9.830 $8.550 Income from investment operations: Net investment income .................................... 0.182 0.360 0.360 0.370 Net realized and unrealized gain (loss) on investments ....................................... 0.020 0.456 (0.220) 1.280 ------- ------- ------ ------ Total from investment operations ......................... 0.202 0.816 0.140 1.650 ------- ------- ------ ------ Less dividends and distributions: Dividends from net investment income ..................... (0.182) (0.366) (0.360) (0.370) ------- ------- ------ ------ Total dividends and distributions ........................ (0.182) (0.366) (0.360) (0.370) ------- ------- ------ ------ Net asset value, end of period .............................. $10.080 $10.060 $9.610 $9.830 ======= ======= ====== ====== Total return(3) ............................................. 2.03% 8.68% 1.56% 19.66% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $1,101 $871 $670 $462 Ratio of expenses to average net assets .................. 1.70% 1.74% 1.75% 1.61%(4) Ratio of expenses to average net assets prior to expense limitation ................................... 1.82% 1.80% 1.81% 1.72%(4) Ratio of net investment income to average net assets ..... 3.64% 3.79% 3.82% 3.74%(4) Ratio of net investment income to average net assets prior to expense limitation .......................... 3.52% 3.73% 3.76% 3.63%(4) Portfolio turnover ....................................... 16% 14% 14% 21%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 34 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE KANSAS FUND - CLASS A ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR YEAR YEAR TWO MONTHS YEAR 6/30/98(1) ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period .............. $11.060 $10.560 $10.730 $ 9.500 $9.630 $10.850 Income from investment operations: Net investment income .......................... 0.263 0.526 0.520 0.560 0.090 0.570 Net realized and unrealized gain (loss) on investments ............................. 0.040 0.506 (0.170) 1.220 (0.130) (1.210) ------- ------- ------- ------- ------ ------- Total from investment operations ............... 0.303 1.032 0.350 1.780 (0.040) (0.640) ------- ------- ------- ------- ------ ------- Less dividends and distributions: Dividends from net investment income ........... (0.263) (0.532) (0.520) (0.550) (0.090) (0.570) Distributions from net realized gain on security transactions ...................... -- -- -- -- -- (0.010) ------- ------- ------- ------- ------ ------- Total dividends and distributions .............. (0.263) (0.532) (0.520) (0.550) (0.090) (0.580) ------- ------- ------- ------- ------ ------- Net asset value, end of period .................... $11.100 $11.060 $10.560 $10.730 $9.500 $ 9.630 ======= ======= ======= ======= ====== ======= Total return(2) ................................... 2.76% 10.06% 3.43% 19.13% (0.38)% (6.10)% Ratios and supplemental data: Net assets, end of period (000 omitted) ........ $12,194 $10,663 $10,176 $10,677 $7,355 $6,469 Ratio of expenses to average net assets ........ 0.87% 0.84% 0.83% 0.37% 0.01%(3) 0.06% Ratio of expenses to average net assets prior to expense limitation ................ 1.01% 1.03% 1.21% 1.11% 1.25%(3) 1.25% Ratio of net investment income to average net assets ...................... 4.75% 4.92% 4.97% 5.32% 5.88%(3) 5.30% Ratio of net investment income to average net assets prior to expense limitation ......................... 4.61% 4.73% 4.59% 4.58% 4.64%(3) 4.11% Portfolio turnover ............................. 34% 30% 56% 19% 0% 38%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Annualized. (4) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 35 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE KANSAS FUND - CLASS B --------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 4/8/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $11.080 $10.570 $10.740 $10.190 Income from investment operations: Net investment income .................................... 0.222 0.440 0.450 0.340 Net realized and unrealized gain (loss) on investments ....................................... 0.029 0.516 (0.170) 0.540 ------- ------- ------- ------- Total from investment operations ......................... 0.251 0.956 0.280 0.880 ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ..................... (0.221) (0.446) (0.450) (0.330) ------- ------- ------- ------- Total dividends and distributions ........................ (0.221) (0.446) (0.450) (0.330) ------- ------- ------- ------- Net asset value, end of period .............................. $11.110 $11.080 $10.570 $10.740 ======= ======= ======= ======= Total return(3) ............................................. 2.28% 9.28% 2.69% 8.76% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $3,885 $3,452 $2,402 $677 Ratio of expenses to average net assets .................. 1.62% 1.61% 1.61% 0.94%(4) Ratio of expenses to average net assets prior to expense limitation ................................... 1.76% 1.80% 2.00% 1.68%(4) Ratio of net investment income to average net assets ..... 4.01% 4.15% 4.16% 4.63%(4) Ratio of net investment income to average net assets prior to expense limitation .......................... 3.87% 3.96% 3.77% 3.89%(4) Portfolio turnover ....................................... 34% 30% 56% 19%
TAX-FREE KANSAS FUND - CLASS C --------------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 4/12/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $11.050 $10.550 $10.720 $10.200 Income from investment operations: Net investment income .................................... 0.222 0.439 0.430 0.320 Net realized and unrealized gain (loss) on investments ....................................... 0.039 0.504 (0.170) 0.510 ------- ------- ------- ------- Total from investment operations ......................... 0.261 0.943 0.260 0.830 ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ..................... (0.221) (0.443) (0.430) (0.310) ------- ------- ------- ------- Total dividends and distributions ........................ (0.221) (0.443) (0.430) (0.310) ------- ------- ------- ------- Net asset value, end of period .............................. $11.090 $11.050 $10.550 $10.720 ======= ======= ======= ======= Total return(3) ............................................. 2.38% 9.17% 2.52% 8.29% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $118 $108 $90 $40 Ratio of expenses to average net assets .................. 1.62% 1.64% 1.77% 1.27%(4) Ratio of expenses to average net assets prior to expense limitation ................................... 1.76% 1.83% 2.00% 1.79%(4) Ratio of net investment income to average net assets ..... 4.01% 4.12% 4.02% 4.21%(4) Ratio of net investment income to average net assets prior to expense limitation .......................... 3.87% 3.93% 3.79% 3.69%(4) Portfolio turnover ....................................... 34% 30% 56% 19%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 36 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE MISSOURI INSURED FUND - CLASS A -------------------------------------------------------------------------- SIX MONTHS ENDED YEAR YEAR YEAR TWO MONTHS YEAR 6/30/98(1) ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period ................ $10.810 $10.370 $10.540 $ 9.270 $9.370 $10.820 Income from investment operations: Net investment income ............................ 0.250 0.504 0.520 0.520 0.100 0.550 Net realized and unrealized gain (loss) on investments ............................... (0.010) 0.446 (0.180) 1.290 (0.110) (1.430) ------- ------- ------- ------- ------ ------- Total from investment operations ................. 0.240 0.950 0.340 1.810 (0.010) (0.880) ------- ------- ------- ------- ------ ------- Less dividends and distributions: Dividends from net investment income ............. (0.250) (0.510) (0.510) (0.540) (0.090) (0.540) Distributions from net realized gain on security transactions ..................... -- -- -- -- -- (0.030) ------- ------- ------- ------- ------ ------- Total dividends and distributions ................ (0.250) (0.510) (0.510) (0.540) (0.090) (0.570) ------- ------- ------- ------- ------ ------- Net asset value, end of period ...................... $10.800 $10.810 $10.370 $10.540 $9.270 $ 9.370 ======= ======= ======= ======= ====== ======= Total return(2) ..................................... 2.24% 9.43% 3.41% 19.96% (0.07)% (8.28)% Ratios and supplemental data: Net assets, end of period (000 omitted) .......... $47,378 $48,565 $49,301 $50,211 $37,790 $37,384 Ratio of expenses to average net assets .......... 0.91% 0.91% 0.71% 0.50% 0.11%(3) 0.15% Ratio of expenses to average net assets prior to expense limitation ........................ 1.01% 0.93% 1.03% 1.07% 1.12%(3) 1.13% Ratio of net investment income to average net assets ................................... 4.67% 4.81% 5.05% 5.25% 6.00%(3) 5.39% Ratio of net investment income to average net assets prior to expense limitation ........... 4.57% 4.79% 4.73% 4.68% 4.99%(3) 4.41% Portfolio turnover ............................... 17% 12% 28% 31% 8% 32%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Annualized. (4) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 37 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE MISSOURI INSURED FUND - CLASS B ------------------------------------------------------------------------------- SIX MONTHS YEAR YEAR YEAR TWO MONTHS PERIOD ENDED 6/30/98(1) ENDED ENDED ENDED ENDED 3/12/94(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period ............... $10.810 $10.370 $10.540 $ 9.270 $9.370 $10.300 Income from investment operations: Net investment income ........................... 0.210 0.425 0.460 0.480 0.080 0.330 Net realized and unrealized gain (loss) on investments .............................. (0.020) 0.451 (0.180) 1.280 (0.100) (0.940) ------- ------- ------- ------- ------ ------- Total from investment operations ................ 0.190 0.876 0.280 1.760 (0.020) (0.610) ------- ------- ------- ------- ------ ------- Less dividends and distributions: Dividends from net investment income ............ (0.210) (0.436) (0.450) (0.490) (0.080) (0.320) ------- ------- ------- ------- ------ ------- Total dividends and distributions ............... (0.210) (0.436) (0.450) (0.490) (0.080) (0.320) ------- ------- ------- ------- ------ ------- Net asset value, end of period ..................... $10.790 $10.810 $10.370 $10.540 $9.270 $ 9.370 ======= ======= ======= ======= ====== ======= Total return(3) .................................... 1.77% 8.66% 2.93% 19.18% (0.14)% (6.16)% Ratios and supplemental data: Net assets, end of period (000 omitted) ......... $11,269 $11,507 $10,432 $6,195 $2,742 $1,701 Ratio of expenses to average net assets ......... 1.66% 1.61% 1.29% 0.97% 0.60%(4) 0.49%(4) Ratio of expenses to average net assets prior to expense limitation ................. 1.76% 1.63% 1.78% 1.81% 1.84%(4) 1.83%(4) Ratio of net investment income to average net assets .......................... 3.92% 4.11% 4.46% 4.70% 5.32%(4) 4.89%(4) Ratio of net investment income to average net assets prior to expense limitation ...... 3.82% 4.09% 3.97% 3.86% 4.08%(4) 3.55%(4) Portfolio turnover .............................. 17% 12% 28% 31% 8% 32%
TAX-FREE MISSOURI INSURED FUND - CLASS C ---------------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 11/11/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ............... $10.810 $10.370 $10.540 $10.360 Income from investment operations: Net investment income ........................... 0.210 0.405 0.430 0.060 Net realized and unrealized gain (loss) on investments .............................. (0.010) 0.455 (0.180) 0.170 ------- ------ ------ ------ Total from investment operations ................ 0.200 0.860 0.250 0.230 ------- ------ ------ ------ Less dividends and distributions: Dividends from net investment income ............ (0.210) (0.420) (0.420) (0.050) ------- ------ ------ ------ Total dividends and distributions ............... (0.210) (0.420) (0.420) (0.050) ------- ------ ------ ------ Net asset value, end of period ..................... $10.800 $10.810 $10.370 $10.540 ======= ======= ======= ======= Total return(3) .................................... 1.86% 8.49% 2.48% 2.24% Ratios and supplemental data: Net assets, end of period (000 omitted) ......... $111 $225 $152 $20 Ratio of expenses to average net assets ......... 1.66% 1.74% 1.62% 1.22%(4) Ratio of expenses to average net assets prior to expense limitation ................. 1.76% 1.76% 1.78% 1.55%(4) Ratio of net investment income to average net assets .......................... 3.92% 3.98% 4.10% 4.09%(4) Ratio of net investment income to average net assets prior to expense limitation ...... 3.82% 3.96% 3.94% 3.76%(4) Portfolio turnover .............................. 17% 12% 28% 31%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 38 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE NORTH DAKOTA FUND - CLASS A ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR YEAR YEAR YEAR YEAR 6/30/98(1) ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97(3) 12/31/96 12/31/95 12/31/94 12/31/93 Net asset value, beginning of period ............ $11.320 $10.880 $11.000 $ 9.850 $11.070 $10.590 Income from investment operations: Net investment income ........................ 0.274 0.546 0.540 0.540 0.560 0.580 Net realized and unrealized gain (loss) on investments .................... 0.030 0.451 (0.130) 1.180 (1.150) 0.580 ------- ------- ------- ------- ------- ------- Total from investment operations ............. 0.304 0.997 0.410 1.720 (0.590) 1.160 ------- ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ......... (0.274) (0.557) (0.530) (0.570) (0.530) (0.580) Distributions from net realized gain on security transactions ................. -- -- -- -- (0.080) (0.100) In excess of net realized gains .............. -- -- -- -- (0.020) -- ------- ------- ------- ------- ------- ------- Total dividends and distributions ............ (0.274) (0.557) (0.530) (0.570) (0.630) (0.680) ------- ------- ------- ------- ------- ------- Net asset value, end of period .................. $11.350 $11.320 $10.880 $11.000 $ 9.850 $11.070 ======= ======= ======= ======= ======= ======= Total return(2) ................................. 2.70% 9.43% 3.89% 17.81% (5.47)% 11.20% Ratios and supplemental data: Net assets, end of period (000 omitted) ...... $30,612 $30,965 $33,713 $36,096 $33,829 $34,880 Ratio of expenses to average net assets ...... 1.00% 1.00% 0.88% 0.81% 0.46% 0.59% Ratio of expenses to average net assets prior to expense limitation .............. 1.14% 1.04% 1.08% 1.05% 1.14% 1.25% Ratio of net investment income to average net assets ............................... 4.84% 4.97% 5.01% 5.07% 5.36% 5.11% Ratio of net investment income to average net assets prior to expense limitation ... 4.70% 4.93% 4.81% 4.83% 4.68% 4.45% Portfolio turnover ........................... 31% 41% 58% 45% 33% 27%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 39 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE NORTH DAKOTA FUND - CLASS B ----------------------------------------------------------------- SIX MONTHS YEAR YEAR YEAR PERIOD FROM ENDED 6/30/98(1) ENDED ENDED ENDED 5/10/94(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 12/31/94 Net asset value, beginning of period ....................... $11.320 $10.880 $11.000 $ 9.850 $10.310 Income from investment operations: Net investment income ................................... 0.232 0.484 0.490 0.480 0.300 Net realized and unrealized gain (loss) on investments ...................................... 0.030 0.451 (0.130) 1.180 (0.390) ------- ------- ------- ------- ------- Total from investment operations ........................ 0.262 0.935 0.360 1.660 (0.090) ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income .................... (0.232) (0.495) (0.480) (0.510) (0.270) Distributions from net realized gain on security transactions ............................... -- -- -- -- (0.080) In excess of net realized gains ......................... -- -- -- -- (0.020) ------- ------- ------- ------- ------- Total dividends and distributions ....................... (0.232) (0.495) (0.480) (0.510) (0.370) ------- ------- ------- ------- ------- Net asset value, end of period ............................. $11.350 $11.320 $10.880 $11.000 $ 9.850 ======= ======= ======= ======= ======= Total return(3) ............................................ 2.31% 8.82% 3.39% 17.24% (0.77)% Ratios and supplemental data: Net assets, end of period (000 omitted) ................. $928 $889 $700 $375 $144 Ratio of expenses to average net assets ................. 1.75% 1.55% 1.36% 1.29% 0.99%(4) Ratio of expenses to average net assets prior to expense limitation ......................... 1.89% 1.59% 1.83% 1.79% 1.89%(4) Ratio of net investment income to average net assets .......................................... 4.09% 4.42% 4.52% 4.56% 4.97%(4) Ratio of net investment income to average net assets prior to expense limitation .............. 3.95% 4.38% 4.05% 4.06% 4.07%(4) Portfolio turnover ...................................... 31% 41% 58% 45% 33%
TAX-FREE NORTH DAKOTA - CLASS C ------------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD FROM ENDED 6/30/98(1) ENDED ENDED 7/29/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ....................... $11.320 $10.870 $11.000 $10.510 Income from investment operations: Net investment income ................................... 0.232 0.441 0.440 0.170 Net realized and unrealized gain (loss) on investments ...................................... 0.020 0.468 (0.140) 0.500 ------- ------- ------- ------- Total from investment operations ........................ 0.252 0.909 0.300 0.670 ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income .................... (0.232) (0.459) (0.430) (0.180) Distributions from net realized gain on security transactions ............................... -- -- -- -- In excess of net realized gains ......................... -- -- -- -- ------- ------- ------- ------- Total dividends and distributions ....................... (0.232) (0.459) (0.430) (0.180) ------- ------- ------- ------- Net asset value, end of period ............................. $11.340 $11.320 $10.870 $11.000 ======= ======= ======= ======= Total return(3) ............................................ 2.23% 8.57% 2.81% 6.47% Ratios and supplemental data: Net assets, end of period (000 omitted) ................. $42 $41 $40 $20 Ratio of expenses to average net assets ................. 1.75% 1.87% 1.75% 1.73%(4) Ratio of expenses to average net assets prior to expense limitation ......................... 1.89% 1.91% 1.75% 1.73%(4) Ratio of net investment income to average net assets .......................................... 4.09% 4.10% 4.06% 4.00%(4) Ratio of net investment income to average net assets prior to expense limitation .............. 3.95% 4.06% 4.06% 4.00%(4) Portfolio turnover ...................................... 31% 41% 58% 45%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 40 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE OREGON INSURED FUND - CLASS A ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR YEAR YEAR TWO MONTHS YEAR 6/30/98(1) ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period ............... $10.310 $ 9.870 $10.050 $ 8.920 $9.000 $10.240 Income from investment operations: Net investment income ........................... 0.240 0.481 0.480 0.490 0.090 0.500 Net realized and unrealized gain (loss) on investments ......................... 0.040 0.444 (0.180) 1.140 (0.090) (1.240) -------- -------- -------- -------- -------- -------- Total from investment operations ................ 0.280 0.925 0.300 1.630 0.000 (0.740) -------- -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ............ (0.240) (0.485) (0.480) (0.500) (0.080) (0.500) -------- -------- -------- -------- -------- -------- Total dividends and distributions ............... (0.240) (0.485) (0.480) (0.500) (0.080) (0.500) -------- -------- -------- -------- -------- -------- Net asset value, end of period ..................... $10.350 $10.310 $ 9.870 $10.050 $8.920 $ 9.000 ======== ======== ======== ======== ======== ======== Total return(2) .................................... 2.73% 9.66% 3.15% 18.71% 0.06% (7.35)% Ratios and supplemental data: Net assets, end of period (000 omitted) ......... $23,595 $22,071 $20,913 $21,590 $14,650 $14,086 Ratio of expenses to average net assets ......... 0.71% 0.71% 0.71% 0.54% 0.05%(3) 0.03% Ratio of expenses to average net assets prior to expense limitation ......................... 1.03% 0.94% 1.07% 1.11% 1.25%(3) 1.25% Ratio of net investment income to average net assets .................................... 4.65% 4.83% 4.92% 5.12% 5.79%(3) 5.17% Ratio of net investment income to average net assets prior to expense limitation ........ 4.33% 4.60% 4.56% 4.55% 4.59%(3) 3.95% Portfolio turnover .............................. 7% 5% 40% 41% 5% 49%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Annualized. (4) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 41 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE OREGON INSURED FUND - CLASS B ------------------------------------------------------------------------------ SIX MONTHS YEAR YEAR YEAR TWO MONTHS PERIOD ENDED 6/30/98(1) ENDED ENDED ENDED ENDED 3/12/94(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period ............ $10.310 $ 9.870 $10.050 $ 8.920 $9.000 $9.850 Income from investment operations: Net investment income ........................ 0.201 0.422 0.430 0.440 0.080 0.270 Net realized and unrealized gain (loss) on investments ...................... 0.040 0.434 (0.180) 1.140 (0.090) (0.850) -------- -------- -------- -------- -------- -------- Total from investment operations ............. 0.241 0.856 0.250 1.580 (0.010) (0.580) -------- -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ......... (0.201) (0.416) (0.430) (0.450) (0.070) (0.270) -------- -------- -------- -------- -------- -------- Total dividends and distributions ............ (0.201) (0.416) (0.430) (0.450) (0.070) (0.270) -------- -------- -------- -------- -------- -------- Net asset value, end of period .................. $10.350 $10.310 $ 9.870 $10.050 $8.920 $9.000 ======== ======== ======== ======== ========= ======== Total return(3) ................................. 2.35% 8.90% 2.61% 18.10% 0.03% (5.95)% Ratios and supplemental data: Net assets, end of period (000 omitted) ...... $5,824 $6,461 $4,758 $2,786 $1,303 $1,146 Ratio of expenses to average net assets ...... 1.46% 1.39% 1.25% 1.04% 0.60%(4) 0.75%(4) Ratio of expenses to average net assets prior to expense limitation ................ 1.78% 1.62% 1.83% 1.86% 2.00%(4) 2.00%(4) Ratio of net investment income to average net assets ......................... 3.90% 4.15% 4.37% 4.57% 5.19%(4) 4.43%(4) Ratio of net investment income to average net assets prior to expense limitation ..... 3.58% 3.92% 3.79% 3.75% 3.79%(4) 3.18%(4) Portfolio turnover ........................... 7% 5% 40% 41% 5% 49%
TAX-FREE OREGON INSURED FUND - CLASS C ----------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 7/7/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ............ $10.320 $ 9.880 $10.050 $ 9.630 Income from investment operations: Net investment income ........................ 0.199 0.411 0.400 0.190 Net realized and unrealized gain (loss) on investments ...................... 0.042 0.431 (0.170) 0.410 -------- -------- -------- -------- Total from investment operations ............. 0.241 0.842 0.230 0.600 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ......... (0.201) (0.402) (0.400) (0.180) -------- -------- -------- -------- Total dividends and distributions ............ (0.201) (0.402) (0.400) (0.180) -------- -------- -------- -------- Net asset value, end of period .................. $10.360 $10.320 $ 9.880 $10.050 ======== ======== ======== ======== Total return(3) ................................. 2.35% 8.75% 2.38% 6.35% Ratios and supplemental data: Net assets, end of period (000 omitted) ...... $992 $532 $360 $250 Ratio of expenses to average net assets ...... 1.46% 1.51% 1.55% 1.39%(4) Ratio of expenses to average net assets prior to expense limitation ................ 1.78% 1.74% 1.82% 1.74%(4) Ratio of net investment income to average net assets ......................... 3.90% 4.03% 4.03% 4.00%(4) Ratio of net investment income to average net assets prior to expense limitation ..... 3.58% 3.80% 3.76% 3.65%(4) Portfolio turnover ........................... 7% 5% 40% 41%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 42 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE WASHINGTON INSURED FUND - CLASS A ----------------------------------------------------------------------- SIX MONTHS ENDED YEAR YEAR YEAR TWO MONTHS YEAR 6/30/98(1) ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97(4) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period ................ $10.770 $10.300 $10.440 $ 9.210 $9.370 $10.670 Income from investment operations: Net investment income ............................ 0.268 0.541 0.540 0.590 0.090 0.550 Net realized and unrealized gain (loss) on investments ........................... 0.030 0.481 (0.140) 1.210 (0.160) (1.260) -------- -------- -------- -------- -------- -------- Total from investment operations ................. 0.298 1.022 0.400 1.800 (0.070) (0.710) -------- -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ............. (0.268) (0.552) (0.540) (0.570) (0.090) (0.570) Distributions from net realized gain on security transactions ........................... -- -- -- -- -- (0.020) -------- -------- -------- -------- -------- -------- Total dividends and distributions ................ (0.268) (0.552) (0.540) (0.570) (0.090) (0.590) -------- -------- -------- -------- -------- -------- Net asset value, end of period ...................... $10.800 $10.770 $10.300 $10.440 $9.210 $ 9.370 ======== ======== ======== ======== ======== ======== Total return(2) ..................................... 2.78% 10.23% 3.98% 19.94% (0.69)% (6.85)% Ratios and supplemental data: Net assets, end of period (000 omitted) .......... $2,308 $2,372 $2,382 $2,099 $2,049 $2,118 Ratio of expenses to average net assets .......... 0.50% 0.49% 0.44% 0.28% 0.10%(3) 0.14% Ratio of expenses to average net assets prior to expense limitation ........................... 1.25% 1.38% 1.25% 1.25% 1.25%(3) 1.25% Ratio of net investment income to average net assets ...................................... 4.95% 5.20% 5.29% 5.57% 6.18%(3) 5.44% Ratio of net investment income to average net assets prior to expense limitation .......... 4.20% 4.31% 4.48% 4.60% 5.03%(3) 4.33% Portfolio turnover ............................... 1% 20% 33% 51% -- --
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Annualized. (4) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 43 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE WASHINGTON INSURED FUND - CLASS B ----------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 10/24/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $10.780 $10.310 $10.440 $10.180 Income from investment operations: Net investment income .................................... 0.228 0.471 0.470 0.090 Net realized and unrealized gain (loss) on investments ... 0.040 0.470 (0.140) 0.250 -------- -------- -------- -------- Total from investment operations ......................... 0.268 0.941 0.330 0.340 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ..................... (0.228) (0.471) (0.460) (0.080) -------- -------- -------- -------- Total dividends and distributions ........................ (0.228) (0.471) (0.460) (0.080) -------- -------- -------- -------- Net asset value, end of period .............................. $10.820 $10.780 $10.310 $10.440 ======== ======== ======== ======== Total return(3) ............................................. 2.49% 9.38% 3.32% 3.30% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $1,239 $963 $516 $15 Ratio of expenses to average net assets .................. 1.25% 1.24% 1.21% 1.04%(4) Ratio of expenses to average net assets prior to expense limitation ...................................... 2.00% 2.13% 2.00% 2.00%(4) Ratio of net investment income to average net assets ..... 4.20% 4.45% 4.47% 4.44%(4) Ratio of net investment income to average net assets prior to expense limitation ............................. 3.45% 3.56% 3.68% 3.48%(4) Portfolio turnover ....................................... 1% 20% 33% 51%
TAX-FREE WASHINGTON INSURED FUND - CLASS C ---------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 4/21/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $10.770 $10.300 $10.430 $ 9.940 Income from investment operations: Net investment income .................................... 0.228 0.465 0.450 0.310 Net realized and unrealized gain (loss) on investments ... 0.040 0.469 (0.140) 0.480 -------- -------- -------- -------- Total from investment operations ......................... 0.268 0.934 0.310 0.790 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ..................... (0.228) (0.464) (0.440) (0.300) -------- -------- -------- -------- Total dividends and distributions ........................ (0.228) (0.464) (0.440) (0.300) -------- -------- -------- -------- Net asset value, end of period .............................. $10.810 $10.770 $10.300 $10.430 ======== ======== ======== ======== Total return(3) ............................................. 2.49% 9.31% 3.12% 8.13% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $301 $69 $19 $19 Ratio of expenses to average net assets .................. 1.25% 1.29% 1.37% 1.30%(4) Ratio of expenses to average net assets prior to expense limitation ...................................... 2.00% 2.18% 2.00% 2.00%(4) Ratio of net investment income to average net assets ..... 4.20% 4.40% 4.36% 4.45%(4) Ratio of net investment income to average net assets prior to expense limitation ............................. 3.45% 3.51% 3.73% 3.75%(4) Portfolio turnover ....................................... 1% 20% 33% 51%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 44 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE WISCONSIN FUND - CLASS A --------------------------------------------------------------------------- SIX MONTHS ENDED YEAR YEAR YEAR FOUR MONTHS YEAR 6/30/98(1) ENDED ENDED ENDED ENDED ENDED (UNAUDITED) 12/31/97(4) 12/31/96 12/31/95 12/31/94 8/31/94 Net asset value, beginning of period ............... $10.010 $ 9.640 $9.780 $8.740 $9.280 $10.000 Income from investment operations: Net investment income ........................... 0.222 0.466 0.460 0.480 0.160 0.490 Net realized and unrealized gain (loss) on investments .......................... (0.010) 0.383 (0.140) 1.040 (0.550) (0.720) -------- -------- -------- -------- -------- -------- Total from investment operations ................ 0.212 0.849 0.320 1.520 (0.390) (0.230) -------- -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ............ (0.222) (0.479) (0.460) (0.480) (0.150) (0.490) -------- -------- -------- -------- -------- -------- Total dividends and distributions ............... (0.222) (0.479) (0.460) (0.480) (0.150) (0.490) -------- -------- -------- -------- -------- -------- Net asset value, end of period ..................... $10.000 $10.010 $9.640 $9.780 $8.740 $ 9.280 ======== ======== ======== ======== ======== ======== Total return(2) .................................... 2.19% 9.07% 3.49% 17.74% (4.12)% (2.40)% Ratios and supplemental data: Net assets, end of period (000 omitted) ......... $34,602 $30,879 $28,292 $26,449 $20,167 $16,093 Ratio of expenses to average net assets ......... 0.99% 0.99% 0.98% 0.88% 0.08%(3) 0.04% Ratio of expenses to average net assets prior to expense limitation ............. 1.03% 1.07% 1.09% 1.09% 1.25%(3) 1.25% Ratio of net investment income to average net assets ............................. 4.57% 4.76% 4.90% 5.05% 5.54%(3) 4.89% Ratio of net investment income to average net assets prior to expense limitation ......... 4.53% 4.68% 4.79% 4.84% 4.37%(3) 3.68% Portfolio turnover .............................. 16% 30% 38% 12% 20% 86%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (3) Annualized. (4) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes for tax-exempt income 45 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
TAX-FREE WISCONSIN FUND - CLASS B ------------------------------------------------ SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 4/22/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ......................... $10.000 $ 9.630 $9.770 $9.390 Income from investment operations: Net investment income ..................................... 0.189 0.395 0.410 0.280 Net realized and unrealized gain (loss) on investments .................................... 0.002 0.382 (0.140) 0.370 -------- -------- -------- -------- Total from investment operations .......................... 0.191 0.777 0.270 0.650 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ...................... (0.191) (0.407) (0.410) (0.270) -------- -------- -------- -------- Total dividends and distributions ......................... (0.191) (0.407) (0.410) (0.270) -------- -------- -------- -------- Net asset value, end of period ............................... $10.000 $10.000 $9.630 $9.770 ======== ======== ======== ======== Total return(3) .............................................. 1.91% 8.27% 2.84% 7.08% Ratios and supplemental data: Net assets, end of period (000 omitted) ................... $2,523 $1,931 $1,339 $725 Ratio of expenses to average net assets ................... 1.74% 1.72% 1.66% 1.45%(4) Ratio of expenses to average net assets prior to expense limitation ....................................... 1.78% 1.80% 1.85% 1.70%(4) Ratio of net investment income to average net assets ...... 3.82% 4.03% 4.37% 4.31%(4) Ratio of net investment income to average net assets prior to expense limitation .............................. 3.78% 3.95% 4.18% 4.06%(4) Portfolio turnover ........................................ 16% 30% 38% 12%
TAX-FREE WISCONSIN FUND - CLASS C ----------------------------------------------------- SIX MONTHS YEAR YEAR PERIOD ENDED 6/30/98(1) ENDED ENDED 3/28/95(2) TO (UNAUDITED) 12/31/97(5) 12/31/96 12/31/95 Net asset value, beginning of period ......................... $10.030 $ 9.660 $9.790 $9.340 Income from investment operations: Net investment income ..................................... 0.192 0.380 0.390 0.300 Net realized and unrealized gain (loss) on investments .................................... (0.001) 0.390 (0.130) 0.440 -------- -------- -------- -------- Total from investment operations .......................... 0.191 0.770 0.260 0.740 -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ...................... (0.191) (0.400) (0.390) (0.290) -------- -------- -------- -------- Total dividends and distributions ......................... (0.191) (0.400) (0.390) (0.290) -------- -------- -------- -------- Net asset value, end of period ............................... $10.030 $10.030 $9.660 $9.790 ======== ======== ======== ======== Total return(3) .............................................. 1.90% 8.16% 2.74% 8.06% Ratios and supplemental data: Net assets, end of period (000 omitted) ................... $1,305 $689 $555 $73 Ratio of expenses to average net assets ................... 1.74% 1.81% 1.75% 1.77%(4) Ratio of expenses to average net assets prior to expense limitation ....................................... 1.78% 1.89% 1.83% 1.77%(4) Ratio of net investment income to average net assets ...... 3.82% 3.94% 4.12% 4.04%(4) Ratio of net investment income to average net assets prior to expense limitation .............................. 3.78% 3.86% 4.04% 4.04%(4) Portfolio turnover ........................................ 16% 30% 38% 12%
- --------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencement of operations. (3) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (4) Annualized. (5) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. See accompanying notes 46 for tax-exempt income NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- Delaware-Voyageur Tax-Free Kansas Fund ("Tax-Free Kansas Fund"), Delaware-Voyageur Tax-Free Missouri Insured Fund ("Tax-Free Missouri Insured Fund"), Delaware-Voyageur Tax-Free Oregon Insured Fund ("Tax-Free Oregon Insured Fund"), and Delaware-Voyageur Tax-Free Washington Insured Fund ("Tax-Free Washington Insured Fund"), series within the Voyageur Investment Trust, Delaware-Voyageur Tax-Free Idaho Fund ("Tax-Free Idaho Fund"), Delaware-Voyageur Tax-Free Iowa Fund ("Tax-Free Iowa Fund"), and Delaware-Voyageur Tax-Free Wisconsin Fund ("Tax-Free Wisconsin Fund"), series within the Voyageur Mutual Funds, Inc., and Delaware-Voyageur Tax-Free North Dakota Fund ("Tax-Free North Dakota Fund"), a series within the Voyageur Tax-Free Funds, Inc. (each referred to as a "Fund" or collectively as the "Funds") are registered as non-diversified, open-end management investment companies under the Investment Company Act of 1940 (as amended). The Funds offer three classes of shares. The A Class carries a front-end sales charge of 3.75%. The B Class carries a back-end deferred sales charge and the C Class carries a level load deferred sales charge. The Tax-Free Idaho Fund, Tax-Free Iowa Fund, Tax-Free North Dakota Fund, and 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 Oregon Insured Fund and Tax-Free Washington Insured Fund seek 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 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. 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 advisor 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 Fund's Board of Directors. Federal Income Taxes - Each Fund intends to continue to qualify as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. Class Accounting - Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Other - Expenses common to all Funds within the Delaware Investments Family of Funds are allocated amongst the funds on the basis of average net assets. Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Original issue discounts and market premium are amortized to interest income over the lives of the respective securities. The Funds declare dividends from net investment income daily and pay such dividends monthly. Capital gains, if any, are distributed annually. Certain Fund expenses are paid through "soft dollar" arrangements with brokers. The amount of these expenses is less than 0.01% of the Fund's average daily net assets 3. Investment Management and Other Transactions with Affiliates In accordance with the terms of the Investment Management Agreement, each Fund pays Delaware Management Company, Inc. (DMC), the Investment Manager of each Fund, an annual fee which is calculated daily based on the net assets of each Fund. DMC has elected to waive its fees and reimburse each Fund to the extent that annual operating expenses exclusive of taxes, interest, brokerage commissions, distribution fees, and extraordinary expenses do not exceed the following percentages of average daily net assets through December 31, 1998. The management fee rates, waiver rates and total expenses absorbed by DMC for the six months ended June 30, 1998 are as follows:
MANAGEMENT OPERATING EXPENSE FEE AS A LIMITATION AS PERCENTAGE OF A PERCENTAGE OF EXPENSES AVERAGE DAILY AVERAGE DAILY ABSORBED NET ASSETS NET ASSETS BY (PER ANNUM) (PER ANNUM) DMC --------------- ------------------ ----------- Tax-Free Idaho Fund ................................ 0.50% 0.75% $17,945 Tax-Free Iowa Fund ................................. 0.50% 0.75% 24,352 Tax-Free Kansas Fund ............................... 0.50% 0.75% 10,135 Tax-Free Missouri Insured Fund ..................... 0.50% 0.66% 28,365 Tax-Free North Dakota Fund ......................... 0.50% 0.75% 23,708 Tax-Free Oregon Insured Fund ....................... 0.50% 0.46% 47,448 Tax-Free Washington Insured Fund ................... 0.50% 0.25% 13,181 Tax-Free Wisconsin Fund ............................ 0.50% 0.75% 7,194
The Funds have engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC, to provide dividend disbursing, transfer agent and accounting and administration services for each Fund. for tax-exempt income 47 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 3. Investment Management and Other Transactions with Affiliates (Continued) For the six months ended June 30, 1998, the amounts expensed for each Fund were as follows:
DIVIDEND DISBURSING, ACCOUNTING TRANSFER AGENT AND FEES AND ADMINISTRATION OTHER EXPENSES SERVICES ----------------- --------------- Tax-Free Idaho Fund ................................ $20,928 $8,903 Tax-Free Iowa Fund ................................. 20,154 11,766 Tax-Free Kansas Fund ............................... 8,651 3,657 Tax-Free Missouri Insured Fund ..................... 26,005 18,515 Tax-Free North Dakota Fund ......................... 18,173 5,917 Tax-Free Oregon Insured Fund ....................... 13,985 5,898 Tax-Free Washington Insured Fund ................... 3,677 592 Tax-Free Wisconsin Fund ............................ 15,294 8,988
On June 30, 1998, the Funds had payables to affiliates as follows:
DIVIDEND DISBURSING, OTHER INVESTMENT TRANSFER AGENT FEES, EXPENSES MANAGEMENT ACCOUNTING SERVICES PAYABLE TO FEES PAYABLE AND OTHER EXPENSES DMC AND TO DMC PAYABLE TO DSC AFFILIATES ------------- ------------------- ----------- Tax-Free Idaho Fund .......................... $21,949 $7,702 $17,310 Tax-Free Iowa Fund ........................... 37,561 8,412 14,134 Tax-Free Kansas Fund ......................... 8,517 1,969 6,538 Tax-Free Missouri Insured Fund ............... 42,089 7,065 20,918 Tax-Free North Dakota Fund ................... 30,343 4,293 9,310 Tax-Free Oregon Insured Fund ................. 12,398 3,790 11,913 Tax-Free Wisconsin Fund ...................... 29,570 6,602 12,158
Pursuant to the Distribution Agreement, the Funds pay Delaware Distributors, L.P. (DDLP), the Distributor and an affiliate of DMC, an annual fee not to exceed 0.25% of the average daily net assets of the A Class and 1.00% of the average daily net assets of the B and C Class. For the six months ended June 30, 1998, DDLP earned commissions on sales of the Fund A Class shares for each Fund as follows: DDLP EARNED COMMISSIONS ON SALES OF THE FUND A CLASS SHARES -------------- Tax-Free Idaho Fund ................................. $20,629 Tax-Free Iowa Fund .................................. 8,462 Tax-Free Kansas Fund ................................ 3,192 Tax-Free Missouri Insured Fund ...................... 4,817 Tax-Free North Dakota Fund .......................... 1,316 Tax-Free Oregon Insured Fund ........................ 11,820 Tax-Free Washington Insured Fund .................... 441 Tax-Free Wisconsin Fund ............................. 6,864 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. 48 for tax-exempt income NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4. Investments During the six months ended June 30, 1998, the Funds made purchases and sales of investment securities other than U.S. government securities and temporary cash investments as follows: PURCHASES SALES ---------- ---------- Tax-Free Idaho Fund ....................... $7,379,429 $1,380,814 Tax-Free Iowa Fund ........................ 4,883,080 3,424,620 Tax-Free Kansas Fund ...................... 4,472,943 2,643,977 Tax-Free Missouri Insured Fund ............ 5,164,525 6,725,795 Tax-Free North Dakota Fund ................ 4,844,033 5,472,915 Tax-Free Oregon Insured Fund .............. 1,964,180 977,530 Tax-Free Washington Insured Fund .......... 147,371 20,000 Tax-Free Wisconsin Fund ................... 8,853,403 4,484,737 At June 30, 1998, the aggregate cost of securities and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows:
COST OF AGGREGATE UNREALIZED AGGREGATE UNREALIZED NET UNREALIZED INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION ----------- -------------------- --------------------- -------------- Tax-Free Idaho Fund $43,609,826 $2,633,457 ($10,598) $2,622,859 Tax-Free Iowa Fund 40,960,622 2,797,639 (799) 2,796,840 Tax-Free Kansas Fund 14,917,811 1,060,148 (1,934) 1,058,214 Tax-Free Missouri Insured Fund 53,703,186 4,237,191 -- 4,237,191 Tax-Free North Dakota Fund 29,114,490 1,925,532 -- 1,925,532 Tax-Free Oregon Insured Fund 27,798,591 2,325,878 -- 2,235,878 Tax-Free Washington Insured Fund 3,522,416 244,159 (488) 243,671 Tax-Free Wisconsin Fund 35,852,050 2,058,375 (3,551) 2,054,824
For federal income tax purposes, as of December 31, 1997, Tax-Free Iowa Fund had a capital loss carryforward of $1,658,076 that will expire in 2001 through 2005, Tax-Free Kansas Fund had a capital loss carryforward of $79,148 that will expire in 2003 and 2004, Tax-Free Missouri Insured Fund had a capital loss carryforward of $1,072,466 that will expire in 2002 through 2004, Tax-Free North Dakota Fund had a capital loss carryforward of $44,191 that will expire in 2004, Tax-Free Oregon Insured Fund had a capital loss carryforward of $600,611 that will expire in 2002 through 2004, Tax-Free Washington Insured Fund had a capital loss carryforward of $80,740 that will expire in 2003, and Tax-Free Wisconsin had a capital loss carryforward of $423,512 that will expire in 2001 through 2003. 5. Capital Stock Transactions in capital stock shares were as follows:
TAX-FREE IDAHO FUND TAX-FREE IOWA FUND ------------------------ ----------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares sold: A Class ............................................... 591,609 731,650 189,265 355,433 B Class ............................................... 83,382 183,407 77,816 135,405 C Class ............................................... 44,636 64,124 34,699 25,201 Shares issued upon reinvestment of dividends from net investment income: A Class ............................................... 49,012 87,352 53,023 124,468 B Class ............................................... 7,689 14,064 4,138 6,562 C Class ............................................... 1,922 3,083 993 1,110 ------- -------- ------- -------- 778,250 1,083,680 359,934 648,179 ------- -------- ------- -------- Shares repurchased: A Class ............................................... (310,381) (406,050) (170,871) (833,421) B Class ............................................... (39,708) (54,443) (5,560) (23,960) C Class ............................................... (11,210) (44,185) (13,082) (9,438) ------- -------- ------- -------- (361,299) (504,678) (189,513) (866,819) ------- -------- ------- -------- Net Increase/Decrease 416,951 579,002 170,421 (218,640) ======= ======== ======= ========
TAX-FREE KANSAS FUND TAX-FREE MISSOURI INSURED FUND ------------------------ ------------------------------ SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares sold: A Class ............................................... 196,444 114,412 116,581 265,509 B Class ............................................... 35,627 89,151 30,054 200,996 C Class ............................................... 2,928 6,942 2,752 9,719 Shares issued upon reinvestment of dividends from net investment income: A Class ............................................... 12,720 27,906 52,859 129,146 B Class ............................................... 4,425 7,813 13,025 33,377 C Class ............................................... 179 404 230 521 ------- -------- -------- -------- 252,323 246,628 215,500 639,268 ------- -------- -------- -------- Shares repurchased: A Class ............................................... (74,255) (142,361) (273,678) (656,405) B Class ............................................... (2,102) (12,598) (63,765) (175,978) C Class ............................................... (2,285) (6,119) (13,547) (4,070) ------- -------- -------- -------- (78,642) (161,078) (350,990) (836,453) ------- -------- -------- -------- Net Increase/Decrease 173,681 85,550 (135,490) (197,185) ======= ======== ======== ========
for tax-exempt income 49 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. Capital Stock (continued)
TAX-FREE NORTH DAKOTA FUND TAX-FREE OREGON INSURED FUND -------------------------- ---------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares sold: A Class ............................................... 72,041 68,674 301,693 372,928 B Class ............................................... 3,338 17,635 38,713 162,406 C Class ............................................... -- -- 48,911 16,538 Shares issued upon reinvestment of dividends from net investment income: A Class ............................................... 40,085 95,230 30,602 61,920 B Class ............................................... 853 2,047 7,675 15,305 C Class ............................................... 74 156 867 1,157 ------- -------- ------- -------- 116,391 183,742 428,461 630,254 ------- -------- ------- -------- Shares repurchased: A Class ............................................... (149,092) (529,157) (192,298) (412,353) B Class ............................................... (873) (5,593) (109,933) (33,265) C Class ............................................... -- (274) (5,583) (2,526) ------- -------- ------- -------- (149,965) (535,024) (307,814) (448,144) ------- -------- ------- -------- Net Increase/Decrease (33,574) (351,282) 120,647 182,110 ======= ======== ======= ========
TAX-FREE WASHINGTON INSURED FUND TAX-FREE WISCONSIN FUND ---------------------------------- ----------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED 6/30/98 12/31/97 6/30/98 12/31/97 (UNAUDITED) (UNAUDITED) Shares sold: A Class ............................................... 8,065 38,633 529,514 729,711 B Class ............................................... 26,685 50,130 74,315 51,892 C Class ............................................... 21,312 4,447 60,924 35,931 Shares issued upon reinvestment of dividends from net investment income A Class ............................................... 2,444 6,061 37,427 78,038 B Class ............................................... 1,247 1,911 2,436 4,328 C Class ............................................... 114 86 1,807 2,504 ------- -------- -------- -------- 59,867 101,268 706,423 902,404 ------- -------- -------- -------- Shares repurchased: A Class ............................................... (17,109) (55,657) (194,177) (657,954) B Class ............................................... (2,717) (12,744) (17,543) (2,138) C Class ............................................... -- -- (1,348) (27,203) ------- -------- -------- -------- (19,826) (68,401) (213,068) (687,295) ------- -------- -------- -------- Net Increase/Decrease 40,041 32,867 493,355 (215,109) ======= ======== ======== ========
6. Lines of Credit The Funds have a committed line of credit for the following amounts: Tax-Free Idaho Fund .......................................... $2,100,000 Tax-Free Iowa Fund ........................................... $2,100,000 Tax-Free Kansas Fund ......................................... $700,000 Tax-Free Missouri Insured Fund ............................... $3,000,000 Tax-Free North Dakota Fund ................................... $1,600,000 Tax-Free Oregon Insured Fund ................................. $1,500,000 Tax-Free Washington Insured Fund ............................. $200,000 Tax-Free Wisconsin Fund ...................................... $1,700,000 No amount was outstanding at June 30, 1998, or at any time during the fiscal year. 7. Credit And Market Risk The Funds concentrate their investments in securities mainly issued by each specific states' municipalities. The value of these investments may be adversely affected by new legislation within the state, regional or local economic conditions, and differing levels of supply and demand for municipal bonds. Many municipalities insure repayment for their obligations. Although bond insurance reduces the risk of loss due to default by an issuer, such bonds remain subject to the risk that market value may fluctuate for other reasons and there is no assurance that the insurance company will meet its obligations. These securities have been identified in the Statement of Net Assets. THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF TAX-FREE IDAHO FUND, TAX-FREE IOWA FUND, TAX-FREE KANSAS FUND, Tax-Free Missouri Insured Fund, Tax-Free North Dakota Fund, Tax-Free Oregon Insured Fund, Tax-Free Washington Insured Fund and Tax-Free Wisconsin Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current Prospectus for each 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 each Fund's current Statement of Additional Information. The figures in this report represent past results which are not a guarantee of future results. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. - ------------------------------------------------------------------------------- INVESTMENT MANAGER Delaware Management Company 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 DELAWARE INVESTMENTS - ------------------------------ Philadelphia o London Printed in the USA on recycled paper (936) SA-VOY8[6/98]TKO 8/98 [photo of globes] For Shareholders 1.800.523.1918 For Securities Dealers 1.800.362.7500 For Financial Institutions Representatives Only 1.800.659.2265 Be sure to consult your financial adviser when making investments. Mutual funds can be a valuable part of your financial plan; however, shares of the Funds are not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union, and involve investment risk, including the possible loss of the principal amount invested. Shares of the Fund are not bank or credit union deposits. Copy Rights Delaware Distributors, L.P. -----END PRIVACY-ENHANCED MESSAGE-----