-----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, HARLHSA+GccTLXRPVSce93D7/6YAMq/IVB1PKYgCeA7Je8iM5BkS+CG7i+NI0deT ZUyxUFsIjpFuAwP2WPYEBg== 0000950116-99-001972.txt : 19991103 0000950116-99-001972.hdr.sgml : 19991103 ACCESSION NUMBER: 0000950116-99-001972 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19991102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR MUTUAL FUNDS CENTRAL INDEX KEY: 0000906236 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411756458 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07742 FILM NUMBER: 99739598 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 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR MUTUAL FUNDS INC DATE OF NAME CHANGE: 19930714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR TAX FREE FUNDS CENTRAL INDEX KEY: 0000733362 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03910 FILM NUMBER: 99739599 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 TAX FREE FUNDS INC DATE OF NAME CHANGE: 19920703 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 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: 99739600 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 N-30D 1 F O R T A X - E X E M P T I N C O M E Delaware Tax-Free Idaho Fund Delaware Tax-Free Iowa Fund Delaware Tax-Free Kansas Fund Delaware Tax-Free Missouri Insured Fund Delaware Tax-Free North Dakota Fund Delaware Tax-Free Oregon Insured Fund Delaware Tax-Free Wisconsin Fund service and guidance professional management 1999 Annual Report goals (various photos demonstrating service and guidance, professional management and goals) DELAWARE(SM) INVESTMENTS - ----------------------- Philadelphia [ ] London A T R A D I T I O N OF S O U N D I N V E S T I N G commitment A Commitment To Our Investors Delaware Investments has a tradition of money management that dates back to 1929. We have a long and distinguished history of helping individuals and institutions--including some of America's largest pension funds--reach their financial goals. Headquartered in Philadelphia, a block from the nation's oldest stock exchange, the Delaware organization established its first mutual fund in 1938. Delaware International Advisers Ltd., our international affiliate, was established in 1990 and is headquartered in London. Delaware Investments offers a full range of mutual funds. We also manage investments for variable annuities and closed-end funds as well as offer a wide range of retirement plan services for individuals and businesses. Delaware Investments manages approximately $47 billion in mutual fund assets and institutional advisory accounts for more than half-a-million investors. Complete information on any fund offered by Delaware Investments can be found in each fund's current prospectus. Prospectuses for all funds offered by Delaware Investments are available from your financial adviser. Please read the prospectus carefully before you invest or send money. Fund Objectives Each Tax-Free Fund and Insured Fund seeks as high a level of current income exempt from federal income tax and from the personal income tax, if any, of a Fund's particular state, as is consistent with preservation of capital. Table of Contents LETTER TO SHAREHOLDERS Page 1 PORTFOLIO MANAGER'S REVIEW Page 4 DELAWARE TAX-FREE IDAHO FUND Page 5 DELAWARE TAX-FREE IOWA FUND Page 5 DELAWARE TAX-FREE KANSAS FUND Page 6 DELAWARE TAX-FREE MISSOURI INSURED FUND Page 6 DELAWARE TAX-FREE NORTH DAKOTA FUND Page 7 DELAWARE TAX-FREE OREGON INSURED FUND Page 7 DELAWARE TAX-FREE WISCONSIN FUND Page 8 PERFORMANCE SUMMARY Page 10 STATEMENTS OF NET ASSETS Page 17 FINANCIAL HIGHLIGHTS Page 36 tax-exempt income tradition [photo of computer keyboard] [photo of illustration for Tax-Exempt income] for tax-exempt income 1 September 7, 1999 Dear Shareholder: FISCAL 1999 WAS A CHALLENGING YEAR for both taxable and tax exempt fixed income investors. Just before our fiscal year began in August, debt problems in Russia and Brazil, along with ongoing concerns about recessions in Asia, created strong worldwide demand for U.S. Treasury bonds. Demand for Treasuries, during times of extreme market turbulence is often referred to as "a flight to quality." Throughout the fall, slower corporate earnings growth also fueled demand for the relative safety of U.S. government debt. Prices for long-term Treasury bonds rose sharply, pushing yields to historic lows. As prices for U.S. Treasury bonds moved higher, municipal bonds seemed to offer exceptional value as compared to Treasuries. Last fall, as Treasury yields were plummeting, an abundant supply of municipal bonds was met with relatively stable demand. As winter approached, three Federal Reserve interest rate cuts helped to restore investors' confidence in the U.S. economy and reduce concerns over global recession. This set the stage for the significant stock market recovery that started in the fourth quarter of 1998 and continued through the end of our fiscal year. In the spring of 1999, the WE ARE PLEASED TO REPORT THAT FOR FISCAL 1999 TOTAL RETURNS AT NET ASSET VALUE FOR ALL SEVEN OF OUR FUNDS OUTPACED THE RETURNS OF THEIR RESPECTIVE LIPPER PEER GROUPS. TOTAL RETURNS - -------------------------------------------------------------------------------- One Year Ended August 31, 1999 - -------------------------------------------------------------------------------- Delaware Tax-Free Idaho Fund A Class -0.99% Delaware Tax-Free Iowa Fund A Class -0.26% Delaware Tax-Free North Dakota Fund A Class -0.41% Delaware Tax-Free Wisconsin Fund A Class -0.87% Lipper Other State Municipal Debt Fund Average (77 funds) -2.52% - -------------------------------------------------------------------------------- Delaware Tax-Free Kansas Fund A Class +0.35% Lipper Kansas Municipal Debt Fund Average (13 funds) -1.95% - -------------------------------------------------------------------------------- Delaware Tax-Free Missouri Insured Fund A Class -0.38% Lipper Missouri Municipal Debt Fund Average (20 funds) -3.02% - -------------------------------------------------------------------------------- Delaware Tax-Free Oregon Insured Fund A Class -1.67% Lipper Oregon Municipal Debt Fund Average (25 funds) -3.00% - -------------------------------------------------------------------------------- Lehman Brothers Municipal Bond Index +0.55% Lehman Brothers Insured Municipal Bond Index -0.29% - -------------------------------------------------------------------------------- All performance shown above is at net asset value and assumes reinvestment of distributions. Past performance does not guarantee future results. Performance of other Fund classes varies due to different charges and expenses. The Lipper Averages represent peer groups of municipal mutual funds from a particular state or many states. The unmanaged Lehman Brothers Municipal Bond Index is composed of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Complete performance information for all funds can be found on pages 10 through 16. for tax-exempt income 2 Dow Jones Industrial Average closed above both the 10,000 and 11,000 marks for the first time. During the spring and summer, fixed-income investments took second billing to equities. The performance of Treasury bonds suffered through June, as strength in the domestic economy reduced demand for "safe haven" investments. Municipal bonds weren't such a clear value as they appeared in spring 1998 when yields on Treasury bonds and municipal bonds were nearly identical, but tax-free bonds remained attractive in our view compared to Treasury securities. The interest income you receive from investing in municipal bonds is free from federal income taxes.* In most states, interest received from securities issued by government units within the state is also exempt from state and local taxes. On June 30, the Federal Reserve Board raised the Fed Funds rate, its target rate for overnight loans between banks, by a quarter of a percentage point citing inflationary concerns. The Treasury market improved as a result, posting solid gains into the first week of July. Even U.S. equity indexes hit new records following the rate increase (Source: Bloomberg). On August 24th, the Federal Reserve again raised interest rates by a quarter of a percentage point, the second increase in less than two months, saying the action should help avert inflation. The bank increased the main rate it controls, the Federal funds target rate on overnight loans between banks, to 5.25% from 5.00%. The Dow Jones Industrial Average reacted favorably to the interest rate increase, reaching an annual high of 11,326 on August 25, 1999 (Source: Bloomberg). Municipals generally weathered the turbulence in the fixed income arena better than Treasuries this past year. The 30-year U.S. Treasury bond yield stood at 6.21%, while 30-year AAA-rated general obligation municipal bonds yielded 5.52% on August 31, 1999. In essence, a 30-year AAA municipal bond provided 89% of the income available on a comparable maturity Treasury bond, even before being adjusted for the tax advantage (Source: Bloomberg). Despite increasing yield levels, municipal bonds, like most fixed instruments, did not deliver exceptional total return for the fiscal year ending August 31. Delaware's Midwest and Northwest tax-free funds were no exception--all seven Funds were either slightly up or slightly down for the fiscal year. We are, however, very pleased that total returns for each of our seven Midwest and Northwest tax-free funds outpaced the returns of their respective Lipper peer groups. discipline for tax-exempt income 3 Please see the Portfolio Manager's Review for a discussion of individual fund performance. Looking forward, we believe taxable and tax exempt bonds may remain in the shadow of stocks as long as economic growth and the roaring bull market continue. However, we still believe fixed income investments play a vital role in well-balanced portfolios. Tax-exempt municipal bonds remain especially popular with investors with good reason. They offer a wide range of benefits, including: o Attractive current income free from federal, and in some cases, state and local taxes* o High degree of safety with regard to payment of interest and repayment of principal o Relatively dependable income potential o Wide range of choices to fit in with your investment objectives with regard to investment quality, maturity, type of bond and geographical location. In the pages that follow, your Fund's portfolio manager, Elizabeth H. Howell, reviews the positioning of our municipal bond funds and provides an outlook for the remainder of the year. We thank you for your patience during a difficult year for fixed income investors. We also appreciate your continued confidence in Delaware Investments. Sincerely, WAYNE A. STORK - ------------------------------ /s/Wayne A. Stork Chairman, Delaware Investments Family of Funds DAVID K. DOWNES - ------------------------------ /s/David K. Downes President and Chief Executive Officer Delaware Investments Family of Funds * A portion of the income from tax-exempt funds may be subject to the alternative minimum tax (AMT). The AMT is a federal tax, revamped by the U.S. Tax Reform Act of 1986, aimed at ensuring that wealthy individuals and corporations pay at least some income tax. for tax-exempt income 4 Portfolio Manager's Review By Elizabeth H. Howell Vice President/Senior Portfolio Manager September 7, 1999 OVERVIEW IN LATE SUMMER AND FALL OF 1998, state and local governments issued municipal bonds at near-record levels, led by education, transportation and health care issues. New U.S. municipal bond issuance reached $285 billion in 1998, second only to the record $292 billion sold in 1993 (Source: The Bond Buyer). This provided us with ample opportunities to select bonds with solid credit ratings, high current income potential and the possibility of price appreciation. The large municipal bond supply, however, slightly exceeded investor demand, which temporarily stifled price gains. This led to disappointing returns in early 1999. New bond issuance cooled off considerably over the first three months of 1999. However, supply picked back up again in March and was sustained throughout the summer. Prices of most fixed income securities declined this past year as the stock market grabbed all major attention. Municipal bonds were no exception. Despite a difficult year, the municipal bond market began gaining luster late in the summer as the yield gap between municipal bonds and Treasury securities narrowed. Less than two weeks after the Federal Reserve raised its Federal funds target rate a second time on August 24 (by 0.25%), high-quality municipal bonds were still looking extraordinarily attractive relative to Treasury bonds, in our view. As of August 31, 1999, investors were giving up very little yield in return for freedom from certain taxes. A couple of factors that we believe are at play in the improving municipal market: o Treasury bond supply has been steadily tapering off this past spring and summer, making them relatively more expensive compared to municipal bonds. For nearly two decades, the government securities market has grown exponentially. The government relied upon Treasuries to help it finance the nation's $5.5 trillion in debt. Now, with a back-to-back budget surplus occurring for the first time since 1956 and 1957, Treasury bonds are becoming relatively scarce (Source: Bloomberg). o Moreover, a robust U.S. economy has improved the credit quality of many overview DESPITE A DIFFICULT YEAR, THE MUNICIPAL BOND MARKET BEGAN GAINING LUSTER LATE IN THE SUMMER AS THE YIELD GAP BETWEEN MUNICIPALS AND TREASURY SECURITIES NARROWED. for tax-exempt income 5 (photo of family on beach) municipal bond jurisdictions, so default risk for high-quality muni bonds is relatively low. In our view, the single biggest factor weighing down municipal bonds now is the bull market in stocks. Against annual double-digit gains in the stock market, the yield on municipal bonds tends to look undersized. DELAWARE TAX-FREE IDAHO FUND Delaware Tax-Free Idaho Fund had a total return of -0.99% (for Class A shares at net asset value with distributions reinvested) for the year ended August 31, 1999. Despite a slightly negative return, your Fund preserved principal to a greater degree than the Fund's peer group, the Lipper Other States Municipal Debt Fund category, which had an average annual return of -2.52%. As of August 31, 1999, Tax-Free Idaho Fund's duration, which measures a fund's sensitivity to interest rate changes, was 8.7 years, longer than the duration of the Lipper Other States Municipal Debt Fund average. This allowed the Fund to benefit as lower interest rates increased the attractiveness of higher yielding long-term bonds. Delaware Tax-Free Idaho Fund maintained a well-diversified portfolio, with a majority of the Fund's assets allocated to high-quality investment grade issues. We complemented the portfolio's investment grade holdings with well-researched unrated bonds to help boost the Fund's income potential. In general, unrated bonds offer more income than comparable rated bonds. While Idaho's state economy is somewhat reliant on resource-based industries (timber, agriculture and minerals), a growing demand for tourism and manufacturing jobs has helped increase diversity. Idaho has also been able to attract several technology and software companies over the past decade, which has helped to create new jobs and boost personal incomes. Overall, we believe, a strong regional economy has strengthened the financial position of many Idaho municipalities. DELAWARE TAX-FREE IOWA FUND Delaware Tax-Free Iowa Fund had a total return of -0.26% (for Class A shares at net asset value with distributions reinvested) for the one-year period ended August 31, 1999. The return handily beat the average return of its 77 peer funds as represented by the Lipper Other States Municipal Debt Fund category. The average effective duration of the Fund as of August 31, 1999, was 7.8 years. Duration is a common measure of a bond or bond fund's sensitivity to interest rates. The longer the duration, the more the bond's price will change for a given increase or decrease in interest rates. Historically, Iowa municipalities have issued relatively few bonds that are exempt from both federal and state taxes. Nevertheless, all of the bonds held by your Fund provide Iowa residents with a dual tax exemption. Some investors subject to tax-free iowa for tax-exempt income 6 (photo of computer keyboard) the federal alternative minimum tax may not benefit completely from this strategy. Over the past few years, increased revenue from legalized gambling has bolstered Iowa's growing economy. In the coming months, we expect strong state and national economic trends to benefit many of this state's municipalities. DELAWARE TAX-FREE KANSAS FUND Delaware Tax-Free Kansas Fund provided a +0.35% total return (for Class A shares at net asset value with distributions reinvested) as of August 31, 1999. This beat the return of the Lipper Kansas Municipal Debt Fund Average (composed of 13 funds), which delivered a -1.95% total return. The economy in Kansas, like the majority of other mid-western state economies is healthy and growing. Falling overseas demand for wheat and declining commodity prices may, however, begin to put pressure on the state's farming industry in the coming year. In our opinion, with budgets in excellent shape and tax revenues rising at both the state and local level, this scenario shouldn't adversely affect the financial situations of Kansas municipalities in the coming fiscal year. DELAWARE TAX-FREE MISSOURI INSURED FUND Your Fund returned -0.38% for the year ended August 31, 1999 (for Class A shares at net asset value with distributions reinvested). We preserved principal better than the average total return of other Missouri municipal bonds funds as tracked by the Lipper Missouri Municipal Debt Fund Average. Delaware Tax-Free Missouri Insured Fund invested exclusively in insured bonds rated AAA by Standard and Poor's. This is the highest bond credit rating available. Increased housing and commercial development activity is promoting relatively rapid growth in Missouri cities, especially St. Louis and Kansas City. We expect this growth to increase tax revenues, which would in turn strengthen the credit quality of Missouri's municipalities. tax-free kansas
PORTFOLIO HIGHLIGHTS TAX-FREE FUNDS - -------------------------------------------------------------------------------------------------------- AUGUST 31, 1999 Idaho Iowa Kansas Missouri Insured - -------------------------------------------------------------------------------------------------------- Average Credit Quality A1 AA AA3 AAA Average Duration 8.7 years 7.8 years 7.1 years 6.3 years Average Effective Maturity* 14.3 years 11.5 years 11.7 years 8.2 years Average Maturity** 18.3 years 17.8 years 19.1 years 17.5 years Alternative Minimum Tax*** 11.22% 5.11% 20.00% 17.94% - -------------------------------------------------------------------------------------------------------- Before Expense Before Expense Before Expense Before Expense Current 30-Day SEC Yield+ Limitation Limitation Limitation Limitation (Class A) 4.40% 4.39% 4.17% 3.99% 4.29% 4.05% 4.03% 4.03% (Class B) 3.83% 3.82% 3.58% 3.40% 3.69% 3.45% 3.44% 3.44% (Class C) 3.83% 3.82% 3.58% 3.40% 3.70% 3.46% 3.43% 3.43% - ---------------------------------------------------------------------------------------------------------
* Average effective maturity takes into consideration all prepayments, puts and adjustable coupons. ** Average maturity is the stated maturity on the bond and does not take into account any prepayments. *** Percentage of income generated for the year ended August 31, 1999 that was subject to the federal alternative minimum tax. + Calculated according to Securities and Exchange Commission guidelines. An expense limitation for each Fund was in effect for the period shown. Yields would have been lower without the limitation. for tax-exempt income 7 DELAWARE TAX-FREE NORTH DAKOTA FUND For the year ended August 31, 1999, Delaware Tax-Free North Dakota Fund provided a slightly negative return of -0.41% (for Class A shares at net asset value with distributions reinvested). Although this return was negative, it compared favorably with the -2.52% return of the Fund's peers. Over the last year, we continued to position the Fund to perform well in a declining interest rate environment. The Fund's average effective duration was 7.1 years. This helped us to protect capital relative to many of the Fund's peers and achieve a higher rate of total return as interest rates fell last fall. Rebuilding projects in metropolitan areas such as Fargo and Grand Forks following the 1997 Red River Valley floods created employment opportunities and helped to boost local economies. Yet unlike most other mid-western states, North Dakota's municipalities have not been able to accumulate significant budget surpluses over the last several years. In the coming months, we will continue to monitor the fiscal health of North Dakota's municipalities to ensure acceptable credit quality for all of Delaware Tax-Free North Dakota Fund's holdings. DELAWARE TAX-FREE OREGON INSURED FUND Delaware Tax-Free Oregon Insured Fund provided a total return of -1.67% for the year ended August 31, 1999 (for Class A shares at net asset value with distributions reinvested). This return compared favorably to the -3.00% average total return for all other Oregon municipal bond funds tracked by Lipper Analytical Services. Delaware Tax-Free Oregon Insured Fund invested exclusively in bonds with AAA ratings from Standard & Poor's. The majority of the bonds in the Fund's portfolio are protected by municipal bond insurance, which guarantees the timely payment of principal and interest. This REGARDLESS OF MARKET CONDITIONS, MUNICIPAL BOND FUNDS HAVE THE POTENTIAL TO OFFER VALUABLE ASSET ALLOCATION BENEFITS WITHOUT ADDING TO TAXABLE INVESTMENT INCOME. tax-free oregon insured PORTFOLIO HIGHLIGHTS TAX-FREE FUNDS - -------------------------------------------------------------------------------- AUGUST 31, 1999 North Dakota Oregon Insured Wisconsin - -------------------------------------------------------------------------------- Average Credit Quality AA3 AAA AA3 Average Duration 7.1 years 8.2 years 8.3 years Average Effective Maturity* 11.2 years 11.5 years 12.0 years Average Maturity** 18.2 years 18.0 years 21.0 years Alternative Minimum Tax*** 14.13% 9.46% 21.04% - -------------------------------------------------------------------------------- Before Expense Before Expense Before Expense Current 30-Day SEC Yield+ Limitation Limitation Limitation (Class A) 5.00% -- 4.63% 4.48% 4.38% 4.31% (Class B) 4.44% -- 4.05% 3.90% 3.80% 3.73% (Class C) 4.45% -- 4.05% 3.89% 3.78% 3.71% - -------------------------------------------------------------------------------- * Average effective maturity takes into consideration all prepayments, puts and adjustable coupons. ** Average maturity is the stated maturity on the bond and does not take into account any prepayments. *** Percentage of income generated for the year ended August 31, 1999 that was subject to the federal alternative minimum tax. + Calculated according to Securities and Exchange Commission guidelines. An expense limitation for each Fund was in effect for the period shown. Yields would have been lower without the limitation. for tax-exempt income 8 does not, however, guarantee against price volatility. The Oregon economy continues to demonstrate economic development and diversification. The Asian recession slowed economic growth in Oregon throughout 1998, but the state largely recovered in 1999, along with the rest of the Northwest. In our opinion, the finances of most Oregon municipalities remain strong and should support the credit quality of the Fund's holdings. DELAWARE TAX-FREE WISCONSIN FUND Delaware Tax-Free Wisconsin Fund had a total return of -0.87% (for Class A shares at net asset value with distributions reinvested) for the year ended August 31, 1999. This return compared favorably to the -2.52% average total return of other funds tracked by the Lipper Other States Municipal Debt Fund category. Most of the bonds issued by Wisconsin municipalities are not exempt from state income tax. We always seek to purchase those relatively rare Wisconsin issues that offered dual exemption from both state and federal income tax. We supplemented these holdings with territorial bonds issued by Puerto Rico and the Virgin Islands. These bonds not only offered dual exemption potential, but also provided an element of diversification for the Fund. The Wisconsin economy continues to benefit from over eight years of economic expansion at the national level. We believe this points to a positive credit outlook for the state's municipalities for the remainder of 1999. OUTLOOK The U.S. seems to be the engine of growth for the entire world at this time. We believe strong forward momentum for the U.S. economy is likely to result in solid growth (about 3% annually) for the remainder of this year. We also believe that the Federal Reserve's two 0.25% interest rate increases on June 30 and August 24 represented fine-tuning rather than fundamental changes in policy. Both actions were made by the central bank in an attempt to avert inflation. (photo of couple talking to financial planner) tax-free wisconsin for tax-exempt income 9 Having now taken back two of last fall's three rate cuts, the Fed did leave open the possibility that it could raise rates a third time this year. We believe they would do so if economic data showed inflationary pressure in the form of further big wage increases or a substantial rise in the Consumer Price Index, an index that tracks U.S. inflationary levels in percentage points. In the coming year, we think that municipal bond prices have the potential to rise. Because municipals are generally not subject to the ebb and flow of foreign demand, like Treasuries, they have been far more stable the last two years. According to Bloomberg, over the two years ended August 31, the price of 10-year Treasuries were three times as volatile as municipal bond prices based on standard deviation. We believe more investors will flock to municipal bonds in the months ahead and drive up demand. If prices rise, state municipal bond mutual funds, such as any of our seven Delaware Midwest and Northwest tax-free funds, have the potential to rise in value. We see the possibility of capital appreciation considering that municipal prices would have to rise significantly so that they yield approximately 84% of what Treasuries yield. Historically, this has been the relationship between Treasuries and municipal bonds (Source: Bloomberg). If U.S. economic growth slows modestly for the remainder of 1999, the Federal Reserve will be less likely to raise short-term rates. Bonds will breathe a sigh of relief and long-term interest rates will most likely fall. Municipal bonds, at their reasonable current prices, should offer investors excellent value in the remainder of 1999. Regardless of market conditions, municipal bond funds have the potential to offer valuable asset allocation benefits without adding to taxable investment income. In our view, investors seeking to diversify their portfolios with less volatile investments will find attractive opportunities in municipal bonds and municipal bond funds. REGARDLESS OF MARKET CONDITIONS, MUNICIPAL BOND FUNDS HAVE THE POTENTIAL TO OFFER VALUABLE ASSET ALLOCATION BENEFITS WITHOUT ADDING TO TAXABLE INVESTMENT INCOME. outlook for tax-exempt income 10 Performance Summary TAX-FREE IDAHO FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT JANUARY 4, 1995 TO AUGUST 31, 1999
Lipper Other States Municipal Debt Fund Average Lehman Brothers Delaware Tax-Free (59 funds) Municipal Bond Index Idaho Fund A Class ----------------- -------------------- ------------------ Jan. `95 $10,000 $ 9,625 $10,000 Feb. `96 $10,291 $10,168 $ 9,979 Aug. `96 $10,897 $10,676 $ 9,988 Feb. `97 $11,428 $11,305 $10,451 Aug. `97 $11,468 $11,314 $10,820 Feb. `98 $12,057 $11,910 $11,306 Aug. `98 $12,528 $12,436 $11,643 Feb. `99 $13,159 $13,118 $11,848 Aug. `99 $13,612 $13,560 $11,543
Chart assumes a $10,000 investment on January 4, 1995, and includes the effect of a 3.75% front-end sales charge and the reinvestment of all distributions. The Lipper Average represents peer groups of municipal bond mutual funds from many states. The unmanaged Lehman Brothers Municipal Bond Index is comprised of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Performance for other classes will differ due to different charges and expenses. Past performance does not guarantee future results. DELAWARE TAX-FREE IDAHO FUND PERFORMANCE - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999 Lifetime Three Year One Year - -------------------------------------------------------------------------------- Class A (Est. 1/4/95) Excluding Sales Charge +7.43% +5.86% -0.99% Including Sales Charge +6.55% +4.54% -4.70% - -------------------------------------------------------------------------------- Class B (Est. 3/16/95) Excluding Sales Charge +5.59% +5.14% -1.82% Including Sales Charge +5.22% +4.23% -5.60% - -------------------------------------------------------------------------------- Class C (Est. 1/11/95) Excluding Sales Charge +6.46% +5.02% -1.82% Including Sales Charge +6.46% +5.02% -2.76% Performance for all classes includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Class A shares of each Fund have a 3.75% maximum front-end sales charge and a 12b-1 fee. Class B shares do not carry a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a deferred sales charge of up to 4% if redeemed before the end of the sixth year. Class C shares have a 1% annual distribution and service fee. If shares are redeemed within 12 months, a 1% contingent deferred sales charge applies. for tax-exempt income 11 TAX-FREE IOWA FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT AUGUST 31, 1993 TO AUGUST 31, 1999
Lipper Other States Municipal Debt Fund Average Lehman Brothers Delaware Tax-Free (23 funds) Municipal Bond Index Idaho Fund A Class ----------------- -------------------- ------------------ Sep. `93 $10,000 $10,000 $ 9,625 Aug. `94 $ 9,901 $ 9,982 $ 9,367 Aug. `95 $10,779 $10,692 $ 9,956 Aug. `96 $11,343 $11,250 $10,433 Aug. `97 $12,392 $12,173 $11,485 Aug. `98 $13,464 $13,090 $12,424 Aug. `99 $13,537 $12,999 $12,390
Chart assumes a $10,000 investment on September 1, 1993, and includes the effect of a 3.75% front-end sales charge and the reinvestment of all distributions. The Lipper Average represents a peer group of municipal bond mutual funds from many states. The unmanaged Lehman Brothers Municipal Bond Index is comprised of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Performance for other classes will differ due to different charges and expenses. Past performance does not guarantee future results. DELAWARE TAX-FREE IOWA FUND PERFORMANCE - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 9/1/93) Excluding Sales Charge +4.32% +5.76% -0.26% Including Sales Charge 3.66% +4.96% -4.04% - -------------------------------------------------------------------------------- Class B (Est. 3/24/95) Excluding Sales Charge +5.21% -1.03% Including Sales Charge +4.83% -4.84% - -------------------------------------------------------------------------------- Class C (Est. 1/4/95) Excluding Sales Charge +6.70% -1.03% Including Sales Charge +6.70% -1.98% Performance for all classes includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Class A shares of each Fund have a 3.75% maximum front-end sales charge and a 12b-1 fee. Class B shares do not carry a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a deferred sales charge of up to 4% if redeemed before the end of the sixth year. Class C shares have a 1% annual distribution and service fee. If shares are redeemed within 12 months, a 1% contingent deferred sales charge applies. for tax-exempt income 12 TAX-FREE KANSAS FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT NOVEMBER 30, 1992 TO AUGUST 31, 1999
Lipper Kansas Municipal Debt Fund Average Lehman Brothers Delaware Tax-Free (23 funds) Municipal Bond Index Kansas Fund A Class ----------------- -------------------- ------------------- Dec. `92 $10,000 $ 9,625 $10,000 Aug. `93 $10,948 $10,766 $11,063 Aug. `94 $10,963 $10,813 $11,041 Aug. `95 $11,935 $11,571 $11,783 Aug. `96 $12,560 $12,242 $12,346 Aug. `97 $13,721 $13,316 $13,188 Aug. `98 $14,908 $14,537 $14,050 Aug. `99 $14,990 $14,587 $14,140
Chart assumes a $10,000 investment on November 30, 1992, and includes the effect of a 3.75% front-end sales charge and the reinvestment of all distributions. The Lipper Average represents a peer group of municipal bond mutual funds from Kansas. The unmanaged Lehman Brothers Municipal Bond Index is comprised of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Performance for other classes will differ due to different charges and expenses. Past performance does not guarantee future results. DELAWARE TAX-FREE KANSAS FUND PERFORMANCE - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 11/30/92) Excluding Sales Charge +6.37% +6.18% +0.35% Including Sales Charge +5.77% +5.36% -3.37% - -------------------------------------------------------------------------------- Class B (Est. 4/8/95) Excluding Sales Charge +5.37% -0.49% Including Sales Charge +4.98% -4.30% - -------------------------------------------------------------------------------- Class C (Est. 4/12/95) Excluding Sales Charge +5.33% -0.40% Including Sales Charge +5.33% -1.35% Performance for all classes includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Class A shares of each Fund have a 3.75% maximum front-end sales charge and a 12b-1 fee. Class B shares do not carry a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a deferred sales charge of up to 4% if redeemed before the end of the sixth year. Class C shares have a 1% annual distribution and service fee. If shares are redeemed within 12 months, a 1% contingent deferred sales charge applies. for tax-exempt income 13 TAX-FREE MISSOURI INSURED FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT NOVEMBER 2, 1992 TO AUGUST 31, 1999
Lipper Missouri Municipal Debt Fund Average Lehman Brothers Delaware Tax-Free (9 funds) Municipal Bond Index Missouri Fund A Class ----------------- -------------------- --------------------- Dec. `92 $10,000 $10,000 $ 9,625 Aug. `93 $10,948 $11,130 $10,629 Aug. `94 $10,963 $10,994 $10,455 Aug. `95 $11,935 $11,847 $11,304 Aug. `96 $12,560 $12,430 $11,941 Aug. `97 $13,721 $13,490 $13,024 Aug. `98 $14,908 $14,564 $14,082 Aug. `99 $14,990 $14,429 $14,028
Chart assumes a $10,000 investment on November 2, 1992, and includes the effect of a 3.75% front-end sales charge and the reinvestment of all distributions. The Lipper Average represents a peer group of municipal bond mutual funds from Missouri. The unmanaged Lehman Brothers Municipal Bond Index is comprised of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Performance for other classes will differ due to different charges and expenses. Past performance does not guarantee future results. DELAWARE TAX-FREE MISSOURI INSURED FUND PERFORMANCE - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 11/2/92) Excluding Sales Charge +5.85% +6.06% -0.38% Including Sales Charge +5.26% +5.26% -4.09% - -------------------------------------------------------------------------------- Class B (Est. 3/12/94) Excluding Sales Charge +4.53% +5.38% -1.13% Including Sales Charge +4.38% +5.05% -4.94% - -------------------------------------------------------------------------------- Class C (Est. 11/11/95) Excluding Sales Charge +3.98% -1.12% Including Sales Charge +3.98% -2.07% Performance for all classes includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Class A shares of each Fund have a 3.75% maximum front-end sales charge and a 12b-1 fee. Class B shares do not carry a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a deferred sales charge of up to 4% if redeemed before the end of the sixth year. Class C shares have a 1% annual distribution and service fee. If shares are redeemed within 12 months, a 1% contingent deferred sales charge applies. for tax-exempt income 14 TAX-FREE NORTH DAKOTA FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT APRIL 1, 1991 TO AUGUST 31, 1999
Lipper Other States Municipal Debt Fund Average Lehman Brothers Delaware Tax-Free (7 funds) Municipal Bond Index North Dakota Fund A Class ----------------- -------------------- ------------------------- Apr. `91 $10,000 $ 9,625 $10,000 Aug. `91 $10,822 $10,513 $10,273 Aug. `92 $11,776 $11,532 $11,215 Aug. `93 $13,222 $12,816 $12,376 Aug. `94 $12,543 $12,115 $12,449 Aug. `95 $14,727 $14,273 $13,326 Aug. `96 $15,380 $14,828 $14,021 Aug. `97 $16,793 $16,200 $15,098 Aug. `98 $17,881 $17,114 $16,167 Aug. `99 $17,651 $16,835 $16,117
Chart assumes a $10,000 investment on April 1, 1991 and includes the effect of a 3.75% front-end sales charge and the reinvestment of all distributions. The Lipper Average represents peer a group of municipal bond mutual funds from many states. The unmanaged Lehman Brothers Municipal Bond Index is comprised of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Performance for other classes will differ due to different charges and expenses. Past performance does not guarantee future results. TAX-FREE NORTH DAKOTA FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 4/1/91) Excluding Sales Charge +6.89% +6.15% -0.41% Including Sales Charge +6.40% +5.34% -4.18% - -------------------------------------------------------------------------------- Class B (Est. 5/10/94) Excluding Sales Charge +5.88% +5.54% -1.14% Including Sales Charge +5.73% +5.21% -4.92% - -------------------------------------------------------------------------------- Class C (Est. 7/29/95) Excluding Sales Charge +4.95% -1.15% Including Sales Charge +4.95% -2.10% Performance for all classes includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Class A shares of each Fund have a 3.75% maximum front-end sales charge and a 12b-1 fee. Class B shares do not carry a front-end sales charge, but are subject to a 1% annual distribution and service fee. They are also subject to a deferred sales charge of up to 4% if redeemed before the end of the sixth year. Class C shares have a 1% annual distribution and service fee. If shares are redeemed within 12 months, a 1% contingent deferred sales charge applies. for tax-exempt income 15 TAX-FREE OREGON INSURED FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT AUGUST 1, 1993 TO AUGUST 31, 1999
Lipper Oregon Municipal Debt Fund Average Lehman Brothers Insured Delaware Tax-Free (10 funds) Municipal Bond Index Oregon Fund A Class ----------------- ----------------------- ------------------- Aug. `93 $10,000 $10,000 $ 9,625 Feb. `94 $10,105 $10,127 $ 9,958 Aug. `94 $10,014 $ 9,890 $ 9,595 Feb. `95 $10,295 $10,145 $ 9,876 Aug. `95 $10,902 $10,610 $10,352 Feb. `96 $11,432 $11,086 $10,935 Aug. `96 $11,473 $11,112 $10,892 Feb. `97 $12,062 $11,609 $11,427 Aug. `97 $12,533 $12,056 $11,896 Feb. `98 $13,164 $12,615 $12,561 Aug. `98 $13,617 $13,009 $12,940 Feb. `99 $13,973 $13,276 $13,230 Aug. `99 $13,692 $12,894 $12,723
Chart assumes a $10,000 investment on August 1, 1993 and includes the effect of a 3.75% front-end sales charge and the reinvestment of all distributions. The Lipper Average represents peer a group of municipal bond mutual funds from Oregon. The unmanaged Lehman Brothers Municipal Bond Index is comprised of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Performance for other classes will differ due to different charges and expenses. Past performance does not guarantee future results. TAX-FREE OREGON INSURED FUND - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 8/1/93) Excluding Sales Charge +4.71% +5.81% -1.67% Including Sales Charge +4.06% +5.00% -5.39% - -------------------------------------------------------------------------------- Class B (Est. 3/12/94) Excluding Sales Charge +4.27% +5.15% -2.41% Including Sales Charge +4.12% +4.82% -6.17% - -------------------------------------------------------------------------------- Class C (Est. 7/7/95) Excluding Sales Charge +4.47% -2.41% Including Sales Charge +4.47% -3.36% Performance for all classes includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Class A shares of each Fund have a 3.75% maximum front-end sales charge. Class A Shares have a 0.25% 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 16 TAX-FREE WISCONSIN FUND'S LIFETIME PERFORMANCE - -------------------------------------------------------------------------------- GROWTH OF A $10,000 INVESTMENT SEPTEMBER 1, 1993 TO AUGUST 31, 1999
Lipper Other States Municipal Debt Fund Average Lehman Brothers Delaware Tax-Free (23 funds) Municipal Bond Index Wisconsin Fund A Class ----------------- -------------------- ---------------------- Sep. '93 $10,000 $10,000 $9,625 Feb. '94 $10,123 $9,991 $9,718 Aug. '94 $9,982 $9,901 $9,394 Feb. '95 $10,245 $10,179 $9,637 Aug. '95 $10,692 $10,779 $10,055 Feb. '96 $11,213 $11,303 $10,593 Aug. '96 $11,250 $11,343 $10,654 Feb. '97 $11,765 $11,926 $11,074 Aug. '97 $12,173 $12,392 $11,477 Feb. '98 $12,713 $13,016 $12,025 Aug. '98 $13,090 $13,464 $12,411 Feb. '99 $13,335 $13,816 $12,641 Aug. '99 $12,989 $13,637 $12,302
Chart assumes a $10,000 investment on September 1, 1993 and includes the effect of a 3.75% front-end sales charge and the reinvestment of all distributions. The Lipper Average represents a peer group of municipal bond mutual funds from many states. The unmanaged Lehman Brothers Municipal Bond Index is comprised of bonds with a variety of quality ratings from many states. You cannot invest directly in an index. Performance for other classes will differ due to different charges and expenses. Past performance does not guarantee future results. TAX-FREE WISCONSIN FUND'S PERFORMANCE - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS THROUGH AUGUST 31, 1999 Lifetime Five Years One Year - -------------------------------------------------------------------------------- Class A (Est. 9/1/93) Excluding Sales Charge +4.19% +5.55% -0.87% Including Sales Charge +3.53% +4.75% -4.56% - -------------------------------------------------------------------------------- Class B (Est. 4/22/95) Excluding Sales Charge +4.50% -1.60% Including Sales Charge +4.11% -5.38% - -------------------------------------------------------------------------------- Class C (Est. 3/28/95) Excluding Sales Charge +4.59% -1.70% Including Sales Charge +4.59% -2.65% Performance for all classes includes reinvestment of distributions and applicable sales charge as described below. Return and share value will fluctuate so that shares when redeemed may be worth more or less than the original cost. Past performance is not a guarantee of future results. Performance for Class B and C shares excluding sales charge assumes either contingent deferred sales charges did not apply or the investment was not redeemed. Class A shares of each Fund have a 3.75% maximum front-end sales charge. Class A Shares have a 0.25% 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 17 Financial Statements VOYAGEUR MUTUAL FUNDS, INC. - DELAWARE TAX-FREE IDAHO FUND STATEMENT OF NET ASSETS AUGUST 31, 1999 - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS - 93.65% GENERAL OBLIGATION BONDS - 8.78% Ada & Canyon County School District #2 5.50% 7/30/16 .......................................... $1,055,000 $1,068,884 Bonner County Local Improvement District # 93-1 6.20% 4/30/05 .................................... 150,000 157,395 Bonner County Local Improvement District # 93-2 6.35% 4/30/06 .................................... 185,000 194,405 Bonner County Local Improvement District # 93-3 6.40% 4/30/07 .................................... 195,000 204,902 Bonner County Local Improvement District # 93-4 6.50% 4/30/08 .................................... 110,000 115,573 Bonner County Local Improvement District # 93-5 6.50% 4/30/10 .................................... 100,000 104,726 Coeur D' Alene Local Improvement District # 6 Series 1995 6.00% 7/1/09 ......................... 85,000 88,867 Coeur D' Alene Local Improvement District # 6 Series 1996 6.05% 7/1/10 ......................... 90,000 94,185 Coeur D' Alene Local Improvement District # 6 Series 1997 6.10% 7/1/12 ......................... 40,000 41,844 Coeur D' Alene Local Improvement District # 6 Series 1998 6.10% 7/1/14 ......................... 45,000 46,959 Madison County (FSA) 5.40% 8/1/14 ................... 300,000 301,791 Puerto Rico Commonwealth 5.375% 7/1/25 .............. 1,250,000 1,195,313 Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ..................................... 1,550,000 1,286,205 Sun Valley 5.20% 8/1/09 ............................. 180,000 180,920 ---------- 5,081,969 ---------- HIGHER EDUCATION REVENUE BONDS - 6.49% Boise State University Idaho Revenue Refunding & Improvement Student Fee (FSA) 5.00% 4/1/23 ........................................... 1,000,000 920,720 Idaho State University Student Fee Bonds (MBIA) 5.80% 4/1/20 .............................. 550,000 563,508 University of Idaho Student Fees Recreation Center (FSA) 5.00% 4/1/25 ............................... 1,000,000 908,810 University of Idaho Student Fee Telecommunications (FSA) 5.85% 4/1/11 ............................... 1,300,000 1,363,089 ---------- 3,756,127 ---------- HOSPITAL REVENUE BONDS - 17.92% Idaho Health Facilities Authority Hospital Revenue - Elks Rehabilitation Hospital 5.45% 7/15/23 ....... 2,000,000 1,809,640 Idaho Health Facilities Authority Revenue - Bannock Regional Medical Project 5.25% 5/1/14 ..................................... 1,500,000 1,407,870 Idaho Health Facilities Authority Revenue - Bannock Regional Medical Center 6.125% 5/1/25 ........................................... 1,500,000 1,505,340 - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) HOSPITAL REVENUE BONDS (CONTINUED) Idaho Health Facilities Authority Revenue - Bannock Regional Medical Center 6.375% 5/1/17 ........................................... $1,695,000 $ 1,771,021 Idaho Health Facilities Authority Revenue - Bonner General Hospital 6.50% 10/1/28 ............ 1,500,000 1,496,010 Idaho Health Facilities Bingham Memorial Hospital 6.00% 3/1/29 ..................................... 2,000,000 1,876,920 Idaho Magic Valley Health Facilities (AMBAC) 5.625% 12/1/13 ................................... 500,000 511,165 ----------- 10,377,966 ----------- HOUSING REVENUE BONDS - 7.41% Idaho State Housing Agency Multi-Family Park Place Project (FHA) 6.50% 12/1/36 ................ 990,000 1,025,204 Idaho State Housing Finance Authority Single Family Series A (AMBAC) 6.05% 7/1/13 ............. 390,000 398,654 Idaho State Housing Finance Authority Single Family Series A (FHA) 6.10% 7/1/16 ............... 365,000 370,431 Idaho State Housing Finance Authority Single Family Series A1 6.85% 7/1/12 .................... 75,000 78,170 Idaho State Housing Finance Authority Single Family Series B (FHA) 6.45% 7/1/15 ............... 185,000 190,631 Idaho State Housing Finance Authority Single Family Series C-2 6.35% 7/1/15 ................... 245,000 252,779 Idaho State Housing Finance Authority Single Family Series E 6.60% 7/1/11 ..................... 105,000 109,370 Idaho State Housing Finance Authority Single Family Series E (FHA) 6.35% 7/1/15 ............... 335,000 346,216 Idaho State Housing Finance Authority Single Family Series G-2 6.15% 7/1/15 ................... 1,495,000 1,521,761 ----------- 4,293,216 ----------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 5.65% Idaho State Water Resource Boise Water 7.25% 12/1/21 .......................................... 100,000 105,515 Meridan EDA for Hi-Micro 5.85% 8/15/11 .............. 1,250,000 1,269,175 Pocatello Development Authority and Tax Increment Revenue 7.25% 12/1/08 ............................ 1,700,000 1,739,916 Puerto Rico Industrial Medical Environmental Revenue - PepsiCo Project 6.25% 11/15/13 ......... 150,000 159,864 ----------- 3,274,470 ----------- LEASE/CERTIFICATES OF PARTICIPATION - 1.75% North Idaho College Dorm Housing - Certificates of Participation 6.45% 10/1/16 ...................... 1,000,000 1,013,730 ----------- 1,013,730 ----------- POLLUTION CONTROL REVENUE BONDS - 18.83% Nez Perce County, Idaho Pollution Control Revenue Refunding - Potlatch Project 6.00% 10/1/24 ....... 5,500,000 5,492,575 Power County Idaho Pollution Control Revenue - FMC Project 5.625% 10/1/14 ....................... 5,570,000 5,412,703 ----------- 10,905,278 ----------- 18 for tax-exempt income DELAWARE TAX-FREE IDAHO FUND STATEMENT OF NET ASSETS (CONTINUED) - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) POWER AUTHORITY REVENUE BONDS - 3.99% + Puerto Rico Electric Power Authority 5.56% 7/1/19 (FSA) ............................... $1,100,000 $ 821,007 Puerto Rico Electric Power Authority (FSA) 6.00% 7/1/16 ........................................... 100,000 104,715 Puerto Rico Electric Power Authority Series X 5.50% 7/1/25 ..................................... 1,415,000 1,386,219 ---------- 2,311,941 ---------- * PRE-REFUNDED BONDS - 5.64% Ada & Canyon County School District #2 5.60% 7/30/12-03 ....................................... 1,325,000 1,401,532 Ammon, Idaho Urban Renewal Agency Tax Increment Revenue 6.25% 8/1/18-06 .......................... 445,000 485,277 Ammon, Idaho Urban Renewal Agency Tax Increment Revenue 5.875% 8/1/17-04 ......................... 350,000 376,926 Canyon County Independent School District #131 (MBIA) 5.50% 7/30/12-03 .......................... 100,000 103,145 Gooding and Lincoln Independent School District #231 6.30% 2/1/14-04 ............................. 100,000 107,414 Idaho Holy Cross - St. Alphonsus Regional Medical Center 6.25% 12/1/22-02 .......................... 590,000 635,288 Puerto Rico Telephone Revenue Authority 5.50% 1/1/22-03 ........................................ 150,000 157,326 ---------- 3,266,908 ---------- TRANSPORTATION REVENUE BONDS - 0.58% Guam Highway (FSA) 6.30% 5/1/12 ................... 150,000 158,307 Puerto Rico Highway Revenue Series W 5.50% 7/1/15 ........................................... 175,000 176,461 ---------- 334,768 ---------- WATER & SEWER REVENUE BONDS - 2.23% Chubbuck Water Revenue 6.35% 4/1/08 ............... 125,000 129,674 Chubbuck Water Revenue 6.40% 4/1/10 ............... 135,000 140,106 McCall Water Revenue (FSA) 5.85% 3/1/16 ........... 1,000,000 1,023,100 ---------- 1,292,880 ---------- OTHER REVENUE BONDS - 14.38% Boise Urban Renewal Agency Tax Increment Revenue 6.125% 9/1/15 ............................ 4,540,000 4,642,241 Hayden, Idaho Improvement District 95 - Special Assessment 6.30% 5/1/12 .................. 115,000 115,216 Hayden, Idaho Improvement District 95 - Special Assessment 6.35% 5/1/13 .................. 120,000 120,236 Hayden, Idaho Improvement District 95 - Special Assessment 6.40% 5/1/14 .................. 125,000 125,271 Hayden, Idaho Improvement District 95 - Special Assessment 6.50% 5/1/15 .................. 125,000 125,284 Idaho State Building Authority Building Revenue Series A 4.75% 9/1/25 ............................ 1,500,000 1,302,525 Puerto Rico Public Building Authority Revenue Series M 5.50% 7/1/21 ............................ 1,175,000 1,158,750 - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) OTHER REVENUE BONDS (CONTINUED) Virgin Islands Public Finance Authority Revenue Sub Lien Funded Notes Series E 5.875% 10/1/18 .......................................... $750,000 $ 735,218 ----------- 8,324,741 ----------- Total Municipal Bonds (cost $54,410,324) 54,233,994 ----------- NUMBER OF SHARES --------- SHORT-TERM INVESTMENTS - 5.06% Dreyfus Tax-Exempt Cash Management, Inc. ............ 38,545 38,545 Norwest Advantage Municipal Money Market Fund ....... 2,890,652 2,890,652 ----------- Total Short-Term Investments (cost $2,929,197) ...... 2,929,197 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED (COST $57,339,521) - 98.71% ................................ $57,163,191 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.29% ..................................................... 746,685 ----------- NET ASSETS APPLICABLE TO 5,296,849 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% .................... $57,909,876 =========== NET ASSET VALUE - TAX-FREE IDAHO FUND A CLASS ($44,299,357 / 4,050,855 SHARES) ........................... $10.94 =========== NET ASSET VALUE - TAX-FREE IDAHO FUND B CLASS ($10,199,350 / 933,698 SHARES) ............................. $10.92 =========== NET ASSET VALUE - TAX-FREE IDAHO FUND C CLASS ($3,411,169 / 312,296 SHARES) .............................. $10.92 =========== COMPONENTS OF NET ASSETS AT AUGUST 31, 1999: Common stock, $0.01 par value, 100,000,000,000 shares authorized to the Fund with 10,000,000,000 shares allocated to Tax-Free 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 ............... $58,130,838 Accumulated net realized loss on investments .................. (44,632) Net unrealized depreciation of investments .................... (176,330) ----------- Total net assets .............................................. $57,909,876 =========== - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. + Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect August 31, 1999. Summary of Abbreviations: AMBAC - Insured by the AMBAC Indemnity Corporation FHA - Insured by the Federal Housing Authority FSA - Insured by Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association for tax-exempt income 19 DELAWARE TAX-FREE IDAHO FUND STATEMENT OF NET ASSETS (CONTINUED) - ------------------------------------------------------------------------------- ------------------------ NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE IDAHO FUND Net asset value A Class (A) ...................................... $10.94 Sales charge (3.75% of offering price, or 3.93% of amount invested per share) (B) ....................... 0.43 ------ Offering price ................................................... $11.37 ====== - ---------------------- (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 TAX-FREE IOWA FUND STATEMENT OF NET ASSETS AUGUST 31, 1999 - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ----------------------- MUNICIPAL BONDS - 100.11% GENERAL OBLIGATION BONDS - 0.95% Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ..................................... $ 500,000 $ 414,905 ---------- 414,905 ---------- HIGHER EDUCATION REVENUE BONDS - 9.27% Iowa Center Community College Dormitory - Merged Area V 5.45% 6/1/18 ....................... 545,000 505,128 Iowa Finance Authority Revenue - Student Housing Dormitory Revenues for Iowa Valley Community College 5.85% 5/1/19 ................... 855,000 802,734 Iowa State University Science & Technology Revenue Dormitory 4.85% 7/1/25 ................... 440,000 392,440 Puerto Rico Educational Facility Revenue - Polytechnic University 6.50% 8/1/24 .............. 640,000 674,842 State University of Iowa - Board Of Regents 5.30% 7/1/13 ..................................... 500,000 508,985 University of North Iowa - Board Of Regents 5.30% 7/1/13 ..................................... 150,000 152,695 University of Puerto Rico Revenue (MBIA) 5.50% 6/1/15 ........................................... 1,000,000 1,013,750 ---------- 4,050,574 ---------- HOSPITAL REVENUE BONDS - 2.92% Puerto Rico Hospital Revenue - Hospital Auxilio Mutuo Obligated Group (MBIA) 6.25% 7/1/24 ........................................... 1,200,000 1,277,292 ---------- 1,277,292 ---------- HOUSING REVENUE BONDS - 1.60% Puerto Rico Housing Bank & Finance Agency (GNMA) 6.25% 4/1/29 .............................. 675,000 697,174 ---------- 697,174 ---------- - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) INDUSTRIAL DEVELOPMENT REVENUE BONDS - 18.18% Iowa Finance Authority - Underground Storage Tank Revenue 5.125% 7/1/14 ...................... $5,200,000 $5,138,484 Lee County Urban Renewal Revenue - Keokuk Waste Treatment 6.40% 6/1/07 .................... 500,000 519,785 Puerto Rico Commonwealth Industrial Development General Purpose Revenue Series B 5.375% 7/1/16 .......................................... 1,000,000 973,480 Puerto Rico Port Authority Revenue - Special Facility - American Airlines (AMT) 6.25% 6/1/26 .......................................... 1,275,000 1,312,893 ---------- 7,944,642 ---------- POWER AUTHORITY REVENUE BONDS - 9.25% +Puerto Rico Electric Power Authority Revenue Series DD (FSA) 5.56% 7/1/19 .................... 1,000,000 746,370 Puerto Rico Electric Power Authority Revenue Series EE 4.75% 7/1/24 .......................... 1,400,000 1,204,448 Puerto Rico Electric Power Authority Revenue Series U 6.00% 7/1/14 ........................... 1,100,000 1,158,982 Virgin Islands Water & Power Authority Electric System Revenue 5.30% 7/1/18 ..................... 1,000,000 934,400 ---------- 4,044,200 ---------- *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 6.59% Puerto Rico Electric Power Authority Revenue 6.25% 7/1/17-02 ................................. 1,000,000 1,065,460 Virgin Islands Public Finance Authority (Escrowed to maturity) 7.30% 10/1/18 ...................... 1,500,000 1,814,430 ---------- 2,879,890 ---------- TRANSPORTATION REVENUE BONDS - 7.94% Guam Highway (FSA) 6.30% 5/1/12 .................... 1,950,000 2,057,991 Puerto Rico Commonwealth Highway & Transportation Revenue 5.25% 7/1/21 ............. 1,500,000 1,414,395 ---------- 3,472,386 ---------- UTILITY REVENUE BONDS - 5.09% Puerto Rico Telephone Revenue Authority 5.50% 1/1/22 .......................................... 2,120,000 2,223,541 ---------- 2,223,541 ---------- WATER & SEWER REVENUE BONDS - 10.62% Iowa Finance Authority - State Revolving Fund Revenue 5.20% 5/1/23 ............................ 2,445,000 2,323,581 Iowa Finance Authority - State Revolving Fund Revenue 6.25% 5/1/24 ............................ 1,750,000 1,855,963 Virgin Islands Water & Power Authority Water System Revenue 5.50% 7/1/17 ..................... 510,000 461,560 ---------- 4,641,104 ---------- OTHER REVENUE BONDS - 27.70% Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.00% 6/1/00 ................... 300,000 300,456 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.10% 6/1/01 ................... 315,000 316,121 20 for tax-exempt income DELAWARE TAX-FREE IOWA FUND STATEMENT OF NET ASSETS (CONTINUED) - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) OTHER REVENUE BONDS (CONTINUED) Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.20% 6/1/02 .................... $ 330,000 $ 331,815 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.30% 6/1/03 .................... 345,000 347,529 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.40% 6/1/04 .................... 365,000 368,307 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.50% 6/1/05 .................... 385,000 389,115 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.60% 6/1/06 .................... 405,000 409,945 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.70% 6/1/07 .................... 425,000 430,797 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.80% 6/1/08 .................... 450,000 456,111 Bettendorf, Iowa Urban Renewal Tax Increment Revenue-Series A 5.90% 6/1/09 .................... 800,000 810,320 Iowa Finance Authority Revenue - Correctional Facility Program 5.70% 6/15/14 ................... 2,000,000 2,056,260 Puerto Rico Municipal Finance Authority (FSA) 6.00% 7/1/14 ..................................... 1,700,000 1,798,073 Puerto Rico Public Building Authority Revenue - Series L 5.75% 7/1/16 ............................ 1,000,000 1,011,240 Puerto Rico Public Building Authority Revenue - Series M 5.50% 7/1/21 ............................ 1,100,000 1,084,787 Puerto Rico Public Building Authority Revenue - Series M 5.75% 7/1/15 ............................ 1,000,000 1,016,220 Virgin Islands Public Finance Authority Revenue - Sub Lien Funded Loan Notes Series E 5.875% 10/1/18 .......................................... 1,000,000 980,290 ----------- 12,107,386 ----------- Total Municipal Bonds (cost $42,734,514) ............ 43,753,094 ----------- - ------------------------------------------------------------------------------- TOTAL MARKET VALUE OF SECURITIES OWNED - 100.11% (COST $42,734,514) .......................................... $43,753,094 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.11%) ...... (49,972) ----------- NET ASSETS APPLICABLE TO 4,506,043 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ..................... $43,703,122 =========== NET ASSET VALUE - TAX-FREE IOWA FUND A CLASS ($37,807,080 / 3,898,185 SHARES) ............................ $9.70 ===== NET ASSET VALUE - TAX-FREE IOWA FUND B CLASS ($4,599,935 / 474,190 SHARES) ............................... $9.70 ===== NET ASSET VALUE - TAX-FREE IOWA FUND C CLASS ($1,296,107 / 133,668 SHARES) ............................... $9.70 ===== COMPONENTS OF NET ASSETS AT AUGUST 31, 1999: Common stock, $0.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax-Free 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 ................................................ $44,308,634 Accumulated net realized loss on investments ................... (1,624,092) Net unrealized appreciation of investments ..................... 1,018,580 ----------- Total net assets ............................................... $43,703,122 =========== - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. + Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect August 31, 1999. Summary of Abbreviations: AMT - Alternative Minimum Tax 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 Net asset value A Class (A) .................................... $9.70 Sales charge (3.75% of offering price or 3.92% of amount invested per share) (B) ..................................... 0.38 ------ Offering price ................................................. $10.08 ====== - ---------------------- (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 21 VOYAGEUR INVESTMENT TRUST DELAWARE TAX-FREE KANSAS FUND STATEMENT OF NET ASSETS AUGUST 31, 1999 - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS - 93.89% CERTIFICATE OF PARTICIPATION - 7.48% Linn County, Kansas for American One, LLC 7.25% 3/1/13 ..................................... $ 350,000 $ 342,941 Spring Hill Certificate of Participation A Spring Hill Golf Corp. 6.50% 1/15/28 .................... 1,000,000 917,980 ---------- 1,260,921 ---------- GENERAL OBLIGATION BONDS - 13.10% Allen County Unified School District #258 (AMBAC) 6.875% 9/1/10 ............................ 240,000 276,389 Ellsworth County, Kansas Series 1 5.75% 9/1/17 ...... 250,000 252,870 Linn County Unified School District 5.70% 11/1/16 .......................................... 500,000 510,855 Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ..................................... 1,100,000 912,791 Summer County Unified School District #356 (MBIA) 5.75% 9/1/11 .............................. 250,000 257,132 ---------- 2,210,037 ---------- HIGHER EDUCATION REVENUE BONDS - 12.71% Kansas Development Finance Authority - Kansas Board of Regents - Wichita State University (AMBAC) 5.875% 6/1/17 ............................ 300,000 307,077 Puerto Rico Educational Facility Revenue - Polytechnic University 6.50% 8/1/24 .............. 1,150,000 1,212,606 Winfield Kansas Educational Facilities Revenue Refunding and Improvement 5.75% 4/1/22 ........... 680,000 623,764 ---------- 2,143,447 ---------- HOSPITAL REVENUE BONDS - 11.47% Kansas State Development Finance Authority Health Facilities Revenue Stormont - Vail Healthcare (MBIA) 2.95% 11/15/23 ................. 600,000 600,000 Lawrence, Kansas for Lawrence Memorial Hospital 6.20% 7/1/19 ............................ 250,000 256,032 Olathe, Kansas Health Facility Revenue for Evangelical Lutheran Good Samaritan Project (AMBAC) 6.00% 5/1/19 ............................. 250,000 258,138 Olathe, Kansas Health Facility Revenue for Olathe Medical Center Series 94A (AMBAC) 5.875% 9/1/16 ........................................... 100,000 101,214 Shawnee County Sister of Charity Leavenworth Hospital (FSA) 5.00% 12/1/23 ..................... 250,000 222,037 Wichita, Kansas Health Care Improvement Industrial Revenue (The Kansas Masonic Home - Series VI) 6.25% 12/1/17 .................. 500,000 496,715 ---------- 1,934,136 ---------- HOUSING REVENUE BONDS - 9.68% Kansas Development Finance Authority Revenue for Martin Creek Multifamily Housing Project (FHA) 6.50% 8/1/24 ............................... 50,000 51,841 - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Kansas State Development Finance Authority Multifamily Revenue - Oak Ridge Park Apartments Project - Series F 6.625% 8/1/29 ........................................... $1,000,000 $1,022,140 Olathe, Kansas Multifamily Housing - Deerfield Apartments Series 1994A (FNMA) 6.45% 6/1/19 ........................................... 250,000 258,668 Olathe, Kansas Multifamily Housing - Jefferson Place Apartments Project - Series B 6.10% 7/1/22 ........................................... 300,000 300,576 ---------- 1,633,225 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 7.27% Columbus Kansas Industrial Revenue ACE Electrical Acquisition 7.00% 8/1/17 .............. 800,000 782,392 Manhattan, Kansas Industrial Revenue Farrar Corp. Project 7.00% 8/1/14 ................ 400,000 393,796 Wamego Pollution Control Revenue Western Resources Inc. Project (MBIA) 6.00% 2/1/33 ....... 50,000 50,952 ---------- 1,227,140 ---------- POWER AUTHORITY REVENUE BONDS - 5.45% + Puerto Rico Electric Power Authority 5.60% 7/1/19 ..................................... 600,000 447,822 Puerto Rico Electric Power Authority Series Z 5.25% 7/1/21 ..................................... 500,000 471,465 ---------- 919,287 ---------- * PRE-REFUNDED BONDS - 19.78% Douglas County Lawrence Unified School District #497 6.00% 9/1/15-03 ............................. 250,000 262,082 Jefferson County Unified School District #340 (FSA) 6.35% 9/1/15-04 ............................ 250,000 270,715 Johnson County G.O. Improvement 6.125% 9/1/12-02 ........................................ 600,000 626,790 Kansas City Community College Student Center (MBIA) 6.25% 5/15/20-02 .......................... 300,000 314,973 Kansas City Utility System Revenue (FGIC) 6.375% 9/1/23-04 ................................. 295,000 324,497 Kansas Development Finance Authority Water Pollution Control Sewer Revenue 6.00% 11/1/14-03 ....................................... 250,000 268,915 Maize Unified School District #266 Series 1994 (FSA) 5.875% 9/1/12-03 ........................... 250,000 263,560 Sedgwick County Unified School District #265 (FSA) 5.50% 10/1/13-04 ........................... 250,000 261,457 Sedgwick County Unified School District #267 6.15% 11/1/09-05 ................................. 250,000 270,288 Shawnee County Unified School District #345 (MBIA) 5.75% 9/1/11-04 ........................... 250,000 264,068 Shawnee County Unified School District #501 (FGIC) 5.75% 2/1/11-03 ........................... 200,000 208,264 ---------- 3,335,609 ---------- 22 for tax-exempt income DELAWARE TAX-FREE KANSAS FUND STATEMENT OF NET ASSETS (CONTINUED) - ------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE ------------------------- MUNICIPAL BONDS (CONTINUED) TRANSPORTATION REVENUE BONDS - 0.59% Kansas Department of Transportation 5.375% 3/1/13 ........................................... $100,000 $ 100,306 ----------- 100,306 ----------- WATER & SEWER REVENUE BONDS - 6.36% Haysville Water & Sewer (FSA) 5.80% 10/1/16 ......... 250,000 256,840 Johnson County Water Revenue 5.25% 12/1/15 .......... 175,000 172,914 Kansas City Utility System Revenue (FGIC) 6.375% 9/1/23 .................................... 605,000 642,528 ----------- 1,072,282 ----------- Total Municipal Bonds (cost $15,471,683) 15,836,390 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED - 93.89% (COST $15,471,683) ........................................ $15,836,390 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 6.11% ...... 1,030,020 ----------- NET ASSETS APPLICABLE TO 1,585,132 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ................... $16,866,410 =========== NET ASSET VALUE - TAX-FREE KANSAS FUND A CLASS ($11,497,655 / 1,081,077 SHARES) .......................... $10.64 =========== NET ASSET VALUE - TAX-FREE KANSAS FUND B CLASS ($4,910,483 / 460,968 SHARES) ............................. $10.65 =========== NET ASSET VALUE - TAX-FREE KANSAS FUND C CLASS ($458,272 / 43,087 SHARES) ................................ $10.64 =========== COMPONENTS OF NET ASSETS AT AUGUST 31,1999: Common stock, $0.01 par value, unlimited shares authorized to the Tax-Free Kansas Fund ............................... $16,544,649 Undistributed net investment income .......................... 7,180 Accumulated net realized loss on investments ................. (50,126) Net unrealized appreciation of investments ................... 364,707 ----------- Total net assets ............................................. $16,866,410 =========== - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. + Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect August 31, 1999. - -------------------------------------------------------------------------------- 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 Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE KANSAS FUND Net asset value A Class (A) .................................. $10.64 Sales charge (3.75% of offering price or 3.85% of amount invested per share) (B) ................................... 0.41 ------ Offering price ............................................... $11.05 ====== - ---------------------- (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 TAX-FREE KANSAS FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1999 ASSETS: Investments at market (Cost $15,471,683) ............ $15,836,390 Cash ................................................ 854,254 Interest receivable ................................. 252,509 Subscriptions receivable ............................ 97,007 Receivable for securities sold ...................... 779,954 Other assets ........................................ 3,449 ----------- Total assets ..................................... $17,823,563 ----------- LIABILITIES: Payable for securities purchased .................... 922,669 Other accounts payable and accrued expenses ......... 34,484 ----------- Total liabilities ................................ 957,153 ----------- TOTAL NET ASSETS .................................... $16,866,410 =========== See accompanying notes for tax-exempt income 23 VOYAGEUR INVESTMENT TRUST DELAWARE TAX-FREE MISSOURI INSURED FUND STATEMENT OF NET ASSETS AUGUST 31, 1999 - ------------------------------------------------------------------------------ PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS - 98.45% GENERAL OBLIGATION BONDS - 5.40% Springfield School District #R12 Series A (MBIA) 5.25% 3/1/11 ..................................... $ 500,000 $ 501,260 St. Charles (FSA) 5.75% 3/1/15 ...................... 1,000,000 1,021,150 St. Charles County Montana Francis Howell School District Capital Appreciation (FGIC) 0.00% 3/1/16 ..................................... 2,000,000 791,460 St Charles County Montana Francis Howell School District Capital Appreciation (FGIC) 0.00% 3/1/17 ..................................... 1,500,000 557,340 ---------- 2,871,210 ---------- HIGHER EDUCATION REVENUE BONDS - 1.89% Missouri State Health & Education Facility - Central Missouri State University (AMBAC) 5.75% 10/1/25 .................................... 1,000,000 1,002,990 ---------- 1,002,990 ---------- HOSPITAL REVENUE BONDS - 25.24% Cape Girardeau SE Missouri Hospital (MBIA) 5.25% 6/1/16 ..................................... 1,000,000 977,060 Hannibal Health Facilities Series A (Hannibal Regional Hospital) (FSA) 5.625% 3/1/12 ........... 2,500,000 2,560,150 Hannibal Health Facilities Series A (Hannibal Regional Hospital) (FSA) 5.75% 3/1/22 ............ 1,000,000 1,005,330 Jackson County St. Joseph's Hospital (MBIA) 6.50% 7/1/12 ..................................... 1,895,000 2,020,544 Jackson County St. Mary's Hospital (MBIA) 5.75% 7/1/24 ..................................... 2,000,000 2,006,520 Missouri State Health & Education Facility (Children's Mercy Hospital) (MBIA) 5.65% 5/15/23 .......................................... 1,000,000 1,000,390 Missouri State Health & Education Facility (Health Midwest) (MBIA) 6.25% 2/15/22 .................... 1,000,000 1,041,600 Missouri State Health & Education Facility (Heartland Health Systems) (AMBAC) 6.35% 11/15/17 ......................................... 1,250,000 1,317,137 Missouri State Health & Education Facility (SSM Health Care) (MBIA) 6.40% 6/1/10 ................. 500,000 549,730 Missouri State Health & Education Facility (St. Luke's Health Systems) (MBIA) 5.125% 11/15/19 ......................................... 1,000,000 933,720 ---------- 13,412,181 ---------- HOUSING REVENUE BONDS - 14.76% Missouri Single Family Housing (FNMA/GNMA) 7.20% 9/1/26 ..................................... 1,640,000 1,797,014 Missouri Single Family Housing (FNMA/GNMA) 7.25% 9/1/26 ..................................... 1,965,000 2,124,420 Missouri Single Family Housing (FNMA/GNMA) 7.45% 9/1/27 ..................................... 1,585,000 1,748,413 Missouri Single Family Housing (FNMA/GNMA) 7.55% 9/1/27 ..................................... 1,470,000 1,610,576 - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Missouri Single Family Housing (GNMA) 7.20% 12/1/17 ......................................... $ 175,000 $ 185,899 Missouri Single Family Housing (GNMA) 7.25% 12/1/20 ......................................... 355,000 376,020 ----------- 7,842,342 ----------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 1.95% St. Louis Municipal Finance Corporation City Lease Revenue - City Justice Center, Series A (AMBAC) 5.95% 2/15/16 .................. 1,000,000 1,038,260 ----------- 1,038,260 ----------- LEASE - 1.94% Kansas City Muehlebach Hotel (FSA) 5.90% 12/1/18 ......................................... 1,000,000 1,033,290 ----------- 1,033,290 ----------- POWER AUTHORITY REVENUE BONDS - 4.63% Puerto Rico Electric Power Authority Power Revenue-Series EE (MBIA) 4.50% 7/1/18 ........... 500,000 433,320 +Puerto Rico Electric Power Authority Power Revenue (FSA) 5.56% 7/1/19 .......................................... 1,275,000 951,622 Sikeston Electric Revenue (MBIA) 6.00% 6/1/13 ...... 1,000,000 1,075,740 ----------- 2,460,682 ----------- *PRE-REFUNDED/ESCROWED TO MATURITY Bonds - 27.34% Clark County School District (FSA) 5.75% 3/1/15-05 ....................................... 1,775,000 1,854,715 Franklin County School District (FGIC) 5.75% 3/1/13-03 ....................................... 1,100,000 1,134,320 Greene County Single Family Mortgage Revenue - (Private Mortgage Insurance) (Escrowed to maturity) 0.00% 3/1/16 .......................... 1,225,000 492,597 Kansas City Airport Revenue (FSA) 6.875% 9/1/14-04 ....................................... 1,675,000 1,866,168 Sikeston Electric Revenue (MBIA) 6.25% 6/1/12-02 ....................................... 2,000,000 2,137,000 St. Charles School District (FGIC) 6.50% 2/1/14-06 ....................................... 1,250,000 1,373,237 St. Louis County School District #8 (MBIA) 5.60% 2/15/15-05 ...................................... 1,490,000 1,559,598 St. Louis Municipal Finance Corporation Leasehold Revenue - (FGIC) 6.25% 2/15/12-05 ...................................... 1,850,000 1,993,763 Troy School District #3 Lincoln County (MBIA) 6.10% 3/1/14-05 ................................. 1,235,000 1,322,796 West Platte School District (MBIA) 5.85% 3/1/15-05 ....................................... 750,000 794,318 ----------- 14,528,512 ----------- 24 for tax-exempt income DELAWARE TAX-FREE MISSOURI INSURED FUND STATEMENT OF NET ASSETS (CONTINUED) - ------------------------------------------------------------------------------ PRINCIPAL MARKET AMOUNT VALUE ------------------------ MUNICIPAL BONDS (CONTINUED) UTILITY REVENUE BONDS - 4.30% Missouri Environmental Pollution Control Revenue - St. Joseph's Light and Power Co. (AMBAC) 5.85% 2/1/13 .......................................$2,200,000 $ 2,281,290 ----------- 2,281,290 ----------- WATER & SEWER REVENUE BONDS - 4.18% Liberty Sewer (MBIA) 6.00% 2/1/08 ..................... 600,000 644,166 Liberty Sewer (MBIA) 6.15% 2/1/15 ..................... 1,500,000 1,577,550 ----------- 2,221,716 ----------- OTHER REVENUE BONDS - 6.82% Kansas City Municipal Assistance - Bartle Hall Convention Center (MBIA) 5.60% 4/15/16 ............. 1,240,000 1,249,077 Missouri State Environmental - State Revolving Fund - Branson (FSA) 6.05% 7/1/16 .................. 2,265,000 2,372,950 ----------- 3,622,027 ----------- Total Municipal Bonds (cost $50,484,553) 52,314,500 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED - 98.45% (COST $50,484,553) ................................. $52,314,500 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.55% 825,381 ----------- NET ASSETS APPLICABLE TO 5,139,267 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ............ $53,139,881 =========== NET ASSET VALUE - TAX FREE MISSOURI INSURED FUND A CLASS ($42,336,683 / 4,094,260 SHARES) ................... $10.34 ====== NET ASSET VALUE - TAX FREE MISSOURI INSURED FUND B CLASS ($10,571,727 / 1,022,634 SHARES) ................... $10.34 ====== NET ASSET VALUE - TAX FREE MISSOURI INSURED FUND C CLASS ($231,471 / 22,373 SHARES) ......................... $10.35 ====== - -------------------------------------------------------------------------------- COMPONENTS OF NET ASSETS AT AUGUST 31, 1999: Common stock, $0.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax Free 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 ................................... $52,155,347 Accumulated net realized loss on investments .............. (845,413) Net unrealized appreciation of investments ................ 1,829,947 ------------ Total net assets .......................................... $53,139,881 ============ - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. + Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect August 31, 1999. 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 Net asset value A Class (A) ....................................... $10.34 Sales charge (3.75% of offering price or 3.87% of amount invested per share) (B) ........................ $ 0.40 ------ Offering price .................................................... $10.74 ====== - ---------------------- (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 25 VOYAGEUR TAX-FREE FUNDS, INC. DELAWARE TAX-FREE NORTH DAKOTA FUND STATEMENT OF NET ASSETS AUGUST 31, 1999 PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS - 97.07% GENERAL OBLIGATION BONDS - 0.99% Grand Forks Sewer Revenue 6.70% 6/1/07 ............... $270,000 $279,696 ---------- 279,696 ---------- HIGHER EDUCATION REVENUE BONDS - 6.09% Burleigh County North Dakota University Facility Revenue University of Mary Project 5.625% 12/1/15 ........................................... 1,000,000 949,390 North Dakota State University Housing & Auxiliary Facility 6.30% 4/1/07 ............................. 250,000 259,520 North Dakota State University Housing & Auxiliary Facility 6.50% 4/1/12 ............................. 500,000 519,790 ---------- 1,728,700 ---------- HOSPITAL REVENUE BONDS - 29.00% Cando, North Dakota Nursing Facility Revenue - Towner County Medical Center Project 7.125% 8/1/22 ..................................... 1,000,000 1,051,280 Carrington, North Dakota Health Facility Revenue for Carrington Health Center 6.25% 11/15/15 .......................................... 500,000 522,910 Cass County, North Dakota Health Facility Revenue for Catholic Health - Villa Nazareth Project 6.25% 11/15/14 .................................... 1,000,000 1,047,210 Fargo Hospital Facility St. Luke's Hospital, Series 1992 6.50% 6/1/15 ................................. 1,000,000 1,050,580 Grand Forks, North Dakota Senior Housing Revenue 4000 Valley Square Project 6.25% 12/1/34 ..................................... 2,000,000 1,944,360 Grand Forks, United Hospital Obligated Group (MBIA) 6.125% 12/1/14.............................. 225,000 238,383 Grand Forks, United Hospital Obligated Group (MBIA) 6.25% 12/1/19 .............................. 250,000 264,725 Killdeer, North Dakota Nursing Care Revenue - Hill Top Home of Comfort 6.00% 11/1/12 ............ 820,000 804,584 Valley City, North Dakota Congregate Housing Revenue - Bridgeview Estates Project 7.25% 8/1/22 ............................................ 300,000 315,918 Ward County, North Dakota Health Care Facility Revenue - Trinity Obligated Group Series 96A 6.00% 7/1/11 ...................................... 1,000,000 997,390 ---------- 8,237,340 ---------- HOUSING REVENUE BONDS - 25.02% Minot Single Family Mortgage 7.70% 8/1/10 ............ 130,000 134,306 North Dakota Housing Finance Agency Single Family Mortgage Series A (FHA) 6.75% 7/1/12 ............................................ 140,000 145,823 North Dakota Housing Finance Authority Single Family Mortgage 6.25% 1/1/17 ...................... 2,105,000 2,175,349 North Dakota Housing Finance Authority Single Family Mortgage Series A 6.30% 7/1/16 ............. 1,770,000 1,835,242 North Dakota State Housing Finance Agency Revenue Multifamily (FNMA) 6.125% 12/1/15 ........................................... 500,000 515,130 PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) North Dakota State Housing Finance Agency Revenue Multifamily (FNMA) 6.15% 12/1/17 ........................................... $1,300,000 $1,339,728 North Dakota State Housing Finance Agency Single Family Mortgage Series E (FNMA) 6.30% 1/1/15 ...................................... 680,000 700,033 North Dakota State Housing Finance Authority Single Family Mortgage Series A 6.95% 7/1/12 ............................................ 250,000 261,250 ---------- 7,106,861 ---------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 1.85% Mercer County Pollution Control - Otter Tail Power Company Project 6.90% 2/1/19 ...................... 500,000 525,595 ---------- 525,595 ---------- POWER AUTHORITY REVENUE BONDS - 11.41% Mercer County Pollution Control Revenue Montana - Dakota Utilities Company Project (FGIC) 6.65% 6/1/22 ............................... 500,000 531,720 Mercer County Pollution Control Revenue for Basin Electric Revenue 6.05% 1/1/19 ..................... 1,250,000 1,282,563 +Puerto Rico Electric Power Authority (FSA) 5.56% 7/1/19 ................................ 900,000 671,733 Puerto Rico Electric Power Authority Series Z 5.25% 7/1/21 ..................................... 800,000 754,344 ---------- 3,240,360 ---------- *PRE-REFUNDED BONDS - 4.08% Bismarck Hospital Alexius Medical Center (AMBAC) 6.90% 5/1/06-01 ........................... 500,000 531,820 Burleigh County University Facilities University of Mary Project 7.125% 12/1/11-01 ................. 250,000 267,650 Fargo Park District Revenue 7.25% 11/1/11-00 ........ 200,000 207,358 North Dakota State Municipal Bond Bank 6.25% 12/1/11-99 ....................................... 150,000 150,942 ---------- 1,157,770 ---------- TRANSPORTATION REVENUE BONDS - 5.13% Puerto Rico Commonwealth Highway & Transportation Authority Series Y 5.50% 7/1/26 ............................................ 1,500,000 1,456,890 ---------- 1,456,890 ---------- TERRITORIAL REVENUE BONDS - 3.13% Guam Power Series A 5.125% 10/1/29 .................. 1,000,000 890,160 ---------- 890,160 ---------- OTHER REVENUE BONDS - 10.37% North Dakota Building Authority Revenue (FSA) 6.00% 12/1/14 ..................................... 1,310,000 1,361,706 North Dakota Building Authority Revenue (FSA) 6.10% 12/1/16 ..................................... 1,480,000 1,543,758 North Dakota State Student Loan (AMBAC) 7.00% 7/1/05 ...................................... 40,000 41,122 ---------- 2,946,586 ---------- Total Municipal Bonds (cost $26,954,827)............. 27,569,958 ---------- 26 for tax-exempt income DELAWARE TAX-FREE NORTH DAKOTA FUND STATEMENT OF NET ASSETS (CONTINUED) NUMBER MARKET OF SHARES VALUE -------------------------- SHORT-TERM INVESTMENTS - 0.05% Norwest Advantage Municipal Money Market Fund .......... 15,037 $15,037 ----------- Total Short-Term Investments (cost $15,037)............. 15,037 ----------- TOTAL MARKET VALUE OF SECURITIES OWNED (COST $26,969,864) - 97.12% ............................ $27,584,995 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 2.88%.... 817,147 ----------- NET ASSETS APPLICABLE TO 2,625,724 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00%................. $28,402,142 =========== NET ASSET VALUE - TAX-FREE NORTH DAKOTA FUND A CLASS ($27,032,045 / 2,499,048 SHARES) ....................... $10.82 ====== NET ASSET VALUE - TAX-FREE NORTH DAKOTA FUND B CLASS ($1,048,484 / 96,932 SHARES) ........................... $10.82 ====== NET ASSET VALUE - TAX-FREE NORTH DAKOTA FUND C CLASS ($321,613 / 29,744 SHARES) ............................. $10.81 ====== COMPONENTS OF NET ASSETS AT AUGUST 31, 1999: Common stock, $0.01 par value, 10,000,000,000 shares authorized to the Fund with 1,000,000,000 shares allocated to Tax-Free 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 .............. $27,833,532 Accumulated net realized loss on investments .............. (46,521) Net unrealized appreciation of investments ................ 615,131 ----------- Total net assets .......................................... $28,402,142 =========== - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which the bond is pre-refunded. + Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect August 31, 1999. 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 Financial Security Assurance MBIA - Insured by the Municipal Bond Insurance Association NET ASSET VALUE AND OFFERING PRICE PER SHARE - TAX-FREE NORTH DAKOTA FUND Net asset value A Class (A)................................ $10.82 Sales charge (3.75% of offering price, or 3.88% of amount invested per share) (B) ................ 0.42 ------ Offering price ........................................... $11.24 ====== - ---------------------- (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 TAX-FREE OREGON INSURED FUND STATEMENT OF NET ASSETS AUGUST 31, 1999 PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS - 94.63% CERTIFICATES OF PARTICIPATION - 6.11% Oregon State Department Administrative Services Certificate of Participation-Series A (AMBAC) 5.00% 5/1/24 ..................................... $2,500,000 $2,266,500 ---------- 2,266,500 ---------- GENERAL OBLIGATION BONDS - 21.04% Clackamas County Oregon School District (FGIC) 4.80% 6/1/18 ...................................... 1,500,000 1,348,815 Columbia County Oregon School District (FGIC) 0.00% 6/1/17 ...................................... 1,000,000 366,340 Hermiston Water Bonds (AMBAC) 6.20% 8/1/24 500,000 515,290 Josephine County Oregon (AMBAC) 4.875% 6/1/18............................................. 1,000,000 907,790 Lane County School District #19 (Springfield) (FGIC) 6.00% 10/15/14.............................. 500,000 534,440 Lincoln County School District (FGIC) 5.25% 6/15/12 ........................................... 1,450,000 1,444,534 Malheur County Jail (MBIA) 6.30% 12/1/12 500,000 534,725 Multnomah County School District #3 Park Rose (FGIC) 5.50% 12/1/11 ............................. 500,000 506,030 North Unit Irrigation District (MBIA) 5.75% 6/1/16 ........................................... 1,000,000 1,020,600 Portland (MBIA) 5.75% 6/1/15 ......................... 500,000 512,215 Umatilla County Oregon School District #6R Umatilla (AMBAC) 0.00% 12/15/22 ................... 200,000 52,236 Washington County School District (Sherwood) (FSA) #88J 6.10% 6/1/12 ........................... 65,000 68,559 ---------- 7,811,574 ---------- HIGHER EDUCATION REVENUE BONDS - 12.82% Central Oregon Community College (FGIC) 5.90% 6/1/09 ............................................ 750,000 777,173 Oregon Health and Education Authority for Lewis & Clark College (MBIA) 6.125% 10/1/24 ............... 1,055,000 1,105,123 Oregon Health and Education Authority for Reed College (MBIA) 5.375% 7/1/25 ...................... 1,000,000 977,400 Oregon Health Sciences University (MBIA) 0.00% 7/1/21 ...................................... 6,500,000 1,897,935 ---------- 4,757,631 ---------- HOSPITAL REVENUE BONDS - 5.55% Western Lane Hospital District for Sisters of St. Joseph Peace Hospital (MBIA) 5.75% 8/1/19 ............................................ 1,000,000 1,014,160 Western Lane Hospital District for Sisters of St. Joseph Peace Hospital (MBIA) 5.875% 8/1/12 ............................................ 1,000,000 1,045,200 ---------- 2,059,360 ---------- for tax-exempt income 27 DELAWARE TAX-FREE OREGON INSURED FUND STATEMENT OF NET ASSETS (CONTINUED) PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS - 2.98% Oregon Health, Housing, Educational and Cultural Facilities Authority for Pier Park Project (GNMA) 6.05% 4/1/18 ............................... $1,095,000 $1,107,352 ---------- 1,107,352 ---------- POWER AUTHORITY REVENUE BONDS - 6.76% Central Lincoln Peoples Utility District (AMBAC) 5.75% 1/1/15 ...................................... 500,000 509,585 Northern Wasco County Peoples Utility District (FGIC) 5.625% 12/1/22 ............................. 1,000,000 1,008,480 +Puerto Rico Electric Power Authority Revenue Series DD (FSA) 5.560% 7/1/19 ............................ 750,000 559,778 Puerto Rico Electric Power Ref-EE Revenue (MBIA) 4.50% 7/1/18 ...................................... 500,000 433,320 ---------- 2,511,163 ---------- *PRE-REFUNDED BONDS - 21.57% Chemeketa Community College (FGIC) 5.80% 6/1/12-06 ......................................... 1,500,000 1,594,305 Eugene Electric Revenue Series C (MBIA) 5.80% 8/1/22-04 ......................................... 1,250,000 1,332,013 Lane County School District #19 Springfield (MBIA) 6.30% 10/15/14-04 .......................... 500,000 545,155 Multnomah County School District #39 Corbett (MBIA) 6.00% 12/1/13-04 ........................... 500,000 533,930 Oregon State Department Administrative Services Certificate of Participation-Series A (AMBAC) 5.80% 5/1/24-07 ................................... 1,000,000 1,070,350 Portland Sewer System Revenue (FSA) 6.25% 6/1/15-04 ......................................... 1,000,000 1,082,920 Tillamook County (FGIC) 6.25% 1/1/14-05 ............. 250,000 270,993 Umatilla Pendleton School District (AMBAC) #016R 6.00% 7/1/14-04 ............................. 500,000 536,670 Washington County Education Service (MBIA) 7.10% 6/1/25-05 ................................... 700,000 786,646 Washington County School District (Sherwood) (FSA) #88J 6.10% 6/1/12-05 ........................ 235,000 252,352 ---------- 8,005,334 ---------- TRANSPORTATION REVENUE BONDS - 5.25% Portland Airport Revenue for Portland International Airport (FGIC) 5.625% 7/1/26 ........ 2,000,000 1,949,840 ---------- 1,949,840 ---------- ATER & SEWER REVENUE BONDS - 12.55% Beaverton Water Revenue (FSA) 6.125% 6/1/14 ........ 500,000 525,680 Klamath Falls Water Revenue (FSA) 6.10% 6/1/14 ............................................ 500,000 528,405 Portland Oregon Sewer System Revenue (MBIA) 4.500% 6/1/18 ..................................... 1,855,000 1,577,678 Salem Water & Sewer Revenue (MBIA) 5.50% 6/1/14............................................. 1,000,000 1,012,820 Salem Water & Sewer Revenue (MBIA) 5.625% 6/1/16 ............................................ 1,000,000 1,013,610 ---------- 4,658,193 ---------- Total Municipal Bonds (cost $34,883,725) ............ 35,126,947 ---------- NUMBER MARKET OF SHARES VALUE -------------------------- SHORT-TERM INVESTMENTS - 3.55% Norwest Advantage Municipal Money Market Fund ....... 1,317,573 $1,317,573 ---------- Total Short-Term Investments (cost $1,317,573) ....... 1,317,573 ---------- TOTAL MARKET VALUE OF SECURITIES OWNED (COST $36,201,298) - 98.18% ............................ $36,444,520 RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.82% ... 675,915 ----------- NET ASSETS APPLICABLE TO 3,785,201 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00%................. $37,120,435 =========== NET ASSET VALUE - TAX-FREE OREGON INSURED FUND A CLASS ($27,518,580 / 2,806,494 SHARES) ....................... $9.81 ===== NET ASSET VALUE - TAX-FREE OREGON INSURED FUND B CLASS ($7,998,890 / 815,429 SHARES) .......................... $9.81 ===== NET ASSET VALUE - TAX-FREE OREGON INSURED FUND C CLASS ($1,602,965 / 163,278 SHARES) .......................... $9.82 ===== COMPONENTS OF NET ASSETS AT AUGUST 31, 1999: Common stock, $0.01 par value, unlimited shares authorized to the Tax-Free Oregon Insured Fund ................... $37,469,847 Accumulated net realized loss on investments .............. (592,634) Net unrealized appreciation of investments ............... 243,222 ----------- Total net assets .......................................... $37,120,435 =========== - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. + Inverse Floaters represent a security that pays interest at rates that increase (decrease) with a decrease (increase) in a specific index. Interest rates disclosed are in effect August 31, 1999. 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 Net asset value A Class (A) .............................. $9.81 Sales charge (3.75% of offering price, or 3.87% of amount invested per share) (B)................. 0.38 ------ Offering price ............................................ $10.19 ====== - ---------------------- (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 28 for tax-exempt income VOYAGEUR MUTUAL FUNDS, INC. DELAWARE TAX-FREE WISCONSIN FUND STATEMENT OF NET ASSETS AUGUST 31, 1999 PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS - 101.46% GENERAL OBLIGATION BONDS - 1.52% Puerto Rico Commonwealth Public Improvement 4.50% 7/1/23 ...................................... $700,000 $580,867 -------- 580,867 -------- HIGHER EDUCATION REVENUE BONDS - 2.17% Madison Community Development Authority Revenue - Edgewood College 6.25% 4/1/14 ........... 500,000 526,100 Puerto Rico Educational Facility Revenue - Polytechnic University 6.50% 8/1/24 ............... 285,000 300,515 -------- 826,615 -------- HOSPITAL REVENUE BONDS - 1.85% Kaukauna Housing Authority Revenue - St. Paul Home Inc. 6.10% 9/1/07 ............................ 200,000 202,174 Puerto Rico Industrial Tourist Educational Medical & Environmental Control Facilities (Hospital Auxilio Mutuo Project-Series A) 5.50% 7/1/17 ...................................... 500,000 503,355 -------- 705,529 -------- HOUSING REVENUE BONDS - 27.76% Dane County Multifamily Housing Revenue - Forest Harbor Apartment Project 5.85% 7/1/11 ............................................ 125,000 126,769 Dane County Multifamily Housing Revenue - Forest Harbor Apartment Project 5.90% 7/1/12 ............................................ 125,000 126,082 Grant County Wisconsin Housing Authority Revenue Refunding - Housing - Orchard Manor 5.35% 7/1/26 ................................ 1,000,000 942,950 Green Bay Wisconsin Housing Authority Multifamily Housing Revenue - Moraine Limited - Series A (FHA) 6.15% 12/1/30 ...................... 2,225,000 2,266,697 La Crosse Housing Authority Washburn Project 6.375% 10/1/16 .................................... 100,000 100,712 La Crosse Housing Authority Washburn Project 6.50% 10/1/26 ..................................... 250,000 250,832 Milwaukee Redevelopment Authority Multifamily Housing 6.30% 8/1/38............................... 1,455,000 1,474,148 New Berlin Multifamily Housing Authority Revenue 7.125% 5/1/24 ............................. 500,000 525,425 Puerto Rico Housing Authority Single Family Mortgage Revenue 6.85% 10/15/23 ................... 625,000 649,550 Puerto Rico Housing Bank and Finance Agency (GNMA) 6.25% 4/1/29 .............................. 680,000 702,338 Superior Housing Authority - St. Francis Project (GNMA) 6.00% 1/20/22 .............................. 565,000 571,294 Superior Housing Authority - St. Francis Project (GNMA) 6.15% 7/20/31 .............................. 835,000 842,841 Waukesha Wisconsin Housing Westgrove Wood Project (GNMA) 6.00% 12/1/31 .............................. 1,500,000 1,523,220 PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS (CONTINUED) HOUSING REVENUE BONDS (CONTINUED) Wauwatosa Multifamily Housing Revenue - Harwood Place, Inc. 5.75% 12/1/08 ................. $480,000 $ 480,490 ----------- 10,583,348 ----------- INDUSTRIAL DEVELOPMENT REVENUE BONDS - 16.09% Hartford Community Development Authority Lease Revenue 6.15% 12/1/09 ............................. 240,000 253,819 Milwaukee Redevelopment Authority Revenue - Goodwill Industries, Inc. 6.35% 10/1/09 ........... 2,000,000 2,067,500 Omro Community Development Authority 5.875% 12/1/11 .................................... 300,000 312,936 Puerto Rico Commonwealth Industrial Development General Purpose Revenue Series B 5.375% 7/1/16............................. 1,000,000 973,480 Puerto Rico Industrial Medical Environmental Revenue - PepsiCo Project 6.25% 11/15/13 .......................................... 1,100,000 1,172,336 Two Rivers Community Development Authority Revenue Architectural Forest Products 6.35% 12/15/12 ..................................... 250,000 251,363 West Allis Community Development Authority Revenue - Poblocki Investments, Ltd. 5.90% 5/1/03 ...................................... 1,080,000 1,104,462 ----------- 6,135,896 ----------- LEASE/CERTIFICATES OF PARTICIPATION - 14.28% Cudahy Community Development Authority Revenue 6.00% 6/1/11 .............................. 1,000,000 1,053,640 De Forest Redevelopment Lease Revenue 6.25% 2/1/18 ...................................... 1,000,000 1,033,220 Little Chute Community Development Lease Revenue 5.625% 3/1/19 ............................. 680,000 681,278 Madison Community Development Authority, Monona Terrace Community Project 5.80% 3/1/05 ............................................ 125,000 131,961 Madison Community Development Authority, Monona Terrace Community Project 5.90% 3/1/06 ............................................ 365,000 385,268 Madison Community Development Authority, Monona Terrace Community Project 6.10% 3/1/10 ............................................ 1,500,000 1,587,270 Redgranite Wisconsin Community Development Authority Revenue 5.85% 3/1/18 .................... 605,000 570,473 ----------- 5,443,110 ----------- *PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 9.18% Puerto Rico Telephone Authority Revenue 5.75% 1/1/11-02 ......................................... 285,000 293,046 Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue (MBIA) 5.80% 12/15/26-07 ...................................... 1,000,000 1,069,570 for tax-exempt income 29 Delaware Tax-Free Wisconsin Fund Statement of Net Assets (Continued) PRINCIPAL MARKET AMOUNT VALUE -------------------------- MUNICIPAL BONDS (CONTINUED) *PRE-REFUNDED/ESCROWED TO MATURITY BONDS (CONTINUED) Superior Redevelopment Authority Revenue - Superior Memorial Hospital (FHA) 5.80% 5/1/10-02 ........................................ $250,000 $ 263,652 Virgin Islands Public Finance Authority (Escrowed to maturity) 7.30% 10/1/18 ........................ 700,000 846,734 Wisconsin Housing Finance Authority (FHA) 6.10% 6/1/21-17 ................................... 980,000 1,027,422 ---------- 3,500,424 ---------- POWER AUTHORITY REVENUE BONDS - 5.14% Puerto Rico Electric Power Authority Series EE 4.75% 7/1/24 ...................................... 500,000 430,160 Puerto Rico Electric Power Authority Revenue Series U 6.00% 7/1/14 ............................. 1,450,000 1,527,749 ---------- 1,957,909 ---------- TERRITORIAL REVENUE BONDS - 2.33% Guam Power Authority Revenue 99A 5.125% 10/1/29 ........................................... 1,000,000 890,160 ---------- 890,160 ---------- OTHER REVENUE BONDS - 21.14% Puerto Rico Municipal Finance Authority (FSA) 6.00% 7/1/14 ..................................... 1,800,000 1,903,842 Southeast Wisconsin Professional Baseball Park District Lease Certificates Zero Coupon (MBIA) 0.00% 12/15/15 ................................... 1,000,000 401,080 Southeast Wisconsin Professional Baseball Park District Sales Revenue Zero Coupon (MBIA) 0.00% 12/15/16 .................................... 1,115,000 419,273 Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue Zero Coupon (MBIA) 0.00% 12/15/24 .................................... 1,500,000 343,995 Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue Zero Coupon (MBIA) 0.00% 12/15/25 .................................... 1,250,000 269,750 Southeast Wisconsin Professional Baseball Park District Sales Tax Revenue Zero Coupon (MBIA) 0.00% 12/15/28 ............................ 6,250,000 1,129,000 Virgin Islands Public Finance Authority Revenue Sub Lien Funded Loan Notes Series E 5.875% 10/1/18 ........................................... 750,000 735,218 Wisconsin Central District Tax Revenue - (FSA) 5.25% 12/15/23 ................................... 3,000,000 2,857,440 ---------- 8,059,598 ---------- Total Municipal Bonds (cost $38,514,209)............. 38,683,456 ---------- TOTAL MARKET VALUE OF SECURITIES OWNED - 101.46% (COST $38,514,209) ..................................... $38,683,456 LIABILITIES NET OF RECEIVABLES OTHER ASSETS - (1.46%) ..... (558,393) ----------- NET ASSETS APPLICABLE TO 3,993,664 SHARES ($0.01 PAR VALUE) OUTSTANDING - 100.00% ................ $38,125,063 =========== NET ASSET VALUE - TAX-FREE WISCONSIN FUND A CLASS ($33,410,229 / 3,499,945 SHARES) ....................... $9.55 ===== NET ASSET VALUE - TAX-FREE WISCONSIN FUND B CLASS ($3,205,781 / 336,090 SHARES) .......................... $9.54 ===== NET ASSET VALUE - TAX-FREE WISCONSIN FUND C CLASS ($1,509,053 / 157,629 SHARES) .......................... $9.57 ===== COMPONENTS OF NET ASSETS AT AUGUST 31, 1999: Common stock, $0.01 par value, 100,000,000,000 shares authorized to the Fund with 10,000,000,000 shares allocated to Tax-Free 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 ........... $38,463,373 Accumulated net realized loss on investments .............. (507,557) Net unrealized appreciation of investments ................ 169,247 ----------- Total net assets .......................................... $38,125,063 =========== - ---------------------- * For Pre-Refunded Bonds, the stated maturity is followed by the year in which each bond is pre-refunded. 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 Net asset value A Class (A) ............................... $9.55 Sales charge (3.75% of offering price or 3.87% of amount invested per share) (B)....................... 0.37 ----- Offering price............................................. $9.92 ===== - ---------------------- (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 30 for tax-exempt income
STATEMENTS OF OPERATIONS YEAR ENDED AUGUST 31, 1999 - -------------------------------------------------------------------------------------------------------------------- VOYAGEUR MUTUAL FUNDS, INC. VOYAGEUR INVESTMENT TRUST TAX-FREE TAX-FREE TAX-FREE TAX-FREE IDAHO IOWA KANSAS MISSOURI FUND FUND FUND INSURED FUND ---------- ----------- ---------- ------------- INVESTMENT INCOME: Interest ................................................ $ 2,987,647 $ 2,424,720 $1,000,057 $ 3,131,274 EXPENSES: Management fees ......................................... 281,574 233,909 91,783 279,337 Distribution expense .................................... 215,272 156,497 77,068 224,409 Dividend disbursing and transfer agent fees and expenses. 45,672 54,766 16,577 48,336 Accounting and administration ........................... 21,356 19,525 7,293 20,075 Reports and statements to shareholders .................. 20,200 18,050 6,356 25,385 Professional fees ....................................... 27,171 6,600 4,411 19,270 Registration fees ....................................... 4,250 11,250 1,250 4,050 Custodian fees .......................................... 6,243 5,600 2,150 2,800 Taxes (other than taxes on income) ...................... 9,310 8,855 360 6,000 Directors' fees ......................................... 1,361 1,290 806 1,465 Other ................................................... 15,117 18,814 6,214 17,464 ----------- ----------- ---------- ----------- 647,526 535,156 214,268 648,591 Less expenses absorbed or waived ........................ (21,192) (38,183) (13,425) (27,206) Less expenses paid indirectly ........................... (1,246) (1,041) (394) (1,287) ----------- ----------- ---------- ----------- Total operating expenses ................................ 625,088 495,932 200,449 620,098 Interest expense ........................................ 127 108 990 8,501 ----------- ----------- ---------- ----------- Total expenses .......................................... 625,215 496,040 201,439 628,599 ----------- ----------- ---------- ----------- NET INVESTMENT INCOME ................................... 2,362,432 1,928,680 798,618 2,502,675 ----------- ----------- ---------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments ................. 3,735 4,469 (39,464) 71,644 Net change in unrealized appreciation/depreciation of investments ....................................... (3,206,434) (2,113,084) (743,441) (2,815,501) ----------- ----------- ---------- ----------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ......... (3,202,699) (2,108,615) (782,905) (2,743,857) ----------- ----------- ---------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................................... $ (840,267) $ (179,935) $ 15,713 $ (241,182) =========== =========== ========== ===========
See accompanying notes for tax-exempt income 31
STATEMENTS OF OPERATIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------ VOYAGEUR VOYAGEUR VOYAGEUR TAX-FREE TAX-FREE TAX-FREE FUNDS, INC. TRUST FUNDS, INC. TAX-FREE TAX-FREE TAX-FREE NORTH DAKOTA OREGON WISCONSIN FUND INSURED FUND FUND ------------ ------------ ----------- INVESTMENT INCOME: Interest ...................................................$1,772,260 $1,895,900 $2,205,402 EXPENSES: Management fees ............................................ 158,426 181,007 207,708 Distribution expense ....................................... 87,006 151,397 132,697 Dividend disbursing and transfer agent fees and expenses ... 38,794 35,756 34,936 Accounting and administration .............................. 11,059 14,695 16,246 Reports and statements to shareholders ..................... 6,500 11,317 11,350 Professional fees .......................................... 8,550 19,613 15,705 Registration fees .......................................... 4,900 3,458 7,050 Custodian fees ............................................. 3,402 4,388 600 Taxes (other than taxes on income) ......................... 5,900 2,695 4,050 Directors' fees ............................................ 2,743 894 970 Other ...................................................... 490 8,918 13,842 ---------- ---------- ---------- 327,770 434,138 445,154 Less expenses absorbed or waived ........................... (10,715) (77,875) (13,413) Less expenses paid indirectly .............................. (703) (833) (916) ---------- ---------- ---------- Total operating expenses ................................... 316,352 355,430 430,825 Interest expense ........................................... 109 74 1,355 ---------- ---------- ---------- Total expenses ............................................. 316,461 355,504 432,180 ---------- ---------- ---------- Net Investment Income ...................................... 1,455,799 1,540,396 1,773,222 ---------- ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments .................... 8,108 19,477 (13,496) Net change in unrealized appreciation/depreciation of investments ..........................................(1,549,466) (2,333,795) (2,175,827) ---------- ---------- ---------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ............(1,541,358) (2,314,318) (2,189,323) ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .........................................$ (85,559) $ (773,922) $ (416,101) ========== ========== ==========
See accompanying notes 32 for tax-exempt income
STATEMENTS OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------------------------------------------------------------ VOYAGEUR MUTUAL FUNDS, INC. VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE IDAHO FUND TAX-FREE IOWA FUND --------------------------------------- --------------------------------------- YEAR ENDED EIGHT MONTHS YEAR ENDED YEAR ENDED EIGHT MONTHS YEAR ENDED 8/31/99 ENDED 8/31/98 12/31/97 8/31/99 ENDED 8/31/98 12/31/97 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ............................... $ 2,362,432 $ 1,374,105 $ 1,840,447 $ 1,928,680 $ 1,235,896 $ 1,895,350 Net realized gain (loss) on investments ............. 3,735 (48,367) 52,973 4,469 88,606 (58,844) Net change in unrealized appreciation/depreciation of investments ................................... (3,206,434) 530,971 1,890,831 (2,113,084) 339,009 1,936,561 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations .................................. (840,267) 1,856,709 3,784,251 (179,935) 1,663,511 3,773,067 ---------- ---------- ---------- ---------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class .......................................... (1,935,872) (1,150,721) (1,561,674) (1,719,461) (1,131,168) (1,786,140) B Class .......................................... (335,490) (189,350) (273,521) (162,016) (80,006) (84,786) C Class .......................................... (87,683) (37,421) (40,080) (47,203) (24,722) (27,910) Net realized gain on investments: A Class .......................................... -- (17,132) -- -- -- -- B Class .......................................... -- (3,270) -- -- -- -- C Class .......................................... -- (743) -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- (2,359,045) (1,398,637) (1,875,275) (1,928,680) (1,235,896) (1,898,836) ---------- ---------- ---------- ---------- ---------- ---------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class .......................................... 9,856,564 8,852,050 8,087,405 3,458,664 2,443,972 3,470,467 B Class .......................................... 4,177,758 1,019,252 2,019,434 1,357,796 1,090,688 1,320,305 C Class .......................................... 2,255,562 707,681 702,551 552,911 492,175 247,082 Net asset value of shares issued upon reinvestment of distributions from net investment income and net realized gain on investments: A Class .......................................... 1,311,933 770,231 967,219 1,076,296 710,428 1,211,605 B Class .......................................... 223,743 120,095 155,808 107,503 57,358 64,063 C Class .......................................... 71,289 30,628 34,029 31,942 14,242 10,869 ---------- ---------- ---------- ---------- ---------- ---------- 17,896,849 11,499,937 11,966,446 6,585,112 4,808,863 6,324,391 ---------- ---------- ---------- ---------- ---------- ---------- Cost of shares repurchased: A Class .......................................... (4,222,098) (3,937,453) (4,493,235) (4,250,442) (2,530,245) (8,103,037) B Class .......................................... (1,125,972) (564,955) (611,419) (557,678) (184,748) (232,768) C Class .......................................... (475,466) (160,744) (480,962) (444,977) (166,201) (90,968) ---------- ---------- ---------- ---------- ---------- ---------- (5,823,536) (4,663,152) (5,585,616) (5,253,097) (2,881,194) (8,426,773) ---------- ---------- ---------- ---------- ---------- ---------- Increase (decrease) in net assets derived from capital share transactions ....................... 12,073,313 6,836,785 6,380,830 1,332,015 1,927,669 (2,102,382) ---------- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ............... 8,874,001 7,294,857 8,289,806 (776,600) 2,355,284 (228,151) NET ASSETS: Beginning of period ................................. 49,035,875 41,741,018 33,451,212 44,479,722 42,124,438 42,352,589 ---------- ---------- ---------- ---------- ---------- ---------- End of period ....................................... $57,909,876 $49,035,875 $41,741,018 $43,703,122 $44,479,722 $42,124,438 ========== ========== ========== ========== ========== ==========
See accompanying notes for tax-exempt income 33
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) - ------------------------------------------------------------------------------------------------------------------------------------ VOYAGEUR INVESTMENT TRUST VOYAGEUR INVESTMENT TRUST TAX-FREE KANSAS FUND TAX-FREE MISSOURI INSURED FUND ------------------------------------ ---------------------------------------- YEAR ENDED EIGHT MONTHS YEAR ENDED YEAR ENDED EIGHT MONTHS YEAR ENDED 8/31/99 ENDED 8/31/98 12/31/97 8/31/99 ENDED 8/31/98 12/31/97 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ..............................$ 798,618 $ 466,674 $ 627,158 $ 2,502,675 $ 1,765,610 $ 2,788,692 Net realized gain (loss) on investments ............ (39,464) 119,598 127,741 71,644 155,408 176,623 Net change in unrealized appreciation/depreciation of investments .................................. (743,441) 42,397 513,267 (2,815,501) 179,094 2,344,920 ----------- ---------- --------- ----------- ---------- ---------- Net increase (decrease) in net assets resulting from operations ................................. 15,713 628,669 1,268,166 (241,182) 2,100,112 5,310,235 ----------- ---------- --------- ----------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class ......................................... (605,332) (364,485) (506,768) (2,067,634) (1,467,138) (2,362,959) B Class ......................................... (178,626) (99,218) (123,076) (427,632) (294,147) (458,482) C Class ......................................... (7,598) (2,853) (4,201) (7,409) (4,325) (7,784) Net realized gain on investments: A Class ......................................... (38,685) -- -- -- -- -- B Class ......................................... (12,054) -- -- -- -- -- C Class ......................................... (373) -- -- -- -- -- ----------- ---------- --------- ----------- ---------- ---------- (842,668) (466,556) (634,045) (2,502,675) (1,765,610) (2,829,225) ----------- ---------- --------- ----------- ---------- ---------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class ......................................... 2,372,007 2,693,842 1,225,439 1,609,116 1,374,617 2,768,917 B Class ......................................... 1,912,350 420,715 948,070 511,000 399,452 2,097,849 C Class ......................................... 354,261 40,545 74,506 172,422 30,000 100,000 Net asset value of shares issued upon reinvestment of distributions from net investment income and net realized gain on investments: A Class ......................................... 317,555 187,468 297,771 1,064,643 758,855 1,353,277 B Class ......................................... 131,928 66,415 83,728 257,250 183,416 349,671 C Class ......................................... 6,220 2,795 4,294 4,334 2,854 5,484 ----------- ---------- --------- ----------- ---------- ---------- 5,094,321 3,411,780 2,633,808 3,618,765 2,749,194 6,675,198 ----------- ---------- --------- ----------- ---------- ---------- Cost of shares repurchased: A Class ......................................... (3,158,135) (1,121,317) (1,511,541) (5,087,919) (4,032,289) (6,861,721) B Class ......................................... (596,102) (280,393) (135,792) (970,200) (834,476) (1,840,881) C Class ......................................... (15,377) (26,367) (66,004) (44,506) (146,282) (42,129) ----------- ---------- --------- ----------- ---------- ---------- (3,769,614) (1,428,077) (1,713,337) (6,102,625) (5,013,047) (8,744,731) ----------- ---------- --------- ----------- ---------- ---------- Increase (decrease) in net assets derived from capital share transactions ...................... 1,324,707 1,983,703 920,471 (2,483,860) 2,263,853 (2,069,533) ----------- ---------- --------- ----------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS .............. 497,752 2,145,816 1,554,592 (5,227,717) (1,929,351) 411,477 NET ASSETS: Beginning of period ................................ 16,368,658 14,222,842 12,668,250 58,367,598 60,296,949 59,885,472 ----------- ---------- --------- ----------- ---------- ---------- End of period ......................................$16,866,410 $16,368,658 $14,222,842 $53,139,881 $58,367,598 $60,296,949 =========== =========== =========== =========== ========== ==========
See accompanying notes 34 for tax-exempt income
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) - ------------------------------------------------------------------------------------------------------------------------------------ VOYAGEUR TAX-FREE FUNDS, INC. VOYAGEUR INVESTMENT TRUST TAX-FREE NORTH DAKOTA FUND TAX-FREE OREGON INSURED FUND ------------------------------------ --------------------------------------- YEAR ENDED EIGHT MONTHS YEAR ENDED YEAR ENDED EIGHT MONTHS YEAR ENDED 8/31/99 ENDED 8/31/98 12/31/97 8/31/99 ENDED 8/31/98 12/31/97 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ................................$ 1,455,799 $ 1,015,407 $ 1,601,793 $ 1,540,396 $ 895,746 $ 1,271,100 Net realized gain (loss) on investments .............. 8,108 151,151 416,818 19,477 (11,500) 17,126 Net change in unrealized appreciation/depreciation of investments .................................... (1,549,466) 154,096 880,044 (2,333,795) 368,882 1,188,556 ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) in net assets resulting from operations ................................... (85,559) 1,320,654 2,898,655 (773,922) 1,253,128 2,476,782 ---------- ---------- ---------- ---------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class ........................................... (1,406,694) (989,212) (1,597,868) (1,225,917) (714,960) (1,033,966) B Class ........................................... (43,161) (25,072) (37,856) (261,267) (162,152) (224,133) C Class ........................................... (5,944) (1,123) (1,691) (53,212) (18,634) (17,078) Net realized gain on investments: A Class ........................................... (110,320) -- -- -- -- -- B Class ........................................... (3,890) -- -- -- -- -- C Class ........................................... (110) -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- (1,570,119) (1,015,407) (1,637,415) (1,540,396) (895,746) (1,275,177) ---------- ---------- ---------- ---------- ---------- ---------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class ........................................... 1,440,696 965,629 751,084 7,214,292 4,019,856 3,728,179 B Class ........................................... 208,846 80,892 192,597 2,756,229 561,598 1,626,102 C Class ........................................... 304,077 -- -- 722,342 507,769 164,876 Net asset value of shares issued upon reinvestment of distributions from net investment income and net realized gain on investments: A Class ........................................... 910,805 599,011 1,047,157 734,060 433,739 616,492 B Class ........................................... 26,551 13,030 22,504 141,931 101,024 152,794 C Class ........................................... 5,787 1,125 1,714 39,399 13,324 11,587 ---------- ---------- ---------- ---------- ---------- ---------- 2,896,762 1,659,687 2,015,056 11,608,253 5,637,310 6,300,030 ---------- ---------- ---------- ---------- ---------- ---------- Cost of shares repurchased: A Class ........................................... (4,235,735) (2,329,708) (5,770,655) (3,023,459) (2,465,216) (4,116,579) B Class ........................................... (107,320) (11,781) (61,932) (441,663) (1,179,572) (326,601) C Class ........................................... (1,454) (12,711) (3,000) (54,713) (68,006) (25,157) ---------- ---------- ---------- ---------- ---------- ---------- (4,344,509) (2,354,200) (5,835,587) (3,519,835) (3,712,794) (4,468,337) ---------- ---------- ---------- ---------- ---------- ---------- Increase (decrease) in net assets derived from capital share transactions ........................ (1,447,747) (694,513) (3,820,531) 8,088,418 1,924,516 1,831,693 ---------- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS ................ (3,103,425) (389,266) (2,559,291) 5,774,100 2,281,898 3,033,298 NET ASSETS: Beginning of period .................................. 31,505,567 31,894,833 34,454,124 31,346,335 29,064,437 26,031,139 ---------- ---------- ---------- ---------- ---------- ---------- End of period ........................................$28,402,142 $31,505,567 $31,894,833 $37,120,435 $31,346,335 $29,064,437 =========== =========== =========== =========== =========== ===========
See accompanying notes for tax-exempt income 35 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) - --------------------------------------------------------------------------------
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE WISCONSIN FUND --------------------------------------- YEAR ENDED EIGHT MONTHS YEAR ENDED 8/31/99 ENDED 8/31/98 12/31/97 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ............................ $ 1,773,222 $1,099,088 $ 1,402,926 Net realized gain (loss) on investments .......... (13,496) (55,924) 190,944 Net change in unrealized appreciation/depreciation of investments ................................. (2,175,827) 352,874 1,023,956 ----------- ----------- ------------- Net increase (decrease) in net assets resulting from operations ................................. (416,101) 1,396,038 2,617,826 ----------- ----------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income: A Class ....................................... (1,605,902) (1,011,692) (1,354,012) B Class ....................................... (112,132) (58,302) (65,438) C Class ....................................... (55,188) (29,094) (26,356) Net realized gain on investments: A Class ....................................... -- -- -- B Class ....................................... -- -- -- C Class ....................................... -- -- -- ----------- ----------- ------------- (1,773,222) (1,099,088) (1,445,806) ----------- ----------- ------------- CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold: A Class ....................................... 4,882,591 5,662,446 7,121,843 B Class ....................................... 1,147,384 955,955 505,833 C Class ....................................... 554,885 657,033 347,276 Net asset value of shares issued upon reinvestment of distributions from net investment income and net realized gain on investments: A Class ....................................... 905,575 515,403 758,408 B Class ....................................... 67,376 33,882 42,097 C Class ....................................... 48,880 25,500 24,405 ----------- ----------- ------------- 7,606,691 7,850,219 8,799,862 ----------- ----------- ------------- Cost of shares repurchased: A Class ....................................... (4,934,768) (2,836,280) (6,376,585) B Class ....................................... (457,430) (318,684) (20,571) C Class ....................................... (292,994) (98,592) (262,082) ----------- ----------- ------------- (5,685,192) (3,253,556) (6,659,238) ----------- ----------- ------------- Increase (decrease) in net assets derived from capital share transactions ...................... 1,921,499 4,596,663 2,140,624 ----------- ----------- ------------- NET INCREASE (DECREASE) IN NET ASSETS (267,824) 4,893,613 3,312,644 ----------- ----------- ------------- Net Assets: Beginning of period .............................. 38,392,887 33,499,274 30,186,630 ----------- ----------- ------------- End of period .................................... $38,125,063 $ 38,392,887 $ 33,499,274 =========== ============ =============
See accompanying notes 36 for tax-exempt income FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE IDAHO FUND - CLASS A ---------------------------------------------------------- EIGHT PERIOD YEAR MONTHS YEAR YEAR 1/4/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period $11.560 $11.450 $10.910 $11.020 $10.000 Income (loss) from investment operations: Net investment income ......................... 0.517 0.356 0.551 0.580 0.600 Net realized and unrealized gain (loss) on investments ............................... (0.620) 0.115 0.552 (0.120) 1.100 -------- -------- -------- -------- -------- Total from investment operations .............. (0.103) 0.471 1.103 0.460 1.700 -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income .......... (0.517) (0.356) (0.563) (0.570) (0.600) Distributions from net realized gain on investments ................................. -- (0.005) -- -- (0.080) -------- -------- -------- -------- -------- Total dividends and distributions ............. (0.517) (0.361) (0.563) (0.570) (0.680) -------- -------- -------- -------- -------- Net asset value, end of period ................... $10.940 $11.560 $11.450 $10.910 $11.020 ======== ======== ======== ======== ======== Total return(4) .................................. (0.99%) 4.19% 10.41% 4.36% 17.48% Ratios and supplemental data: Net assets, end of period (000 omitted) ....... $44,299 $39,843 $33,788 $27,684 $13,540 Ratio of expenses to average net assets ....... 1.00% 0.95% 0.87% 0.60% 0.26%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly .............................. 1.04% 1.02% 1.02% 1.10% 1.25%(5) Ratio of net investment income to average net assets ................................... 4.52% 4.65% 4.98% 5.29% 5.24%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ................. 4.48% 4.58% 4.83% 4.79% 4.25%(5) Portfolio turnover ............................ 2% 8% 19% 35% 42%
- ---------------------- 1 Ratios have been annualized and total return has not been annualized. 2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. 3 Commencement of operations. 4 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. 5 Annualized. 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:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE IDAHO FUND - CLASS B -------------------------------------------------------------- EIGHT PERIOD YEAR MONTHS YEAR YEAR 3/16/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period ............. $11.550 $11.440 $10.890 $11.010 $10.500 Income (loss) from investment operations: Net investment income ......................... 0.432 0.298 0.487 0.520 0.420 Net realized and unrealized gain (loss) on investments ................................. (0.630) 0.117 0.560 (0.130) 0.590 -------- -------- -------- -------- -------- Total from investment operations .............. (0.198) 0.415 1.047 0.390 1.010 -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income .......... (0.432) (0.300) (0.497) (0.510) (0.420) Distributions from net realized gain on investments ................................. -- (0.005) -- -- (0.080) -------- -------- -------- -------- -------- Total dividends and distributions ............. (0.432) (0.305) (0.497) (0.510) (0.500) -------- -------- -------- -------- -------- Net asset value, end of period ................... $10.920 $11.550 $11.440 $10.890 $11.010 ======== ======== ======== ======== ======== Total return(4) .................................. (1.82%) 3.68% 9.87% 3.75% 9.86% Ratios and supplemental data: Net assets, end of period (000 omitted) ....... $10,199 $7,474 $6,827 $4,945 $1,977 Ratio of expenses to average net assets ....... 1.75% 1.70% 1.46% 1.11% 0.79%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ............................. 1.79% 1.77% 1.61% 1.85% 1.90%(5) Ratio of net investment income to average net assets ...................................... 3.77% 3.90% 4.39% 4.78% 4.68%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly .................... 3.73% 3.83% 4.24% 4.04% 3.57%(5) Portfolio turnover ............................ 2% 8% 19% 35% 42%
- ---------------------- 1 Ratios have been annualized and total return has not been annualized. 2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. 3 Commencement of operations. 4 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. 5 Annualized. 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:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE IDAHO FUND - CLASS C ------------------------------------------------------------- EIGHT PERIOD YEAR MONTHS YEAR YEAR 1/11/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period $11.550 $11.430 $10.900 $11.020 $10.040 Income (loss) from investment operations: Net investment income ............................. 0.432 0.302 0.459 0.500 0.500 Net realized and unrealized gain (loss) on investments ..................................... (0.630) 0.123 0.549 (0.130) 1.060 -------- -------- -------- -------- ---------- Total from investment operations .................. (0.198) 0.425 1.008 0.370 1.560 -------- -------- -------- -------- ---------- Less dividends and distributions: Dividends from net investment income .............. (0.432) (0.300) (0.478) (0.490) (0.500) Distributions from net realized gain on investments ..................................... -- (0.005) -- -- (0.080) -------- -------- -------- -------- -------- Total dividends and distributions ................. (0.432) (0.305) (0.478) (0.490) (0.580) -------- -------- -------- -------- -------- Net asset value, end of period ....................... $10.920 $11.550 $11.430 $10.900 $11.020 ======== ======== ======== ======= ======== Total return(4) ...................................... (1.82%) 3.77% 9.49% 3.48% 15.81% Ratios and supplemental data: Net assets, end of period (000 omitted) ........... $3,411 $1,719 $1,125 $822 $789 Ratio of expenses to average net assets ........... 1.75% 1.70% 1.62% 1.33% 1.05%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ...................................... 1.79% 1.77% 1.77% 1.82% 2.00%(5) Ratio of net investment income to average net assets ...................................... 3.77% 3.90% 4.23% 4.57% 4.48%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ........................ 3.73% 3.83% 4.08% 4.08% 3.53%(5) Portfolio turnover ................................ 2% 8% 19% 35% 42%
- ---------------------- 1 Ratios have been annualized and total return has not been annualized. 2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. 3 Commencement of operations. 4 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. 5 Annualized. 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:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE IOWA FUND - CLASS A ---------------------------------------------------------------------- EIGHT FOUR YEAR MONTHS YEAR YEAR YEAR MONTHS ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 Net asset value, beginning of period .................. $10.160 $10.060 $9.620 $9.830 $8.560 $9.260 Income (loss) from investment operations: Net investment income .............................. 0.440 0.294 0.449 0.440 0.450 0.170 Net realized and unrealized gain (loss) on investments .................................... (0.460) 0.100 0.440 (0.210) 1.290 (0.720) -------- -------- --------- -------- -------- -------- Total from investment operations ................... (0.020) 0.394 0.889 0.230 1.740 (0.550) -------- -------- --------- -------- -------- -------- Less dividends: Dividends from net investment income ............... (0.440) (0.294) (0.449) (0.440) (0.470) (0.150) -------- -------- --------- -------- -------- -------- Total dividends .................................... (0.440) (0.294) (0.449) (0.440) (0.470) (0.150) -------- -------- --------- -------- -------- -------- Net asset value, end of period ........................ $9.700 $10.160 $10.060 $9.620 $9.830 $8.560 ======== ======== ======== ======== ======== ======== Total return(3)........................................ (0.26%) 3.98% 9.49% 2.56% 20.80% (5.86%) Ratios and supplemental data: Net assets, end of period (000 omitted) ............ $37,807 $39,345 $38,343 $40,037 $42,374 $32,373 Ratio of expenses to average net assets ............ 1.00% 0.96% 0.91% 0.92% 0.72% 0.11%(4) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ....................................... 1.08% 1.06% 0.97% 1.06% 1.06% 1.25%(4) Ratio of net investment income to average net assets ....................................... 4.36% 4.38% 4.62% 4.68% 4.88% 5.71%(4) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ......................... 4.28% 4.28% 4.56% 4.54% 4.54% 4.57%(4) Portfolio turnover ................................. 2% 13% 14% 14% 21% 7%
- ---------------------- 1 Ratios have been annualized and total return has not been annualized. 2 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. 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. 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:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE IOWA FUND - CLASS B ------------------------------------------------------------- EIGHT PERIOD YEAR MONTHS YEAR YEAR 3/24/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period ........................... $10.160 $10.060 $9.610 $9.830 $9.180 Income (loss) from investment operations: Net investment income ....................................... 0.363 0.243 0.366 0.380 0.310 Net realized and unrealized gain (loss) on investments ...... (0.460) 0.100 0.457 (0.220) 0.640 -------- -------- -------- -------- -------- Total from investment operations ............................ (0.097) 0.343 0.823 0.160 0.950 -------- -------- -------- -------- -------- Less dividends: Dividends from net investment income ........................ (0.363) (0.243) (0.373) (0.380) (0.300) -------- -------- -------- -------- -------- Total dividends ............................................. (0.363) (0.243) (0.373) (0.380) (0.300) -------- -------- -------- -------- -------- Net asset value, end of period ................................. $9.700 $10.160 $10.060 $9.610 $9.830 ======== ======== ======== ======== ======== Total return(4) ................................................ (1.03%) 3.46% 8.75% 1.76% 10.62% Ratios and supplemental data: Net assets, end of period (000 omitted) ..................... $4,600 $3,910 $2,910 $1,645 $819 Ratio of expenses to average net assets ..................... 1.75% 1.71% 1.67% 1.61% 1.28%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ........... 1.83% 1.81% 1.73% 1.81% 1.65%(5) Ratio of net investment income to average net assets ........ 3.61% 3.63% 3.86% 3.97% 4.06%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly .. 3.53% 3.53% 3.80% 3.77% 3.69%(5) Portfolio turnover .......................................... 2% 13% 14% 14% 21%
- -------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. 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:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE IOWA FUND - CLASS C ------------------------------------------------------------- EIGHT PERIOD YEAR MONTHS YEAR YEAR 1/4/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period ............................ $10.160 $10.060 $9.610 $9.830 $8.550 Income (loss) from investment operations: Net investment income ........................................ 0.363 0.243 0.360 0.360 0.370 Net realized and unrealized gain (loss) on investments ....... (0.460) 0.100 0.456 (0.220) 1.280 -------- -------- -------- -------- -------- Total from investment operations ............................. (0.097) 0.343 0.816 0.140 1.650 -------- -------- -------- -------- -------- Less dividends: Dividends from net investment income ......................... (0.363) (0.243) (0.366) (0.360) (0.370) -------- -------- -------- -------- -------- Total dividends .............................................. (0.363) (0.243) (0.366) (0.360) (0.370) -------- -------- -------- -------- -------- Net asset value, end of period .................................. $9.700 $10.160 $10.060 $9.610 $9.830 ======== ======== ======== ======== ======== Total return(4) ................................................. (1.03%) 3.46% 8.68% 1.56% 19.66% Ratios and supplemental data: Net assets, end of period (000 omitted) ...................... $1,296 $1,225 $871 $670 $462 Ratio of expenses to average net assets ...................... 1.75% 1.71% 1.74% 1.75% 1.61%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ............ 1.83% 1.81% 1.80% 1.81% 1.72%(5) Ratio of net investment income to average net assets ......... 3.61% 3.63% 3.79% 3.82% 3.74%(5) Ratio of net investment income to average net assets ......... prior to expense limitation and expenses paid indirectly ... 3.53% 3.53% 3.73% 3.76% 3.63%(5) Portfolio turnover 2% 13% 14% 14% 21%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. 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:
VOYAGEUR INVESTMENT TRUST TAX-FREE KANSAS FUND - CLASS A --------------------------------------------------------------------------------- EIGHT TWO YEAR MONTHS YEAR YEAR YEAR MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98(1) 12/31/97(2) 2/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period ........... $11.160 $11.060 $10.560 $10.730 $9.500 $9.630 $10.850 Income (loss) from investment operations: Net investment income ....................... 0.538 0.351 0.526 0.520 0.560 0.090 0.570 Net realized and unrealized gain (loss) on investments ............................ (0.491) 0.100 0.506 (0.170) 1.220 (0.130) (1.210) ------- ------- ------- ------- ------- ------ ------ Total from investment operations ............ 0.047 0.451 1.032 0.350 1.780 (0.040) (0.640) ------- ------- ------- ------- ------- ------ ------ Less dividends and distributions: Dividends from net investment income ........ (0.534) (0.351) (0.532) (0.520) (0.550) (0.090) (0.570) Distributions from net realized gain on investments ............................ (0.033) -- -- -- -- -- (0.010) ------- ------- ------- ------- ------- ------ ------ Total dividends and distributions ........... (0.567) (0.351) (0.532) (0.520) (0.550) (0.090) (0.580) ------- ------- ------- ------- ------- ------ ------ Net asset value, end of period ................. $10.640 $11.160 $11.060 $10.560 $10.730 $9.500 $9.630 ======= ======= ======= ======= ======= ====== ====== Total return(3) ................................ 0.35% 4.14% 10.06% 3.43% 19.13% (0.38%) (6.10%) Ratios and supplemental data: Net assets, end of period (000 omitted) ..... $11,498 $12,548 $10,663 $10,176 $10,677 $7,355 $6,469 Ratio of expenses to average net assets ..... 0.98% 0.89% 0.84% 0.83% 0.37% 0.01%(4) 0.06% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ........................... 1.06% 0.99% 1.03% 1.21% 1.11% 1.25%(4) 1.25% Ratio of net investment income to average net assets ........................ 4.86% 4.75% 4.92% 4.97% 5.32% 5.88%(4) 5.30% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ... 4.78% 4.65% 4.73% 4.59% 4.58% 4.64%(4) 4.11% Portfolio turnover .......................... 28% 40% 30% 56% 19% 0% 38%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (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. 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:
VOYAGEUR INVESTMENT TRUST TAX-FREE KANSAS FUND - CLASS B ----------------------------------------------------------------- YEAR EIGHT MONTHS YEAR YEAR PERIOD ENDED ENDED ENDED ENDED 4/8/95(3) TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period ........................... $11.180 $11.080 $10.570 $10.740 $10.190 Income (loss) from investment operations: Net investment income ....................................... 0.455 0.296 0.440 0.450 0.340 Net realized and unrealized gain (loss) on investments ...... (0.501) 0.099 0.516 (0.170) 0.540 -------- -------- -------- -------- -------- Total from investment operations ............................ (0.046) 0.395 0.956 0.280 0.880 -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ........................ (0.451) (0.295) (0.446) (0.450) (0.330) Distributions from net realized gain on investments ......... (0.033) -- -- -- -- -------- -------- -------- -------- -------- Total dividends and distributions ........................... (0.484) (0.295) (0.446) (0.450) (0.330) -------- -------- -------- -------- -------- Net asset value, end of period ................................. $10.650 $11.180 $11.080 $10.570 $10.740 ======== ======== ======== ======== ======== Total return(4) ................................................ (0.49%) 3.62% 9.28% 2.69% 8.76% Ratios and supplemental data: Net assets, end of period (000 omitted) ..................... $4,910 $3,694 $3,452 $2,402 $677 Ratio of expenses to average net assets ..................... 1.73% 1.64% 1.61% 1.61% 0.94%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ........... 1.81% 1.74% 1.80% 2.00% 1.68%(5) Ratio of net investment income to average net assets ........ 4.11% 4.00% 4.15% 4.16% 4.63%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly .. 4.03% 3.90% 3.96% 3.77% 3.89%(5) Portfolio turnover .......................................... 28% 40% 30% 56% 19%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. 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:
VOYAGEUR INVESTMENT TRUST TAX-FREE KANSAS FUND - CLASS C YEAR EIGHT MONTHS YEAR YEAR PERIOD ENDED ENDED ENDED ENDED 4/12/95(3) TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period .......................... $11.160 $11.050 $10.550 $10.720 $10.200 Income (loss) from investment operations: Net investment income ...................................... 0.453 0.296 0.439 0.430 0.320 Net realized and unrealized gain (loss) on investments ..... (0.490) 0.110 0.504 (0.170) 0.510 -------- -------- -------- -------- -------- Total from investment operations ........................... (0.037) 0.406 0.943 0.260 0.830 -------- -------- -------- -------- -------- Less dividends and distributions: Dividends from net investment income ....................... (0.450) (0.296) (0.443) (0.430) (0.310) Distributions from net realized gain on investments ........ (0.033) -- -- -- -- -------- -------- -------- -------- -------- Total dividends and distributions .......................... (0.483) (0.296) (0.443) (0.430) (0.310) -------- -------- -------- -------- -------- Net asset value, end of period ................................ $10.640 $11.160 $11.050 $10.550 $10.720 ======== ======== ======== ======== ======== Total return(4) ............................................... (0.40%) 3.72% 9.17% 2.52% 8.29% Ratios and supplemental data: Net assets, end of period (000 omitted) .................... $458 $127 $108 $90 $40 Ratio of expenses to average net assets .................... 1.73% 1.64% 1.64% 1.77% 1.27%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly .......... 1.81% 1.74% 1.83% 2.00% 1.79%(5) Ratio of net investment income to average net assets ....... 4.11% 4.00% 4.12% 4.02% 4.21%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly . 4.03% 3.90% 3.93% 3.79% 3.69%(5) Portfolio turnover ......................................... 28% 40% 30% 56% 19%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. 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:
VOYAGEUR INVESTMENT TRUST TAX-FREE MISSOURI INSURED FUND - CLASS A --------------------------------------------------------------------------- EIGHT TWO YEAR MONTHS YEAR YEAR YEAR MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period .................... $10.870 $10.810 $10.370 $10.540 $9.270 $9.370 $10.820 Income (loss) from investment operations: Net investment income ................................ 0.498 0.333 0.504 0.520 0.520 0.100 0.550 Net realized and unrealized gain (loss) on investments ..................................... (0.530) 0.060 0.446 (0.180) 1.290 (0.110) (1.430) ------- ------- ------- ------- ------- ------ ------ Total from investment operations ..................... (0.032) 0.393 0.950 0.340 1.810 (0.010) (0.880) ------- ------- ------- ------- ------- ------ ------ Less dividends and distributions: Dividends from net investment income ................. (0.498) (0.333) (0.510) (0.510) (0.540) (0.090) (0.540) Distributions from net realized gain on investments ..................................... -- -- -- -- -- -- (0.030) ------- ------- ------- ------- ------- ------ ------ Total dividends and distributions .................... (0.498) (0.333) (0.510) (0.510) (0.540) (0.090) (0.570) ------- ------- ------- ------- ------- ------ ------ Net asset value, end of period .......................... $10.340 $10.870 $10.810 $10.370 $10.540 $9.270 $9.370 ======= ======= ======= ======= ======= ====== ====== Total return(3).......................................... (0.38%) 3.70% 9.43% 3.41% 19.96% (0.07%) (8.28%) Ratios and supplemental data: Net assets, end of period (000 omitted) .............. $42,337 $46,939 $48,565 $49,301 $50,211 $37,790 $37,384 Ratio of expenses to average net assets .............. 0.97% 0.92% 0.91% 0.71% 0.50% 0.11%(4) 0.15% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly .................................... 1.02% 1.02% 0.93% 1.03% 1.07% 1.12%(4) 1.13% Ratio of net investment income to average net assets . 4.62% 4.64% 4.81% 5.05% 5.25% 6.00%(4) 5.39% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ........................... 4.57% 4.54% 4.79% 4.73% 4.68% 4.99%(4) 4.41% Portfolio turnover ................................... 7% 18% 12% 28% 31% 8% 32%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (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. See accompanying notes 46 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR INVESTMENT TRUST TAX-FREE MISSOURI INSURED FUND - CLASS B -------------------------------------------------------------------------- EIGHT TWO PERIOD YEAR MONTHS YEAR YEAR YEAR MONTHS 3/12/94(3) ENDED ENDED ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period .................... $10.870 $10.810 $10.370 $10.540 $9.270 $9.370 $10.300 Income (loss) from investment operations: Net investment income ................................ 0.416 0.279 0.425 0.460 0.480 0.080 0.330 Net realized and unrealized gain (loss) on investments ..................................... (0.530) 0.060 0.451 (0.180) 1.280 (0.100) (0.940) ------- ------- ------- ------- ------- ------ ------ Total from investment operations ..................... (0.114) 0.339 0.876 0.280 1.760 (0.020) (0.610) ------- ------- ------- ------- ------- ------ ------ Less dividends: Dividends from net investment income ................. (0.416) (0.279) (0.436) (0.450) (0.490) (0.080) (0.320) ------- ------- ------- ------- ------- ------ ------ Total dividends ...................................... (0.416) (0.279) (0.436) (0.450) (0.490) (0.080) (0.320) ------- ------- ------- ------- ------- ------ ------ Net asset value, end of period .......................... $10.340 $10.870 $10.810 $10.370 $10.540 $9.270 $9.370 ======= ======= ======= ======= ======= ====== ====== Total return(4) ......................................... (1.13%) 3.19% 8.66% 2.93% 19.18% (0.14%) (6.16%) Ratios and supplemental data: Net assets, end of period (000 omitted) .............. $10,572 $11,317 $11,507 $10,432 $6,195 $2,742 $1,701 Ratio of expenses to average net assets .............. 1.72% 1.67% 1.61% 1.29% 0.97% 0.60%(5) 0.49%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly .................................... 1.77% 1.77% 1.63% 1.78% 1.81% 1.84%(5) 1.83%(5) Ratio of net investment income to average net assets . 3.87% 3.89% 4.11% 4.46% 4.70% 5.32%(5) 4.89%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ............................. 3.82% 3.79% 4.09% 3.97% 3.86% 4.08%(5) 3.55%(5) Portfolio turnover ................................... 7% 18% 12% 28% 31% 8% 32%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes for tax-exempt income 47 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR INVESTMENT TRUST TAX-FREE MISSOURI INSURED FUND - CLASS C ------------------------------------------------------------- EIGHT PERIOD YEAR MONTHS YEAR YEAR 11/11/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 ------------------------------------------------------------- Net asset value, beginning of period ....................... $10.880 $10.810 $10.370 $10.540 $10.360 Income (loss) from investment operations: Net investment income ................................... 0.419 0.279 0.405 0.430 0.060 Net realized and unrealized gain (loss) on investments .. (0.530) 0.070 0.455 (0.180) 0.170 ------- ------- ------- ------- ------- Total from investment operations ........................ (0.111) 0.349 0.860 0.250 0.230 ------- ------- ------- ------- ------- Less dividends: Dividends from net investment income .................... (0.419) (0.279) (0.420) (0.420) (0.050) ------- ------- ------- ------- ------- Total dividends ......................................... (0.419) (0.279) (0.420) (0.420) (0.050) ------- ------- ------- ------- ------- Net asset value, end of period ............................. $10.350 $10.880 $10.810 $10.370 $10.540 ======= ======= ======= ======= ======= Total return(4)............................................. (1.12%) 3.28% 8.49% 2.48% 2.24% Ratios and supplemental data: Net assets, end of period (000 omitted) ................. $231 $112 $225 $152 $20 Ratio of expenses to average net assets ................. 1.72% 1.67% 1.74% 1.62% 1.22%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ....... 1.77% 1.77% 1.76% 1.78% 1.55%(5) Ratio of net investment income to average net assets .... 3.87% 3.89% 3.98% 4.10% 4.09%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ............................................ 3.82% 3.79% 3.96% 3.94% 3.76%5 Portfolio turnover ...................................... 7% 18% 12% 28% 31%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes 48 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE NORTH DAKOTA FUND - CLASS A ---------------------------------------------------------------------- YEAR EIGHT MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 Net asset value, beginning of period ........................ $11.440 $11.320 $10.880 $11.000 $9.850 $11.070 Income (loss) from investment operations: Net investment income .................................... 0.541 0.364 0.546 0.540 0.540 0.560 Net realized and unrealized gain (loss) on investments ... (0.578) 0.120 0.451 (0.130) 1.180 (1.150) ------- ------- ------- ------- ------- ------ Total from investment operations ......................... (0.037) 0.484 0.997 0.410 1.720 (0.590) ------- ------- ------- ------- ------- ------ Less dividends and distributions: Dividends from net investment income ..................... (0.541) (0.364) (0.557) (0.530) (0.570) (0.530) Distributions from net realized gain on investments ...... (0.042) -- -- -- -- (0.080) Distributions in excess of net realized gains ............ -- -- -- -- -- (0.020) ------- ------- ------- ------- ------- ------ Total dividends and distributions ........................ (0.583) (0.364) (0.557) (0.530) (0.570) (0.630) ------- ------- ------- ------- ------- ------ Net asset value, end of period .............................. $10.820 $11.440 $11.320 $10.880 $11.000 $9.850 ======= ======= ======= ======= ======= ====== Total return(3) ............................................. (0.41%) 4.35% 9.43% 3.89% 17.81% (5.47%) Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $27,032 $30,496 $30,965 $33,713 $36,096 $33,829 Ratio of expenses to average net assets .................. 1.00% 1.00% 1.00% 0.88% 0.81% 0.46% Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ..... 1.04% 1.15% 1.04% 1.08% 1.05% 1.14% Ratio of net investment income to average net assets ..... 4.79% 4.82% 4.97% 5.01% 5.07% 5.36% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly .......................................... 4.75% 4.67% 4.93% 4.81% 4.83% 4.68% Portfolio turnover ....................................... 28% 23% 41% 58% 45% 33%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (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. See accompanying notes for tax-exempt income 49 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE NORTH DAKOTA FUND - CLASS B ---------------------------------------------------------------------- EIGHT PERIOD FROM YEAR MONTHS YEAR YEAR YEAR 5/10/94(3) ENDED ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 Net asset value, beginning of period ..................... $11.440 $11.320 $10.880 $11.000 $9.850 $10.310 Income (loss) from investment operations: Net investment income ................................. 0.457 0.308 0.484 0.490 0.480 0.300 Net realized and unrealized gain (loss) on investments. (0.578) 0.119 0.451 (0.130) 1.180 (0.390) ------- ------- ------- ------- ------- ------ Total from investment operations ...................... (0.121) 0.427 0.935 0.360 1.660 (0.090) ------- ------- ------- ------- ------- ------ Less dividends and distributions: Dividends from net investment income .................. (0.457) (0.307) (0.495) (0.480) (0.510) (0.270) Distributions from net realized gain on investments ... (0.042) -- -- -- -- (0.080) Distributions in excess of net realized gains ......... -- -- -- -- -- (0.020) ------- ------- ------- ------- ------- ------ Total dividends and distributions ..................... (0.499) (0.307) (0.495) (0.480) (0.510) (0.370) ------- ------- ------- ------- ------- ------ Net asset value, end of period ........................... $10.820 $11.440 $11.320 $10.880 $11.000 $9.850 ======= ======= ======= ======= ======= ====== Total return(4) .......................................... (1.14%) 3.83% 8.82% 3.39% 17.24% (0.77%) Ratios and supplemental data: Net assets, end of period (000 omitted) ............... $1,048 $980 $889 $700 $375 $144 Ratio of expenses to average net assets ............... 1.75% 1.75% 1.55% 1.36% 1.29% 0.99%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly .. 1.79% 1.90% 1.59% 1.83% 1.79% 1.89%(5) Ratio of net investment income to average net assets .. 4.04% 4.07% 4.42% 4.52% 4.56% 4.97%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ..................................... 4.00% 3.92% 4.38% 4.05% 4.06% 4.07%(5) Portfolio turnover .................................... 28% 23% 41% 58% 45% 33%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes 50 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR TAX-FREE FUNDS, INC. TAX-FREE NORTH DAKOTA FUND - CLASS C ------------------------------------------------------------ EIGHT PERIOD FROM YEAR MONTHS YEAR YEAR 7/29/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period ........................ $11.430 $11.320 $10.870 $11.000 $10.510 Income (loss) from investment operations: Net investment income .................................... 0.456 0.307 0.441 0.440 0.170 Net realized and unrealized gain (loss) on investments ... (0.578) 0.110 0.468 (0.140) 0.500 ------- ------- ------- ------- ------- Total from investment operations ......................... (0.122) 0.417 0.909 0.300 0.670 ------- ------- ------- ------- ------- Less dividends and distributions: Dividends from net investment income ..................... (0.456) (0.307) (0.459) (0.430) (0.180) Distributions from net realized gain on investments ...... (0.042) -- -- -- -- Distributions in excess of net realized gains ............ -- -- -- -- -- ------- ------- ------- ------- ------- Total dividends and distributions ........................ (0.498) (0.307) (0.459) (0.430) (0.180) ------- ------- ------- ------- ------- Net asset value, end of period .............................. $10.810 $11.430 $11.320 $10.870 $11.000 ======= ======= ======= ======= ======= Total return(4) ............................................. (1.15%) 3.74% 8.57% 2.81% 6.47% Ratios and supplemental data: Net assets, end of period (000 omitted) .................. $322 $30 $41 $40 $20 Ratio of expenses to average net assets .................. 1.75% 1.75% 1.87% 1.75% 1.73%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ..... 1.79% 1.90% 1.91% 1.75% 1.73%(5) Ratio of net investment income to average net assets ..... 4.04% 4.07% 4.10% 4.06% 4.00%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly 4.00% 3.92% 4.06% 4.06% 4.00%(5) Portfolio turnover ....................................... 28% 23% 41% 58% 45%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes for tax-exempt income 51 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR INVESTMENT TRUST TAX-FREE OREGON INSURED FUND - CLASS A ----------------------------------------------------------------------------------- YEAR EIGHT MONTHS YEAR YEAR YEAR TWO MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period ......... $10.430 $10.310 $ 9.870 $10.050 $ 8.920 $ 9.000 $10.240 Income (loss) from investment operations: Net investment income ....................... 0.458 0.320 0.481 0.480 0.490 0.090 0.500 Net realized and unrealized gain (loss) on investments ............................ (0.620) 0.120 0.444 (0.180) 1.140 (0.090) (1.240) ------- ------- ------- ------- ------- ------- ------- Total from investment operations ............ (0.162) 0.440 0.925 0.300 1.630 0.000 (0.740) ------- ------- ------- ------- ------- ------- ------- Less dividends: Dividends from net investment income ........ (0.458) (0.320) (0.485) (0.480) (0.500) (0.080) (0.500) ------- ------- ------- ------- ------- ------- ------- Total dividends ............................. (0.458) (0.320) (0.485) (0.480) (0.500) (0.080) (0.500) ------- ------- ------- ------- ------- ------- ------- Net asset value, end of period ............... $ 9.810 $10.430 $10.310 $ 9.870 $10.050 $ 8.920 $ 9.000 ======= ======= ======= ======= ======= ======= ======= Total return(3) .............................. (1.67%) 4.33% 9.66% 3.15% 18.71% 0.06% (7.35%) Ratios and supplemental data: Net assets, end of period (000 omitted) ..... $27,518 $24,336 $22,071 $20,913 $21,590 $14,650 $14,086 Ratio of expenses to average net assets ..... 0.80% 0.71% 0.71% 0.71% 0.54% 0.05%(4) 0.03% Ratio of expenses to average net assets ..... prior to expense limitation and expenses paid indirectly ........................... 1.02% 1.03% 0.94% 1.07% 1.11% 1.25%(4) 1.25% Ratio of net investment income to average net assets ................................ 4.44% 4.64% 4.83% 4.92% 5.12% 5.79%(4) 5.17% Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ............. 4.22% 4.32% 4.60% 4.56% 4.55% 4.59%(4) 3.95% Portfolio turnover .......................... 10% 5% 5% 40% 41% 5% 49%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (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. See accompanying notes 52 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR INVESTMENT TRUST TAX-FREE OREGON INSURED FUND - CLASS B ----------------------------------------------------------------------------------- PERIOD YEAR EIGHT MONTHS YEAR YEAR YEAR TWO MONTHS 3/12/94(3) ENDED ENDED ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 10/31/94 Net asset value, beginning of period......... $10.430 $10.310 $ 9.870 $10.050 $ 8.920 $9.000 $9.850 Income (loss) from investment operations: Net investment income ...................... 0.381 0.268 0.422 0.430 0.440 0.080 0.270 Net realized and unrealized gain (loss) on investments............................. (0.620) 0.120 0.434 (0.180) 1.140 (0.090) (0.850) ------- ------- ------ ------- ------ ------ ------ Total from investment operations ........... (0.239) 0.388 0.856 0.250 1.580 (0.010) (0.580) ------- ------- ------ ------- ------ ------ ------ Less dividends: Dividends from net investment income........ (0.381) (0.268) (0.416) (0.430) (0.450) (0.070) (0.270) ------- ------- ------ ------- ------ ------ ------ Total dividends............................. (0.381) (0.268) (0.416) (0.430) (0.450) (0.070) (0.270) ------- ------- ------ ------- ------ ------ ------ Net asset value, end of period............... $ 9.810 $10.430 $10.310 $ 9.870 $10.050 $8.920 $9.000 ======= ======= ======= ======= ======= ====== ====== Total return(4).............................. (2.41%) 3.82% 8.90% 2.61% 18.10% 0.03% (5.95%) Ratios and supplemental data: Net assets, end of period (000 omitted)..... $7,999 $6,011 $6,461 $4,758 $2,786 $1,303 $1,146 Ratio of expenses to average net assets..... 1.55% 1.46% 1.39% 1.25% 1.04% 0.60%(5) 5 0.75%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly ........................... 1.77% 1.78% 1.62% 1.83% 1.86% 2.00%(5) 2.00%(5) Ratio of net investment income to average net assets................................. 3.69% 3.89% 4.15% 4.37% 4.57% 5.19%(5) 4.43%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly .................. 3.47% 3.57% 3.92% 3.79% 3.75% 3.79%(5) 3.18%(5) Portfolio turnover.......................... 10% 5% 5% 40% 41% 5% 49%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes for tax-exempt income 53 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR INVESTMENT TRUST TAX-FREE OREGON INSURED FUND - CLASS C --------------------------------------------------------------- PERIOD YEAR EIGHT MONTHS YEAR YEAR 7/7/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period ........................... $10.440 $10.320 $ 9.880 $10.050 $ 9.630 Income (loss) from investment operations: Net investment income ......................................... 0.380 0.268 0.411 0.400 0.190 Net realized and unrealized gain (loss) on investments ........ (0.620) 0.120 0.431 (0.170) 0.410 ------- ------- ------- ------- ------- Total from investment operations .............................. (0.240) 0.388 0.842 0.230 0.600 ------- ------- ------- ------- ------- Less dividends: Dividends from net investment income .......................... (0.380) (0.268) (0.402) (0.400) (0.180) ------- ------- ------- ------- ------- Total dividends ............................................... (0.380) (0.268) (0.402) (0.400) (0.180) ------- ------- ------- ------- ------- Net asset value, end of period ................................. $ 9.820 $10.440 $10.320 $ 9.880 $10.050 ======= ======= ======= ======= ======= Total return(4)................................................. (2.41%) 3.81% 8.75% 2.38% 6.35% Ratios and supplemental data: Net assets, end of period (000 omitted)........................ $1,603 $999 $532 $360 $250 Ratio of expenses to average net assets........................ 1.55% 1.46% 1.51% 1.55% 1.39%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly....................... 1.77% 1.78% 1.74% 1.82% 1.74%(5) Ratio of net investment income to average net assets........... 3.69% 3.89% 4.03% 4.03% 4.00%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ........... 3.47% 3.57% 3.80% 3.76% 3.65%(5) Portfolio turnover............................................. 10% 5% 5% 40% 41%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes 54 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE WISCONSIN FUND - CLASS A ----------------------------------------------------------------------- YEAR EIGHT MONTHS YEAR YEAR YEAR FOUR MONTHS ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 12/31/94 Net asset value, beginning of period.................... $10.080 $10.010 $ 9.640 $9.780 $8.740 $9.280 Income (loss) from investment operations: Net investment income ................................. 0.452 0.304 0.466 0.460 0.480 0.160 Net realized and unrealized gain (loss) on investments. (0.530) 0.070 0.383 (0.140) 1.040 (0.550) ------- ------- ------- ------ ------ ------ Total from investment operations ...................... (0.078) 0.374 0.849 0.320 1.520 (0.390) ------- ------- ------- ------ ------ ------ Less dividends: Dividends from net investment income................... (0.452) (0.304) (0.479) (0.460) (0.480) (0.150) ------- ------- ------- ------ ------ ------ Total dividends........................................ (0.452) (0.304) (0.479) (0.460) (0.480) (0.150) ------- ------- ------- ------ ------ ------ Net asset value, end of period.......................... $ 9.550 $10.080 $10.010 $9.640 $9.780 $8.740 ======= ======= ======= ====== ====== ====== Total return(3)......................................... (0.87%) 3.80% 9.07% 3.49% 17.74% (4.12%) Ratios and supplemental data: Net assets, end of period (000 omitted)................ $33,410 $34,489 $30,879 $28,292 $26,449 $20,167 Ratio of expenses to average net assets................ 1.00% 1.00% 0.99% 0.98% 0.88% 0.08%(4) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly...... 1.03% 1.04% 1.07% 1.09% 1.09% 1.25%(4) Ratio of net investment income to average net assets... 4.54% 4.56% 4.76% 4.90% 5.05% 5.54%(4) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly............................................ 4.51% 4.52% 4.68% 4.79% 4.84% 4.37%(4) Portfolio turnover..................................... 6% 16% 30% 38% 12% 20%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (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. See accompanying notes for tax-exempt income 55 FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE WISCONSIN FUND - CLASS B ---------------------------------------------------------- PERIOD YEAR EIGHT MONTHS YEAR YEAR 4/22/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period ............................... $10.070 $10.000 $ 9.630 $9.770 $9.390 Income (loss) from investment operations: Net investment income ............................................. 0.378 0.255 0.395 0.410 0.280 Net realized and unrealized gain (loss) on investments............. (0.530) 0.070 0.382 (0.140) 0.370 ------- ------- ------- ------ ------ Total from investment operations .................................. (0.152) 0.325 0.777 0.270 0.650 ------- ------- ------- ------ ------ Less dividends: Dividends from net investment income............................... (0.378) (0.255) (0.407) (0.410) (0.270) ------- ------- ------- ------ ------ Total dividends ................................................... (0.378) (0.255) (0.407) (0.410) (0.270) ------- ------- ------- ------ ------ Net asset value, end of period...................................... $ 9.540 $10.070 $10.000 $9.630 $9.770 ======= ======= ======= ====== ====== Total return(4)..................................................... (1.60%) 3.29% 8.27% 2.84% 7.08% Ratios and supplemental data: Net assets, end of period (000 omitted)............................ $3,206 $2,621 $1,931 $1,339 $725 Ratio of expenses to average net assets ........................... 1.75% 1.75% 1.72% 1.66% 1.45%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly .......................... 1.78% 1.79% 1.80% 1.85% 1.70%(5) Ratio of net investment income to average net assets............... 3.79% 3.81% 4.03% 4.37% 4.31%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly ......... 3.76% 3.77% 3.95% 4.18% 4.06%(5) Portfolio turnover................................................. 6% 16% 30% 38% 12%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes 56 for tax-exempt income FINANCIAL HIGHLIGHTS (CONTINUED) - -------------------------------------------------------------------------------- Selected data for each share of the Fund outstanding throughout each period were as follows:
VOYAGEUR MUTUAL FUNDS, INC. TAX-FREE WISCONSIN FUND - CLASS C ----------------------------------------------------------- PERIOD YEAR EIGHT MONTHS YEAR YEAR 3/28/95(3) ENDED ENDED ENDED ENDED TO 8/31/99 8/31/98(1) 12/31/97(2) 12/31/96 12/31/95 Net asset value, beginning of period................................ $10.110 $10.030 $ 9.660 $9.790 $9.340 Income (loss) from investment operations: Net investment income ............................................. 0.377 0.259 0.380 0.390 0.300 Net realized and unrealized gain (loss) on investments ............ (0.540) 0.075 0.390 (0.130) 0.440 ------- ------- ------- ------ ------ Total from investment operations................................... (0.163) 0.334 0.770 0.260 0.740 ------- ------- ------- ------ ------ Less dividends: Dividends from net investment income............................... (0.377) (0.254) (0.400) (0.390) (0.290) ------- ------- ------- ------ ------ Total dividends ................................................... (0.377) (0.254) (0.400) (0.390) (0.290) ------- ------- ------- ------ ------ Net asset value, end of period ..................................... $ 9.570 $10.110 $10.030 $9.660 $9.790 ======= ======= ======= ====== ====== Total return(4)..................................................... (1.70%) 3.38% 8.16% 2.74% 8.06% Ratios and supplemental data: Net assets, end of period (000 omitted)............................ $1,509 $1,283 $689 $555 $73 Ratio of expenses to average net assets ........................... 1.75% 1.75% 1.81% 1.75% 1.77%(5) Ratio of expenses to average net assets prior to expense limitation and expenses paid indirectly .......................... 1.78% 1.79% 1.89% 1.83% 1.77%(5) Ratio of net investment income to average net assets............... 3.79% 3.81% 3.94% 4.12% 4.04%(5) Ratio of net investment income to average net assets prior to expense limitation and expenses paid indirectly.......... 3.76% 3.77% 3.86% 4.04% 4.04%(5) Portfolio turnover................................................. 6% 16% 30% 38% 12%
- ---------------------- (1) Ratios have been annualized and total return has not been annualized. (2) Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund Managers, Inc. as the Fund's investment manager. (3) Commencement of operations. (4) 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. (5) Annualized. See accompanying notes for tax-exempt income 57 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999 - -------------------------------------------------------------------------------- Delaware Tax-Free Kansas Fund ("Tax-Free Kansas Fund"), Delaware Tax-Free Missouri Insured Fund ("Tax-Free Missouri Insured Fund"), and Delaware Tax-Free Oregon Insured Fund ("Tax-Free Oregon Insured Fund"), series within the Voyageur Investment Trust, Delaware Tax-Free Idaho Fund ("Tax-Free Idaho Fund"), Delaware Tax-Free Iowa Fund ("Tax-Free Iowa Fund"), and Delaware Tax-Free Wisconsin Fund ("Tax-Free Wisconsin Fund"), series within the Voyageur Mutual Funds, Inc., and Delaware 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 Missouri Insured Fund and Tax-Free Oregon 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. Significant Accounting Policies The following accounting policies are in accordance with generally accepted accounting principles and are consistently followed by the Funds. Security Valuation - Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Money market instruments having less than 60 days to maturity are valued at amortized cost which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Funds' Board of Directors. Federal Income Taxes - Each Fund intends to continue to qualify as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for federal income taxes has been made in the financial statements. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. Class Accounting - Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Funds on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Other - Expenses common to all funds within the Delaware Investments Family of Funds are allocated amongst the funds on the basis of average net assets. Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Original issue discounts and market 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 expenses of the Funds are paid through "soft dollar" arrangements with brokers. These transactions are done subject to best price and execution. The expenses paid under the above arrangement are included in their respective expense captions on the Statement of Operations with the corresponding expenses offset shown as "expenses paid indirectly". The amount of these expenses for the year ended August 31, 1999 are as follows: "SOFT DOLLAR" EXPENSES ------------- Tax-Free Idaho Fund .............................. $1,246 Tax-Free Iowa Fund ............................... 1.041 Tax-Free Kansas Fund ............................. 394 Tax-Free Missouri Insured Fund ................... 1,287 Tax-Free North Dakota Fund ....................... 703 Tax-Free Oregon Insured Fund ..................... 833 Tax-Free Wisconsin Fund .......................... 916 2. Investment Management and Other Transactions with Affiliates Commencing January 1, 1999, and in accordance with the terms of the Investment Management Agreement, the Tax-Free Missouri Insured Fund and the Tax-Free Oregon Insured Fund pay Delaware Management Company ("DMC"), the Investment Manager of the Funds, an annual fee which is calculated at the rate of 0.50% on the first $500 million of average daily net assets of the funds, 0.475% on the next $500 million, 0.45% on the next $1,500 million and 0.425% on the average daily net assets in excess of $2,500 million. Commencing April 15, 1999, with the exception of the Tax-Free Kansas Fund which commenced January 1, 1999, the Tax-Free Idaho Fund, Tax-Free Iowa Fund, Tax-Free Kansas Fund, Tax-Free North Dakota Fund, and Tax-Free Wisconsin Fund pay DMC an annual fee which is calculated at the rate of 0.55% on the first $500 million of average daily net assets of the funds, 0.500% on the next $500 million , 0.45% on the next $1,500 million and 0.425% on the average daily net assets in excess of $2,500 million. Prior to January 1, 1999 and April 15, 1999, respectively, all of the Funds paid DMC an annual fee which was calculated at the rate of 0.50% of the average daily net assets. 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, exceed the following percentages of average daily net assets through December 31, 1999: 58 for tax-exempt income NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 2. Investment Management and Other Transactions with Affiliates (Continued) OPERATING EXPENSE LIMITATION AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS (PER ANNUM) ----------------- Tax-Free Idaho Fund ................................... 0.75% Tax-Free Iowa Fund .................................... 0.75% Tax-Free Kansas Fund .................................. 0.75% Tax-Free Missouri Insured Fund ........................ N/A* Tax-Free North Dakota Fund ............................ N/A** Tax-Free Oregon Insured Fund .......................... 0.60%*** Tax-Free Wisconsin Fund ............................... 0.75% - ---------------------- * For the period September 1, 1998 through December 31, 1998, and the period January 1, 1999 through June 30, 1999 the expense limitation for Tax-Free Missouri Insured Fund was 0.66% and 0.75% respectively. ** Prior to July 1, 1999, the expense limitation for Tax-Free North Dakota Fund was 0.75%. *** Prior to January 1, 1999, the expense limitation for Tax-Free Oregon Insured Fund was 0.46%. The Funds have engaged Delaware Service Company, Inc. ("DSC"), an affiliate of DMC, to provide dividend disbursing, transfer agent and accounting and administrative services. Each Fund pays DSC a monthly fee based on number of shareholder accounts, shareholder transactions and average net assets, subject to certain minimums. On August 31, 1999, the Funds had payables to affiliates as follows: DIVIDEND DISBURSING, TRANSFER AGENT FEES, INVESTMENT ACCOUNTING SERVICES MANAGEMENT AND OTHER OTHER EXPENSES FEES PAYABLE EXPENSES PAYABLE TO DMC TO DMC PAYABLE TO DSC AND AFFILIATES ----------------------------------------------- Tax-Free Idaho Fund ............ -- $6,372 $23,657 Tax-Free Iowa Fund ............. $22,838 6,288 15,434 Tax-Free Kansas Fund ........... -- 2,479 5,751 Tax-Free Missouri Insured Fund . 16,483 6,876 18,003 Tax-Free North Dakota Fund ..... 17,043 3,986 11,966 Tax-Free Oregon Insured Fund ... 8,719 4,554 14,783 Tax-Free Wisconsin Fund ........ 15,418 4,659 13,485 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 year ended August 31, 1999, commissions earned by DDLP on sales of the Funds' A Class shares were as follows: Tax-Free Idaho Fund .................................... $33,170 Tax-Free Iowa Fund ..................................... 11,921 Tax-Free Kansas Fund ................................... 8,529 Tax-Free Missouri Insured Fund ......................... 3,518 Tax-Free North Dakota Fund ............................. 2,978 Tax-Free Oregon Insured Fund ........................... 24,691 Tax-Free Wisconsin Fund ................................ 15,344 Certain officers of DMC, DSC and DDLP are officers, directors and/or employees of the Funds. These officers, directors and employees are paid no compensation by the Funds. 3. Investments During the year ended August 31, 1999, the Funds made purchases and sales of investment securities other than U.S. government securities and temporary cash investments as follows: Purchases Sales ------------------------ Tax-Free Idaho Fund .............................. $9,787,624 $827,055 Tax-Free Iowa Fund ............................... 3,165,714 949,386 Tax-Free Kansas Fund ............................. 4,274,033 5,178,644 Tax-Free Missouri Insured Fund ................... 3,691,867 6,852,049 Tax-Free North Dakota Fund ....................... 8,492,337 10,448,764 Tax-Free Oregon Insured Fund ..................... 10,191,273 3,585,888 Tax-Free Wisconsin Fund .......................... 5,095,430 2,343,073 for tax-exempt income 59 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 3. Investments (Continued) At August 31, 1999, the aggregate cost of securities and unrealized appreciation (depreciation) for federal income tax purposes for each Fund were as follows:
AGGREGATE AGGREGATE AGGREGATE NET UNREALIZED COST OF UNREALIZED UNREALIZED APPRECIATION INVESTMENTS APPRECIATION DEPRECIATION (DEPRECIATION) ----------------------------------------------------- Tax-Free Idaho Fund ............................ $57,339,521 $1,095,779 ($1,272,109) ($176,330) Tax-Free Iowa Fund ............................. 42,734,514 1,597,657 (579,077) 1,018,580 Tax-Free Kansas Fund ........................... 15,471,683 582,838 (218,131) 364,707 Tax-Free Missouri Insured Fund ................. 50,484,553 2,179,229 (349,282) 1,829,947 Tax-Free North Dakota Fund ..................... 27,007,679 902,711 (325,395) 577,316 Tax-Free Oregon Insured Fund ................... 36,201,298 1,219,914 (976,692) 243,222 Tax-Free Wisconsin Fund ........................ 38,531,219 1,035,356 (883,119) 152,237
For federal income tax purposes, each Fund had accumulated capital losses at August 31, 1999 as follows:
YEAR OF YEAR OF YEAR OF YEAR OF YEAR OF YEAR OF YEAR OF EXPIRATION EXPIRATION EXPIRATION EXPIRATION EXPIRATION EXPIRATION EXPIRATION 2001 2002 2003 2004 2005 2006 2007 TOTAL ----------------------------------------------------------------------------------------------- Tax-Free Idaho Fund .............. -- -- -- -- -- $44,632 -- $44,632 Tax-Free Iowa Fund ............... $950,762 $18,853 $368,235 $168,308 $117,934 -- -- 1,624,092 Tax-Free Missouri Insured Fund ... -- -- 209,612 525,264 -- -- -- 734,876 Tax-Free Oregon Insured Fund ..... -- 215,801 158,365 218,468 -- -- -- 592,634 Tax-Free Wisconsin Fund .......... -- 128,938 64,926 229,647 -- -- 53,540 477,051
4. Capital Stock Transactions in capital stock shares were as follows:
TAX-FREE IDAHO FUND TAX-FREE IOWA FUND ----------------------------------------------------------------------- YEAR EIGHT MONTHS YEAR YEAR EIGHT MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97 Shares sold: A class ........................................... 859,702 771,907 731,650 341,908 243,079 355,433 B class ........................................... 366,423 89,150 183,407 134,546 108,244 135,405 C class ........................................... 198,983 61,814 64,124 54,506 48,973 25,201 Shares issued upon reinvestment of distributions from net Investment income and net realized gain on investments: A class ........................................... 114,940 67,203 87,352 106,955 70,558 124,468 B class ........................................... 19,655 10,490 14,064 10,686 5,695 6,562 C class ........................................... 6,278 2,676 3,083 3,179 1,415 1,110 --------- --------- --------- ------- ------- ------- 1,565,981 1,003,240 1,083,680 651,780 477,964 648,179 --------- --------- --------- ------- ------- ------- Shares repurchased: A class ........................................... (370,113) (343,954) (406,050) (423,067) (251,562) (833,421) B class ........................................... (99,593) (49,387) (54,443) (55,825) (18,336) (23,960) C class ........................................... (41,822) (14,047) (44,185) (44,536) (16,486) (9,438) --------- --------- --------- ------- ------- ------- (511,528) (407,388) (504,678) (523,428) (286,384) (866,819) --------- --------- --------- -------- -------- -------- Net increase (decrease) .............................. 1,054,453 595,852 579,002 128,352 191,580 (218,640) ========= ======= ======= ======= ======= ========
60 for tax-exempt income NOTES TO FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- 4. Capital Stock (Continued) Transactions in capital stock shares were as follows:
TAX-FREE KANSAS FUND TAX-FREE MISSOURI INSURED FUND ---------------------------------------------------------------------- YEAR EIGHT MONTHS YEAR YEAR EIGHT MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97 Shares sold: A class ...................................... 213,539 244,419 114,412 149,789 127,338 265,509 B class ...................................... 172,332 37,997 89,151 47,604 36,960 200,996 C class ...................................... 32,553 3,682 6,942 15,875 2,752 9,719 Shares issued upon reinvestment of distributions from net investment income and net realized gain on investments: A class ...................................... 28,696 16,919 27,906 98,821 70,272 129,146 B class ...................................... 11,924 5,986 7,813 23,890 16,990 33,377 C class ...................................... 564 252 404 404 264 521 ------- ------- ------- ------- ------- ------- 459,608 309,255 246,628 336,383 254,576 639,268 ------- ------- ------- ------- ------- ------- Shares repurchased: A class ...................................... (285,048) (101,432) (142,361) (471,038) (373,253) (656,405) B class ...................................... (53,746) (25,196) (12,598) (89,897) (77,609) (175,978) C class ...................................... (1,377) (2,379) (6,119) (4,175) (13,547) (4,070) ------- ------- ------- ------- ------- ------- (340,171) (129,007) (161,078) (565,110) (464,409) (836,453) ------- ------- ------- ------- ------- ------- Net increase (decrease) ......................... 119,437 180,248 85,550 (228,727) (209,833) (197,185) ======= ======= ====== ======== ======== ========
TAX-FREE NORTH DAKOTA FUND TAX-FREE OREGON INSURED FUND --------------------------------------------------------------------- YEAR EIGHT MONTHS YEAR YEAR EIGHT MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED 8/31/99 8/31/98 12/31/97 8/31/99 8/31/98 12/31/97 Shares sold: A class ...................................... 127,381 85,182 68,674 697,470 389,222 372,928 B class ...................................... 18,412 7,136 17,635 268,258 54,361 162,406 C class ...................................... 26,760 -- -- 69,203 49,358 16,538 Shares issued upon reinvestment of distributions from net investment income and net realized gain on investments: A class ...................................... 80,736 52,793 95,230 71,190 41,911 61,920 B class ...................................... 2,356 1,149 2,047 13,777 9,754 15,305 C class ...................................... 521 99 156 3,828 1,286 1,157 ------- ------- ------- --------- -------- ------- 256,166 146,359 183,742 1,123,726 545,892 630,254 ------- ------- ------- --------- -------- ------- Shares repurchased: A class ...................................... (375,693) (205,612) (529,157) (295,662) (238,227) (412,353) B class ...................................... (9,548) (1,044) (5,593) (42,818) (114,262) (33,265) C class ...................................... (131) (1,113) (274) (5,433) (6,562) (2,526) ------- ------- -------- --------- -------- ------- (385,372 (207,769) (535,024) (343,913) (359,051) (448,144) ------- ------- ------- --------- ------- ------- Net increase (decrease) ......................... (129,206) (61,410) (351,282) 779,813 186,841 182,110 ======== ======= ======== ======= ======= =======
for tax-exempt income 61 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4. Capital Stock (Continued) Transactions in capital stock shares were as follows: TAX-FREE WISCONSIN FUND -------------------------------- YEAR EIGHT MONTH YEAR ENDED ENDED ENDED 8/31/99 8/31/98 12/31/97 Shares sold: A class ............................. 488,062 567,546 729,711 B class ............................. 114,881 95,654 51,892 C class ............................. 55,257 65,500 35,931 Shares issued upon reinvestment of distributions from net investment income and net realized gain on investments: A class ............................. 90,957 51,547 78,038 B class ............................. 6,775 3,392 4,328 C class ............................. 4,896 2,544 2,504 -------- -------- -------- 760,828 786,183 902,404 -------- -------- -------- Shares repurchased: A class ............................. (500,517) (283,460) (657,954) B class ............................. (45,854) (31,926) (2,138) C class ............................. (29,398) (9,845) (27,203) -------- -------- -------- (575,769) (325,231) (687,295) -------- -------- -------- Net increase (decrease) ............. 185,059 460,952 (215,109) ======== ======== ======== 5. 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 Wisconsin Fund ................................ 1,700,000 No amounts were outstanding at August 31, 1999, or at any time during the fiscal year. 6. Credit And Market Risk The Funds concentrate their investments in securities mainly issued by each specific 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 Statements of Net Assets. 7. Tax Information (Unaudited) The information set forth below is for each Fund's fiscal year as required by federal laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of a fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in early 2000. Please consult your tax advisor for proper treatment of this information. For the fiscal year ended August 31, 1999, each Fund designates as long term capital gains, ordinary income, and tax-exempt income distributions paid during the year as follows: LONG-TERM ORDINARY TOTAL CAPITAL GAINS INCOME TAX-EXEMPT DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS INTEREST (TAX BASIS) ----------------------------------------------------- Fund: Tax-Free Idaho Fund ...... -- -- 100% 100% Tax-Free Iowa Fund ....... -- -- 100% 100% Tax-Free Kansas Fund ..... 6% -- 94% 100% Tax-Free Missouri Insured Fund .......... -- -- 100% 100% Tax-Free North Dakota Fund ........... 7% -- 93% 100% Tax-Free Oregon Insured Fund .......... -- -- 100% 100% Tax-Free Wisconsin Fund .. -- -- 100% 100% 62 for tax-exempt income REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- TO THE SHAREHOLDERS AND BOARD OF DIRECTORS VOYAGEUR MUTUAL FUNDS, INC. - DELAWARE TAX-FREE IDAHO FUND VOYAGEUR MUTUAL FUNDS, INC. - DELAWARE TAX-FREE IOWA FUND VOYAGEUR INVESTMENT TRUST - DELAWARE TAX-FREE KANSAS FUND VOYAGEUR INVESTMENT TRUST - DELAWARE TAX-FREE MISSOURI INSURED FUND VOYAGEUR TAX-FREE FUNDS, INC. - DELAWARE TAX-FREE NORTH DAKOTA FUND VOYAGEUR INVESTMENT TRUST - DELAWARE TAX-FREE OREGON INSURED FUND VOYAGEUR MUTUAL FUNDS, INC. - DELAWARE TAX-FREE WISCONSIN FUND We have audited the accompanying statements of net assets of Delaware Tax-Free Idaho Fund, Delaware Tax-Free Iowa Fund, Delaware Tax-Free Kansas Fund, Delaware Tax-Free Missouri Insured Fund, Delaware Tax-Free North Dakota Fund, Delaware Tax-Free Oregon Insured Fund and Delaware Tax-Free Wisconsin Fund (the "Funds") and the statement of assets and liabilities for the Delaware Tax-Free Kansas Fund as of August 31, 1999, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the periods indicated therein, and the financial highlights for each of the periods presented from January 1, 1997 through August 31, 1999. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods presented through December 31, 1996 were audited by other auditors whose reports thereon dated February 14, 1997 expressed unqualified opinions on those financial highlights. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds at August 31, 1999, the results of their operations for the year then ended, the changes in their net assets for each of the periods presented therein, and their financial highlights for each of the periods presented from January 1, 1997 through August 31, 1999, in conformity with generally accepted accounting principles. /s/ Ernst & Young ---------------------- Philadelphia, Pennsylvania October 1, 1999 for tax-exempt income 63 PROXY RESULTS (UNAUDITED) - -------------------------------------------------------------------------------- For the year ended August 31, 1999, Voyageur Investment Trust shareholders voted on the following proposals at the annual meeting of shareholders on December 4, 1998, the Voyageur Mutual Funds Inc. and Voyageur Tax-Free Funds, Inc., shareholders voted at the annual meeting of shareholders on March 17, 1999, or as adjourned. The description of each proposal and number of shares voted are as follows: 1. To elect the Voyageur Investment Trust Board of Directors. SHARES SHARES VOTED VOTED WITHHELD FOR AUTHORITY ------------------------ Wayne A. Stork ................................ 6,708,496 780,817 Jeffrey J. Nick* .............................. 6,709,705 779,608 Walter P. Babich .............................. 6,709,705 779,608 Anthony D. Knerr .............................. 6,709,849 779,464 Ann R. Leven .................................. 6,723,556 765,757 W. Thacher Longstreth ......................... 6,723,556 765,757 Thomas F. Madison ............................. 6,723,556 765,757 Charles E. Peck ............................... 6,723,556 765,757 To elect the Voyageur Mutual Funds, Inc. Board of Directors. SHARES SHARES VOTED VOTED WITHHELD FOR AUTHORITY ------------------------ Jeffrey J. Nick* .............................. 23,375,980 933,942 Walter P. Babich .............................. 23,375,739 934,183 Anthony D. Knerr .............................. 23,481,657 828,265 Ann R. Leven .................................. 23,479,947 829,975 Thomas F. Madison ............................. 23,485,349 824,573 Charles E. Peck ............................... 23,485,349 824,573 Wayne A. Stork ................................ 23,485,349 824,573 Jan L. Yeomans ................................ 23,485,349 824,573 To elect the Voyageur Tax-Free Funds, Inc. Board of Directors. SHARES SHARES VOTED VOTED WITHHELD FOR AUTHORITY ----------------------- Jeffrey J. Nick* .............................. 24,689,040 1,566,542 Walter P. Babich .............................. 24,673,024 1,582,558 Anthony D. Knerr .............................. 24,682,070 1,573,512 Ann R. Leven .................................. 24,708,871 1,546,711 Thomas F. Madison ............................. 24,678,176 1,577,406 Charles E. Peck ............................... 24,709,389 1,546,193 Wayne A. Stork ................................ 24,709,389 1,546,193 Jan L. Yeomans ................................ 24,709,389 1,546,193 - ---------------------- * Mr. Nick resigned from the Board of Directors (or Trustees for the Company) on June 4, 1999. 2. To approve the redesignation of the investment objective from fundamental to non-fundamental. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,622,837 58,888 298,723 Tax-Free Iowa Fund .................. 2,710,087 198,511 240,773 Tax-Free Kansas Fund ................ 664,756 28,692 70,188 Tax-Free Missouri Insured Fund ...... 2,920,325 193,729 400,358 Tax-Free North Dakota Fund .......... 1,526,728 73,421 237,097 Tax-Free Oregon Insured Fund ........ 1,448,428 47,861 198,354 Tax-Free Wisconsin Fund ............. 2,215,279 75,153 169,149 3. To approve standardized fundamental investment restrictions (proposal involves separate votes on seven sub-proposals 3A-3G) 3A. To adopt a new fundamental investment restriction concerning concentration of the investments in the same industry. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,703,117 22,030 255,301 Tax-Free Iowa Fund .................. 2,710,736 146,572 292,065 Tax-Free Kansas Fund ................ 665,996 28,288 69,352 Tax-Free Missouri Insured Fund ...... 2,961,133 139,658 413,622 Tax-Free North Dakota Fund .......... 1,567,814 66,795 202,638 Tax-Free Oregon Insured Fund ........ 1,458,453 41,015 195,175 Tax-Free Wisconsin Fund ............. 2,254,928 58,915 145,738 3B. To adopt a new fundamental investment restriction concerning borrowing money and issuing senior securities. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,692,872 56,608 230,970 Tax-Free Iowa Fund .................. 2,655,563 231,615 262,194 Tax-Free Kansas Fund ................ 677,438 31,723 54,475 Tax-Free Missouri Insured Fund ...... 2,953,471 150,240 410,702 Tax-Free North Dakota Fund .......... 1,566,435 63,781 207,031 Tax-Free Oregon Insured Fund ........ 1,477,124 28,335 189,184 Tax-Free Wisconsin Fund ............. 2,248,732 55,957 154,892 3C. To adopt a new fundamental investment restriction concerning underwriting. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,633,636 47,883 298,930 Tax-Free Iowa Fund .................. 2,638,663 204,631 306,077 Tax-Free Kansas Fund ................ 680,386 28,288 54,962 Tax-Free Missouri Insured Fund ...... 2,964,848 140,191 409,374 Tax-Free North Dakota Fund .......... 1,544,818 66,061 226,368 Tax-Free Oregon Insured Fund ........ 1,459,777 39,294 195,572 Tax-Free Wisconsin Fund ............. 2,228,872 64,483 166,225 64 for tax-exempt income PROXY RESULTS (CONTINUED) - -------------------------------------------------------------------------------- 3D. To adopt a new fundamental investment restriction concerning investments in real estate. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,653,554 57,857 269,036 Tax-Free Iowa Fund .................. 2,671,027 220,915 257,431 Tax-Free Kansas Fund ................ 687,039 27,703 48,894 Tax-Free Missouri Insured Fund ...... 2,980,740 135,413 398,259 Tax-Free North Dakota Fund .......... 1,522,123 72,064 243,059 Tax-Free Oregon Insured Fund ........ 1,470,570 30,203 193,870 Tax-Free Wisconsin Fund ............. 2,246,067 62,934 150,580 3E. To adopt a new fundamental investment restriction concerning investments in commodities. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,625,913 63,222 291,312 Tax-Free Iowa Fund .................. 2,626,422 229,576 293,374 Tax-Free Kansas Fund ................ 668,116 46,627 48,894 Tax-Free Missouri Insured Fund ...... 2,886,008 215,282 413,122 Tax-Free North Dakota Fund .......... 1,545,853 92,310 199,085 Tax-Free Oregon Insured Fund ........ 1,456,865 50,344 187,434 Tax-Free Wisconsin Fund ............. 2,218,125 89,120 152,336 3F. To adopt a new fundamental investment restriction concerning lending by the Fund. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,619,906 70,818 289,724 Tax-Free Iowa Fund .................. 2,661,827 216,495 271,050 Tax-Free Kansas Fund ................ 679,231 35,948 48,457 Tax-Free Missouri Insured Fund ...... 2,933,022 179,118 402,272 Tax-Free North Dakota Fund .......... 1,559,120 71,528 206,598 Tax-Free Oregon Insured Fund ........ 1,457,792 49,048 187,803 Tax-Free Wisconsin Fund ............. 2,214,685 99,305 145,592 3G. To reclassify all current fundamental investment restrictions as non-fundamental. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,633,302 51,690 295,457 Tax-Free Iowa Fund .................. 2,552,811 248,146 348,416 Tax-Free Kansas Fund ................ 663,684 30,309 69,643 Tax-Free Missouri Insured Fund ...... 2,888,983 187,232 438,196 Tax-Free North Dakota Fund .......... 1,522,045 59,327 255,875 Tax-Free Oregon Insured Fund ........ 1,452,676 40,998 200,969 Tax-Free Wisconsin Fund ............. 2,210,012 83,781 165,787 4. To approve a new investment management agreement with Delaware Management Company for the Funds. FOR AGAINST ABSTAIN ---------------------------------- Tax-Free Idaho Fund ................. 2,703,801 30,075 246,573 Tax-Free Iowa Fund .................. 2,692,600 169,825 286,946 Tax-Free Kansas Fund ................ 673,984 31,620 58,032 Tax-Free Missouri Insured Fund ...... 3,007,138 118,442 388,832 Tax-Free North Dakota Fund .......... 1,521,690 93,616 221,940 Tax-Free Oregon Insured Fund ........ 1,490,882 26,880 176,881 Tax-Free Wisconsin Fund ............. 2,239,655 57,102 162,824 5. To ratify the selection of Ernst & Young LLP, as the independent auditors for Voyageur Investment Trust. FOR AGAINST ABSTAIN ---------------------------------- 6,100,208 40,763 538,338 To ratify the selection of Ernst & Young LLP, as the independent auditors for Voyageur Mutual Funds, Inc. FOR AGAINST ABSTAIN ---------------------------------- 23,192,942 243,342 873,624 To ratify the selection of Ernst & Young LLP, as the independent auditors for Voyageur Tax-Free Funds, Inc. FOR AGAINST ABSTAIN ---------------------------------- 24,357,056 333,988 1,564,528 6. To approve the restructuring of Voyageur Investment Trust from a Massachusetts Business Trust into a Maryland Corporation. FOR AGAINST ABSTAIN ---------------------------------- 5,232,140 136,091 604,462 To approve the restructuring of Voyageur Mutual Funds, Inc. from a Minnesota Corporation into a Delaware Business Trust and the dissolution of the Minnesota Corporation. FOR AGAINST ABSTAIN ---------------------------------- 18,642,505 933,974 1,312,086 To approve the restructuring of Voyageur Tax-Free Funds, Inc. from a Minnesota Corporation into a Delaware Business Trust and the dissolution of the Minnesota Corporation. FOR AGAINST ABSTAIN ---------------------------------- 18,966,804 3,045,110 2,212,199 THIS 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, 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 set forth details about charges, expenses, investment objectives and operating policies of each Fund. You should read the prospectus carefully before you invest. The figures in this report represent past results which are not a guarantee of future results. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Board of Directors WAYNE A. STORK Chairman Delaware Investments Family of Funds Philadelphia, PA WALTER P. BABICH Board Chairman, Citadel Constructors, Inc. King of Prussia, PA DAVID K. DOWNES President and Chief Executive Officer Delaware Investments Family of Funds Philadelphia, PA JOHN H. DURHAM Partner, Complete Care Services Horsham, PA ANTHONY D. KNERR Consultant, Anthony Knerr & Associates New York, NY ANN R. LEVEN Treasurer, National Gallery of Art Washington, DC THOMAS F. MADISON President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN CHARLES E. PECK Secretary/Treasurer, Enterprise Homes, Inc. Fredericksburg, VA JAN L. YEOMANS Vice President and Treasurer 3M Corporation St. Paul, Minnesota Affiliated Officers RICHARD J. FLANNERY Executive Vice President and General Counsel Delaware Investments Family of Funds Philadelphia, PA BRUCE D. BARTON President and Chief Executive Officer Delaware Distributors, L.P. Philadelphia, PA ERIC E. MILLER Senior Vice President, Secretary and Deputy General Counsel Delaware Investments Family of Funds Philadelphia, PA (photo of globes) directors & officers 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 When used with prospective investors, this report must be preceded or accompanied by a current prospectus for the Funds and the Delaware Investments Performance Update for the most recently completed calendar quarter. For a prospectus of any other mutual fund from Delaware Investments, contact your financial adviser or Delaware Investments. (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 www.delawareinvestments.com Be sure to consult your financial adviser when making investments. Mutual funds can be a valuable part of your financial plan; however, shares of the Funds are not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union, and involve investment risk, including the possible loss of the principal amount invested. Shares of the Funds are not bank or credit union deposits. (C) Delaware Distributors, L.P. DELAWARE(SM) INVESTMENTS - ---------------------- Philadelphia [] London Printed in the USA on recycled paper (J5159) (2173) AR-CORN[8/99]PPL10/99 -----END PRIVACY-ENHANCED MESSAGE-----