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Delaware Group Tax Free Fund, et al. · 485BPOS · On 1/3/07

Filed On 1/3/07 12:27pm ET   ·   SEC Files 2-86606, 811-03850   ·   Accession Number 1137439-7-3

  in   Show  and 
  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 1/03/07  Delaware Group Tax Free Fund      485BPOS     1/03/07    7:70                                     Pietrzykowski Kris..R/FA
          Delaware Group Tax Free Fund

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Post-Effective Amendment                            HTML    596K 
 2: EX-99.E     Miscellaneous Exhibit                               HTML     23K 
 3: EX-99.H     Miscellaneous Exhibit                               HTML      8K 
 4: EX-99.H     Miscellaneous Exhibit                               HTML      7K 
 5: EX-99.H     Miscellaneous Exhibit                               HTML      6K 
 6: EX-99.J     Miscellaneous Exhibit                               HTML      5K 
 7: EX-99.Q     Miscellaneous Exhibit                               HTML     35K 


485BPOS   ·   Post-Effective Amendment
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"Table of Contents
"Concentration
"The risks of investing in the Funds
"Distributor
"Calculation of Contingent Deferred Sales Charges - Class B and Class C
"Dealer Compensation
"How to reduce your sales charge
"Dividends, distributions and taxes
"Alternative Minimum Tax
"Bond
"Fixed-income securities
"Nasd
"Nationally recognized statistical rating organization (NRSRO)
"Advance Refunded Bonds
"Forward Commitments
"Municipal Obligations
"Reverse Repurchase Agreements
"Rule 144A Securities
"Transfer Agent
"Class A Shares
"Dealer's Commission
"MoneyLine(SM) On Demand
"Contingent Deferred Sales Charge for Certain Redemptions of Class A Shares Purchased at Net Asset Value
"Distributions
"Taxes
"Item 23. Exhibits. The following exhibits are incorporated by reference to the Registrant's previously filed documents indicated below, except as noted:
"Item 24. Persons Controlled by or Under Common Control with Registrant. None
"Item 26. Business and Other Connections of Investment Adviser
"Item 27. Principal Underwriters
"Item 29. Management Services. None
"Item 30. Undertakings. Not applicable

This is an EDGAR HTML document rendered as filed.  [ Alternative Formats ]


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM N-1A

                                                              File No. 002-86606
                                                              File No. 811-03850

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                      /X/

         Pre-Effective Amendment No.                                         / /
                                                  ---------
         Post-Effective Amendment No.                34                      /X/
                                                  ---------

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940              /X/

         Amendment No.                               34
                                                  ---------

                          DELAWARE GROUP TAX-FREE FUND
--------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

            2005 Market Street, Philadelphia, Pennsylvania 19103-7094
--------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code:               (800) 523-1918

     David F. Connor, Esq., 2005 Market Street, Philadelphia, PA 19103-7094
--------------------------------------------------------------------------------
                     (Name and Address of Agent for Service)

Approximate Date of Public Offering:                             January 3, 2007

It is proposed that this filing will become effective:

    /X /     immediately upon filing pursuant to paragraph (b)
-----------
    /  /     on (date) pursuant to paragraph (b)
-----------
    / /     60 days after filing pursuant to paragraph (a) (1)
-----------
    / /     on (date) pursuant to paragraph (a)(1)
-----------
    / /     75 days after filing pursuant to paragraph (a) (2)
-----------
    / /     on (date) pursuant to paragraph (a)(2) of Rule 485.
-----------

If appropriate:

   / /         This post-effective amendment designates a new effective date for
               a previously filed post-effective amendment.

                             --- C O N T E N T S ---

This Post-Effective Amendment No. 34 to Registration File No. 002-86606 includes
the following:

          1.     Facing Page

          2.     Contents Page

          3.     Part A - Prospectus (1)

          4.     Part B - Statement of Additional Information (1)

          5.     Part C - Other Information (1)

          6.     Signatures

          7.     Exhibits

     (1)  This Registration  Statement contains one Prospectus and one Statement
          of Additional  Information for two  registrants  (each of which offers
          its shares in one or more series). A separate Registration  Statement,
          which  incorporates  by  reference  the common  Prospectus  and common
          Statement of  Additional  Information  and includes its own Part C, is
          being filed for the other registrant.

          The  Prospectus and Statement of Additional  Information  contained in
          this Post-Effective Amendment relate to the Class A, B and C shares of
          the Registrant's two series,  Delaware  Tax-Free USA Fund and Delaware
          Tax-Free USA  Intermediate  Fund,  and also to the  Delaware  National
          High-Yield  Municipal Bond Fund series of Voyageur  Mutual Funds.  The
          Part C contained in this Post-Effective  Amendment relates only to the
          Registrant's  two  series.  A separate  Registration  Statement  which
          incorporates  by reference the  Prospectus and Statement of Additional
          Information  as  it  relates  to  the  Delaware  National   High-Yield
          Municipal  Bond Fund and  includes  its own Part C is being  filed for
          Voyageur Mutual Funds.

                                                                       Delaware
                                                                  Investments(R)
                                             A member of Lincoln Financial Group

FIXED INCOME

Prospectus
DECEMBER 29, 2006

DELAWARE TAX-FREE USA FUND
CLASS A o CLASS B o CLASS C

DELAWARE TAX-FREE USA INTERMEDIATE FUND
CLASS A o CLASS B o CLASS C

DELAWARE NATIONAL HIGH-YIELD MUNICIPAL BOND FUND
CLASS A o CLASS B o CLASS C

The  Securities and Exchange  Commission  has not approved or disapproved  these
securities   or  passed  upon  the   accuracy  of  this   prospectus,   and  any
representation to the contrary is a criminal offense.

TABLE OF CONTENTS

Fund profile                                                              page 2
Delaware Tax-Free USA Fund                                                     2
Delaware Tax-Free USA Intermediate Fund                                        4
Delaware National High-Yield Municipal Bond Fund                               6

How we manage the Funds                                                  page 10
Our investment strategies                                                     10
The securities we typically invest in                                         11
The risks of investing in the Funds                                           17
Disclosure of portfolio holdings                                              19

Who manages the Funds                                                    page 20
Investment manager                                                            20
Investment management fees                                                    20
Portfolio managers                                                            20
Manager of managers structure                                                 20
Who's who?                                                                    21

About your account                                                       page 22
Investing in the Funds                                                        22
      Choosing a share class                                                  22
      Dealer compensation                                                     25
Payments to intermediaries                                                    25
How to reduce your sales charge                                               26
How to buy shares                                                             29
Fair valuation                                                                30
Document delivery                                                             30
How to redeem shares                                                          31
Account minimums                                                              32
Special services                                                              32
Frequent trading of Fund shares                                               34
Dividends, distributions and taxes                                            36

Financial highlights                                                     page 38

Glossary                                                                 page 44

Additional information                                                   page 47

                                       1

Profile: Delaware Tax-Free USA Fund

What is the Fund's  goal?
Delaware  Tax-Free  USA Fund  seeks as high a level of current  interest  income
exempt from federal income tax as is available from municipal obligations and as
is consistent with prudent  investment  management and  preservation of capital.
Although the Fund will strive to meet its goal,  there is no  assurance  that it
will.

What are the Fund's main investment strategies?
Under normal circumstances,  the Fund will invest at least 80% of its net assets
in  securities  the  income  from which is exempt  from  federal  income  taxes,
including the federal alternative minimum tax. This is a fundamental  investment
policy that may not be changed without prior shareholder approval.

The Fund will invest  primarily in municipal debt obligations that are issued by
state and local  governments to raise funds for various public  purposes such as
hospitals, schools and general capital expenses. The Fund will invest its assets
in  securities  with  maturities  of  various   lengths,   depending  on  market
conditions,  but will  have a  dollar-weighted  average  effective  maturity  of
between five and 30 years. We will attempt to adjust the average maturity of the
bonds in the portfolio to provide a high level of tax-exempt  income  consistent
with  preservation  of capital.  The Fund's income level will vary  depending on
current  interest rates and the specific  securities in the portfolio.  The Fund
may  concentrate  its  investments  in  certain  types of bonds or in a  certain
segment of the  municipal  bond market when the supply of bonds in other sectors
does not suit our investment needs.

What are the main risks of investing  in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest.  Over time, the value of your investment in
the Fund will  increase  and  decrease  according to changes in the value of the
securities  in the Fund's  portfolio.  This Fund will be affected  primarily  by
changes in interest rates.  For example,  when interest rates rise, the value of
bonds in the portfolio will likely decline. The Fund may also be affected by the
ability of individual  municipalities to pay interest and repay principal on the
bonds they issue.  The Fund is  non-diversified  as defined under the Investment
Company Act of 1940,  as amended  (1940  Act),  which means that it may invest a
greater percentage of its assets in a single issuer than a diversified fund, and
may  be  subject  to  greater  volatility  or  risk  of  loss  than  if it  were
diversified.  The Fund is  permitted  to invest  up to 20% of its net  assets in
securities the income from which is subject to the federal  alternative  minimum
tax. Income from these securities would be taxable for investors subject to that
tax.

For a more complete  discussion  of risk,  please see "The risks of investing in
the Funds" on page 17.

An  investment  in the Fund is not a deposit  of any bank and is not  insured or
guaranteed  by the Federal  Deposit  Insurance  Corporation  (FDIC) or any other
government agency.

You  should  keep  in mind  that an  investment  in the  Fund is not a  complete
investment  program;  it  should  be  considered  just  one  part of your  total
financial  plan.  Be sure to discuss  this Fund with your  financial  advisor to
determine whether it is an appropriate choice for you.

Who should  invest in the Fund
o    Investors seeking monthly income, free from federal income taxes.
o    Investors with long-term financial goals.

Who should not invest in the Fund
o    Investors with very short-term financial goals.
o    Investors  who are  unwilling to accept  share  prices that may  fluctuate,
     especially over the short term.

                                       2

How has Delaware Tax-Free USA Fund performed?

This bar chart and table can help you  evaluate  the risks of  investing  in the
Fund. We show how annual  returns for the Fund's Class A shares have varied over
the past ten calendar  years, as well as the average annual returns of the Class
A, B and C shares for one-year,  five-year and ten-year periods. The Fund's past
performance  (before and after taxes) does not necessarily  indicate how it will
perform in the future.  The returns  reflect  expense caps in effect  during the
periods.  The returns would be lower  without the expense  caps.  Please see the
footnotes on page 9 for additional information about the expense caps.

Year-by-year total return (Class A)

1996   1997    1998    1999    2000    2001    2002    2003    2004    2005
----- ------- ------ ------- ------- ------- ------- -------- ------- ------
0.84%  8.31%   4.85%  -5.18%  10.89%   4.37%   8.72%   6.69%   5.22%   3.80%

As of September 30, 2006, the Fund's Class A shares had a calendar  year-to-date
return of 3.93%.  During the periods  illustrated  in this bar chart,  Class A's
highest  quarterly return was 4.55% for the quarter ended September 30, 2002 and
its lowest quarterly return was -3.30% for the quarter ended June 30, 1999.

The maximum Class A sales charge of 4.50%,  which is normally  deducted when you
purchase shares, is not reflected in the total returns in the previous paragraph
or in the bar chart.  If this fee were included,  the returns would be less than
those shown.  The average annual returns in the table below do include the sales
charge.

Average annual returns for periods ending 12/31/05
-------------------------------------------------------------------------------
Delaware Tax-Free USA Fund                     1 year    5 years     10 years**
-------------------------------------------------------------------------------
Class A return before taxes                    (0.91%)    4.78%        4.28%
-------------------------------------------------------------------------------
Class A return after taxes on distributions    (0.91%)    4.78%        4.21%
-------------------------------------------------------------------------------
Class A return after taxes on distributions
and sale of Fund shares                         0.86%     4.78%        4.31%
-------------------------------------------------------------------------------
Class B return before taxes*                   (0.98%)    4.68%        4.09%
-------------------------------------------------------------------------------
Class C return before taxes*                    2.01%     4.93%        3.94%
-------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index            3.51%     5.59%        5.71%
(reflects no deduction for fees,
 expenses or taxes)

The Fund's  returns  are  compared  to the  performance  of the Lehman  Brothers
Municipal  Bond  Index.  The Index  measures  the total  return  performance  of
long-term,  investment-grade  tax-exempt bonds with maturities  greater than two
years.  You should  remember  that,  unlike the Fund, the Index is unmanaged and
does not reflect  the costs of  operating  a mutual  fund,  such as the costs of
buying,  selling and holding  securities.  Maximum sales charges are included in
the Fund returns shown above.

After-tax  performance  is  presented  only for Class A shares of the Fund.  The
after-tax  returns for other Fund  classes may vary.  Actual  after-tax  returns
depend on the  investor's  individual  tax  situation  and may  differ  from the
returns  shown.   After-tax   returns  are  not  relevant  for  shares  held  in
tax-deferred  investment  vehicles such as  employer-sponsored  401(k) plans and
individual   retirement   accounts  (IRAs).  The  after-tax  returns  shown  are
calculated  using the highest  individual  federal  marginal income tax rates in
effect  during the periods  presented and do not reflect the impact of state and
local   taxes.   The   after-tax   rate  used  is  based  on  the   current  tax
characterization  of the elements of the Fund's  returns  (e.g.,  qualified  vs.
non-qualified dividends). Past performance,  both before and after taxes, is not
a guarantee of future results.

     *    Total returns assume  redemption of shares at end of period.  Ten-year
          returns for Class B shares reflect  conversion to Class A shares after
          8 years.  If shares were not  redeemed,  the returns  before taxes for
          Class B would be 3.00%,  4.93% and 4.09% for the  one-year,  five-year
          and ten-year periods,  respectively,  and the returns before taxes for
          Class C would be 3.00%,  4.93% and 3.94% for the  one-year,  five-year
          and ten-year periods, respectively.
     **   The Lehman  Brothers  Municipal  Bond Index  returns shown are for ten
          years because the Fund's Class A, Class B and Class C shares commenced
          operations  more than 10 calendar years ago. The Index reports returns
          on a monthly basis as of the last day of the month.

                                       3

Profile: Delaware Tax-Free USA Intermediate Fund

What is the Fund's goal?
Delaware  Tax-Free  USA  Intermediate  Fund  seeks  as high a level  of  current
interest  income exempt from federal  income tax as is available  from municipal
obligations  and  as  is  consistent  with  prudent  investment  management  and
preservation of capital.  Although the Fund will strive to meet its goal,  there
is no assurance that it will.

What are the Fund's main investment strategies?
Under normal circumstances,  the Fund will invest at least 80% of its net assets
in  securities  the  income  from which is exempt  from  federal  income  taxes,
including the federal alternative minimum tax. This is a fundamental  investment
policy that may not be changed without prior shareholder approval.

The Fund will invest  primarily in municipal debt obligations that are issued by
state and local  governments to raise funds for various public  purposes such as
hospitals, schools and general capital expenses. The Fund will invest its assets
in  securities  with  maturities  of  various   lengths,   depending  on  market
conditions,  but will  have a  dollar-weighted  average  effective  maturity  of
between  three and 10 years.  We will attempt to adjust the average  maturity of
the  bonds  in the  portfolio  to  provide  a high  level of  tax-exempt  income
consistent  with  preservation  of capital.  The Fund's  income  level will vary
depending  on  current  interest  rates  and  the  specific  securities  in  the
portfolio. The Fund may concentrate its investments in certain types of bonds or
in a certain  segmentn of the municipal  bond market when the supply of bonds in
other sectors does not suit our investment needs.

What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest.  Over time, the value of your investment in
the Fund will  increase  and  decrease  according to changes in the value of the
securities  in the Fund's  portfolio.  This Fund will be affected  primarily  by
changes in interest rates.  For example,  when interest rates rise, the value of
bonds in the portfolio will likely decline. The Fund may also be affected by the
ability of individual  municipalities to pay interest and repay principal on the
bonds they issue.  The Fund is  non-diversified  as defined  under the 1940 Act,
which  means that it may invest a greater  percentage  of its assets in a single
issuer than a diversified fund, and may be subject to greater volatility or risk
of loss than if it were diversified.  Under normal  circumstances,  the Fund may
invest up to 20% of its net  assets  in  securities  the  income  from  which is
subject to the federal  alternative  minimum tax.  Income from these  securities
would be taxable for investors subject to that tax.

For a more complete  discussion  of risk,  please see "The risks of investing in
the Funds" on page 17.

An  investment  in the Fund is not a deposit  of any bank and is not  insured or
guaranteed by the FDIC or any other government agency.

You  should  keep  in mind  that an  investment  in the  Fund is not a  complete
investment  program;  it  should  be  considered  just  one  part of your  total
financial  plan.  Be sure to discuss  this Fund with your  financial  advisor to
determine whether it is an appropriate choice for you.

Who should invest in the Fund
o    Investors seeking monthly income, free from federal income taxes.
o    Investors with long-term financial goals.
o    Investors  willing to give up some income  potential  in  exchange  for the
     reduced  risk of  principal  fluctuation  that comes  with an  intermediate
     maturity investment.

Who should not invest in the Fund
o    Investors with very short-term financial goals.
o    Investors  who are  unwilling to accept  share  prices that may  fluctuate,
     especially over the short term.

                                       4

How has Delaware Tax-Free USA Intermediate Fund performed?

This bar chart and table can help you  evaluate  the risks of  investing  in the
Fund. We show how annual  returns for the Fund's Class A shares have varied over
the past ten calendar  years, as well as the average annual returns of the Class
A, B and C shares for one-year,  five-year and ten-year periods. The Fund's past
performance  (before and after taxes) does not necessarily  indicate how it will
perform in the future.  The returns  reflect  expense caps in effect  during the
periods.  The returns would be lower  without the expense  caps.  Please see the
footnotes on page 9 for additional information about the expense caps.

Year-by-year total return (Class A)

1996    1997    1998     1999    2000    2001     2002    2003     2004     2005
----- ------- -------- ------- ------- -------  -------- ------- -------  ------
4.61%   6.50%   5.83%   -1.41%   9.44%   5.12%    9.10%   6.10%    4.93%   3.45%

As of September 30, 2006, the Fund's Class A shares had a calendar  year-to-date
return of 3.26%.  During the periods  illustrated  in this bar chart,  Class A's
highest  quarterly return was 4.69% for the quarter ended September 30, 2002 and
its lowest quarterly return was -2.15% for the quarter ended June 30, 2004.

The maximum Class A sales charge of 2.75%,  which is normally  deducted when you
purchase shares, is not reflected in the total returns in the previous paragraph
or in the bar chart.  If this fee were included,  the returns would be less than
those shown.  The average annual returns in the table below do include the sales
charge.

Average annual returns for periods ending 12/31/05
--------------------------------------------------------------------------------
Delaware Tax-Free USA Intermediate Fund       1 year     5 years      10 years**
--------------------------------------------------------------------------------
Class A return before taxes                    0.65%      5.13%           5.03%
--------------------------------------------------------------------------------
Class A return after taxes on distributions    0.65%      5.13%           5.03%
--------------------------------------------------------------------------------
Class A return after taxes on distributions
and sale of Fund shares                        1.66%      4.98%           4.94%
--------------------------------------------------------------------------------
Class B return before taxes*                   0.50%      4.81%           4.88%
--------------------------------------------------------------------------------
Class C return before taxes*                   1.58%      4.83%           4.44%
--------------------------------------------------------------------------------
Lehman Brothers Municipal Bond 3-15 Year Index
(reflects no deduction for fees, expenses, or
 taxes)                                        2.25%      5.18%           5.42%
--------------------------------------------------------------------------------
Merrill Lynch 3-7 Year Municipal Bond Index
(reflects no deduction for fees, expenses,
or taxes)                                      1.25%      4.86%           4.97%

The Fund's  returns  are  compared  to the  performance  of the Lehman  Brothers
Municipal  Bond 3-15 Year Index and the Merrill  Lynch 3-7 Year  Municipal  Bond
Index. You should remember that,  unlike the Fund, the Indices are unmanaged and
do not  reflect  the  costs of  operating  a mutual  fund,  such as the costs of
buying,  selling and holding  securities.  Maximum sales charges are included in
the Fund returns shown above.

After-tax  performance  is  presented  only for Class A shares of the Fund.  The
after-tax  returns for other Fund  classes may vary.  Actual  after-tax  returns
depend on the  investor's  individual  tax  situation  and may  differ  from the
returns  shown.   After-tax   returns  are  not  relevant  for  shares  held  in
tax-deferred  investment  vehicles such as  employer-sponsored  401(k) plans and
IRAs. The after-tax  returns shown are calculated  using the highest  individual
federal marginal income tax rates in effect during the periods  presented and do
not  reflect the impact of state and local  taxes.  The  after-tax  rate used is
based on the current tax  characterization of the elements of the Fund's returns
(e.g., qualified vs. non-qualified dividends). Past performance, both before and
after taxes, is not a guarantee of future results.

     *    Total returns assume  redemption of shares at end of period.  Ten-year
          returns for Class B shares reflect  conversion to Class A shares after
          5 years.  If shares were not  redeemed,  the returns  before taxes for
          Class B would be 2.49%,  4.81% and 4.88% for the  one-year,  five-year
          and ten-year periods,  respectively,  and the returns before taxes for
          Class C would be 2.58%,  4.83% and 4.44% for the  one-year,  five-year
          and ten-year periods, respectively.
     **   The Merrill Lynch 3-7 Year  Municipal  Bond Index and Lehman  Brothers
          Municipal Bond 3-15 Year Index returns shown are for ten years because
          the Fund's  Class A, Class B and Class C shares  commenced  operations
          more than 10 calendar  years ago. The Lehman  Brothers  Municipal Bond
          3-15 Year Index is replacing  the Merrill  Lynch 3-7 Year Index as the
          Fund's benchmark.  As a result of the changes in the Fund's investment
          strategy,   the  investment  manager  (Manager)  believes  the  Lehman
          Brothers  Municipal Bond 3-15 Year Index is a more accurate  benchmark
          of the Fund's  investments.  The Merrill Lynch 3-7 year Municipal Bond
          Index may be excluded from this comparison in the future.  The Indices
          report returns on a monthly basis as of the last day of the month.

                                       5

Profile: Delaware National High-Yield Municipal Bond Fund

What is the Fund's goal?
Delaware National  High-Yield  Municipal Bond Fund seeks a high level of current
income exempt from federal  income tax primarily  through  investment in medium-
and lower-grade municipal obligations. Although the Fund will strive to meet its
goal, there is no assurance that it will.

What are the Fund's main investment strategies?
Under normal circumstances,  the Fund will invest at least 80% of its net assets
in  municipal  securities  the income from which is exempt from  federal  income
taxes.  This is a fundamental  investment policy that may not be changed without
prior shareholder approval.

Municipal debt  obligations  are issued by state and local  governments to raise
funds for various public purposes such as hospitals, schools and general capital
expenses.  The Fund will  invest its assets in  securities  with  maturities  of
various  lengths,  depending on market  conditions,  but will  typically  have a
dollar-weighted  average  effective  maturity between five and 30 years. We will
attempt to adjust the average  maturity of the bonds in the portfolio to provide
a high level of tax-exempt income  consistent with preservation of capital.  The
Fund's  income will vary  depending on current  interest  rates and the specific
securities in the portfolio. The Fund may concentrate its investments in certain
types of bonds or in a certain  segment of the  municipal  bond  market when the
supply of bonds in other sectors does not suit our investment needs.

Under normal  circumstances,  Delaware National  High-Yield  Municipal Bond Fund
will invest primarily in lower rated municipal securities, which typically offer
higher income potential and involve greater risk than higher quality securities.

What are the main risks of investing in the Fund?
Investing in any mutual fund involves risk, including the risk that you may lose
part or all of the money you invest.  Over time, the value of your investment in
the Fund will  increase  and  decrease  according to changes in the value of the
securities  in the Fund's  portfolio.  This Fund will be affected  primarily  by
changes in interest rates.  For example,  when interest rates rise, the value of
bonds in the portfolio will likely decline.

The Fund may also be affected by the ability of individual municipalities to pay
interest and repay  principal on the bonds they issue.  This risk is significant
for the Fund  because the issuers of the bonds in the  portfolio  are  generally
considered to be in a less secure  financial  situation and may be affected more
by adverse economic  conditions.  The Fund may be subject to greater  volatility
during  periods of adverse  economic  conditions and it may experience a greater
incidence of credit problems.  The Fund is  non-diversified as defined under the
1940 Act, which means that it may invest a greater percentage of its assets in a
single issuer than a diversified fund, and may be subject to greater  volatility
or risk of loss than if it were  diversified.  Under normal  circumstances,  the
Fund may to invest up to 100% of its net assets in  securities  the income  from
which is subject to the  federal  alternative  minimum  tax.  Income  from these
securities would be taxable for investors subject to that tax.

For a more complete  discussion  of risk,  please see "The risks of investing in
the Funds" on page 17.

An  investment  in the Fund is not a deposit  of any bank and is not  insured or
guaranteed by the FDIC or any other government agency.

You  should  keep  in mind  that an  investment  in the  Fund is not a  complete
investment  program;  it  should  be  considered  just  one  part of your  total
financial  plan.  Be sure to discuss  this Fund with your  financial  advisor to
determine whether it is an appropriate choice for you.

Who should invest in the Fund
o    Investors seeking monthly income, free from federal income taxes.
o    Investors with long-term financial goals.
o    Investors willing to accept the possibility of significant  fluctuations in
     share price, particularly in the short term.

Who should not invest in the Fund
o    Investors with very short-term financial goals.
o    Investors  who are  unwilling to accept  share  prices that may  fluctuate,
     especially in the short term.

                                       6

How has Delaware National High-Yield Municipal Bond Fund performed?

This bar chart and table can help you  evaluate  the risks of  investing  in the
Fund. We show how annual  returns for the Fund's Class A shares have varied over
the past ten calendar  years, as well as the average annual returns of the Class
A, B and C shares for one-year,  five-year and ten-year or lifetime periods,  as
applicable.  The Fund's  past  performance  (before  and after  taxes)  does not
necessarily  indicate  how it will  perform in the future.  The returns  reflect
expense caps in effect  during the periods.  The returns  would be lower without
the caps.  Please see the footnotes on page 9 for additional  information  about
the expense caps.

Year-by-year total return (Class A)

1996    1997    1998     1999    2000    2001     2002    2003     2004     2005
------ ------- ------- ------- -------- ------- -------- ------- -------- ------
6.53%  10.32%   6.68%   -3.57    6.98%   5.36%    4.69%   6.57%    7.36%   5.92%

As of September 30, 2006, the Fund's Class A shares had a calendar  year-to-date
return of 4.46%.  During the periods  illustrated  in this bar chart,  Class A's
highest  quarterly return was 3.00% for the quarter ended September 30, 2000 and
its lowest quarterly return was -2.83% for the quarter ended December 31, 1999.

The maximum Class A sales charge of 4.50%,  which is normally  deducted when you
purchase shares, is not reflected in the total returns in the previous paragraph
or in the bar chart.  If this fee were included,  the returns would be less than
those shown.  The average annual returns in the table below do include the sales
charge.

Average annual returns for periods ending 12/31/05
--------------------------------------------------------------------------------
Delaware National High-Yield Municipal         1 year    5 years     10 years or
Bond Fund                                                             lifetime**
--------------------------------------------------------------------------------
Class A return before taxes                     1.14%      5.00%           5.14%
--------------------------------------------------------------------------------
Class A return after taxes on distributions     1.14%      5.00%           5.10%
--------------------------------------------------------------------------------
Class A return after taxes on distributions
and sale of Fund shares                         2.39%      5.02%           5.15%
--------------------------------------------------------------------------------
Class B return before taxes*                    1.12%      4.90%           4.87%
--------------------------------------------------------------------------------
Class C return before taxes*                    4.11%      5.14%           4.67%
--------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index
(reflects no deduction for fees, expenses,
 or taxes)                                      3.51%      5.59%           5.71%
--------------------------------------------------------------------------------

The Fund's  returns  are  compared  to the  performance  of the Lehman  Brothers
Municipal  Bond  Index.  The Index  measures  the total  return  performance  of
long-term,  investment-grade  tax-exempt bonds with maturities  greater than two
years.  You should  remember  that,  unlike the Fund, the Index is unmanaged and
does not reflect  the costs of  operating  a mutual  fund,  such as the costs of
buying,  selling and holding  securities.  Maximum sales charges are included in
the Fund returns shown above.

After-tax  performance  is  presented  only for Class A shares of the Fund.  The
after-tax  returns for other Fund  classes may vary.  Actual  after-tax  returns
depend on the  investor's  individual  tax  situation  and may  differ  from the
returns  shown.   After-tax   returns  are  not  relevant  for  shares  held  in
tax-deferred  investment  vehicles such as  employer-sponsored  401(k) plans and
IRAs. The after-tax  returns shown are calculated  using the highest  individual
federal marginal income tax rates in effect during the periods  presented and do
not  reflect the impact of state and local  taxes.  The  after-tax  rate used is
based on the current tax  characterization of the elements of the Fund's returns
(e.g., qualified vs. non-qualified dividends). Past performance, both before and
after taxes, is not a guarantee of future results.

     *    Total returns assume  redemption of shares at end of period.  Lifetime
          returns for Class B shares reflect  conversion to Class A shares after
          8 years.  If shares were not  redeemed,  the returns  before taxes for
          Class B would be 5.12%,  5.15% and 4.87% for the  one-year,  five-year
          and lifetime periods,  respectively,  and the returns before taxes for
          Class C would be 5.11%,  5.14% and 4.67% for the  one-year,  five-year
          and lifetime periods, respectively.
     **   Lifetime  returns  are  shown if the  Class  existed  for less than 10
          years. The Lehman Brothers Municipal Bond Index return shown is for 10
          years because the Fund's Class A shares commenced operations more than
          10 years ago.  The  inception  dates for Class B and Class C shares of
          the Fund were  December 18, 1996 and May 26, 1997,  respectively.  The
          Index  returns for Class B's and Class C's lifetime  periods are 5.86%
          and 5.89%, respectively.  The Index reports returns on a monthly basis
          as of the last day of the month.  As a result,  the Index  returns for
          Class B and Class C lifetimes  reflect the returns  from  December 31,
          1996 and May 31, 1997, respectively, through December 31, 2005.

                                       7

Profiles:(continued)

What are the Funds' fees and expenses?

Sales charges are fees        DELAWARE TAX-FREE USA FUND AND DELAWARE NATIONAL HIGH-YIELD
paid directly from your       MUNICIPAL BOND FUND
investments when you buy      CLASS                                   A          B          C
or sell shares of the Funds.  ----------------------------- ----------- ---------- ----------
                              Maximum sales charge
                              (load) imposed on
                              purchases as a percentage
                              of offering price                   4.50%       none       none
                              ----------------------------- ----------- ---------- ----------
                              Maximum contingent
                              deferred sales charge
                              (load) as a percentage of
                              original purchase price
                              or redemption price,
                              whichever is lower                none(1)   4.00%(2)   1.00%(3)
                              ----------------------------- ----------- ---------- ----------
                              Maximum sales charge
                              (load) imposed on
                              reinvested dividends                 none       none       none
                              ----------------------------- ----------- ---------- ----------
                              Redemption fees                      none       none       none

                              DELAWARE TAX-FREE USA INTERMEDIATE FUND
                              CLASS                                   A          B         C
                              ----------------------------- ----------- ---------- ----------
                              Maximum sales charge
                              (load) imposed on
                              purchases as a percentage
                              of offering price                   2.75%      none       none
                              ----------------------------- ----------- ---------- ----------
                              Maximum contingent
                              deferred sales charge
                              (load) as a percentage of
                              original purchase price
                              or redemption price,
                              whichever is lower                none(1)   4.00%(2)   1.00%(3)
                              ----------------------------- ----------- ---------- ----------
                              Maximum sales charge
                              (load) imposed on
                              reinvested dividends                 none       none       none
                              ----------------------------- ----------- ---------- ----------
                              Redemption fees                      none       none       none

Annual fund operating         DELAWARE TAX-FREE USA FUND
expenses are deducted from    CLASS                                   A          B         C
the Funds' assets.            ----------------------------- ----------- ---------- ----------
                              Management fees(6)                  0.55%      0.55%      0.55%
                              ----------------------------- ----------- ---------- ----------
                              Distribution and service
                              (12b-1) fees                   0.27%(4,5)      1.00%      1.00%
                              ----------------------------- ----------- ---------- ----------
                              Other expenses                      0.18%      0.18%      0.18%
                              ----------------------------- ----------- ---------- ----------
                              Total operating expenses            1.00%      1.73%      1.73%
                              ----------------------------- ----------- ---------- ----------
                              Fee waivers and payments          (0.15%)    (0.11%)    (0.11%)
                              ----------------------------- ----------- ---------- ----------
                              Net expenses                        0.85%      1.62%      1.62%
                              ----------------------------- ----------- ---------- ----------

                              DELAWARE TAX-FREE USA INTERMEDIATE FUND

                              CLASS                                   A          B          C
                              ----------------------------- ----------- ---------- ----------
                              Management fees(6)                  0.50%      0.50%      0.50%
                              ----------------------------- ----------- ---------- -----------
                              Distribution and service
                              (12b-1) fees                     0.30%(5)      1.00%      1.00%
                              ---------------------------------------------------------------
                              Other expenses                      0.27%      0.27%      0.27%
                              ---------------------------------------------------------------
                              Total operating expenses            1.07%      1.77%      1.77%
                              ---------------------------------------------------------------
                              Fee waivers and payments          (0.32%)    (0.17%)    (0.17%)
                              ------------------------------------- -------------------------
                              Net expenses                        0.75%      1.60%      1.60%
                              ---------------------------------------------------------------

                              DELAWARE NATIONAL HIGH-YIELD MUNICIPAL BOND FUND

                              CLASS                                   A          B         C
                              ---------------------------------------------------------------
                              Management fees(6)                  0.55%      0.55%      0.55%
                              --------------------------------------- -----------------------
                              Distribution and service
                              (12b-1) fees                         0.25      1.00%      1.00%
                              ----------------------------- ----------- ---------- ----------
                              Other expenses                      0.22%      0.22%      0.22%
                              ----------------------------- ----------- ---------- ----------
                              Total operating expenses            1.02%      1.77%      1.77%
                              ----------------------------- ----------- ---------- ----------
                              Fee waivers and payments          (0.12%)    (0.12%)    (0.12%)
                              ----------------------------- ----------- ---------- ----------
                              Net expenses                        0.90%      1.65%      1.65%
                              ----------------------------- ----------- ---------- ----------

                                        8

This example is intended      DELAWARE TAX-FREE USA FUND
to help you compare the
cost of investing in the      CLASS (8)       A         B         B (if          C         C (if
Funds to the cost of                                          redeemed)                redeemed)
investing in other mutual     ------------------------------------------------------------------
funds with similar investment 1 year       $533      $165          $565       $165          $265
objectives. We show the       3 years      $740      $534          $759       $534          $534
cumulative amount of Fund     5 years      $964      $928        $1,078       $928          $928
expenses on a hypothetical    10 years   $1,607    $1,838        $1,838     $2,032        $2,032
investment of $10,000 with    ------------------------------------------------------------------
an annual 5% return over the
time shown.(7) This is an
example only, and does not    DELAWARE TAX-FREE USA INTERMEDIATE FUND
represent future expenses,
which may be greater or       CLASS (8)       A         B         B (if          C         C (if
less than those shown here.                                   redeemed)                redeemed)
                              ------------------------------------------------------------------
                              1 year       $349      $163          $363       $163          $263
                              3 years      $575      $541          $641       $541          $541
                              5 years      $819      $943          $943       $943          $943
                              10 years   $1,517    $1,885        $1,885     $2,070        $2,070
                              ------------------------------------------------------------------

                              DELAWARE NATIONAL HIGH-YIELD MUNICIPAL BOND FUND

                              CLASS (8)       A         B         B (if          C         C (if
                                                              redeemed)                redeemed)
                              ------------------------------------------------------------------
                              1 year       $538      $168          $568       $168          $268
                              3 years      $749      $546          $771       $546          $546
                              5 years      $977      $948        $1,098       $948          $948
                              10 years   $1,631    $1,876        $1,876     $2,074        $2,074
                              ------------------------------------------------------------------

(1)  A purchase of Class A shares of $1 million or more may be made at net asset
     value.  However,  if you buy the shares through a financial  advisor who is
     paid a  commission,  a  contingent  deferred  sales  charge  will  apply to
     redemptions made within two years of purchase.  Additional Class A purchase
     options that involve a  contingent  deferred  sales charge may be permitted
     from  time to time  and will be  disclosed  in the  Prospectus  if they are
     available.
(2)  For Delaware Tax-Free USA Fund and Delaware National  High-Yield  Municipal
     Bond Fund, if you redeem Class B shares during the first year after you buy
     them,  you will pay a  contingent  deferred  sales  charge of 4.00%,  which
     declines  to 3.00%  during the second  year,  2.25%  during the third year,
     1.50% during the fourth and fifth years, 1.00% during the sixth year and 0%
     thereafter.  For Delaware  Tax-Free USA  Intermediate  Fund,  if you redeem
     Class B shares  during the first  year  after you buy them,  you will pay a
     contingent  deferred sales charge of 2.00%,  which declines to 1.00% during
     the second and third years and 0% thereafter.
(3)  Class C shares  redeemed within one year of purchase are subject to a 1.00%
     contingent deferred sales charge.
(4)  The Board of Trustees has adopted a formula for calculating 12b-1 plan fees
     for the  Delaware  Tax-Free USA Fund's Class A shares that went into effect
     on June 1, 1992. The total 12b-1 fees to be paid by Class A shareholders of
     the  Fund  will  be the  sum of  0.10%  of the  average  daily  net  assets
     representing  shares that were acquired  prior to June 1, 1992 and 0.30% of
     the average daily net assets  representing the shares that were acquired on
     or after June 1, 1992. All Class A shareholders will bear 12b-1 fees at the
     same rate,  the  blended  rate based upon the  allocation  of the 0.10% and
     0.30% rates described above.
(5)  The  Funds'  distributor  has  contracted  to waive the Class A 12b-1  fees
     through December 31, 2007 to 0.25% and 0.15% of average daily net assets of
     the Delaware  Tax-Free USA Fund and the Delaware  Tax-Free USA Intermediate
     Fund, respectively. This contractual waiver is applied to the shares of the
     Delaware  Tax-Free USA Fund that were  acquired on or after June 1, 1992 in
     calculating the applicable 12b-1 fee rate.
(6)  The  Manager  has  contracted  to waive all or a portion of its  investment
     advisory fees and/or reimburse  expenses through December 31, 2007 in order
     to prevent total annual fund operating  expenses  (excluding any 12b-1 plan
     expenses,  taxes,  interest,  brokerage fees,  certain  insurance costs and
     non-routine expenses or costs, including but not limited to, those relating
     to reorganizations,  litigation,  certain Trustee retirement plan expenses,
     conducting    shareholder   meetings   and   liquidations    [collectively,
     "non-routine  expenses"]) from exceeding,  in an aggregate  amount,  0.62%,
     0.60% and 0.65% of average  daily net assets of the  Delaware  Tax-Free USA
     Fund,  Delaware  Tax-Free USA Intermediate  Fund and the Delaware  National
     High-Yield Municipal Bond Fund, respectively. For purposes of these waivers
     and reimbursements,  non-routine  expenses may also include such additional
     costs and  expenses  as may be agreed  upon from time to time by the Funds'
     Boards and the Manager.
(7)  The  Funds'  actual  rate  of  return  may be  greater  or  less  than  the
     hypothetical 5% return we use here. This example reflects the net operating
     expenses with expense waivers for the one-year  contractual  period and the
     total operating expenses without expense waivers for years two through 10.
(8)  For Delaware Tax-Free USA Fund and Delaware National  High-Yield  Municipal
     Bond Fund,  Class B shares  automatically  convert to Class A shares at the
     end of the eighth year.  Information for the ninth and tenth years reflects
     expenses of the Class A shares.  For  Delaware  Tax-Free  USA  Intermediate
     Fund, Class B shares automatically  convert to class A shares at the end of
     the fifth year.  Information for years six through ten reflects expenses of
     the Class A shares.

                                       9

How we manage the Funds

Our investment strategies
We analyze economic and market conditions, seeking to identify the securities or
market sectors that we think are the best investments for a particular Fund. The
following is a general  description of the investment  strategies used to manage
the Funds and a list of securities the Funds may invest in.

We take a disciplined approach to investing, combining investment strategies and
risk management techniques that can help shareholders meet their goals.

We  will  generally  invest  in debt  obligations  issued  by  state  and  local
governments  and  their  political  subdivisions,   agencies,   authorities  and
instrumentalities that are exempt from federal income tax. We may also invest in
debt  obligations  issued by or for the District of Columbia,  and its political
subdivisions,  agencies,  authorities and  instrumentalities  or territories and
possessions of the United States that are exempt from federal income tax.

We will generally  invest in securities  for income rather than seeking  capital
appreciation  through  active  trading.  However,  we may sell  securities for a
variety  of  reasons  such  as to  reinvest  the  proceeds  in  higher  yielding
securities,  to eliminate  investments not consistent  with the  preservation of
capital or to honor redemption  requests.  As a result, we may realize losses or
capital gains which could be taxable to shareholders.

Delaware Tax-Free USA Fund and Delaware National High-Yield  Municipal Bond Fund
will generally have a dollar-weighted average effective maturity of between five
and 30 years.  Delaware  Tax-Free USA  Intermediate  Fund will  generally have a
dollar-weighted average effective maturity between three and 10 years. This is a
more  conservative  strategy than funds with longer  average  maturities,  which
should result in the Fund experiencing less price volatility when interest rates
rise or fall.

The  investment   objective  of  each  Fund  described  in  this  Prospectus  is
fundamental.  This means the  Boards of  Trustees  may not change the  objective
without obtaining  shareholder approval. If the objective were changed, we would
notify the shareholders before the change in the objective became effective.

                                       10

The securities we typically invest in

Fixed income  securities  offer the potential for greater  income  payments than
stocks,  and also may provide  capital  appreciation.  Municipal bond securities
typically  pay  income  free of  federal  income  taxes and may be free of state
income taxes in the state where they are issued.

-------------------------- -----------------------------------------------------
       Securities                             How we use them
-------------------------- ---------------- ---------------- -------------------
                                               Delaware
                              Delaware        Tax-Free USA   Delaware National
                            Tax-Free USA      Intermediate        High-Yield
                                Fund              Fund       Municipal Bond Fund
-------------------------- --------------------------------- -------------------
Tax-exempt obligations:    Under normal conditions, we may   Under normal
Commonly known as          invest 80% of each Fund's         conditions, we
municipal bonds. These     assets in tax-exempt debt         will invest
are debt obligations       obligations rated in the top      primarily in
issued by or for a state   four quality grades by Standard   medium- and
or territory, its          & Poor's (S&P) or another         lower-grade
agencies or                nationally recognized             tax-exempt
instrumentalities,         statistical rating organization   obligations rated
municipalities or other    (NRSRO), or in unrated            between BBB and B-.
political                  tax-exempt obligations if, in
sub-divisions.  The        the Manager's opinion, they are   We will not make
interest on these debt     equivalent in quality to the      initial
obligations can            top four quality grades. These    investments in
generally be excluded      bonds may include general         securities rated
from federal income tax    obligation bonds and revenue      below B-, although
as well, as personal       bonds.                            it may continue to
income tax in the state                                      hold such
where the bond is                                            securities if
issued. Determination of                                     their rating has
a bond's tax-exempt                                          been reduced below
status is based on the                                       that grade.
opinion of the bond
issuer's legal counsel.                                      We may invest all
                                                             or a portion of
                                                             the Delaware
                                                             National
                                                             High-Yield
                                                             Municipal Bond
                                                             Fund's assets in
                                                             higher grade
                                                             securities if the
                                                             Manager determines
                                                             that abnormal
                                                             market conditions
                                                             make investing in
                                                             lower rated
                                                             securities
                                                             inconsistent with
                                                             shareholders' best
                                                             interest.
--------------------------- -------------------------------- -------------------
General obligation bonds:   We may invest without limit in   We may invest in
Municipal bonds on which    general obligation bonds in      general
the payment of principal    the top four quality grades or   obligations and
and interest is secured     bonds that are unrated, but      will typically
by the issuer's pledge of   which the Manager determines     invest in lower
its full faith, credit      to be of equal quality.          quality bonds
and taxing power.                                            rated between BBB
                                                             and B- by S&P or
                                                             another NRSRO.
--------------------------- -------------------------------- -------------------
Revenue bonds: Municipal    We may invest without limit in   The Fund may
bonds on which principal    revenue bonds in the top four    invest in revenue
and interest payments are   quality grades or bonds that     bonds and will
made from revenues          are unrated, but which the       typically invest
derived from a particular   Manager determines to be of      in lower quality
facility, from the          equal quality.                   bonds rated
proceeds of a special                                        between BBB and B-
excise tax or from                                           by S&P or another
revenue generated by an                                      NRSRO.
operating project.
Principal and interest
are not secured by the
general taxing power.
Tax-exempt industrial
development bonds, in
most cases, are a type of
revenue bond that is not
backed by the credit of
the issuing municipality
and may therefore involve
more risk.
--------------------------- -------------------------------- -------------------

                                       11

How we manage the Funds (continued)

-------------------------- -----------------------------------------------------
       Securities                             How we use them
-------------------------- ---------------- ---------------- -------------------
                                                Delaware
                              Delaware        Tax-Free USA   Delaware National
                            Tax-Free USA      Intermediate        High-Yield
                                Fund              Fund       Municipal Bond Fund
-------------------------- --------------------------------- -------------------
Insured municipal bonds:    We may invest without limit in insured bonds. We do
Municipal issuers may       not evaluate the creditworthiness of the private
obtain insurance for        insurer.  Instead, we focus first on the
their obligations. In the   creditworthiness of the actual bond issuer and its
event of a default, the     ability to pay interest and principal.
insurer is required to
make payments of interest   It is possible that a substantial portion of each
and principal when due to   Fund's portfolio may consist of municipal bonds
the bondholders.            that are insured by a single insurance company.
However, there is no
assurance that the          Insurance is available on uninsured bonds and each
insurance company will      Fund may purchase such insurance directly. We will
meet its obligations.       generally do so only if we believe that purchasing
Insured obligations are     and insuring a bond provides an investment
typically rated in the      opportunity at least comparable to owning other
top quality grades by an    available insured securities.
NRSRO.
                            The purpose of insurance is to protect against
                            credit risk. It does not insure against market risk
                            or guarantee the value of the securities in the
                            portfolio or the value of shares of any of the
                            Funds.

                            Insured bonds will typically not be a significant
                            portion of the investments of the Funds.
--------------------------- --------------------------------- ------------------
Private activity or         We may invest up to 20% of each   We may invest
private placement bonds:    Fund's assets in bonds whose      without limit in
Municipal bond issues       income is subject to the          these bonds.
whose proceeds are used     federal alternative minimum
to finance certain          tax. This means that a portion
non-government              of each Fund's distributions
activities, including       could be subject to the federal
some types of industrial    alternative minimum tax that
revenue bonds such as       applies to certain taxpayers.
privately owned sports
and convention
facilities.  The Tax
Reform Act of 1986
subjects interest income
from these bonds to the
federal alternative
minimum tax and makes the
tax-exempt status of
certain bonds dependent
on the issuer's
compliance with specific
requirements after the
bonds are issued.
--------------------------- ----------------------------------------------------
Zero coupon bonds: Debt     We may invest in zero coupon bonds. The market
obligations which do not    prices of these bonds are generally more volatile
entitle the holder to any   than the market prices of securities that pay
periodic payments of        interest periodically and are likely to react to
interest prior to           changes in interest rates to a greater degree than
maturity or a specified     interest-paying bonds having similar maturities and
date when the securities    credit quality.  They may have certain tax
begin paying current        consequences which, under certain conditions, could
interest. Therefore, they   be adverse to the Funds.
are issued and traded at
a price lower than their
face amounts or par value.
--------------------------- ----------------------------------------------------

                                       12

---------------------------- ---------------------------------------------------
       Securities                             How we use them
---------------------------- ---------------- ---------------- -----------------
                                                Delaware
                              Delaware        Tax-Free USA   Delaware National
                            Tax-Free USA      Intermediate        High-Yield
                                Fund              Fund       Municipal Bond Fund
---------------------------- --------------------------------- -----------------
Inverse floaters: Inverse    We may invest in inverse         We may invest up
floaters are instruments     floaters.  We may invest up to   to 25% of
with floating or variable    25% of each Fund's respective    Delaware National
interest rates that move     net assets in inverse floaters   High-Yield
in the opposite direction    when the underlying bond is      Municipal Bond
of short-term interest       tax-exempt.  Otherwise, each     Fund's net assets
rates.  Consequently, the    Fund's investments in taxable    in inverse
market values of inverse     investments and securities       floaters.
floaters will generally be   rated below investment grade,
more volatile than other     including inverse floaters on
tax-exempt investments.      taxable bonds, are limited to
These securities may be      20% of each Fund's net assets.
considered to be
derivative securities.
---------------------------- ---------------------------------------------------
Variable rate and floating   We may purchase "floating rate" and "variable
rate obligations: Pay        rate" obligations without limit.
interest at rates that are
not fixed, but instead
vary with changes in
specified market rates or
indices on pre-designated
dates.
---------------------------- ---------------------------------------------------
Advance refunded bonds:      We may invest without limit in advance refunded
In an advance refunding,     bonds.  These bonds are generally considered to be
the issuer uses the          of very high quality because of the escrow account,
proceeds of a new bond       which typically holds U.S. Treasuries.
issue to purchase high
grade interest bearing
debt securities. These
securities are then
deposited into an
irrevocable escrow
account held by a trustee
bank to secure all future
principal and interest
payments on pre-existing
bonds, which are then
considered to be "advance
refunded bonds." Escrow
secured bonds often
receive the highest
rating from S&P and
Moody's.
---------------------------- ---------------------------------------------------
Short-term tax-free          We may invest without limit in high-quality
instruments: Include         short-term tax-free instruments.
instruments such as
tax-exempt commercial
paper and general
obligation, revenue and
project notes, as well as
variable floating rate
demand obligations.
--------------------------- ----------------------------------------------------

                                       13

How we manage the Funds (continued)

---------------------------- ---------------------------------------------------
       Securities                             How we use them
---------------------------- ---------------- ---------------- -----------------
                                                Delaware
                              Delaware        Tax-Free USA   Delaware National
                            Tax-Free USA      Intermediate        High-Yield
                                Fund              Fund       Municipal Bond Fund
---------------------------- --------------------------------- -----------------
High yield, high risk        We may invest up to 20% of each   We will invest
municipal bonds:             Fund's net assets in high yield,  primarily in
Municipal debt               high risk fixed-income            lower rated,
obligations rated lower      securities.                        high-yield
than investment grade by                                       securities.
an NRSRO or, if unrated,
of comparable quality.
These securities are
often referred to as
"junk bonds" and are
considered to be of poor
standing and
predominately speculative.
--------------------------- ----------------------------------------------------
Options: Options             We may invest in futures, options and closing
represent a right to buy     transactions related thereto.  These activities
or sell a security at an     will not be entered into for speculative purposes,
agreed upon price at a       but rather for hedging purposes and to facilitate
future date. The             the ability to quickly deploy into the market a
purchaser of an option       Fund's cash, short-term debt securities and other
may or may not choose to     money market instruments at times when each Fund's
go through with the          assets are not fully invested.  We may only enter
transaction.                 into these transactions for hedging purposes if it
                             is consistent with a Fund's respective investment
Certain options may be       objective and policies.
considered to be
derivative securities.       We may invest up to an aggregate of 20% of a Fund's
                             net assets in futures, options and swaps as long as
                             each Fund's investment in these securities when
                             aggregated with other taxable instruments and
                             securities rated below investment grade (other than
                             the Delaware National High-Yield Municipal Bond
                             Fund) does not exceed 20% of each Fund's total net
                             assets.

                             Use of these strategies can increase the operating
                             costs of the Funds and can lead to loss of
                             principal.
---------------------------- ---------------------------------------------------
Futures contracts: Futures   We may invest in futures, options and closing
contacts are agreements      transactions related thereto.  These activities
for the purchase or sale     will not be entered into for speculative
of securities (or index of   purposes, but rather for hedging purposes and
securities) at a specified   to facilitate the ability to quickly deploy
price, on a specified        into the market a Fund's cash, short-term debt
date.  Unlike an option, a   securities and other money market instruments
futures contract must be     at times when each Fund's assets are not fully
executed unless it is sold   invested.  We may only enter into these
before the settlement        transactions for hedging purposes if it is
date.                        consistent with a Fund's respective investment
                             objective and policies.
Certain futures and
options on futures may be    We may invest up to an aggregate of 20% of each
considered to be             Fund's net assets in futures, options and swaps
derivative securities.       as long as each Fund's investment in these
                             securities when aggregated with other taxable
                             instruments and securities rated below
                             investment grade (other than Delaware National
                             High-Yield Municipal Bond Fund) does not exceed
                             20% of each Fund's total net assets.

                             At times when we anticipate adverse conditions,
                             we may want to protect gains on securities
                             without actually selling them.  We might use
                             futures or options on futures to neutralize the
                             effect of any price declines, without selling a
                             bond or bonds.

                             Use of these strategies can increase the
                             operating costs of the Funds and can lead to
                             loss of principal.
---------------------------- -------------------------------------------------

                                       14

---------------------------- ---------------------------------------------------
       Securities                             How we use them
---------------------------- ---------------- ---------------- -----------------
                                                Delaware
                              Delaware        Tax-Free USA   Delaware National
                            Tax-Free USA      Intermediate        High-Yield
                                Fund              Fund       Municipal Bond Fund
---------------------------- --------------------------------- -----------------
Restricted securities:       We may invest without limitation in
Privately-placed             privately-placed securities including those
securities whose resale is   that are eligible for resale only among certain
restricted under             institutional buyers without registration,
securities law.              which are commonly known as "Rule 144A
                             Securities."
---------------------------- ---------==---------------------- -----------------
Illiquid securities:         We may invest up to 10% of      We may invest
Securities that do not       each Fund's net assets in       up to 15% of
have a ready market, and     illiquid securities.            Delaware
cannot be easily sold                                        National
within seven days at                                         High-Yield
approximately the price                                      Municipal Bond
that a fund has valued                                       Fund's net
them.                                                        assets in
                                                             illiquid
                                                             securities.
---------------------------- --------------------==----------- -----------------
Repurchase agreements:       Typically, we use repurchase agreements as a
Agreements between a buyer   short-term investment for our cash position. We
of securities, such as a     may use repurchase agreements which are at
fund, and a seller of        least 102% collateralized by securities in
securities, in which the     which a Fund is permitted to invest directly.
seller agrees to buy the     We will only enter into repurchase agreements
securities back within a     in which the collateral is comprised of U.S.
specified time at the same   government securities.
price the buyer paid for
them, plus an amount equal   We may not enter into repurchase agreements
to an agreed upon interest   that represent more than 10% of Delaware
rate. Repurchase             National High-Yield Municipal Bond Fund's total
agreements are often         assets except when investing for defensive
viewed as equivalent to      purposes during periods of adverse market
cash.                        conditions.
---------------------------- ------------------------------- -----------------
Reverse repurchase           This is not a principal         We may enter
agreements: The same as      strategy for the Funds.         into reverse
repurchase agreements                                        repurchase
except that a fund would                                     agreements for
act as the seller and                                        amounts
agree to buy back the                                        aggregating up
securities at the same                                       to 10% of
price the buyer paid for                                     Delaware
them, plus an agreed upon                                    National
interest rate.                                               High-Yield
                                                             Municipal Bond
                                                             Fund's total
                                                             assets.  This
                                                             may be
                                                             preferable to a
                                                             regular sale
                                                             because it
                                                             avoids certain
                                                             market risk and
                                                             transaction
                                                             costs. However,
                                                             it is a form of
                                                             leveraging
                                                             which may
                                                             exaggerate any
                                                             increases or
                                                             decreases in
                                                             the Fund's net
                                                             asset value.
                                                             Because use of
                                                             this technique
                                                             is limited, we
                                                             believe it may
                                                             facilitate the
                                                             Fund's ability
                                                             to provide
                                                             current income
                                                             without
                                                             adversely
                                                             affecting our
                                                             ability to
                                                             preserve
                                                             capital.
---------------------------- ------------------------------- -----------------

                                       15

How we manage the Funds (continued)

-------------------------- -----------------------------------------------------
       Securities                             How we use them
-------------------------- ---------------- ---------------- -------------------
                                                Delaware
                              Delaware        Tax-Free USA   Delaware National
                            Tax-Free USA      Intermediate        High-Yield
                                Fund              Fund       Municipal Bond Fund
---------------------------- --------------------------------- -----------------
Interest rate swaps and      We may use interest rate swaps to adjust each
index swap agreements:  In   Fund's sensitivity to interest rates by
an interest rate swap, a     changing its duration.  We may also use
fund receives payment from   interest rate swaps to hedge against changes in
another party based on a     interest rates.  We may use index swaps to gain
floating interest rate in    exposure to markets that each Fund invests in
return for making payments   and may also use index swaps as a substitute
based on a fixed interest    for futures, options or forward contracts if
rate.  An interest rate      such contracts are not directly available to
swap can also work in        each Fund on favorable terms.
reverse, with a fund
receiving payments based     We may invest up to an aggregate of 20% of each
on a fixed interest rate     Fund's net assets in futures, options and swaps
and making payments based    as long as each Fund's investment in these
on a floating interest       securities when aggregated with other taxable
rate.  In an index swap, a   instruments and securities rated below
fund receives gains or       investment grade (other than the Delaware
incurs losses based on the   National High-Yield Municipal Bond Fund) does
total return of an index,    not exceed 20% of each Fund's total assets.
in exchange for making
fixed or floating interest   Use of these strategies can increase the
rate payments to another     operating costs of the Funds and can lead to
party.                       loss of principal.
---------------------------- -------------------------------------------------

Please  see  the  Statement  of  Additional  Information  (SAI)  for  additional
descriptions of these securities.

Borrowing money
Each Fund may borrow money from banks as a temporary  measure for  extraordinary
or emergency purposes or to facilitate  redemptions but normally does not do so.
Each  Fund may  borrow  up to 10% of the  value  of its  total  assets  (20% for
Delaware  National  High-Yield  Municipal Bond Fund). A Fund will be required to
pay interest to the lending banks on the amount borrowed. As a result, borrowing
money could result in a Fund being unable to meet its investment objective.  The
Funds will not borrow money in excess of one-third of the value of their assets.

Purchasing securities on a when-issued or delayed delivery basis
Each Fund may buy securities on a when-issued or  delayed-delivery  basis;  that
is, paying for securities  before  delivery or taking  delivery at a later date.
The Funds will  designate  cash or  securities  in amounts  sufficient  to cover
obligations and will value the designated assets daily.

Lending securities
Delaware  Tax-Free  USA  Intermediate  Fund may lend up to 25% of its  assets to
qualified   brokers/dealers  and  institutional   investors  for  their  use  in
securities  transactions.  Borrowers  of  the  Fund's  securities  must  provide
collateral to the Fund and adjust the amount of  collateral  each day to reflect
changes  in the value of loaned  securities.  These  transactions,  if any,  may
generate additional income for the Fund.

Concentration
Where we feel there is a limited  supply of appropriate  investments,  each Fund
may  concentrate  its  investments  (invest  more than 25% of total  assets)  in
municipal  obligations  relating  to  similar  types of  projects  or with other
similar  economic,  business  or  political  characteristics  (such  as bonds of
housing finance agencies or health care facilities).  In addition, each Fund may
invest more than 25% of its assets in  industrial  development  bonds or, in the
case of Delaware Tax-Free USA Fund and Delaware Tax-Free USA Intermediate  Fund,
pollution control bonds,  which may be backed only by the assets and revenues of
a nongovernmental  issuer. Each Fund will not, however,  invest more than 25% of
its total assets in bonds issued for companies in the same industry.

Temporary defensive measures
In response to unfavorable  market  conditions,  each Fund may invest in taxable
instruments for temporary  defensive  purposes.  These could include  securities
such as obligations of the U.S. government,  its agencies and instrumentalities,
commercial paper,  cash,  certificates of deposit of domestic banks,  other cash
equivalents and other debt instruments.  These investments may not be consistent
with each  Fund's  investment  objective.  To the extent that a Fund holds these
investments, it may be unable to achieve its investment objective.

Portfolio turnover
It is possible  that each Fund's annual  portfolio  turnover may be greater than
100%.  A turnover  rate of 100% would occur if, for  example,  a Fund bought and
sold all of the  securities  in its  portfolio  once in the  course of a year or
frequently  traded a single security.  A high rate of portfolio  turnover in any
year may result in increased transaction costs for investors and may affect each
Fund's performance.

                                       16

The risks of investing in the Funds
Investing  in any mutual fund  involves  risk,  including  the risk that you may
receive little or no return on your  investment,  and the risk that you may lose
part or all of the money you  invest.  Before you  invest in a Fund,  you should
carefully  evaluate  the risks.  Because of the nature of the Funds,  you should
consider your investment to be a long-term  investment  that typically  provides
the best results when held for a number of years.  The table below describes the
principal risks you assume when investing in these funds. Please see the SAI for
further discussion of these risks and other risks not discussed here.

------------------------- ------------------------------------------------------
         Risks                         How we strive to manage them
------------------------- ---------------- ----------------- -------------------
                                                Delaware
                             Delaware         Tax-Free USA    Delaware National
                           Tax-Free USA      Intermediate        High-Yield
                               Fund              Fund        Municipal Bond Fund
------------------------- ---------------------------------- -------------------
Interest rate risk: The   We do not try to increase return   In an attempt to
risk that securities,     by predicting and aggressively     reduce interest
particularly bonds with   capitalizing on interest rate      rate risk, we will
longer maturities, will   moves.                             adjust the Fund's
decrease in value if                                         average maturity
interest rates rise.      In an attempt to reduce interest   based on our view
                          rate risk, we will adjust a        of interest
                          Fund's average maturity based on   rates.  In
                          our view of interest rates.  In    anticipation of an
                          anticipation of an interest rate   interest rate
                          decline, we may extend average     decline, we may
                          maturity and when we anticipate    extend average
                          an increase we may shorten         maturity and when
                          average maturity.                  we anticipate an
                                                             increase we may
                                                             shorten average
                                                             maturity.
------------------------- ------------------------------------------------------
Market risk: The risk     We maintain a long-term investment approach and focus
that all or a majority    on bonds we believe will provide a steady income
of the securities in a    stream regardless of interim market fluctuations. We
certain market--like the  do not try to predict overall market movements and
stock or bond             generally do not trade for short-term purposes.
market--will decline in
value because of
economic conditions,
future expectations or
investor confidence.
------------------------- ------------------------------------------------------
Industry and security     We spread each Fund's assets across different types
risk:  Industry risk is   of municipal bonds and among bonds representing
the risk that the value   different industries and regions throughout the
of securities in a        country in order to minimize the impact that a poorly
particular industry       performing security would have on a Fund. We also
will decline because of   follow a rigorous selection process before choosing
changing expectations     securities for the portfolio.
for the performance of
that industry.            As discussed under "Concentration" on page 16, where
                          we feel there is a limited supply of appropriate
Security risk is the      investments, we may concentrate each Fund's
risk that the value of    investments in just a few industries.  This will
an individual security    expose a Fund to greater industry and security risk.
will decline because of
changing expectations
for the performance of
that individual company
issuing the stock or
bond.
------------------------- ------------------------------------------------------

                                       17

How we manage the Funds (continued)

------------------------- ------------------------------------------------------
         Risks                         How we strive to manage them
------------------------- ---------------- ----------------- -------------------
Credit risk:              We conduct careful credit       The Fund is subject
The possibility that a    analysis of individual bonds;   to significant credit
bond's issuer (or an      we focus on high-quality        risk due to its
entity that insures the   bonds and limit our holdings    investment in lower
bond) will be unable to   of bonds rated below            quality,
make timely payments of   investment grade; and we hold   high-yielding bonds.
interest and principal.   a number of different bonds     This risk is
                          in the portfolio. All of this   described more fully
In the case of            is designed to help reduce      below. We strive to
municipal bonds,          credit risk.                    manage this risk by
issuers may be affected                                   maintaining a number
by poor economic                                          of different bonds
conditions in their                                       from different
states.                                                   issuers so that if
                                                          one issuer
                                                          experiences
                                                          difficulties, it will
                                                          have a lesser effect
                                                          on the entire
                                                          portfolio.
------------------------- ------------------------------- -----------------------
Call risk: The risk       We take into consideration the likelihood of
that a bond issuer will   prepayment when we select bonds and, in certain
prepay the bond during    environments, we may look for bonds that have
periods of low interest   protection against early prepayment.
rates, forcing
investors to reinvest
their money at interest
rates that might be
lower than rates on the
called bond.
------------------------- -------------------------------------------------------
Liquidity risk: The       We limit each Fund's exposure to illiquid securities
possibility that          to no more than 15% of a Fund's net assets.
securities cannot be
readily sold, within
seven days, at
approximately the price
that a fund values them.
------------------------- ------------------------------- -----------------------
High-yield, high risk     We limit the amount of the      This is a significant
municipal bonds:          portfolio which may be          risk for the Delaware
Investing in so-called    invested in lower quality,      National High-Yield
"junk" bonds entails      higher yielding bonds.          Municipal Bond Fund.
the risk of principal                                     In striving to manage
loss, which may be                                        this risk, we hold a
greater than the risk                                     number of different
involved in investment                                    bonds representing a
grade bonds. High-yield                                   variety of industries
bonds are sometimes                                       and municipal
issued by                                                 projects, seeking to
municipalities with                                       minimize the effect
less financial strength                                   that any one bond may
and therefore less                                        have on the portfolio.
ability to make
projected debt payments
on the bonds.

A protracted economic
downturn could
adversely affect the
value of outstanding
high-yield bonds and
the ability of
high-yield issuers to
repay principal and
interest.
------------------------- ------------------------------- -----------------------

                                       18

------------------------- -------------------------------------------------------
         Risks                         How we strive to manage them
------------------------- ---------------- ----------------- --------------------
                                                Delaware
                               Delaware       Tax-Free USA    Delaware National
                             Tax-Free USA     Intermediate        High-Yield
                               Fund              Fund        Municipal Bond Fund
---------------------------- ----------------------------------------------------
Non-diversified funds have   Each Fund is a non-diversified fund and is subject
the flexibility to invest    to this risk.  Nevertheless, we typically hold
as much as 50% of their      securities from a variety of different issuers,
assets in as few as two      representing different sectors and different types
issuers provided no single   of municipal projects.  We also perform extensive
issuer accounts for more     credit analysis on all securities.  We are
than 25% of the              particularly diligent in reviewing the credit
portfolio.  The remaining    status of bonds that represent a larger percentage
50% of the portfolio must    of portfolio assets.
be diversified so that no
more than 5% of a fund's
assets is invested in the
securities of a single
issuer.  Because a
non-diversified fund may
invest its assets in fewer
issuers, the value of fund
shares may increase or
decrease more rapidly than
if a fund was fully
diversified.  If a fund
were to invest a large
portion of its assets in a
single issuer, the fund
could be significantly
affected if that issuer
was unable to satisfy its
financial obligations.
---------------------------- ----------------------------------------------------
Derivatives risk:            We will use derivatives for defensive purposes,
Derivatives risk is the      such as to protect gains or hedge against
possibility that a fund      potential losses in the portfolio without actually
may experience a             selling a security, to neutralize the impact of
significant loss if its      interest rate changes, to improve diversification
employs a derivatives        or to earn additional income.  We will generally
strategy (including a        not use derivatives for reasons inconsistent with
strategy involving inverse   our investment objective.
floaters, futures,
options, and swaps such as
interest rate swaps and
index swaps) related to a
security or a market index
and that security or index
moves in the opposite
direction from what the
portfolio manager had
anticipated.  A
significant risk of
derivative transactions is
the creditworthiness of
the counter-party, since
the transaction depends on
the willingness and
ability of the
counterparty to fulfill
its contractual
obligations.  Derivatives
also involve additional
expenses, which could
reduce any benefit or
increase any loss to a
fund from using the
strategy.
---------------------------- ----------------------------------------------------

Disclosure of portfolio holdings
A  description  of each  Fund's  policies  and  procedures  with  respect to the
disclosure of a Fund's portfolio securities is available in the Funds' SAI.

                                       19

Who manages the Funds

Investment manager
The Funds are  managed by Delaware  Management  Company  (Manager),  a series of
Delaware  Management Business Trust, which is an indirect subsidiary of Delaware
Management Holdings,  Inc. The Manager makes investment decisions for the Funds,
manages the Funds' business affairs and provides daily administrative  services.
For these  services to the Funds,  the Manager was paid  aggregate  fees, net of
waivers, for the last fiscal year as follows:

                           Investment management fees

                      Delaware Tax-Free   Delaware Tax-Free USA    Delaware National High-Yield
                           USA Fund         Intermediate Fund          Municipal Bond Fund
--------------------- ------------------ ------------------------- ------------------------------
As a percentage of          0.45%                  0.33%                       0.43%
average daily net
assets

A discussion  regarding  the basis for the Boards of  Trustees'  approval of the
investment  advisory  contract  is  available  in each Fund's  annual  report to
shareholders for the period ended August 31, 2006.

Portfolio managers
Joseph R. Baxter and Robert F. Collins have  primary  responsibility  for making
day-to-day  investment  decisions for each Fund. Mr. Baxter became co-manager of
the Funds in January 2003. Mr. Collins assumed  responsibility  for the Funds on
June 25, 2004.

Joseph R. Baxter
Senior Vice  President,  Head of Municipal  Bond  Department,  Senior  Portfolio
Manager Mr.  Baxter  joined  Delaware  Investments  in 1999. He heads the firm's
municipal  bond  department  and is  responsible  for setting  the  department's
investment  strategy.  He is also a co-portfolio manager of the firm's municipal
bond funds and several client accounts. Before joining Delaware Investments,  he
held  investment  positions  with First  Union,  most  recently  as a  municipal
portfolio  manager with the Evergreen  Funds.  Mr. Baxter  received a bachelor's
degree in finance and marketing from LaSalle University.

Robert F. Collins, CFA
Senior Vice  President,  Senior  Portfolio  Manager Mr. Collins joined  Delaware
Investments  in 2004 and is a  co-portfolio  manager  of  several  of the firm's
municipal bond funds and client accounts. Prior to joining Delaware Investments,
he spent five years as a co-manager of the municipal portfolio  management group
within PNC Advisors,  where he oversaw the  tax-exempt  investments  of high net
worth and  institutional  accounts.  Before that, he headed the municipal  fixed
income  team at  Wilmington  Trust,  where he  managed  funds and high net worth
accounts.  Mr.  Collins  earned a bachelor's  degree in  economics  from Ursinus
College,  and he is  also  a  former  president  of the  Financial  Analysts  of
Wilmington, Delaware.

The Funds' SAI provides  additional  information about each portfolio  manager's
compensation,  other  accounts  managed  by  each  portfolio  manager  and  each
portfolio manager's ownership of Fund shares.

Manager of managers structure
The Funds and the Manager have received an exemptive  order from the  Securities
and Exchange  Commission (SEC) to operate under a manager of managers  structure
that  permits  the  Manager,  with the  approval of the Boards of  Trustees,  to
appoint  and  replace  sub-advisors,  enter into  sub-advisory  agreements,  and
materially  amend and terminate  sub-advisory  agreements on behalf of the Funds
without shareholder approval (the Manager of Managers Structure). The Manager of
Managers  Structure was approved by  shareholders at a meeting held on March 23,
2005 (or as adjourned).  Under the Manager of Manager Structure, the Manager has
ultimate  responsibility,  subject  to  oversight  by  the  Funds'  Boards,  for
overseeing the Funds'  sub-advisors and recommending to the Boards their hiring,
termination or replacement. The SEC order does not apply to any sub-advisor that
is  affiliated  with the  Funds  or the  Manager.  While  the  Manager  does not
currently  expect to use the Manager of Managers  Structure  with respect to the
Funds,  the  Manager  may,  in the future,  recommend  to the Funds'  Boards the
establishment of the Manager of Managers Structure by recommending the hiring of
one or more sub-advisors to manage all or a portion of the Funds' portfolio.

The Manager of Managers  Structure  enables  the Funds to operate  with  greater
efficiency  and  without  incurring  the  expense  and  delays  associated  with
obtaining   shareholder  approvals  for  matters  relating  to  sub-advisors  or
sub-advisory  agreements.  The Manager of Managers  Structure does not permit an
increase  in the  overall  management  and  advisory  fees  payable by the Funds
without shareholder approval.  Shareholders will be notified of any changes made
to sub-advisors or sub-advisory agreements within 90 days of the change.

                                       20

Who's who?

This  diagram  shows  the  various   organizations   involved   with   managing,
administering, and servicing the Delaware Investments(R) Funds.

[GRAPHIC  OMITTED:  DIAGRAM  SHOWING THE  VARIOUS  ORGANIZATIONS  INVOLVED  WITH
MANAGING, ADMINISTERING AND SERVICING THE DELAWARE INVESTMENTS(R) FUNDS]

                                                 Board of Trustees
                                                                                  Custodian
 Investment Manager                                                               JPMorgan Chase Bank
 Delaware Management Company                                                      4 Chase Metrotech Center
 2005 Market Street                                   The Fund                    Brooklyn, NY 11245
 Philadelphia, PA 19103-7094

                                                                      Service agent
                                   Distributor                        Delaware Service Company, Inc.
                                   Delaware Distributors, L.P.        2005 Market Street
                                   2005 Market Street                 Philadelphia, PA 19103-7094
                                   Philadelphia, PA 19103-7094

                                   Financial intermediary wholesaler
 Portfolio managers                Lincoln Financial Distributors,
 (see page 20 for details)         Inc.
                                   2001 Market Street
                                   Philadelphia, PA 19103-7055

                                                 Financial advisors

                                                 Shareholders

Board of Trustees
A  mutual  fund  is  governed  by  a  board  of  trustees  which  has  oversight
responsibility  for the  management  of the fund's  business  affairs.  Trustees
establish  procedures  and oversee and review the  performance of the investment
manager,  the  distributor  and  others  that  perform  services  for the  fund.
Generally,  at least 40% of the board of  trustees  must be  independent  of the
fund's investment  manager and distributor.  However,  the Funds rely on certain
exemptive  rules  adopted by the SEC that require their Boards of Trustees to be
comprised  of  a  majority  of  such  independent  Trustees.  These  independent
Trustees, in particular, are advocates for shareholder interests.

Investment manager
An  investment  manager  is  a  company   responsible  for  selecting  portfolio
investments  consistent  with the  objective  and policies  stated in the mutual
fund's   prospectus.   The  investment  manager  places  portfolio  orders  with
broker/dealers  and is responsible  for obtaining the best overall  execution of
those  orders.  A  written  contract  between a mutual  fund and its  investment
manager specifies the services the manager performs.  Most management  contracts
provide  for the manager to receive an annual fee based on a  percentage  of the
fund's  average  daily net  assets.  The  manager is subject to  numerous  legal
restrictions,  especially regarding transactions between itself and the funds it
advises.

Portfolio managers
Portfolio  managers are employed by the  investment  manager to make  investment
decisions for individual portfolios on a day-to-day basis.

Custodian
Mutual funds are legally required to protect their portfolio securities and most
funds place them with a qualified bank custodian who segregates  fund securities
from other bank assets.

Distributor
Most  mutual  funds   continuously  offer  new  shares  to  the  public  through
distributors  who are  regulated as  broker/dealers  and are subject to National
Association  of  Securities  Dealers  (NASD) rules  governing  mutual fund sales
practices.

Financial intermediary wholesaler
Pursuant to a contractual arrangement with Delaware Distributors,  L.P., Lincoln
Financial  Distributors,  Inc. (LFD) is primarily  responsible for promoting the
sale of  Fund  shares  through  broker/dealers,  financial  advisors  and  other
financial intermediaries.

Service agent
Mutual fund companies employ service agents  (sometimes  called transfer agents)
to maintain records of shareholder  accounts,  calculate and disburse  dividends
and  capital  gains  and  prepare  and  mail  shareholder   statements  and  tax
information,  among other  functions.  Many service agents also provide customer
service to shareholders.

Financial advisors
Financial  advisors provide advice to their clients -- analyzing their financial
objectives and recommending  appropriate funds or other  investments.  Financial
advisors are associated  with  securities  broker/dealers  who have entered into
selling and/or service arrangements with the Distributor. Selling broker/dealers
and financial  advisors are compensated for their  services,  generally  through
sales  commissions,  12b-1 fees and/or  service  fees  deducted  from the fund's
assets.

Shareholders
Like  shareholders of other companies,  mutual fund  shareholders  have specific
voting rights.  Material  changes in the terms of a fund's  management  contract
must be approved by a shareholder vote, and funds seeking to change  fundamental
investment policies must also seek shareholder approval.

                                       21

About your account

Investing in the Funds
You can choose from a number of share classes for each Fund.  Because each share
class has a different  combination of sales charges,  fees, and other  features,
you should  consult your financial  advisor to determine  which class best suits
your investment goals and time frame.

Choosing a share class

Class A

     o    Class A shares of Delaware  Tax-Free  USA Fund and  Delaware  National
          High-Yield  Municipal Bond Fund have an up-front sales charge of up to
          4.50% that you pay when you buy the shares. Class A shares of Delaware
          Tax-Free USA Intermediate  Fund have an up-front sales charge of up to
          2.75%.

     o    If you invest  $100,000 or more,  your front-end  sales charge will be
          reduced.

     o    You may  qualify  for  other  reductions  in sales  charges  and under
          certain  circumstances the sales charge may be waived, as described in
          "How to reduce your sales charge" on page 26.

     o    Class A shares are also subject to an annual 12b-1 fee no greater than
          0.30% (0.25% for Delaware National High-Yield  Municipal Bond Fund) of
          average daily net assets,  which is lower than the 12b-1 fee for Class
          B and Class C shares. See "Dealer Compensation" on page 25 for further
          information.

     o    Class A shares  generally  are not  subject to a  contingent  deferred
          sales  charge  except in the limited  circumstances  described  in the
          table below.

Class A sales charges

The table below details your sales  charges on purchases of Class A shares.  The
offering price for Class A shares includes the front-end sales charge. The sales
charge as a percentage of the net amount  invested is the maximum  percentage of
the amount invested rounded to the nearest hundredth. The actual sales charge as
a  percentage  of the net  amount  invested  will vary  depending  on the amount
invested, rounding and the then-current net asset value (NAV).

                         Delaware Tax-Free USA Fund
                         and Delaware National High-               Delaware Tax-Free USA
                         Yield Municipal Bond Fund                   Intermediate Fund
---------------------------------------------------------   ----------------------------------
                       Sales charge      Sales charge         Sales charge     Sales charge
                          as % of         as % of net             as % of       as % of net
  Amount of purchase   offering price   amount invested       offering price  amount invested
---------------------------------------------------------   ----------------------------------
Up to $99,999             4.50%             4.71%                 2.75%          2.83%
---------------------------------------------------------   ----------------------------------
$100,000 - $249,999       3.50%             3.63%                 2.00%          2.04%
---------------------------------------------------------   ----------------------------------
$250,000 - $499,999       2.50%             2.56%                 1.00%          1.01%
---------------------------------------------------------   ----------------------------------
$500,000 - $999,999       2.00%             2.04%                 1.00%          1.01%
---------------------------------------------------------   ----------------------------------
Amount over $1 million    None              None                  None           None
---------------------------------------------------------   ----------------------------------

As shown above,  there is no front-end sales charge when you purchase $1 million
or more  of  Class A  shares.  However,  if  your  financial  advisor  is paid a
commission on your purchase,  you will have to pay a limited contingent deferred
sales charge (Limited CDSC),  unless a specific waiver of the charge applies, of
1.00% if you redeem Delaware Tax-Free USA Fund and Delaware National  High-Yield
Municipal  Bond Fund within the first year and 0.50% if you redeem shares within
the second  year;  and of 0.75% if you redeem  shares of Delaware  Tax-Free  USA
Intermediate  Fund within the first year. See "Dealer  compensation"  on page 25
for a description of the amount of dealer compensation that is paid.

                                       22

Class B

     o    Class B shares have no up-front  sales  charge,  so the full amount of
          your  purchase  is  invested  in a  Fund.  However,  you  will  pay  a
          contingent  deferred sales charge if you redeem your shares within six
          years  after you buy them  (three  years  for  Delaware  Tax-Free  USA
          Intermediate Fund).

     o    If you  redeem  Class B  shares  of  Delaware  Tax-Free  USA  Fund and
          Delaware National High-Yield Municipal Bond Fund during the first year
          after  you buy  them,  the  shares  will be  subject  to a  contingent
          deferred sales charge of 4.00%.  The con