UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-2715
Exact name of registrant as specified in charter: Delaware Group State Tax
Free Income Trust
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service: Richelle S. Maestro, Esq.
2005 Market Street
Philadelphia, PA 19103
Registrant's telephone number, including area code: (800) 523-1918
Date of fiscal year end: February 28
Date of reporting period: August 31, 2004
Item 1. Reports to Stockholders
Delaware Tax-Free Pennsylvania Fund Semiannual Shareholder Report
Delaware
Investments(SM)
--------------------------------------
A member of Lincoln Financial Group(R)
FIXED INCOME
SEMIANNUAL REPORT AUGUST 31, 2004
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DELAWARE TAX-FREE PENNSYLVANIA FUND
[LOGO]
POWERED BY RESEARCH.(SM)
TABLE
OF CONTENTS
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DISCLOSURE OF FUND EXPENSES 1
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SECTOR ALLOCATION 2
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FINANCIAL STATEMENTS:
Statement of Net Assets 3
Statement of Operations 7
Statements of Changes in Net Assets 8
Financial Highlights 9
Notes to Financial Statements 12
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Funds are not FDIC insured and are not guaranteed. It is possible to lose
the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a
series of Delaware Management Business Trust, which is a registered
investment advisor.
(C) 2004 Delaware Distributors, L.P.
DISCLOSURE For the Period March 1, 2004 to August 31, 2004
OF FUND EXPENSES
As a shareholder of a fund, you incur two types of costs: (1) transaction costs,
including sales charges (loads) on purchase payments, reinvested dividends, or
other distributions; redemption fees; and exchange fees; and (2) ongoing costs,
including management fees; distribution and/or service (12b-1) fees; and other
fund expenses. This Example is intended to help you understand your ongoing
costs (in dollars) of investing in the fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period March 1, 2004 to August 31, 2004.
ACTUAL EXPENSES
The first section of the table shown, "Actual Fund Return," provides information
about actual account values and actual expenses. You may use the information in
this section, together with the amount you invested, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the first section under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table shown, "Hypothetical 5% Return," provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second
section of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds. In
addition, if these transactional costs were included, your costs would have been
higher. The Fund's actual expenses shown in the table reflect fee waivers in
effect. The expenses shown in the table assume reinvestment of all dividends and
distributions.
DELAWARE TAX-FREE PENNSYLVANIA FUND
EXPENSE ANALYSIS OF AN INVESTMENT OF $1,000
Expenses
Beginning Ending Paid During
Account Account Annualized Period*
Value Value Expense 3/1/04 to
3/1/04 8/31/04 Ratio 8/31/04
- --------------------------------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A $1,000.00 $1,002.00 0.92% 4.63
Class B $1,000.00 $998.10 1.70% 8.54
Class C $1,000.00 $998.10 1.70% 8.54
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HYPOTHETICAL 5% RETURN (5% return before expenses)
Class A $1,000.00 $1,020.32 0.92% 4.68
Class B $1,000.00 $1,016.35 1.70% 8.65
Class C $1,000.00 $1,016.35 1.70% 8.65
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* Expenses are equal to the Fund's annualized expense ratio, multiplied by the
average account value over the period, multiplied by 184/366 (to reflect the
one-half year period).
1
SECTOR ALLOCATION As of August 31, 2004
DELAWARE TAX-FREE PENNSYLVANIA FUND
The SEC adopted a requirement that all funds present their categories of
portfolio holdings in a table, chart, or graph format in their annual and
semiannual shareholder reports, whether or not a schedule of investments is
utilized. The following chart, which presents portfolio holdings as a percent of
total net assets, is provided in compliance with such requirement.
PERCENTAGE
SECTOR OF NET ASSETS
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MUNICIPAL BONDS 98.91%
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Airport Revenue Bonds 2.35%
Continuing Care/Retirement Revenue Bonds 2.83%
Corporate Backed Revenue Bonds 4.81%
Escrowed to Maturity Bonds 6.85%
Higher Education Revenue Bonds 13.38%
Hospital Revenue Bonds 15.66%
Investor Owned Utilities Revenue Bonds 13.69%
Miscellaneous Revenue Bonds 8.95%
Municipal Lease Revenue Bonds 1.43%
Parking Revenue Bonds 0.73%
Political Subdivision General Obligation Bonds 0.32%
Ports & Harbors Revenue Bonds 1.73%
Pre-Refunded Bonds 7.90%
School District General Obligation Bonds 2.40%
School District Revenue Bonds 0.81%
Single Family Housing Revenue Bonds 3.41%
Tax Increment/Special Assessment Bonds 0.61%
Territorial Revenue Bonds 4.97%
Transportation Revenue Bonds 0.80%
Turnpike/Toll Road Revenue Bonds 1.78%
Waste Disposal Revenue Bonds 0.36%
Water & Sewer Revenue Bonds 3.14%
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TOTAL MARKET VALUE 98.91%
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RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES 1.09%
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TOTAL NET ASSETS 100.00%
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2
STATEMENT DELAWARE TAX-FREE PENNSYLVANIA FUND
OF NET ASSETS August 31, 2004 (Unaudited)
Principal Market
Amount Value
MUNICIPAL BONDS - 98.91%
Airport Revenue Bonds - 2.35%
Allegheny County Airport Revenue
(Pittsburgh International
Airport Project) Series A
5.75% 1/1/14 (MBIA) (AMT) $ 6,910,000 $ 7,721,027
Lehigh Northampton Airport
Authority Revenue (Lehigh
Valley Airport Project) Series A
6.00% 5/15/25 (MBIA) (AMT) 1,525,000 1,690,752
6.00% 5/15/30 (MBIA) (AMT) 2,700,000 2,970,972
Philadelphia Authority for Industrial
Development Revenue (Sub-Air
Cargo Project) Series A
7.50% 1/1/25 (AMT) 2,500,000 2,528,100
-----------
14,910,851
-----------
Continuing Care/Retirement Revenue Bonds - 2.83%
Allegheny County Residential Finance
Authority Health Care Facilities
Revenue (Lemington Home for
Aged Project) Series A
5.75% 5/20/37 995,000 1,041,894
Bucks County Industrial Development
Authority Multi-Family County-
Guaranteed (New Hope Manor
Project) Series A
5.40% 3/1/22 1,265,000 1,324,202
5.50% 3/1/41 5,340,000 5,512,001
+Delaware County Authority Revenue
(Main Line & Haverford Nursing
and Rehabilitation Center Project)
9.00% 8/1/22 1,865,000 1,132,018
Lancaster County Hospital Authority
Revenue Health Center (Willow
Valley Retirement Project)
5.875% 6/1/31 2,100,000 2,176,188
Lancaster Authority for Industrial
Development Authority Revenue
(Garden Spot Village Project)
Series A 7.625% 5/1/31 1,650,000 1,702,899
Philadelphia Authority for Industrial
Development Revenue (Stapeley
Hall Germantown Continuing Care
Community Project)
6.60% 1/1/16 5,250,000 5,063,100
-----------
17,952,302
-----------
Corporate-Backed Revenue Bonds - 4.81%
Allegheny County Industrial
Development Authority
Environmental Improvement
Revenue Refunding
(USX Corp. Project)
5.50% 12/1/29 13,000,000 13,066,950
Beaver County Industrial Development
Authority Pollution Control
Revenue Refunding
(Atlantic Richfield Co. Project)
5.95% 7/1/21 5,100,000 5,323,380
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Corporate-Backed Revenue Bonds (continued)
^Bucks County Industrial Development
Authority Environmental
Improvement Revenue
(USX Corp. Project)
5.40% 11/1/17 $ 2,250,000 $ 2,480,288
Pennsylvania Economic Development
Financing Authority Solid Waste
Disposal Revenue
(Proctor & Gamble Paper Project)
5.375% 3/1/31 (AMT) 9,200,000 9,679,872
-----------
30,550,490
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Escrowed to Maturity Bonds - 6.85%
Delaware County Authority
Revenue Health Facilities
(Mercy Health Corp. Project)
6.00% 12/15/26 3,500,000 3,837,925
New Morgan Guaranteed Revenue
8.00% 11/1/05 2,590,000 2,694,791
Pennsylvania State Higher Educational
Facilities Authority College &
University Revenue
(University of the Arts Project)
5.20% 3/15/25 (RADIAN) 4,490,000 4,911,521
Philadelphia Authority for Industrial
Development Commercial Revenue
(Girard Estates Facilities Leasing Project)
5.00% 5/15/27 4,500,000 4,537,575
Philadelphia Hospitals & Higher
Education Facilities Authority
Hospital Revenue (Presbyterian
Medical Center Project)
6.65% 12/1/19 13,000,000 16,248,310
Pittsburgh Water & Sewer Authority
Revenue Refunding
7.25% 9/1/14 (FGIC) 9,000,000 10,945,530
Pottsville School District
9.375% 5/1/06 (AMBAC) 330,000 353,691
-----------
43,529,343
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Higher Education Revenue Bonds - 13.38%
Allegheny County Higher Education
Building Authority Revenue
(Carnegie Mellon University
Project) 5.25% 3/1/32 1,900,000 1,951,870
(Chatham College Project)
Series A 5.85% 3/1/22 650,000 679,452
Series A 5.95% 3/1/32 1,000,000 1,028,840
Series B 5.75% 11/15/35 5,000,000 5,185,050
Delaware County Authority College
Revenue (Eastern College Project)
Series B 5.50% 10/1/19 4,175,000 4,257,164
5.50% 10/1/24 2,850,000 2,858,607
(Haverford College Project)
5.75% 11/15/29 1,875,000 2,057,344
3
STATEMENT DELAWARE TAX-FREE PENNSYLVANIA FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Higher Education Revenue Bonds (continued)
Indiana County Industrial Development
Authority Revenue (Indiana University
Student Co-op Association, Inc. Project)
Series A
5.875% 11/1/24 (AMBAC) $ 1,000,000 $ 1,065,140
5.875% 11/1/29 (AMBAC) 1,000,000 1,064,060
Lehigh County General Purpose
Authority Revenue
(Desales University Project)
5.125% 12/15/23 (RADIAN) 5,000,000 5,147,600
Lycoming County Authority College
Revenue (Pennsylvania College of
Technology Project)
5.375% 7/1/30 (AMBAC) 5,000,000 5,225,850
Montgomery County Higher Education &
Health Authority Revenue
(Arcadia University Project)
5.85% 4/1/21 (Connie Lee) 5,465,000 5,880,176
Pennsylvania State Higher Educational
Facilities Authority College &
University Revenue (Drexel
University Project) 6.00% 5/1/29 3,000,000 3,182,130
Series A 5.20% 5/1/29 1,500,000 1,526,250
Series A 5.20% 5/1/32 1,000,000 1,016,620
(Lafayette College Project)
6.00% 5/1/30 2,500,000 2,818,600
(Philadelphia University Project)
6.00% 6/1/29 (RADIAN) 1,800,000 1,959,066
(Thomas Jefferson University Project)
5.00% 1/1/29 5,000,000 5,054,000
(University of Pennsylvania Project)
Series B 5.90% 9/1/15 4,205,000 4,372,569
(Ursinus College Project)
5.125% 1/1/33 (RADIAN) 2,000,000 2,027,520
Pennsylvania State Public School
Authority (Lehigh Career &
Technical Institute Project)
5.125% 10/1/28 (FGIC) 2,800,000 2,892,932
Philadelphia Redevelopment
Authority Revenue
(Beech Student Housing
Complex Project)
5.50% 7/1/35 (ACA) 1,500,000 1,518,630
5.625% 7/1/28 (ACA) 1,000,000 1,026,350
Philadelphia Hospitals & Higher
Educational Facilities Authority
College Revenue
(Chestnut Hill College Project)
6.00% 10/1/29 4,360,000 4,334,538
Swarthmore Borough Authority
College Revenue
(Swarthmore College Project)
5.00% 9/15/31 15,000,000 15,190,500
West Cornwall Township Municipal
Authority College Revenue
(Elizabethtown College Project)
6.00% 12/15/27 1,615,000 1,660,365
-----------
84,981,223
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Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Hospital Revenue Bonds - 15.66%
Allegheny County Hospital Development
Authority Revenue Health Center
(UPMC Health Systems Project) $ 5,745,000 $ 6,851,659
Series B 6.00% 7/1/23 (MBIA)
6.00% 7/1/26 (MBIA) 2,750,000 3,236,668
Berks County Municipal Authority
Revenue (Health Care Reading
Hospital Pooled Financing Project)
5.00% 3/1/28 11,750,000 11,834,130
Chester County Health & Educational
Facilities Authority Health System
Revenue (Jefferson Health Systems
Project) Series B 5.375% 5/15/27 14,270,000 14,528,144
Lancaster County Hospital Revenue
(General Hospital Project)
5.50% 3/15/26 3,000,000 3,049,680
Monroe County Hospital Authority
Revenue (Pocono Medical
Center Project) 6.00% 1/1/43 6,710,000 6,860,841
Montgomery County Higher Education &
Health Authority Hospital Revenue
(Abington Memorial Hospital Project)
Series A 5.125% 6/1/32 4,600,000 4,579,392
Mount Lebanon Hospital Authority
(St. Clair Memorial Hospital Project)
Series A 5.625% 7/1/32 4,500,000 4,590,945
Pennsylvania Economic Development
Financing Authority Revenue
(Dr. Gertrude A. Barber Center, Inc.
Project) 5.90% 12/1/30 (RADIAN) 2,250,000 2,407,883
Pennsylvania State Higher Educational
Facilities Authority Revenue
(UPMC Health Systems Project)
Series A 6.00% 1/15/31 10,000,000 10,556,000
(Jeanes Health System Project)
6.85% 7/1/22 10,000,000 10,055,700
Southcentral General Authority Revenue
(Wellspan Health Obligated Project)
5.625% 5/15/26 20,000,000 20,952,399
-----------
99,503,441
-----------
Investor Owned Utilities Revenue Bonds - 13.69%
Beaver County Industrial Development
Authority Pollution Control Revenue
Refunding (Cleveland Electric
Illuminating Project) 7.625% 5/1/25 8,500,000 8,957,725
Series A 7.75% 7/15/25 10,000,000 10,652,700
Cambria County Industrial Development
Authority Pollution Control Revenue
(Pennsylvania Electric Co. Project)
Series A 5.80% 11/1/20 (MBIA) 4,000,000 4,243,160
Series B 6.05% 11/1/25 (AMT) (MBIA) 9,700,000 10,301,400
Carbon County Industrial Development
Authority Refunding
(Panther Creek Partners Project)
6.65% 5/1/10 (AMT) 8,655,000 9,366,008
^Delaware County Industrial Development
Authority Pollution Control Revenue
Refunding (PECO Energy Co. Project)
Series A 5.20% 4/1/21 15,500,000 15,537,975
4
STATEMENT DELAWARE TAX-FREE PENNSYLVANIA FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Investor Owned Utilities Revenue Bonds (continued)
Indiana County Industrial Development
Authority Pollution Control Revenue
Refunding (PSE&G Power Project)
5.85% 6/1/27 (AMT) $ 3,000,000 $ 3,037,470
Lehigh County Industrial Development
Authority Pollution Control Revenue
Refunding (Pennsylvania Power &
Light Co. Project) Series B
6.40% 9/1/29 (MBIA) 15,000,000 15,354,150
^Montgomery County Industrial
Development Authority Pollution
Control Revenue (PECO Energy Co.
Project) Series A 5.20% 10/1/30 9,500,000 9,523,275
-----------
86,973,863
-----------
Miscellaneous Revenue Bonds - 8.95%
**First Albany Corp. Municipal Trusts
Inverse Floater
6.13% 12/15/14 (AMBAC) 46,500,000 54,961,140
++Philadelphia Gas Works Revenue
Capital Appreciation Series C
6.54% 1/1/12 (AMBAC) 2,500,000 1,895,575
-----------
56,856,715
-----------
Municipal Lease Revenue Bonds - 1.43%
Dauphin County General Authority
Office & Parking (Forum Place
Project) Series A 6.00% 1/15/25 9,210,000 4,365,540
Philadelphia Authority for Industrial
Development Lease Revenue
Series B 5.25% 10/1/30 (FSA) 4,510,000 4,691,933
-----------
9,057,473
-----------
Parking Revenue Bonds - 0.73%
Pennsylvania Economic Development
Financing Authority Revenue
(30th Street Station Garage Project)
5.875% 6/1/33 (ACA) 4,500,000 4,649,625
-----------
4,649,625
-----------
Political Subdivision General Obligation Bonds - 0.32%
Lancaster County Series A
5.00% 11/1/27 (FGIC) 2,000,000 2,042,260
-----------
2,042,260
-----------
Ports & Harbors Revenue Bonds - 1.73%
Delaware River Port Authority
(Pennsylvania and New Jersey
Port District Project) Series B
5.70% 1/1/21 (FSA) 8,560,000 9,516,922
Erie Western Pennsylvania Port
Authority General Revenue Refunding
6.25% 6/15/10 (AMT) 1,365,000 1,464,236
-----------
10,981,158
-----------
*Pre-Refunded Bonds - 7.90%
Abington School District
6.00% 5/15/26-06 (FGIC) 6,000,000 6,429,600
Chester Refunding (Guaranteed
Host Community Project)
7.25% 12/1/05-05 1,785,000 1,903,149
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
*Pre-Refunded Bonds (continued)
Dauphin County General Authority
College Revenue
(Holy Family College Project)
7.50% 12/1/19-04 $ 3,025,000 $ 3,070,980
Harrisburg Authority Office &
Parking Revenue Series A
6.00% 5/1/19-08 7,500,000 8,446,200
Norwin School District
6.00% 4/1/30-10 (FGIC) 2,000,000 2,320,220
Pennsylvania State Higher Education
Assistance Agency
Capital Acquisition
5.875% 12/15/30-10 (MBIA) 7,385,000 8,592,817
Pennsylvania State Higher Educational
Facilities Authority College &
University Revenue
(Ursinus College Project)
5.90% 1/1/27-07 1,000,000 1,106,690
Pennsylvania State Higher Educational
Facilities Authority Revenue
Series M 5.75% 6/15/20-05 (AMBAC) 17,730,000 18,325,905
-----------
50,195,561
-----------
School District General Obligation Bonds - 2.40%
Canon McMillan School District
Series B 5.25% 12/1/34 (FGIC) 3,580,000 3,731,255
Greater Johnstown School District
Refunding Series C
5.125% 8/1/25 (MBIA) 7,500,000 7,796,400
McGuffey School District
5.125% 8/1/31 (FGIC) 2,000,000 2,050,220
Nazareth Area School District
Series A 5.00% 2/15/30 (FSA) 1,645,000 1,667,076
-----------
15,244,951
-----------
School Districts Revenue Bonds - 0.81%
Pennsylvania Economic Development
Financing Authority School Revenue
(Germantown Friends School Project)
5.35% 8/15/31 2,820,000 2,899,975
Pennsylvania State Public School
Building Authority (Lehigh Career &
Technical Institute Project)
5.25% 10/1/32 (FGIC) 2,140,000 2,236,257
-----------
5,136,232
-----------
Single Family Housing Revenue Bonds - 3.41%
Allegheny County Residential Finance
Authority Mortgage Revenue
Single Family
Series II-2 5.90% 11/1/32 (AMT) 975,000 1,018,524
Series KK-2 5.40% 5/1/26 (AMT) 2,740,000 2,816,254
Pennsylvania Housing Finance Agency
Single Family Mortgage
Series 66A 5.65% 4/1/29 (AMT) 3,875,000 3,962,149
Series 70A 5.90% 4/1/31 (AMT) 8,250,000 8,542,957
Series 72A 5.35% 10/1/31 (AMT) 5,190,000 5,293,022
-----------
21,632,906
-----------
5
STATEMENT DELAWARE TAX-FREE PENNSYLVANIA FUND
OF NET ASSETS (CONTINUED)
Principal Market
Amount Value
MUNICIPAL BONDS (continued)
Tax Increment/Special Assessment Bonds - 0.61%
Allegheny County Redevelopment
Authority (Waterfront Project)
Series B
6.00% 12/15/10 $ 1,000,000 $ 1,123,460
6.40% 12/15/18 2,500,000 2,751,125
-----------
3,874,585
-----------
Territorial Revenue Bonds - 4.97%
Puerto Rico Commonwealth
Highway & Transportation
Authority Revenue
Series E 5.50% 7/1/19 (FSA) 1,450,000 1,699,502
Series G 5.00% 7/1/33 3,000,000 3,031,830
Series G 5.00% 7/1/42 6,700,000 6,713,802
Series J 5.00% 7/1/34 3,550,000 3,589,654
Puerto Rico Public Buildings
Authority Revenue Series I
5.25% 7/1/33 16,000,000 16,558,079
-----------
31,592,867
-----------
Transportation Revenue Bonds - 0.80%
Pennsylvania Economic Development
Financing Authority Facilities
Revenue (Amtrak Project)
Series A 6.375% 11/1/41 (AMT) 5,000,000 5,101,650
-----------
5,101,650
-----------
Turnpike/Toll Road Revenue Bonds - 1.78%
Delaware River Toll Bridge
5.00% 7/1/28 3,000,000 3,037,860
Pennsylvania State Turnpike Commission
Series A 5.00% 12/1/34 (AMBAC) 3,000,000 3,063,990
Series F 5.00% 7/15/31 (AMBAC) 1,000,000 1,018,960
Series F 5.00% 7/15/41 (AMBAC) 1,600,000 1,618,768
Series R 5.00% 12/1/30 (AMBAC) 2,500,000 2,550,850
-----------
11,290,428
-----------
Waste Disposal Revenue Bonds - 0.36%
Chester Resource Recovery
(Guaranteed Host Community Project)
7.25% 12/1/05 2,230,000 2,272,861
-----------
2,272,861
-----------
Water & Sewer Revenue Bonds - 3.14%
Dauphin County Industrial
Development Authority Water
Development Revenue Refunding
(Dauphin Consolidated Water
Supply Project) Series B
6.70% 6/1/17 1,750,000 2,175,793
Delaware County Industrial
Development Authority Water
Facilities Revenue (Philadelphia
Suburban Water Project)
6.00% 6/1/29 (FGIC) (AMT) 3,000,000 3,317,250
Erie Water Authority Water Revenue
Series A 5.125% 12/1/25 (MBIA) 4,000,000 4,154,920
Pittsburgh Water & Sewer Authority
Revenue First Lien
5.125% 12/1/31 (AMBAC) 10,000,000 10,272,000
-----------
19,919,963
-----------
TOTAL MUNICIPAL BONDS
(cost $587,404,002) $628,250,748
------------
TOTAL MARKET VALUE OF SECURITIES - 98.91%
(cost $587,404,002) 628,250,748
RECEIVABLES AND OTHER ASSETS
NET OF LIABILITIES - 1.09% 6,928,809
------------
NET ASSETS APPLICABLE TO 78,610,568
SHARES OUTSTANDING - 100.00% $635,179,557
============
Net Asset Value - Delaware Tax-Free Pennsylvania Fund
Class A ($602,437,545 / 74,558,332 Shares) $8.08
-----
Net Asset Value - Delaware Tax-Free Pennsylvania Fund
Class B ($26,140,079 / 3,235,210 Shares) $8.08
-----
Net Asset Value - Delaware Tax-Free Pennsylvania Fund
Class C ($6,601,933 / 817,026 Shares) $8.08
-----
COMPONENTS OF NET ASSETS AT AUGUST 31, 2004:
Shares of beneficial interest
(unlimited authorization - no par) $618,033,775
Accumulated net realized loss on investments (23,700,964)
Net unrealized appreciation of investments 40,846,746
------------
Total net assets $635,179,557
============
*For Pre-refunded Bonds, the stated maturity is followed by the year in which
the bond is pre-refunded.
**An inverse floater bond is a type of bond with variable or floating interest
rates that move in the opposite direction of short-term interest rates.
Interest rate disclosed is in effect as of August 31, 2004.
+Non-income producing security. Security is currently in default.
++Zero coupon bond. The interest rate shown is the yield at the time of
purchase.
^Variable rate notes. The interest rate shown is the rate as of August 31,
2004.
SUMMARY OF ABBREVIATIONS:
ACA - Insured by American Capital Access
AMBAC - Insured by the AMBAC Assurance Corporation
AMT - Subject to Alternative Minimum Tax
Connie Lee - Insured by the College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
RADIAN - Insured by the Radian Asset Assurance
NET ASSET VALUE AND OFFERING PRICE PER SHARE -
DELAWARE TAX-FREE PENNSYLVANIA FUND
Net asset value Class A (A) $8.08
Sales charge (4.50% of offering price,
or 4.70% of amount invested per share) (B) 0.38
-----
Offering price $8.46
=====
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying note
6
STATEMENT DELAWARE TAX-FREE PENNSYLVANIA FUND
OF OPERATIONS Six Months Ended August 31, 2004 (Unaudited)
INVESTMENT INCOME:
Interest $ 17,589,675
------------
EXPENSES:
Management fees 1,736,579
Distribution expenses - Class A 799,071
Distribution expenses - Class B 136,636
Distribution expenses - Class C 31,772
Dividend disbursing and transfer agent fees and expenses 195,880
Accounting and administration expenses 141,408
Reports and statements to shareholders 70,982
Custodian fees 32,167
Legal and professional fees 26,775
Trustees' fees 20,180
Registration fees 19,086
Pricing fees 3,309
Other 8,593
------------
3,222,438
Less waived distribution expenses - Class A (121,954)
Less expenses paid indirectly (12,171)
------------
Total expenses 3,088,313
------------
NET INVESTMENT INCOME 14,501,362
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (293,017)
Net change in unrealized appreciation/depreciation of
investments (13,834,583)
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (14,127,600)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 373,762
============
See accompanying notes
7
STATEMENTS DELAWARE TAX-FREE PENNSYLVANIA FUND
OF CHANGES IN NET ASSETS
Six Months Year
Ended Ended
8/31/04 2/29/04
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 14,501,362 $ 30,500,660
Net realized gain (loss) on investments (293,017) 2,688,989
Net change in unrealized appreciation/depreciation of investments (13,834,583) 5,759,399
------------ ------------
Net increase in net assets resulting from operations 373,762 38,949,048
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A (13,870,220) (29,176,006)
Class B (511,945) (1,173,099)
Class C (119,197) (212,714)
------------ ------------
(14,501,362) (30,561,819)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Class A 10,500,086 22,693,886
Class B 378,883 1,716,243
Class C 890,380 1,517,470
Net asset value of shares issued upon reinvestment of dividends and distributions:
Class A 7,873,313 16,900,046
Class B 256,739 596,011
Class C 87,932 146,911
------------ ------------
19,987,333 43,570,567
------------ ------------
Cost of shares repurchased:
Class A (40,878,100) (78,240,248)
Class B (3,460,854) (8,024,352)
Class C (325,421) (862,142)
------------ ------------
(44,664,375) (87,126,742)
------------ ------------
Decrease in net assets derived from capital share transactions (24,677,042) (43,556,175)
------------ ------------
NET DECREASE IN NET ASSETS (38,804,642) (35,168,946)
NET ASSETS:
Beginning of period 673,984,199 709,153,145
------------ ------------
End of period (there is no undistributed net investment income at each period end) $635,179,557 $673,984,199
============ ============
See accompanying notes
8
FINANCIAL
HIGHLIGHTS
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE TAX-FREE PENNSYLVANIA FUND CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
8/31/04(1) 2/29/04 2/28/03 2/28/02 2/28/01 2/29/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $8.250 $8.140 $7.950 $7.820 $7.460 $8.290
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.183 0.365 0.374 0.387 0.402 0.410
Net realized and unrealized gain (loss) on investments (0.170) 0.110 0.189 0.130 0.360 (0.830)
------ ------ ------ ------ ------ ------
Total from investment operations 0.013 0.475 0.563 0.517 0.762 (0.420)
------ ------ ------ ------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.183) (0.365) (0.373) (0.387) (0.402) (0.410)
------ ------ ------ ------ ------ ------
Total dividends and distributions (0.183) (0.365) (0.373) (0.387) (0.402) (0.410)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $8.080 $8.250 $8.140 $7.950 $7.820 $7.460
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) 0.20% 6.00% 7.29% 6.78% 10.47% (5.18%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $602,438 $638,325 $669,042 $682,030 $695,329 $716,646
Ratio of expenses to average net assets 0.92% 0.90% 0.92% 0.89% 0.92% 0.92%
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly 0.96% 0.94% 0.92% 0.89% 0.92% 0.92%
Ratio of net investment income to average net assets 4.53% 4.47% 4.69% 4.92% 5.26% 5.21%
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly 4.57% 4.43% 4.69% 4.92% 5.26% 5.21%
Portfolio turnover 15% 12% 18% 38% 23% 38%
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge. Total
investment return reflects a waiver and payment of fees by the distributor,
as applicable. Performance would have been lower had the expense limitation
not been in effect.
See accompanying notes
9
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE TAX-FREE PENNSYLVANIA FUND CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
8/31/04(1) 2/29/04 2/28/03 2/28/02 2/28/01 2/29/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $8.250 $8.140 $7.950 $7.820 $7.460 $8.290
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.151 0.301 0.312 0.324 0.341 0.347
Net realized and unrealized gain (loss) on investments (0.170) 0.110 0.189 0.130 0.360 (0.830)
------ ------ ------ ------ ------ ------
Total from investment operations (0.019) 0.411 0.501 0.454 0.701 (0.483)
------ ------ ------ ------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.151) (0.301) (0.311) (0.324) (0.341) (0.347)
------ ------ ------ ------ ------ ------
Total dividends and distributions (0.151) (0.301) (0.311) (0.324) (0.341) (0.347)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $8.080 $8.250 $8.140 $7.950 $7.820 $7.460
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) (0.19%) 5.17% 6.46% 5.93% 9.59% (5.94%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $26,140 $29,589 $34,914 $37,533 $36,350 $37,390
Ratio of expenses to average net assets 1.70% 1.68% 1.70% 1.69% 1.72% 1.72%
Ratio of net investment income to average net assets 3.75% 3.69% 3.91% 4.12% 4.46% 4.41%
Portfolio turnover 15% 12% 18% 38% 23% 38%
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge.
See accompanying notes
10
FINANCIAL
HIGHLIGHTS (CONTINUED)
Selected data for each share of the Fund outstanding
throughout each period were as follows:
DELAWARE TAX-FREE PENNSYLVANIA FUND CLASS C
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Ended
8/31/04(1) 2/29/04 2/28/03 2/28/02 2/28/01 2/29/00
(Unaudited)
NET ASSET VALUE, BEGINNING OF PERIOD $8.250 $8.140 $7.950 $7.820 $7.460 $8.290
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.151 0.301 0.312 0.324 0.340 0.347
Net realized and unrealized gain (loss) on investments (0.170) 0.110 0.189 0.130 0.360 (0.830)
------ ------ ------ ------ ------ ------
Total from investment operations (0.019) 0.411 0.501 0.454 0.700 (0.483)
------ ------ ------ ------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.151) (0.301) (0.311) (0.324) (0.340) (0.347)
------ ------ ------ ------ ------ ------
Total dividends and distributions (0.151) (0.301) (0.311) (0.324) (0.340) (0.347)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $8.080 $8.250 $8.140 $7.950 $7.820 $7.460
====== ====== ====== ====== ====== ======
TOTAL RETURN(2) (0.19%) 5.17% 6.46% 5.93% 9.58% (5.94%)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $6,602 $6,070 $5,197 $4,512 $3,898 $3,909
Ratio of expenses to average net assets 1.70% 1.68% 1.70% 1.69% 1.72% 1.72%
Ratio of net investment income to average net assets 3.75% 3.69% 3.91% 4.12% 4.46% 4.41%
Portfolio turnover 15% 12% 18% 38% 23% 38%
(1) Ratios and portfolio turnover have been annualized and total return has not
been annualized.
(2) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of dividends and distributions at
net asset value and does not reflect the impact of a sales charge.
See accompanying notes
11
NOTES DELAWARE TAX-FREE PENNSYLVANIA FUND
TO FINANCIAL STATEMENTS August 31, 2004 (Unaudited)
Delaware Group State Tax-Free Income Trust (the "Trust") is organized as a
Delaware statutory trust and offers one series: Delaware Tax-Free Pennsylvania
Fund (the "Fund"). The Trust is an open-end investment company. The Fund is
considered non-diversified under the Investment Company Act of 1940, as amended
and offers Class A, Class B, and Class C shares. Class A shares are sold with a
front-end sales charge of up to 4.50%. Class B shares are sold with a contingent
deferred sales charge that declines from 4% to zero depending upon the period of
time the shares are held. Class B shares will automatically convert to Class A
shares on a quarterly basis approximately 8 years after purchase. Class C shares
are sold with a contingent deferred sales charge of 1%, if redeemed during the
first 12 months.
The investment objective of Delaware Tax-Free Pennsylvania Fund is to seek a
high level of current interest income exempt from federal income tax and certain
Pennsylvania state and local taxes, consistent with the preservation of capital.
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principles and are consistently followed by the Fund.
Security Valuation - Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term debt securities having less than 60 days to maturity are
valued at amortized cost, which approximates market value. Other securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith under the direction of the Fund's Board of
Trustees.
Federal Income Taxes - The Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
Class Accounting - Investment income and common expenses are allocated to the
classes of the Fund on the basis of "settled shares" of each class in relation
to the net assets of the Fund. Realized and unrealized gain (loss) on
investments are allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and other expenses are paid monthly. Security transactions are
recorded on the date the securities are purchased or sold (trade date). Costs
used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to interest
income over the lives of the respective securities.
The Fund declares dividends daily from net investment income and pays such
dividends monthly and declares and pays distributions from net realized gain on
investments, if any, annually. The Fund receives earnings credits from its
custodian when positive cash balances are maintained, which are used to offset
custody fees. The earnings credits for the six months ended August 31, 2004 were
approximately $12,171. The expenses paid under the above arrangement is included
in "custodian fees" on the Statement of Operations with the corresponding
expense offset shown as "expenses paid indirectly."
2. INVESTMENT MANAGEMENT, ADMINISTRATION AGREEMENTS AND OTHER TRANSACTIONS WITH
AFFILIATES
In accordance with the terms of its investment management agreement, the Fund
pays Delaware Management Company (DMC), a series of Delaware Management Business
Trust and the investment manager, an annual fee which is calculated daily at the
rate of 0.55% on the first $500 million of average daily net assets of the Fund,
0.50% on the next $500 million, 0.45% on the next $1.5 billion, and 0.425% on
average daily net assets in excess of $2.5 billion.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides accounting,
administration, dividend disbursing and transfer agent services. The Fund pays
DSC a monthly fee based on the average net assets subject to certain minimums
for accounting and administration services. The Fund pays DSC a monthly fee
based on the number of shareholder accounts for dividend disbursing and transfer
agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays
Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an
annual distribution and service fee not to exceed 0.30% of the average daily net
assets of the Class A shares and 1.00% of the average daily net assets of the
Class B and C shares. DDLP has contracted to waive distribution and service fees
through April 30, 2005 in order to prevent distribution and service fees of
Class A shares from exceeding 0.25% of average daily net assets.
At August 31, 2004, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC $289,368
Dividend disbursing, transfer agent,
accounting and administrative fees, and
other expenses payable to DSC $49,254
Other expenses payable to DMC and affiliates* $151,250
*DMC, as part of its administrative services, pays operating expenses on behalf
of the Fund and is reimbursed on a periodic basis. Such expenses include items
such as printing of shareholder reports, fees for audit, legal, and tax
services, registration fees and trustees' fees.
As provided in the investment management agreement, the Fund bears the cost of
certain legal service expenses, including in-house legal services provided to
the Fund by DMC employees. For the six months ended August 31, 2004, the
Delaware Tax-Free Pennsylvania Fund had costs of $8,493.
For the six months ended August 31, 2004, DDLP earned $23,594 for commissions on
sales of the Fund's Class A shares.
Certain officers of DMC, DSC and DDLP are officers and/or trustees of the Trust.
These officers and trustees are paid no compensation by the Fund.
3. INVESTMENTS
For the six months ended August 31, 2004, the Fund made purchases of $25,457,639
and sales of $50,283,309 of investment securities other than short-term
investments.
At August 31, 2004, the cost of investments for federal income tax purposes has
been estimated since the final tax characteristics cannot be determined until
fiscal year end. At August 31, 2004, the cost of investments was $592,099,812.
At August 31, 2004, the net unrealized appreciation was $36,150,936 of which
$41,224,637 related to unrealized appreciation of investments and $5,073,701
related to unrealized depreciation of investments.
12
NOTES DELAWARE TAX-FREE PENNSYLVANIA FUND
TO FINANCIAL STATEMENTS (CONTINUED)
4. DIVIDEND AND DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with federal income tax regulations, which may differ from U.S. generally
accepted accounting principles. The tax character of dividends and distributions
paid during the six months ended August 31, 2004 and the year ended February 29,
2004 was as follows:
8/31/04 2/29/04
----------- -----------
Tax-exempt income $14,501,362 $30,561,819
*Tax information for the six months ended August 31, 2004 is an estimate and the
tax character of dividends and distributions may be redesignated at fiscal year
end.
The components of net assets are estimated since the final tax characteristics
cannot be determined until fiscal year end. As of August 31, 2004, the estimated
components of net assets on a tax basis were as follows:
Shares of beneficial interest $618,033,775
Capital loss carryforwards (19,005,154)
Unrealized appreciation of investments 36,150,936
------------
Net assets $635,179,557
============
The difference between book basis and tax basis components of net assets are
primarily attributable to tax deferral of losses on wash sales.
At February 29, 2004, for federal income tax purposes, the Fund had capital loss
carryforwards of $18,712,137 which may be carried forward and applied against
future capital gains. Such capital loss carryforwards expire as follows:
$9,227,179 expires in 2008, $8,323,306 expires in 2009, and $1,161,652 expires
in 2010.
For the six months ended August 31, 2004, the Fund had capital losses of
$293,017 which may be added to the capital loss carryforwards.
5. CAPITAL SHARES
Transactions in capital shares were as follows:
Six Months Year
Ended Ended
8/31/04 2/29/04
Shares sold:
Class A 1,311,206 2,782,740
Class B 47,368 211,221
Class C 111,113 186,731
Shares issued upon reinvestment of
dividends and distributions:
Class A 983,925 2,080,106
Class B 32,085 73,362
Class C 10,994 18,079
---------- -----------
2,496,691 5,352,239
---------- -----------
Shares repurchased:
Class A (5,114,460) (9,648,248)
Class B (431,093) (985,491)
Class C (40,841) (107,300)
---------- -----------
(5,586,394) (10,741,039)
---------- -----------
Net decrease (3,089,703) (5,388,800)
========== ===========
For the six months ended August 31, 2004 and the year ended February 29, 2004,
257,898 Class B shares were converted to 257,898 Class A shares valued at
$2,071,440 and 238,898 Class B shares were converted to 238,898 Class A shares
valued at $1,933,320, respectively. The respective amounts are included in Class
B redemptions and Class A subscriptions in the table above and the Statement of
Changes in Net Assets.
6. LINE OF CREDIT
The Fund, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participates in a $177,300,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each funds' allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement. The
Fund had no amounts outstanding as of August 31, 2004, or at any time during the
period.
7. CREDIT AND MARKET RISKS
The Fund concentrates its investments in securities issued by Pennsylvania
municipalities. The value of these investments may be adversely affected by new
legislation within Pennsylvania, regional or local economic conditions, and
differing levels of supply and demand for municipal bonds. Many municipalities
insure repayment for their obligations. Although bond insurance reduces the risk
of loss due to default by an issuer, such bonds remain subject to the risk that
market may fluctuate for other reasons and there is no assurance that the
insurance company will meet its obligations. These securities have been
identified in the Statement of Net Assets.
8. CONTRACTUAL OBLIGATIONS
The Fund enters into contracts in the normal course of business that contain a
variety of indemnifications. The Fund's maximum exposure under these
arrangements is unknown. However, the Fund has not had prior claims or losses
pursuant to these contracts. Management has reviewed the Fund's existing
contracts and expects the risk of loss to be remote.
13
Delaware
Investments(SM)
- --------------------------------------
A member of Lincoln Financial Group(R)
This semiannual report is for the information of Delaware Tax-Free Pennsylvania
Fund shareholders, but it may be used with prospective investors when preceded
or accompanied by a current prospectus for Delaware Tax-Free Pennsylvania Fund
and the Delaware Investments Performance Update for the most recently completed
calendar quarter. The prospectus sets forth details about charges, expenses,
investment objectives, and operating policies of the Fund. You should read the
prospectus carefully before you invest. The figures in this report represent
past results which are not a guarantee of future results. The return and
principal value of an investment in the Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
BOARD OF TRUSTEES AFFILIATED OFFICERS CONTACT INFORMATION
JUDE T. DRISCOLL JOSEPH H. HASTINGS INVESTMENT MANAGER
Chairman Executive Vice President and Delaware Management Company
Delaware Investments Family of Funds Chief Financial Officer Philadelphia, PA
Philadelphia, PA Delaware Investments Family of Funds
Philadelphia, PA INTERNATIONAL AFFILIATE
WALTER P. BABICH Delaware International Advisers Ltd.
Board Chairman RICHELLE S. MAESTRO London, England
Citadel Construction Corporation Executive Vice President,
King of Prussia, PA Chief Legal Officer and Secretary NATIONAL DISTRIBUTOR
Delaware Investments Family of Funds Delaware Distributors, L.P.
JOHN H. DURHAM Philadelphia, PA Philadelphia, PA
Private Investor
Gwynedd Valley, PA MICHAEL P. BISHOF SHAREHOLDER SERVICING, DIVIDEND
Senior Vice President and Treasurer DISBURSING AND TRANSFER AGENT
JOHN A. FRY Delaware Investments Family of Funds Delaware Service Company, Inc.
President Philadelphia, PA 2005 Market Street
Franklin & Marshall College Philadelphia, PA 19103-7094
Lancaster, PA
FOR SHAREHOLDERS
ANTHONY D. KNERR 800 523-1918
Managing Director
Anthony Knerr & Associates FOR SECURITIES DEALERS AND FINANCIAL
New York, NY INSTITUTIONS REPRESENTATIVES ONLY
800 362-7500
ANN R. LEVEN
Former Treasurer/Chief Fiscal Officer Web site
National Gallery of Art www.delawareinvestments.com
Washington, DC
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
JANET L. YEOMANS
Vice President/Mergers & Acquisitions
3M Corporation
St. Paul, MN
- --------------------------------------------------------------------------------
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. The Fund's Forms N-Q, as well as a description of the policies and
procedures that the Fund uses to determine how to vote proxies (if any) relating
to portfolio securities is available without charge (i) upon request, by calling
800 523-1918; (ii) on the Fund's Web site at http://www.delawareinvestments.com;
and (iii) on the Commission's Web site at http://www.sec.gov. The Fund's Forms
N-Q may be reviewed and copied at the Commission's Public Reference Room in
Washington, DC; information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio
securities during the most recently disclosed 12-month period ended June 30 is
available without charge (i) through the Fund's Web site at
http://www.delawareinvestments.com; and (ii) on the Commission's Web site at
http://www.sec.gov.
- --------------------------------------------------------------------------------
(8925) Printed in the USA
SA-007 [8/04] IVES 10/04 J9820
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Included as part of report to shareholders filed under Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Companies and Affiliated Purchasers
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 10. Controls and Procedures
The registrant's principal executive officer and principal financial
officer have evaluated the registrant's disclosure controls and procedures
within 90 days of the filing of this report and have concluded that they are
effective in providing reasonable assurance that the information required to be
disclosed by the registrant in its reports or statements filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission.
There were no significant changes in the registrant's internal control
over financial reporting that occurred during the registrant's last fiscal
half-year that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 11. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal
Financial Officer pursuant to Rule 30a-2 under the Investment
Company Act of 1940 are attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule
23c-1 under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf, by the undersigned, thereunto duly authorized.
DELAWARE GROUP STATE TAX FREE INCOME TRUST
Jude T. Driscoll
- -------------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: November 4, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Jude T. Driscoll
- -------------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: November 4, 2004
Joseph H. Hastings
- -------------------------------------
By: Joseph H. Hastings
Title: Chief Financial Officer
Date: November 4, 2004