Shareholder tax center

Download a printable version of the 2008 tax booklet.

Delaware Investments offers information in this section to help you better understand the year-end tax reports that we provide to shareholders. Your tax liability for the Delaware Investments^® mutual funds that you owned in 2008 is derived primarily from income and capital gains distributions made by the funds, as well as personal gains or losses resulting from the sale or exchange of fund shares.

Here, you can find valuable information on the following topics:

Capital gains

• Capital gains tax rates — Details on reporting capital gains
• How to complete tax forms for capital gains — Instructions on filling in forms for both short- and long-term capital gains
• Determining cost basis — Explanation of "cost basis" and how to calculate it to determine whether you have a capital gain or loss on shares you sold or exchanged

Tax forms

Forms you may receive from Delaware Investments

• 1099-DIV
• 1099-B
• Cost basis statement
• 1099-INT
• 1099-Q
• 1099-R
• 1042-S
• 5498 and 5498-ESA

Important state tax information

For shareholders of the following national tax-free funds

• Delaware Tax-Free USA Fund
• Delaware Tax-Free USA Intermediate Fund
• Delaware Tax-Free Money Fund ¹
• Delaware National High-Yield Municipal Bond Fund

For the calendar year 2008, all income dividends received from investments in all classes of the Delaware Investments national tax-free funds, with the exception of Delaware Tax-Free USA Fund, were exempt from federal income tax. However, these dividends may or may not be exempt under the laws of a particular state or local taxing authority.

The link above provides, on a state-by-state basis, the percentage of interest income earned on municipal obligations of issuers in each such state during the calendar year 2008. The percentages are the same for all classes of each fund.

For shareholders of the Delaware Investments state-specific tax-exempt funds

The link above gives the percentage of interest income earned on municipal obligations on a state-by-state basis for the Delaware Investments state-specific tax-exempt funds. While all income dividends from investments in these funds are generally exempt from federal income tax, they may not be exempt from state or local taxes. Please contact your tax advisor for details.

Funds that derived income from U.S. government obligations

In most states, income from U.S. Treasury securities and other U.S. government obligations is exempt from state income taxes. Please contact your tax advisor for details. The link above lists the Delaware Investments funds with the percentage of ordinary dividends they derived from U.S. government obligations.

Alternative minimum tax

Percentage of income subject to the alternative minimum tax (AMT)

For state-specific tax-exempt funds

A percentage of the income paid to shareholders of the Delaware Investments state-specific tax-free funds may also be subject to the AMT, which applies to some investors. This link lists the percentage of income subject to the AMT for these funds. Your tax advisor can provide more information on the AMT and whether this tax applies to you.

• Delaware Tax-Free Arizona Fund
• Delaware Tax-Free California Fund
• Delaware Tax-Free Colorado Fund
• Delaware Tax-Free Idaho Fund
• Delaware Minnesota High-Yield Municipal Bond Fund
• Delaware Tax-Free Minnesota Intermediate Fund
• Delaware Tax-Free Minnesota Fund
• Delaware Tax-Free New York Fund
• Delaware Tax-Free Pennsylvania Fund

For national tax-free funds

A percentage of the income paid to shareholders of the Delaware Investments national tax-free funds may be subject to the AMT, which applies to some investors. This link lists the percentage of income subject to the AMT for these funds. Your tax advisor can provide more information on the AMT and whether this tax applies to you. The funds are:

• Delaware Tax-Free USA Fund
• Delaware Tax-Free USA Intermediate Fund
• Delaware Tax-Free Money Fund ¹
• Delaware National High-Yield Municipal Bond Fund

Roth IRAs

Conversions and recharacterizations

Recharacterization is the process by which investors "undo" a Roth IRA and transfer their money back into a traditional IRA account, provided this is done before the due date (including extensions) for filing the investor's federal income tax return for the year for which the Roth IRA contribution was made. Conversion is changing from a traditional IRA to a Roth IRA. See this section for the tax implications.

International fund information

For shareholders of the following international funds

• Delaware Emerging Markets Fund
• Delaware International Value Equity Fund ²
• Delaware Global Value Fund ³

You may be able to reduce your 2008 income taxes in connection with foreign income tax paid by the international funds listed above.

Investing your tax refund

If you expect a refund this year and would like to automatically invest it into your Delaware Investments account, learn how with our helpful instructions.

Additional resources

IRS publications

The Internal Revenue Service has several publications and Web tools available free of charge to help taxpayers complete their tax returns. These publications and Web tools can be obtained by visiting the IRS Web site at www.irs.gov. The publications can also be obtained by calling the IRS at 800 TAX-1040 (800 829-1040).

Delaware Investments

If you need duplicate 1099 tax forms, you can request them by calling Delaphone, our 24-hour automated telephone account information system, at 800 362-FUND (800 362-3863).

¹An 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. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

Delaware Investments money market funds are participating in the U.S. Treasury's Temporary Guaranty Program for Money Market Funds.

²Please see the supplement to the Fund's prospectus, which contains important information regarding the investment manager for the Fund. Please obtain a copy of the Fund's prospectus by calling 800 523-1918 or by visiting the prospectuses & shareholder reports section of www.delawareinvestments.com.

³Effective Feb. 1, 2008, the investment strategies and portfolio management responsibilities for the domestic equity segment of Delaware Global Value Fund changed. For more information about these changes, please obtain a copy of the Fund's prospectus by calling 800 523-1918 or by visiting the prospectuses & shareholder reports section of www.delawareinvestments.com.

Please see the supplement to the Fund's prospectus, which contains important information regarding the investment manager for the Fund.

The information contained in the Tax Center is not intended to be legal or tax advice. Please consult a tax advisor if you need assistance preparing your tax return.

Information may be abridged and therefore incomplete. Any discussion pertaining to taxes in this communication (including attachments) may be part of the promotion or marketing of a product. As provided for in government regulations, advice (if any) related to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Individuals should seek advice based on their own particular circumstances from an independent tax advisor.

Investors should consider the investment objectives, risks and charges and expenses of a Fund carefully before investing. Each Fund's prospectus contains this and other important information about the Fund. Please request a prospectus by calling 800 523-1918 or by visiting the prospectuses & shareholder reports section of www.delawareinvestments.com. Read it carefully before investing or sending money. Delaware Distributors, L.P. is the distributor for all open-end investment companies within the Delaware Investments Family of Funds.