NORTH DAKOTA TAX FREE FUND
SEMI-ANNUAL REPORT
Dated June 30, 1995
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds as your objectives or market
conditions change.
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
Voyageur ARIZONA Tax Free Fund Voyageur KANSAS Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
<TABLE>
<S> <C>
Voyageur ARIZONA Insured Tax Free Fund Voyageur MISSOURI Insured Tax Free Fund
Voyageur CALIFORNIA Insured Tax Free Fund Voyageur NATIONAL Insured Tax Free Fund
Voyageur FLORIDA Insured Tax Free Fund Voyageur OREGON Insured Tax Free Fund
Voyageur MINNESOTA Insured Fund Voyageur WASHINGTON Insured Tax Free Fund
</TABLE>
VOYAGEUR LIMITED TERM FUNDS seek to preserve original investment principal while
providing income free from both Federal income taxes and state income taxes
(where applicable). The Funds invest in intermediate term investment grade
municipal bonds.
<TABLE>
<S> <C>
Voyageur FLORIDA Limited Term Tax Free Fund Voyageur MINNESOTA Limited Term Tax Free Fund
</TABLE>
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
Voyageur AGGRESSIVE GROWTH Fund Voyageur INTERNATIONAL Equity Fund
Voyageur GROWTH Stock Fund
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur MUNICIPAL CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur GOVERNMENT CASH Series Voyageur PRIME CASH Series
Voyageur MINNESOTA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
Dear Shareholder:
The municipal bond market's dramatic rebound in the first half of 1995 caused
many mutual funds to recover much of the ground they lost in last year's bear
market. This strong rally was evidenced by the Fund's performance. I am pleased
to present a considerably brighter picture of the municipal bond market and the
Fund's performance than was presented in my last letter to you.
The results below summarize the Fund's net asset value, dividends paid and total
net assets for the reporting period.
<TABLE>
<CAPTION>
NET ASSET NET ASSET TOTAL NET
VALUE VALUE DIVIDENDS ASSETS
BEGINNING END PAID PER END OF
PERIOD OF PERIOD OF PERIOD SHARE PERIOD (000'S)
<S> <C> <C> <C> <C>
Period ended June 30, 1995:
Class A Shares $9.85 $10.49 $0.29 $35,855
Class B Shares 9.85 10.49 0.27 186
</TABLE>
In the pages that follow, the Fund's Manager will update you on how the economy
and the municipal bond market affected the Fund during this reporting period.
The manager will discuss the Fund's performance and some strategies used to
maximize performance.
We assert that a long-range view of investing provides the greatest benefit to
our shareholders. We encourage you to maintain a long-range view of investing;
we believe that you will derive the greatest benefit by doing so.
Thank-you for investing with Voyageur.
Sincerely,
John G. Taft
President
Voyageur North Dakota Tax Free Fund
FACTORS AFFECTING FUND PERFORMANCE
During the reporting period, municipal bond funds rebounded strongly and largely
reversed the negative total return performance from 1994. Yields fell a striking
90 basis points (.90%) and long term treasury bond yields fell 125 basis points
(1.25%). Responding to strong economic growth and continued inflation fears, the
Federal Reserve Board raised short term interest rates in February an additional
50 basis points to 6.00%. The market viewed this rate increase as, most likely,
the final increase in the Fed's one-year campaign of tighter monetary policy.
Since February 1995, the market witnessed a dramatic shift in sentiment as the
economy revealed signs of a slow down with no evidence of inflation. As yields
fell, bond prices increased and investment returns on all fixed income classes
were sharply positive.
Several notable events in the reporting period affected the bond market's
performance:
* The Federal Reserve Board continued its restrictive policy and raised short
term interest rates 50 basis points in February. This seemed to prove
successful in slowing domestic growth and curbing the threat of inflation.
As indications of a slowing economy became more evident, market
participants became more comfortable with the fact that the Fed's strategy
had succeeded and that the economy could sustain slow growth and low
inflation. The reversal of sentiment in 1995 resulted in a substantial bond
market rally.
* The reduction of municipal bond issuance in 1995 coupled with strong demand
bolstered municipal bond prices. Bond issuance in the first half of this
year was down 50% from 1994 levels and, in addition, a record $80 billion
in bonds was to be called away from investors in June and July. This
shortage of supply should continue to have a positive technical impact on
municipal bond performance throughout the rest of 1995.
* The issue of radical tax reform, specifically proposals such as a flat tax
or national sales tax, dominated the municipal bond marketplace in the
second quarter of 1995. While municipal bond prices increased, this price
appreciation compared to treasuries did not occur as rapidly in the second
quarter. This price differential (called a risk premium) between treasury
yields and municipal yields resulted from the discussions surrounding tax
reform. We view the current price discrepancies between municipal bonds and
treasuries as an opportunity to purchase quality bonds at a discount to
taxable bond equivalents.
* Radical tax reform proposals caused many investors to fear that the tax
advantage of municipal bonds may erode. While there are numerous proposals
and relative degrees of reform, it is the radical reform proposals that
suggest a drastic restructuring of the current federal tax code and that
have been the subject of much media attention. All of the discussions and
proposals are in preliminary stages. At Voyageur, we believe the likelihood
of radical reform is remote. Clearly some reform is possible, although we
believe that we are at least two to three years away from potential
enactment. We continue to monitor the issue of tax reform and believe that
this discussion will continue to prevail in the months ahead.
* In general, the municipal market recovered from the temporary setback of
prices surrounding the Orange County, California derivative debacle last
year. However, California state-specific bonds continue to lag the overall
market, and volatility remains high due to the county's credit problems.
OUTLOOK
Our outlook for the municipal bond market is optimistic both in the near term
and for the balance of the decade. We anticipate a steeper yield curve (lower
short term rates) for the rest of the year and well into 1996. We believe the
economic fundamentals will affirm our view that inflation is under control and
that the Fed has been successful in slowing the domestic economy. Economic
growth should slow to 3.0% to 3.5% for the year, inflation should remain in
check in the 3.0 to 3.5% range, and unemployment will be in the 5.0% to 5.4%
range.
The "technical"condition of the municipal bond market, or the supply and demand
equation, continues to be very favorable. Currently we are experiencing the
lowest municipal bond supply in five years, while the demand continues to
strengthen prices. In addition, during the summer, volumes of bonds will be
called out of the marketplace. On a net basis, the fewer number of bonds in the
marketplace bodes favorably for the bond prices throughout the balance of the
year.
We expect the bond market to witness lower volatility during the second half of
the year. Throughout 1994 and during the first half of 1995, bond investors
experienced unusually high volatility in both bull and bear market cycles. We
look for bond yields to remain in a narrow trading range and believe lower
interest rates will prevail for the coming year.
Given our expectations for the rest of the year, we will continue to make minor
adjustments to the duration of our portfolios as needed. By maintaining our
longer-than-average duration last year, we were able to capture superior returns
in the bond market rally for the first and second quarters. We continue to
monitor the tax reform discussion and look for opportunities to purchase quality
bonds trading at a discount in the market. We seek bonds with good call
protection, specifically ten-year call protection, to avoid the risk of having
bonds called away in a declining yield environment. We believe that high quality
bonds with call protection will perform the best in the economic environment of
lower rates.
The dramatic change in sentiment from bearish to bullish demonstrated how the
market climate has changed. At Voyageur, we remain committed to the long term
approach to investing. We believe those investors who take a conservative
approach with asset allocation will, over the course of time, be rewarded for
their patience with above average returns.
DISCUSSION OF FUND MANAGEMENT BY ANDREW M. MCCULLAGH, JR., PORTFOLIO MANAGER
Mr. McCullagh is Senior Vice President and Tax Exempt Portfolio Manager for the
Voyageur North Dakota Tax Free Fund. He has over 22 years experience in
municipal bond trading, underwriting, and portfolio management.
At the state level, economic growth and the employment outlook continued to
prosper. Low issuance of municipal bonds was a dominant factor in the first half
of 1995, bolstering the price of existing North Dakota bonds. We expect the
scarcity of North Dakota bonds to continue for the remainder of the year.
The North Dakota Tax Free Funds' Class A total investment return was 9.42% for
the reporting period. Moreover, the Fund ranked seventh among its 45 fund
competitors in its Lipper objective of other states municipal debt funds for one
year, 6/30/94 through 6/30/95. (Note: This Lipper Analytical Services ranking
and the total return information that follow represent past performance which is
no guarantee of future results. Shares may be worth more or less than their
original cost. The total return based on net asset value for the Fund's A-shares
was 8.39% at one year and 7.53% since inception.)
At the end of the reporting period, the Fund held no cash and was fully invested
in long bonds. Industrial, health care and housing were the three largest
sectors (19%, 17% and 16% respectively) in which the Fund was invested. We
remain committed to quality paper, hence 96% of the Voyageur North Dakota Tax
Free Fund's portfolio is comprised of bonds rated in the three highest
categories by Standard & Poor's Corporation and/or Moody's Investors Service
(AAA/Aaa, AA/Aa, and A/A).
We continue to adhere to the strategy of buying quality bonds for the Fund. We
expect that favorable returns will continue, although not at the dramatic pace
experienced during the first half of this year. We believe that the Voyageur
North Dakota Tax Free Fund is poised to take full advantage of current market
conditions.
<TABLE>
<CAPTION>
VOYAGEUR NORTH DAKOTA TAX FREE FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1995
<S> <C>
ASSETS
Investments in securities, at market value (note 1)
(identified cost: $36,462,471)............................................... $35,821,971
Accrued interest receivable..................................................... 534,921
Receivable for investment securities sold....................................... 726,226
Receivable for Fund shares sold................................................. 1,795
Organizational costs (note 1)................................................... 2,715
Total assets................................................................. 37,087,628
LIABILITIES
Disbursements in excess of cash in bank on demand deposit....................... 125,358
Dividends payable to shareholders............................................... 39,707
Payable for investment securities purchased..................................... 832,538
Payable for Fund shares redeemed................................................ 932
Other accrued expenses.......................................................... 48,122
Total liabilities............................................................ 1,046,657
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK.............................. $36,040,971
Represented by:
Capital Stock - $.01 par value (note 1)...................................... $ 34,361
Additional paid-in capital................................................... 36,631,879
Undistributed net investment income.......................................... 5,152
Accumulated net realized gain on investments................................. 10,079
Unrealized depreciation of investments....................................... (640,500)
TOTAL NET ASSETS........................................................... $36,040,971
Net assets applicable to outstanding Class A Shares............................. $35,855,192
Net assets applicable to outstanding Class B Shares............................. $ 185,779
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of Capital Stock outstanding: 3,418,435 (note 4)............ $10.49
Class B - Shares of Capital Stock outstanding: 17,711 (note 4)............... $10.49
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR NORTH DAKOTA TAX FREE FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1995
<S> <C>
Investment income:
Interest................................................................ $1,054,043
Expenses (note 3):
Investment advisory and management fee.................................. 88,764
Dividend-disbursing, administrative and accounting services fees........ 38,599
Printing, postage and supplies.......................................... 6,145
Audit and accounting fees............................................... 6,665
Legal fees.............................................................. 2,474
Distribution fees - Class A............................................. 44,192
Distribution fees - Class B............................................. 819
Directors' fees......................................................... 1,168
Registration fees....................................................... 2,150
Custodian fees.......................................................... 4,514
Amortization of organizational costs.................................... 1,725
Other ................................................................ 535
Total expenses........................................................ 197,750
Less: Expenses waived, absorbed or reduced............................. (49,115)
Total net expenses.................................................... 148,635
Investment income - net............................................... 905,408
Realized and unrealized gain on investments:
Realized gain on security transactions (note 2)......................... 78,270
Net change in unrealized depreciation of investments.................... 2,261,178
Net gain on investments............................................... 2,339,448
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $3,244,856
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR NORTH DAKOTA TAX FREE FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
<S> <C> <C>
Operations:
Investment income - net .......................................... $ 905,408 $ 1,935,876
Realized gain on investments - net ............................... 78,270 283,858
Net change in unrealized appreciation or depreciation
of investments ................................................. 2,261,178 (4,311,228)
Net increase (decrease) in net assets resulting from operations .. 3,244,856 (2,091,494)
Distributions to shareholders from:
Investment income - net:
Class A ........................................................ (1,012,952) (1,816,356)
Class B ........................................................ (4,228) (2,596)
Net realized gain on investments:
Class A ........................................................ -- (282,927)
Class B ........................................................ -- (931)
Excess distributions of net realized gains:
Class A ........................................................ -- (67,967)
Class B ........................................................ -- (224)
Total distributions .......................................... (1,017,180) (2,171,001)
Capital share transactions (note 4):
Proceeds from sale of shares:
Class A (note 3) ............................................... 1,825,849 7,013,267
Class B ........................................................ 27,900 148,507
Net asset value of shares issued in reinvestment of net investment
income and realized gain distributions:
Class A ...................................................... 810,280 1,276,264
Class B ...................................................... 4,379 1,955
Payments for redemption of shares:
Class A ........................................................ (2,828,419) (5,084,626)
Increase (decrease) in net assets from share transactions ........ (160,011) 3,355,367
Total increase (decrease) in net assets ........................ 2,067,665 (907,128)
Net assets at beginning of period ................................... 33,973,306 34,880,434
Net assets at end of period (including undistributed net
investment income of $5,152, and $116,924, respectively) ......... $ 36,040,971 $ 33,973,306
</TABLE>
See accompanying notes to financial statements.
VOYAGEUR NORTH DAKOTA TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur North Dakota Tax Free Fund (the Fund), a fund within Voyageur Tax
Free Funds, Inc., is registered under the Investment Company Act of 1940 (as
amended) as a non-diversified, open-end management investment company. The Fund
offers Class A, Class B and Class C Shares. Class A Shares are sold with a
front-end sales charge. Class B Shares may be subject to a contingent deferred
sales charge and such shares automatically convert to Class A after eight years.
Class C Shares (first offered on March 1, 1995) are not subject to a front-end
sales charge or contingent deferred sales charge and have no conversion feature.
There were no Class C Shares outstanding as of June 30, 1995. Each class of
shares has identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that the level of distribution fees charged differs
between classes. Income, expenses (other than expenses incurred under each
class' Distribution Agreement) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets. Pursuant to its amended articles of incorporation, Voyageur Tax Free
Funds, Inc. has 10 trillion shares of authorized capital stock that may be
issued in one or more series.
The significant accounting policies followed by the Funds are summarized as
follows:
Investments in Securities
Securities are valued at fair value as determined by the Board of Directors.
Determination of fair value involves, among other things, using pricing services
or prices quoted by independent brokers. Short-term securities are valued at
amortized cost which approximates market value.
Security transactions are accounted for on the trade date. Securities gains
and losses are calculated on the identified-cost basis. Interest income,
including level-yield amortization of premium and original issue discount, is
accrued daily.
The Fund concentrates its investments in certain geographical areas, and
therefore may have more credit risk related to the economic conditions of these
areas than a portfolio with broader geographical diversification.
Securities Purchased on a When-Issued Basis
Delivery and payment for securities which have been purchased by the Fund on
a forward commitment or when-issued basis can take place up to a month or more
after the transaction date. During this period, such securities are subject to
market fluctuations and the portfolio maintains, in a segregated account with
its custodian, assets with a market value equal to or greater than the amount of
its purchase commitments.
Organizational Costs
Organizational costs are being amortized over 60 months on an inverse
acceleration (sum of the years' digits) basis.
Federal Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders in amounts that will avoid or minimize federal
income or excise taxes for the Fund. Net investment income and net realized
gains (losses) for the Fund may differ for financial statement and tax purposes
primarily because of losses deferred for tax purposes due to "wash sale"
transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. The effect on dividend
distributions on certain book-to-tax differences is reflected as excess
distributions of net realized gains in the statement of changes in net assets.
Also, due to the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income or realized
gains (losses) were recorded by the Fund.
For federal income tax purposes, as of December 31, 1994, the Fund had a
capital loss carryover of $30,335 that will expire in 2003 if not offset by
subsequent capital gains. It is unlikely that the Board of Directors will
authorize a distribution of any net realized capital gains until the available
capital loss carryover has been offset or expires.
Distributions to Shareholders
Dividends declared daily from net investment income are payable monthly in
cash or reinvested in additional shares of the Fund. Net short-term realized
capital gains, if any, may be paid throughout the year and net long-term
realized capital gains, when available, are distributed annually.
(2) SECURITIES TRANSACTIONS
Purchase cost and proceeds from sales of securities other than short-term
securities aggregated $3,633,466 and $3,946,812 during the six months ended June
30, 1995, respectively.
(3) EXPENSES
The Fund has an investment advisory and management agreement with Voyageur
Fund Managers, Inc. (Voyageur) under which Voyageur manages the Fund's assets
and provides other specified services. The fee for investment management and
advisory services is paid monthly and is based on the average daily net assets
of the Fund at the annual rate of .50%. In addition, the Fund will pay most
other operating expenses including directors' fees, registration fees, printing
of shareholder reports, legal and auditing services and other miscellaneous
expenses. Voyageur is obligated to pay all expenses of the Fund (excluding
distribution fees, insurance premiums on portfolio securities, taxes, interest
and brokerage commissions) which exceed 1% of average daily net assets, on an
annual basis.
The Fund will also pay a fee to Voyageur for acting as the Fund's dividend
disbursing, administrative and accounting services agent. The fee is paid
monthly and is equal to the sum of $1.33 per shareholder account per month, a
fixed monthly fee ranging from $1,000 to $1,500 based on the level of the Fund's
average daily net assets and an annualized percentage of average daily net
assets at reducing rates from .11% to .02%. The Fund is also responsible for
reimbursing Voyageur's out-of-pocket expense in connection with the performance
of dividend-disbursing, administrative and accounting services.
Each class of shares has a Distribution Agreement under Rule 12b-1 of the
Investment Company Act of 1940 with Voyageur Fund Distributors, Inc. (Fund
Distributors). Under these plans the Fund is obligated to pay Fund Distributors
a monthly distribution fee at an annual rate of .25% of average daily net assets
of the Class A Shares and 1.00% of average daily net assets of the Class B and
Class C Shares. Fund Distributors may waive all or part of its distribution fee
at its sole discretion. During the period ended June 30, 1995, Fund Distributors
voluntarily waived Class A distribution fees of $44,192 and Class B
distributions fees of $409. The Fund earned $9,140 in credits on uninvested cash
balances held at the custodian during the six months ended June 30, 1995. Of
these credits $4,514 were used to reduce certain fees for various custodial,
pricing and accounting services provided by the custodian bank and $4,626 are
included in interest income.
Sales charges paid by Class A shareholders were $21,415. Of this amount, Fund
Distributors received $3,119.
(4) SHARE TRANSACTIONS
Transactions in shares of capital stock during the periods ended June 30, 1995
and December 31, 1994 were as follows:
<TABLE>
<CAPTION>
(CLASS A) (CLASS B)
SIX MONTHS YEAR SIX MONTHS PERIOD FROM
ENDED ENDED ENDED MAY 10, 1994*
JUNE 30, 1995 DECEMBER 31, JUNE 30, 1995 TO DECEMBER 31,
(UNAUDITED) 1994 (UNAUDITED) 1994
<S> <C> <C> <C> <C>
Shares sold...................... 175,404 657,610 2,657 14,434
Shares issued for reinvested
distributions................. 79,236 121,738 427 193
Shares redeemed.................. (271,796) (495,792) -- --
Increase (decrease) in
shares outstanding............ (17,156) 283,556 3,084 14,627
</TABLE>
* Commencement of operations.
(5) FINANCIAL HIGHLIGHTS
Per share data (rounded to the nearest cent) for a share of capital stock
outstanding and selected information for each period are as follows:
<TABLE>
<CAPTION>
(CLASS A)
PERIOD FROM
SIX MONTHS APRIL 1,
ENDED 1991(d) TO
JUNE 30, 1995 YEAR ENDED DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991
Net asset value:
<S> <C> <C> <C> <C> <C>
Beginning of period .................. $ 9.85 $ 11.07 $ 10.59 $ 10.34 $ 10.00
Operations:
Net investment income ................ .26 .56 .58 .62 .49
Net realized and unrealized
gain (loss) on investments ........ .67 (1.15) .58 .34 .41
Total from operations ........... .93 (.59) 1.16 .96 .90
Distributions to shareholders:
From net investment income ........... (.29) (.53)(a) (.58)(a) (.62)(a) (.49)(a)
From net realized gains .............. -- (.08) (.10) (.09) (.07)
In excess of net realized gains ...... -- (.02) -- -- --
Total distributions ............... (.29) (.63) (.68) (.71) (.56)
Net asset value:
End of period ......................... $ 10.49 $ 9.85 $ 11.07 $ 10.59 $ 10.34
Total investment return (b) ............ 9.42% (5.47)% 11.20% 9.70% 9.23%
Net assets at end of
period (000's omitted) .............. $35,855 $33,829 $34,880 $15,846 $ 4,914
Ratios:
Ratio of expenses to
average daily net assets .......... .83%(e) .46% .59% .40% .16%(e)
Ratio of net investment income
to average daily net assets ....... 5.11%(e) 5.36% 5.11% 5.78% 6.43%(e)
Assuming no voluntary waivers and
reimbursements and reductions:
Expenses (c) ................ 1.11%(e) 1.14% 1.25% 1.25% 1.25%(e)
Net investment income ....... 4.83%(e) 4.68% 4.45% 4.93% 5.34%(e)
Portfolio turnover rate (excluding
short-term securities) ................ 10.47% 32.60% 27.39% 26.27% 126.37%
</TABLE>
See accompanying notes to Financial Highlights.
<TABLE>
<CAPTION>
(CLASS B)
SIX MONTHS PERIOD FROM
ENDED MAY 10, 1994(d)
JUNE 30, 1995 TO DECEMBER 31,
(UNAUDITED) 1994
<S> <C> <C>
Net asset value:
Beginning of period .................... $ 9.85 $ 10.31
Operations:
Net investment income .................. .24 .30
Net realized and unrealized
gain (loss) on investments ........... .67 (.39)
Total from operations .............. .91 (.09)
Distributions to shareholders:
From net investment income ............. (.27) (.27)(a)
From net realized gains ................ -- (.08)
In excess of net realized gains ........ -- (.02)
Total distributions .................. (.27) (.37)
Net asset value:
End of period .......................... $ 10.49 $ 9.85
Total investment return (b) ............... 9.16% (.77)%
Net assets at end of period (000's omitted) $ 186 $ 144
Ratios:
Ratio of expenses to
average daily net assets........................ 1.34%(e) .99%(e)
Ratio of net investment income
to average daily net assets..................... 4.58%(e) 4.97%(e)
Assuming no voluntary waivers and
reimbursements and reductions:
Expenses (c).............................. 1.86%(e) 1.89%(e)
Net investment income..................... 4.06%(e) 4.07%(e)
Portfolio turnover rate (excluding
short-term securities)............................ 10.47% 32.60%
</TABLE>
See accompanying notes to Financial Highlights.
NOTES TO FINANCIAL HIGHLIGHTS
(a) For federal income tax purposes, all of the net investment income
distributions were derived from interest on securities exempt from federal
income tax. For the period ended December 31, 1991 $.01 per share of the
distribution from net investment income was subject to state income tax.
(b) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(c) Voyageur Fund Distributors voluntarily waived or reimbursed expenses during
the periods presented. The annual contractual expenses limit for the Fund
(excluding distribution fees, insurance premiums on portfolio securities,
taxes, interest and brokerage commissions) is 1% of average daily net
assets. The maximum distribution fee is .25% of the Fund's average daily
net assets for Class A Shares and 1.00% of the Fund's average daily net
assets for Class B and Class C Shares.
(d) Commencement of operations.
(e) Annualized.
<TABLE>
<CAPTION>
VOYAGEUR NORTH DAKOTA TAX FREE FUND
INVESTMENTS IN SECURITIES (UNAUDITED) JUNE 30, 1995
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (c) RATE MATURITY VALUE (a)
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (99.4%):
GENERAL OBLIGATION (11.9%):
<S> <C> <C> <C>
$ 210 Bismarck Tax Increment GO............................................... 5.70% 05-01-07 $ 210,794
110 Devils Lake............................................................. 5.75 05-01-10 107,104
110 Devils Lake............................................................. 5.75 05-01-11 106,442
110 Devils Lake............................................................. 5.75 05-01-12 105,752
100 Devils Lake Public School District #1................................... 6.80 05-01-11 102,567
150 Fargo Park District Improvement......................................... 5.10 05-01-11 138,772
165 Fargo Park District Improvement......................................... 5.10 05-01-12 151,356
170 Fargo Park District Improvement......................................... 5.10 05-01-13 155,166
625 Fargo Public School District #1 (MBIA Insured).......................... 5.75 05-01-10 623,706
650 Fargo Public School District #1 (MBIA Insured).......................... 5.75 05-01-12 641,673
155 Grand Forks Highway Unlimited Tax....................................... 6.00 12-01-10 156,111
165 Grand Forks Highway Unlimited Tax....................................... 6.00 12-01-11 165,741
170 Grand Forks Highway Unlimited Tax....................................... 6.00 12-01-12 170,391
270 Grand Forks Sewer Reserve............................................... 6.70 06-01-07 285,290
250 North Dakota State Real Estate.......................................... 6.00 09-01-96(b) 250,418
1,000 Puerto Rico (MBIA Insured).............................................. 5.38 07-01-22 933,750
4,305,033
UTILITIES (8.2%):
145 Grand Forks Water Revenue.............................................. 5.70 06-01-11(e) 141,005
155 Grand Forks Water Revenue.............................................. 5.75 06-01-12(e) 150,589
165 Grand Forks Water Revenue.............................................. 5.80 06-01-13(e) 160,745
175 Grand Forks Water Revenue.............................................. 5.85 06-01-14(e) 171,021
190 Grand Forks Water Revenue.............................................. 5.85 06-01-15(e) 185,194
2,200 Mercer County Pollution Control (MBIA Insured)......................... 5.85 06-01-23 2,140,908
2,949,462
INDUSTRIAL (19.3%):
200 Fargo Park District Revenue............................................ 7.25 11-01-11 214,030
750 Fargo Trollwood Square Project IDR..................................... 5.63 11-01-16 749,970
2,500 Fargo Trollwood Village................................................ 5.13 11-01-16 2,393,150
500 Mercer County Pollution Control (FGIC Insured)......................... 6.65 06-01-22 523,955
500 Mercer Pollution Control Otter Tail Power.............................. 6.90 02-01-19 528,460
2,250 Morton Pollution Control Montana/Dakota Utility (FGIC Insured)......... 6.65 06-01-22 2,357,796
185 Oliver Pollution Control Square Butte Electric Co-op................... 7.00 12-31-10 185,004
6,952,365
HEALTH CARE (16.8%):
500 Bismarck Hospital Alexius Medical Center (AMBAC Insured)............... 6.90 05-01-06 545,885
250 Bismarck Hospital Medical Center (BIG Insured)......................... 7.50 05-01-13 275,313
1,000 Cass County Health Facility Catholic Health Corp.,
Villa Nazareth Project............................................... 6.25 11-15-14 1,006,020
1,000 Fargo Hospital Facility St. Luke's Hospital, Series 1992............... 6.50 06-01-15 1,026,270
225 Grand Forks Health Care (MBIA Insured)................................. 6.13 12-01-14 227,043
250 Grand Forks Health Care Revenue (MBIA Insured)......................... 6.25 12-01-19 253,440
1,250 Grand Forks United Hospital (MBIA Insured)............................. 6.63 12-01-10 1,325,487
1,000 Ward County Health Care Facility....................................... 7.50 07-01-21 1,123,750
250 Williston Catholic Health Corporation Mercy Hospital
Williston Project (MBIA Insured) 7.20 06-01-14 265,000
6,048,208
HOUSING REVENUE (16.3%):
380 Minot Single Family Mortgage........................................... 7.70 08-01-10 408,922
1,000 North Dakota Housing Finance Authority Single Family Mortgage.......... 6.30 07-01-15 999,990
440 North Dakota State Housing Finance Agency Single Family Mortgage
(FHA Insured)....................................................... 6.95 07-01-12 455,941
220 North Dakota State Housing Finance Agency Single Family Mortgage....... 6.75 07-01-12 225,267
1,330 North Dakota State Housing Finance Agency Single Family Mortgage....... 5.55 07-01-24 1,185,841
2,000 North Dakota State Housing Finance Agency Single Family Mortgage....... 5.80 07-01-25 1,845,820
810 North Dakota State Housing Finance Agency (MBIA Insured)............... 5.75 07-01-23 755,050
5,876,831
EDUCATION (6.3%):
250 Burleigh County University Facilities Mary PJ Bank Qualified........... 7.13 12-01-11 250,978
250 North Dakota State University Housing and Auxiliary Facility........... 6.30 04-01-07 260,775
500 North Dakota State University Housing and Auxiliary Facility........... 6.50 04-01-12 514,425
320 University of North Dakota State Board of Higher Education............. 5.25 04-01-08 306,301
340 University of North Dakota State Board of Higher Education............. 5.25 04-01-09 321,504
360 University of North Dakota State Board of Higher Education............. 5.25 04-01-10 336,233
300 University of North Dakota State Board of Higher Education............. 5.25 04-01-13 273,903
2,264,119
CERTIFICATES OF PARTICIPATION (7.9%):
400 North Dakota Building Authority Lease Revenue (AMBAC Insured).......... 6.75 06-01-11 419,752
1,000 North Dakota Building Authority Lease Revenue (AMBAC Insured).......... 5.45 08-15-11 931,910
1,000 North Dakota Building Authority Refunding Lease (AMBAC Insured)........ 6.00 06-01-10 1,008,840
500 North Dakota State Building Authority.................................. 5.40 08-15-08 478,685
2,839,187
OTHER REVENUE (12.7%):
500 Fargo Refunding Improvement ........................................... 5.90 05-01-07 511,455
1,000 Fargo Sales Tax Revenue................................................ 7.25 01-01-09 1,056,740
120 North Dakota Muni Bond Bank............................................ 5.13 06-01-11 109,339
450 North Dakota Muni Bond Bank............................................ 6.25 12-01-11 453,744
120 North Dakota Muni Bond Bank............................................ 5.13 06-01-12 108,239
125 North Dakota Muni Bond Bank............................................ 5.13 06-01-13 112,115
2,000 North Dakota Muni Bond Bank............................................ 6.25 10-01-14 2,020,380
200 North Dakota Student Loan (AMBAC Insured).............................. 7.00 07-01-05 214,754
4,586,766
TOTAL INVESTMENT IN SECURITIES (cost: $36,462,471) (d) $35,821,971
</TABLE>
See accompanying notes to investments in securities.
NOTES TO INVESTMENTS IN SECURITIES (UNAUDITED)
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) The maturity dates for these issues represent mandatory puts or dates on
which, in the opinion of the Fund's investment advisor, the issue is likely
to be called.
(c) Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
Aaa/AAA Aa/AA A/A Baa/BAA Other Total
35% 20% 41% 3% 1% 100%
(d) The cost of securities for federal income tax purposes is $36,500,327 and
the aggregate gross unrealized appreciation and depreciation of securities
based on this cost are as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Depreciation
405,922 (1,084,278) (678,356)
(e) At June 30, 1995, the cost of securities purchased on a when-issued basis
was $830,000.
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, Minnesota 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota 55402
VOYAGEUR
NORTH DAKOTA TAX FREE FUND
SEMI-ANNUAL REPORT
Dated June 30, 1995
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, Minnesota 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota 55402
BULK RATE
U.S. Postage
PAID
Minneapolis, MN.
Permit #3322
VOYAGEUR
90 SOUTH SEVENTH STREET, SUITE 4400
MINNEAPOLIS, MINNESOTA 55402.4115
