VOYAGEUR INVESTMENTS
YOUR TAX SENSITIVE INVESTMENT MANAGER
AGGRESSIVE GROWTH FUND
GROWTH AND INCOME FUND
GROWTH STOCK FUND
INTERNATIONAL EQUITY FUND
SEMI-ANNUAL REPORT
Dated October 31, 1996
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 HIGH YIELD FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in medium and
lower grade municipal bonds.
Voyageur MINNESOTA High Yield Municipal Bond Fund
Voyageur NATIONAL High Yield Municipal Bond Fund
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.
<TABLE>
<CAPTION>
<S> <C>
Voyageur ARIZONA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur NATIONAL Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NEW YORK Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur KANSAS 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.
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
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.
Voyageur FLORIDA Limited Term Tax Free Fund Voyageur NATIONAL Limited Term Tax Free Fund
Voyageur MINNESOTA Limited Term Tax Free Fund
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
Voyageur AGGRESSIVE GROWTH Fund Voyageur GROWTH Stock Fund
Voyageur GROWTH AND INCOME Fund Voyageur INTERNATIONAL Equity 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).
</TABLE>
[Photograph of John G. Taft,
upper right hand corner,
with the following caption]
JOHN G. TAFT, PRESIDENT
LETTER FROM THE PRESIDENT
Letter from the President
Despite the long-awaited downturn, the equity market continued to climb with the
S&P 500 gaining nearly 9 percent in the six months between May and October. Much
of the gain and activity in the stock market was focused on the technology
sector.
While we cannot predict when the stock market will have a correction, we believe
it cannot continue to go up and up indefinitely without some type of temporary
or focused adjustment. One of the most important actions you can take to protect
your assets in uncertain markets is to diversify your portfolio. That's why, at
Voyageur Investments, we remain committed to providing investors with
professionally managed mutual funds that invest in a variety of equity and fixed
markets.
Those investors in the Voyageur International Equity Fund will note that
Voyageur International Asset Managers Ltd. is now the subadvisor of the Fund.
Based in Edinburgh, Scotland -- one of the traditional centers of international
money management -- Voyageur International Asset Managers can offer our
shareholders more than a half a century of combined experience in managing
international securities.
If at any time you have questions about your Voyageur fund investment, please
contact your personal financial advisor or Voyageur Investments at 800.543.3863.
Voyageur Client Service representatives are available from 7 a.m. to 6 p.m.
Central Time, if you have a question or concern that cannot be addressed through
the interactive voice response system.
We appreciate your continued patronage of Voyageur Investments and look forward
to working with you and your financial advisor by offering outstanding service
and products designed to bring you closer to your investment goals.
Sincerely,
/s/ John G. Taft
John G. Taft
President
Voyageur Aggressive Growth Fund
Voyageur Growth and Income Fund
Voyageur Growth Stock Fund
Voyageur International Equity Fund
[Page Break]
[Photograph of Tony H. Elavia,
upper left hand corner,
with the following caption.]
TONY H. ELAVIA IS THE SENIOR
EQUITY PORTFOLIO MANAGER FOR
THE VOYAGEUR AGGRESSIVE GROWTH
FUND. MR. ELAVIA HAS MANAGED
THE FUND SINCE MAY 1995, AND
HAS OVER 14 YEARS OF
INVESTMENT INDUSTRY
EXPERIENCE.
VOYAGEUR AGGRESSIVE GROWTH FUND
For the six months ended October 31, 1996, the Voyageur Aggressive Growth Fund's
total return for Class A shares was 10.02 percent. This compares favorably to
the S&P 500 performance of 8.97 percent for the same period.*
A key reason we were able to outperform the broader market has been the Fund's
emphasis on technology, the market's best-performing sector. As of October 31,
72.9 percent of the Fund's total assets were in technology holdings.
Specifically, our focus has been on telecommunications and networking equipment,
software and information services three areas that have done very well for us
during this period. We recently decreased our exposure to telecommunications
equipment companies, however, because their price per earnings (P/E) multiples
now seem too high, based on next year's forecasted earnings per share.
At the same time, we began moving back into a broad range of semiconductor
companies microprocessors, large chip manufacturers and also companies that
manufacture equipment used by these companies. This industry tends to be quite
cyclical because demand is steady but, once production has started, it's hard to
stop. So when supply swamps demand, as it did in the fall of 1995, the industry
tends to fall in disfavor with the market. The dark cloud that fell over the
semiconductor industry a year ago -- when we began our exodus -- has finally
begun to lift. We have been taking advantage of this shift by buying
semiconductor companies at what we consider very attractive P/Es.
With the market's continued upward drive, we have also captured profits in the
Physician Practice Management Industry, a market segment that we had been
previously emphasizing.
The process we use in making such changes is, first, to identify the industries
that are expected to grow at twice the rate of the S&P 500. Then, within those
industries, we look for companies whose forward-looking P/Es are lower than
their long-term growth rate. While there's no guarantee that this formula will
always work and that past performance does not ensure future results,
historically it's been quite successful in producing better-than-average
returns.
We need to emphasize, however, that this is an aggressive portfolio which may
often manifest above-average volatility characteristics. In part, this is
because we are typically taking large sector-based positions. Within the
sectors, our emphasis remains on undervalued companies with very high growth
rates. Investors who can tolerate the added volatility that such ventures
entail, we believe, will be rewarded as we continue to seek new areas of
investment opportunity.
[Caveat, lower left hand corner.]
*PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS. INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE.
[Page Break]
VOYAGEUR GROWTH & INCOME FUND
[Upper right hand corner
caption as follows -- no photo.]
SEGALL, BRYANT &
HAMILL INVESTMENT
COUNSEL IS
SUB-ADVISOR TO AND
HAS DAY-TO-DAY
PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR
THE VOYAGEUR GROWTH
AND INCOME FUND.
RALPH M. SEGALL IS
THE PORTFOLIO MANAGER
FOR THE VOYAGEUR
GROWTH AND INCOME
FUND.
For the six months ended October 31, 1996, the Voyageur Growth & Income Fund's
total return for Class A shares was 1.33 percent. This compares to the S&P 500
performance of 8.97 percent for the same period.*
A portion of the underperformance can be attributed to the non-equity
investments in the portfolio. Cautious about stock market valuations and
believing interest rates would be coming down, we maintained for most of the
period approximately two thirds of the Fund's assets in equities and the
remainder about equally split between bonds and cash. While interest rates
didn't cooperate during this period, we continue to hold the bonds in
anticipation of future downward moves in rates.
A second factor in comparing performance numbers is that gains in the S&P 500
Index were rather narrowly focused, especially among large capitalization
multi-national companies, such as General Electric and Microsoft (both of which
are in the Fund, but not as heavily weighted).
To improve performance, we have increased the equity exposure to approximately
83 percent of the Fund's net assets. Further, we've made the decision to use the
firm's all-capitalization model portfolio when selecting stocks for the Fund.
This means broadening out the range of stocks for the Fund to include some
high-quality, mid-cap stocks down to a market capitalization of $300 million.
As long as the stock market continues to be driven in a momentum-based manner,
the Fund's results will tend to lag. The Fund is not heavily weighted in the
large-cap stocks that have been driving this market because our valuation work
suggests they don't have enough upside potential left. Instead, we're selecting
stocks that, we believe, are attractive at current valuations.
We take a growth in income approach in stock selection for the Voyageur Growth
and Income Fund. Truly neither growth or value investors, we focus on return on
investment (ROI), a measure of profitability and operational efficiency. ROI is
calculated by dividing total capital (common and preferred stock plus long-term
debt) into earnings before interest, taxes and dividends. We believe companies
with superior ROI will, over time, be able to grow both their earnings and their
dividends. Examples of two companies we currently favor are Amphenol, in the
connector and coaxial cable business, and OEA, an airbag manufacturer.
Anticipating a slow growth economy for the next six to 12 months, we remain
cautious about the market. Any disappointment, such as slower-than-anticipated
earnings, could throw the market into a decline. Therefore, we are being very
sensitive to valuations and stock selection right now in the belief that such
caution should result in better risk-adjusted returns over time.
[Caveat, lower right hand corner.]
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE.
[Page Break]
VOYAGEUR GROWTH STOCK FUND
[Picture of James C. King,
upper left hand corner,
with the following caption.]
JAMES C. KING IS THE SENIOR
EQUITY PORTFOLIO MANAGER FOR
THE VOYAGEUR GROWTH STOCK
FUND. MR. KING HAS MANAGED THE
FUND SINCE JANUARY 1992, AND
HAS NEARLY 30 YEARS OF
INVESTMENT INDUSTRY
EXPERIENCE.
For the six months ended October 31, 1996, the Voyageur Growth Stock Fund's
total return for Class A shares was 7.27 percent. This compares to the
performance of 11 percent on the Wilshire Large Cap Growth Index (the Fund's
benchmark index) and 8.97 percent on the S&P 500 for the same period.*
This is a high-quality, large-capitalization growth fund. We don't change our
strategy to meet whatever market environment is in existence. Instead, our goal
is to provide long-term, consistent results over the business cycle. We strive
to be defensive in bad market environments and do not expect to outperform the
indices in more aggressive, mature markets, such as the market we are currently
experiencing. Consequently, we've been underweighted in technology, the market's
best-performing sector, and instead have continued to emphasize high-quality
companies that, we believe, can provide long-term earnings and dividend growth.
The Fund invests in a high quality universe of A+ and A-rated companies. Only
242 companies out of approximately 7,000 publicly traded companies have this A+
or A quality rating, and we choose approximately 30 of these stocks to hold. We
search for stocks at the low end of their historical valuation and hold them
until they reach their highs. We typically hold positions in the Fund for
approximately three to five years, resulting in a low turnover rate for the
Fund.
With the market continuing to soar to new heights, we are especially sensitive
about valuation levels. To attempt to avoid being caught in a market downturn,
we're watching the Fund's overall price per earnings ratio a ratio that is
calculated by dividing a stock's current price by its trailing 12 months'
earnings per share.
It's impossible, of course, to know exactly when the current cycle will end. Our
experience is that both up and down markets tend to go further and last longer
than anyone anticipates. We believe we've positioned the Fund correctly to do
better than the market in a correction, but we recognize corrections tend to be
random and unpredictable. We firmly believe that by adhering to our philosophy
and continuing to invest in high-quality companies for the long-term, we provide
shareholders consistent earnings streams through many different market cycles.
[Caveat, lower left hand corner.]
*PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE.
[Page Break]
VOYAGEUR INTERNATIONAL EQUITY FUND
[Upper right hand corner caption
as follows -- no photo.]
VOYAGEUR INTERNATIONAL ASSET
MANAGERS LTD. IS SUB-ADVISOR
TO AND HAS DAY-TO-DAY
PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE
VOYAGEUR INTERNATIONAL EQUITY
FUND. VOYAGEUR INTERNATIONAL
ASSET MANAGERS LTD. IS AN
INTERNATIONAL MONEY MANAGER
BASED IN EDINBURGH, SCOTLAND.
For six months ended October 31, 1996, the Voyageur International Equity Fund's
total return for Class A shares was -3.36 percent.* This compares to a
performance of -2.27 percent for the same period on the Morgan Stanley EAFE
Index (representing 18 countries in Europe, Australia, and the Far East).
We took over as subadvisor of the Fund in September, and we will be making
significant changes to the Fund over the coming months. Our plan is to reduce
the number of stocks and sharpen the focus of the portfolio. We have been
measuring the Fund's holdings against our international equity model which we
have been running successfully for a number of years with the goal of bringing
the two into line with each other. The current portfolio has several areas not
currently part of the model which have been beneficial to performance,
especially New Zealand and Australia which will be retained for the time being.
In other areas, while the weighting was generally in line in Europe, the Fund
was underweighted in its Japanese exposure. Only about 26 percent of the Fund's
net assets are invested in Japanese companies compared to 35 percent of the
index. In addition, the Fund is somewhat overweighted in Southeast Asia and
Latin America the latter region is not even included in the EAFE Index.
Why have we been taking a relatively slow approach to changing the Fund? Because
of the size of the Fund, we didn't want to generate extravagant expenses and
negatively impact performance by making wholesale changes in the early stages.
So, as a first step, we've been following a fairly strong asset allocation
management style, trying to get the Fund's weighting more in line with our
model.
Recently in international markets, the relatively good performance in Europe has
been counterbalanced by poor performance from Japan and, after the great boom,
the emerging markets of Southeast Asia and Latin America. Going forward, we
believe that Japan is the key to getting the Far Eastern component performing
well during the next six months. Peripheral areas, such as Hong Kong or
Thailand, could add excitement, but we believe Japan will carry it through.
Japan is particularly difficult to predict right now. All the building blocks
for a strong market are in place, but there is absolutely no momentum to carry
the Japanese market forward and sentiment remains very poor. Consequently, for
the past 12 months, the Tokyo Nikkei 225 Average has been trading within a
narrow range of 20,500 to 21,500. We're gradually increasing the Fund's Japanese
holdings on the weaker days and selling Japanese stocks we don't like on the
better days, replacing them with stocks we prefer. So far, that's been a fairly
successful strategy.
Elsewhere, the current portfolio has a fairly sizeable position in Latin
America, which we will probably reduce to compensate for a larger Japanese
exposure. We're comfortable maintaining a market weight in Europe, where we
anticipate steady growth with no risk of inflation across the whole continent.
In Southeast Asia, we're reducing the Fund's exposure to Malaysia and Singapore,
both of which seem to be well through their economic cycles, and will
concentrate on the Hong Kong market where values already seem to discount the
anticipated historic events due in 1997. Although recent international markets
have been disappointing, we continue to believe that an exposure outside of the
United States will, over time, help increase your returns and help reduce the
volatility in your overall portfolio. We anticipate the European markets will
continue to move ahead with faster growth and lower inflation and a recovery in
Japan, then returns from international investments may turn the corner in the
very near future.
[Caveat, lower right hand corner.]
*PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS. INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE.
[End of Text]
(This page intentionally left blank.)
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) OCTOBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
AGGRESSIVE GROWTH AND
ASSETS GROWTH FUND INCOME FUND
----------- -----------
<S> <C> <C>
Investments in securities, at market value (note 1)
(identified costs: $4,885,178, $4,338,764, $24,448,207 and
$2,232,821, respectively)............................................. $5,423,428 $4,628,274
Cash in bank on demand deposit (including foreign currency of
$13,084 for the International Equity Fund).............................. 432,000 145,897
Dividends and interest receivable.......................................... 1,707 12,502
Receivable for investment securities sold.................................. -- --
Receivable for Fund shares sold............................................ -- --
Organizational costs (note 1).............................................. 12,464 24,460
---------- ----------
Total assets............................................................ 5,869,599 4,811,133
---------- ----------
LIABILITIES
Payable for investment securities purchased................................ 146,995 --
Accrued expenses........................................................... 26,880 26,299
---------- ----------
Total liabilities....................................................... 173,875 26,299
---------- ----------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK......................... $5,695,724 $4,784,834
========== ==========
Represented by:
Capital Stock - $.01 par value (note 1)................................ $ 3,960 $ 4,200
Additional paid-in capital.............................................. 4,259,370 4,334,376
Undistributed net investment income..................................... (35,469) 15,219
Accumulated net realized gain on investments and
foreign currency transactions......................................... 929,613 141,529
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies.......................... 538,250 289,510
---------- ----------
TOTAL NET ASSETS...................................................... $5,695,724 $4,784,834
========== ==========
Net assets applicable to outstanding Class A shares........................ $5,542,635 $4,608,038
========== ==========
Net assets applicable to outstanding Class B shares........................ $55,495 $176,796
======= ========
Net assets applicable to outstanding Class C shares........................ $97,594 N/A
=======
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of capital stock outstanding: 385,252; 404,401;
1,252,056 and 233,006, respectively (note 4).......................... $14.39 $11.39
====== ======
Class B - Shares of capital stock outstanding: 3,879; 15,621;
35,088 and 2,337, respectively (note 4)............................... $14.31 $11.32
====== ======
Class C - Shares of capital stock outstanding: 6,909; N/A;
16,409 and 2,515, respectively (note 4)............................... $14.13 N/A
======
See accompanying notes to financial statements.
[WIDE TABLE CONTINUED FROM ABOVE]
THE VOYAGEUR FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) OCTOBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
GROWTH INTERNATIONAL
STOCK FUND EQUITY FUND
---------- -----------
Investments in securities, at market value (note 1)
(identified costs: $4,885,178, $4,338,764, $24,448,207 and
$2,232,821, respectively)............................................. $31,596,625 $2,286,146
Cash in bank on demand deposit (including foreign currency of
$13,084 for the International Equity Fund).............................. 1,525,106 12,366
Dividends and interest receivable.......................................... 45,444 6,237
Receivable for investment securities sold.................................. 1,096,523 208,288
Receivable for Fund shares sold............................................ 20,000 --
Organizational costs (note 1).............................................. -- 18,334
----------- ----------
Total assets............................................................ 34,283,698 2,531,371
----------- ----------
LIABILITIES
Payable for investment securities purchased................................ 1,165,060 112,704
Accrued expenses........................................................... 52,173 27,242
----------- ----------
Total liabilities....................................................... 1,217,233 139,946
----------- ----------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK......................... $33,066,465 $2,391,425
=========== ==========
Represented by:
Capital Stock - $.01 par value (note 1)................................ $ 13,036 $ 2,379
Additional paid-in capital.............................................. 23,503,775 2,283,426
Undistributed net investment income..................................... 75,615 7,773
Accumulated net realized gain on investments and
foreign currency transactions......................................... 2,325,621 44,279
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies.......................... 7,148,418 53,568
----------- ----------
TOTAL NET ASSETS...................................................... $33,066,465 $2,391,425
=========== ==========
Net assets applicable to outstanding Class A shares........................ $31,778,567 $2,343,149
=========== ==========
Net assets applicable to outstanding Class B shares........................ $877,280 $23,373
======== =======
Net assets applicable to outstanding Class C shares........................ $410,618 $24,903
======== =======
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of capital stock outstanding: 385,252; 404,401;
1,252,056 and 233,006, respectively (note 4).......................... $25.38 $10.06
====== ======
Class B - Shares of capital stock outstanding: 3,879; 15,621;
35,088 and 2,337, respectively (note 4)............................... $25.00 $10.00
====== ======
Class C - Shares of capital stock outstanding: 6,909; N/A;
16,409 and 2,515, respectively (note 4)............................... $25.02 $9.90
====== =====
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
AGGRESSIVE GROWTH AND
GROWTH FUND INCOME FUND
----------- -----------
<S> <C> <C>
Investment income:
Dividends (net of foreign taxes withheld of $3,039
for the International Equity Fund).................................... $ 6,923 $ 20,855
Interest................................................................ -- 30,426
-------- --------
Total investment income............................................... 6,923 51,281
-------- --------
Expenses (note 2):
Investment advisory and management fee.................................. 26,230 16,586
Dividend disbursing, administrative and accounting services fees........ 16,796 12,520
Distribution fee - Class A.............................................. 6,321 5,389
Distribution fee - Class B.............................................. 168 556
Distribution fee - Class C.............................................. 780 N/A
Printing, postage and supplies.......................................... 3,113 2,906
Legal fees.............................................................. 325 138
Custodian fees.......................................................... 11,557 7,386
Compensation of directors............................................... 337 275
Audit and accounting fees............................................... 4,983 5,506
Registration fees....................................................... 11,077 17,645
Amortization of organizational costs.................................... 2,493 3,191
Other expenses.......................................................... 1,560 844
-------- --------
Total expenses........................................................ 85,740 72,942
Less (note 2):
Expenses waived or absorbed............................................. (35,000) (25,000)
Earnings credits on uninvested cash..................................... (4,125) (7,386)
-------- --------
Total net expenses.................................................... 46,615 40,556
-------- --------
Investment income (loss) - net........................................ (39,692) 10,725
-------- --------
Realized and unrealized gain (loss) on investments and
foreign currency - net:
Net realized gain (loss) from:
Investments ........................................................ 989,739 63,099
Foreign currency transactions....................................... -- --
Net increase (decrease) in unrealized appreciation or depreciation of:
Investments......................................................... (442,642) (12,862)
Translation of other assets and liabilities in foreign currencies... -- --
-------- --------
Net gain (loss) on investments and foreign currency................... 547,097 50,237
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............ $507,405 $ 60,962
======== ========
See accompanying notes to financial statements.
[WIDE TABLE CONTINUED FROM ABOVE]
THE VOYAGEUR FUNDS
STATEMENTS OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
GROWTH INTERNATIONAL
STOCK FUND EQUITY FUND
---------- -----------
Investment income:
Dividends (net of foreign taxes withheld of $3,039
for the International Equity Fund).................................... $ 335,063 $ 28,721
Interest................................................................ 44,030 --
---------- ----------
Total investment income............................................... 379,093 28,721
---------- ----------
Expenses (note 2):
Investment advisory and management fee.................................. 156,816 13,488
Dividend disbursing, administrative and accounting services fees........ 57,365 29,288
Distribution fee - Class A.............................................. 38,143 3,312
Distribution fee - Class B.............................................. 3,245 117
Distribution fee - Class C.............................................. 980 127
Printing, postage and supplies.......................................... 12,044 1,471
Legal fees.............................................................. 4,279 126
Custodian fees.......................................................... 1,359 14,598
Compensation of directors............................................... 1,726 150
Audit and accounting fees............................................... 12,047 9,004
Registration fees....................................................... 18,350 8,161
Amortization of organizational costs.................................... -- 3,667
Other expenses.......................................................... 6,324 292
---------- ----------
Total expenses........................................................ 312,678 83,801
Less (note 2):
Expenses waived or absorbed............................................. -- (50,000)
Earnings credits on uninvested cash..................................... (1,359) (6,641)
---------- ----------
Total net expenses.................................................... 311,319 27,160
---------- ----------
Investment income (loss) - net........................................ 67,774 1,561
---------- ----------
Realized and unrealized gain (loss) on investments and
foreign currency - net:
Net realized gain (loss) from:
Investments ........................................................ 1,415,624 49,247
Foreign currency transactions....................................... -- (359)
Net increase (decrease) in unrealized appreciation or depreciation of:
Investments......................................................... 690,909 (144,565)
Translation of other assets and liabilities in foreign currencies... -- 428
---------- ----------
Net gain (loss) on investments and foreign currency................... 2,106,533 (95,249)
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............ $2,174,307 $ (93,688)
========== ===========
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR AGGRESSIVE VOYAGEUR GROWTH AND
GROWTH FUND INCOME FUND
-------------------------------- ----------------------------------
SIX MONTHS YEAR SIX MONTHS PERIOD FROM
ENDED ENDED ENDED SEPTEMBER 7, 1995*
OCTOBER 31, 1996 APRIL 30, OCTOBER 31, 1996 TO APRIL 30,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Operations:
Investment income gain (loss) - net .................... $ (39,692) $ (35,170) $ 10,725 $ 6,939
Realized gain on investments - net ..................... 989,739 217,654 63,099 78,430
Net change in unrealized appreciation or depreciation
of investments ....................................... (442,642) 716,738 (12,862) 302,372
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations ... 507,405 899,222 60,962 387,741
----------- ----------- ----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A .............................................. -- -- -- (6,699)
Net realized gain on investments:
Class A .............................................. -- (116,580) -- --
Class C .............................................. -- (4,669) N/A N/A
Return of capital:
Class A .............................................. -- (24,621) -- --
Class C .............................................. -- (987) N/A N/A
----------- ----------- ----------- -----------
Total distributions ................................ -- (146,857) -- (6,699)
----------- ----------- ----------- -----------
Capital share transactions (note 4):
Proceeds from sale of shares (note 2):
Class A .............................................. 1,153,797 1,916,283 657,866 3,798,090
Class B .............................................. 111,096 310 180,984 10,581
Class C .............................................. 41,189 14,350 N/A N/A
Net asset value of shares issued in reinvestment of
net investment income, net realized gain and return of
capital distributions:
Class A .......................................... -- 138,626 -- 6,288
Class B .......................................... -- -- -- --
Class C .......................................... -- 5,488 N/A N/A
Payments for redemption of shares:
Class A .............................................. (436,741) (631,277) (73,548) (222,445)
Class B .............................................. (53,972) (26) (14,986) --
Class C .............................................. (111,402) (28,787) N/A N/A
----------- ----------- ----------- -----------
Increase in net assets from capital share transactions . 703,967 1,414,967 750,316 3,592,514
----------- ----------- ----------- -----------
Total increase in net assets ......................... 1,211,372 2,167,332 811,278 3,973,556
Net assets at beginning of period ......................... 4,484,352 2,317,020 3,973,556 --
----------- ----------- ----------- -----------
Net assets at end of period (including undistributed
net investment income (loss) of $(35,469), $4,223,
$15,219, and $4,494, respectively) ..................... $ 5,695,724 $ 4,484,352 $ 4,784,834 $ 3,973,556
=========== =========== =========== ===========
</TABLE>
- ----------------------------------
* Commencement of operations
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
VOYAGEUR GROWTH VOYAGEUR INTERNATIONAL
STOCK FUND EQUITY FUND
------------------------------- ----------------------------------
SIX MONTHS YEAR SIX MONTHS PERIOD FROM
ENDED ENDED ENDED SEPTEMBER 7, 1995*
OCTOBER 31, 1996 APRIL 30, OCTOBER 31, 1996 TO APRIL 30,
(UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operations:
Investment income gain - net ............................. $ 67,774 $ 92,678 $ 1,561 $ 1,463
Net realized gain (loss) on investments and
foreign currency transactions ........................ 1,415,624 2,164,698 48,888 55,295
Net change in unrealized appreciation or depreciation
of investments and translation of other assets and
liabilities and in foreign currencies .............. 690,909 3,458,567 (144,137) 196,834
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations ...................................... 2,174,307 5,715,943 (93,688) 253,952
------------ ------------ ------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A .............................................. -- (119,377) -- (3,259)
Class B .............................................. -- (2,294) -- --
Class C .............................................. -- (385) -- --
Net realized gain on investments:
Class A .............................................. -- (1,184,833) -- --
Class B .............................................. -- (10,519) -- --
Class C .............................................. -- (1,656) -- --
Return of capital:
Class A .............................................. -- -- -- (1,587)
------------ ------------ ------------ ------------
Total distributions ................................ -- (1,319,064) -- (4,846)
------------ ------------ ------------ ------------
Capital share transactions (note 4):
Proceeds from sale of shares (note 2):
Class A .............................................. 2,944,417 5,051,319 281,563 770,109
Class B .............................................. 393,880 456,058 500 22,812
Class C .............................................. 419,916 100,512 4,291 6,646
Net asset value of shares issued in reinvestment of
net investment income, return of capital and net
realized gain distributions:
Class A .......................................... -- 1,227,276 -- 4,437
Class B .......................................... -- 9,400 -- --
Class C .......................................... -- 65 -- --
Payments for redemption of shares:
Class A .............................................. (2,242,197) (5,356,509) (638,957) (236,210)
Class B (note 2) ..................................... (14,684) (21,866) -- (10)
Class C .............................................. (123,689) (23) (7,764) --
------------ ------------ ------------ ------------
Increase (decrease) in net assets from capital
share transactions ................................... 1,377,643 1,466,232 (360,367) 567,784
------------ ------------ ------------ ------------
Total increase (decrease) in net assets ............ 3,551,950 5,863,111 (454,055) 816,530
Net assets at beginning of period ......................... 29,514,515 23,651,404 2,845,480 2,028,950
------------ ------------ ------------ ------------
Net assets at end of period (including undistributed net
investment income (loss) of $75,615, $7,841, $7,773, and
$6,212, respectively) ................................ $ 33,066,465 $ 29,514,515 $ 2,391,425 $ 2,845,480
============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
THE VOYAGEUR FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Voyageur Aggressive Growth Fund (Aggressive Growth Fund), Voyageur Growth
and Income Fund (Growth and Income Fund), Voyageur Growth Stock Fund (Growth
Stock Fund) and Voyageur International Equity Fund (International Equity Fund),
series within Voyageur Mutual Funds III, Inc., are registered under the
Investment Company Act of 1940 (as amended) as diversified open-end management
investment companies. Aggressive Growth Fund seeks to provide shareholders with
long-term capital appreciation by investing in equity securities of companies
having the potential for high earnings growth. Growth and Income Fund's
investment objective is growth of capital. Growth and Income Fund's secondary
objective is current income. Growth and Income Fund seeks to achieve these
objectives by investing in a diversified portfolio of securities including
common stock, preferred stock, bonds, convertible securities, and warrants and
rights to purchase common stock. Growth Stock Fund seeks to provide shareholders
with long-term capital appreciation by investing in equity securities
diversified among individual companies and industries. International Equity Fund
seeks to provide shareholders with a high total return consistent with
reasonable risk by investing primarily in a diversified portfolio of equity
securities of companies located in countries outside the United States and
Canada.
Aggressive Growth Fund, Growth and Income Fund, Growth Stock Fund and
International Equity Fund (the Funds) each offer Class A, Class B and Class C
Shares. As of October 31, 1996, there were no outstanding Class C shares in
Growth and Income Fund. 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 may be
subject to a contingent deferred sales charge and have no conversion feature.
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 and foreign currency transactions are allocated
to each class of shares based upon its relative net assets. Pursuant to its
articles of incorporation, Voyageur Mutual Funds III, Inc. has 10 trillion
shares of authorized capital stock that may be issued.
The significant accounting policies followed by the Funds are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of net increases (decreases) in net assets resulting from
operations during the reporting period. Actual results could differ from those
estimates.
CONCENTRATION OF RISK
Investments in countries with limited or developing capital markets may
involve greater risks than investments in more developed markets and the prices
of such investments are volatile. The consequences of political, social or
economic changes in these markets may have disruptive effects on the market
prices of the Funds' investments and the income it generates, as well as the
Funds' ability to repatriate such amounts.
INVESTMENTS IN SECURITIES
Investments in securities traded on national or international securities
exchanges are valued at the last sales price on that exchange; securities traded
in the over-the-counter market and listed securities for which no sale was
reported on the valuation date are valued on the basis of the last current bid
price. The values of fixed income securities are determined by using pricing
services or prices quoted by independent brokers. When market quotations are not
readily available, or in certain other circumstances, securities are valued at
fair value according to methods selected in good faith by the Board of
Directors. Investments in short-term securities with maturities of more than 60
days from the valuation date are valued at the last bid price or at fair value
as determined by a pricing service approved by the Board of Directors.
Short-term securities with maturities of less than 60 days are valued at
amortized cost which approximates market value.
Security transactions are accounted for on trade date. Realized gains and
losses are calculated on the identified cost basis. Dividend income is
recognized on the ex- dividend date or upon receipt of ex-dividend notification
in the case of foreign securities. Interest income, including level-yield
amortization of premium and discount, is accrued daily.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN
CURRENCY CONTRACTS
The market value of securities and other assets and liabilities denominated
in foreign currencies is translated daily into U.S. dollars at the closing rate
of exchange. Purchases and sales of securities, and the related income and
expenses are translated at the exchange rate on the transaction date. Exchange
gains (losses) may also be realized between the trade and settlement dates on
security and forward contract transactions.
The International Equity Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
The International Equity Fund may enter into forward foreign currency
exchange contracts for operational purposes and to protect against adverse
exchange rate fluctuation. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the International Equity Fund and
the resulting unrealized appreciation or depreciation would be determined using
foreign currency exchange rates from an independent pricing service. The
International Equity Fund would be subject to the credit risk that the other
party would not complete the obligations of the contract.
FEDERAL TAXES
The Funds' 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 Funds.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the recognition of
certain foreign currency gains (losses) as ordinary income (loss) for tax
purposes and 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. 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, the Aggressive Growth Fund and International
Equity Fund had capital loss carryovers of $51,126, and $4,609, respectively, at
April 30, 1996, that will expire in 2005, 2004 and 2003, if not offset by
subsequent capital gains. It is unlikely the Board of Directors will authorize a
distribution of any net realized capital gains until the available capital loss
carryovers have been offset or expire.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income, if any, are
declared and paid annually. Net realized capital gains, if any, are also
distributed annually. All distributions are payable in cash or reinvested in
additional shares of each Fund.
ORGANIZATIONAL COSTS
Organizational costs of the Aggressive Growth Fund, Growth and Income Fund
and International Equity Fund are being amortized over 60 months on a straight
line basis.
(2) EXPENSES AND SALES CHARGES
Each Fund has an investment advisory agreement with Voyageur Fund Managers,
Inc. (Voyageur). Under the investment advisory agreements, investment decisions
for the Aggressive Growth Fund and Growth Stock Fund are made and executed by
Voyageur which provides all the Funds with office facilities, equipment and
personnel, and monitors the performance of various organizations performing
services for the Funds. The investment advisory agreements provide for the
payment on a monthly basis of a fee equal to an annual rate of .75% of Growth
and Income Fund's average daily net assets, and 1.00% of Aggressive Growth
Fund's, Growth Stock Fund's and International Equity Fund's average daily net
assets. Investment decisions for the Growth and Income Fund are made and
executed by Segall Bryant and Hamill. Voyageur pays Segall Bryant and Hamill for
their services a sub-advisory fee equal to .75% of average daily net assets.
Investment decisions for the International Equity Fund are made and executed by
Voyageur International Asset Managers, Ltd. Voyageur pays Voyageur International
Asset Managers, Ltd. for their services a sub-advisory fee equal to .50% of
average daily net assets. The Funds paid no direct fees to the sub-advisors.
Each Fund will also pay a fee to Voyageur for acting as the Funds' transfer
agent, dividend-disbursing and accounting services agent. The fee for Aggressive
Growth Fund, Growth and Income Fund and Growth Stock Fund is equal to the sum of
$1.25 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
.035%. The fee for International Equity is equal to the sum of $1.33 per
shareholder account per month, a fixed monthly fee ranging from $3,000 to $5,000
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%. Each
Fund is also responsible for reimbursing Voyageur's out-of-pocket expenses in
connection with the performance of transfer agency, dividend disbursing and
accounting services.
In addition to the advisory fee and the transfer agency, dividend disbursing
and accounting services fees, each Fund is responsible for paying most other
operating expenses including outside directors' fees and expenses, custodian
fees, registration fees, printing and shareholder reports, legal and auditing
fees and other miscellaneous expenses.
Each Fund 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 each Fund pays Fund Distributors a monthly distribution fee at
an annual rate of .25% of each Fund's average daily net assets of the Class A
Shares and 1.00% of each Fund's average daily net assets of the Class B and
Class C Shares.
The laws of certain states in which each Fund's shares may be offered for
sale also require that each Fund be reimbursed to the extent such Fund's total
expenses exceed certain percentages of average daily net assets. The most
restrictive state limitation to which the funds are currently subject provides
that total expenses (excluding certain distribution plan expenses) cannot exceed
2.5% of the first $30 million of average daily net assets, 2.0% of the next $70
million, and 1.50% of the average daily net assets in excess of $100 million.
Also Voyageur has voluntarily agreed to pay all expenses (excluding stock
transfer fees, taxes, interest and brokerage commissions) which exceed 1.75% of
average daily Class A net assets and 2.50% of average daily Class B and Class C
net assets for Aggressive Growth Fund, Growth and Income Fund, and Growth Stock
Fund (1.65% of average daily Class A net assets and 2.40% of average daily Class
B and Class C net assets for Growth Stock Fund prior to August 29, 1996) and
2.00% of average daily Class A net assets and 2.75% of average daily Class B and
Class C net assets for International Equity Fund, on an annual basis. During the
six months ended October 31, 1996, Voyageur absorbed $7,069 for Aggressive
Growth Fund, $6,747 for Growth and Income Fund and $43,514 for International
Equity Fund pursuant to the most restrictive state limitation and voluntarily
absorbed $27,931 for Aggressive Growth Fund, $18,253 for Growth and Income Fund
and $6,486 for International Equity Fund. The Funds earned credits on uninvested
cash balances held at the custodian. The credits earned for the six months ended
October 31, 1996 were $4,125 for Aggressive Growth Fund, $8,825 for Growth and
Income Fund, $45,389 for Growth Stock Fund and $6,641 for International Equity
Fund. Of these credits, $4,125, $7,386, $1,359 and $6,641, respectively, were
used to reduce certain fees for various custodial, pricing and accounting
services provided by the custodian bank. The remaining $0, $1,439, $44,030 and
$0, respectively, are included in interest income.
Sales charges paid by Class A shareholders during the six months ended
October 31, 1996 were $7,015, $2,440, $29,491 and $2,043 for Aggressive Growth
Fund, Growth and Income Fund, Growth Stock Fund and International Equity Fund,
respectively. Of these amounts, Fund Distributors received $593, $358, $4,512,
and $295, respectively. Contingent deferred sales charges paid by Class B
shareholders during the six months ended October 31, 1996 were $414 for Growth
Stock Fund.
(3) INVESTMENT SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (other
than short-term securities) aggregated $5,613,390 and $5,053,837 for Aggressive
Growth Fund, $3,488,454 and $2,118,895 for Growth and Income Fund, $5,460,289
and $4,684,447 for Growth Stock Fund and $950,357 and $1,132,583 for
International Equity Fund during the six months ended October 31, 1996.
(4) CAPITAL STOCK Transactions in shares during the periods
shown were as follows:
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
----------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- --------------------------- ---------------------------
SIX MONTHS SIX MONTHS PERIOD FROM SIX MONTHS
ENDED YEAR ENDED APRIL 16, ENDED YEAR
OCTOBER 31, ENDED, OCTOBER 31, 1996* TO OCTOBER 31, ENDED
1996 APRIL 30, 1996 APRIL 30, 1996 APRIL 30,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
---------- -------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................. 84,380 162,201 7,791 26 2,888 1,213
Shares issued for
reinvested distributions . -- 11,759 -- -- -- 471
Shares redeemed ............. (30,509) (53,033) (3,937) (1) (7,612) (2,392)
-------- -------- -------- -------- -------- --------
Increase (decrease) in
shares outstanding ....... 53,871 120,927 3,854 25 (4,724) (708)
======== ======== ======== ======== ======== ========
- ------------------------------------
* Commencement of operations
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
----------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------- -------------------------------------
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 7, 1995* ENDED DECEMBER 28, 1995*
OCTOBER 31, 1996 TO APRIL 30, OCTOBER 31, 1996 TO APRIL 30,
(UNAUDITED) 1996 (UNAUDITED) 1996
---------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Shares sold .................. 58,566 372,622 15,970 994
Shares reinvested ............ -- 587 -- --
Shares redeemed .............. (6,690) (20,684) (1,343) --
-------- -------- -------- --------
Increase in shares outstanding 51,876 352,525 14,627 994
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
GROWTH STOCK FUND
-------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
--------------------------- --------------------------- -----------------------------
SIX MONTHS SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED YEAR ENDED SEPTEMBER 8, ENDED OCTOBER 21,
OCTOBER 31, ENDED, OCTOBER 31, 1995* TO OCTOBER 31, 1995* TO
1996 APRIL 30, 1996 APRIL 30, 1996 APRIL 30,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
-------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................. 119,937 227,245 16,287 19,924 17,151 4,441
Shares issued for
reinvested distributions . -- 55,233 -- 426 -- 3
Shares redeemed ............. (91,861) (246,555) (604) (945) (5,185) (1)
-------- -------- -------- -------- -------- --------
Increase (decrease) in
shares outstanding ....... 28,076 35,923 15,683 19,405 11,966 (4,443)
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
---------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------ --------------------------- -------------------------
SIX MONTHS SIX MONTHS PERIOD FROM SIX MONTHS
ENDED YEAR ENDED APRIL 16, ENDED YEAR
OCTOBER 31, ENDED OCTOBER 31, 1996* TO OCTOBER 31, ENDED
1996 APRIL 30, 1996 APRIL 30, 1996 APRIL 30,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................. 27,803 78,718 50 2,288 430 691
Shares issued for
reinvested distribution .. -- 448 -- -- -- --
Shares redeemed ............. (62,928) (24,280) -- (1) (765) --
------- ------- ------- ------- ------- -------
Increase (decrease) in shares
outstanding .............. (35,125) 54,886 50 2,287 (335) 691
======= ======= ======= ======= ======= =======
- --------------------------------
*Commencement of operations
</TABLE>
(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>
AGGRESSIVE GROWTH FUND
----------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------- ---------------------------------
SIX MONTHS YEAR PERIOD FROM SIX MONTHS PERIOD FROM
ENDED ENDED MAY 16, 1994* ENDED APRIL 16, 1996*
OCTOBER 31, 1996 APRIL 30, TO APRIL 30, OCTOBER 31, 1996 TO APRIL 30,
(UNAUDITED) 1996 (d) 1995 (UNAUDITED) 1996
---------------- -------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period...................... $13.08 $10.40 $10.00 $13.06 $11.91
------ ------ ------ ------ ------
Operations:
Net investment income (loss)............. (.10) (.10) (.09) (.12) (.01)
Net realized and unrealized
gain on investments.................... 1.41 3.27 .49 1.37 1.16
------ ------ ------ ------ ------
Total from operations................ 1.31 3.17 .40 1.25 1.15
------ ------ ------ ------ ------
Distributions to shareholders:
From net realized gains.................. -- (.40) -- -- --
From return of capital................... -- (.09) -- -- --
------ ------ ------ ------ ------
Total distributions.................... -- (.49) -- -- --
------ ------ ------ ------ ------
Net asset value:
End of period............................ $14.39 $13.08 $10.40 $14.31 $13.06
====== ====== ====== ====== ======
Total investment return (c)................. 10.02% 31.02% 4.00% 9.57% 9.66%
Net assets at end of
period (000's omitted)................... $5,543 $4,334 $2,189 $55 $0
Ratios:
Expenses to average net assets (e)....... 1.90%(a) 2.01% 1.74%(a) 2.50%(a) 1.86%(a)
Expenses to average net assets
(net of expenses paid indirectly)...... 1.75%(a) 1.74% N/A 2.37%(a) 1.86%(a)
Net investment loss to average net assets (1.48)%(a) (1.00)% (1.21)%(a) (2.15)%(a) (1.39)%(a)
Assuming no voluntary waivers and
reimbursements and expense reductions,
up to the most restrictive state
limitation in effect:
Expenses...................... 2.97%(a) 2.74% 2.97%(a) 3.50%(a) 1.86%(a)
Net investment income (loss).. (2.55)%(a) (1.73)% (2.44)%(a) (3.15)%(a) (1.39)%(a)
Portfolio turnover rate (excluding
short-term securities)................. 100.5% 165.5% 88.3% 100.5% 165.5%
Average commission rate (g)................. $0.01 N/A N/A $0.01 N/A
Per share amounts are presented based upon average fund shares outstanding.
* Commencement of operations
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
---------------------------------------------------
CLASS C
---------------------------------------------------
SIX MONTHS YEAR PERIOD FROM
ENDED ENDED MAY 20, 1994*
OCTOBER 30, 1996 APRIL 30, TO APRIL 30,
(UNAUDITED) 1996 (d) 1995
---------------- ------- -------------
<S> <C> <C> <C>
Net asset value:
Beginning of period ...................... $ 12.88 $ 10.33 $ 10.00
------- ------- -------
Operations:
Net investment income (loss) ............. (.20) (.21) (.16)
Net realized and unrealized
gain on investments .................... 1.45 3.25 .49
------- ------- -------
Total from operations ................ 1.25 3.04 .33
------- ------- -------
Distributions to shareholders:
From net realized gains .................. -- (.40) --
From return of capital ................... -- (.09) --
------- ------- -------
Total distributions .................... -- (.49) --
------- ------- -------
Net asset value:
End of period ............................ $ 14.13 $ 12.88 $ 10.33
======= ======= =======
Total investment return (c) ................. 9.70% 29.96% 3.30%
Net assets at end of
period (000's omitted) ................... $ 98 $ 150 $ 128
Ratios:
Expenses to average net assets (e) ....... 2.65%(a) 2.77% 2.40%(a)
Expenses to average net assets
(net of expenses paid indirectly) ...... 2.50%(a) 2.49% N/A
Net investment loss to average net assets (2.25)%(a) (1.73)% (1.80)%(a)
Assuming no voluntary waivers and
reimbursements and expense reductions,
up to the most restrictive state
limitation in effect:
Expenses ...................... 3.50%(a) 3.50% 3.50%(a)
Net investment income (loss) .. (3.09)%(a) (2.46)% (2.90)%(a)
Portfolio turnover rate (excluding
short-term securities) ................. 100.5% 165.5% 88.3%
Average commission rate (g) ................. $ 0.01 N/A N/A
- --------------------------------
Per share amounts are presented based upon average fund shares outstanding.
* Commencement of operations
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
--------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------ ------------------------------------
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 7, 1995* ENDED DECEMBER 28, 1995*
OCTOBER 31, 1996 TO APRIL 30, OCTOBER 31, 1996 TO APRIL 30
(UNAUDITED) 1996 (UNAUDITED) 1996
---------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period.................... $11.24 $10.00 $11.21 $10.64
------ ------ ------ ------
Operations:
Net investment income (loss)........... .02 .02 .01 (.01)
Net realized and unrealized gain on
investments.......................... .13 1.24 .10 .58
------ ------ ------ ------
Total from operations.............. .15 1.26 .11 .57
------ ------ ------ ------
Distributions to shareholders:
From net investment income............. -- (.02) -- --
------ ------ ------ ------
Net asset value:
End of period.......................... $11.39 $11.24 $11.32 $11.21
====== ====== ====== ======
Total investment return (c)............... 1.33% 12.64% .98% 5.36%
Net assets at end of
period (000's omitted)................. $4,608 $3,962 $177 $11
Ratios:
Expenses to average net assets (e)..... 2.14%(a) 1.98%(a) 2.86%(a) 2.68%(a)
Expenses to average net assets
(net of expenses paid indirectly).... 1.75%(a) 1.75%(a) 2.50%(a) 2.45%(a)
Net investment income (loss) to
average net assets................... .50%(a) .36%(a) (.22)%(a) (.37)%(a)
Assuming no voluntary waivers and
reimbursements and expense
reductions, up to the most
restrictive state limitation
in effect:
Expenses................ 2.97%(a) 2.97%(a) 3.50%(a) 3.50%(a)
Net investment income
(loss)............... (.33)%(a) (.63)%(a) (.86)%(a) (1.19)%(a)
Portfolio turnover rate (excluding
short-term securities)................. 60.9% 56.1% 60.9% 56.1%
Average commission rate (g)............... $0.05 N/A $0.05 N/A
- ----------------------------------
Per share amounts are presented based upon average fund shares outstanding.
* Commencement of operations
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
GROWTH STOCK FUND
------------------------------------------------------------------
CLASS A
------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED APRIL 30,
OCTOBER 31, 1996 -------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992(b)
---------------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of year........................... $23.66 $19.91 $17.51 $17.81 $23.81 $19.36
------ ------ ------ ------ ------ ------
Operations:
Net investment income (loss)................ .05 .08 .15 .07 .05 (.18)
Net realized and unrealized
gain (loss) on investments................ 1.67 4.82 2.77 (.16) .22 4.81
------ ------ ------ ------ ------ ------
Total from operations................... 1.72 4.90 2.92 (.09) .27 4.63
------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income.................. -- (.11) (.13) (.06) -- --
From net realized gains..................... -- (1.04) (.39) (.15) (6.27) (.18)
------ ------ ------ ------ ------ ------
Total distributions....................... -- (1.15) (.52) (.21) (6.27) (.18)
------ ------ ------ ------ ------ ------
Net asset value:
End of year................................. $25.38 $23.66 $19.91 $17.51 $17.81 $23.81
====== ====== ====== ====== ====== ======
Total investment return (c).................... 7.27% 25.00% 17.04% (.52)% 1.51% 23.86%
Net assets at end of
year (000's omitted)........................ $31,779 $28,956 $23,651 $28,518 $26,784 $19,351
Ratios:
Expenses to average net assets (e).......... 1.97%(a) 1.78% 1.90% 1.90% 1.90% 2.25%
Expenses to average net assets
(net of expenses paid indirectly)......... 1.68%(a) 1.72% N/A N/A N/A N/A
Net investment income (loss) to average
net assets............................... .45%(a) .36% .75% .40% .26% (.76)%
Assuming no voluntary waivers,
reimbursements and
expense reductions:
Expenses......................... 1.97%(a) 1.87% 1.99% 2.13% 2.70% 2.86%
Net investment income (loss)..... .45%(a) .27% .66% .17% (.54)% (1.37)%
Portfolio turnover rate
(excluding short-term securities)......... 16.0% 36.6% 21.8% 34.2% 16.5% 142.6%
Average commission rate (g).................... $0.05 N/A N/A N/A N/A N/A
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
GROWTH STOCK FUND
----------------------------------------------------------------------------
CLASS B CLASS C
-------------------------------------- ------------------------------------
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 8, 1995* ENDED OCTOBER 21, 1995*
OCTOBER 31, 1996 TO APRIL 30, OCTOBER 31, 1996 TO APRIL 30
(UNAUDITED) 1996 (UNAUDITED) 1996
--------------- ------------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period ........................ $ 23.39 $ 21.64 $ 23.43 $ 22.61
------- ------- ------- -------
Operations:
Net investment income (loss) ............... (.02) .06 .02 .11
Net realized and unrealized
gain on investments ...................... 1.63 2.96 1.57 2.00
------- ------- ------- -------
Total from operations .................. 1.61 3.02 1.59 2.11
------- ------- ------- -------
Distributions to shareholders:
From net investment income ................. -- (.23) -- (.25)
From net realized gains .................... -- (1.04) -- (1.04)
------- ------- ------- -------
Total distributions ...................... -- (1.27) -- (1.29)
------- ------- ------- -------
Net asset value:
End of period .............................. $ 25.00 $ 23.39 $ 25.02 $ 23.43
======= ======= ======= =======
Total investment return (c) ................... 6.88% 14.37% 6.79% 9.72%
Net assets at end of
period (000's omitted) ..................... $ 877 $ 454 $ 411 $ 104
Ratios:
Expenses to average net assets (e) ......... 2.70%(a) 2.41%(a) 2.68%(a) 2.35%(a)
Expenses to average net assets
(net of expenses paid indirectly) ........ 2.44%(a) 2.37%(a) 2.43%(a) 2.31%(a)
Net investment income (loss) to average
net assets ............................. (.35)%(a) (.62)%(a) (.31)%(a) (.65)%(a)
Assuming no voluntary waivers and
reimbursements and expense reductions:
Expenses ........................... 2.70%(a) 2.50%(a) 2.68%(a) 2.43%(a)
Net investment income (loss) ...... (.35)%(a) (.71)%(a) (.31)%(a) (.73)%(a)
Portfolio turnover rate
(excluding short-term securities) .......... 16.0% 36.6% 16.0% 36.6%
Average commission rate (g) ................... $ 0.05 N/A $ 0.05 N/A
- ---------------------------------
* Commencement of operations
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
---------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------- ---------------------------
SIX MONTHS SIX MONTHS PERIOD FROM
ENDED YEAR PERIOD FROM ENDED JANUARY 16,
OCTOBER 31, ENDED MAY 16, 1994* OCTOBER 31, 1996*
1996 (f) APRIL 30, TO APRIL 30, 1996 (f) TO APRIL 30,
(UNAUDITED) 1996 1995 (UNAUDITED) 1996
----------- --------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period ................. $10.41 $ 9.42 $10.00 $10.40 $ 9.97
------ ------ ------ ------ ------
Operations:
Net investment income gain (loss) ... .01 -- (.05) (.13) --
Net realized and unrealized loss
on investments and translation of
assets and liabilities in
foreign currencies ............ (.36) 1.01 (.53) (.27) .43
------ ------ ------ ------ ------
Total from operations ....... (.35) 1.01 (.58) (.40) .43
------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income .......... -- (.01) -- -- --
From return of capital .............. -- (.01) -- -- --
------ ------ ------ ------ ------
Total distributions ............... -- (.02) -- -- --
------ ------ ------ ------ ------
Net asset value:
End of period ....................... $10.06 $10.41 $ 9.42 $10.00 $10.40
====== ====== ====== ====== ======
Total investment return (c) ............ (3.36)% 10.74% (5.80)% (3.85)% 4.31%
Net assets at end of
period (000's omitted) .............. $2,343 $2,792 $2,009 $ 23 $ 24
Ratios:
Expenses to average net assets (e) .. 2.49%(a) 2.40% 1.99%(a) 3.24%(a) 3.10%(a)
Expenses to average net assets
(net of expenses paid indirectly) . 2.00%(a) 2.00% N/A 2.75%(a) 2.73%(a)
Net investment income (loss) to
average net assets ................ .13%(a) .07% (.55)%(a) (.65)%(a) (.84)%(a)
Assuming no voluntary waivers and
reimbursements, up to the most
restrictive state limitation
in effect:
Expenses ............... 2.97%(a) 2.97% 2.97%(a) 3.50%(a) 3.50%(a)
Net investment income
(loss) ............... (.36)%(a) (.50)% (1.53)%(a) (.91)%(a) (1.24)%(a)
Portfolio turnover rate (excluding
short-term securities) .............. 38.4% 66.8% 92.1% 38.4% 66.8%
Average commission rate (g) ............ $ 0.02 N/A N/A $ 0.02 N/A
Per share amounts are presented based upon average fund shares outstanding.
* Commencement of operations
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
----------------------------------------------
CLASS C
----------------------------------------------
SIX MONTHS YEAR PERIOD FROM
ENDED ENDED MAY 20, 1994*
OCTOBER 31, 1996(f) APRIL 30, TO APRIL 30,
(UNAUDITED) 1996 1995
------------------- --------- ------------
<S> <C> <C> <C>
Net asset value:
Beginning of period ................. $10.29 $ 9.36 $ 9.99
------ ------ ------
Operations:
Net investment income gain (loss) ... .10 (.05) (.11)
Net realized and unrealized loss
on investments and translation of
assets and liabilities in
foreign currencies ............ (.49) .98 (.52)
------ ------ ------
Total from operations ....... (.39) .93 (.63)
------ ------ ------
Distributions to shareholders:
From net investment income .......... -- -- --
From return of capital .............. -- -- --
------ ------ ------
Total distributions ............... -- -- --
------ ------ ------
Net asset value:
End of period ....................... $ 9.90 $10.29 $ 9.36
====== ====== ======
Total investment return (c) ............ (3.79)% 9.94% (6.31)%
Net assets at end of
period (000's omitted) .............. $ 25 $ 29 $ 20
Ratios:
Expenses to average net assets (e) .. 3.27%(a) 3.15% 2.74%(a)
Expenses to average net assets
(net of expenses paid indirectly) . 2.75%(a) 2.75% N/A
Net investment income (loss) to
average net assets ................ (.55)%(a) (.69)% (1.36)%(a)
Assuming no voluntary waivers and
reimbursements, up to the most
restrictive state limitation
in effect:
Expenses ............... 3.50%(a) 3.50% 3.50%(a)
Net investment income
(loss) ............... (.78)%(a) (1.04)% (2.12)%(a)
Portfolio turnover rate (excluding
short-term securities) .............. 38.4% 66.8% 92.1%
Average commission rate (g) ............ $ 0.02 N/A N/A
- ------------------------------
Per share amounts are presented based upon average fund shares outstanding.
* Commencement of operations
See accompanying notes to Financial Highlights.
</TABLE>
Notes to Financial Highlights
(a) Adjusted to an annual basis.
(b) Wilke/Thompson Capital Management was acting as the Growth Stock Fund's
sub-investment adviser until January 1, 1992 when Voyageur became the sole
investment adviser to the Fund.
(c) 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.
(d) Effective May 1, 1995, Voyageur replaced George D. Bjurman & Associates as
the investment adviser for Aggressive Growth Fund to become the sole
investment adviser to the Fund.
(e) Beginning in the period ended April 30, 1996 the expense ratio reflects the
effect of gross expenses attributable to earnings credits on uninvested
cash balances received by the Funds. Prior period expense ratios have not
been adjusted.
(f) Effective August 15, 1996, Voyageur International Asset Managers, Ltd.
replaced Murray Johnstone International, Ltd. as the investment sub-adviser
for International Equity Fund.
(g) Begining in the period ended October 31, 1996, the average commission rate
paid per share for security transactions is a required disclosure. Prior
period average commission rates have not been disclosed.
VOYAGEUR AGGRESSIVE GROWTH FUND
INVESTMENTS IN SECURITIES (UNAUDITED) OCTOBER 31, 1996
- --------------------------------------------------------------------------------
MARKET
ISSUER NUMBER OF SHARES VALUE(a)
- --------------------------------------------------------------------------------
(Percentages of each investment category relate to total net assets)
COMMON STOCKS (95.2%):
CAPITAL GOODS TECHNOLOGY (2.1%):
- --------------------------------------------------------------------------------
Smart Modular Technology 6,000(c) $ 121,500
----------
COMMERCIAL SERVICES (18.7%):
- --------------------------------------------------------------------------------
American Management Systems 2,500(c) 79,062
Ciber, Incorporated 2,700(c) 95,850
Claremont Technology 3,300(c) 100,650
Computer Horizons 4,900(c) 151,900
Electronic Data Systems 3,700 166,500
Famous Daves 10,000(c) 105,000
Gartner Group, Incorporated 3,000(c) 92,250
Keane 2,500(c) 115,938
Reynolds & Reynolds Company 2,200 58,025
Viasoft Incorporated 2,000(c) 98,500
----------
1,063,675
----------
CONSUMER NON-DURABLE (3.3%):
- --------------------------------------------------------------------------------
Gillette Company 800 59,800
Proctor & Gamble 1,300 128,700
----------
188,500
----------
ENERGY ( 2.0%):
- --------------------------------------------------------------------------------
Belco Oil & Gas 4,500(c) 111,938
----------
FINANCIAL (6.6%):
- --------------------------------------------------------------------------------
Associates First Capital 3,000 130,125
Federal National Mortgage Association 2,000 78,250
Green Tree Financial 3,000 118,875
Wells Fargo & Company 175 46,747
----------
373,997
----------
HEALTHCARE (3.3%):
- --------------------------------------------------------------------------------
Boston Scientifiic Corporation 2,000(c) 108,750
HCIA, Incorporated 3,000(c) 83,250
----------
192,000
----------
TECHNOLOGY (59.2%):
- --------------------------------------------------------------------------------
Altera Corporation 2,000(c) 124,000
Anadigics, Incorporated 2,000(c) 63,000
Applix, Incorporated 3,000(c) 72,750
Ascend Communications, Incorporated 3,900(c) 254,960
Aspect 4,000(c) 99,500
Baan Company 2,000(c) 74,000
Business Objects 5,400(c) 80,325
C-Cube Microsystems, Incorporated 2,300(c) 89,125
Cascade Communications 1,500(c) 108,938
CISCO Systems, Incorporated 3,000(c) 185,625
Computer Associates International 2,250 133,032
Data Dimensions 4,000(c) 124,000
Fore Systems 4,700(c) 186,825
Harmonic Lightwave 6,000(c) 101,250
Intel Corporation 1,400 153,825
LSI Logic Corporation 4,000(c) 106,000
Micron Technology 4,000 101,500
Newbridge Networks 4,400(c) 139,150
Objective Systems Integrators 4,000(c) 86,000
Premisys Communications, Incorporated 2,800(c) 140,000
Project Software & Development 4,000(c) 136,000
Security Dynamics 1,000(c) 81,250
Shiva Corporation 2,400(c) 98,400
TCSI Corporation 7,000(c) 55,125
US Robotics Corporation 4,000 251,500
Videoserver Incorporated 2,600(c) 123,175
Vitesse Semiconductor 4,300(c) 137,063
Xilinx Incorporated 4,300(c) 65,500
----------
3,371,818
----------
TOTAL INVESTMENTS IN SECURITIES (cost: $4,885,178)(b) $5,423,428
==========
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR GROWTH AND INCOME FUND
INVESTMENTS IN SECURITIES (UNAUDITED) (CONTINUED) OCTOBER 31, 1996
- --------------------------------------------------------------------------------------------------------------
MARKET
ISSUER NUMBER OF SHARES VALUE(a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(Percentages of each investment category relate to total net assets)
COMMON STOCKS (83.1%):
BASIC MATERIALS (3.1%):
- --------------------------------------------------------------------------------------------------------------
Dole Food Company 3,800 $ 148,200
----------
CAPITAL GOODS (20.5%):
- --------------------------------------------------------------------------------------------------------------
Corning Incorporated 3,000 116,250
First Data Corporation 1,800 143,550
General Electric 1,500 145,125
Illinois Tool Works 2,000 140,500
Littelfuse Incorporated 3,200(c) 132,000
Oea Incorporated 4,000 151,000
Raychem Corporation 1,950 152,344
----------
980,769
----------
COMMERCIAL SERVICES (2.7%):
- --------------------------------------------------------------------------------------------------------------
Interpublic Group Company 2,700 130,950
----------
CONSUMER CYCLICAL (6.0%):
- --------------------------------------------------------------------------------------------------------------
Duracell International Incorporated 2,100 140,175
Mattel Incorporated 5,100 147,263
----------
287,438
----------
CONSUMER GROWTH ( 2.9%):
- --------------------------------------------------------------------------------------------------------------
Nellcor Incorporated 7,000(c) 136,500
----------
ENERGY (5.3%):
- --------------------------------------------------------------------------------------------------------------
Camco International Incorporated 3,600 139,500
Enron Corporation 2,500 116,250
----------
255,750
----------
FINANCIAL (17.4%):
- --------------------------------------------------------------------------------------------------------------
AON Corporation 2,600 150,150
Banco Latinoamericano de Export 2,600 135,850
Norwest Corporation 3,500 153,562
Protective Life Corporation 3,800 131,100
Republic New York 2,000 152,500
Security Cap Industries Trust 5,916 107,227
----------
830,389
----------
HEALTHCARE (7.9%):
- --------------------------------------------------------------------------------------------------------------
Abbott Labs 2,800 141,750
Columbia/HCA Healthcare 4,050 144,788
Pharmacia & Upjohn Incorporated 2,600 93,600
----------
380,138
----------
TECHNOLOGY (16.0%):
- --------------------------------------------------------------------------------------------------------------
Amphenol Corporation 7,000 139,125
Danka Business Systems - ADR 4,550 180,294
Electronic Data Systems (GME) 2,400 108,000
Intel Corporation 1,300 142,838
Microsoft Corporation 500(c) 68,625
National Service Industry 3,700 127,650
----------
766,532
----------
UTILITY (1.3%):
- --------------------------------------------------------------------------------------------------------------
Portland General Corporation 1,400 61,250
----------
TOTAL INVESTMENTS IN COMMON STOCK (cost: $3,691,213) 3,977,916
----------
CONVERTIBLE PREFERRED STOCKS ( 0.3%):
CONSUMER NON-DURABLE ( 0.3%):
- --------------------------------------------------------------------------------------------------------------
Corning Dell LP $3.00 250 14,000
----------
TOTAL INVESTMENTS IN CONVERTIBLE PREFERRED STOCKS (cost: $12,956) 14,000
----------
CONVERTIBLE CORPORATE BONDS (2.3%):
FINANCIAL (2.3%):
- --------------------------------------------------------------------------------------------------------------
Mitsubishi Bank International Finance, 3.00% due 11/30/02 100,000 108,625
----------
TOTAL INVESTMENTS IN CONVERTIBLE CORPORATE BONDS (cost: $108,500) 108,625
----------
NONCONVERTIBLE CORPORATE BONDS (2.5%):
FINANCIAL (2.5%):
- --------------------------------------------------------------------------------------------------------------
Rockefeller Center, 12.3% due 12/31/00 (e) 200,000 119,500
----------
TOTAL INVESTMENTS IN NONCONVERTIBLE CORPORATE BONDS (cost: $123,167) 119,500
----------
U.S. AGENCY OBLIGATIONS (6.4%):
- --------------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Inverse Floater Structured Note,
9.07% due 11/18/97 (d) 300,000 306,000
----------
TOTAL INVESTMENTS IN U.S. AGENCY OBLIGATIONS (cost: $302,740) 306,000
----------
U.S. TREASURY OBLIGATIONS (2.1%):
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Note 6.875% due 08/15/25 100,000 102,233
----------
TOTAL INVESTMENTS IN U.S. TREASURY OBLIGATIONS (cost: $100,188) 102,233
----------
TOTAL INVESTMENTS IN SECURITIES (cost: $4,338,764)(b) $4,628,274
==========
See accompanying notes to investments in securities
</TABLE>
VOYAGEUR GROWTH STOCK FUND
INVESTMENTS IN SECURITIES (UNAUDITED) OCTOBER 31, 1996
- ---------------------------------------------------------------------------
MARKET
ISSUER NUMBER OF SHARES VALUE(a)
- ---------------------------------------------------------------------------
COMMON STOCKS (95.6%):
BASIC INDUSTRIES (14.7%):
- ---------------------------------------------------------------------------
Archer Daniels Midland Company 62,000 $1,348,500
Bemis 32,000 1,120,000
Great Lakes Chemical Corporation 22,000 1,146,750
Sigma-Aldrich 21,000 1,233,750
----------
4,849,000
----------
CAPITAL GOODS - INDUSTRIAL (10.2%):
- ---------------------------------------------------------------------------
Gannett Company 15,000 1,138,125
Grainger (W.W.) 15,000 1,111,875
Pitney - Bowes 20,000 1,117,500
----------
3,367,500
----------
COMSUMER CYCLICAL (16.4%):
- ---------------------------------------------------------------------------
Bandag, Incorporated 24,000 1,140,000
Circuit City Stores 31,000 1,015,250
Dillard Department Stores 36,000 1,143,000
Genuine Parts 26,000 1,137,500
Walmart Stores 37,000 985,125
----------
5,420,875
----------
CONSUMER NONDURABLE ( 23.5%):
- ---------------------------------------------------------------------------
Albertson's Incorporated 31,000 1,065,625
Anheuser Busch 26,000 1,001,000
Conagra Incorporated 25,000 1,246,875
Philip Morris 12,000 1,111,500
Sara Lee 34,000 1,207,000
Sysco Corporation 31,000 1,054,000
UST, Incorporated 37,000 1,068,375
----------
7,754,375
----------
ENERGY (7.4%)
- ---------------------------------------------------------------------------
Royal Dutch Petroleum 7,000 1,157,625
Shell Transport & Trading 13,000 1,274,000
----------
2,431,625
----------
FINANCIAL SERVICES (6.9%):
- ---------------------------------------------------------------------------
Southtrust Corporation 35,000 1,159,375
Suntrust Banks 24,000 1,119,000
----------
2,278,375
----------
HEALTHCARE (10.1%):
- ---------------------------------------------------------------------------
Abbott Labs 23,000 1,164,375
Merck & Company 14,000 1,037,750
Schering Plough Corporation 18,000 1,152,000
----------
3,354,125
----------
TECHNOLOGY (6.4%):
- ---------------------------------------------------------------------------
Electronic Data Systems 26,000 1,170,000
Hewlett Packard 22,000 970,750
----------
2,140,750
TOTAL INVESTMENTS IN SECURITIES (cost: $24,448,207)(b) $31,596,625
===========
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR INTERNATIONAL EQUITY FUND
INVESTMENTS IN SECURITIES (UNAUDITED) OCTOBER 31, 1996
- ------------------------------------------------------------------------------------------------------------
MARKET
ISSUER NUMBER OF SHARES VALUE(a)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(Percentages of each investment category relate to total net assets)
COMMON STOCKS (95.6%):
ARGENTINA (1.2%):
- ------------------------------------------------------------------------------------------------------------
VPF Sociedad Anonima (energy) 1,300 $ 29,575
--------
AUSTRALIA (4.2%):
- ------------------------------------------------------------------------------------------------------------
News Corporation (publishing) 8,000 45,552
Pioneer International Limited (building materials) 20,800 55,423
--------
100,975
--------
BRAZIL (1.1%):
- ------------------------------------------------------------------------------------------------------------
Telebras (telecommunications) 340 25,330
--------
FRANCE (6.1%):
- ------------------------------------------------------------------------------------------------------------
Assurances Gen De France (insurance) 920 27,159
CIE Parisienne De Reescompte (financial services) 421 33,461
Legris Industries S.A. (machinery) 570 22,194
Lyonnaise Des Eaux (environmental control) (water distribution) 297 26,280
Michelin Tires (wholesale & international trade) 779 37,591
--------
146,685
--------
GERMANY ( 5.1%):
- ------------------------------------------------------------------------------------------------------------
Allianz AG Holdings (insurance) 11 19,794
Bayerishe Moteren Werke - BMW (automobiles) 90 52,756
Mannesmann AG (diversified machine) 125 48,738
--------
121,288
--------
HONG KONG ( 8.0%):
- ------------------------------------------------------------------------------------------------------------
Amoy Properties (property) 60,000 74,105
Cheung Kong (real estate) 7,000 56,128
Swire Pacific A (conglomerate) 7,000 61,786
--------
192,019
--------
IRELAND (2.1%):
- ------------------------------------------------------------------------------------------------------------
Allied Irish Bank (banking) 7,900 50,107
--------
ITALY (1.5%):
- ------------------------------------------------------------------------------------------------------------
Istituto Mobiliare Italiano (financial services) 4,600 36,418
--------
JAPAN (25.9%):
- ------------------------------------------------------------------------------------------------------------
Banyu Pharmaceutical Company Limited (pharmaceuticals) 4,000 50,994
Canon Incorporated (electrical machinery) 3,000 57,500
Itochu Corporation (wholesale and international trade) 7,000 42,281
JGC Corporation (construction) 3,000 31,651
Matsushita Communications (electronics) 2,000 52,928
Mitsubishi Materials Corporation (diversified metals) 8,000 35,590
Nippon Sanso Corporation (chemicals) 6,000 25,585
Nippon Steel (steel) 14,000 40,865
Nissan Motor Company Limited (automobiles) 5,000 37,849
NKK Corporation (steel) 15,000 (c) 37,718
Nomura Securities Company Limited (securities houses) 2,000 33,058
Omron Corporation (electronics) 2,000 35,695
Orix (financial services) 800 29,822
Sanwa Bank (banking) 2,000 34,113
Shiseido Company Limited (pharmaceuticals) 3,000 35,080
Sumitomo Electric (energy) 3,000 39,564
--------
620,293
--------
MALAYSIA (2.2%):
- ------------------------------------------------------------------------------------------------------------
Genting Berhad (hotel & leisure) 3,000 22,441
Malayan Banking Berhad (banking) 3,000 29,684
--------
52,125
--------
MEXICO (5.8%):
- ------------------------------------------------------------------------------------------------------------
CIFRA SA (retail) 30,000 (c) 38,262
Grupo Industrial Durango ADR (oil-international integrated)vvvv 2,400 (c) 26,100
ICA Empresas ADR (construction) 1,800 (c) 23,400
Telefonos De Mexico ADR (utilities) 800 24,400
Transportadora De Gas Del Sur (energy) 2,300 26,738
--------
138,900
--------
NETHERLANDS (6.9%):
- ------------------------------------------------------------------------------------------------------------
Elsevier (publishing) 2,220 36,915
Grand Hotel Krasnapolsky (real estate) 184 29,620
Ing Groep N.V. (banking) 1,500 46,789
VNU Verigd Bezit (publishing) 2,800 50,852
--------
164,176
--------
NEW ZEALAND (2.5%):
- ------------------------------------------------------------------------------------------------------------
Carter Holt Harvey Limited (paper) 15,000 33,741
Lion Nathan Limited (wines & spirits) 10,000 25,818
--------
59,559
--------
SINGAPORE (3.6%):
- ------------------------------------------------------------------------------------------------------------
Keppel Corporation (construction) 7,000 52,165
Singapore Land Limited (real estate) 6,000 33,215
--------
85,380
--------
SWITZERLAND (3.7%):
- ------------------------------------------------------------------------------------------------------------
Abb Sa SF2100 (machinery) 30 37,228
Ciba-Geigy (pharmaceuticals) 21 25,976
Sandoz AG (pharmaceuticals) 22 25,535
--------
88,739
--------
UNITED KINGDOM (15.7%):
- ------------------------------------------------------------------------------------------------------------
Abbey National PLC (banking) 2,000 20,811
BOC Group PLC (chemicals) 2,000 28,220
British Petroleum Company PLC (energy) 3,000 32,291
BTR PLC (diversified industrial) 3,700 15,515
Cable & Wireless PLC (telecommunications) 2,200 17,518
Carlton Communications (broadcasting) 3,600 28,842
Commercial Union ORD (insurance) 1,500 15,840
Glaxo Wellcome PLC (pharmaceticals) 1,400 21,977
Grand Metropolitan (wines & spirits) 3,000 22,643
Kingfisher ORD (retail) 2,500 26,604
Lloyds TSB Group PLC (banking) 4,056 25,759
Manganese Bronze Holdings PLC (automobiles) 4,800 30,366
Rank Organization (leisure) 2,800 18,626
Rolls-Royce (aerospace) 4,600 19,026
Unilever PLC (food processing) 1,000 21,023
Wolseley ORD (building materials) 3,800 29,516
--------
374,577
--------
TOTAL INVESTMENTS IN SECURITIES (cost: $2,232,821)(b) $2,286,146
==========
See accompanying notes to investments in securities.
</TABLE>
VOYAGEUR AGGRESSIVE GROWTH FUND
VOYAGEUR GROWTH AND INCOME FUND
VOYAGEUR GROWTH STOCK FUND
VOYAGEUR INTERNATIONAL EQUITY FUND
NOTES TO INVESTMENTS IN SECURITIES (UNAUDITED)
- --------------------------------------------------------------------------------
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) Also represents the cost of securities for federal income tax purposes for
Growth Stock Fund and International Equity Fund. The cost of securities for
federal income tax purposes for Aggressive Growth Fund and Growth and
Income Fund are $4,894,178 and $4,346,166, respectively. The aggregate
gross unrealized appreciation and depreciation on investments based on
these costs are:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation (Depreciation) Appreciation
------------ -------------- ------------
<S> <C> <C> <C>
Aggressive Growth Fund $872,477 $(343,227) $529,250
Growth and Income Fund 421,484 (139,376) 282,108
Growth Stock Fund 7,694,141 (545,723) 7,148,418
International Equity Fund 193,621 (140,296) 53,325
</TABLE>
(c) Presently non-income producing security.
(d) Inverse floater, represents a security that pays interest at rates that
increase (decrease) with a decline (increase) in a specified index, DM
LIBOR-Deutschemark London InterBank Offered Rate. Interest rate disclosed
is the rate in effect on October 31, 1996.
(e) Zero coupon security. Interest rate disclosed is the effective yield as of
the date of acquisition.
THE VOYAGEUR FUNDS
SPECIAL MEETING RESULTS
- --------------------------------------------------------------------------------
A special meeting of Shareholders of Voyageur International Equity Fund (the
"Fund") was held on August 15, 1996. The following matter was voted upon at the
meeting, as well as the number of votes cast for or against and the number of
abstentions with respect to such matter, are set forth below.
1. Approval of a Sub-Advisory Agreement by and between Voyageur Fund Managers,
Inc. and Voyageur International Asset Managers, Ltd. and pursuant to which
Voyageur International Asset Managers Ltd. would manage the assets of the
Fund.
Shares Voted Shares Voted
"For" "Against" Abstentions
------------ ------------ -----------
204,311 0 77,536
VOYAGEUR ON CALL(TM)
We invite you to use the Voyageur interactive voice response system, Voyageur On
Call(TM) (800.545.3863). The system is designed to give you information about
the Fund(s) in your account. It can also provide price and yield information for
the Fund(s). 24-hour access available to Touch Tone telephones only.
[LOGO]
800.545.3863
VOYAGEUR INVESTMENTS
YOUR TAX SENSITIVE INVESTMENT MANAGER
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402-4115
