NATIONAL TAX FREE FUND
NATIONAL INSURED TAX FREE FUND
NATIONAL LIMITED TERM TAX FREE FUND
ANNNUAL REPORT
Dated December 31, 1995
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds
as your objectives or market conditions change.
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
Voyageur ARIZONA Tax Free Fund Voyageur 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 NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
Voyageur KANSAS 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 Voyageur MISSOURI Insured
Tax Free Fund Tax Free Fund
Voyageur CALIFORNIA Insured Voyageur NATIONAL Insured
Tax Free Fund Tax Free Fund
Voyageur FLORIDA Voyageur OREGON
Tax Free Fund Tax Free Fund
Voyageur MINNESOTA Insured Fund Voyageur WASHINGTON
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
Voyageur MINNESOTA Limited Term Tax Free Fund 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).
Dear Shareholder:
1995 was an excellent year for municipal bond fund investors and I am pleased to
report that your Funds did extremely
well.
As you may recall, the previous year, 1994, represented one of the most
difficult years for fixed income investors since the 1920s. Voyageur's
investment strategy, however, emphasizes total return over the long term.
Shareholders who maintained a long term outlook through 1994 are to be
congratulated for their patience. This patience was rewarded
in 1995.
Two of the major factors contributing to the resurgence of the municipal bond
market this past year were:
* Progressively lower interest rates throughout the year. (Falling
interest rates directly increases the value of your Fund's portfolio,
and hence your shares.)
* A narrowing "spread" between yields on higher quality bonds versus
lower quality bonds. (Your Funds benefited from maintaining a large
position in quality bonds.)
In the following pages, Drew McCullagh and Steve Eldredge, the Funds' portfolio
managers, will elaborate on these and other points of interest regarding the
municipal bond market in 1995 and will also share Voyageur's economic
outlook for the next fiscal year.
Finally, I'd like to apprise you of the amount of capital appreciation and
current income generated by the Funds on your behalf in 1995.
VOYAGEUR NATIONAL TAX FREE FUND
<TABLE>
<CAPTION>
TOTAL NET
NET ASSET NET ASSET ASSETS
VALUE VALUE DIVIDENDS END OF
BEGINNING END PAID PER PERIOD
OF PERIOD OF PERIOD SHARE (000'S)
--------- --------- ----- -------
PERIOD
- ------
Period ended December 31, 1995:
<S> <C> <C> <C> <C>
Class A Shares $10.00* $10.48 $0.28 $1,274
Class B Shares 10.09** 10.48 0.25 157
Class C Shares 10.00*** 10.48 0.25 48
</TABLE>
_______________________________
*Net asset value at September 8, 1995 (commencement of operations)
**Net asset value at September 15, 1995 (commencement of operations)
***Net asset value at September 12, 1995 (commencement of operations)
VOYAGEUR NATIONAL INSURED TAX FREE FUND
<TABLE>
<CAPTION>
TOTAL NET
NET ASSET NET ASSET ASSETS
VALUE VALUE DIVIDENDS END OF
BEGINNING END PAID PER PERIOD
OF PERIOD OF PERIOD SHARE (000'S)
--------- --------- ----- -------
PERIOD
- ------
Period ended December 31, 1995:
<S> <C> <C> <C> <C>
Class A Shares $9.32 $10.64 $0.56 $35,662
Class B Shares 9.32 10.64 0.52 1,545
Class C Shares 10.38* 10.63 0.08 10
</TABLE>
_______________________________
*Net asset value at October 20, 1995 (commencement of operations)
VOYAGEUR NATIONAL LIMITED TAX FREE FUND
<TABLE>
<CAPTION>
TOTAL NET
NET ASSET NET ASSET ASSETS
VALUE VALUE DIVIDENDS END OF
BEGINNING END PAID PER PERIOD
OF PERIOD OF PERIOD SHARE (000'S)
--------- --------- ----- -------
PERIOD
- ------
<S> <C> <C>
Period ended December 31, 1995:
Class A Shares $10.00* $10.16 $0.15 $1,230
</TABLE>
_______________________________
*Net asset value at September 7, 1995 (commencement of operations)
I will be reporting to you again in August, 1996 to review the first half of the
coming year. In the interim, if you have any questions or comments about your
Funds, please call Voyageur's Shareholder Services Department at (800)545- 3863
or your financial advisor.
Thank you for investing with Voyageur.
Sincerely,
John G. Taft
President
Voyageur National Tax Free Fund
Voyageur National Insured Tax Free Fund
Voyageur National Limited Term Tax Free Fund
FUND INVESTMENT OBJECTIVES AND STRATEGIES
The primary objective of the Voyageur National Tax Free Fund is to seek as high
a level of current income free from
federal income tax as is consistent with preservation of capital.
The primary objective of the Voyageur National Insured Tax Free Fund is to seek
as high a level of current income exempt from federal income tax as is
consistent with preservation of capital, with the added safety of an insured
portfolio. The Voyageur National Insured Tax Free Fund adopted a modification of
an investment policy which will permit this Fund to retain insured municipal
bonds in its portfolio the rating of which is not lower than AA by Standard &
Poor's Ratings Service or Aa by Moody's Investor Service so long as such AA or
Aa insured municipal bonds do not exceed 35% of the Fund's total assets. Such
bonds must still have a AAA or Aaa rating at the time of initial investment by
the Fund.
The primary objective of the Voyageur National Limited Term Tax Free Fund is to
seek to preserve original investment
principal while providing income free from federal income tax.
The National Tax Free Fund generally invests in long-term investment grade
municipal bonds; the National Insured Tax Free Fund generally invests in
long-term insured municipal bonds. The National Limited Term Tax Free Fund
generally invests in intermediate-term investment grade municipal bonds.
DISCUSSION OF FUNDS PERFORMANCE
by Andrew M. McCullagh, Jr. and Steven P. Eldredge
MR. MCCULLAGH AND MR. ELDREDGE CO-MANAGE THE VOYAGEUR NATIONAL TAX FREE FUNDS.
THEY ARE BOTH SENIOR VICE PRESIDENTS AND TAX EXEMPT PORTFOLIO MANAGERS FOR
VOYAGEUR FUND MANAGERS AND COLLECTIVELY REPRESENT OVER FORTY YEARS EXPERIENCE IN
THE MUNICIPAL BOND MARKETPLACE.
We are pleased to report the 1995 performance results of the Voyageur National
Tax Free Funds for the fiscal year ending December 31, 1995. Of the Voyageur
National Insured Tax Free Fund, Voyageur National Tax Free Fund and Voyageur
National Limited Term Tax Free Fund, only the Class 'A' and 'B' shares of the
National Insured Fund have been in operation for the entire fiscal year. The
Voyageur National Insured Tax Free Fund achieved a total return of +20.63% in
1995 for Class 'A' shares (assuming purchase at net asset value and reinvestment
of dividends and capital gains). Class 'B' shares achieved a +20.10% total
return. (For information pertaining to total returns, relative performance, and
inception dates for the other Funds and/or share classes, as well as information
about the Funds' performance over additional timeframes and including the effect
of sales charges, please refer to the charts on pages 7, 8 and 9.
FACTORS AFFECTING FUND PERFORMANCE IN 1995
As discussed in John Taft's introduction, a general downward trend in prevailing
interest rates had a positive impact on the net asset value of Fund shares in
1995. The National Insured Fund's relative performance for the fiscal year was
very good, beating the industry average over 3%. According to Lipper Analytical
Services, the Fund (Class 'A' shares) was ranked #7 of 45 national insured bond
funds. As a group, these 45 funds achieved an average one year total return of
+17.6%. (Once again, please refer to the charts on pages 7, 8 and 9 for
additional performance information.)
Your Fund was able to capture significant capital appreciation through duration
management. Longer duration funds experience wider fluctuations in market prices
than shorter duration funds. The Voyageur National Insured Tax Free Fund started
1995 with an average weighted duration of 11.7 years which allowed for a
significant increase in net asset value. After having captured this market
rally, the duration of the Fund was systematically reduced, closing the year at
approximated 8.5 years.
The Voyageur National Insured Tax Free Fund also benefited from relative changes
in value between high quality bonds and lower quality bonds. As interest rate
spreads between these two classes of municipal bonds narrowed, high quality
bonds (which had been dramatically oversold during the 1994 bear market) gained
significant relative value. The Fund is comprised exclusively of bonds rated AAA
and/or Aaa by Moody's Investors Service and/or Standard & Poor's Ratings
Service.
Finally, supply and demand trends of municipal bonds benefited Fund
shareholders. Even though the economy grew at a steady pace in 1995, new
issuance of municipal bonds remained low. The primary reason for this lower rate
of new issuance stems from some municipal bond refinancing limitations
established under the Tax Reform Act of 1986. A lower level of supply of
municipal bonds favors existing bond holders, particularly large institutional
buyers, such as mutual funds.
OUTLOOK FOR 1996
Our outlook for the municipal bond market remains bullish. However, we do not
anticipate as significant levels of total return in the upcoming year as was
achieved in 1995.
Our 1996 economic outlook calls for:
* CONTINUED LOW RATES OF INFLATION. We expect a Consumer Price Index (CPI)
increase of from 2.5% to 2.8%.
* SLOWING OF ECONOMIC GROWTH. In 1995, U.S. Gross Domestic Product (GDP)
climbed about 3%. Voyageur's 1996 projection for GDP calls for an increase
of about 2.4%.
* STABLE TO SLIGHTLY DECLINING INTEREST RATES. During 1995, the Federal
Reserve Board encouraged lower interest rates by reducing the Federal Funds
Rate by a total of .5%. (Rates were subsequently lowered by an additional
.25% in February 1996.) We expect further reductions of .5% to .75%, which
will likely occur well in advance of the
November elections.
In conclusion, Voyageur believes the municipal bond market will have a good year
in 1996. However, we advise against expectations of total return levels achieved
in 1995.
PURSUANT TO RULE 232.304(a) OF REGULATION S-T THE FOLLOWING IS A TABULAR
REPRESENTATION OF A LINE GRAPH FOR VOYAGEUR NATIONAL INSURED TAX FREE FUND
PORTFOLIO ABSTRACT FOR THE PERIOD ENDED DECEMBER 31, 1995. THE DATA REPRESENTS
THE CUMULATIVE TOTAL RETURN OF A HYPOTHETICAL INVESTMENT IN CLASS A SHARES OF
$10,000 MADE ON THE DATE THE FUND COMMENCED OPERATIONS THROUGH DECEMBER 31,
1995.
ENDING VALUE ENDING VALUE ENDING VALUE
WITH SALES WITHOUT SALES LEHMAN BROS.
DATE CHARGE CHARGE BOND INDEX
- ---- ------ ------ ----------
Jan-92 9525 10000 10000
Jan-92 9442.7 9913.6 10014.9
Feb-92 9365.71 9832.77 10018.9
Mar-92 9359.78 9826.54 10042.95
Apr-92 9450.13 9921.39 10137.35
May-92 9598.95 10077.63 10270.15
Jun-92 9758.44 10245.08 10459.12
Jul-92 10074.8 10577.22 10833.56
Aug-92 9890.35 10383.57 10698.14
Sep-92 9931.5 10426.77 10751.63
Oct-92 9783.23 10271.11 10598.96
Nov-92 10062.92 10564.75 10868.17
Dec-92 10232.99 10743.29 11010.55
Jan-93 10349.18 10865.28 11128.36
Feb-93 10659.25 11190.81 11600.2
Mar-93 10693.86 11227.15 11499.28
Apr-93 10840.87 11381.49 11644.17
May-93 10864.87 11406.69 11740.82
Jun-93 11053.82 11605.06 11956.85
Jul-93 11046.22 11597.08 11971.2
Aug-93 11319.74 11884.24 12257.31
Sep-93 11436.46 12006.79 12411.75
Oct-93 11458.46 12029.88 12434.09
Nov-93 11248.09 11809.01 12297.32
Dec-93 11471.41 12043.48 12593.68
Jan-94 11717.61 12301.96 12752.36
Feb-94 11424.89 11994.64 12373.62
Mar-94 10934.1 11479.37 11721.53
Apr-94 10746.24 11282.14 11817.64
May-94 10897.03 11440.45 11957.09
Jun-94 10816.71 11356.12 11837.52
Jul-94 11057.68 11609.12 12108.6
Aug-94 11077.29 11629.7 12142.5
Sep-94 10862.11 11403.79 11899.65
Oct-94 10600.65 11129.29 11585.5
Nov-94 10348.96 10865.05 11314.4
Dec-94 10617.06 11146.51 11669.67
Jan-95 11012.38 11561.55 12125.96
Feb-95 11466.8 12038.64 12566.13
Mar-95 11588.33 12166.23 12709.38
Apr-95 11582.6 12160.21 12706.84
May-95 11985.19 12582.87 13185.89
Jun-95 11805.89 12394.63 12982.83
Jul-95 11849.27 12440.17 13050.34
Aug-95 11975.6 12572.81 13229.13
Sep-95 12125.94 12730.64 13333.64
Oct-95 12371.92 12988.9 13617.64
Nov-95 12631.38 13261.3 13918.59
Dec-95 12807.6 13446.3 14113.45
VOYAGEUR NATIONAL INSURED TAX FREE FUND
AVERAGE ANNUAL TOTAL RETURNS
(CLASS A SHARES)
----------------
SINCE
1 YEAR 1/10/92**
------ ---------
Without Sales Charge 20.63% 7.73%
With Sales Charge* 14.90% 6.42%
Lehman Bros. Long 18.56% 9.05%
Insured Municipal
Bond Index
VOYAGEUR NATIONAL INSURED TAX FREE FUND
AVERAGE ANNUAL TOTAL RETURNS
(CLASS B SHARES)
----------------
SINCE
1 YEAR 4/30/94**
------ ---------
Without Contingent
Deferred Sales Charge 20.10% 10.33%
With Contingent 16.10% 7.96%
Deferred Sales Charge***
VOYAGEUR NATIONAL INSURED TAX FREE FUND
TOTAL RETURNS
(CLASS C SHARES)
----------------
SINCE
10/20/95**
----------
3.21%
* Average annual total reutrns include the maximum 4.75% sales charge.
** Commencement of operations.
** Assumes redemption on December 31, 1995.
PURSUANT TO RULE 232.304(a) OF REGULATION S-T THE FOLLOWING IS A TABULAR
REPRESENTATION OF A LINE GRAPH FOR VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
PORTFOLIO ABSTRACT FOR THE PERIOD ENDED DECEMBER 31, 1995. THE DATA REPRESENTS
THE CUMULATIVE TOTAL RETURN OF A HYPOTHETICAL INVESTMENT IN CLASS A SHARES OF
$10,000 MADE ON THE DATE THE FUND COMMENCED OPERATIONS THROUGH DECEMBER 31,
1995.
ENDING VALUE ENDING VALUE ENDING VALUE
WITH SALES WITHOUT SALES LEHMAN BROS.
DATE CHARGE CHARGE BOND INDEX
- ---- ------ ------ ----------
Sep-95 9725 10000 10000
Sep-95 9774.046 10050.43 10030.39
Oct-95 9862.669 10141.56 10117.65
Nov-95 9980.922 10263.16 10228.95
Dec-95 10070.89 10322.49 10283.16
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
TOTAL RETURNS
(CLASS A SHARES)
----------------
SINCE
9/7/95**
--------
Without Sales Charge 3.22%
With Sales Charge* .71%
Lehman Bros. 7 2.83%
Year Municipal
Bond Index
*Average annual total returns include th emaximum 4.75% sales charge.
** Commencement of operations.
PURSUANT TO RULE 232.304(a) OF REGULATION S-T THE FOLLOWING IS A TABULAR
REPRESENTATION OF A LINE GRAPH FOR VOYAGEUR NATIONAL TAX FREE FUND PORTFOLIO
ABSTRACT FOR THE PERIOD ENDED DECEMBER 31, 1995. THE DATA REPRESENTS THE
CUMULATIVE TOTAL RETURN OF A HYPOTHETICAL INVESTMENT IN CLASS A SHARES OF
$10,000 MADE ON THE DATE THE FUND COMMENCED OPERATIONS THROUGH DECEMBER 31,
1995.
ENDING VALUE ENDING VALUE ENDING VALUE
WITH SALES WITHOUT SALES LEHMAN BROS.
DATE CHARGE CHARGE BOND INDEX
- ---- ------ ------ ----------
Sep-95 9525 10000 10000
Sep-95 9598.199 10076.85 10063.15
Oct-95 9846.484 10337.52 10277.5
Nov-95 10086.64 10589.65 10504.63
Dec-95 10202.22 10710.99 10,651.69
VOYAGEUR NATIONAL TAX FREE FUND
TOTAL RETURNS
(CLASS A SHARES)
----------------
SINCE
9/8/95**
--------
Without Sales Charge 7.11%
With Sales Charge* 2.02%
Lehman Bros. 20 6.52%
Year Municipal
Bond Index
VOYAGEUR NATIONAL TAX FREE FUND
TOTAL RETURNS
(CLASS B SHARES)
SINCE
9/15/95**
---------
Without Contingent
Deferred Sales Charge 6.41%
With Contingent 2.41%
Deferred Sales Charge***
VOYAGEUR NATIONAL TAX FREE FUND
TOTAL RETURNS
(CLASS C SHARES)
----------------
SINCE
9/12/95**
---------
7.32%
* Average annual total returns include th emaximum 4.75% sales charge.
** Commencement of operations.
*** Assumes redemption on December 31, 1995.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Voyageur Mutual Funds, Inc.
Voyageur Insured Funds, Inc.
Voyageur Intermediate Tax Free Funds, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments in securities, of Voyageur National Tax
Free Fund (a Fund within Voyageur Mutual Funds, Inc.), Voyageur National Insured
Tax Free Fund (a fund within Voyageur Insured Funds, Inc.) and Voyageur National
Limited Term Tax Free Fund (a fund within Voyageur Intermediate Tax Free Funds,
Inc.) as of December 31, 1995, and the related statements of operations for the
period from September 8, 1995, commencement of operations, to December 31, 1995
for Voyageur National Tax Free Fund and the year ended December 31, 1995 for
Voyageur National Insured Tax Free Fund and the period from September 7, 1995,
commencement of operations, to December 31, 1995 for Voyageur National Limited
Term Tax Free Fund and the statements of changes in net assets for the period
from September 8, 1995 to December 31, 1995 for Voyageur National Tax Free Fund,
each of the years in the two-year period ended December 31, 1995 for Voyageur
National Insured Tax Free Fund and for the period from September 7, 1995 to
December 31, 1995 for Voyageur National Limited Term Tax Free Fund and the
financial highlights for the periods presented in note 5. These financial
statements and the financial highlights are the responsibility of Fund
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Voyageur National Tax Free
Fund, Voyageur National Insured Tax Free Fund and Voyageur National Limited Term
Tax Free Fund at December 31, 1995 and the results of their operations, the
changes in their net assets and the financial highlights for the periods stated
in the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 9, 1996
(BLANK PAGE)
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR NATIONAL NATIONAL
NATIONAL INSURED LIMITED TERM
TAX FREE TAX FREE TAX FREE
FUND FUND FUND
ASSETS ---------- ---------- ----------
<S> <C> <C> <C>
Investments in securities, at market value (note 1)
(identified cost: $1,256,455, $34,854,763 and
$1,195,292, respectively).................................... $1,310,866 $36,634,087 $1,212,705
Cash in bank on demand deposit.................................... 157,349 302,132 --
Accrued interest receivable....................................... 20,201 488,821 16,756
Organizational costs (note 1)..................................... 20,569 15,416 20,569
---------- ---------- ----------
Total assets................................................... 1,508,985 37,440,456 1,250,030
---------- ---------- ----------
LIABILITIES
Bank overdraft.................................................... -- -- 2,138
Dividends payable to shareholders................................. 18,608 163,082 5,883
Distribution fees payable......................................... 870 19,554 486
Other accrued expenses............................................ 9,866 40,712 11,598
---------- ---------- ----------
Total liabilities.............................................. 29,344 223,348 20,105
---------- ---------- ----------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK................ $1,479,641 $37,217,108 $1,229,925
========== =========== ==========
Represented by:
Capital Stock - $.01 par value (note 1)........................ $ 1,412 $ 34,978 $ 1,211
Additional paid-in capital..................................... 1,422,728 36,164,908 1,210,409
Undistributed net investment income............................ 1,090 6,820 892
Accumulated net realized loss on investments................... -- (768,922) --
Unrealized appreciation of investments......................... 54,411 1,779,324 17,413
---------- ---------- ----------
TOTAL NET ASSETS............................................. $1,479,641 $37,217,108 $1,229,925
========== =========== ==========
Net assets applicable to outstanding Class A Shares............... $1,274,041 $35,661,544 $1,229,925
========== =========== ==========
Net assets applicable to outstanding Class B Shares............... $ 157,382 $ 1,545,191 N/A
========== =========== ==========
Net assets applicable to outstanding Class C Shares............... $ 48,218 $ 10,373 N/A
========== =========== ==========
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of Capital Stock outstanding: 121,591,
3,351,541 and 121,093, respectively (note 4)................. $10.48 $10.64 $10.16
====== ====== ======
Class B - Shares of Capital Stock outstanding: 15,014,
145,243 and N/A, respectively (note 4)....................... $10.48 $10.64 N/A
====== ====== ======
Class C - Shares of Capital Stock outstanding: 4,600,
976 and N/A, respectively (note 4)........................... $10.48 $10.63 N/A
====== ====== ======
</TABLE>
<TABLE>
THE VOYAGEUR FUNDS
STATEMENTS OF OPERATIONS PERIOD ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR NATIONAL NATIONAL
NATIONAL INSURED LIMITED TERM
TAX FREE TAX FREE TAX FREE
FUND* FUND FUND**
------- ---------- -------
<S> <C> <C> <C>
Investment income:
Interest....................................................... $20,490 $2,097,242 $16,117
------- ---------- -------
Expenses (note 3):
Investment advisory and management fee......................... 1,882 179,363 1,389
Dividend-disbursing, administrative and accounting services fees 6,361 70,870 7,315
Printing, postage and supplies................................. 1,536 5,713 1,535
Audit and accounting fees...................................... 3,001 9,432 3,501
Legal fees..................................................... 1,008 471 1,007
Distribution fees - Class A.................................... 874 87,384 876
Distribution fees - Class B.................................... 211 9,212 N/A
Distribution fees - Class C.................................... 62 19 N/A
Directors' fees................................................ 756 999 507
Registration fees.............................................. 3,050 25,676 3,300
Custodian fees................................................. 431 19,607 726
Amortization of organizational costs........................... 1,470 12,005 1,470
Other ......................................................... 922 2,706 664
------- ---------- -------
Total expenses............................................... 21,564 423,457 22,290
Less: Expenses waived or absorbed............................. (20,077) (200,120) (20,332)
------- ---------- -------
Net expenses before earnings credits on uninvested cash........ 1,487 223,337 1,958
Less: Earnings credits on uninvested cash..................... -- (19,607) (475)
------- ---------- -------
Total net expenses........................................... 1,487 203,730 1,483
------- ---------- -------
Investment income - net...................................... 19,003 1,893,512 14,634
------- ---------- -------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) on security transactions (note 2)......... 12,234 (768,922) 967
Net change in unrealized appreciation or depreciation of investments 54,411 5,704,995 17,413
------- ---------- -------
Net gain on investments...................................... 66,645 4,936,073 18,380
------- ---------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. $85,648 $6,829,585 $33,014
======= ========== =======
* Period from September 8, 1995 (commencement of operations) to December 31,
1995.
** Period from September 7, 1995 (commencement of operations) to December 31,
1995.
</TABLE>
<TABLE>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------
VOYAGEUR NATIONAL
TAX FREE FUND
PERIOD FROM
SEPTEMBER 8, 1995*
TO DECEMBER 31,
Operations: 1995
----------
<S> <C>
Investment income - net...................................................... $ 19,003
Realized gain (loss) on investments - net.................................... 12,234
Net change in unrealized appreciation or depreciation of investments......... 54,411
----------
Net increase (decrease) in net assets resulting from operations............ 85,648
----------
Distributions to shareholders from:
Investment income - net:
Class A.................................................................... (18,179)
Class B.................................................................... (935)
Class C.................................................................... (268)
Net realized gain on investments:
Class A.................................................................... (10,370)
Class B.................................................................... (1,427)
Class C.................................................................... (437)
----------
Total distributions.......................................................... (31,616)
----------
Capital share transactions (note 4): Proceeds from sale of shares:
Class A (note 3)........................................................... 2,206,306
Class B.................................................................... 155,010
Class C.................................................................... 50,010
Net asset value of shares issued in reinvestment of net investment income and
realized gain distributions:
Class A.................................................................. 11,310
Class B.................................................................. 401
Class C.................................................................. 109
Payments for redemption of shares:
Class A.................................................................... (995,010)
Class B (note 3)........................................................... (10)
Class C (note 3)........................................................... (2,517)
----------
Increase (decrease) in net assets from capital share transactions............ 1,425,609
----------
Total increase in net assets............................................... 1,479,641
Net assets at beginning of period............................................... --
----------
Net assets at end of period (including undistributed net investment
income of $1,090, $6,820, $98,943 and $892, respectively).................. $1,479,641
==========
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR NATIONAL
INSURED TAX FREE FUND
--------------------------------------
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31
Operations: 1995 1994
----------- -----------
<S> <C> <C>
Investment income - net...................................................... $ 1,893,512 $ 1,769,009
Realized gain (loss) on investments - net.................................... (768,922) 40,510
Net change in unrealized appreciation or depreciation of investments......... 5,704,995 (4,233,416)
----------- -----------
Net increase (decrease) in net assets resulting from operations............ 6,829,585 (2,423,897)
----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A.................................................................... (1,945,689) (1,683,451)
Class B.................................................................... (45,262) (10,845)
Class C.................................................................... (71) N/A
Net realized gain on investments:
Class A.................................................................... -- (87,023)
Class B.................................................................... -- (405)
Class C.................................................................... -- N/A
----------- -----------
Total distributions.......................................................... (1,991,022) (1,781,724)
----------- -----------
Capital share transactions (note 4): Proceeds from sale of shares:
Class A (note 3)........................................................... 10,391,623 24,952,369
Class B.................................................................... 1,133,058 497,749
Class C.................................................................... 15,175 N/A
Net asset value of shares issued in reinvestment of net investment income and
realized gain distributions:
Class A.................................................................. 1,246,400 1,081,870
Class B.................................................................. 33,452 7,591
Class C.................................................................. 31 N/A
Payments for redemption of shares:
Class A.................................................................... (16,006,766) (11,865,565)
Class B (note 3)........................................................... (212,794) --
Class C (note 3)........................................................... (5,047) N/A
----------- -----------
Increase (decrease) in net assets from capital share transactions............ (3,404,868) 14,674,014
----------- -----------
Total increase in net assets............................................... 1,433,695 10,468,393
Net assets at beginning of period............................................... 35,783,413 25,315,020
Net assets at end of period (including undistributed net investment ----------- -----------
income of $1,090, $6,820, $98,943 and $892, respectively).................. $37,217,108 $35,783,413
=========== ===========
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR NATIONAL
LIMITED TERM TAX FREE FUND
--------------------------
PERIOD FROM
SEPTEMBER 7, 1995*
TO DECEMBER 31,
1995
-----------
Operations:
<S> <C>
Investment income - net...................................................... $ 14,634
Realized gain (loss) on investments - net.................................... 967
Net change in unrealized appreciation or depreciation of investments......... 17,413
-----------
Net increase (decrease) in net assets resulting from operations............ 33,014
-----------
Distributions to shareholders from:
Investment income - net:
Class A.................................................................... (15,211)
Class B.................................................................... N/A
Class C.................................................................... N/A
Net realized gain on investments:
Class A.................................................................... (967)
Class B.................................................................... N/A
Class C.................................................................... N/A
-----------
Total distributions.......................................................... (16,178)
-----------
Capital share transactions (note 4): Proceeds from sale of shares:
Class A (note 3)........................................................... 1,202,975
Class B.................................................................... N/A
Class C.................................................................... N/A
Net asset value of shares issued in reinvestment of net investment income and
realized gain distributions:
Class A.................................................................. 10,294
Class B.................................................................. N/A
Class C.................................................................. N/A
Payments for redemption of shares:
Class A.................................................................... (180)
Class B (note 3)........................................................... N/A
Class C (note 3)........................................................... N/A
-----------
Increase (decrease) in net assets from capital share transactions............ 1,213,089
-----------
Total increase in net assets............................................... 1,213,089
-----------
Net assets at beginning of period............................................... --
-----------
Net assets at end of period (including undistributed net investment
income of $1,090, $6,820, $98,943 and $892, respectively).................. $1,229,925
===========
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
THE VOYAGEUR FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur National Tax Free Fund (National Tax Free Fund), a fund within
Voyageur Mutual Funds, Inc., Voyageur National Insured Tax Free Fund (National
Insured Tax Free Fund), a fund within Voyageur Insured Funds, Inc. and Voyageur
National Limited Term Tax Free Fund (National Limited Term Tax Free Fund), a
fund within Voyageur Intermediate Tax Free Funds, Inc. are registered under the
Investment Company Act of 1940 (as amended) as diversified, open-end management
investment companies. National Tax Free Fund seeks high current income free from
federal income taxes by investing in investment grade municipal bonds. National
Insured Tax Free Fund seeks high current income free from federal income taxes
with the added safety of an insured portfolio by investing in insured municipal
bonds. National Limited Term Tax Free Fund seeks to preserve original investment
principal while providing income free from federal income taxes by investing in
intermediate term investment grade municipal bonds.
National Tax Free Fund, National Insured Tax Free Fund and National Limited
Term Tax Free Fund (the Funds) offer Class A, Class B and Class C Shares. Class
A Shares are sold with a front-end sales charge. Class B Shares (first offered
by National Tax Free Fund and National Limited Term Tax Free Fund in 1995) may
be subject to a contingent deferred sales charge and such shares automatically
convert to Class A after eight years. Class C Shares, (first offered by the
Funds in 1995) are not subject to a front-end sales charge or contingent
deferred sales charge and have no conversion feature. As of December 31, 1995
the National Limited Term Tax Free Fund had no Class B and Class C Shares
outstanding. All classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between classes. Income, expenses (other than
expenses incurred under each class' Distribution Agreement), and realized and
unrealized gains or losses on investments are allocated to each class of shares
based upon its relative net assets.
Pursuant to their amended articles of incorporation, Voyageur Mutual Funds,
Inc. has 100 billion and Voyageur Insured Funds, Inc. and Voyageur Intermediate
Tax Free Funds each have 10 trillion shares of authorized capital stock that may
be issued in one or more series.
The significant accounting policies followed by the Funds are summarized as
follows:
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
from operations during the reporting period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Securities are valued at fair value as determined by the Board of
Directors. Determination of fair value involves, among other things, using
pricing services or prices quoted by independent brokers. Short-term securities
are valued at amortized cost which approximates market value.
Security transactions are accounted for on the trade date. Securities gains
and losses are calculated on the identified-cost basis. Interest income,
including level-yield amortization of premium and original issue discount, is
accrued daily.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by each Fund
on a forward commitment or when-issued basis can take place up to a month or
more after the transaction date. During this period, such securities are subject
to market fluctuations and the portfolio maintains, in a segregated account with
its custodian, assets with a market value equal to or greater than the amount of
its purchase commitments.
ORGANIZATIONAL COSTS
Organizational costs are being amortized over 60 months on an inverse
acceleration (sum of the years' digits) basis for National Insured Tax Free Fund
and on a straight line basis for National Tax Free Fund and National Limited
Term Tax Free Fund.
FEDERAL TAXES
Each Fund's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders in amounts that will avoid or minimize
federal income or excise taxes for each Fund. Net investment income and net
realized gains (losses) for each Fund may differ for financial statement and tax
purposes primarily because of losses deferred for tax purposes due to "wash
sale" transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. 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
each Fund. For federal income tax purposes, National Insured Tax Free Fund had a
capital loss carryover at December 31, 1995, of $768,922 that will expire in
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 carryover has been offset or expires.
On the statements of assets and liabilities, as a result of permanent
book-to-tax differences, reclassification adjustments have been made to increase
undistributed net investment income and decrease additional paid-in capital by
$1,469 for National Tax Free Fund and National Limited Term Tax Free Fund and
$5,387 for National Insured Tax Free Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared daily from net investment income are payable monthly in
cash or reinvested in additional shares of each Fund. Net short-term realized
capital gains, if any, may be paid throughout the year and net long-term
realized capital gains, when available, are distributed annually.
(2) SECURITIES TRANSACTIONS
Purchase cost and proceeds from sales of securities other than short-term
securities aggregated $1,953,106 and $708,885 for National Tax Free Fund,
$68,451,327 and $70,949,780 for National Insured Tax Free Fund and $1,842,270
and $647,945 for National Limited Term Tax Free Fund, respectively, for the
period ended December 31, 1995.
(3) EXPENSES
Each Fund has an investment advisory and management agreement with Voyageur
Fund Managers, Inc. (Voyageur) under which Voyageur manages each Fund's assets
and provides other specified services. The fee for investment management and
advisory services is paid monthly and is based on the average daily net assets
of each Fund at the annual rate of .50% for National Tax Free Fund and National
Insured Tax Free Fund and .40% for National Limited Term Tax Free Fund. In
addition, each Fund will pay most other operating expenses including directors'
fees, registration fees, printing of shareholder reports, legal and auditing
services and other miscellaneous expenses. There was no portfolio insurance
expense for the National Insured Tax Free Fund during the year ended December
31, 1995. Portfolio insurance expense, if any, is recognized over the premium
period. Voyageur is obligated to pay all expenses of each Fund (excluding
distribution fees, insurance premiums on portfolio securities, taxes, interest
and brokerage commissions) which exceed 1% of average daily net assets, on an
annual basis. During the period ended December 31, 1995, Voyageur absorbed
$16,612 for National Tax Free Fund and $17,909 for National Limited Term Tax
Free Fund pursuant to the contractual 1% expense limitation and, excluding
waiver of distribution fees, voluntarily absorbed $3,388 for National Tax Free
Fund, $175,000 for National Insured Tax Free Fund and $2,091 for National
Limited Term Tax Free Fund.
Each Fund will also pay a fee to Voyageur for acting as the Funds' dividend
disbursing, administrative and accounting services agent. The fee is paid
monthly and is equal to the sum of $1.33 per shareholder account per month, a
fixed monthly fee ranging from $1,000 to $1,500 based on the level of each
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 expense in connection with the
performance of dividend-disbursing, administrative and accounting services.
Each class of shares has a Distribution Agreement under Rule 12b-1 of the
Investment Company Act of 1940 with Voyageur Fund Distributors, Inc. (Fund
Distributors). Under these plans, each Fund is obligated to pay Fund
Distributors a monthly distribution fee at an annual rate of .25% average daily
net assets of the Class A Shares and 1.00% of average daily net assets of the
Class B and Class C Shares. Fund Distributors may waive all or part of its
distribution fees at its sole discretion. During the period ended December 31,
1995, Fund Distributors voluntarily waived Class A distribution fees of $21,418
for National Insured Tax Free Fund and $332 for National Limited Term Tax Free
Fund and Class B distribution fees of $77 for National Tax Free Fund and $3,702
for National Insured Tax Free Fund. National Insured Tax Free Fund earned
$38,673 and National Limited Term Tax Free Fund earned $475 in credits on
uninvested cash balances held by the Funds at the custodian. Of these credits,
$19,607 and $475, respectively, were used to reduce certain fees for various
custodial, pricing and accounting services provided by the custodian bank. The
remaining $19,066 for National Insured Tax Free Fund is included in interest
income.
Sales charges paid by Class A shareholders were $293 for the National Tax
Free Fund, $78,880 for the National Insured Tax Free Fund and $5,775 for the
National Limited Term Tax Free Fund. Of these amounts Fund Distributors received
$45, $10,663 and $1,275, respectively. Contingent deferred sales charges paid by
Class B shareholders were $6,289 for National Insured Tax Free Fund.
(4) SHARE TRANSACTIONS
Transactions in shares of capital stock during each period were as follows:
<TABLE>
<CAPTION>
NATIONAL TAX FREE FUND
-----------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------- ------------------- -------------------
PERIOD FROM PERIOD FROM PERIOD FROM
SEPTEMBER 8, 1995* SEPTEMBER 15, 1995* SEPTEMBER 12, 1995*
TO DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
-------------------- ------------------- -------------------
<S> <C> <C> <C>
Shares sold............................. 216,356 14,976 4,834
Shares issued for
reinvested distributions............. 1,100 39 10
Shares redeemed......................... (95,865) (1) (244)
--------- ---------- ---------
Increase in shares outstanding.......... 121,591 15,014 4,600
========= ========== =========
</TABLE>
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------------------- --------------------------- -------------
PERIOD FROM PERIOD FROM
YEAR YEAR YEAR MAY 26, OCTOBER 20,
ENDED ENDED ENDED 1994* TO 1995* TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994 1995
----------- ----------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
Shares sold.................... 1,032,700 2,537,566 111,409 50,523 1,461
Shares issued for
reinvested distributions.... 124,540 108,943 3,314 796 3
Shares redeemed................ (1,595,201) (1,228,465) (20,799) -- (488)
----------- ----------- ---------- --------- -------
Increase (decrease) in
shares outstanding.......... (437,961) 1,418,044 93,924 51,319 976
=========== ============ ========== ========= =======
</TABLE>
<TABLE>
<CAPTION>
NATIONAL LIMITED TERM TAX FREE FUND
-----------------------------------
CLASS A
-----------------
PERIOD FROM
SEPTEMBER 7, 1995*
TO DECEMBER 31,
1995
----------------
<S> <C>
Shares sold...................................... 120,091
Shares issued for
reinvested distributions...................... 1,020
Shares redeemed.................................. (18)
-----------
Increase in shares outstanding................... 121,093
==========
______________________________
* Commencement of operations.
</TABLE>
(5) FINANCIAL HIGHLIGHTS
Per share data (rounded to nearest cent) for a share of capital stock
outstanding and selected information for each period were as follows:
<TABLE>
<CAPTION>
NATIONAL TAX FREE FUND
-----------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------- --------------------- ---------------------
PERIOD FROM PERIOD FROM PERIOD FROM
SEPTEMBER 8, 1995(d) SEPTEMBER 15, 1995(d) SEPTEMBER 12, 1995(d)
TO DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
-------------------- --------------------- ---------------------
<S> <C> <C> <C>
Net asset value:
Beginning of period...................... $10.00 $10.09 $10.00
------ ------ -----
Operations:
Net investment income.................... .18 .15 .15
Net realized and unrealized
gain on investments.................... .58 .49 .58
------ ------ -----
Total from operations................ .76 .64 .73
------ ------ -----
Distributions to shareholders:
From net investment income (f)........... (.18) (.15) (.15)
From net realized gains.................. (.10) (.10) (.10)
------ ------ -----
Total distributions.................... (.28) (.25) (.25)
------ ------ -----
Net asset value:
End of period............................ $10.48 $10.48 $10.48
====== ====== ======
Total investment return (b)................. 7.11% 6.41% 7.32%
Net assets at end of
period (000's omitted)................... $1,274 $157 $48
Ratios:
Ratio of expenses to
average daily net assets (g)........... .35%(e) .88%(e) 1.22%(e)
Ratio of net investment income
to average daily net assets............ 5.03%(e) 4.52%(e) 4.36%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)..................... 1.25%(e) 2.00%(e) 2.00%(e)
Net investment income............ 4.13%(e) 3.40%(e) 3.59%(e)
Portfolio turnover rate (excluding
short-term securities)................... 49.62% 49.62% 49.62%
See accompanying notes to Financial Highlights.
</TABLE>
(5) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
--------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------------------------------- ------------------------ ------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 10, YEAR MAY 26, OCTOBER 20,
1992(d) TO ENDED 1994(d) TO 1995(d)
YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------------
1995 1994 1993 1992 1995 1994 1995
------ ------ ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period......... $ 9.32 $10.67 $10.14 $10.00 $9.32 $9.81 $10.38
------ ------ ------ ------ ------ ----- ------
Operations:
Net investment income....... .54 .56 .60 .57 .50 .31 .09
Net realized and unrealized
gain (loss) on investments 1.34 (1.34) .60 .14 1.34 (.50) .24
------ ------ ------ ------ ------ ----- ------
Total from operations... 1.88 (.78) 1.20 .71 1.84 (.19) .33
------ ------ ------ ------ ------ ----- ------
Distributions to shareholders:
From net investment income (a) (.56) (.55) (.60) (.57) (.52) (.29) (.08)
From net realized gains..... -- (.02) (.07) -- -- (.01) --
------ ------ ------ ------ ------ ----- ------
Total distributions....... (.56) (.57) (.67) (.57) (.52) (.30) (.08)
------ ------ ------ ------ ------ ----- ------
Net asset value:
End of period . . .......... $10.64 $ 9.32 $10.67 $10.14 $10.64 $9.32 $10.63
====== ====== ====== ====== ====== ===== ======
Total investment return (b).... 20.63% (7.45)% 12.10% 7.43% 20.10% (1.94)% 3.21%
Net assets at end of
period (000's omitted)...... $35,662 $35,305 $25,315 $2,919 $1,545 $478 $10
Ratios:
Ratio of expenses to
average daily net assets (g) .61% .10% --% --% .93% .48%(e) .93%(e)
Ratio of net investment income
to average daily net assets 5.29% 5.71% 5.29% 5.85%(e) 4.85% 5.37%(e) 4.46%(e)
Assuming no voluntary
waivers and reimbursements:
Expenses (c)........ 1.16% 1.25% 1.25% 1.25%(e) 1.81% 1.99%(e) 1.40%(e)
Net investment income 4.74% 4.56% 4.04% 4.60%(e) 3.97% 3.86%(e) 3.99%(e)
Portfolio turnover rate (excluding
short-term securities)...... 192.90% 31.25% 77.79% 114.92% 192.90% 31.25% 192.90%
See accompanying notes to Financial Highlights.
</TABLE>
(5) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
NATIONAL LIMITED TERM TAX FREE FUND
-----------------------------------
CLASS A
--------------------
PERIOD FROM
SEPTEMBER 7, 1995(d)
TO DECEMBER 31,
1995
--------------------
<S> <C>
Net asset value:
Beginning of period...................................... $10.00
------
Operations:
Net investment income.................................... .14
Net realized and unrealized
gain on investments.................................... .17
------
Total from operations................................ .31
------
Distributions to shareholders:
From net investment income (f)........................... (.14)
From net realized gains.................................. (.01)
------
Total distributions.................................... (.15)
------
Net asset value:
End of period............................................ $10.16
======
Total investment return (b)................................. 3.22%
Net assets at end of
period (000's omitted)................................... $1,230
Ratios:
Ratio of expenses to
average daily net assets (g)........................... .56%(e)
Ratio of net investment income
to average daily net assets............................ 4.17%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)..................................... 1.25%(e)
Net investment income............................ 3.48%(e)
Portfolio turnover rate (excluding
short-term securities)................................... 54.31%
See accompanying notes to Financial Highlights.
</TABLE>
(5) FINANCIAL HIGHLIGHTS (CONTINUED)
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period ended December 31, 1995 $.01 per share of the distribution
from net investment income were subject to federal income tax for Class A
and Class B Shares. For the period ended December 31, 1995 all of the
distributions from net investment income were derived from interest on
securities exempt from federal income tax for Class C Shares. For the
periods ended December 31, 1994, and 1993 all of the distributions from net
investment income were derived from interest on securities exempt from
federal income tax. For the period ended December 31, 1992 $.05 per share
of the distributions from net investment income were subject to federal
income tax.
(b) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(c) For the periods presented the advisor and distributor voluntarily absorbed
various fees and expenses for the Funds. The advisor also paid $6,364
beyond total fees and expenses for the period ended December 31, 1992 for
National Insured Tax Free Fund. The annual contractual expense limit for
the Fund (excluding distribution fees, insurance premiums on portfolio
securities, taxes, interest and brokerage commissions) is 1% of average
daily net assets. The maximum distribution fee is .25% of each Fund's
average daily net assets for Class A Shares and 1.00% of each Fund's
average daily net assets for Class B and Class C Shares.
(d) Commencement of operations.
(e) Annualized.
(f) For the period ended December 31, 1995, all of the distributions from net
investment income were derived from interest on securities exempt from
federal income tax.
(g) Beginning in the year ended December 31, 1995, 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.
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL TAX FREE FUND
INVESTMENTS IN SECURITIES DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (B) RATE MATURITY VALUE (a)
- -------------------------------------------------------------------------------------------------------------------
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (88.6%):
ALABAMA (3.4%):
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 50 Birmingham Special Care Facility Revenue (Connie Lee Insured).......... 5.88% 08-15-25 $50,847
----------
ALASKA (10.1%):
------------------------------------------------------------------------------------------------------
150 Alaska State Housing Finance Corporation (MBIA Insured)................ 5.88 12-01-30 150,143
----------
CALIFORNIA (7.1%):
------------------------------------------------------------------------------------------------------
100 Chino Unified School District Cert. of Participation (FSA Insured)..... 6.13 09-01-26 104,730
----------
COLORADO (8.8%):
------------------------------------------------------------------------------------------------------
50 Arapahoe County Capital Improvement Highway Rev. - E-470 Project....... 7.00 08-31-26 54,125
50 Denver City & County Airport Revenue (MBIA Insured).................... 5.60 11-15-20 50,313
25 Green Valley Ranch Metropolitan District G.O. - (L.O.C. - Colorado National Bank)612-01-19 25,781
----------
130,219
----------
FLORIDA (6.8%):
------------------------------------------------------------------------------------------------------
50 Orlando & Orange County Expressway Authority Revenue (FGIC Insured).... 5.25 07-01-23 49,497
50 St. Lucie County Special Assessment Revenue (Asset Guaranty Insured) .. 6.10 11-01-20 51,187
----------
100,684
----------
GEORGIA (7.0%):
------------------------------------------------------------------------------------------------------
50 Gainesville/Hall Hospital Authority Revenue (MBIA Insured)............. 6.00 10-01-25 52,370
50 Marietta Development Authority Rev. - Life College, Inc (FSA Insured).. 5.75 09-01-14 51,148
----------
103,518
----------
HAWAII (3.3%):
------------------------------------------------------------------------------------------------------
50 Hawaii G.O............................................................. 5.25 09-01-15 49,453
----------
IDAHO (3.4%):
------------------------------------------------------------------------------------------------------
50 Idaho State Health Facility Revenue - Bannock Medical Center........... 6.38 05-01-17 50,612
----------
ILLINOIS (4.3%):
------------------------------------------------------------------------------------------------------
60 Illinois Health Facility Revenue- University of Chicago (MBIA Insured). 6.13 08-15-21 63,188
----------
INDIANA (6.9%):
------------------------------------------------------------------------------------------------------
50 West Lafayette Jr-Sr. High Building Revenue (MBIA Insured)............. 5.85 01-15-18 51,873
50 Indianapolis Gas Utility Revenue (FGIC Insured)........................ 5.38 06-01-21 49,744
----------
101,617
----------
LOUISIANA (6.8%):
------------------------------------------------------------------------------------------------------
100 Louisiana Public Facility Rev - Glen Retirement System................. 6.70 12-01-25 100,317
----------
MINNESOTA (6.9%):
------------------------------------------------------------------------------------------------------
50 Bemidji Hospital Facilities Revenue - North Country Health............. 6.05 09-01-24 51,487
50 Minnesota Housing Finance Authority, Single Family Housing (AMBAC Insured)5.95 02-01-15 50,870
----------
102,357
----------
NEW MEXICO (3.4%):
------------------------------------------------------------------------------------------------------
50 Las Cruses Solid Waste Authority Revenue............................... 6.00 06-01-16 50,372
----------
TEXAS (3.4%):
------------------------------------------------------------------------------------------------------
50 Brownsville Utility System Revenue (AMBAC Insured)..................... 5.25 09-01-15 49,572
----------
WASHINGTON (7.0%):
------------------------------------------------------------------------------------------------------
50 Seattle Municipal Light & Power Revenue (MBIA Insured)................. 5.70 09-01-19 51,090
50 Snohomish County Public Utility Electric Revenue (FGIC Insured)........ 6.00 01-01-18 52,147
----------
103,237
----------
TOTAL INVESTMENT IN SECURITIES (cost: $1,256,455) (c) $1,310,866
==========
See accompanying notes to investments in securities.
VOYAGEUR NATIONAL INSURED TAX FREE FUND
INVESTMENTS IN SECURITIES DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (B) RATE MATURITY VALUE (A)
- -------------------------------------------------------------------------------------------------------------------
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (98.4%):
ALABAMA (4.1%):
------------------------------------------------------------------------------------------------------
$1,500 Birmingham - Carraway Methodist (Connie Lee Insured)................... 5.88% 08-15-15 $1,537,605
----------
ALASKA (16.5%):
------------------------------------------------------------------------------------------------------
4,100 Alaska State Housing Corporation Series A (MBIA Insured)............... 5.88 12-01-30 4,103,895
1,000 Anchorage G.O. (FGIC Insured).......................................... 5.00 10-01-15 968,220
1,000 Anchorage General Purpose G.O. (FGIC Insured).......................... 6.00 02-01-15 1,053,100
----------
6,125,215
----------
CALIFORNIA (2.8%):
------------------------------------------------------------------------------------------------------
1,000 Los Angeles Department of Water & Power Revenue
(FGIC Insured)....................................................... 5.90 05-15-12 1,052,580
----------
COLORADO (4.8):
------------------------------------------------------------------------------------------------------
1,700 Arapahoe County Capital Improvements E-470 (MBIA Insured).............. 6.05 08-31-15 1,791,375
----------
FLORIDA (4.1%):
------------------------------------------------------------------------------------------------------
1,500 Florida Board of Education (MBIA Insured).............................. 5.60 06-01-25 1,514,520
----------
ILLINOIS (2.6%):
------------------------------------------------------------------------------------------------------
1,000 Illinois Development Authority - Catholic Health (Connie Lee Insured).. 5.30 02-15-18 957,880
----------
INDIANA (7.8%):
-------------------------------------------------------------------------------------------------------
1,000 Brownsburg School Building #2 (FSA Insured)............................ 5.95 08-01-10 1,067,800
1,750 Indiana Health Finance Revenue - Marion Hospital (MBIA Insured)........ 6.00 07-01-16 1,837,185
----------
2,904,985
IOWA (5.2%):
------------------------------------------------------------------------------------------------------
2,000 Des Moines Iowa Hospital Revenue (AMBAC Insured)....................... 5.25 08-15-15 1,942,660
----------
LOUISIANA (2.8%):
-------------------------------------------------------------------------------------------------------
1,000 New Orleans Refunding G.O. (AMBAC Insured)............................. 5.88 10-01-11 1,045,370
----------
NEVADA (5.5%):
------------------------------------------------------------------------------------------------------
1,000 Clark County School District G.O. (MBIA Insured)....................... 5.50 06-15-16 1,005,230
1,000 Washoe County Airport Authority Revenue (MBIA Insured)................. 5.88 07-01-10 1,045,710
----------
2,050,940
----------
NEW MEXICO (5.8%):
------------------------------------------------------------------------------------------------------
1,000 City of Santa Fe Revenue Series 1994 A (AMBAC Insured)................. 6.30 06-01-24 1,069,880
1,000 City of Santa Fe Revenue Series 1994 A (AMBAC Insured)................. 6.25 06-01-15 1,070,730
----------
2,140,610
----------
NORTH DAKOTA (5.9%):
------------------------------------------------------------------------------------------------------
1,000 Grand Forks United Hospital Revenue (MBIA Insured)..................... 6.25 12-01-24 1,070,510
1,000 New York State Medical Care Facility Agency (AMBAC Insured)............ 6.75 08-15-14 1,113,770
----------
2,184,280
----------
TEXAS (10.3%):
------------------------------------------------------------------------------------------------------
1,000 Abilene Health Facility Rev Hendrick Medical Center (MBIA Insured)..... 6.00 09-01-13 1,059,860
1,000 Dallas County Mental Health Men Retardation Center Facilities Revenue
(FSA Insured)....................................................... 5.75 09-01-16 1,015,030
1,630 Harris County Toll Road (MBIA Insured)................................. 6.25 08-15-15 1,768,142
----------
3,843,032
----------
UTAH (2.8%):
------------------------------------------------------------------------------------------------------
1,000 Provo City Energy Systems Revenue (MBIA Insured)....................... 5.75 05-15-14 1,025,390
----------
VIRGINIA (2.7%):
------------------------------------------------------------------------------------------------------
1,000 Loudoun County Hospital (FSA Insured).................................. 5.80 06-01-20 1,019,590
----------
WASHINGTON (4.1%):
------------------------------------------------------------------------------------------------------
1,500 Spokane Solid Waste Revenue (AMBAC Insured)............................ 5.50 12-01-10 1,521,135
----------
WEST VIRGINIA (2.7%):
------------------------------------------------------------------------------------------------------
1,000 West Virginia State Hospital Charleston Medical Center (MBIA Insured).. 5.75 09-01-13 1,023,650
----------
WISCONSIN (7.9%):
------------------------------------------------------------------------------------------------------
1,000 Wisconsin State Health & Education SSM (MBIA Insured).................. 5.75 06-01-12 1,001,600
1,000 Wisconsin State Health & Education Waukesha (AMBAC Insured)............ 5.25 08-15-19 965,820
1,000 Wisconsin State Health & Education Franciscan Sisters
(Connie Lee Insured)................................................. 5.50 02-15-14 985,850
----------
2,953,270
----------
TOTAL INVESTMENT IN SECURITIES (cost: $34,854,763) (c) $36,634,087
===========
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
INVESTMENTS IN SECURITIES DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (B) RATE MATURITY VALUE (a)
- -------------------------------------------------------------------------------------------------------------------
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (98.6%):
ALABAMA (8.1%):
------------------------------------------------------------------------------------------------------
$ 50 Alabama Mental Health Finance Authority Revenue (MBIA Insured)......... 5.00% 05-01-0$ $49,996
50 Birmingham - Carraway Special Care Facility Revenue (Connie Lee Insured) 5.20 08-15-06 50,200
----------
100,196
----------
ALASKA (4.1%):
------------------------------------------------------------------------------------------------------
50 Anchorage Solid Waste Utility Revenue (FSA Insured).................... 5.38 04-01-09 50,500
----------
ARIZONA (7.9%):
------------------------------------------------------------------------------------------------------
50 Maricopa County IDA-Baptist Hospital (MBIA Insured).................... 5.00 09-01-03 50,920
45 Tuscon Water Revenue................................................... 5.40 07-01-05 46,457
----------
97,377
----------
CALIFORNIA (8.3%):
------------------------------------------------------------------------------------------------------
50 North City West School Facility Finance Revenue (FSA Insured).......... 5.63 09-01-08 52,261
50 Chino Unified School District COP (FSA Insured)........................ 5.00 09-01-05 50,073
----------
102,334
----------
CONNECTICUT (8.6%):
-------------------------------------------------------------------------------------------------------
50 Connecticut State Special Tax Obligation Revenue....................... 5.90 09-01-05 54,328
50 Connecticut State Health & Educational Facilities Authority Revenue.... 5.25 11-01-02 51,498
----------
105,826
----------
FLORIDA (4.2%):
------------------------------------------------------------------------------------------------------
50 Miami Parking Facility Revenue......................................... 5.70 10-01-09 51,178
----------
ILLINOIS (8.1%):
------------------------------------------------------------------------------------------------------
100 Illinois Development Finance Authority PCR - Public Service Colorado... 4.20 08-15-98 (d) 99,298
----------
KENTUCKY (4.0%):
------------------------------------------------------------------------------------------------------
50 Kentucky State Property & Buildings Commission Revenue (MBIA Insured).. 4.80 09-01-05 49,696
----------
MICHIGAN (12.3%):
------------------------------------------------------------------------------------------------------
150 Detroit Water Supply System Revenue (MBIA Insured)..................... 5.20 07-01-08 150,684
----------
MINNESOTA (8.2%):
------------------------------------------------------------------------------------------------------
50 Minneapolis-St. Paul Health Care System - Childrens Healthcare
(FSA Insured)....................................................... 4.95% 08-15-05 50,187
50 Minnesota State Housing Finance Authority Revenue (AMBAC Insured)...... 4.90 08-01-03 50,502
----------
100,689
MISSISSIPPI (4.1%):
------------------------------------------------------------------------------------------------------
50 Jackson Public School District G.O. (FGIC Insured)..................... 5.00 04-01-04 50,660
----------
MISSOURI (4.1%):
------------------------------------------------------------------------------------------------------
50 Kansas City Land Clearance Redevelopment Lease Revenue (FSA Insured).... 5.25 12-01-07 50,653
----------
NEW JERSEY (4.1%):
------------------------------------------------------------------------------------------------------
50 Mercer County G.O. Unlimited........................................... 5.13 09-01-07 50,471
----------
NEW YORK (4.1%):
------------------------------------------------------------------------------------------------------
50 New York State Dorm Authority Revenue - State University Education
Facilities........................................................... 5.25 05-15-01 50,870
----------
TEXAS (4.2%):
------------------------------------------------------------------------------------------------------
50 Brownsville Utility System Revenue (AMBAC Insured)..................... 5.00 09-01-04 51,043
----------
UTAH (4.2%):
------------------------------------------------------------------------------------------------------
50 Utah Agriculture & Applied Science University Revenue
(MBIA Insured)....................................................... 5.55 12-01-08 51,230
----------
TOTAL INVESTMENT IN SECURITIES (cost: $1,195,292) (c) $1,212,705
==========
See accompanying notes to investments in securities.
</TABLE>
VOYAGEUR NATIONAL TAX FREE FUND
VOYAGEUR NATIONAL INSURED TAX FREE FUND
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
NOTES TO INVESTMENTS IN SECURITIES
- -------------------------------------------------------------------------------
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) Investments in bonds, by rating category (unaudited) as a percentage of
total bonds, are as follows:
<TABLE>
<CAPTION>
AAA/AAA AA/AA A/A BAA/BBB TOTAL
------- ----- --- ------- -----
<S> <C> <C> <C> <C> <C>
National Tax Free Fund...................... 67% 8% 10% 15% 100%
National Insured Tax Free Fund.............. 100% -- -- -- 100%
National Limited Term Tax Free Fund......... 67% 21% 8% 4% 100%
</TABLE>
(c) Also represents the cost of securities for federal income tax purposes and
the aggregate gross unrealized appreciation and depreciation of securities
based on this cost were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
------------ ------------ ------------
<S> <C> <C> <C>
National Tax Free Fund...................... $ 54,411 -- $ 54,411
National Insured Tax Free Fund.............. 1,779,324 -- 1,779,324
National Limited Term Tax Free Fund......... 17,413 -- 17,413
</TABLE>
(d) The maturity dates for these issues represent mandatory puts or dates on
which, in the opinion of the Fund's investment advisor, the issue is likely
to be called.
FEDERAL INCOME TAX INFORMATION
- --------------------------------------------------------------------------------
Information for federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions for the year ended December
31, 1995 shown below. Exempt interest dividends are exempt from federal income
tax and should not be included in shareholder's gross income, but need to be
reported on the income tax return for informational purposes. Each shareholder
should consult a tax adviser about reporting this income for state and local
purposes. In January 1996, the Fund separately provided each shareholder with
tax information for calendar year 1995.
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL TAX FREE FUND
--------------------------------------------------------
PER CLASS PER CLASS PER CLASS
A SHARE B SHARE C SHARE
------- ------- -------
PERIOD FROM PERIOD FROM PERIOD FROM
SEPTEMBER 8, 1995 SEPTEMBER 15, 1995 SEPTEMBER 12,
TO DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
----------------- ------------------ --------------
<S> <C> <C> <C>
Net investment income distributions (none qualifying for
corporate dividend received deduction)................. $.1762 $.1459 $.1475
Short-term capital gain distribution...................... .0950 .0950 .0950
------ ------ ------
Total Distribution..................................... $.2712 $.2409 $.2425
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL INSURED TAX FREE FUND
------------------------------------------------------
PER CLASS PER CLASS PER CLASS
A SHARE B SHARE C SHARE
------- ------- -------
YEAR YEAR PERIOD FROM
ENDED ENDED OCTOBER 20, 1995
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
----------------- ------------------ --------------
<S> <C> <C> <C>
Net investment income distributions (none qualifying for
corporate dividend received deduction)................. $.5609 $.5186 $.0771
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
--------------------------------------------
PER CLASS
A SHARE
---------
PERIOD FROM
SEPTEMBER 7, 1995
TO DECEMBER 31,
1995
---------
<S> <C>
Net investment income distributions (none qualifying for
corporate dividend received deduction)......................... $.1425
Short-term capital gain distribution.............................. .0080
------
Total Distribution............................................. $.1505
======
</TABLE>
The short-term capital gain distributions above are taxable as ordinary income
to shareholders for federal and state income tax purposes.
For federal income tax purposes, 100.00%, 98.83% and 100.00% of the above net
investment income distributions for the National Tax Free Fund, National Insured
Tax Free Fund and National Limited Term Tax Free Fund, respectively, were
derived from interest
on securities exempt from federal income tax.
