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VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
NATIONAL TAX FREE FUND
NATIONAL INSURED TAX FREE FUND
NATIONAL LIMITED TERM TAX FREE FUND
SEMI-ANNUAL REPORT
DATED JUNE 30, 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 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>
<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 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
</TABLE>
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
<TABLE>
<S> <C>
Voyageur ARIZONA Insured Tax Free Fund Voyageur MISSOURI Insured Tax Free Fund
Voyageur CALIFORNIA Insured Tax Free Fund Voyageur NATIONAL Insured Tax Free Fund
Voyageur FLORIDA Insured Tax Free Fund Voyageur OREGON Insured Tax Free Fund
Voyageur MINNESOTA Insured Fund Voyageur WASHINGTON Insured Tax Free Fund
</TABLE>
VOYAGEUR LIMITED TERM FUNDS seek to preserve original investment principal while
providing income free from both Federal income taxes and state income taxes
(where applicable). The Funds invest in intermediate term investment grade
municipal bonds.
<TABLE>
<S> <C>
Voyageur FLORIDA Limited Term Tax Free Fund Voyageur NATIONAL Limited Term Tax Free Fund
Voyageur MINNESOTA Limited Term Tax Free Fund
</TABLE>
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
<TABLE>
<S> <C>
Voyageur AGGRESSIVE GROWTH Fund Voyageur GROWTH Stock Fund
Voyageur GROWTH AND INCOME Fund Voyageur INTERNATIONAL Equity Fund
</TABLE>
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.
<TABLE>
<S> <C>
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
</TABLE>
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).
LETTER FROM THE PRESIDENT
[PHOTO] JOHN G. TAFT
PRESIDENT
Dear Shareholder:
Since our last report, the headline story in the municipal bond market has been
the demise of a radical tax reform. One of the best ways to illustrate this
demise is to look at how municipal bonds have traded in relation to Treasury
securities. At the height of the tax reform scare -- when Steve Forbes was
campaigning on his Flat Tax platform in January 1996 -- long municipal
securities were trading at a very cheap 90% of Treasuries. At the time of this
report, market fears have abated and municipal bonds are trading at a more
traditional 81%.
We believe the issue of reforming the tax code is far from thoroughly closed.
And it is likely -- in this a U.S. presidential election year -- that we may see
renewed discussions about less radical tax reforms. However, as is often the
case in the financial markets, we believe these times of short-term volatility
and uncertainty represent good opportunities for long-term investors.
At Voyageur, we continue to stress the importance of maintaining a long-term
view -- in both the investment horizons of our shareholders and in our approach
to purchasing securities for the Voyageur Tax Free Funds. In order to select the
best long-term securities for the funds, we favor purchasing negotiated new
municipal issues over those in the secondary or competitive market.
Unlike the taxable bond market where the structure of new bond issues are
frequently predetermined and fixed, we have more flexibility and negotiating
power in determining how a municipal bond issue will be structured. In many
cases, our credit research analysts -- who are experienced experts in the area
of municipal bond transactions -- work closely with municipal bond issuers to
determine the appropriate structure for new bond issues. Our analysts' intimate
knowledge of what's in the market and their ability to actually dissect
individual municipal securities helps us to determine appropriate prices that
accurately reflect an issuer's strength and value while assisting us in
protecting our shareholders' interests. They also help us pinpoint rising and
falling stars -- bonds whose credits may be upgraded or downgraded -- in the
municipal market.
We remain committed to providing our clients with the best investment products
and services available in today's financial markets. The Voyageur Tax Free Funds
allow you access to a wide variety of national and state-specific municipal
bonds funds, all of which are actively managed to meet their individual fund
objectives.
As part of our commitment to you, we have also redesigned our shareholder
reports to provide you with more in-depth information about your Voyageur fund
investments in an easier-to-read format. We welcome any comments you may have
about these changes and encourage you to call our Voyageur Shareholder Services
at 800.543.3863.
If at any time you have questions about your Voyageur fund investments, please
contact your personal financial advisor or Voyageur Shareholder Services. Our
Voyageur Shareholder Services 800 number -- known as Voyageur On Call(TM) --
allows you 24-hour access, seven days a week to an automated voice response
service with shareholder services representatives available from 8 a.m. to 5
p.m. Central Standard Time.
We appreciate your continued patronage of Voyageur Funds and look forward to
working with you and your financial advisors in creating products and services
designed to bring you closer to your investment goals.
Sincerely,
/s/ John G. Taft
John G. Taft
President
Voyageur National Limited Term Tax Free Fund
Voyageur National Insured Tax Free Fund
Voyageur National Tax Free Fund
VOYAGEUR NATIONAL TAX FREE FUNDS
[PHOTO] STEVEN P. ELDREDGE IS THE
SENIOR MUNICIPAL BOND
MANAGER FOR THE VOYAGEUR
NATIONAL LIMITED TERM TAX
FREE FUND AND THE VOYAGEUR
NATIONAL TAX FREE FUND.
MR. ELDREDGE HAS MORE THAN
18 YEARS OF INVESTMENT
INDUSTRY EXPERIENCE.
[PHOTO] ANDREW M. McCULLAGH, JR. IS
THE SENIOR MUNICIPAL BOND
MANAGER FOR THE VOYAGEUR
NATIONAL INSURED TAX FREE
FUND. MR. McCULLAGH HAS
MORE THAN 23 YEARS OF
INVESTMENT INDUSTRY
EXPERIENCE.
For the six months ended June 30, 1996, the total returns at net asset value
(NAV) for the Class A shares of Voyageur National Tax Free Funds were as
follows: Voyageur National Limited Term Tax Free Fund 0.17%; Voyageur National
Insured Tax Free Fund -2.09%; and the Voyageur National Tax Free Fund -0.94%.*
Within the Funds, we maintained our long-term outlook for lower interest rates
by keeping our Funds' durations long as compared to the industry average.
Although this caused the Funds' performance to lag when interest rates rose
earlier this year, we believe the worst is over and are expecting to see a
turnaround in interest rates later this year or early 1997.
AREAS OF OPPORTUNITY
Within the National Tax Free Funds, one of the portfolio techniques we use is to
look for individual security opportunities instead of targeting specific
geographic areas of the United States. We believe our shareholders in all of the
Voyageur National Tax Free Funds ultimately benefit from our state-specific
expertise -- where we can select our best ideas and investments from each of our
31 individual state-specific Funds and include them in our National Tax Free
Funds.
In the Voyageur National Tax Free Funds, we remain committed to purchasing
municipal bonds that our credit research staff has identified as having high
credit ratings -- with the Voyageur National Insured Tax Free Fund only invested
in insured municipal securities.** We also emphasize investing in essential
service revenue bonds with dedicated and specific sources of taxes pledged for
their repayment.
During the past six months, we continued to search for areas or sectors where we
could add value to the Funds' portfolios. One such area has been to include
investments that have added income to the portfolios. Although we still maintain
our commitment to total return, we believe this addition of income to the
portfolios will help dampen the effects of market volatility while allowing our
shareholders to benefit from higher income streams.
In order to attempt to protect our shareholders' current income level for a
longer period of time, we have continued to take advantage of opportunities to
extend the funds' call protection. This emphasis has led to a majority of the
holdings in the Voyageur National Limited Term Tax Free Fund to be noncallable.
It has also led to the Voyageur National Insured Tax Free Fund and Voyageur
National Tax Free Fund to have an average call protection of approximately 10
years.
OUTLOOK FOR THE MUNICIPAL MARKET
The U.S. economy is still showing signs of moderate growth with moderate
inflation -- a trend we expect to see continue for the remainder of the year.
Our outlook for the municipal market continues to be favorable, and we expect
interest rates to decline over the long term. This has caused us to position the
Funds to take advantage of this trend -- staggering the length of duration in
each of the individual Funds in order to maintain our cover the yield curve
strategy.
* Past performance is no guarantee of future results.
** Insurance pertains only to the timely payment of principal and interest by
the securities in the Fund's portfolio. The value of the insured securities and
the Fund itself will fluctuate due to changing market conditions. No
representation is made as to any insurer's ability to meet its commitment.
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1996
- -----------------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR NATIONAL NATIONAL
NATIONAL INSURED LIMITED TERM
TAX FREE TAX FREE TAX FREE
ASSETS FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
Investments in securities, at market value (note 1)
(identified cost: $2,653,967, $33,365,594 and
$1,196,068, respectively) ................................ $ 2,660,195 $ 33,949,280 $ 1,187,176
Cash in bank on demand deposit ................................ 200,429 298,738 --
Receivable for investment securities sold ..................... -- 991,309 --
Accrued interest receivable ................................... 31,602 450,633 18,022
Organizational costs (note 1) ................................. 18,365 7,708 18,365
------------ ------------ ------------
Total assets ............................................... 2,910,591 35,697,668 1,223,563
------------ ------------ ------------
LIABILITIES
Bank overdraft ................................................ -- -- 71,862
Dividends payable to shareholders ............................. 2,888 39,510 1,133
Payable for investment securities purchased ................... 350,393 990,059 --
Payable for Fund shares redeemed .............................. -- 50,571 --
Other accrued expenses ........................................ 16,238 46,576 13,057
------------ ------------ ------------
Total liabilities .......................................... 369,519 1,126,716 86,052
------------ ------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK ............ $ 2,541,072 $ 34,570,952 $ 1,137,511
============ ============ ============
Represented by:
Capital Stock - $.01 par value (note 1) .................... $ 2,519 $ 34,077 $ 1,143
Additional paid-in capital ................................. 2,535,645 35,248,867 1,145,724
Distributions in excess of net investment income ........... (3,641) (42,212) (1,294)
Accumulated net realized gain (loss) on investments (note 1) 321 (1,253,466) 830
Unrealized appreciation (depreciation) of investments ...... 6,228 583,686 (8,892)
------------ ------------ ------------
TOTAL NET ASSETS ......................................... $ 2,541,072 $ 34,570,952 $ 1,137,511
============ ============ ============
Net assets applicable to outstanding Class A Shares ........... $ 2,230,784 $ 32,922,693 $ 1,088,110
============ ============ ============
Net assets applicable to outstanding Class B Shares ........... $ 265,365 $ 1,633,284 $ 49,401
============ ============ ============
Net assets applicable to outstanding Class C Shares ........... $ 44,923 $ 14,975 N/A
============ ============
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of Capital Stock outstanding: 221,154,
3,245,204 and 109,339, respectively (note 4) ............. $ 10.09 $ 10.15 $ 9.95
============ ============ ============
Class B - Shares of Capital Stock outstanding: 26,294,
161,000 and 4,962, respectively (note 4) ................. $ 10.09 $ 10.14 $ 9.96
============ ============ ============
Class C - Shares of Capital Stock outstanding: 4,451,
1,477 and N/A, respectively (note 4) ..................... $ 10.09 $ 10.14 N/A
============ ============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------
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 ................................................... $ 48,723 $ 1,036,136 $ 29,082
----------- ----------- -----------
Expenses (note 3):
Investment advisory and management fee ..................... 4,415 89,313 2,382
Dividend-disbursing, administrative and accounting
services fees ........................................... 7,799 33,461 6,885
Printing, postage and supplies ............................. 985 2,936 355
Audit and accounting fees .................................. 3,501 6,537 3,501
Legal fees ................................................. 412 248 208
Distribution fees - Class A ................................ 1,926 42,596 1,449
Distribution fees - Class B ................................ 900 8,100 156
Distribution fees - Class C ................................ 226 69 N/A
Directors' fees ............................................ 388 998 232
Registration fees .......................................... 17,485 16,570 15,226
Custodian fees ............................................. 6,488 5,747 5,283
Amortization of organizational costs ....................... 2,204 7,708 2,204
Other ...................................................... 932 499 256
----------- ----------- -----------
Total expenses .......................................... 47,661 214,782 38,137
Less: Expenses waived or absorbed ......................... (45,317) (101,337) (35,643)
----------- ----------- -----------
Net expenses before earnings credits on uninvested cash .... 2,344 113,445 2,494
Less: Earnings credits on uninvested cash ................. (546) -- (661)
----------- ----------- -----------
Total net expenses ...................................... 1,798 113,445 1,833
----------- ----------- -----------
Investment income - net ................................. 46,925 922,691 27,249
----------- ----------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) on security transactions (note 2) ..... 321 (484,544) 830
Net change in unrealized appreciation or depreciation of
investments .............................................. (48,183) (1,195,638) (26,305)
----------- ----------- -----------
Net loss on investments ................................. (47,862) (1,680,182) (25,475)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (937) $ (757,491) $ 1,774
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
VOYAGEUR NATIONAL
TAX FREE FUND
------------------------------------
SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 8, 1995*
JUNE 30, 1996 TO DECEMBER 31,
Operations: (UNAUDITED) 1995
------------------------------------
<S> <C> <C>
Investment income - net ................................................... $ 46,925 $ 19,003
Realized gain (loss) on investments - net ................................. 321 12,234
Net change in unrealized appreciation or depreciation of investments ...... (48,183) 54,411
----------- -----------
Net increase (decrease) in net assets resulting from operations ....... (937) 85,648
----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A ............................................................... (42,482) (18,179)
Class B ............................................................... (4,481) (935)
Class C ............................................................... (1,052) (268)
Distributions in excess of net investment income:
Class A ............................................................... (3,041) --
Class B ............................................................... (481) --
Class C ............................................................... (119) --
Net realized gain on investments:
Class A ............................................................... -- (10,370)
Class B ............................................................... -- (1,427)
Class C ............................................................... -- (437)
----------- -----------
Total distributions ....................................................... (51,656) (31,616)
----------- -----------
Capital share transactions (note 4):
Proceeds from sale of shares:
Class A (note 3) ...................................................... 1,595,254 2,206,306
Class B ............................................................... 110,629 155,010
Class C ............................................................... -- 50,010
Net asset value of shares issued in reinvestment of
net investment income, distributions in excess of net investment
income and realized gain distributions:
Class A .......................................................... 28,039 11,310
Class B .......................................................... 3,535 401
Class C .......................................................... 1,200 109
Payments for redemption of shares:
Class A ............................................................... (621,873) (995,010)
Class B (note 3) ...................................................... -- (10)
Class C ............................................................... (2,760) (2,517)
----------- -----------
Increase (decrease) in net assets from capital share transactions ......... 1,114,024 1,425,609
----------- -----------
Total increase (decrease) in net assets ............................... 1,061,431 1,479,641
Net assets at beginning of period .............................................. 1,479,641 --
----------- -----------
Net assets at end of period (including undistributed or (distributions in excess
of) net investment income of $(3,641), $1,090, $(42,212), $6,820,
$(1,294) and $892, respectively) ...................................... $ 2,541,072 $ 1,479,641
=========== ===========
</TABLE>
* Commencement of operations.
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
VOYAGEUR NATIONAL VOYAGEUR NATIONAL
INSURED TAX FREE FUND LIMITED TERM TAX FREE FUND
-------------------------------- --------------------------------
SIX MONTHS YEAR SIX MONTHS PERIOD FROM
ENDED ENDED ENDED SEPTEMBER 7, 1995*
JUNE 30, 1996, DECEMBER 31, JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
$ 922,691 $ 1,893,512 $ 27,249 $ 14,634
(484,544) (768,922) 830 967
(1,195,638) 5,704,995 (26,305) 17,413
------------ ----------- ---------- ----------
(757,491) 6,829,585 1,774 33,014
------------ ----------- ---------- ----------
(890,051) (1,945,689) (27,499) (15,211)
(39,136) (45,262) (640) N/A
(321) (71) -- N/A
(40,739) -- (1,296) (967)
(1,476) -- -- N/A
-- -- N/A N/A
-- -- -- --
-- -- -- --
-- -- N/A --
------------ ----------- ---------- ----------
(971,723) (1,991,022) (29,435) (16,178)
------------ ----------- ---------- ----------
2,009,046 10,391,623 602,852 1,202,975
252,007 1,133,058 50,000 N/A
5,000 15,175 N/A N/A
612,185 1,246,400 33,298 10,294
28,843 33,452 595 N/A
345 31 N/A N/A
(3,711,685) (16,006,766) (751,498) (180)
(112,683) (212,794) -- N/A
-- (5,047) N/A N/A
------------ ----------- ---------- ----------
(916,942) (3,404,868) (64,753) 1,213,089
------------ ----------- ---------- ----------
(2,646,156) 1,433,695 (92,414) 1,229,925
37,217,108 35,783,413 1,229,925 --
------------ ----------- ---------- ----------
$ 34,570,952 $37,217,108 $1,137,511 $1,229,925
============ =========== ========== ==========
</TABLE>
THE VOYAGEUR FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur National Tax Free Fund (National Tax Free Fund), a series of
Voyageur Mutual Funds, Inc., Voyageur National Insured Tax Free Fund (National
Insured Tax Free Fund), a series of Voyageur Insured Funds, Inc. and Voyageur
National Limited Term Tax Free Fund (National Limited Term Tax Free Fund), a
series of 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
may be subject to a contingent deferred sales charge and such shares
automatically convert to Class A after eight years. Class C Shares are not
subject to a front-end sales charge or contingent deferred sales charge and have
no conversion feature. As of June 30, 1996 the National Limited Term Tax Free
Fund had no 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 articles of incorporation, Voyageur Mutual Funds,
Inc., 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 a straight line
basis for the Funds.
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.
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 $1,898,000 and $742,809 for National Tax Free Fund,
$17,172,117 and $18,176,742 for National Insured Tax Free Fund and $99,445 and
$99,499 for National Limited Term Tax Free Fund, respectively, for the six
months ended June 30, 1996.
(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 six months
ended June 30, 1996. 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 six months ended June 30, 1996, Voyageur absorbed
$35,749 for National Tax Free Fund and $30,580 for National Limited Term Tax
Free Fund pursuant to the contractual 1% expense limitation and, excluding
waiver of distribution fees, voluntarily absorbed $9,251 for National Tax Free
Fund, $95,000 for National Insured Tax Free Fund and $4,420 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 Agreementunder 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 six months ended June 30,
1996, Fund Distributors voluntarily waived Class A distribution fees of $3,391
for National Insured Tax Free Fund and $579 for National Limited Term Tax Free
Fund and Class B distribution fees of $317 for National Tax Free Fund, $2,946
for National Insured Tax Free Fund and $64 for National Limited Term Tax Free
Fund. National Tax Free Fund earned $546 and National Limited Term Tax Free Fund
earned $661 in credits on uninvested cash balances held by the Funds at the
custodian. These credits were used to reduce certain fees for various custodial,
pricing and accounting services provided by the custodian bank.
Sales charges paid by Class A shareholders were $10,017 for the National
Tax Free Fund, $26,741 for the National Insured Tax Free Fund and $4,792 for the
National Limited Term Tax Free Fund. Of these amounts Fund Distributors received
$1,491, $4,024 and $1,040, respectively. Contingent deferred sales charges paid
by Class B shareholders were $3,819 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
----------------------- --------------------------------
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 8, 1995* ENDED SEPTEMBER 15, 1995*
JUNE 30, 1996 TO DECEMBER 31, JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold .............................. 156,818 216,356 10,936 14,976
Shares issued for reinvested distributions 2,725 1,100 344 39
Shares redeemed .......................... (59,980) (95,865) -- (1)
-------- -------- -------- --------
Increase in shares outstanding ........... 99,563 121,591 11,280 15,014
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
NATIONAL TAX FREE FUND
CLASS C
------------------------------------
SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 12, 1995*
JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995
------------------------------------
<S> <C> <C>
Shares sold .............................. -- 4,834
Shares issued for reinvested distributions 116 10
Shares redeemed .......................... (265) (244)
------ ------
Increase (decrease) in shares outstanding (149) 4,600
====== ======
</TABLE>
- ---------------------------------
* Commencement of operations
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
-------------------------------------------------------------
CLASS A CLASS B
--------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold .................. 202,714 1,032,700 24,103 111,409
Shares issued for
reinvested distributions 50,460 124,540 2,788 3,314
Shares redeemed .............. (359,511) (1,595,201) (11,134) (20,799)
---------- ---------- ---------- ----------
Increase (decrease) in
shares outstanding ..... (106,337) (437,961) 15,757 93,924
========== ========== ========== ==========
</TABLE>
NATIONAL INSURED TAX FREE FUND
-------------------------------
CLASS C
-------------------------------
IX MONTHS PERIOD FROM
ENDED OCTOBER 20,
JUNE 30, 1996 1995* TO
(UNAUDITED) DECEMBER 31, 1995
-------------------------------
Shares sold .................. 467 1,461
Shares issued for
reinvested distributions 34 3
Shares redeemed .............. -- (488)
------ ------
Increase in shares outstanding 501 976
====== ======
<TABLE>
<CAPTION>
NATIONAL LIMITED TERM TAX FREE FUND
--------------------------------------------------
CLASS A CLASS B
-------------------------------- ----------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED SEPTEMBER 7, 1995* MARCH 7, 1996*
JUNE 30, 1996 TO DECEMBER 31, TO JUNE 30, 1996
(UNAUDITED) 1995 (UNAUDITED)
--------------------------------------------------
<S> <C> <C> <C>
Shares sold ............................. 58,456 120,091 4,902
Shares issued for
reinvested distributions ......... 3,306 1,020 60
Shares redeemed ......................... (73,516) (18) --
-------- -------- --------
Increase (decrease) in shares outstanding (11,754) 121,093 4,962
======== ======== ========
</TABLE>
* Commencement of operations.
(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
SIX MONTHS SEPTEMBER 8, SIX MONTHS SEPTEMBER 15, SIX MONTHS SEPTEMBER 12,
ENDED 1995(d) TO ENDED 1995(d) TO ENDED 1995(d) TO
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period............. $10.48 $10.00 $10.48 $10.09 $10.48 $10.00
------ ------ ------ ------ ------ ------
Operations:
Net investment income........... .28 .18 .26 .15 .23 .15
Net realized and unrealized
gain (loss) on investments.... (.38) .58 (.37) .49 (.36) .58
------ ------ ------ ------ ------ ------
Total from operations....... (.10) .76 (.11) .64 (.13) .73
------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income (f).. (.28) (.18) (.26) (.15) (.23) (.15)
From excess distributions of net
investment income............. (.01) -- (.02) -- (.03) --
From net realized gains......... -- (.10) -- (.10) -- (.10)
------ ------ ------ ------ ------ ------
Total distributions........... (.29) (.28) (.28) (.25) (.26) (.25)
------ ------ ------ ------ ------ ------
Net asset value:
End of period................... $10.09 $10.48 $10.09 $10.48 $10.09 $10.48
====== ====== ====== ====== ====== ======
Total investment return (b)........ (.94)% 7.57% (1.23)% 6.39% (1.40)% 7.37%
Net assets at end of
period (000's omitted).......... $2,231 $1,274 $265 $157 $45 $48
Ratios:
Ratio of expenses to
average daily net assets (g)...20%(e) .35%(e) .60%(e) .88%(e) .96%(e) 1.22%(e)
Ratio of net investment income
to average daily net assets...5.36%(e) 5.03%(e) 4.96%(e) 4.52%(e) 4.62%(e) 4.36%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)............1.25%(e) 1.25%(e) 2.00%(e) 2.00%(e) 2.00%9(e) 2.00%(e)
Net investment income...4.31%(e) 4.13%(e) 3.56%(e) 3.40%(e) 3.58%(e) 3.59%(e)
Portfolio turnover rate (excluding
short-term securities).......... 43.75% 49.62% 43.75% 49.62% 43.75% 49.62%
</TABLE>
See accompanying notes to Financial Highlights.
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
------------------------------------------------------------------
CLASS A
------------------------------------------------------------------
PERIOD FROM
SIX MONTHS JANUARY 10,
ENDED YEAR ENDED DECEMBER 31, 1992(d) TO
JUNE 30, 1996 ------------------------------ DECEMBER 31,
(UNAUDITED) 1995 1994 1993 1992
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period................... $10.64 $ 9.32 $10.67 $10.14 $10.00
------ ------ ------ ------ ------
Operations:
Net investment income................. .27 .54 .56 .60 .57
Net realized and unrealized
gain (loss) on investments......... (.48) 1.34 (1.34) .60 .14
------ ------ ------ ------ ------
Total from operations........... (.21) 1.88 (.78) 1.20 .71
------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income (a)........ (.27) (.56) (.55) (.60) (.57)
From excess distributions of net
investment income.................. (.01) -- -- -- --
From net realized gains............... -- -- (.02) (.07) --
------ ------ ------ ------ ------
Total distributions................ (.28) (.56) (.57) (.67) (.57)
------ ------ ------ ------ ------
Net asset value:
End of period . . .................... $10.15 $10.64 $ 9.32 $10.67 $10.14
====== ====== ====== ====== ======
Total investment return (b).............. (2.09)% 20.63% (7.45)% 12.10% 7.43%
Net assets at end of
period (000's omitted)................ $32,923 $35,662 $35,305 $25,315 $2,919
Ratios:
Ratio of expenses to
average daily net assets (g)....... .62%(e) .61% .10% --% --%
Ratio of net investment income
to average daily net assets........ 5.19%(e) 5.29% 5.71% 5.29% 5.85%(e)
Assuming no voluntary waivers and reimbursements:
Expenses (c)............. 1.17%(e) 1.16% 1.25% 1.25% 1.25%(e)
Net investment income.... 4.64%(e) 4.74% 4.56% 4.04% 4.60%(e)
Portfolio turnover rate (excluding
short-term securities)................ 48.59% 192.90% 31.25% 77.79% 114.92%
</TABLE>
See accompanying notes to Financial Highlights.
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
----------------------------------------------------------------------------
CLASS B CLASS C
------------------------------------------ -------------------------------
PERIOD FROM PERIOD FROM
SIX MONTHS YEAR MAY 26, SIX MONTHS OCTOBER 20,
ENDED ENDED 1994(d) TO ENDED 1995(d) TO
JUNE 30, 1996 DECEMBER 31, DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 1994 (UNAUDITED) 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:.......................
Beginning of period................ $10.64 $9.32 $9.81 $10.63 $10.38
------ ------ ----- ------ ------
Operations:
Net investment income.............. .25 .50 .31 .23 .09
Net realized and unrealized
gain (loss) on investments...... (.49) 1.34 (.50) (.48) .24
------ ------ ----- ------ ------
Total from operations........ (.24) 1.84 (.19) (.25) .33
------ ------ ----- ------ ------
Distributions to shareholders:.........
From net investment income (a)..... (.25) (.52) (.29) (.24) (.08)
From excess distributions of net
investment income............... (.01) -- -- -- --
From net realized gains............ -- -- (.01) -- --
------ ------ ----- ------ ------
Total distributions............. (.26) (.52) (.30) (.24) (.08)
------ ------ ----- ------ ------
Net asset value:
End of period . . ................. $10.14 $10.64 $9.32 $10.14 $10.63
====== ====== ===== ====== ======
Total investment return (b)............ (2.38)% 20.10% (1.94)% (2.47)% 3.21%
Net assets at end of
period (000's omitted)............. $1,633 $1,545 $478 $15 $10
Ratios:
Ratio of expenses to
average daily net assets (g)...... 1.03%(e) .93% .48%(e) 1.39%(e) .93%(e)
Ratio of net investment income
to average daily net assets....... 4.77%(e) 4.85% 5.37%(e) 4.43%(e) 4.46%(e)
Assuming no voluntary waivers and reimbursements:
Expenses (c).............. 1.92%(e) 1.81% 1.99%(e) 1.93%(e) 1.40%(e)
Net investment income..... 3.88%(e) 3.97% 3.86%(e) 3.89%(e) 3.99%(e)
Portfolio turnover rate (excluding
short-term securities).............. 48.59% 192.90% 31.25% 48.59% 192.90%
</TABLE>
See accompanying notes to Financial Highlights.
<TABLE>
<CAPTION>
NATIONAL LIMITED TERM TAX FREE FUND
------------------------------------------------------
CLASS A CLASS B
---------------------------------- ------------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED SEPTEMBER 7, 1995(d) MARCH 7, 1996(d)
JUNE 30, 1996 TO DECEMBER 31, TO JUNE 30, 1996
(UNAUDITED) 1995 (UNAUDITED)
------------------------------------------------------
<S> <C> <C> <C>
Net asset value:
Beginning of period................................ $10.16 $10.00 $10.20
----- ------ ------
Operations:
Net investment income.............................. .23 .14 .13
Net realized and unrealized
gain (loss) on investments..................... (.20) .17 (.24)
----- ------ -----
Total from operations...................... .03 .31 (.11)
----- ------ -----
Distributions to shareholders:
From net investment income (f)..................... (.23) (.14) (.13)
From distributions in excess of net investment income (.01) -- --
From net realized gains............................ -- (.01) --
----- ------ -----
Total distributions............................ (.24) (.15) (.13)
----- ------ -----
Net asset value:
End of period...................................... $9.95 $10.16 $9.96
===== ====== =====
Total investment return (b).......................... .17% 3.22% (1.20)%
Net assets at end of
period (000's omitted)............................. $1,088 $1,230 $49
Ratios:
Ratio of expenses to
average daily net assets (g)................... .41%(e) .56%(e) .87%(e)
Ratio of net investment income
to average daily net assets.................... 4.59%(e) 4.17%(e) 4.13%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)......................... 1.25%(e) 1.25%(e) 2.00%(e)
Net investment income................ 3.75%(e) 3.48%(e) 3.00%(e)
Portfolio turnover rate (excluding
short-term securities)............................ 8.75% 54.31% 8.75%
</TABLE>
See accompanying notes to Financial Highlights.
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 (UNAUDITED) JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------
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 (95.2%):
ALABAMA (3.8%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100 Birmingham Special Care Facility Revenue (Connie Lee Insured).......... 5.88% 08-15-25 $ 97,209
---------
ALASKA (4.1%):
-------------------------------------------------------------------------------------------------------
110 Alaska State Housing Finance Corporation (MBIA Insured)................ 5.88 12-01-30 104,602
----------
ARIZONA (4.0):
-------------------------------------------------------------------------------------------------------
100 Maricopa County Unified School District #8-Osborn (FGIC Insured)....... 5.88(h) 07-01-14 100,211
----------
CALIFORNIA (15.6%):
-------------------------------------------------------------------------------------------------------
250 California Housing Finance Agency Home Mortgage Revenue
Series 96K (MBIA Insured)........................................... 6.15(h) 08-01-16 250,000
100 Chino Unified School District Certificate of Participation (FSA Insured) 6.13 09-01-26 100,030
50 Foothills California Eastern Transportation Toll Road Revenue.......... 6.00 01-01-34 47,237
-----------
397,267
----------
COLORADO (5.4%):
-------------------------------------------------------------------------------------------------------
100 Arapahoe County Capital Improvement Highway Revenue - E-470
Project, Zero Coupon............................................... 6.62(g) 08-31-08 45,264
90 Colorado Housing Financial Authority Multi-Family Series A-3.......... 6.25 10-01-26 90,885
----------
136,149
----------
FLORIDA (6.3%):
-------------------------------------------------------------------------------------------------------
100 Manatee County Single Family Housing (GNMA/FHLMC Insured)............. 7.45(f) 05-01-27 109,845
50 St. Lucie County Special Assessment Revenue (Asset Guaranty
Insured) .......................................................... 6.10 11-01-20 49,375
----------
159,220
----------
GEORGIA (3.9%):
-------------------------------------------------------------------------------------------------------
50 Gainesville/Hall Hospital Authority Revenue (MBIA Insured)............. 6.00 10-01-25 50,047
50 Marietta Development Authority Revenue - Life College, Inc (FSA Insured) 5.75 09-01-14 49,331
----------
99,378
----------
IDAHO (1.9%):
-------------------------------------------------------------------------------------------------------
50 Idaho State Health Facility Revenue - Bannock Medical Center.......... 6.38 05-01-17 49,455
----------
ILLINOIS (6.4%):
-------------------------------------------------------------------------------------------------------
60 Illinois Health Facility Revenue- University of Chicago (MBIA Insured) 6.13 08-15-21 60,152
100 Illinois St. Certificate Of Participation (MBIA Insured).............. 6.25 07-01-13 102,779
----------
162,931
----------
INDIANA (3.8%):
-------------------------------------------------------------------------------------------------------
50 Indianapolis Gas Utility Revenue (FGIC Insured)....................... 5.38 06-01-21 46,612
50 West Lafayette Jr-Sr. High Building Revenue (MBIA Insured)............ 5.85 01-15-18 49,878
----------
96,490
----------
LOUISIANA (8.8%):
-------------------------------------------------------------------------------------------------------
115 Louisiana Housing Financial Authority (AMBAC Insured) ................. 7.80(f) 12-01-26 129,088
100 Louisiana Public Facility Revenue - Glen Retirement System............. 6.70 12-01-25 95,579
----------
224,667
----------
MINNESOTA (7.8%):
-------------------------------------------------------------------------------------------------------
100 Bass Brook Pollution Control Revenue, MN Power and Light............. 6.00 07-01-22 97,812
50 Bemidji Hospital Facilities Revenue - North Country Health........... 6.05 09-01-24 49,396
50 Minnesota Housing Finance Authority, Single Family Housing
(AMBAC Insured)................................................... 5.95 02-01-15 49,858
----------
197,066
----------
MISSOURI (2.1%):
-------------------------------------------------------------------------------------------------------
50 MO Housing Dv. Community SFMR Home Owners Program
(GNMA Insured).................................................... 7.20(f) 09-01-26 53,813
----------
NEW MEXICO (1.9%):
-------------------------------------------------------------------------------------------------------
50 Las Cruces Solid Waste Authority Revenue............................. 6.00 06-01-16 48,418
----------
NORTH CAROLINA (4.0%):
-------------------------------------------------------------------------------------------------------
100 Concord North Carolina Certificate of Participation (MBIA Insured)... 5.70(f) 06-01-06 100,625
----------
PUERTO RICO (11.5%):
-------------------------------------------------------------------------------------------------------
100 Puerto Rico Port Authority Commonwealth Highway and Transportation... 5.50 07-01-26 93,554
200 Puerto Rico Port Authority AMR Airlines.............................. 6.25(f) 06-01-26 197,930
----------
291,484
----------
WASHINGTON (3.9%):
-------------------------------------------------------------------------------------------------------
50 Seattle Municipal Light & Power Revenue (MBIA Insured)............... 5.70 09-01-19 49,032
50 Snohomish County Public Utility Electric Revenue (FGIC Insured)...... 6.00 01-01-18 50,178
----------
99,210
----------
TOTAL MUNICIPAL BONDS (cost: $2,411,967) 2,418,195
----------
SHORT-TERM SECURITIES (9.5%):
-------------------------------------------------------------------------------------------------------
121 Dreyfus Investment Tax Exempt Money Market Fund..................... 3.13(e) 121,000
121 Nuveen Investment Tax Free Fund..................................... 3.10(e) 121,000
----------
TOTAL SHORT-TERM SECURITIES (cost:$242,000) 242,000
----------
TOTAL INVESTMENTS IN SECURITIES (cost $2,653,967)(c) $2,660,195
==========
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL INSURED TAX FREE FUND
INVESTMENTS IN SECURITIES (UNAUDITED) (CONTINUED) JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------
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 (98.2%):
ALABAMA (4.3%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,500 Birmingham - Carraway Methodist (Connie Lee Insured)................... 5.88% 08-15-15 $ 1,473,210
------------
ALASKA (10.7%):
-------------------------------------------------------------------------------------------------------
1,750 Alaska State Housing Corporation Series A (MBIA Insured)............... 5.88 12-01-30 1,664,145
1,000 Anchorage General Purpose G.O. (FGIC Insured).......................... 6.00 02-01-15 1,009,950
1,000 Alaska Student Loan Revenue Series A (AMBAC Insured)................... 6.35(f) 07-01-12 1,007,500
------------
3,681,595
------------
CALIFORNIA (5.8%):
-------------------------------------------------------------------------------------------------------
1,000 California State Health Facility Fng. Catholic Health (AMBAC Insured). 5.88 05-01-21 1,004,740
1,000 Los Angeles Department of Water & Power Revenue (FGIC Insured)........ 5.90 05-15-12 1,010,310
------------
2,015,050
------------
COLORADO (5.0%):
-------------------------------------------------------------------------------------------------------
1,700 Arapahoe County Capital Improvements E-470 (MBIA Insured)............. 6.05 08-31-15 1,729,121
------------
CONNECTICUT (2.8%):
-------------------------------------------------------------------------------------------------------
1,000 Bridgeport G.O. (AMBAC - Insured)..................................... 5.50 09-01-15 961,020
------------
IDAHO( 1.0%) :
-------------------------------------------------------------------------------------------------------
350 University of Idaho Revenue (FSA Insured)............................. 5.85 04-01-11 354,700
------------
ILLINOIS (3.1%):
-------------------------------------------------------------------------------------------------------
1,040 Illinois Certificate Of Participation (MBIA Insured) ................. 6.25 07-01-13 1,068,902
------------
INDIANA (8.0%):
------------------------------------------------------------------------------------------------------
1,000 Brownsburg School Building #2 (FSA Insured)........................... 5.95 08-01-10 1,023,990
1,750 Indiana Health Finance Revenue - Marion Hospital (MBIA Insured)....... 6.00 07-01-16 1,756,982
------------
2,780,972
------------
LOUISIANA (19.1%):
-------------------------------------------------------------------------------------------------------
5,000 Louisiana Housing Financial Authority (AMBAC Insured)................ 7.80(f) 12-01-26 5,612,500
1,000 New Orleans Refunding G.O. (AMBAC Insured)........................... 5.88 10-01-11 1,005,630
------------
6,618,130
------------
MICHIGAN (2.9%):
-------------------------------------------------------------------------------------------------------
1,000 Kenowa Hills Public Schools G.O. (MBIA Insured).................... 5.88 05-01-21 986,410
------------
NEVADA (5.7%):
-------------------------------------------------------------------------------------------------------
1,000 Clark County School District G.O. (MBIA Insured)................... 5.50 06-15-16 965,920
1,000 Washoe County Airport Authority Revenue (MBIA Insured)............. 5.88 07-01-10 1,010,080
------------
1,976,000
------------
NEW MEXICO (4.5%):
-------------------------------------------------------------------------------------------------------
1,000 City of Santa Fe Revenue Series 1994 A (AMBAC Insured)........... 6.30 06-01-24 1,027,790
500 City of Santa Fe Revenue Series 1994 A (AMBAC Insured)........... 6.25 06-01-15 539,380
------------
1,567,170
------------
NORTH DAKOTA (3.0%):
-------------------------------------------------------------------------------------------------------
1,000 Grand Forks United Hospital Revenue (MBIA Insured)............... 6.25 12-01-24 1,019,080
------------
NEW YORK (3.1%):
-------------------------------------------------------------------------------------------------------
1,000 New York State Medical Care Facility Agency (AMBAC Insured)...... 6.75 08-15-14 1,079,380
------------
TEXAS (9.2%):
-------------------------------------------------------------------------------------------------------
1,000 Abilene Health Facility Rev Hendrick Medical Center (MBIA Insured) 6.00 09-01-13 1,012,070
500 Dallas County Mental Health Mental Retardation Center Facilities
Revenue (FSA Insured)......................................... 5.75 09-01-16 489,170
1,630 Harris County Toll Road (MBIA Insured)........................... 6.25 08-15-15 1,692,625
------------
3,193,865
------------
UTAH (2.9%):
-------------------------------------------------------------------------------------------------------
1,000 Provo City Energy Systems Revenue (MBIA Insured)................. 5.75 05-15-14 991,660
------------
VIRGINIA (2.8%):
-------------------------------------------------------------------------------------------------------
1,000 Loudoun County Hospital (FSA Insured)............................ 5.80 06-01-20 975,080
------------
WASHINGTON (4.3%):
-------------------------------------------------------------------------------------------------------
1,500 Spokane Solid Waste Revenue (AMBAC Insured)...................... 5.50 12-01-10 1,477,935
------------
TOTAL INVESTMENTS IN SECURITIES (cost: $33,365,594) (c) $ 33,949,280
============
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
INVESTMENTS IN SECURITIES (UNAUDITED) JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------
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 (104.4%):
ALABAMA (8.6%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 50 Alabama Mental Health Finance Authority Revenue (MBIA Insured)......... 5.00% 05-01-06 $ 48,896
50 Birmingham - Carraway Special Care Facility Revenue
(Connie Lee Insured)................................................ 5.20 08-15-06 49,073
----------
97,969
----------
ALASKA (4.3%):
-------------------------------------------------------------------------------------------------------
50 Anchorage Solid Waste Utility Revenue (FSA Insured).................... 5.38 04-01-09 48,758
----------
ARIZONA (8.4%):
-------------------------------------------------------------------------------------------------------
50 Maricopa County IDA-Baptist Hospital (MBIA Insured).................... 5.00 09-01-03 49,967
45 Tucson Water Revenue................................................... 5.40 07-01-05 45,414
----------
95,381
----------
CALIFORNIA (8.8%):
-------------------------------------------------------------------------------------------------------
50 North City West School Facility Finance Revenue (FSA Insured).......... 5.63 09-01-08 50,589
50 Chino Unified School District Certificate of Participation (FSA Insured) 5.00 09-01-05 49,026
----------
99,615
----------
CONNECTICUT (9.1%):
-------------------------------------------------------------------------------------------------------
50 Connecticut State Special Tax Obligation Revenue....................... 5.90 09-01-05 52,932
50 Connecticut State Health & Educational Facilities Authority Revenue.... 5.25 11-01-02 50,475
----------
103,407
----------
FLORIDA (4.4%):
-------------------------------------------------------------------------------------------------------
50 Miami Parking Facility Revenue......................................... 5.70 10-01-09 49,582
----------
KENTUCKY (4.3%):
-------------------------------------------------------------------------------------------------------
50 Kentucky State Property & Buildings Commission Revenue
(MBIA Insured)...................................................... 4.80 09-01-05 48,589
----------
MICHIGAN (12.9%):
-------------------------------------------------------------------------------------------------------
150 Detroit Water Supply System Revenue (MBIA Insured)..................... 5.20 07-01-08 146,858
----------
MINNESOTA (8.7%):
-------------------------------------------------------------------------------------------------------
50 Minneapolis-St. Paul Health Care System - Childrens Healthcare
(FSA Insured)....................................................... 4.95 08-15-05 49,098
50 Minnesota State Housing Finance Authority Revenue (AMBAC Insured)...... 4.90 08-01-03 49,703
----------
98,801
----------
MISSISSIPPI (4.4%):
-------------------------------------------------------------------------------------------------------
50 Jackson Public School District G.O. (FGIC Insured)..................... 5.00 04-01-04 49,702
----------
MISSOURI (4.3%):
-------------------------------------------------------------------------------------------------------
50 Kansas City Land Clearance Redevelopment Lease Revenue (FSA Insured)... 5.25 12-01-07 49,281
----------
NEW JERSEY (4.3%):
-------------------------------------------------------------------------------------------------------
50 Mercer County G.O. Unlimited........................................... 5.13% 09-01-07 $ 49,308
----------
NEW YORK (4.4%):
-------------------------------------------------------------------------------------------------------
50 New York State Dorm Authority Revenue - State University Education
Facilities.......................................................... 5.25 05-15-01 50,081
----------
NORTH CAROLINA (4.4%):
-------------------------------------------------------------------------------------------------------
50 Concord North Carolina Certificate of Participation (MBIA Insured)..... 5.70 06-01-06 50,313
----------
RHODE ISLAND (4.3%):
-------------------------------------------------------------------------------------------------------
50 Rhode Island State Housing/Mortgage Financial Corporation.............. 5.75(f) 04-01-07 49,412
----------
TEXAS (4.4%):
-------------------------------------------------------------------------------------------------------
50 Brownsville Utility System Revenue (AMBAC Insured)..................... 5.00 09-01-04 50,020
----------
UTAH (4.4%):
-------------------------------------------------------------------------------------------------------
50 Utah State University (MBIA Insured) .................................. 5.55 12-01-08 50,099
----------
TOTAL INVESTMENTS IN SECURITIES (cost: $1,196,068) (c) $1,187,176
==========
</TABLE>
See accompanying notes to investments in securities.
VOYAGEUR NATIONAL TAX FREE FUND
VOYAGEUR NATIONAL INSURED TAX FREE FUND
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
NOTES TO INVESTMENTS IN SECURITIES (UNAUDITED)
- --------------------------------------------------------------------------------
(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...................... 64% 6% 4% 26% 100%
National Insured Tax Free Fund.............. 100% -- -- -- 100%
National Limited Term Tax Free Fund......... 71% 17% 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>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation/
Appreciation Depreciation (Depreciation)
------------ ------------ --------------
<S> <C> <C> <C>
National Tax Free Fund...................... $ 14,567 $ (8,339) $ 6,228
National Insured Tax Free Fund.............. 638,740 (55,054) 583,686
National Limited Term Tax Free Fund......... 1,592 (10,484) (8,892)
</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.
(e) Dividend yields change daily to reflect current market conditions. Rate
shown is the quoted yield at June 30, 1996.
(f) Security subject to the Alternative Minimum Tax.
(g) The interest rate disclosed for zero coupon issues represents the effective
yield on the date of acquisition.
(h) At June 30, 1996, the cost of securities purchased on a when issued basis
was $349,150 for National Tax Free Fund and $988,420 for National Insured
Tax Free Fund.
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, MN 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, MN 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, MN 55402
[LOGO] VOYAGEUR ON CALL (TM)
[LINE DRAWING: TELEPHONE RINGING]
800.545.3863
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] Voyageur
Your tax sensitive investment manager
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402-4115
