VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
NATIONAL TAX FREE FUND
NATIONAL INSURED TAX FREE FUND
NATIONAL LIMITED TERM TAX FREE FUND
NATIONAL HIGH YIELD MUNICIPAL BOND FUND
ANNUAL REPORT
DATED DECEMBER 31, 1996
Family of Funds
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds as your objectives or market
conditions change.
VOYAGEUR HIGH YIELD FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in medium and
lower grade municipal bonds.
Voyageur MINNESOTA High Yield Municipal Bond Fund
Voyageur NATIONAL High Yield Municipal Bond Fund
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
<TABLE>
<S> <C>
Voyageur ARIZONA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur NATIONAL Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NEW YORK Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur KANSAS Tax Free Fund Voyageur WISCONSIN Tax Free Fund
</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> <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> <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> <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> <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:
The year 1996 was marked with mixed economic events. During the first half of
the year, interest rates rose steadily, propelled by market fears that faster
Gross Domestic Product (GDP) growth would ignite inflation. Once these fears
abated in June, interest rates began a descent that lasted throughout most of
the remainder of the year.
In comparison to their peer group of funds, the overall performance of the
Voyageur Tax Free Funds was excellent in 1996. The main reason for this strong
performance was Voyageur portfolio managers' subtle shift toward adding income
to the portfolios. This additional income allowed us to better position the
Funds during the first half of the year when interest rates were rising and
municipal bond prices were falling. Within all of our Tax Free Funds, we
continued to extend call protection, where possible, in order to better provide
for income for longer periods of time.
In January 1997, Lincoln National Corporation (NYSE: LNC) announced that it
planned to acquire the parent company of Voyageur Fund Managers, Inc. -- the
investment adviser for the Voyageur Tax Free Funds. LNC, with headquarters in
Fort Wayne, Indiana, is a diversified organization with operations in many
aspects of the financial services industry, including insurance and investment
management. Delaware Management Company, Inc. (DMC), an indirect wholly owned
subsidiary of LNC, and its affiliate, Delaware International Advisers Ltd.,
serve as the investment advisers to the investment companies in the Delaware
Group of Funds (the Delaware Group), which currently includes 16 open-end funds
and two closed-end funds (comprising 48 separate investment portfolios). DMC
through its Delaware Investment Advisers division, Delaware International
Advisers Ltd. and certain other subsidiaries of Delaware Management Holdings,
Inc. (DMH) also provides investment advice with respect to separately managed
accounts of institutional and other clients. DMH, through its subsidiaries, is
responsible for the management of approximately $32 billion. Voyageur Fund
shareholders should benefit from this acquisition by being able to select from a
wider variety of mutual funds in the expanded Delaware-Voyageur fund family.
Delaware Management, like Voyageur, has a conservative, long-term investment
philosophy. The continuity in the Voyageur Tax Free Funds' management styles
should also be further maintained since Andrew M. McCullagh and Elizabeth
Howell, two of the senior municipal bond portfolio managers for the Voyageur Tax
Free Funds, will continue to play a key role in the management of the Voyageur
Tax Free Funds after the transition.
We appreciate your patronage and confidence in Voyageur Fund Managers. If at any
time you have questions about your Voyageur fund investment, I urge you to
contact your personal financial adviser. Voyageur Client Service representatives
are also available from 7 a.m. to 6 p.m. (Central Standard Time) to answer any
questions you may have concerning this transaction or your Voyageur fund
investment.
Sincerely,
/s/ John G. Taft
John G. Taft
President
Voyageur National Tax Free Fund
Voyageur National Insured Tax Free Fund
Voyageur National Limited Term Tax Free Fund
Voyageur National High Yield Municipal Bond Fund
VOYAGEUR NATIONAL TAX FREE FUNDS
For the year ended December 31, 1996, the total returns at net asset value (NAV)
for the class A shares of the Voyageur National Tax Free Funds were as follows:
Voyageur National Tax Free Fund 4.38%*; Voyageur National Insured Tax Free Fund
2.70%*; and Voyageur National Limited Term Tax Free Fund 4.87%.*
Within the Voyageur National Tax Free Funds, we continue to look for
opportunities for enhancing tax free income and preserving capital. We believe
shareholders in all of the Voyageur National Tax Free Funds will ultimately
benefit from our well-developed and active presence in the municipal market --
specifically Voyageur's presence and expertise in state-specific issues. This
expertise allows us to select our best ideas and investments from opportunities
we see for our state-specific funds and include them in the National Tax Free
Funds.
This diverse market presence also allows us to select securities that are good
values for a wide variety of reasons. For example, if there happens to be an
excessive supply of New York municipal bond issues, we may decide to increase
our holdings in New York municipal bonds since the supply could cause the
securities to be purchased cheaply. However, if Florida has a major shortage of
issues, we may want to sell some Florida municipal bonds within the portfolio
while they are at high valuations. This type of municipal bond market "bargain"
hunting also extends to market sectors -- i.e., housing bonds, utility bonds,
etc. -- where we might see good value due to availability and market changes.
We continue to manage the Voyageur National Tax Free Funds with a dual focus of
generating higher tax-exempt income levels and protecting future income streams.
By elevating portfolio income, we are able to accomplish two important things.
First, we were able to provide our shareholders with competitive distribution
rates. Second, higher income levels create a valuable cushion against market
declines -- such as those we witnessed during the first half of 1996.
In order to better provide for current income level for longer periods of time,
we have continued to take advantage of opportunities to extend the Funds' call
protection whenever possible.
OUTLOOK
The U.S. economy is still showing signs of moderate growth with moderate
inflation. Our outlook for the municipal market continues to be favorable, and
we expect interest rates to decline over the long term.
[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.
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INSURANCE PERTAINS ONLY TO
THE TIMELY PAYMENT OF PRINCIPAL AND INTEREST BY THE SECURITIES IN THE VOYAGEUR
NATIONAL INSURED TAX FREE 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.
VOYAGEUR NATIONAL HIGH YIELD MUNICIPAL BOND FUND
[PHOTO]
STEVEN P. ELDREDGE IS THE SENIOR MUNICIPAL BOND MANAGER FOR THE VOYAGEUR
NATIONAL HIGH YIELD MUNICIPAL BOND FUND. MR. ELDREDGE HAS MORE THAN 18 YEARS OF
INVESTMENT INDUSTRY EXPERIENCE.
*PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. HIGH YIELD INVESTING
INVOLVES UNIQUE RISKS. REFER TO THE "RISKS AND SPECIAL INVESTMENT
CONSIDERATIONS" SECTION OF THE FUND'S PROSPECTUS FOR A MORE COMPLETE DESCRIPTION
OF CREDIT RISK.
For the year ended December 31, 1996, the total returns at net asset value (NAV)
for the class A shares of the Voyageur National High Yield Municipal Bond Fund
was 6.39%.*
Since Voyageur's investment philosophy is consistent with that of the Fund's
previous managers, the Voyageur National High Yield Municipal Bond Fund has
changed little since Voyageur acquired it in November 1996. Our main thrust
during the past two months has been to lengthen the callability protection of
the Fund's portfolio holdings in order to better provide for income for a longer
period of time.
In the past, the portfolio was managed for income. The Fund had a moderate
duration and a relatively high dividend. While we generally support this
emphasis on high income, we believe it is equally important not to have a
complete disregard for total return and have made subtle shifts in the
management of the portfolio in order to make the Fund slightly more total return
sensitive.
OUTLOOK
The United States is entering its seventh year of an economic expansion. The
credit quality across the municipal market has been improving for the last few
years, and the quality of high-yield municipal bond securities is currently
relatively good. The high-yield sector of the municipal market has presented
good opportunities to buy strong credits with attractive yield compensation.
However, we believe it is important to be very selective in our search for
high-yield securities. As the demand for high-yield municipal bonds increases,
so does the chance that more marginal credits get financed. In order to enhance
value for shareholders it is important to maintain thorough and constant
surveillance of the high-yield issues in the portfolio.
VOYAGEUR NATIONAL TAX FREE FUND
Portfolio Abstract
For the Period Ended December 31, 1996
Class A Shares
[GRAPH]
<TABLE>
<CAPTION>
National Tax Free National Tax Free Lehman Bros. 20
Without Sales Charge With Sales Charge Year Municipal Bond Index
<S> <C> <C> <C>
Aug-95 10000 9625 10000
10076 9698 10063
10337 9949 10277
10589 10192 10504
Dec-95 10756 10353 10651
10838 10432 10706
10723 10321 10583
10535 10140 10414
10522 10128 10372
10562 10166 10385
10655 10256 10531
10728 10325 10635
10757 10354 10618
10937 10527 10832
11064 10649 10962
11257 10834 11191
Dec-96 11228 10807 11125
</TABLE>
Voyageur National Tax Free Fund Without Sales Charge - Ending Value $11,228
Voyageur National Tax Free Fund With Sales Charge - Ending Value $10,807
Lehman Bros. 20 Year Municipal Bond Index - Ending Value $11,125
The Lehman Bros. 20 Year Municipal Bond Index is a broad, unmanaged index of
securities of United States Municipalities. The index assumes that no operating
expenses, transaction fees or sales loads are incurred by a hypothetical
investor who directly owns the securities maintained in the index. In order to
outperform an index over any specific time frame, a fund must return to
investors an amount greater than that provided by the index plus total operating
expenses. For this reason, few fixed income funds are able to outperform broad
market indices over the long term. The chart above is comprised of data that
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, 1996.
The performance of separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes.
Performance quoted represents past performance and is not indicative of
future results.
* Average annual total returns include the maximum 3.75% sales charge.
** Commencement of operations.
*** Assumes redemption on December 31, 1996
Voyageur National Tax Free Fund
Average Annual Total Returns
(Class A Shares)
Since
1 Year 9/8/95**
Without Sales Charge 4.38% 9.19%
With Sales Charge* 0.47% 6.07%
Lehman Bros. 20 4.45% 8.44%
Year Municipal
Bond Index
Voyageur National Tax Free Fund
Average Annual Total Returns
(Class B Shares)
Since
1 Year 9/15/95**
Without Contingent 3.83% 7.97%
Deferred Sales Charge
With Contingent (1.17%) 4.94%
Deferred Sales Charge***
Voyageur National Tax Free Fund
Average Annual Total Returns
(Class C Shares)
Since
1 Year 9/12/95**
3.51% 8.46%
State Breakdown
(shown as % of total net assets)
Alabama 7.3% Louisiana 6.1%
Arizona 2.8% Minnesota 6.5%
California 10.8% Mississippi 4.0%
Colorado 3.8% Missouri 1.5%
Florida 7.0% New Mexico 1.3%
Georgia 2.7% North Carolina 3.3%
Idaho 5.5% Puerto Rico 8.0%
Illinois 11.2% Utah 4.0%
Indiana 2.7% Washington 2.7%
Wisconsin 4.0%
Statistics
Average Maturity 14.7 Years
Average Coupon 6.16%
Portfolio Duration 9.0 Years
Average Quality Aa/AA
VOYAGEUR NATIONAL INSURED TAX FREE FUND
Portfolio Abstract
For the Period Ended December 31, 1996
Class A Shares
[GRAPH]
<TABLE>
<CAPTION>
National Insured National Insured Lehman Bros. Long
Without Sales Charge With Sales Charge Insured Municipal Bond Index
<S> <C> <C> <C>
Dec-91 10000 9625 10000
9913 9541 10014
9832 9464 10018
9826 9458 10042
9921 9549 10137
10077 9699 10270
10245 9860 10459
10577 10180 10833
10383 9994 10698
10426 10035 10751
10271 9885 10598
10564 10168 10868
Dec-92 10743 10340 11010
10865 10457 11128
11190 10771 11600
11227 10806 11499
11381 10954 11644
11406 10978 11740
11605 11169 11956
11597 11162 11971
11884 11438 12257
12006 11556 12411
12029 11578 12434
11809 11366 12297
Dec-93 12043 11591 12593
12301 11840 12752
11994 11544 12373
11479 11048 11721
11281 10858 11817
11440 11011 11957
11355 10930 11837
11608 11173 12108
11629 11193 12142
11403 10975 11899
11129 10711 11585
10864 10457 11314
Dec-94 11146 10728 11669
11561 11127 12125
12038 11586 12566
12166 11709 12709
12160 11704 12706
12582 12110 13185
12394 11929 12982
12439 11973 13050
12572 12101 13229
12730 12253 13333
12988 12501 13617
13261 12763 13918
Dec-95 13446 12941 14113
13543 13035 14216
13396 12893 14102
13069 12579 13896
13036 12547 13849
13067 12577 13842
13164 12671 14004
13288 12789 14133
13346 12845 14127
13520 13013 14335
13669 13156 14504
13885 13364 14790
Dec-96 13809 13291 14713
</TABLE>
Voyageur National Insured Tax Free Fund Without Sales Charge - Ending Value
$13,810
Voyageur National Insured Tax Free Fund With Sales Charge - Ending Value $13,292
Lehman Bros. Long Insured Municipal Bond Index - Ending Value $14,713
The Lehman Bros. Long Insured Municipal Bond Index is a broad, unmanaged index
of securities of United States Municipalities. The index assumes that no
operating expenses, transaction fees or sales loads are incurred by a
hypothetical investor who directly owns the securities maintained in the index.
In order to outperform an index over any specific time frame, a fund must return
to investors an amount greater than that provided by the index plus total
operating expenses. For this reason, few fixed income funds are able to
outperform broad market indices over the long term. The chart above is comprised
of data that 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, 1996.
The performance of separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes.
Performance quoted represents past performance and is not indicative of
future results.
* Average annual total returns include the maximum 3.75% sales charge.
** Commencement of operations.
*** Assumes redemption on December 31, 1996
Voyageur National Insured Tax Free Fund
Average Annual Total Returns
(Class A Shares)
Since
1 Year 1/10/92**
Without Sales Charge 2.70% 6.70%
With Sales Charge* (1.15%) 5.88%
Lehman Bros. 4.25% 8.07%
Long Insured
Municipal Bond Index
Voyageur National Insured Tax Free Fund
Average Annual Total Returns
(Class B Shares)
Since
1 Year 5/26/94**
Without Contingent 2.24% 7.14%
Deferred Sales Charge
With Contingent (2.76%) 5.75%
Deferred Sales Charge***
Voyageur National Insured Tax Free Fund
Average Annual Total Returns
(Class C Shares)
Since
1 Year 10/20/95**
2.02% 4.39%
State Breakdown
(shown as % of total net assets)
Alabama 4.7% New Mexico 3.4%
Alaska 11.1% New York 6.4%
California 3.3% North Carolina 3.1%
Colorado 3.3% North Dakota 3.3%
Connecticut 3.1% Pennsylvania 2.9%
Illinois 9.7% Texas 3.3%
Indiana 3.3% Utah 3.1%
Louisiana 20.7% Virginia 3.2%
Michigan 6.2% Wisconsin 4.6%
Nevada 3.2%
Statistics
Average Maturity 14.8 Years
Average Coupon 6.25%
Portfolio Duration 8.9 Years
Average Quality Aaa/AAA
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
Portfolio Abstract
For the Period Ended December 31, 1996
Class A Shares
[GRAPH]
<TABLE>
<CAPTION>
National Limited Term Tax National Limited Term Tax Lehman Bros. 20 Year
Free Without Sales Charge Free With Sales Charge Municipal Bond Index
<S> <C> <C> <C>
Sept-95 10000 9725 10000
10050 9774 10000
10141 9862 10117
10263 9980 10228
Dec-95 10322 10038 10283
10445 10158 10382
10434 10147 10347
10300 10017 10247
10279 9996 10228
10247 9965 10213
10340 10056 10292
10433 10146 10377
10484 10196 10382
10567 10277 10476
10683 10389 10589
10851 10553 10766
Dec-96 10824 10527 10733
</TABLE>
Voyageur National Limited Term Tax FreeFund Without Sales Charge - Ending Value
$10,825
Voyageur National Limited Term Tax FreeFund With Sales Charge - Ending Value
$10,527
Lehman Bros. 7 Year Municipal Bond Index - Ending Value $10,733
The Lehman Bros. 7 Year Municipal Bond Index is a broad, unmanaged index of
securities of United States Municipalities. The index assumes that no operating
expenses, transaction fees or sales loads are incurred by a hypothetical
investor who directly owns the securities maintained in the index. In order to
outperform an index over any specific time frame, a fund must return to
investors an amount greater than that provided by the index plus total operating
expenses. For this reason, few fixed income funds are able to outperform broad
market indices over the long term. The chart above is comprised of data that
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, 1996.
The performance of separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes.
Performance quoted represents past performance and is not indicative of
future results.
* Average annual total returns include the maximum 2.75% sales charge.
** Commencement of operations.
*** Assumes redemption on December 31, 1996
Voyageur National Limited Term Tax Free Fund
Average Annual Total Returns
(Class A Shares)
Since
1 Year 9/7/95**
Without Sales Charge 4.87% 6.19%
With Sales Charge* 1.98% 3.97%
Lehman Bros. 7 4.38% 5.53%
Year Municipal
Bond Index
Voyageur National Limited Term Tax Free Fund
Total Returns
(Class B Shares)
Since
3/7/96**
Without Contingent 3.19%
Deferred Sales Charge
With Contingent (0.81%)
Deferred Sales Charge***
State Breakdown
(shown as % of total net assets)
Alabama 17.2% Kentucky 4.2%
Alaska 4.2% Minnesota 8.4%
Arizona 3.9% Missouri 4.3%
California 8.6% New York 4.3%
Colorado 5.1% Rhode Island 4.2%
Connecticut 4.3% Utah 8.5%
Idaho 4.4% Washington 4.3%
Illinois 8.5% Wyoming 4.3%
Statistics
Average Maturity 8.8 Years
Average Coupon 5.47%
Portfolio Duration 6.7 Years
Average Quality Aa/AA
VOYAGEUR NATIONAL HIGH YIELD MUNICIPAL BOND FUND
Portfolio Abstract
For the Period Ended December 31, 1996
Class A Shares
[GRAPH]
<TABLE>
<CAPTION>
National High Yield Municipal National High Yield Municipal Lehman Bros. 7
Bond Fund Without Sales Charge Bond Fund With Sales Charge Year Municipal Bond Index
<S> <C> <C> <C>
Sept-86 10000 9625 10000
9916 9544 10007
10166 9785 10180
10270 9885 10382
Dec-86 10276 9890 10353
10400 10010 10665
10534 10139 10717
10514 10120 10603
10138 9758 10071
10040 9663 10021
10157 9776 10316
10276 9890 10421
10334 9946 10444
10069 9691 10059
9904 9533 10095
10309 9922 10358
Dec-87 10491 10097 10509
10820 10415 10883
10936 10526 10998
10795 10391 10870
10827 10421 10953
10846 10439 10921
11029 10616 11081
11027 10613 11153
11129 10712 11163
11305 10881 11365
11495 11064 11565
11396 10968 11459
Dec-88 11563 11129 11577
11699 11261 11816
11641 11205 11681
11679 11241 11653
11920 11473 11930
12124 11669 12178
12285 11824 12343
12410 11944 12511
12341 11878 12389
12319 11857 12352
12473 12005 12503
12636 12162 12722
Dec-89 12765 12286 12826
12682 12206 12765
12776 12297 12879
12796 12317 12883
12725 12248 12790
12923 12438 13069
13036 12547 13184
13239 12743 13379
13074 12583 13184
13121 12629 13192
13266 12768 13431
13514 13008 13701
Dec-90 13584 13074 13761
13709 13195 13945
13799 13281 14067
13847 13328 14072
13967 13443 14260
14067 13539 14387
14042 13516 14372
14265 13730 14547
14453 13911 14739
14647 14097 14931
14780 14226 15065
14818 14262 15107
Dec-91 15124 14557 15431
15137 14569 15467
15142 14574 15472
15221 14651 15477
15404 14827 15615
15577 14993 15799
15791 15199 16064
16215 15607 16546
16165 15559 16384
16223 15614 16491
16103 15499 16329
16401 15786 16622
Dec-92 16609 15986 16791
16760 16132 16986
17234 16588 17601
17214 16568 17414
17367 16716 17590
17465 16810 17689
17711 17047 17984
17748 17082 18007
18028 17352 18382
18220 17536 18592
18320 17633 18627
18225 17541 18463
Dec-93 18499 17805 18853
18764 18060 19067
18411 17721 18574
17856 17186 17818
17855 17186 17969
17989 17314 18125
17973 17299 18015
18277 17592 18345
18345 17657 18409
18150 17470 18138
17958 17285 17815
17706 17042 17493
Dec-94 18033 17356 17878
18416 17725 18389
18842 18174 18924
19023 18310 18924
19098 18382 19165
19570 18836 19776
19461 18732 19604
19585 18851 19790
19768 19027 20042
19906 19160 20168
20210 19452 20460
20565 19794 20800
Dec-95 20737 19959 21000
20869 20086 21159
20886 20103 21015
20702 19925 20746
20669 19894 20688
20715 19938 20680
20893 20110 20905
21109 20317 21096
21192 20397 21091
21426 20623 21387
21621 20810 21628
21909 21088 22024
Dec-96 22063 21236 21932
</TABLE>
Voyageur National High Yield Municipal Bond Fund Without Sales Charge - Ending
Value $22,064
Voyageur National High Yield Municipal Bond Fund With Sales Charge - Ending
Value $21,236
Lehman Bros. Municipal Bond Index - Ending Value $21,932
The Lehman Bros. Municipal Bond Index is a broad, unmanaged index of securities
of United States Municipalities. The index assumes that no operating expenses,
transaction fees or sales loads are incurred by a hypothetical investor who
directly owns the securities maintained in the index. In order to outperform an
index over any specific time frame, a fund must return to investors an amount
greater than that provided by the index plus total operating expenses. For this
reason, few fixed income funds are able to outperform broad market indices over
the long term. The chart above is comprised of data that 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,
1996.
The performance of separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes.
Performance quoted represents past performance and is not indicative of
future results.
* Average annual total returns include the maximum 3.75% sales charge.
** Commencement of operations.
*** Assumes redemption on December 31, 1996
Voyageur National High Yield Municipal Bond Fund
Average Annual Total Returns
(Class A Shares)
Since
1 Year 5 Years 10 Years 9/22/86**
Without Sales Charge 6.39% 7.83% 7.93% 8.00%
With Sales Charge* 2.40% 7.01% 7.52% 7.60%
Lehman Bros. 4.44% 7.28% 7.80% 7.94%
Municipal
Bond Index
Voyageur National High Yield Municipal Bond Fund
Total Returns
(Class B Shares)
Since
12/12/96**
Without Contingent 0.43%
Deferred Sales Charge
With Contingent (4.57%)
Deferred Sales Charge***
State Breakdown
(shown as % of total net assets)
Alabama 8.7% Maine 1.8% Pennsylvania 14.1%
Arizona 0.9% Michigan 3.5% South Dakota 4.8%
Colorado 8.0% Minnesota 1.8% Tennessee 1.8%
Connecticut 1.7% Missouri 9.3% Texas 3.5%
Florida 3.7% Nebraska 3.0% Washington 1.6%
Idaho 0.4% New Hampshire 1.7% West Virginia 1.3%
Illinois 14.8% New Mexico 1.3% Wisconsin 1.0%
Indiana 3.0% Oklahoma 8.8% Wyoming 0.7%
Statistics
Average Maturity 7.8 Years
Average Coupon 7.4%
Portfolio Duration 5.4 Years
Average Quality C/C
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.), Voyageur National
Limited Term Tax Free Fund (a fund within Voyageur Intermediate Tax Free Funds,
Inc.) and Voyageur National High Yield Municipal Bond Fund (a fund within
Voyageur Mutual Funds, Inc.) as of December 31, 1996, and the related statements
of operations for the year ended December 31, 1996 (for the five-month period
ended December 31, 1996 and the year ended July 31, 1996 for Voyageur National
High Yield Municipal Bond Fund) and the statements of changes in net assets for
the year ended December 31, 1996 and 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, 1996 for Voyageur National Insured Tax Free
Fund, for the year ended December 31, 1996 and the period from September 7, 1995
to December 31, 1995 for Voyageur National Limited Term Tax Free Fund and for
the five-month period ended December 31, 1996 and each of the years in the
two-year period ended July 31, 1996 for Voyageur National High Yield Municipal
Bond Fund and the financial highlights for the periods presented in note 7.
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 and the financial
highlights 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. As to securities purchased but not received, we request confirmations
from brokers and where replies are not received we carry out other appropriate
auditing procedures. 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 and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Voyageur National Tax Free Fund, Voyageur National Insured Tax Free Fund,
Voyageur National Limited Term Tax Free Fund and Voyageur National High Yield
Municipal Bond Fund as of December 31, 1996 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 14, 1997
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1996
- ----------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR VOYAGEUR
VOYAGEUR NATIONAL NATIONAL NATIONAL
NATIONAL INSURED LIMITED TERM HIGH YIELD
TAX FREE TAX FREE TAX FREE MUNI BOND
FUND FUND FUND FUND
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at market value (note 1)
(identified cost: $3,478,430, $31,618,426,
$1,154,029 and $57,652,166, respectively) .... $ 3,557,703 $ 32,627,359 $ 1,169,115 $ 59,898,630
Cash in bank on demand deposit .................... 127,259 2,075,742 -- --
Receivable for Fund shares sold ................... -- 45,000 -- --
Accrued interest receivable ....................... 65,073 448,212 16,507 1,039,209
Organizational costs (note 1) ..................... 16,162 -- 16,162 --
------------ ------------ ------------ ------------
Total assets .................................... 3,766,197 35,196,313 1,201,784 60,937,839
------------ ------------ ------------ ------------
LIABILITIES
Bank overdraft .................................... -- -- 5,381 405,764
Dividends payable to shareholders ................. 18,184 133,498 5,175 302,960
Payable for investment securities purchased ....... -- 2,988,308 -- 997,500
Distribution fees payable ......................... 2,268 24,587 470 21,728
Other accrued expenses ............................ 7,924 19,662 6,333 16,911
------------ ------------ ------------ ------------
Total liabilities ............................... 28,376 3,166,055 17,359 1,744,863
------------ ------------ ------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK $ 3,737,821 $ 32,030,258 $ 1,184,425 $ 59,192,976
============ ============ ============ ============
Represented by:
Capital Stock - $.01 par value (note 1) ......... $ 3,619 $ 30,843 $ 1,164 $ 56,934
Additional paid-in capital ...................... 3,650,970 31,919,267 1,162,709 57,006,556
Undistributed net investment income ............. 3,959 4,771 5,466 5,622
Accumulated net realized loss on investments
(note 1) ..................................... -- (933,556) -- (122,600)
Unrealized appreciation of investments .......... 79,273 1,008,933 15,086 2,246,464
------------ ------------ ------------ ------------
TOTAL NET ASSETS ............................. $ 3,737,821 $ 32,030,258 $ 1,184,425 $ 59,192,976
============ ============ ============ ============
Net assets applicable to outstanding Class A Shares $ 3,203,314 $ 30,160,053 $ 1,133,038 $ 59,104,609
============ ============ ============ ============
Net assets applicable to outstanding Class B Shares $ 472,365 $ 1,780,248 $ 51,387 $ 88,367
============ ============ ============ ============
Net assets applicable to outstanding Class C Shares $ 62,142 $ 89,957 N/A N/A
============ ============ ============ ============
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of Capital Stock outstanding:
310,159; 2,904,199; 111,391; and 5,684,868;
respectively (note 6) ........................ $ 10.33 $ 10.38 $ 10.17 $ 10.40
============ ============ ============ ============
Class B - Shares of Capital Stock outstanding:
45,714; 171,462; 5,050; and 8,498;
respectively (note 6) ........................ $ 10.33 $ 10.38 $ 10.18 $ 10.40
============ ============ ============ ============
Class C - Shares of Capital Stock outstanding:
6,014; 8,670; N/A; and N/A;
respectively (note 6) ........................ $ 10.33 $ 10.38 N/A N/A
============ ============ ============ ============
See accompanying notes to financial statments.
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR NATIONAL NATIONAL VOYAGEUR NATIONAL
NATIONAL INSURED LIMITED TERM HIGH YIELD
TAX FREE TAX FREE TAX FREE MUNICIPAL BOND
FUND FUND FUND FUND
----------- ----------- ----------- --------------------------
YEAR YEAR YEAR FIVE MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, JULY 31,
1996 1996 1996 1996 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ........................................ $ 143,891 $ 2,040,921 $ 59,511 $ 1,767,468 $ 4,486,670
----------- ----------- ----------- ----------- -----------
Expenses (note 3):
Investment advisory and management fee .......... 12,665 174,688 4,731 140,548 322,677
Dividend-disbursing, administrative and
accounting services fees ..................... 19,984 75,044 16,304 28,025 48,308
Printing, postage and supplies .................. 2,173 4,242 214 4,601 15,409
Audit and accounting fees ....................... 6,370 12,085 4,858 10,135 12,383
Legal fees ...................................... 33 300 17 7,936 9,697
Distribution fees - Class A ..................... 5,503 83,067 2,854 72,153 193,606
Distribution fees - Class B ..................... 2,817 16,639 410 31 N/A
Distribution fees - Class C ..................... 506 395 -- -- N/A
Directors' fees ................................. 185 1,830 94 2,775 7,500
Registration fees ............................... 21,683 20,234 19,574 5,000 4,454
Custodian fees .................................. 4,469 4,187 2,189 500 1,136
Amortization of organizational costs ............ 4,407 15,416 4,407 -- --
Other ........................................... 371 1,163 141 1,969 6,750
----------- ----------- ----------- ----------- -----------
Total expenses ............................... 81,166 409,740 55,793 273,673 621,920
Less: Expenses waived or absorbed .............. (70,841) (156,852) (51,306) (53,023) (73,210)
----------- ----------- ----------- ----------- -----------
Net expenses before earnings credits on
uninvested cash .............................. 10,325 252,888 4,487 220,650 548,710
Less: Earnings credits on uninvested cash ...... (4,469) (978) (659) -- --
----------- ----------- ----------- ----------- -----------
Total net expenses ........................... 5,856 251,910 3,828 220,650 548,710
----------- ----------- ----------- ----------- -----------
Investment income - net ...................... 138,035 1,789,011 55,683 1,546,818 3,937,960
----------- ----------- ----------- ----------- -----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) on security
transactions (note 2) ..................... 1,777 (164,634) 630 (97,077) 211,120
Net change in unrealized appreciation or
depreciation of investments .................. 24,862 (770,391) (2,327) 1,323,262 691,939
----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments ............. 26,639 (935,025) (1,697) 1,226,185 903,059
----------- ----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................ $ 164,674 $ 853,986 $ 53,986 $ 2,773,003 $ 4,841,019
=========== =========== =========== =========== ===========
See accompanying notes to financial statments.
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
VOYAGEUR NATIONAL
TAX FREE FUND
-------------
YEAR PERIOD FROM
ENDED SEPTEMBER 8, 1995*
DECEMBER 31, TO DECEMBER 31,
1996 1995
<S> <C> <C>
Operations: ----------- -----------
Investment income - net .................................................. $ 138,035 $ 19,003
Realized gain (loss) on security transactions ............................ 1,777 12,234
Net change in unrealized appreciation or depreciation of investments ..... 24,862 54,411
----------- -----------
Net increase in net assets resulting from operations ................. 164,674 85,648
----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A .............................................................. (122,805) (18,179)
Class B .............................................................. (14,295) (935)
Class C .............................................................. (2,474) (268)
Net realized gain on investments:
Class A .............................................................. (1,520) (10,370)
Class B .............................................................. (227) (1,427)
Class C .............................................................. (30) (437)
Excess distribution of net realized gain:
Class A .............................................................. -- --
----------- -----------
Total distributions ...................................................... (141,351) (31,616)
----------- -----------
Capital share transactions (note 6):
Proceeds from sale of shares:
Class A (note 3) ..................................................... 2,627,842 2,206,306
Class B .............................................................. 304,896 155,010
Class C .............................................................. 15,000 50,010
Net asset value of shares issued in reinvestment of net investment income,
realized gain distributions, and distributions in excess of net
realized gains:
Class A ......................................................... 61,233 11,310
Class B ......................................................... 6,827 401
Class C ......................................................... 1,998 109
Payments for redemption of shares:
Class A .............................................................. (780,179) (995,010)
Class B (note 3) ..................................................... -- (10)
Class C (note 3) ..................................................... (2,760) (2,517)
----------- -----------
Increase (decrease) in net assets from capital share transactions ........ 2,234,857 1,425,609
----------- -----------
Total increase (decrease) in net assets .............................. 2,258,180 1,479,641
Net assets at beginning of period ............................................. 1,479,641 --
----------- -----------
Net assets at end of period (including undistributed net investment income
of $3,959, $1,090, $4,771, $6,820, $5,466, $892, $5,622, $0
and $0, respectively) .................................................... $ 3,737,821 $ 1,479,641
=========== ===========
* Commencement of operations.
See accompanying notes to financial statments.
</TABLE>
(WIDE TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
VOYAGEUR NATIONAL VOYAGEUR NATIONAL VOYAGEUR NATIONAL
INSURED TAX FREE FUND LIMITED TERM TAX FREE FUND HIGH YIELD MUNICIPAL BOND FUND
- ---------------------------- ---------------------------- --------------------------------------------
YEAR YEAR YEAR PERIOD FROM PERIOD FROM YEAR YEAR
ENDED ENDED ENDED SEPTEMBER 7, 1995* AUGUST 1, 1996 ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31, JULY 31, JULY 31,
1996 1995 1996 1995 1996 1996 1995
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C> <C> <C>
$ 1,789,011 $ 1,893,512 $ 55,683 $ 14,634 $ 1,546,818 $ 3,937,960 $ 4,417,173
(164,634) (768,922) 630 967 (97,077) 211,120 868,133
(770,391) 5,704,995 (2,327) 17,413 1,323,262 691,939 (592,387)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
853,986 6,829,585 53,986 33,014 2,773,003 4,841,019 4,692,919
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
(1,717,236) (1,945,689) (53,853) (15,211) (1,541,075) (3,937,960) (4,417,173)
(77,614) (45,262) (1,664) N/A (121) N/A N/A
(1,599) (71) N/A N/A N/A N/A N/A
-- -- (603) (967) -- (779,384) (308,935)
-- -- (27) -- -- N/A N/A
-- -- N/A N/A N/A N/A N/A
-- -- -- -- -- (25,474) --
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
(1,796,449) (1,991,022) (56,147) (16,178) (1,541,196) (4,742,818) (4,726,108)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
5,317,143 10,391,623 609,662 1,202,975 2,208,712 2,593,882 3,529,401
615,154 1,133,058 50,000 N/A 88,126 N/A N/A
80,900 15,175 N/A N/A N/A N/A N/A
985,479 1,246,400 54,054 10,294 625,742 2,523,625 2,501,190
49,688 33,452 1,484 N/A -- N/A N/A
1,314 31 N/A N/A N/A N/A N/A
(10,900,651) (16,006,766) (758,539) (180) (8,421,106) (8,113,265) (11,812,598)
(389,803) (212,794) -- N/A -- N/A N/A
(3,611) (5,047) N/A N/A N/A N/A N/A
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
(4,244,387) (3,404,868) (43,339) 1,213,089 (5,498,526) (2,995,758) (5,782,007)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
(5,186,850) 1,433,695 (45,500) 1,229,925 (4,266,719) (2,897,557) (5,815,196)
37,217,108 35,783,413 1,229,925 -- 63,459,695 66,357,252 72,172,448
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 32,030,258 $ 37,217,108 $ 1,184,425 $ 1,229,925 $ 59,192,976 $ 63,459,695 $ 66,357,252
============ ============ ============ ============ ============ ============ ============
</TABLE>
THE VOYAGEUR FUNDS
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur National Tax Free Fund (National Tax Free Fund) and Voyageur
National High Yield Municipal Bond Fund (National High Yield Municipal Bond
Fund) 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 open-end management
investment companies. National Tax Free Fund, National Insured Tax Free Fund and
National Limited Term Tax Free Fund are registered as diversified funds.
National High Yield Municipal Bond Fund is registered as a non-diversified Fund.
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 High Yield Municipal Bond Fund
seeks a high level of current income exempt from federal income tax primarily
through investment in medium- and lower-grade municipal bonds.
National Tax Free Fund, National Insured Tax Free Fund, National Limited Term
Tax Free Fund and National High Yield Municipal Bond 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 may be subject to a contingent deferred sales charge and have no
conversion feature. As of December 31, 1996 the National Limited Term Tax Free
Fund and National High Yield Municipal Bond 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 resulting from
operations during the reporting period. Actual results could differ from those
estimates.
INVESTMENTS IN SECURITIES
The values of fixed income securities are determined using pricing services
or prices quoted by independent brokers. When market quotations are not readily
available, or in certain other circumstances, securities are valued at fair
value according to methods selected in good faith by the Board of Directors.
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 National Tax Free Fund, National Insured 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, as of December 31, 1996, National
Insured Tax Free Fund had a capital loss carryover of $933,556 that will expire
in 2003 and 2004 and National High Yield Municipal Bond Fund had a capital loss
carryover of $122,600 that will expire in 2004 and 2005 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
$4,408 for National Tax Free Fund and National Limited Term Tax Free Fund and
$5,389 for National Insured Tax Free Fund. On the statements of assets and
liabilities, as a result of permanent book-to- tax differences, reclassification
entries have been made to increase additional paid-in capital and decrease
accumulated net realized loss on investments by $49 for National High Yield
Municipal Bond 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.
ILLIQUID SECURITIES
At December 31, 1996, investments in securities for the Funds may include
issues that are illiquid. The Funds currently limit investments in illiquid
securities to 15% of net assets, at market value, at the date of purchase. The
aggregate value of such securities at December 31, 1996, was $99,875 (2.7% of
total net assets) for National Tax Free Fund and $5,662,363 (9.6% of total net
assets) for National High Yield Municipal Bond Fund.
(2) SECURITIES TRANSACTIONS
Purchase cost and proceeds from sales of securities other than short-term
securities aggregated $3,739,944 and $1,519,746 for National Tax Free Fund,
$28,817,981 and $31,889,684 for National Insured Tax Free Fund and $768,954 and
$810,847 for National Limited Term Tax Free Fund, and $4,442,915 and $5,043,498
for National High Yield Municipal Bond Fund, respectively, for the period ended
December 31, 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, .65% (.50% prior to November 9, 1996 pursuant to an
advisory agreement with IFG Asset Management Services, Inc.) for National High
Yield Municipal Bond 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, 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 year ended December 31, 1996, Voyageur absorbed $46,949
for National Tax Free Fund and $40,702 for National Limited Term Tax Free Fund
pursuant to the contractual 1% expense limitation and, excluding waiver of
distribution fees, voluntarily absorbed $23,051 for National Tax Free Fund,
$145,000 for National Insured Tax Free Fund, $9,298 for National Limited Term
Tax Free Fund and $35,572 for National High Yield Municipal Bond 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% (.30% prior to
November 9, 1996 for National High Yield Municipal Bond Fund pursuant to
distribution agreements with Dain Bosworth Incorporated and Rauscher Pierce
Refsnes, Inc.) of average daily net assets of the Class A Shares and 1.00% of
average daily net assets of the Class B and Class C Shares. Fund Distributors
may waive all or part of its distribution fees at its sole discretion. During
the period ended December 31, 1996, Fund Distributors voluntarily waived Class A
distribution fees of $6,617 for National Insured Tax Free Fund, $1,141 for
National Limited Term Tax Free Fund and $17,451 for National High Yield
Municipal Bond Fund, and Class B distribution fees of $841 for National Tax Free
Fund, $5,235 for National Insured Tax Free Fund and $165 for National Limited
Term Tax Free Fund. National Tax Free Fund earned $4,469, National Insured Tax
Free Fund earned $978, and National Limited Term Tax Free Fund earned $659 in
credits on uninvested cash balances held by the Funds at the custodian. These
credits were used to reduce certain fees for various custodial services provided
by the custodian bank.
Sales charges paid by Class A shareholders were $22,009 for National Tax Free
Fund, $42,119 for National Insured Tax Free Fund, $4,983 for National Limited
Term Tax Free Fund and $2,060 for National High Yield Municipal Bond Fund. Of
these amounts Fund Distributors received $2,989, $4,583, $1,073 and $0,
respectively. Contingent deferred sales charges paid by Class B shareholders
were $4,313 for National Insured Tax Free Fund. Contingent deferred sales
charges paid by Class C shareholders were $29 for National Insured Tax Free
Fund.
(4) FUND MERGER
On November 9, 1996, Voyageur National High Yield Municipal Bond Fund
acquired all of the net assets of Great Hall National Tax-Exempt Fund (Great
Hall Fund) pursuant to an Agreement and Plan of Reorganization approved by Great
Hall shareholders on November 6, 1996. The acquisition was accompanied by a
tax-free exchange of 5,755,266 shares of Great Hall Fund for 5,755,266 Class A
shares of National High Yield Municipal Bond Fund. The aggregate net assets of
Great Hall Fund before the acquisition were $59,694,131 (including paid-in
capital of $57,708,560, accumulated net realized loss of $42,445, and unrealized
gains of $2,028,016).
Since Voyageur National High Yield Municipal Bond Fund had no operations or
assets and liabilities prior to the acquisition, the Fund will retain financial
history of Great Hall Fund for financial reporting and income tax purposes.
(5) PLANNED FUND REORGANIZATION
On January 15, 1997 Voyageur's parent, Dougherty Financial Group, Inc.
("DFG") executed an Agreement and Plan of Merger with Lincoln National
Corporation ("LNC") pursuant to which LNC would acquire DFG, including the
mutual fund investment advisory business of DFG conducted by Voyageur. Also
proposed, is a Plan of Liquidation and Termination for National Tax Free Fund,
National Insured Tax Free Fund and National Limited Term Tax Free Fund. The
merger and Plan of Liquidation and Termination are subject to approval of the
Funds' Board of Directors and shareholders.
(6) SHARE TRANSACTIONS
Transactions in shares of capital stock during each period were as follows:
<TABLE>
<CAPTION>
NATIONAL TAX FREE FUND
----------------------
CLASS A CLASS B
----------------------------- ------------------------------
YEAR PERIOD FROM YEAR PERIOD FROM
ENDED SEPTEMBER 8, 1995* ENDED SEPTEMBER 15, 1995*
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1996 1995 1996 1995
----------- -------- -------- --------
<S> <C> <C> <C> <C>
Shares sold 258,116 216,356 30,034 14,976
Shares issued for reinvested distributions 5,980 1,100 666 39
Shares redeemed (75,528) (95,865) -- (1)
-------- -------- -------- --------
Increase in shares outstanding 188,568 121,591 30,700 15,014
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
NATIONAL TAX FREE FUND
----------------------
CLASS C
--------------------------------------
YEAR PERIOD FROM
ENDED SEPTEMBER 12, 1995*
DECEMBER 31, TO DECEMBER 31,
1996 1995
------------------ ---------------
<S> <C> <C>
Shares sold............................................. 1,485 4,834
Shares issued for reinvested distributions.............. 194 10
Shares redeemed......................................... (265) (244)
------- -------
Increase in shares outstanding.......................... 1,414 4,600
======= ======
</TABLE>
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
------------------------------
CLASS A CLASS B
---------------------------- ---------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
----------- ------------ -------- ----------
<S> <C> <C> <C> <C>
Shares sold................................ 514,487 1,032,700 59,194 111,409
Shares issued for
reinvested distributions............. 95,449 124,540 4,815 3,314
Shares redeemed............................ (1,057,278) (1,595,201) (37,790) (20,799)
----------- ------------ -------- ----------
Increase (decrease) in
shares outstanding................... (447,342) (437,961) 26,219 93,924
=========== ============= ========== ==========
- ---------------------------------
* Commencement of operations
</TABLE>
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
------------------------------
CLASS C
-------------------------------------------------
YEAR PERIOD FROM
ENDED OCTOBER 20,
DECEMBER 31, 1995* TO
1996 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
Shares sold......................................... 7,916 1,461
Shares issued for
reinvested distributions....................... 127 3
Shares redeemed..................................... (349) (488)
------ ------
Increase in shares outstanding...................... 7,694 976
====== ======
</TABLE>
<TABLE>
<CAPTION>
NATIONAL LIMITED TERM TAX FREE FUND
-----------------------------------
CLASS A CLASS B
--------------------------------- -----------
YEAR PERIOD FROM PERIOD FROM
ENDED SEPTEMBER 7, 1995* MARCH 7, 1996*
DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1996 1995 1996
----------- ----------- ----------
<S> <C> <C> <C>
Shares sold...................................... 59,138 120,091 4,902
Shares issued for
reinvested distributions.................. 5,368 1,020 148
Shares redeemed.................................. (74,208) (18) --
----------- ----------- ----------
Increase (decrease) in shares outstanding........ ( 9,702) 121,093 5,050
============ =========== ==========
</TABLE>
<TABLE>
<CAPTION>
NATIONAL HIGH YIELD MUNICIPAL BOND FUND
---------------------------------------
CLASS A CLASS B
------------------------------------------- ------------
PERIOD FROM YEAR YEAR PERIOD FROM
AUGUST 1, 1996 ENDED ENDED DECEMBER 18, 1996*
TO DECEMBER 31, JULY 31, JULY 31, TO DECEMBER 31,
1996 1996 1995 1996
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Shares sold............................. 213,088 253,498 354,203 8,498
Shares issued for
reinvested distributions......... 60,940 245,537 250,761 --
Shares redeemed......................... (819,364) (790,794) (1,182,858) --
------------ ------------ ----------- -----------
Increase (decrease) in shares outstanding (545,336) (291,759) (577,894) 8,498
============ ============ ============ ===========
* Commencement of operations.
</TABLE>
(7) 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
YEAR SEPTEMBER 8, YEAR SEPTEMBER 15, YEAR SEPTEMBER 12,
ENDED 1995(d) TO ENDED 1995(d) TO ENDED 1995(d) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995 1996 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 ........... .58 .18 .53 .15 .50 .15
Net realized and unrealized
gain (loss) on investments .... (.14) .58 (.14) .49 (.14) .58
--------- --------- --------- --------- --------- ---------
Total from operations ....... .44 .76 .39 .64 .36 .73
--------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From net investment income (f) .. (.58) (.18) (.53) (.15) (.50) (.15)
From net realized gains ......... (.01) (.10) (.01) (.10) (.01) (.10)
--------- --------- --------- --------- --------- ---------
Total distributions ........... (.59) (.28) (.54) (.25) (.51) (.25)
--------- --------- --------- --------- --------- ---------
Net asset value:
End of period ................... $ 10.33 $ 10.48 $ 10.33 $ 10.48 $ 10.33 $ 10.48
========= ========= ========= ========= ========= =========
Total investment return (b) ........ 4.38% 7.57% 3.83% 6.39% 3.51% 7.37%
Net assets at end of
period (000's omitted) .......... $ 3,203 $ 1,274 $ 472 $ 157 $ 62 $ 48
Ratios:
Ratio of expenses to
average daily net assets (g) .. .34% .35%(e) .80% .88%(e) 1.09% 1.22%(e)
Ratio of net investment income
to average daily net assets ... 5.50% 5.03%(e) 5.07% 4.52%(e) 4.74% 4.36%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c) ............ 1.25% 1.25%(e) 2.00% 2.00%(e) 2.00% 2.00%(e)
Net investment income ... 4.59% 4.13%(e) 3.87% 3.40%(e) 3.83% 3.59%(e)
Portfolio turnover rate (excluding
short-term securities) .......... 62.25% 49.62% 62.25% 49.62% 62.25% 49.62%
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
---------------------------------------------------------------------------
CLASS A
---------------------------------------------------------------------------
PERIOD FROM
JANUARY 10,
YEAR ENDED DECEMBER 31, 1992(d) TO
---------------------------------------------------------- DECEMBER 31,
1996 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 ............... .53 .54 .56 .60 .57
Net realized and unrealized
gain (loss) on investments ....... (.26) 1.34 (1.34) .60 .14
---------- ---------- ---------- ---------- ----------
Total from operations ......... .27 1.88 (.78) 1.20 .71
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income (a) ...... (.53) (.56) (.55) (.60) (.57)
From net realized gains ............. -- -- (.02) (.07) --
---------- ---------- ---------- ---------- ----------
Total distributions .............. (.53) (.56) (.57) (.67) (.57)
---------- ---------- ---------- ---------- ----------
Net asset value:
End of period ....................... $ 10.38 $ 10.64 $ 9.32 $ 10.67 $ 10.14
========== ========== ========== ========== ==========
Total investment return (b) ............ 2.70% 20.63% (7.45)% 12.10% 7.43%
Net assets at end of
period (000's omitted) .............. $ 30,160 $ 35,662 $ 35,305 $ 25,315 $ 2,919
Ratios:
Ratio of expenses to
average daily net assets (g) ..... .70% .61% .10% --% --%
Ratio of net investment income
to average daily net assets ...... 5.15% 5.29% 5.71% 5.29% 5.85%(e)
Assuming no voluntary
waivers and reimbursements:
Expenses (c) ........... 1.14% 1.16% 1.25% 1.25% 1.25%(e)
Net investment income .. 4.71% 4.74% 4.56% 4.04% 4.60%(e)
Portfolio turnover rate (excluding
short-term securities) .............. 83.45% 192.90% 31.25% 77.79% 114.92%
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
NATIONAL INSURED TAX FREE FUND
---------------------------------------------------------------------
CLASS B CLASS C
----------------------------------------- ------------------------
PERIOD FROM PERIOD FROM
MAY 26, YEAR OCTOBER 20,
YEAR ENDED DECEMBER 31, 1994(d) TO ENDED 1995(d) TO
----------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1996 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 ........... .48 .50 .31 .46 .09
Net realized and unrealized
gain (loss) on investments ... (.26) 1.34 (.50) (.26) .24
--------- --------- --------- --------- ---------
Total from operations ..... .22 1.84 (.19) .20 .33
--------- --------- --------- --------- ---------
Distributions to shareholders:
From net investment income (a) .. (.48) (.52) (.29) (.45) (.08)
From net realized gains ......... -- -- (.01) -- --
--------- --------- --------- --------- ---------
Total distributions .......... (.48) (.52) (.30) (.45) (.08)
--------- --------- --------- --------- ---------
Net asset value:
End of period ................... $ 10.38 $ 10.64 $ 9.32 $ 10.38 $ 10.63
========= ========= ========= ========= =========
Total investment return (b) ......... 2.24% 20.10% (1.94)% 2.02% 3.21%
Net assets at end of
period (000's omitted) .......... $ 1,780 $ 1,545 $ 478 $ 90 $ 10
Ratios:
Ratio of expenses to
average daily net assets (g) ... 1.16% .93% .48%(e) 1.50% .93%(e)
Ratio of net investment income
to average daily net assets .... 4.66% 4.85% 5.37%(e) 4.27% 4.46%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c) ........... 1.89% 1.81% 1.99%(e) 1.91% 1.40%(e)
Net investment income .. 3.93% 3.97% 3.86%(e) 3.86% 3.99%(e)
Portfolio turnover rate (excluding
short-term securities) ........... 83.45% 192.90% 31.25% 83.45% 192.90%
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
NATIONAL LIMITED TERM TAX FREE FUND
-----------------------------------
CLASS A CLASS B
------------------------ ---------
YEAR PERIOD FROM PERIOD FROM
ENDED SEPTEMBER 7, 1995(d) MARCH 7, 1996(d)
DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1996 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Net asset value:
Beginning of period ................ $ 10.16 $ 10.00 $ 10.20
--------- --------- ---------
Operations:
Net investment income .............. .48 .14 .34
Net realized and unrealized
gain (loss) on investments ..... .01 .17 (.02)
--------- --------- ---------
Total from operations ...... .49 .31 .32
--------- --------- ---------
Distributions to shareholders:
From net investment income (f) ..... (.47) (.14) (.33)
From net realized gains ............ (.01) (.01) (.01)
--------- --------- ---------
Total distributions ............ (.48) (.15) (.34)
--------- --------- ---------
Net asset value:
End of period ...................... $ 10.17 $ 10.16 $ 10.18
========= ========= =========
Total investment return (b) .......... 4.87% 3.22% 3.19%
Net assets at end of
period (000's omitted) ............. $ 1,133 $ 1,230 $ 51
Ratios:
Ratio of expenses to
average daily net assets (g) ... .36% .56%(e) .82%(e)
Ratio of net investment income
to average daily net assets .... 4.72% 4.17%(e) 4.30%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c) ......... 1.25% 1.25%(e) 2.00%(e)
Net investment income 3.83% 3.48%(e) 3.12%(e)
Portfolio turnover rate (excluding
short-term securities) ............ 67.35% 54.31% 67.35%
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
NATIONAL HIGH YIELD MUNICIPAL BOND FUND
----------------------------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------------------------
PERIOD FROM
AUGUST 1, 1996 YEAR ENDED JULY 31,
TO DECEMBER 31, ----------------------------------------------------------------------
1996(h) 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period ............... $ 10.19 $ 10.17 $ 10.17 $ 10.50 $ 10.22 $ 9.65
---------- ---------- ---------- ---------- ---------- ----------
Operations:
Net investment income ............. .26 .63 .65 .62 .65 .70
Net realized and unrealized
gain (loss) on investments .... .21 .14 .04 (.31) .28 .57
---------- ---------- ---------- ---------- ---------- ----------
Total from operations ..... .47 .77 .69 .31 .93 1.27
---------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income (f) .... (.26) (.63) (.65) (.62) (.65) (.70)
From net realized gains ........... -- (.12) (.04) (.02) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ........... (.26) (.75) (.69) (.64) (.65) (.70)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value:
End of period ..................... $ 10.40 $ 10.19 $ 10.17 $ 10.17 $ 10.50 $ 10.22
========== ========== ========== ========== ========== ==========
Total investment return (b) ......... 4.52% 7.78% 7.16% 2.99% 9.45% 13.84%
Net assets at end of
period (000's omitted) ............ $ 59,105 $ 63,460 $ 66,357 $ 72,172 $ 58,048 $ 43,166
Ratios:
Ratio of expenses to
average daily net assets (g) ... .87 %(e) .85% .79% .91% 1.01% .84%
Ratio of net investment income
to average daily net assets .... 6.06%(e) 6.10% 6.45% 5.98% 6.32% 7.15%
Assuming no voluntary waivers
and reimbursements:
Expenses (c) ......... 1.07%(e) .96% .90% 1.01% 1.24% 1.14%
Net investment income 5.86%(e) 5.99% 6.34% 5.88% 6.09% 6.85%
Portfolio turnover rate (excluding
short-term securities) ............ 7.51% -- 8.45% 27.88% 16.36% 14.50%
See accompanying notes to Financial Highlights.
</TABLE>
<TABLE>
<CAPTION>
NATIONAL HIGH YIELD MUNICIPAL BOND FUND
CLASS B
PERIOD FROM
DECEMBER 18, 1996(d)
TO DECEMBER 31,
1996
<S> <C>
Net asset value:
Beginning of period................................ $10.37
------
Operations:
Net investment income.............................. .01
Net realized and unrealized
gain on investments............................ .03
------
Total from operations...................... .04
------
Distributions to shareholders:
From net investment income (f)..................... (.01)
------
Net asset value:
End of period...................................... $10.40
======
Total investment return (b).......................... .43%
Net assets at end of
period (000's omitted)............................. $88
Ratios:
Ratio of expenses to
average daily net assets (g)................... 1.45%(e)
Ratio of net investment income
to average daily net assets.................... 4.65%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)......................... 1.66%(e)
Net investment income................ 4.44%(e)
Portfolio turnover rate (excluding
short-term securities)............................ 7.51%
See accompanying notes to Financial Highlights.
</TABLE>
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 periods presented, 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.
(h) On November 6, 1996, the Fund's shareholders approved a change of
investment adviser from IFG Asset Management Services, Inc. to Voyageur
Fund Managers, Inc.
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL TAX FREE FUND
INVESTMENTS IN SECURITIES DECEMBER 31, 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 (7.3%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 170 Alabama College and Univeristy, Tuskegee University
(Asset Gaurantee Insured).......................................... 5.90% 09-01-16 $ 172,995
100 Birmingham Special Care Facility Revenue, Carraway Meth Health
(Connie Lee Insured)............................................... 5.88 08-15-25 100,345
----------
273,340
----------
ARIZONA (2.8%):
-------------------------------------------------------------------------------------------------------
100 Maricopa County Unified School District #8-Osborn G.O. (FGIC Insured) . 5.88 07-01-14 103,290
----------
CALIFORNIA (10.8%):
-------------------------------------------------------------------------------------------------------
250 California Housing Finance Agency Home Mortgage Revenue
(MBIA Insured)..................................................... 6.15 08-01-16 252,890
100 Chino Unified School District Certificate of Participation (FSA Insured) 6.13 09-01-26 102,955
50 Foothills/Eastern Corridor Toll Road Revenue.......................... 6.00 01-01-34 48,981
-----------
404,826
-----------
COLORADO (3.8%):
-------------------------------------------------------------------------------------------------------
100 Arapahoe County Capital Improvement Highway Revenue - E-470
Project, Zero Coupon...............................................6.62(g) 08-31-08 48,345
90 Colorado Housing Financial Authority Multi-Family Insured Mortgage.... 6.25 10-01-26 91,868
----------
140,213
----------
FLORIDA (7.0%):
-------------------------------------------------------------------------------------------------------
100 Manatee County Single Family Housing Revenue (GNMA/FHLMC
Collateralized)....................................................7.45(f) 05-01-27 111,489
100 Pinellas County Educational Facilities Clearwater Christian College...8.00(i) 02-01-11 99,875
50 St. Lucie County Special Assessment Revenue (Asset Guaranty
Insured) .......................................................... 6.10 11-01-20 50,188
----------
261,552
----------
GEORGIA (2.7%):
-------------------------------------------------------------------------------------------------------
50 Gainesville/Hall Hospital Authority Revenue (MBIA Insured)............. 6.00 10-01-25 51,413
50 Marietta Development Authority Revenue - Life College, Inc (FSA Insured) 5.75 09-01-14 50,632
----------
102,045
----------
IDAHO (5.5%):
-------------------------------------------------------------------------------------------------------
50 Idaho State Health Facility Revenue - Bannock Medical Center.......... 6.38 05-01-17 50,537
150 Pocatello Development Tax Increment Revenue........................... 7.25 12-01-08 155,437
---------
205,974
---------
ILLINOIS (11.2%):
-------------------------------------------------------------------------------------------------------
60 Illinois Health Facility Revenue- University of Chicago (MBIA Insured) 6.13 08-15-21 62,096
100 Illinois State Certificate Of Participation (MBIA Insured)............ 6.25 07-01-13 106,148
150 Lake County School District #116 (Asset Guaranty Insured)............. 6.13 02-01-12 152,250
100 Palatine Multifamily Housing Revenue-Prairiebrook Project............. 5.50 12-01-26 99,858
-----------
420,352
-----------
INDIANA (2.7%):
-------------------------------------------------------------------------------------------------------
50 Indianapolis Gas Utility Revenue (FGIC Insured)...................... 5.38 06-01-21 48,144
50 West Lafayette Jr-Sr. High Building Revenue (MBIA Insured)........... 5.85 01-15-18 50,967
-----------
99,111
-----------
LOUISIANA (6.1%):
-------------------------------------------------------------------------------------------------------
115 Louisiana Housing Finance Mortgage Revenue (AMBAC Insured) .......... 7.80(f) 12-01-26 128,656
100 Louisiana Public Facility Revenue - Glen Retirement System........... 6.70 12-01-25 98,734
-----------
227,390
-----------
MINNESOTA (6.5%):
-------------------------------------------------------------------------------------------------------
150 Bass Brook Pollution Control Revenue, MN Power and Light Co.......... 6.00 07-01-22 149,881
50 Bemidji Hospital Facilities Revenue - North Country Health Services.. 6.05 09-01-24 50,196
45 Minnesota Housing Finance Authority, Single Family Housing Rental
(AMBAC Insured)................................................... 5.95 02-01-15 45,405
-----------
245,482
-----------
MISSISSPPI (4.0%):
-------------------------------------------------------------------------------------------------------
150 Mississippi Dev. Bank Special Obligation Adams County Hospital
Project (FSA Insured)............................................ 5.75 07-01-16 149,302
----------
MISSOURI (1.5%):
-------------------------------------------------------------------------------------------------------
50 Missouri Housing Development Mortgage Revenue-Homeowners Loan
Program (GNMA Collateralized).................................... 7.20(f) 09-01-26 54,414
-----------
NEW MEXICO (1.3%):
-------------------------------------------------------------------------------------------------------
50 Las Cruces Solid Waste Authority Revenue............................ 6.00 06-01-16 49,906
-----------
NORTH CAROLINA (3.3%):
-------------------------------------------------------------------------------------------------------
120 North Carolina Single Family Housing Finance Agency................. 6.15(f) 03-01-11 121,564
----------
PUERTO RICO (8.0%):
-------------------------------------------------------------------------------------------------------
100 Puerto Rico Commonwealth Highway and Transportation Revenue......... 5.50 07-01-26 96,057
200 Puerto Rico Port Authority Revenue-Special Facility-American Airlines 6.25(f) 06-01-26 203,990
-----------
300,047
-----------
UTAH (4.0%):
-------------------------------------------------------------------------------------------------------
150 Salt Lake City Municipal Building Authority Lease Revenue.......... 5.85 10-01-17 149,094
----------
WASHINGTON (2.7%):
-------------------------------------------------------------------------------------------------------
50 Seattle Municipal Light & Power Revenue (MBIA Insured)............. 5.70 09-01-19 50,194
50 Snohomish County Public Utility Electric Revenue (FGIC Insured).... 6.00 01-01-18 51,176
-----------
101,370
-----------
WISCONSIN (4.0%):
-------------------------------------------------------------------------------------------------------
150 Wisconsin Health and Educational Facilities Revenue-Sinai Samaritan
Medical Center, Inc. (MBIA Insured)........................... 5.88 08-15-26 148,431
----------
TOTAL INVESTMENTS IN SECURITIES (cost $3,478,430)(c) $ 3,557,703
===========
See accompanying notes to investments in securities.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL INSURED TAX FREE FUND
INVESTMENTS IN SECURITIES (CONTINUED) DECEMBER 31, 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 (101.9%):
ALABAMA (4.7%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1,500 Birmingham - Carraway Methodist (Connie Lee Insured)................... 5.88% 08-15-15 $1,515,825
----------
ALASKA (11.1%):
-------------------------------------------------------------------------------------------------------
1,500 Alaska State Housing Corporation Series A (MBIA Insured)............... 5.88 12-01-30 1,485,735
1,000 Alaska Student Loan Revenue Series A (AMBAC Insured)...................6.35(f) 07-01-12 1,035,000
1,000 Anchorage General Purpose G.O. (FGIC Insured).......................... 6.00 02-01-15 1,028,900
-----------
3,549,635
-----------
CALIFORNIA (3.3%):
-------------------------------------------------------------------------------------------------------
1,000 Los Angeles Department of Water & Power Revenue (FGIC Insured)........ 5.90 05-15-12 1,040,000
-----------
COLORADO (3.3%):
-------------------------------------------------------------------------------------------------------
1,000 Arapahoe County Capital Improvements E-470 (MBIA Insured)............. 6.05 08-31-15 1,046,210
-----------
CONNECTICUT (3.1%):
-------------------------------------------------------------------------------------------------------
1,000 Bridgeport G.O. (AMBAC Insured)....................................... 5.50 09-01-15 986,160
-----------
ILLINOIS (9.7%):
-------------------------------------------------------------------------------------------------------
1,040 Illinois Certificate Of Participation (MBIA Insured) ................. 6.25 07-01-13 1,103,939
2,000 Illinois Health Facilities Authority Revenue Referendum-Advocate
Health Care (MBIA Insured)......................................... 5.88(h) 08-15-22 1,998,540
-----------
3,102,479
-----------
INDIANA (3.3%):
-------------------------------------------------------------------------------------------------------
1,000 Brownsburg School Building #2 (FSA Insured).......................... 5.95 08-01-10 1,044,610
-----------
LOUISIANA (20.7%):
-------------------------------------------------------------------------------------------------------
5,000 Louisiana Housing Financial Authority (AMBAC Insured)................ 7.80(f) 12-01-26 5,593,750
1,000 New Orleans Refunding G.O. (AMBAC Insured)........................... 5.88 10-01-11 1,035,120
-----------
6,628,870
-----------
MICHIGAN (6.2%):
-------------------------------------------------------------------------------------------------------
1,000 Eastern Michigan University Revenue (FGIC Insured)................... 5.50(h) 06-01-27 979,690
1,000 Kenowa Hills Public Schools G.O. (MBIA Insured)...................... 5.88 05-01-21 1,013,360
-----------
1,993,050
-----------
NEVADA (3.2%):
-------------------------------------------------------------------------------------------------------
1,000 Washoe County Airport Authority Revenue (MBIA Insured).............. 5.88 07-01-10 1,035,430
-----------
NEW MEXICO (3.4%):
-------------------------------------------------------------------------------------------------------
1,000 City of Santa Fe Revenue Series 1994 A (AMBAC Insured).............. 6.30 06-01-24 1,096,390
-----------
NEW YORK (6.4%):
-------------------------------------------------------------------------------------------------------
1,000 New York City Municipal Water Finance Authority (FSA Insured).... 5.38 06-15-26 959,340
1,000 New York State Medical Care Facility Agency (AMBAC Insured)...... 6.75 08-15-14 1,102,000
-----------
2,061,340
-----------
NORTH CAROLINA (3.1%):
-------------------------------------------------------------------------------------------------------
1,000 North Carolina Eastern Municipal Power (MBIA Insured)............ 5.63 01-01-24 977,500
-----------
NORTH DAKOTA (3.3%):
-------------------------------------------------------------------------------------------------------
1,000 Grand Forks United Hospital Revenue (MBIA Insured)............... 6.25 12-01-24 1,052,090
-----------
PENNSYLVANIA (2.9%)
-------------------------------------------------------------------------------------------------------
950 Northeastern Pennsylvania Hospital and Education Authority Health
Care Revenue Wyoming VY-Series 1A (AMBAC Insured)............. 5.25 01-01-26 941,920
------------
TEXAS (3.3%):
-------------------------------------------------------------------------------------------------------
1,000 Harris County Toll Road (MBIA Insured)........................... 6.25 08-15-15 1,054,560
-----------
UTAH (3.1%):
-------------------------------------------------------------------------------------------------------
1,000 Provo City Energy Systems Revenue (MBIA Insured)................. 5.75 05-15-14 1,007,170
-----------
VIRGINIA (3.2%):
-------------------------------------------------------------------------------------------------------
1,000 Loudoun County Hospital (FSA Insured)............................ 5.80 06-01-20 1,009,810
-----------
WISCONSIN (4.6%):
-------------------------------------------------------------------------------------------------------
1,500 Wisconsin State Health and Educational Facilities Sinai Samaritan
Medical Center (MBIA Insured)................................. 5.88 08-15-26 1,484,310
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $31,618,426) (c) $32,627,359
===========
See accompanying notes to investments in securities.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
INVESTMENTS IN SECURITIES DECEMBER 31, 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 (98.7%):
ALABAMA (17.2%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 150 Alabama College and University Revenue, Tuskegee University............ 5.50% 09-01-07 $ 153,733
50 Birmingham - Special Care Facility Revenue, Carraway Meth Health
(Connie Lee Insured)................................................ 5.20 08-15-06 50,185
-----------
203,918
-----------
ALASKA (4.2%):
-------------------------------------------------------------------------------------------------------
50 Anchorage Solid Waste Utility Revenue (FSA Insured).................... 5.38 04-01-09 49,822
-----------
ARIZONA (3.9%):
-------------------------------------------------------------------------------------------------------
45 Tucson Water Revenue................................................... 5.40 07-01-05 46,307
-----------
CALIFORNIA (8.6%):
-------------------------------------------------------------------------------------------------------
50 Chino Unified School District Certificate of Participation (FSA Insured) 5.00 09-01-05 49,996
50 North City West School Facility Finance Revenue (FSA Insured).......... 5.63 09-01-08 52,014
-----------
102,010
-----------
COLORADO (5.1%):
-------------------------------------------------------------------------------------------------------
60 Denver City and County Airport Revenue................................ 5.20(f) 11-15-05 60,646
-----------
CONNECTICUT (4.3%):
-------------------------------------------------------------------------------------------------------
50 Connecticut State Health & Educational Facilities Revenue Jewish
Home Project........................................................ 5.25 11-01-02 51,153
-----------
IDAHO (4.4%):
-------------------------------------------------------------------------------------------------------
50 Pocatello Development and Tax Increment Revenue....................... 7.25 12-01-08 51,812
-----------
ILLINOIS (8.5%):
-------------------------------------------------------------------------------------------------------
50 Lake County School District #116...................................... 5.20 02-01-04 50,500
50 Palatine Multifamily Housing Revenue-Prairiebrook Project............. 5.50 12-01-06(d) 49,929
----------
100,429
----------
KENTUCKY (4.2%):
-------------------------------------------------------------------------------------------------------
50 Henderson Electric and Power Revenue................................. 5.70 03-01-03 50,034
----------
MINNESOTA (8.4%):
-------------------------------------------------------------------------------------------------------
50 Beltrami County Housing and Redevelopment Authority Lease Revenue.... 5.60 02-01-05 49,780
50 Minneapolis-St. Paul Health Care System - Childrens Healthcare
(FSA Insured)..................................................... 4.95 08-15-05 50,032
----------
99,812
----------
MISSOURI (4.3%):
-------------------------------------------------------------------------------------------------------
50 Kansas City Land Clearance Redevelopment Lease Revenue
(FSA Insured)..................................................... 5.25 12-01-07 50,388
----------
NEW YORK (4.3%):
-------------------------------------------------------------------------------------------------------
50 New York State Dorm Authority Revenue - State University Education
Facility.......................................................... 5.25 05-15-01 50,600
---------
RHODE ISLAND (4.2%):
-------------------------------------------------------------------------------------------------------
50 Rhode Island State Housing and Mortgage Financial Revenue............ 5.75(f) 04-01-07 50,072
----------
UTAH (8.5%):
-------------------------------------------------------------------------------------------------------
50 Salt Lake City Municipal Building Authority Lease Revenue............ 5.25 10-01-05 50,134
50 Utah State University Revenue (MBIA Insured)......................... 5.55 12-01-08 50,875
----------
101,009
----------
WASHINGTON (4.3%):
-------------------------------------------------------------------------------------------------------
50 Washington Public Power System Revenue #3........................... 5.50 07-01-07 50,845
----------
WYOMING (4.3%):
-------------------------------------------------------------------------------------------------------
50 Wyoming Community Development Authority Housing Revenue............. 5.40(f) 12-01-04 50,259
----------
TOTAL INVESTMENTS IN SECURITIES (cost: $1,154,029) (c) $1,169,115
==========
See accompanying notes to investments in securities.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL HIGH YIELD MUNICIPAL BOND FUND
INVESTMENTS IN SECURITIES DECEMBER 31, 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 (101.2%):
ALABAMA (8.7%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 800 Etowah County Refunding Warrants..................................... 8.50% 11-01-10 $ 899,000
1,500 Moundville Industrial Development Board Revenue Lawter
International, Inc................................................ 6.75 12-01-11 1,500,000
1,500 Orange Beach Refunding and Capital Improvement Revenue
Unlimited G.O..................................................... 6.25 10-01-13 1,535,625
1,250 Upper Bear Creek Water and Fire Revenue.............................. 6.25 08-01-15 1,210,938
---------
5,145,563
---------
ARIZONA (0.9%):
-------------------------------------------------------------------------------------------------------
500 Prescott Valley Improvement District................................ 7.90 01-01-12 556,250
----------
COLORADO (8.0%):
-------------------------------------------------------------------------------------------------------
210 Arapahoe Water and Sanitation District Revenue...................... 9.25 12-01-13 231,263
300 Arapahoe Water and Sanitation District Revenue...................... 9.13 12-01-08 312,375
200 Arapahoe Water and Sanitation District Revenue...................... 9.13 12-01-08 219,750
595 Colorado Technical Center Metropolitan District Unlimited G.O....... 9.75 06-01-09 670,119
125 Mesa County Single Family Mortgage Revenue.......................... 8.88 12-01-10 127,790
750 Panorama Metropolitan District Unlimited G.O........................ 9.00 12-01-09 795,000
600 Piney Creek Metropolitan District Unlimited G.O..................... 8.50 12-01-14 637,188
1,000 San Miguel Mountain Village Metropolitan District Unlimited G.O..... 8.10 12-01-11 1,100,000
350 Westminster Shaw Heights Special Assessment......................... 7.50(i) 12-01-07 352,030
250 Winter Park West Water and Sanitation District Unlimited G.O........ 9.25(i) 12-01-06 263,125
----------
4,708,640
----------
CONNECTICUT (1.7%):
-------------------------------------------------------------------------------------------------------
1,000 Connecticut Housing Finance Agency.................................. 6.00(f)(h) 11-15-27 988,750
----------
FLORIDA (3.7%)
-------------------------------------------------------------------------------------------------------
1,000 Arbor Greene Community Development District, Special
Assessment Revenue............................................... 7.00(i) 05-01-03 998,750
1,190 Volusia Industrial Development Authority-Bishop Glen Project........ 7.50 11-01-16 1,182,563
-----------
2,181,313
-----------
IDAHO (0.4%):
-------------------------------------------------------------------------------------------------------
250 Pocatello Development Authority and Tax Increment Revenue........... 7.25 12-01-08 259,375
----------
ILLINOIS (14.8%):
-------------------------------------------------------------------------------------------------------
1,200 Bedford Park Tax Increment Revenue............................... 8.00 12-01-10 1,440,000
1,000 Illinois Health Facility Authority Revenue-Midwest
Physician Group Project....................................... 8.10 11-15-14 1,085,000
1,100 Illinois State Development Finance Authority East St. Louis
Debt Restructure Revenue...................................... 7.38 11-15-11 1,199,000
400 Illinois State Development Finance Authority Harrisburg
Medical Center Project........................................ 7.00 03-01-06 409,500
400 Illinois State Development Finance Authority Harrisburg
Medical Center Project........................................ 7.20 03-01-07 410,500
400 Illinois State Development Finance Authority Harrisburg
Medical Center Project........................................ 7.20 03-01-08 406,500
860 Niles Park District Revenue...................................... 6.65 12-01-14 897,625
1,000 Romeoville Unlimited G.O......................................... 7.80 01-01-11 1,100,000
1,000 Streamwood Special Service Area #3 Tax Revenue................... 8.38(i) 01-01-09 1,042,500
720 West Chicago Tax Increment Revenue............................... 7.38 12-01-12 739,800
----------
8,730,425
----------
INDIANA (3.0%):
-------------------------------------------------------------------------------------------------------
1,000 Fishers Economic Development Revenue-United Student Aids
Funds, Inc................................................... 8.38 09-01-14 1,045,000
700 Indianapolis Economic Development Revenue-National Benevolent
Association.................................................. 7.25 10-01-10 734,125
-----------
1,779,125
-----------
MAINE (1.8%):
-------------------------------------------------------------------------------------------------------
1,025 Yarmouth Pollution Control Revenue-Central Maine Power........... 6.75 06-01-02 1,035,660
----------
MICHIGAN (3.5%):
-------------------------------------------------------------------------------------------------------
500 Bad Axe Water Supply Revenue..................................... 8.25 12-01-07 528,155
1,500 Troy Economic Development Revenue-Drury Inn Project.............. 6.75 10-01-12 1,573,125
----------
2,101,280
----------
MINNESOTA (1.8%):
-------------------------------------------------------------------------------------------------------
500 Alexandria Health Care Facility Revenue-Board of Social
Ministry...................................................... 8.75 08-01-21 545,000
500 Spring Park Health Care Facility Revenue-Langton Lake
Place, Inc.................................................... 8.25 08-01-11 525,625
-----------
1,070,625
-----------
MISSOURI (9.3%):
-------------------------------------------------------------------------------------------------------
1,500 Clarence Cannon Wholesale Water Revenue.......................... 5.75 05-15-13 1,393,125
1,255 Franklin County Waterworks and Sewer System Revenue.............. 7.38 12-01-18 1,324,025
1,050 Marion County Nursing Home Revenue............................... 7.00 08-01-13 1,047,375
105 Platte Waterworks and Sewer System Revenue....................... 7.75 04-01-08 109,190
115 Platte Waterworks and Sewer System Revenue....................... 7.75 04-01-97 119,590
1,500 St. Louis County Industrial Development Authority-Deaconess
Manor Association............................................. 7.50 06-01-16 1,500,000
----------
5,493,305
----------
NEBRASKA (3.0%):
-------------------------------------------------------------------------------------------------------
1,750 Douglas County Zoo Facility Revenue.............................. 6.00 06-01-03 1,754,813
----------
NEW HAMPSHIRE (1.7%):
-------------------------------------------------------------------------------------------------------
1,000 New Hampshire Education and Health Authority Revenue-
Brewster Academy.............................................. 6.75 06-01-25 1,018,750
----------
NEW MEXICO (1.3%):
-------------------------------------------------------------------------------------------------------
750 Rio Grande Gas System Revenue.................................... 6.13 07-01-13 746,250
----------
OKLAHOMA (8.8%):
-------------------------------------------------------------------------------------------------------
1,000 Andarko Public Works Utility System Revenue...................... 7.00 10-01-12 1,042,500
600 Chelsea Gas Authority Revenue.................................... 7.25 07-01-13 631,500
700 Chelsea Gas Authority Revenue.................................... 7.30 07-01-19 734,125
1,000 Clinton Public Works Authority Revenue........................... 6.25 01-01-14 1,005,000
750 Heavener Utility System Revenue.................................. 6.50 10-01-09 777,188
1,000 Oklahoma City Public Property Authority Revenue.................. 8.30 10-01-16 1,037,500
-----------
5,227,813
-----------
PENNSYLVANIA (14.1%):
-------------------------------------------------------------------------------------------------------
500 Adamstown Borough Sewer Revenue..................................... 9.00 10-01-97 519,205
905 Adamstown Borough Sewer Revenue..................................... 6.25 10-01-17 894,819
950 Butler Unlimited GO................................................. 6.88 03-01-23 1,059,250
1,000 Easton Area Sewer Authority Revenue................................. 6.20 04-01-09 1,008,750
500 Elizabeth Borough Municipal Sewer Revenue........................... 7.15 01-01-21 502,500
1,215 Hopewell Township Guaranteed Sewer Revenue.......................... 6.00 11-01-13 1,173,994
750 Lehigh County General Purpose Revenue-Wiley House................... 8.75 11-01-14 773,437
1,000 New Kensington Municipal Sanitation Authority Revenue............... 7.50 10-01-11 1,053,750
1,300 Pennsylvania Higher Education Facility Revenue-Drexel University.... 6.75 05-01-12 1,365,000
----------
8,350,705
----------
SOUTH DAKOTA (4.8%):
-------------------------------------------------------------------------------------------------------
590 Lead Recreation Center Lease Revenue-Northern Hills YMCA............ 8.88 10-01-18 652,688
1,000 South Dakota Health and Education Facilities Revenue-Huron
Regional Medical Center.......................................... 7.00 04-01-10 1,060,000
1,125 South Dakota Health and Education Facilities Revenue-Westhills
Retirement Village............................................... 7.25 09-01-13 1,122,187
----------
2,834,875
----------
TENNESSEE (1.8%):
-------------------------------------------------------------------------------------------------------
1,000 Newbern IDB Revenue-Dana Corporation................................ 7.90(i) 03-01-00 1,057,500
----------
TEXAS (3.5%):
-------------------------------------------------------------------------------------------------------
1,000 Denton County Health Facility Revenue-Lutheran Social
Services Corporation............................................. 7.50 08-15-15 1,073,750
100 Wharton Housing Development Corporation............................. 8.00(i) 02-01-03 100,234
105 Wharton Housing Development Corporation............................. 8.00(i) 02-01-04 105,245
110 Wharton Housing Development Corporation............................. 8.00(i) 02-01-05 110,257
120 Wharton Housing Development Corporation............................. 8.00(i) 02-01-06 120,281
130 Wharton Housing Development Corporation............................. 8.00(i) 02-01-07 130,304
140 Wharton Housing Development Corporation............................. 8.00(i) 02-01-08 140,327
155 Wharton Housing Development Corporation............................. 8.00(i) 02-01-09 155,362
165 Wharton Housing Development Corporation............................. 8.00(i) 02-01-10 165,386
-----------
2,101,146
-----------
WASHINGTON (1.6%):
-------------------------------------------------------------------------------------------------------
220 Washington State Housing Finance Commission-School Directors
Association...................................................... 8.25(i) 07-01-02 235,125
625 Washington State Housing Finance Commission-School Directors
Association...................................................... 8.25(i) 07-01-12 685,937
-----------
921,062
-----------
WEST VIRGINIA (1.3%):
-------------------------------------------------------------------------------------------------------
775 Ohio County Building Commission Revenue-Ohio Valley
Medical Center................................................... 9.63 01-01-13 790,911
-----------
WISCONSIN (1.0%):
-------------------------------------------------------------------------------------------------------
600 La Crosse Nursing Home Fac Revenue Catholic Charities Inc........... 9.25 07-01-17 620,994
------------
WYOMING (0.7%):
-------------------------------------------------------------------------------------------------------
400 Green River-Sweetwater Joint Power Revenue.......................... 8.50 12-01-07 423,500
-----------
TOTAL INVESTMENTS IN SECURITIES (cost:$57,652,166) (c) $59,898,630
===========
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
VOYAGEUR NATIONAL HIGH YIELD MUNICIPAL BOND 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>
Not
Aaa/AAA Aa/AA A/A Baa/BBB Rated Other Total
------- ----- --- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
National Tax Free Fund................. 55% 12% 7% 19% 7% --% 100%
National Insured Tax Free Fund......... 100 -- -- -- -- -- 100
National Limited Term Tax Free Fund.... 57 17 13 9 4 -- 100
National High Yield Municipal Bond Fund -- 2 2 5 85 6 100
</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...................... $ 79,788 $ (515) $ 79,273
National Insured Tax Free Fund.............. 1,019,790 (10,857) 1,008,933
National Limited Term Tax Free Fund......... 15,377 (291) 15,086
National High Yield Municipal Bond Fund..... 2,390,374 (143,910) 2,246,464
</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 December 31, 1996.
(f) Security subject to the Alternative Minimum Tax (AMT). At December 31,
1996, the total of such securities is equal to 16.6%, 20.7%, 13.6% and 1.7%
of total net assets for National Tax Free Fund, National Insured Tax Free
Fund, National Limited Term Tax Free Fund and National High Yield Municipal
Bond Fund, respectively. National Insured Tax Free Fund currently limits
investments in securities sunject to AMT to 20% of net assets, at market
value, as of the date of purchase. At June 14, 1996, the date of the most
recent purchases of such securities, National Insured Tax Free Fund had
19.3% of its total net assets in securities subject to AMT.
(g) The interest rate disclosed for zero coupon issues represents the effective
yield on the date of acquisition.
(h) At December 31, 1996, the cost of securities purchased on a when issued
basis was $2,969,100 for National Insured Tax Free Fund and $997,500 for
National High Yield Municipal Bond Fund.
(i) These securities, representing 2.7% and 9.6% of total net assets of
National Tax Free Fund and National High Yield Municipal Bond Fund,
respectively, have been identified by portfolio management as illiquid.
Such determinations are reviewed from time to time by Fund management and
are subject to change.
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, 1996 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 1997, the Fund separately provided each shareholder with
tax information for calendar year 1996.
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL TAX FREE FUND
-------------------------------
PER CLASS PER CLASS PER CLASS
A SHARE B SHARE C SHARE
------- ------- -------
YEAR YEAR YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1996 1996
------- ------- -------
<S> <C> <C> <C>
Net investment income distributions (none qualifying for
corporate dividend received deduction)................. $.5818 $.5375 $.5051
Short-term capital gain distribution...................... .0050 .0050 .0050
------- ------- -------
Total Distribution..................................... $.5868 $.5425 $.5101
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL INSURED TAX FREE FUND
---------------------------------------
PER CLASS PER CLASS PER CLASS
A SHARE B SHARE C SHARE
------- ------- -------
YEAR YEAR YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1996 1996
------ ------ ------
<S> <C> <C> <C>
Net investment income distributions (none qualifying for
corporate dividend received deduction)................. $.5307 $.4840 $.4513
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL LIMITED TERM TAX FREE FUND
--------------------------------------------
PER CLASS PER CLASS
A SHARE B SHARE
------- -------
YEAR PERIOD FROM
ENDED MARCH 7, 1996
DECEMBER 31, TO DECEMBER 31,
1996 1996
------- -------
<S> <C> <C>
Net investment income distributions (none qualifying for
corporate dividend received deduction)............... $.4737 $.3344
Short-term capital gain distribution.................... .0054 .0054
------- -------
Total Distribution................................... $.4791 $.3398
====== ======
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR NATIONAL HIGH YIELD MUNICIPAL BOND FUND
------------------------------------------------
PER CLASS PER CLASS
A SHARE B SHARE
------- -------
FIVE MONTHS PERIOD FROM
ENDED DECEMBER 18, 1996
DECEMBER 31, TO DECEMBER 31,
1996 1996
------ ------
<S> <C> <C>
Net investment income distributions (none qualifying for
corporate dividend received deduction)................. $.2595 $.0143
====== ======
</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, 99.97%, 100.00% , 98.96% and 100.00% of the
above net investment income distributions for the National Tax Free Fund,
National Insured Tax Free Fund, National Limited Term Tax Free Fund and National
High Yield Municipal Bond Fund, respectively, were derived from interest exempt
from federal income tax.
VOYAGEUR ON CALL(TM)
[Line Drawing of a telephone]
800.545.3863
We invite you to use the Voyaguer 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.
VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402-4115
VOY-NAR 3/97
