[PHOTO]
VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
COLORADO TAX FREE FUND
SEMI-ANNUAL REPORT
DATED JUNE 30, 1996
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds as your objectives or market
conditions change.
VOYAGEUR HIGH YIELD FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in medium and
lower grade municipal bonds.
Voyageur MINNESOTA High Yield Municipal Bond Fund
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
<TABLE>
<S> <C>
Voyageur ARIZONA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur NATIONAL Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
Voyageur KANSAS Tax Free Fund
</TABLE>
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
<TABLE>
<S> <C>
Voyageur ARIZONA Insured Tax Free Fund Voyageur MISSOURI Insured Tax Free Fund
Voyageur CALIFORNIA Insured Tax Free Fund Voyageur NATIONAL Insured Tax Free Fund
Voyageur FLORIDA Insured Tax Free Fund Voyageur OREGON Insured Tax Free Fund
Voyageur MINNESOTA Insured Fund Voyageur WASHINGTON Insured Tax Free Fund
</TABLE>
VOYAGEUR LIMITED TERM FUNDS seek to preserve original investment principal while
providing income free from both Federal income taxes and state income taxes
(where applicable). The Funds invest in intermediate term investment grade
municipal bonds.
<TABLE>
<S> <C>
Voyageur FLORIDA Limited Term Tax Free Fund Voyageur NATIONAL Limited Term Tax Free Fund
Voyageur MINNESOTA Limited Term Tax Free Fund
</TABLE>
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
<TABLE>
<S> <C>
Voyageur AGGRESSIVE GROWTH Fund Voyageur GROWTH Stock Fund
Voyageur GROWTH AND INCOME Fund Voyageur INTERNATIONAL Equity Fund
</TABLE>
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
<TABLE>
<S> <C>
Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur MUNICIPAL CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur GOVERNMENT CASH Series Voyageur PRIME CASH Series
Voyageur MINNESOTA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
</TABLE>
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
LETTER FROM THE PRESIDENT
[PHOTO] ANDREW M. McCULLAGH, JR.
PRESIDENT
Dear Shareholder:
Since our last report, the headline story in the municipal bond market has been
the demise of a radical tax reform. One of the best ways to illustrate this
demise is to look at how municipal bonds have traded in relation to Treasury
securities. At the height of the tax reform scare -- when Steve Forbes was
campaigning on his Flat Tax platform in January 1996 -- long municipal
securities were trading at a very cheap 90% of Treasuries. At the time of this
report, market fears have abated and municipal bonds are trading at a more
traditional 81%.
We believe the issue of reforming the tax code is far from thoroughly closed.
And it is likely -- in this a U.S. presidential election year -- that we may see
renewed discussions about less radical tax reforms. However, as is often the
case in the financial markets, we believe these times of short-term volatility
and uncertainty represent good opportunities for long-term investors.
At Voyageur, we continue to stress the importance of maintaining a long-term
view -- in both the investment horizons of our shareholders and in our approach
to purchasing securities for the Voyageur Tax Free Funds. In order to select the
best long-term securities for the funds, we favor purchasing negotiated new
municipal issues over those in the secondary or competitive market.
Unlike the taxable bond market where the structure of new bond issues are
frequently predetermined and fixed, we have more flexibility and negotiating
power in determining how a municipal bond issue will be structured. In many
cases, our credit research analysts -- who are experienced experts in the area
of municipal bond transactions -- work closely with municipal bond issuers to
determine the appropriate structure for new bond issues. Our analysts' intimate
knowledge of what's in the market and their ability to actually dissect
individual municipal securities helps us to determine appropriate prices that
accurately reflect an issuer's strength and value while assisting us in
protecting our shareholders' interests. They also help us pinpoint rising and
falling stars -- bonds whose credits may be upgraded or downgraded -- in the
municipal market.
We remain committed to providing our clients with the best investment products
and services available in today's financial markets. The Voyageur Tax Free Funds
allow you access to a wide variety of national and state-specific municipal
bonds funds, all of which are actively managed to meet their individual fund
objectives.
As part of our commitment to you, we have also redesigned our shareholder
reports to provide you with more in-depth information about your Voyageur fund
investments in an easier-to-read format. We welcome any comments you may have
about these changes and encourage you to call our Voyageur Shareholder Services
at 800.543.3863.
If at any time you have questions about your Voyageur fund investments, please
contact your personal financial advisor or Voyageur Shareholder Services. Our
Voyageur Shareholder Services 800 number -- known as Voyageur On Call(TM) --
allows you 24-hour access, seven days a week to an automated voice response
service with shareholder services representatives available from 8 a.m. to 5
p.m. Central Standard Time.
We appreciate your continued patronage of Voyageur Funds and look forward to
working with you and your financial advisors in creating products and services
designed to bring you closer to your investment goals.
Sincerely,
Andrew M. McCullagh, Jr.
President
Voyageur Colorado Tax Free Fund
VOYAGEUR COLORADO TAX FREE FUND
[PHOTO] ANDREW M. McCULLAGH, JR. IS
THE SENIOR MUNICIPAL BOND
MANAGER FOR THE VOYAGEUR
COLORADO TAX FREE FUND.
MR. McCULLAGH HAS MORE
THAN 23 YEARS OF INVESTMENT
INDUSTRY EXPERIENCE.
For the six months ended June 30, 1996, the total return at net asset value
(NAV) for the Voyageur Colorado Tax Free Fund's Class A shares was -1.01%.*
Within the Fund, we maintained our long-term outlook for lower interest rates by
keeping our Fund's durations long as compared to the industry average. Although
this caused the Fund's performance to lag slightly when interest rates rose, we
believe the worst is over and are expecting to see a turnaround in interest
rates later this year or early 1997.
AREAS OF OPPORTUNITY
In the Fund's holdings, we remained committed to purchasing municipal bonds with
high credit ratings, emphasizing securities in the general obligation and health
care sectors.
During the past six months, we continued to search for areas or sectors where we
could add value to the portfolios of the Voyageur Colorado Tax Free Fund. One
such area has been to include investments that have added income to the fund.
Although we still maintain our commitment to total return, we believe this
addition of income will allow us to dampen the effects of market volatility
while allowing our shareholders to benefit from higher income streams.
We believe another area of opportunity is our investment in the Lowry
Redevelopment Agency, which represents 3.6% of the Fund's total assets. The
Lowry Redevelopment Agency is redeveloping the property that was once Lowry Air
Force Base before the government shut it down. We believe this property -- which
is 15 minutes from downtown Denver -- should prove to be an attractive
investment for the fund.
In order to attempt to protect our shareholders' current income level for a
longer period of time, we have continued to take advantage of opportunities to
to extend the Fund's call protection. Due to this focus, the Fund now has an
average call protection of approximately eight years.
OUTLOOK FOR THE MUNICIPAL MARKET
Unlike the Colorado of the 1980s, today the state is booming from a
broader-based economy and population growth. Industries in Colorado include
telecommunications, financial services, computers -- all in addition to the old
mainstays of oil and tourism.
In the U.S. economy, we are still seeing signs of moderate growth with moderate
inflation -- a trend we expect to see continue for the remainder of the year.
Our outlook for the municipal market continues to be favorable, and we expect
interest rates to decline over the long term. This has caused us to maintain a
longer duration in the Fund in order to take advantage of this trend.
*Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
VOYAGEUR COLORADO TAX FREE FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1996
- ----------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at market value (note 1)
(identified cost: $367,821,233) .................................. $ 371,006,826
Accrued interest receivable ......................................... 3,799,747
Receivable for Fund shares sold ..................................... 111,943
-------------
Total assets ..................................................... 374,918,516
-------------
LIABILITIES
Bank overdraft ...................................................... 2,401,705
Dividends payable to shareholders ................................... 407,020
Payable for investment securities purchased ......................... 2,737,760
Payable for Fund shares redeemed .................................... 196,915
Other accrued expenses .............................................. 123,916
-------------
Total liabilities ................................................ 5,867,316
-------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK .................. $ 369,051,200
=============
Represented by:
Capital Stock - $.001 par value (note 1) ......................... $ 35,097
Additional paid-in capital ....................................... 376,427,140
Distributions in excess of net investment income ................. (310,303)
Accumulated net realized loss on investments ..................... (10,286,327)
Unrealized appreciation of investments ........................... 3,185,593
-------------
TOTAL NET ASSETS ............................................... $ 369,051,200
=============
Net assets applicable to outstanding Class A shares ................. $ 365,114,866
=============
Net assets applicable to outstanding Class B shares ................. $ 2,338,212
=============
Net assets applicable to outstanding Class C shares ................. $ 1,598,122
=============
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of Capital Stock outstanding: 34,722,672 (note 4) $ 10.52
=============
Class B - Shares of Capital Stock outstanding: 222,383 (note 4) .. $ 10.51
=============
Class C - Shares of Capital Stock outstanding: 151,952 (note 4) .. $ 10.52
=============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR COLORADO TAX FREE FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1996
- -----------------------------------------------------------------------------------------
<S> <C>
Investment income:
Interest ........................................................... $ 11,241,258
------------
Expenses (note 3):
Investment advisory and management fee ............................. 944,361
Dividend-disbursing, administrative and accounting services fees ... 207,768
Printing, postage and supplies ..................................... 46,686
Audit and accounting fees .......................................... 15,100
Legal fees ......................................................... 4,623
Distribution fees - Class A ........................................ 468,033
Distribution fees - Class B ........................................ 9,808
Distribution fees - Class C ........................................ 6,129
Directors' fees .................................................... 13,033
Registration fees .................................................. 1,848
Custodian fees ..................................................... 52,212
Other .............................................................. 11,213
------------
Total expenses ................................................... 1,780,814
Less: Expenses waived or absorbed by the distributor .............. (264,121)
------------
Total net expenses ............................................... 1,516,693
------------
Investment income - net .......................................... 9,724,565
------------
Realized and unrealized gain (loss) on investments:
Realized loss on security transactions (note 2) .................... (880,430)
Net change in unrealized appreciation or depreciation of investments (12,709,274)
------------
Net loss on investments .......................................... (13,589,704)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $ (3,865,139)
============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR COLORADO TAX FREE FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
Operations: (UNAUDITED) 1995
------------- -------------
<S> <C> <C>
Investment income - net ................................................ $ 9,724,565 $ 20,124,536
Realized loss on investments - net ..................................... (880,430) (9,220,493)
Net change in unrealized appreciation or
depreciation of investments ......................................... (12,709,274) 61,036,568
------------- -------------
Net increase (decrease) in net assets resulting from operations .. (3,865,139) 71,940,611
------------- -------------
Distributions to shareholders from:
Investment income - net:
Class A ............................................................. (9,672,643) (20,437,593)
Class B ............................................................. (43,888) (20,541)
Class C ............................................................. (26,468) (33,262)
Excess distributions of net investment income:
Class A ............................................................. (310,118) --
Class C ............................................................. (207) --
------------- -------------
Total distributions .............................................. (10,053,324) (20,491,396)
------------- -------------
Capital share transactions (note 4):
Proceeds from sale of shares:
Class A (note 3) .................................................... 12,236,316 37,603,482
Class B ............................................................. 1,003,703 1,630,345
Class C ............................................................. 649,808 570,571
Net asset value of shares issued in reinvestment of net investment income
distributions:
Class A .......................................................... 7,224,543 13,311,806
Class B .......................................................... 28,834 12,329
Class C .......................................................... 22,738 27,040
Payments for redemption of shares:
Class A ............................................................. (33,345,445) (63,543,450)
Class B (note 3) .................................................... (272,377) (49,987)
Class C ............................................................. (79,494) (112,717)
------------- -------------
Decrease in net assets from capital share transactions ................. (12,531,374) (10,550,581)
------------- -------------
Total increase (decrease) in net assets ............................. (26,449,837) 40,898,634
Net assets at beginning of period ......................................... 395,501,037 354,602,403
------------- -------------
Net assets at end of period (including undistributed or (distributions in
excess of) net investment income of $(310,303) and $18,456,
respectively) ........................................................... $ 369,051,200 $ 395,501,037
============= =============
</TABLE>
See accompanying notes to financial statements.
VOYAGEUR COLORADO TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur Colorado Tax Free Fund (the Fund), a series of Voyageur Mutual
Funds II, Inc., is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. The Fund
seeks high current income free from both federal and state income taxes by
investing in investment grade municipal bonds.
The Fund offers Class A, Class B and Class C Shares. Class A Shares are
sold with a front-end sales charge. Class B Shares may be subject to a
contingent deferred sales charge and such shares automatically convert to Class
A after eight years. Class C Shares may be subject to a contingent deferred
sales charge and have no conversion feature. 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 its amended articles of incorporation, Voyageur Mutual Funds
II, Inc. has 10 trillion shares of authorized capital stock that may be issued
in one or more series.
The significant accounting policies followed by the Fund 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 increase (decrease) in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Securities are valued at fair value as determined by the Board of
Directors. Determination of fair value involves, among other things, using
pricing services or prices quoted by independent brokers. Short-term securities
are valued at amortized cost which approximates market value.
Security transactions are accounted for on the trade date. Securities
gains and losses are calculated on the identified-cost basis. Interest income,
including level-yield amortization of premium and original issue discount, is
accrued daily.
The Fund concentrates its investments in a single state, and therefore may
have more credit risk related to the economic conditions of the state of
Colorado than a portfolio with broader geographical diversification.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by the Fund
on a forward commitment or when-issued basis can take place up to a month or
more after the transaction date. During this period, such securities are subject
to market fluctuations and the portfolio maintains, in a segregated account with
its custodian, assets with a market value equal to or greater than the amount of
its purchase commitments.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders in amounts that will avoid or minimize
federal income or excise taxes for the Fund. Net investment income and net
realized gains (losses) for the Fund may differ for financial statement and tax
purposes primarily because of losses deferred for tax purposes due to "wash
sale" transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. The effect on dividend
distributions on certain book-to-tax differences is reflected as excess
distributions of net realized gains in the statement of changes in net assets.
Also, due to the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income or realized
gains (losses) were recorded by the Fund. For federal income tax purposes,
Colorado Tax Free Fund had a capital loss carryover at December 31, 1995, of
$8,359,188 that will expire in 2003 if not offset by subsequent capital gains.
It is unlikely the Board of Directors will authorize a distribution of any net
realized capital gains until the available capital loss carryover has been
offset or expires.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared daily from net investment income are payable monthly in
cash or reinvested in additional shares of the Fund. Net short-term realized
capital gains, if any, may be distributed throughout the year and net long-term
realized capital gains, when available, are distributed annually.
(2) SECURITIES TRANSACTIONS
Purchase cost and proceeds from sales of securities other than short-term
securities aggregated $102,589,357 and $115,203,471, respectively, for the six
months ended June 30, 1996.
(3) EXPENSES
The Fund has an investment advisory and management agreement with Voyageur
Fund Managers, Inc. (Voyageur) under which Voyageur manages the Fund's assets
and provides other specified services. The fee for investment management and
advisory services is paid monthly and is based on the average daily net assets
of the Fund at the annual rate of .50%. In addition, the Fund will pay most
other operating expenses including directors' fees, registration fees, printing
of shareholder reports, legal and auditing services and other miscellaneous
expenses. Voyageur is obligated to pay all expenses of the Fund (excluding
distribution fees, insurance premiums on portfolio securities, taxes, interest
and brokerage commissions) which exceed 1% of average daily net assets, on an
annual basis.
The Fund will also pay a fee to Voyageur for acting as the Fund's dividend
disbursing, administrative and accounting services agent. The fee is paid
monthly and is equal to the sum of $1.33 per shareholder account per month, a
fixed monthly fee ranging from $1,000 to $1,500 based on the level of the Fund's
average daily net assets and an annualized percentage of average daily net
assets at reducing rates from .11% to .02%. The Fund is also responsible for
reimbursing Voyageur's out-of-pocket expense in connection with the performance
of dividend-disbursing, administrative and accounting services.
Each class of shares has a Distribution Agreement under Rule 12b-1 of the
Investment Company Act of 1940 with Voyageur Fund Distributors, Inc. (Fund
Distributors). Under these plans the Fund is obligated to pay Fund Distributors
a monthly distribution fee at an annual rate of .25% of average daily net assets
of the Class A Shares and 1.00% of average daily net assets of the Class B and
Class C Shares. Fund Distributors may waive all or part of its distribution fees
at its sole discretion. During the six months ended June 30, 1996, Fund
Distributors voluntarily waived Class A distribution fees of $262,824 and Class
B distribution fees of $1,297.
Sales charges paid by Class A shareholders were $309,042. Of this amount,
Fund Distributors received $53,394. Contingent deferred sales charges for the
six months ended June 30, 1996 were $6,283 for Class B shareholders.
(4) SHARE TRANSACTIONS
Transactions in shares of capital stock during the periods ended June 30, 1996
and December 31, 1995 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS PERIOD FROM
ENDED ENDED ENDED MARCH 22, 1995*
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
-------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Shares sold........................... 1,144,714 3,671,995 94,525 154,321
Shares issued for reinvested
distributions.................... 677,401 1,293,858 2,721 1,168
Shares redeemed....................... (3,130,027) (6,106,138) (25,637) (4,715)
------------ ------------ -------- ---------
Increase (decrease) in
shares outstanding............... (1,307,912) (1,140,285) 71,609 150,774
============ ============ ======== =========
</TABLE>
CLASS C
-------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
-------------------------------------
Shares sold .................. 61,735 54,821
Shares issued for reinvested
distributions ........... 2,144 2,607
Shares redeemed .............. (7,537) (10,608)
------- -------
Increase in shares outstanding 56,342 46,820
======= =======
* Commencement of operations.
(5) FINANCIAL HIGHLIGHTS
Per share data (rounded to the nearest cent) for a share of capital stock
outstanding and selected information for each period are as follows:
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period........................ $10.90 $ 9.53 $11.10 $10.57 $10.27 $10.02
------ ------- ----- ------ ------ ------
Operations:
Net investment income...................... .27 .54 .55 .56 .58 .61
Net realized and unrealized
gain (loss) on investments.............. (.37) 1.38 (1.54) .85 .45 .43
------ ------ ----- ------ ------ ------
Total from operations...................... (.10) 1.92 (.99) 1.41 1.03 1.04
------ ------ ----- ------ ------ ------
Distributions to shareholders:
From net investment income (a)............. (.27) (.55) (.54) (.56) (.58) (.61)
In excess of net investment income......... (.01) -- -- -- -- --
From net realized gains.................... -- -- (.04) (.32) (.15) (.18)
------ ------ ----- ------ ------ ------
Total distributions..................... (.28) (.55) (.58) (.88) (.73) (.79)
------ ------ ----- ------ ------ ------
Net asset value:
End of period.............................. $10.52 $10.90 $9.53 $11.10 $10.57 $10.27
====== ====== ===== ====== ====== ======
Total investment return (b).................... (1.01)% 20.54% (9.12)% 13.72% 10.42% 10.80%
Net assets at end of
period (000's omitted)..................... $365,115 $392,815 $354,138 $399,218 $202,165 $104,863
Ratios:
Ratio of expenses to
average daily net assets (f)............ .80%(e) .76% .66% .75% .80% .82%
Ratio of net investment income
to average daily net assets............. 5.16%(e) 5.18% 5.35% 4.97% 5.59% 6.15%
Assuming no voluntary waivers and
reimbursements:
Expenses (c).................. .94%(e) .93% .72% .75% .80% .82%
Net investment income......... 5.02%(e) 5.01% 5.29% 4.97% 5.59% 6.15%
Portfolio turnover rate (excluding
short-term securities)..................... 27.08% 82.83% 69.32% 58.61% 69.72% 92.42%
</TABLE>
See accompanying notes to Financial Highlights.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------- ---------------------------------------------
SIX MONTHS PERIOD FROM SIX MONTHS YEAR PERIOD FROM
ENDED MARCH 22, 1995(d) ENDED ENDED MAY 6, 1994(d)
JUNE 30, 1996 TO DECEMBER 31, JUNE 30, 1996 DECEMBER 31, TO DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995 1994
----------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period............... $10.90 $10.25 $10.90 $ 9.53 $10.21
------ ------ ------ ------ ------
Operations:
Net investment income............. .24 .35 .23 .45 .29
Net realized and unrealized
gain (loss) on investments..... (.39) .65 (.38) 1.37 (.67)
----- ------ ------ ------ ------
Total from operations....... (.15) 1.00 (.15) 1.82 (.38)
----- ------ ------ ------ ------
Distributions to shareholders:
From net investment income (a).... (.24) (.35) (.23) (.45) (.27)
From net realized gains........... -- -- -- -- (.03)
------ ------ ------ ------ ------
Total distributions............ (.24) (.35) (.23) (.45) (.30)
------ ------ ------ ------ ------
Net asset value:
End of period..................... $10.51 $10.90 $10.52 $10.90 $ 9.53
====== ====== ====== ====== ======
Total investment return (b)........... (1.47)% 9.96% (1.45)% 19.44% (3.75)%
Net assets at end of
period (000's omitted)............ $2,338 $1,643 $1,598 $1,042 $465
Ratios:
Ratio of expenses to
average daily net assets (f)... 1.55%(e) 1.39%(e) 1.68%(e) 1.66% 1.80%(e)
Ratio of net investment income
to average daily net assets.... 4.37%(e) 3.96%(e) 4.26%(e) 4.20% 4.23%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)......... 1.68%(e) 1.60%(e) 1.68%(e) 1.66% 1.81%(e)
Net investment income 4.24%(e) 3.75%(e) 4.26%(e) 4.20% 4.22%(e)
Portfolio turnover rate (excluding
short-term securities)............ 27.08% 82.83% 27.08% 82.83% 69.32%
</TABLE>
See accompanying notes to Financial Highlights.
Notes to Financial Highlights
(a) For federal income tax purposes, all of the net investment income
distributions were derived from interest on securities exempt from
federal income tax. For Class A Shares for the years ended December 31,
1993, 1992, 1991 and 1990, $.01 per share of the distributions from net
investment income were subject to state income tax.
(b) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(c) For the periods ended June 30, 1996, December 31, 1995 and 1994, Fund
Distributors voluntarily waived a portion of their distribution fees. 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 the Fund's average daily net assets for Class
A Shares and 1.00% of the Fund's average daily net assets for Class B and
Class C Shares.
(d) Commencement of operations.
(e) Annualized.
(f) 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 Fund. Prior period expense
ratios have not been adjusted.
<TABLE>
<CAPTION>
VOYAGEUR COLORADO TAX FREE FUND
INVESTMENTS IN SECURITIES (UNAUDITED) JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER(B) RATE MATURITY VALUE(a)
- -------------------------------------------------------------------------------------------------------------------
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
COLORADO MUNICIPAL BONDS (100.5%):
ESCROWED WITH U.S. GOVERNMENT BONDS (0.5%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,820 Auraria Higher Education Center Fee (AMBAC Insured)................... 6.50% 05-01-12 $ 1,922,047
------------
GENERAL OBLIGATION (22.2%):
-------------------------------------------------------------------------------------------------------
3,000 Arapahoe County School District Inverse Floater...................... 6.37(e) 12-15-15 2,556,450
8,010 Arapahoe County Water & Sanitation Series 1995A....................... 6.00 12-01-15 8,012,003
10,075 Arapahoe County Water & Sanitation Series 1995A....................... 6.15 12-01-19 10,104,923
1,000 Boulder Valley School District #RE-2 Series A......................... 6.25 12-01-12 1,051,000
3,000 Boulder Valley School District #RE-2 Series A......................... 6.30 12-01-13 3,152,640
6,250 Boulder Valley School District #RE-2 Series A......................... 6.30 12-01-14 6,533,000
5,060 Douglas County School District Series 94A (MBIA Insured).............. 6.50 12-15-16 5,379,792
1,000 Eagle County School District #RE50J (FGIC Insured).................... 6.30 12-01-12 1,052,500
6,575 Eagles Nest Metropolitan District Limited Tax......................... 6.50 11-15-17 6,533,051
1,250 El Paso County School District #20 Inverse Floater.................... 7.17(e) 12-15-14 1,182,438
1,850 Highlands Ranch School Metropolitan District #4, Inverse Floater...... 6.07(e) 06-15-16 1,466,791
4,200 Highlands Ranch Metropolitan District #4 (LOC - Swiss Bank Insured) 6.00 12-01-15 4,251,660
6,170 Interstate South Metropolitan District................................ 6.00 12-01-20 6,002,546
11,350 Jefferson County School District #R-001 (AMBAC Insured)............... 6.00 12-15-12 11,575,411
2,250 Jefferson County Met Dist.-Section 14, Series A....................... 6.20 12-01-13 2,302,492
1,000 Jefferson County Met Dist.-Section 14, Series A....................... 6.20 06-01-14 1,019,600
2,600 Larimer County School District #R1 Poudre (MBIA Insured).............. 6.15 12-15-16 2,660,892
3,285 Larimer County School District #R1 Poudre (MBIA Insured).............. 5.63 12-15-12 3,262,268
1,500 Montezuma County School District #RE 4A - Delores..................... 7.00 12-01-19 1,633,680
2,500 Pueblo County School District #70 (MBIA Insured)...................... 5.80 06-01-11 2,058,159
------------
81,791,296
------------
UTILITIES (5.2%):
-------------------------------------------------------------------------------------------------------
4,100 Centennial County Water and Sanitary District Revenue
(LOC - Swiss Bank Insured)....................................... 5.75 06-15-12 4,110,414
4,000 Centennial County Water and Sanitary District Revenue
(LOC - Swiss Bank Insured)....................................... 6.00 12-01-15 4,049,200
3,000 Centennial County Water and Sanitary District Revenue
(LOC - Swiss Bank Insured)...................................... 5.75 06-15-15 2,986,200
5,475 Platte River Power Authority Series BB............................... 6.13 06-01-14 5,586,252
1,500 Westminster Water & Sewer Utility Revenue (AMBAC Insured)............ 6.00 12-01-09 1,550,190
1,000 Westminster Water & Sewer Utility Revenue (AMBAC Insured)............ 6.25 12-01-14 1,033,380
------------
19,315,636
------------
TRANSPORTATION (18.2%):
-------------------------------------------------------------------------------------------------------
11,920 Arapahoe County Vehicle Reg E-470 (MBIA Insured)..................... 6.15% 08-31-26 $12,133,368
4,500 Arapahoe County Capital Improvement E-470-E, Zero Coupon............. 6.62(f) 08-31-08 2,036,880
10,000 Arapahoe County Capital Improvement E-470............................ 7.00 08-31-26 10,509,800
11,650 Denver City & County Airport Revenue (MBIA Insured).................. 5.60 11-15-20 11,169,438
13,825 Denver City & County Airport Revenue (MBIA Insured).................. 5.70 11-15-25 13,306,563
19,050 Denver City & County Airport Revenue (MBIA Insured).................. 5.50 11-15-25 17,930,813
------------
67,086,862
------------
HEALTH CARE (23.0%):
-------------------------------------------------------------------------------------------------------
2,555 Boulder County Hospital Revenue Longmont United Project............. 5.80 12-01-13 2,414,475
3,250 Boulder County Hospital Revenue Longmont United Project............. 5.88 12-01-20 3,011,450
3,375 Colorado Health Facility Authority Revenue Inverse Floater
(MBIA Insured)................................................... 6.57(e) 10-01-26 2,692,474
3,135 Colorado Health Facilities Authority Craig Hospital................. 5.38 12-01-13 2,937,777
3,970 Colorado Health Facilities Authority Craig Hospital................. 5.50 12-01-21 3,662,166
3,625 Colorado Health Facilities Authority Boulder
Community Hospital Series B...................................... 5.88 10-01-23 3,586,720
1,000 Colorado Health Facilities Authority Children's
Hospital (MBIA Insured).......................................... 5.25 10-01-26 898,890
1,085 Colorado Health Facilities Authority National Benev.
Series A......................................................... 6.90 06-01-15 1,129,474
6,500 Colorado Health Facilities Authority Vail Valley Medical
Center Revenue................................................... 6.60 01-15-20 6,535,555
4,150 Colorado Health Facilities Authority Covenant Retirement............ 6.75 12-01-25 4,218,973
1,750 Colorado Health Facilities Authority Covenant Retirement............ 6.75 12-01-15 1,787,835
4,000 Colorado Health Facilities Authority Parkview Hospital.............. 6.00 09-01-16 3,824,160
7,750 Colorado Health Facilities Authority Parkview Hospital.............. 6.13 09-01-25 7,381,023
5,885 Colorado Health Facilities Authority Rocky Mountain Adventist
Healthcare....................................................... 6.63 02-01-22 5,955,502
13,000 Colorado Health Facilities Authority Rocky Mountain Adventist
Healthcare....................................................... 6.63 02-01-13 13,168,480
5,725 Colorado Springs Memorial Hospital (MBIA Insured)................... 6.00 12-15-15 5,771,945
11,850 Colorado Springs Memorial Hospital (MBIA Insured)................... 6.00 12-15-24 11,862,205
4,000 University of Colorado Hospital Revenue (AMBAC Insured)............. 6.40 11-15-22 4,083,640
------------
84,922,744
------------
HOUSING (16.3%):
-------------------------------------------------------------------------------------------------------
11,690 Aurora Single Family Mortgage Revenue.............................. 7.30 05-01-10 12,347,563
1,520 Colorado Housing Financial Authority............................... 7.15 11-01-14 1,635,900
8,530 Colorado Housing Finance Authority Multifamily Series A-3.......... 6.25 10-01-26 8,613,850
1,625 Colorado Housing Finance Authority Multifamily Housing
Mortgage Revenue............................................... 5.90 10-01-29 1,596,026
5,035 Colorado Housing Finance Authority Single Family Access Series 94C 7.90 12-01-24 5,651,788
1,000 Colorado Housing Finance Authority Single Family Housing
Project Series C2............................................... 7.45 06-01-17 1,100,000
2,500 Colorado Housing Finance Authority Single Family Housing Series B-2 7.45(d) 11-01-27 2,730,000
3,345 Colorado Housing Finance Authority Single Family Mortgage.......... 7.50 11-01-24 3,671,137
3,080 Colorado Housing Finance Authority 1994 Series D II Revenue........ 8.13 06-01-25 3,480,400
4,585 Colorado Housing Finance Authority Single Family Mortgage Revenue 8.00 12-01-24 5,140,931
1,000 Colorado State Single Family Housing Authority Senior Revenue...... 7.10 06-01-14 1,070,000
9,145 Englewood Multifamily Marks Apartments Series B.................... 6.00 12-15-18 8,936,403
4,000 Pueblo County Single Family Mortgage Revenue
Series 1994A (GNMA Insured)..................................... 7.05 11-01-27 4,221,640
------------
60,195,638
------------
EDUCATION (4.6%):
-------------------------------------------------------------------------------------------------------
4,420 Aurora Educational Development (Connie Lee Insured).............. 6.00 10-15-15 4,450,763
1,000 Board of Trustees Mesa St. College (MBIA Insured)................ 5.70 05-15-14 995,490
3,350 Colorado State Post Secondary Education Faculty Revenue
Inverse Floater............................................... 8.07(e) 03-01-16 3,394,287
2,000 Colorado Education Facility Authority University of Denver
(Connie Lee Insured).......................................... 6.00 03-01-16 2,006,500
1,250 Colorado Post Secondary Education Auraria Fund Project
(FSA Insured)................................................. 5.75 09-01-10 1,263,187
1,000 Colorado Post Secondary Education Auraria Fund Project
(FGIC Insured)............................................... 6.00 09-01-15 1,013,970
1,100 Colorado Mountain College Resident Hall Authority
Revenue (MBIA Insured)........................................ 5.75 06-01-23 1,080,728
1,035 Colorado State Board Community College Front Range
(AMBAC Insured)............................................... 5.70 11-01-15 1,030,104
500 Colorado State Board Community College Pikes Peak
(AMBAC Insured)............................................... 5.88 11-01-15 501,675
1,360 Colorado State College Trustee (MBIA Insured).................... 5.88 05-15-16 1,364,121
------------
17,100,825
------------
OTHER REVENUE (8.1%):
-------------------------------------------------------------------------------------------------------
1,100 Aurora Saddle Rock Golf Course................................... 5.75 12-01-10 1,053,206
2,000 Aurora Saddle Rock Golf Course................................... 6.20 12-01-15 1,961,200
7,075 Governor Metropolitan District Colorado Series 95A Revenue....... 6.00 12-01-15 7,076,840
4,725 Governor Metropolitan District Colorado Series 95A Revenue....... 6.13 12-01-19 4,735,773
13,700 Lowry Colorado Economic Redevelopment Authority.................. 7.50 12-01-10 13,340,375
1,685 Pueblo Urban Renewal Authority Revenue (AMBAC Insured)........... 6.15 12-01-19 1,716,644
------------
29,884,038
------------
CERTIFICATE OF PARTICIPATION (2.4%):
-------------------------------------------------------------------------------------------------------
2,000 Arapahoe County Lib. District COP (MBIA Insured)................. 5.70 12-15-10 1,995,840
5,000 Jefferson County COP Inverse Floater (MBIA Insured).............. 6.57(e) 12-01-09 4,699,950
2,220 Pueblo County Colorado School District, Inverse Floater
(MBIA Insured)................................................ 6.82(e) 12-01-10 2,091,950
------------
8,787,740
TOTAL INVESTMENTS IN SECURITIES (cost: $367,821,233) (c) $371,006,826
============
</TABLE>
See accompanying notes to investments in securities.
VOYAGEUR COLORADO TAX FREE FUND
NOTES TO INVESTMENTS IN SECURITIES (UNAUDITED)
- --------------------------------------------------------------------------------
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) Investments in bonds, by rating category (unaudited) as a percentage of
total bonds, are as follows:
<TABLE>
<CAPTION>
Aaa/AAA Aa/AA A/A Baa/BBB NR/NR Total
------- ----- --- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
36% 21% 15% 19% 9% 100%
</TABLE>
(c) The cost of securities for federal income tax purposes is $368,867,942.
The aggregate gross unrealized appreciation and depreciation in securities
based on this cost are as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation
------------ ------------ ------------
<S> <C> <C> <C>
$5,375,117 $(3,236,233) $2,138,884
</TABLE>
(d) At June 30, 1996, the cost of securities purchased on a when issued basis
was $2,730,000.
(e) Inverse floater, represents a security that pays interest at rates that
increase (decrease) with a decline (increase) in a general money market
index. Interest rate disclosed is the rate in effect on June 30, 1996.
(f) The interest rate disclosed for zero coupon issues represents the
effective yield on the date of acquisition.
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, MN 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, MN 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, MN 55402
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Minneapolis, Minnesota 55402-4115
