U.S. GOVERNMENT SECURITIES FUND
ANNUAL REPORT
Dated June 30, 1995
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds as your objectives or market
conditions change.
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
Voyageur ARIZONA Tax Free Fund Voyageur KANSAS Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur MINNESOTA 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 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 MINNESOTA Limited Term Tax Free Fund
</TABLE>
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
Voyageur AGGRESSIVE GROWTH Fund Voyageur INTERNATIONAL Equity Fund
Voyageur GROWTH Stock Fund
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur MUNICIPAL CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur GOVERNMENT CASH Series Voyageur PRIME CASH Series
Voyageur MINNESOTA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
Dear Shareholder:
The bond market's dramatic rebound in the first half of 1995 was evidenced by
the Voyageur U.S. Government Securities Fund's performance. At the end of this
annual reporting period, the Fund's performance for A-shares (total return at
net asset value) for one year was 13.45%. More performance information is shown
in the chart below. Total return information for all share classes is shown
later in this report.
Total Return Information for the Voyageur U.S. Government Securities Fund
(A-shares at NAV)
1 Year 5 Years Since Inception
(11/87)
Without Sales Charge 13.45% 9.78% 9.48%
With Sales Charge 8.06% 8.72% 8.79%
The Voyageur U.S. Government Securities Fund has a proven track record of strong
performance. The Fund has been among the top five percent for total return
within Morningstar's Government General Objective for both the one-year and
five-year periods ending June 30, 1995. (Note: The Morningstar Government
General Objective seeks income by investing in a blend of over 300
mortgage-backed securities, treasuries, and agency securities. The Voyageur U.S.
Government Securities Fund was rated 15th of 328 government bond funds for one
year and 5th of 116 like funds for five years. Keep in mind, that past
performance is no guarantee of future results.)
We attribute the Fund's strong and solid history to its management team's
fundamental approach and long-range view. This approach has thrived in bull
markets and weathered bear markets, as well. In the pages that follow, Jane
Wyatt, the Fund's co-manager and Voyageur's Chief Investment Officer, discusses
the factors that have affected the Fund's performance during this fiscal year.
She also offers some insight as to what you may expect from the Fund's managers
for the remainder of the year.
I am pleased to present a considerably brighter picture of the government
securities market and Fund performance than was painted in my last letter to
you. As you know, volatility is a constant factor in the markets, and the fiscal
year for this fund--as well as for most mutual funds--demonstrates this point.
We encourage you to maintain a long-range view of investing and believe that you
will derive the greatest benefit by doing so.
Sincerely,
John G. Taft
President
Voyageur U.S. Government Securities Fund
Voyageur U.S. Government Securities Fund
Class A Shares
Investment Performance Through June 30, 1995
The Growth of a $10,000 Investment
(LINE GRAPH)
Voyageur U.S. Government Securities Fund
Average Annual Total Returns
(Class A Shares)
Since
1 Year 5 Years 11/2/87**
Without Sales Charge 13.45% 9.78% 9.48%
With Sales Charge* 8.06% 8.72% 8.79%
Lehman Brothers 12.07% 9.35% 9.37%
Government Bond Index
* Average annual total returns include the maximum 4.75% sales charge.
** Commencement of operations.
Performance quoted represents past performance and is not indicative of future
results. 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.
Voyageur U.S. Government Securities Fund
Class B, C, and I Shares
Investment Performance Through June 30, 1995
Voyageur U.S. Government Securities Fund
Average Annual Total Returns
(Class B Shares)
Since
1 Year 6/7/94**
Without Contingent 12.90% 9.07%
Deferred Sales Charge
With Contingent 8.90% 5.40%
Deferred Sales Charge*
Lehman Brothers 12.07% 11.09%
Government Bond Index
Voyageur U.S. Government Securities Fund
Total Returns
(Class C Shares)
Since
1/10/95**
Without Contingent 12.73%
Deferred Sales Charge
With Contingent 11.73%
Deferred Sales Charge*
Lehman Brothers 10.61%
Government Bond Index
Voyageur U.S. Government Securities Fund
Average Annual Total Returns
(Institutional Shares)
Since
1 Year 6/7/94**
Institutional Shares 13.57% 9.71%
Lehman Brothers 12.07% 11.09%
Government Bond Index
* Assumes redemption on June 30, 1995.
** Commencement of operations.
Performance quoted represents past performance and is not indicative of future
results. The perfomance of separate classes will vary based on the differences
in sales loads and distribution fees paid by shareholders investing in the
different classes.
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND ANNUAL REPORT TO SHAREHOLDERS
DISCUSSION OF FUND MANAGEMENT
Jane M. Wyatt, Portfolio Manager
Ms. Wyatt is Chief Investment Officer for Voyageur Funds and Portfolio Manager
for the Voyageur U.S. Government Securities Fund. She is a Chartered Financial
Analyst with 18 years experience in fixed income trading and risk management.
FACTORS AFFECTING FUND PERFORMANCE
June 30, 1994 to June 30, 1995--the Fund's fiscal year--captured considerable
volatility in the economy and in the government securities market. From July
through December last year, the market was affected by concern over excessive
economic strength. The potential of a slowdown, or even a recession, came to
light by April of 1995. Interest rate changes were a major part of the economic
news. From February of 1994 through February of 1995, the Federal Reserve Board
(the Fed) raised short term interest rates on seven different occasions. In June
of 1995, it started to lower short term rates.
It is important to recognize that the Fed's mandate is to effect policies that
control inflationary pressures. However, that is not its sole purpose. The Fed
also fosters policies that promote noninflationary growth. Thus, in 1994--when
economic activity was accelerating--it raised rates to slow the pace of growth.
In June of 1995--when economic data indicated that Fed policies were potentially
too restrictive and could possibly push the economy into a recession--the Fed
lowered rates.
In order for runaway growth (inflation) or economic slowdown (recession) to
occur, there must be excesses in the economy. As guardian of U.S. monetary
policy, the Fed has permitted no excesses. The Federal Reserve Board has the
challenging job of blending historical data with forward expectations. Under
current chairman Alan Greenspan, the Fed adopted a "gradualist" course of action
which has helped them in achieving their long term objectives. This approach
smooths out the curves, as opposed to shocking the system with rate changes in
larger increments, as past Fed chairmen have done. By limiting shocks to the
system, the country's economy may--for the first time ever-- experience a "soft
landing" rather than the traditional cycle of boom or bust economies.
Our main strategy in managing the Fund was to stay the course. There was
tremendous short term psychological pressure to shorten the duration of the
Fund. However, Voyageur did not and does not anticipate inflation as a
continuing problem. We believed the Fed was following the right course of action
and would win the battle. The market's quick snap back in the first half of the
year was evidence of the Fed's victory.
During the reporting period, we've used mortgages more aggressively than before.
In June of 1994, we had 40 percent of the portfolio in mortgages. At the time of
this report, mortgages make up 56 percent of the portfolio. We think mortgages
currently offer very good value. Income premium in the mortgage market is
disproportionately large to the prepayment risk, so investors are well
compensated for participating in this market sector. We have positioned the
portfolio to take advantage of extra income opportunities in the market. From a
price appreciation standpoint, shareholders will benefit from being in the
mortgage-backed sector.
OUTLOOK
We do not anticipate significant NAV appreciation or depreciation for the
remainder of 1995. However, if yields increase, we will view the increase as a
buying opportunity. Conversely, we think the market is fairly valued, so if we
witness an extraordinary continuation of the market rally, we may lessen the
duration of the Fund. At the time of this report, we believe the Fund is well
positioned, and have no plans to significantly change the Fund's duration.
Commitment to a long term, fundamental approach is at the heart of our Fund's
success and track record. Short term psychology can provide opportunities to
implement strategies that support our long term, fundamental approach.
The past 30 months have been an extremely volatile period. Staying the course in
a market that reacts to such volatility is not easy. In the long run, staying
the course provides investors with the greatest reward. It is our opinion that
long term investors realize value by maintaining a long term perspective and
being opportunistic toward the market.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Voyageur Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of Voyageur U.S. Government
Securities Fund, a portfolio within Voyageur Funds, Inc., as of June 30, 1995,
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period ended June
30, 1995, and the financial highlights for each of the years in the five-year
period ended June 30, 1995. 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. 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 U.S. Government Securities Fund at June 30, 1995, and the results of
its operations for the year then ended and changes in its net assets for each of
the years in the two-year period ended June 30, 1995 and financial highlights
for the periods stated in the first paragraph above, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 4, 1995
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
ASSETS
<S> <C>
Investments in securities (note 1) (identified cost: $123,987,766)............................... $129,375,731
Cash in bank on demand deposit................................................................... 96,386
Accrued interest receivable ..................................................................... 1,439,498
Receivable for Fund shares sold.................................................................. 83,484
Total assets ................................................................................. 130,995,099
LIABILITIES
Dividends payable to shareholders................................................................ 165,669
Payable for Fund shares redeemed................................................................. 16,602
Distribution fees payable........................................................................ 80,006
Other accrued expenses .......................................................................... 42,891
Total liabilities............................................................................. 305,168
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK .............................................. $130,689,931
Represented by:
Capital stock - authorized 10,000,000,000 shares of $.01 par value............................ 125,992
Additional paid-in capital.................................................................... 134,961,251
Distributions in excess of net investment income.............................................. (21,533)
Accumulated net realized loss from investments ............................................... (9,763,744)
Unrealized appreciation of investments ....................................................... 5,387,965
Total net assets........................................................................... $130,689,931
Net assets applicable to outstanding Class A Shares.............................................. $ 75,885,986
Net assets applicable to outstanding Class B Shares.............................................. $ 138,678
Net assets applicable to outstanding Class C Shares.............................................. $ 220,686
Net assets applicable to outstanding Institutional Class Shares.................................. $ 54,444,581
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A Shares (7,316,794 shares outstanding)................................................. $10.37
Class B Shares (13,359 shares outstanding).................................................... $10.38
Class C Shares (21,292 shares outstanding).................................................... $10.36
Institutional Class Shares (5,247,734 shares outstanding)..................................... $10.37
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 1995
<S> <C>
Investment income:
Interest..................................................................................... $ 9,492,870
Expenses (note 3):
Investment advisory and management fee....................................................... 647,382
Dividend disbursing, administrative and accounting services fees............................. 144,961
Distribution fees (Class A).................................................................. 192,688
Distribution fees (Class B).................................................................. 455
Distribution fees (Class C).................................................................. 228
Distribution fees (Institutional Class)...................................................... 130,835
Printing, postage and supplies............................................................... 20,471
Audit fees................................................................................... 17,794
Legal fees................................................................................... 9,769
Custodian fees............................................................................... 18,746
Directors' fees.............................................................................. 3,357
Registration fees............................................................................ 37,949
Other........................................................................................ 3,217
Total expenses............................................................................ 1,227,852
Less (note 3):
Expense reductions and waivers............................................................... (2,719)
Total net expenses........................................................................ 1,225,133
Investment income - net................................................................... 8,267,737
Realized and unrealized gain (loss) on investments (note 2):
Realized loss on security transactions....................................................... (9,763,744)
Net change in unrealized appreciation of investments......................................... 18,185,818
Net gain on investments................................................................... 8,422,074
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................. $16,689,811
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
Operations: 1995 1994
<S> <C> <C>
Investment income - net ............................................. $ 8,267,737 $ 7,210,126
Net realized gain (loss) on investments ............................. (9,763,744) 2,174,027
Net change in unrealized appreciation or depreciation of investments 18,185,818 (16,334,304)
Net increase (decrease) in net assets resulting from operations .. 16,689,811 (6,950,151)
Distributions to shareholders from:
Investment income - net:
Class A .......................................................... (4,919,889) (7,126,639)
Class B .......................................................... (2,497) (27)
Class C .......................................................... (1,136) N/A
Institutional Class .............................................. (3,344,215) (83,460)
Distributions in excess of net investment income:
Class A .......................................................... (12,813) N/A
Class B .......................................................... (7) N/A
Class C .......................................................... (3) N/A
Institutional Class .............................................. (8,710) N/A
Net realized gain on investments:
Class A .......................................................... (160,578) (3,892,940)
Class B .......................................................... (36) (75)
Class C .......................................................... 0 N/A
Institutional Class .............................................. (100,354) (152,428)
Total distributions ............................................ (8,550,238) (11,255,569)
Share transactions:
Proceeds from sale of shares:
Class A (987,529 and 6,901,620 shares) (note 3) .................. 9,513,749 75,291,346
Class B (13,081 and 2,505 shares) ................................ 130,370 25,178
Class C (21,237 shares and N/A) .................................. 218,517 N/A
Institutional Class (1,832,690 and 5,114,086 shares) ............. 17,648,013 51,396,155
Net asset value of shares issued in reinvestment of net investment
income and net realized gain distributions:
Class A (347,009 and 657,845 shares) ........................... 3,394,023 6,997,411
Class B (95 and 2 shares) ...................................... 952 15
Class C (56 shares and N/A) .................................... 564 N/A
Institutional Class (194,552 and 9,331 shares) ................. 1,908,755 91,818
Payments for redemption of shares:
Class A (2,693,318 and 9,126,209 shares) ......................... (26,146,449) (93,541,063)
Class B (2,323 and 1 share) (note 3) ............................. (22,398) (10)
Class C (1 share and N/A) ........................................ (10) N/A
Institutional Class (1,895,210 and 7,715 shares) ................. (18,678,004) (77,064)
Increase (decrease) in net assets from share transactions ........... (12,031,918) 40,183,786
Total increase (decrease) in net assets ........................ (3,892,345) 21,978,066
Net assets at beginning of year ................................................ 134,582,276 112,604,210
Net assets at end of year (including distributions in excess of
net investment income of $21,533 and $0, respectively) ..................... $ 130,689,931 $ 134,582,276
</TABLE>
See accompanying notes to financial statements.
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur U. S. Government Securities Fund (the Fund) is a portfolio within
Voyageur Funds, Inc. which is registered under the Investment Company Act of
1940 (as amended) as a diversified, open-end management investment company. The
Fund offers Class A, Class B, Class C and Institutional Class 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 (first offered on January 10, 1995)
are sold subject to a contingent deferred sales charge and have no conversion
feature. Institutional Class Shares are sold without a front-end sales charge
and are not subject to a contingent deferred sales charge. 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 proportionate
net assets.
The significant accounting policies followed by the Fund are summarized as
follows:
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 discount, is accrued daily.
Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute 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. 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, at June 30, 1995, the Fund had a capital
loss carryover of $9,676,704 that will expire in 2003 through 2004 if not offset
by subsequent capital gains. It is unlikely that 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 may be reinvested in additional shares of the Fund at net asset value.
Net realized short-term capital gains, when available, may be distributed
throughout the year. Net realized long-term capital gains, when available, are
distributed annually.
Repurchase Agreements
Securities pledged as collateral for repurchase agreements are held by the
Fund's custodian bank until maturity of the repurchase agreement. Procedures for
all agreements ensure that the daily market value of the collateral is in excess
of the repurchase agreement in the event of default.
(2) INVESTMENT SECURITIES TRANSACTIONS
Purchase cost and proceeds of sales of investment securities, other than
short-term securities, aggregated $185,308,625 and $195,410,692, respectively,
for the year ended June 30, 1995.
(3) EXPENSES
The Fund has an investment advisory agreement with Voyageur Fund Managers,
Inc. (Voyageur), under which Voyageur manages the Fund's assets and furnishes
related office facilities, equipment, research and personnel. The Fund pays a
monthly fee to Voyageur equal to an annual rate of .50% of the Fund's average
daily net assets.
The Fund also has Distribution Agreements under Rule 12b-1 of the Investment
Company Act of 1940 with Voyageur Fund Distributors, Inc. (Fund Distributors).
The Fund is obligated to pay Fund Distributors a monthly distribution fee at an
annual rate of .25% of the average daily net assets of the Class A and
Institutional Class Shares and 1.00% of the average daily net assets of the
Class B and Class C Shares. Fund Distributors may waive all or part of its
distribution fee at its sole discretion. During the year ended June 30, 1995
Fund Distributors voluntarily waived Class B distribution fees of $65 and
Class C distribution fees of $6.
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%. Prior to October 27, 1994, the
annualized percentage of average daily net assets component of the fee was based
on reducing rates from .1% to .01%. The Fund is also responsible for reimbursing
Voyageur's out-of-pocket expenses in connection with the performance of dividend
disbursing, administrative and accounting services.
In addition to the fees above, the Fund is responsible for paying most other
operating expenses including directors' fees, registration fees, printing of
shareholder reports, legal and auditing services, and other miscellaneous
expenses. Under the investment advisory agreement, Voyageur is obligated to pay
all expenses and fees (excluding distribution fees, interest, taxes and
brokerage commission) which exceed 1.00% of the Fund's average daily net assets,
on an annual basis. The Fund earned $2,648 in credits on uninvested cash
balances held at the custodian which were used to reduce certain fees for
various custodial, pricing and accounting services provided by the custodian
bank.
Sales charges paid by Class A shareholders were $75,170 during the year ended
June 30, 1995. Of this amount, Fund Distributors received $10,778. Contingent
deferred sales charges paid by Class B shareholders were $896 during the year
ended June 30, 1995.
(4) 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
YEAR ENDED JUNE 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period ................ $ 9.76 $ 10.99 $ 10.46 $ 9.99 $ 9.77
Operations:
Net investment income .............. .62 .55 .61 .67 .78
Net realized and unrealized
gain (loss) on investments ...... .63 (.94) .83 .76 .32
Total from operations ......... 1.25 (.39) 1.44 1.43 1.10
Distributions to shareholders:
From net investment income ......... (.62) (.55) (.61) (.67) (.78)
From net realized gains ............ (.02) (.29) (.30) (.29) (.10)
Total distributions ........... (.64) (.84) (.91) (.96) (.88)
Net asset value:
End of period ...................... $ 10.37 $ 9.76 $ 10.99 $ 10.46 $ 9.99
Total investment return (d) ................... 13.45% (3.95)% 14.25% 14.68% 11.67%
Net assets at end of
period (000's omitted) ............. $75,886 $84,660 $112,604 $53,332 $22,176
Ratios:
Ratio of expenses to
average daily net assets (b) .... .95% .96% 1.10% 1.00% .95%
Ratio of net investment income
to average daily net assets (b) . 6.38% 5.10% 5.61% 6.60% 7.95%
Portfolio turnover rate (excluding
short-term securities) .......... 144.39% 124.38% 175.02% 198.54% 186.15%
</TABLE>
See accompanying notes to Financial Highlights.
<TABLE>
<CAPTION>
CLASS B CLASS C INSTITUTIONAL CLASS
PERIOD FROM PERIOD FROM PERIOD FROM
YEAR JUNE 6, JANUARY 10, YEAR JUNE 6,
ENDED 1994(c) TO 1995(c) TO ENDED 1994(c) TO
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period .............. $ 9.75 $ 10.05 $ 9.48 $ 9.75 $ 10.05
Operations:
Net investment income ............ .56 .01 .27 .62 .01
Net realized and unrealized
loss on investments ........... .65 (.28) .88 .64 (.28)
Total from operations ....... 1.21 (.27) 1.15 1.26 (.27)
Distributions to shareholders:
From net investment income ....... (.56) (.01) (.27) (.62) (.01)
From net realized gains .......... (.02) (.02) 0 (.02) (.02)
Total distributions ......... (.58) (.03) (.27) (.64) (.03)
Net asset value:
End of period .................... $ 10.38 $ 9.75 $ 10.36 $ 10.37 $ 9.75
Total investment return (d) ................. 12.90% (2.68)% 12.73% 13.57% (2.64%)
Net assets at end of
period (000's omitted) ........... $ 139 $ 24 $ 221 $ 54,445 $ 49,898
Ratios:
Ratio of expenses to
average daily net assets (f) .. 1.54% .30%(a) 1.62%(e) .94% .25%(a)
Ratio of net investment income
to average daily net assets (f) 5.56% .11%(a) 5.10%(e) 6.39% .16%(a)
Portfolio turnover rate (excluding
short-term securities) ........ 144.39% 124.38% 144.39% 144.39% 124.38%
</TABLE>
See accompanying notes to Financial Highlights.
NOTES TO FINANCIAL HIGHLIGHTS
(a) Ratios presented for the period from June 7, 1994 to June 30, 1994 are not
annualized as they are not indicative of anticipated annual results.
(b) The Fund's adviser waived, absorbed or reduced expenses representing
voluntary waivers of $1,582, $30,000, $93,839 and $41,921 for the periods
ended June 30, 1995, 1993, 1992 and 1991. If the Fund had been charged for
the expenses which were voluntarily waived, the ratio of expenses to
average daily net assets would have been .95% for the period ended June 30,
1995, 1.14% for the period ended June 30, 1993, and equal to the
contractual expense limitation of 1.25% for the periods ended June 30, 1992
and 1991. The ratio of net investment income to average daily net assets
would have been 6.38%, 5.57%, 6.35% and 7.65%, respectively.
(c) Commencement of investment operations.
(d) 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.
(e) Annualized.
(f) The Fund's advisor waived, absorbed or reduced expenses representing
voluntary waivers of $65 for Class B Shares, $6 for Class C Shares and
$1,066 for Institutional Class Shares during the period ended June 30,
1995. If the Fund had been charged for the expenses which were voluntarily
waived, the ratio of expenses to average daily net assets would have been
1.69% for Class B Shares, 1.65% for Class C Shares and 0.94% for
Institutional Class Shares for the period ended June 30, 1995. The ratio of
net investment income to average daily net assets would have been 5.41% for
Class B Shares, 5.07% for Class C Shares and 6.39% for Institutional Class
Shares.
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
INVESTMENTS IN SECURITIES JUNE 30, 1995
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE(a)
(Percentage of each investment category relates to total net assets)
BONDS (99.0%):
U.S. GOVERNMENT AGENCY OBLIGATIONS (55.9%):
<S> <C> <C> <C>
Government National Mortgage Association
Mortgage-Backed Pass-Thru Certificates
10.00% due 12/20/02 $ 117,929 $ 122,388
10.00% due 03/15/16 121,743 132,869
8.00% due 01/15/17 82,700 85,359
7.00% due 05/15/23 937,331 922,850
7.00% due 06/15/23 2,743,253 2,700,870
7.00% due 07/15/23 4,083,287 4,020,200
7.00% due 10/15/23 10,162,890 10,005,874
7.00% due 11/15/23 1,119,947 1,102,644
7.00% due 01/15/24 1,943,609 1,913,580
7.00% due 02/15/24 9,635,895 9,487,020
7.00% due 03/15/24 3,077,801 3,030,249
7.00% due 04/15/24 3,124,087 3,075,820
7.00% due 05/15/24 9,653,588 9,504,442
8.00% due 05/15/24 1,956,289 2,003,944
7.00% due 06/15/24 3,900,778 3,840,511
8.00% due 06/15/24 2,935,300 3,006,803
8.00% due 07/15/24 978,555 982,821
8.00% due 08/15/24 978,278 1,002,109
8.00% due 09/15/24 2,992,669 3,065,571
8.00% due 10/15/24 7,872,685 8,064,465
8.00% due 11/15/24 978,684 1,002,524
8.00% due 04/15/25 3,949,789 4,046,005
73,118,918
U.S. TREASURY ISSUES (43.1%):
U.S. Treasury Notes
8.75% due 10/15/97 $ 1,000,000 $ 1,060,620
8.00% due 08/15/99 500,000 536,485
6.375% due 01/15/00 1,700,000 1,725,228
8.50% due 02/15/00 800,000 880,248
6.75% due 04/30/00 1,000,000 1,030,310
8.875% due 05/15/00 1,000,000 1,120,780
7.875% due 08/15/01 5,900,000 6,441,148
7.50% due 05/15/02 1,150,000 1,238,044
6.375% due 08/15/02 1,000,000 1,011,870
5.75% due 08/15/03 20,000,000 19,390,600
6.50% due 05/15/05 1,000,000 1,021,250
10.00% due 05/15/10 16,500,000 20,800,230
56,256,813
TOTAL INVESTMENTS IN SECURITIES (cost: $123,987,766) (b) $129,375,731
</TABLE>
See accompanying notes to investments in securities.
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) The cost of securities for federal income tax purposes was $124,074,806 and
the aggregate gross unrealized appreciation and depreciation based on this
cost was:
Gross unrealized appreciation....... $ 6,416,590
Gross unrealized depreciation....... (1,115,665)
Net unrealized appreciation....... $ 5,300,925
FEDERAL INCOME TAX INFORMATION
Information for federal income tax purposes is presented as an aid to
shareholders in reporting certain dividend distributions for the year ended June
30, 1995 shown below. Shareholders should consult a tax adviser on how to report
these distributions for state and local purposes.
LONG-TERM CAPITAL GAIN DISTRIBUTIONS
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C INSTITUTIONAL CLASS
PAYABLE DATE PER SHARE PER SHARE PER SHARE PER SHARE
<S> <C> <C> <C>
December 31, 1994......... $ .0072 $.0072 -- $.0072
</TABLE>
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, Minnesota 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota 55402
VOYAGEUR
U.S. GOVERNMENT SECURITIES FUND
ANNUAL REPORT
Dated June 30, 1995
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, Minnesota 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota 55402
BULK RATE
U.S. Postage
PAID
Minneapolis, MN.
Permit #3322
VOYAGEUR
90 SOUTH SEVENTH STREET, SUITE 4400
MINNEAPOLIS, MINNESOTA 55402.4115
