U.S. GOVERNMENT SECURITIES FUND
S E M I - A N N U A L R E P O R T
Dated December 31 1995
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds
as your objectives or market conditions change.
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
Voyageur ARIZONA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur NATIONAL Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
Voyageur KANSAS Tax Free Fund
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
Voyageur ARIZONA Insured Voyageur MISSOURI Insured
Tax Free Fund Tax Free Fund
Voyageur CALIFORNIA Insured Voyageur NATIONAL Insured
Tax Free Fund Tax Free Fund
Voyageur FLORIDA Voyageur OREGON
Tax Free Fund Tax Free Fund
Voyageur MINNESOTA Insured Fund Voyageur WASHINGTON
Tax Free Fund
VOYAGEUR LIMITED TERM FUNDS seek to preserve original investment principal while
providing income free from both Federal income taxes and state income taxes
(where applicable). The Funds invest in intermediate term investment grade
municipal bonds.
Voyageur FLORIDA Limited Term Tax Free Fund Voyageur NATIONAL Limited
Voyageur MINNESOTA Limited Term Tax Free Fund Term Tax Free Fund
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
Voyageur AGGRESSIVE GROWTH Fund Voyageur GROWTH Stock Fund
Voyageur GROWTH AND INCOME Fund Voyageur INTERNATIONAL Equity Fund
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur MUNICIPAL CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur GOVERNMENT CASH Series Voyageur PRIME CASH Series
Voyageur MINNESOTA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
Dear Shareholder:
My last report to you, dated June 30, 1995, discussed the bond market's dramatic
rebound in the first half of 1995. This good news continued for Voyageur U.S.
Government Securities Fund investors in this reporting period.
As you may recall, 1994 represented one of the most difficult years for fixed
income investors since the 1920s. Voyageur's investment strategy, however,
emphasizes total return over the long term. Shareholders who maintained a long
term outlook through 1994 are to be congratulated for their patience, and
moreover, have been rewarded for this patience in 1995.
We have had some interesting and unique economic and political developments
during this reporting period. Federal funds rates (the rate that Federal Reserve
member banks charge each other for overnight borrowings) were lowered by a total
of .50% (50 basis points). Also during this reporting period, Congress
continues--even at the time of this printing--to debate how to balance the
federal budget.
In the following pages, Jane Wyatt, the Fund's manager and Voyageur's Chief
Investment Officer, will elaborate on these and other points of interest related
to your Fund. She will also share Voyageur's economic outlook.
Finally, I'd like to apprise you of the amount of capital appreciation and
current income generated by the Fund on your behalf during the reporting period.
<TABLE>
<CAPTION>
TOTAL NET
NET ASSET NET ASSET ASSETS
VALUE VALUE DIVIDENDS END OF
BEGINNING END PAID PER PERIOD
OF PERIOD OF PERIOD SHARE (000'S)
--------- --------- ----- -------
PERIOD
- ------
Period ended December 31, 1995:
<S> <C> <C> <C> <C>
Class A Shares $10.37 $10.73 $0.29 $74,761
Class B Shares 10.38 10.74 0.27 934
Class C Shares 10.36 10.72 0.26 280
Institutional Class Shares 10.37 10.74 0.29 44,566
</TABLE>
If you have any questions about your Fund, please call Voyageur Shareholder
Services Department at (800) 545-3863 or talk with your investment advisor.
Thank you for investing with Voyageur.
Sincerely,
John G. Taft
President
Voyageur U.S. Government Securities Fund
DISCUSSION OF FUND PERFORMANCE BY JANE M. WYATT
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 19 YEARS EXPERIENCE IN FIXED INCOME TRADING AND RISK MANAGEMENT.
The Fund's performance results for the six-month reporting period ended December
31, 1995, were as follows: the Voyageur U.S. Government Securities Fund achieved
a total return at net asset value of 6.56% for Class A shares; 6.29% for Class B
shares; 6.17% for Class C shares; and 6.56% for Institutional Class Shares. The
Fund (A shares) received a 3 star rating for risk adjusted return as of December
31, 1995 from Morningstar. The Voyageur U.S. Government Securities Fund was
ranked as follows among all general government bond funds as of December 31,
1995: for 1 year, it was ranked 23 of 361 funds; for 3 years, it was ranked 16
of 184 funds; and for 5 years, it was ranked 9 of 117 funds. (Note: Morningstar
proprietary rating reflect historical risk-adjusted performance as of 12/31/95.
The ratings are subject to change every month. The General Government Bond
Objective seeks income as blend of mortgage-backed securities, Treasuries, and
agency securities. Also keep in mind that past performance is no guarantee of
future results.)
As John Taft mentioned in his introduction, the Federal Reserve Board modestly
lowered the federal funds rate on two separate occasions during this reporting
period. The fed funds rate was reduced by .25% (25 basis points) in July, then
again by the same amount in December. Moreover, on January 31, 1996, the federal
funds rate was dropped by 25 basis points, and at this time, the market is
waiting for another cut.
In the political arena, Congress continues--at the time of this printing--to
debate balancing the federal budget. During this reporting period, the
Congressional impasse affected many Americans through periods of lessened
government services and partial shutdowns. The Federal Reserve Board and its
chairman, Alan Greenspan, are paying close attention to the debate and would
obviously be pleased with concrete evidence of fiscal discipline. Although the
Fed does not anticipate a recession, Greenspan's recent Humphey-Hawkins
testimony reflected his desire to keep the funds rate at a neutral, not
restrictive level.
The Voyageur U.S. Government Securities Fund is comprised of U.S. Treasury
securities and GNMA mortgage obligations. As you know, bond funds--even when
made up of U.S. government guaranteed securities--can fluctuate in value. The
guarantee assures that interest will be paid on time and that the bonds will be
redeemed at face value at maturity. Until then, market value of such bonds can
(and does) vary. U.S. Treasury bonds are thought to have no credit risk, because
they are backed by the full faith and credit of the United States Treasury, but
U.S. Treasury bonds are still subject to market risk, sometimes called interest
rate risk, because prices are directly affected by changes in interest rates.
Through much of the reporting period, we used mortgage-backed securities very
aggressively. We allocated a greater percentage of the Fund to defensive GNMA
mortgage-backed bonds than to Treasuries. We did this to add income and to be
somewhat more defensive in a volatile market environment. At the beginning of
the reporting period, the Fund was comprised of approximately 57% of the Fund in
mortgage-backed securities and 43% of the Fund in Treasuries. We kept a similar
weighting in mortgage-backed securities throughout most of the period. At the
end of the reporting period, we positioned the Fund differently with
approximately 56% of the Fund in Treasuries and 44% in mortgage-backed
securities. The downward trend in mortgage rates raises the risk of prepayments.
We have anticipated that refinancings will occur, but far below the levels
experienced in 1993's market.
The Fund performed very well in 1995 and those investors who weathered 1994s
bear market have experienced a very good year in 1995, as this report confirms.
Our outlook for 1996 includes continued low rates of inflation. We expect a
Consumer Price Index (CPI) increase of 2.5% to 2.8%. We also expect slowing of
economic growth, as measured by a rise of approximately 2.0% to 2.4% in the U.S.
Gross Domestic Product. We also expect stable to slightly declining interest
rates, perhaps further reductions of .5% to .75%, which will likely occur well
in advance of the November elections.
In conclusion, Voyageur believes that 1996 will be a favorable one for the
market, but we advise investors against expectations of total return levels
achieved in 1995.
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at market value (note 1)
(identified cost: $113,630,676)............................................................... $120,164,062
Accrued interest receivable ..................................................................... 1,217,645
Receivable for Fund shares sold.................................................................. 62,736
-------------
Total assets ................................................................................. 121,444,443
-------------
LIABILITIES
Bank overdraft................................................................................... 176,450
Dividends payable to shareholders................................................................ 579,870
Distribution fees payable........................................................................ 79,841
Other accrued expenses .......................................................................... 65,287
-------------
Total liabilities............................................................................. 901,448
-------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK .............................................. $ 120,542,995
=============
Represented by:
Capital stock - authorized 10,000,000,000 shares of $.01 par value............................ 112,311
Additional paid-in capital.................................................................... 120,431,132
Undistributed net investment income........................................................... 171,582
Accumulated net realized loss from investments ............................................... (6,705,416)
Unrealized appreciation of investments ....................................................... 6,533,386
-------------
TOTAL NET ASSETS............................................................................ $ 120,542,995
=============
Net assets applicable to outstanding Class A Shares.............................................. $ 74,762,157
=============
Net assets applicable to outstanding Class B Shares.............................................. $ 934,334
=============
Net assets applicable to outstanding Class C Shares.............................................. $ 280,376
=============
Net assets applicable to outstanding Institutional Class Shares.................................. $ 44,566,128
=============
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A Shares (6,966,672 shares outstanding) (note 4)........................................ $10.73
======
Class B Shares (87,007 shares outstanding) (note 4)........................................... $10.74
======
Class C Shares (26,155 shares outstanding) (note 4)........................................... $10.72
======
Institutional Class Shares (4,151,248 shares outstanding) (note 4)............................ $10.74
======
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Interest...................................................................................... $4,482,886
----------
Expenses (note 3):
Investment advisory and management fee........................................................ 321,840
Dividend disbursing, administrative and accounting services fees.............................. 94,120
Distribution fees (Class A)................................................................... 93,865
Distribution fees (Class B)................................................................... 2,608
Distribution fees (Class C)................................................................... 1,234
Distribution fees (Institutional Class)....................................................... 66,100
Printing, postage and supplies................................................................ 14,338
Audit fees.................................................................................... 13,778
Legal fees.................................................................................... 10,081
Custodian fees................................................................................ 15,398
Directors' fees............................................................................... 3,434
Registration fees............................................................................. 20,953
Other......................................................................................... 14,887
----------
Total expenses.............................................................................. 672,636
Less: Expenses waived or absorbed by the distributor.......................................... (668)
----------
Net expenses before expenses paid indirectly.................................................. 671,968
Less: Expenses paid indirectly................................................................ (204)
----------
Total net expenses.......................................................................... 671,764
----------
Investment income - net..................................................................... 3,811,122
----------
Realized and unrealized gain (loss) on investments (note 2):
Realized gain on security transactions........................................................ 3,058,328
Net change in unrealized appreciation or depreciation of investments.......................... 1,145,421
----------
Net gain on investments..................................................................... 4,203,749
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................. $8,014,871
==========
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, 1995 JUNE 30,
Operations: (UNAUDITED) 1995
----------------- ------------
<S> <C> <C>
Investment income - net................................................. $ 3,811,122 $ 8,267,737
Net realized gain (loss) on investments................................. 3,058,328 (9,763,744)
Net change in unrealized appreciation or depreciation of investments.... 1,145,421 18,185,818
------------ ------------
Net increase in net assets resulting from operations.................. 8,014,871 16,689,811
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A............................................................... (2,105,946) (4,919,889)
Class B............................................................... (12,524) (2,497)
Class C............................................................... (5,957) (1,136)
Institutional Class................................................... (1,493,580) (3,344,215)
Distributions in excess of net investment income:
Class A............................................................... -- (12,813)
Class B............................................................... -- (7)
Class C............................................................... -- (3)
Institutional Class................................................... -- (8,710)
Net realized gain on investments:
Class A............................................................... -- (160,578)
Class B............................................................... -- (36)
Institutional Class................................................... -- (100,354)
------------ ------------
Total distributions................................................. (3,618,007) (8,550,238)
------------ ------------
Share transactions: (note 4)
Proceeds from sale of shares:
Class A (note 3)...................................................... 3,679,387 9,513,749
Class B............................................................... 769,953 130,370
Class C............................................................... 49,659 218,517
Institutional Class................................................... 8,013,049 17,648,013
Net asset value of shares issued in reinvestment of net investment income and
net realized gain distributions:
Class A............................................................. 1,215,802 3,394,023
Class B............................................................. 3,572 952
Class C............................................................. 1,008 564
Institutional Class................................................. 859,722 1,908,755
Payments for redemption of shares:
Class A............................................................... (8,586,528) (26,146,449)
Class B (note 3)...................................................... (3,734) (22,398)
Class C............................................................... -- (10)
Institutional Class................................................... (20,545,690) (18,678,004)
------------ ------------
Decrease in net assets from share transactions.......................... (14,543,800) (12,031,918)
------------ ------------
Total decrease in net assets.......................................... (10,146,936) (3,892,345)
Net assets at beginning of year............................................ 130,689,931 134,582,276
------------ ------------
Net assets at end of year (including undistributed (distributions in excess of)
net investment income of $171,852 and $(21,533), respectively).......... $120,542,995 $130,689,931
============ ============
See accompanying notes to financial statements.
</TABLE>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(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 seeks high current income from investments issued, guaranteed or otherwise
backed by the full faith and credit of the U.S. Government. 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 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:
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 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 and 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 $88,062,264 and $101,477,682, respectively,
for the six months ended December 31, 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 six months ended
December 31, 1995, Fund Distributors voluntarily waived Class B distribution
fees of $668.
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 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 $204 in credits on uninvested cash balances
held by the Fund at the custodian which were used to reduce fees for custodial
services provided by the custodian bank.
Sales charges paid by Class A shareholders were $81,831 during the six
months ended December 31, 1995. Of this amount, Fund Distributors received
$10,106. Contingent deferred sales charges paid by Class B shareholders were
$136 during the six months ended December 31, 1995.
(4) SHARE TRANSACTIONS
Transactions in shares for the periods ended December 31, 1995 and June 30,
1995 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------ ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, 1995 JUNE 30, DECEMBER 31, 1995 JUNE 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------- ------------- --------- --------
<S> <C> <C> <C> <C>
Shares sold...................... 353,915 987,529 73,669 13,081
Shares issued for
reinvested distributions...... 117,168 347,009 343 95
Shares redeemed.................. (821,205) (2,693,318) (364) (2,323)
------------- ------------- --------- --------
Increase (decrease) in shares
outstanding................... (350,122) (1,358,780) 73,648 10,853
============ ============= ========= ========
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL
CLASS C CLASS
------------------------------------- -------------------------------
SIX MONTHS PERIOD FROM SIX MONTHS YEAR
ENDED JANUARY 10, 1995* ENDED ENDED
DECEMBER 31, 1995 TO JUNE 30, DECEMBER 31, 1995 JUNE 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
---------------- ---------------- ----------------- ---------
<S> <C> <C> <C> <C>
Shares sold...................... 4,766 21,237 769,697 1,832,690
Shares issued for
reinvested distributions...... 97 56 82,822 194,552
Shares redeemed.................. -- (1) (1,949,005) (1,895,210)
--------- ---------- ------------ -----------
Increase (decrease) in shares
outstanding................... 4,863 21,292 (1,096,486) 132,032
========= ========= ============ ===========
_________________________________
* Commencement of operations.
</TABLE>
(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
DECEMBER 31, 1995 YEAR ENDED JUNE 30,
(UNAUDITED) 1995 1994 1993 1992 1991
Net asset value: --------- ----- ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Beginning of period.................... $10.37 $9.76 $10.99 $10.46 $ 9.99 $9.77
------ ----- ------ ------ ------ -----
Operations:
Net investment income.................. .31 .62 .55 .61 .67 .78
Net realized and unrealized
gain (loss) on investments........... .34 .63 (.94) .83 .76 .32
------ ----- ------ ------ ------ -----
Total from operations.............. .65 1.25 (.39) 1.44 1.43 1.10
------ ----- ------ ------ ------ -----
Distributions to shareholders:
From net investment income............. (.29) (.62) (.55) (.61) (.67) (.78)
From net realized gains................ -- (.02) (.29) (.30) (.29) (.10)
------ ----- ------ ------ ------ -----
Total distributions.................. (.29) (.64) (.84) (.91) (.96) (.88)
------ ----- ------ ------ ------ -----
Net asset value:
End of period.......................... $10.73 $10.37 $ 9.76 $10.99 $10.46 $9.99
====== ====== ====== ====== ====== =====
Total investment return (d)............... 6.56% 13.45% (3.95)% 14.25% 14.68% 11.67%
Net assets at end of
period (000's omitted)................. $74,761 $75,886 $84,660 $112,604 $53,332 $22,176
Ratios:
Ratio of expenses to
average daily net assets (b)......... 1.04%(e) .95% .96% 1.10% 1.00% .95%
Ratio of net investment income
to average daily net assets (b)...... 5.93%(e) 6.38% 5.10% 5.61% 6.60% 7.95%
Portfolio turnover rate (excluding
short-term securities)............... 69.28% 144.39% 124.38% 175.02% 198.54% 186.15%
See accompanying notes to Financial Highlights.
</TABLE>
(5) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------- ----------------------------
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED YEAR JUNE 6, ENDED JANUARY 10,
DECEMBER 31, ENDED 1994(c) TO DECEMBER 31, 1995(c) TO
1995 JUNE 30, JUNE 30, 1995 JUNE 30,
(UNAUDITED) 1995 1994 (UNAUDITED) 1995
------------- -------- ----------- ------------- -----------
Net asset value:
<S> <C> <C> <C> <C> <C>
Beginning of period................ $10.38 $9.75 $10.05 $10.36 $9.48
------ ----- ------ ------ -----
Operations:
Net investment income.............. .28 .56 .01 .27 .27
Net realized and unrealized
gain (loss) on investments....... .35 .65 (.28) .35 .88
------ ----- ------ ------ -----
Total from operations.......... .63 1.21 (.27) .62 1.15
------ ----- ------ ------ -----
Distributions to shareholders:
From net investment income......... (.27) (.56) (.01) (.26) (.27)
From net realized gains............ -- (.02) (.02) -- --
------ ----- ------ ------ -----
Total distributions.............. (.27) (.58) (.03) (.26) (.27)
------ ----- ------ ------ -----
Net asset value:
End of period...................... $10.74 $10.38 $9.75 $10.72 $10.36
====== ====== ===== ====== ======
Total investment return (d)........... 6.29% 12.90% (2.68)% 6.17% 12.73%
Net assets at end of
period (000's omitted)............. $934 $139 $24 $280 $221
Ratios:
Ratio of expenses to
average daily net assets (f)..... 1.44%(e) 1.54% .30%(a) 1.76%(e) 1.62%(e)
Ratio of net investment income
to average daily net assets (f).. 5.29%(e) 5.56% .11%(a) 5.12%(e) 5.10%(e)
Portfolio turnover rate (excluding
short-term securities)........... 69.28% 144.39% 124.38% 69.28% 144.39%
See accompanying notes to Financial Highlights.
</TABLE>
(5) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
--------------------------------------------------------
SIX MONTHS YEAR PERIOD FROM
ENDED ENDED JUNE 6, 1994(c)
DECEMBER 31, 1995 JUNE 30, TO JUNE 30,
(UNAUDITED) 1995 1994
----------------- --------- ---------------
Net asset value:
<S> <C> <C> <C>
Beginning of period......................... $10.37 $9.75 $10.05
------ ----- ------
Operations:
Net investment income....................... .31 .62 .01
Net realized and unrealized
gain (loss) on investments................ .35 .64 (.28)
------ ----- ------
Total from operations................... .66 1.26 (.27)
------ ----- ------
Distributions to shareholders:
From net investment income.................. (.29) (.62) (.01)
From net realized gains..................... -- (.02) (.02)
------ ----- ------
Total distributions....................... (.29) (.64) (.03)
------ ----- ------
Net asset value:
End of period............................... $10.74 $10.37 $9.75
====== ====== =====
Total investment return (d).................... 6.56% 13.57% (2.64)%
Net assets at end of
period (000's omitted)...................... $44,566 $54,445 $49,898
Ratios:
Ratio of expenses to
average daily net assets (g).............. 1.05%(e) .94% .25%(a)
Ratio of net investment income
to average daily net assets (g)........... 5.93%(e) 6.39% .16%(a)
Portfolio turnover rate (excluding
short-term securities).................... 69.28% 144.39% 124.38%
See accompanying notes to Financial Highlights.
</TABLE>
(5) FINANCIAL HIGHLIGHTS (CONTINUED)
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 $119, $1,582, $30,000, $93,839 and $41,921 for the
periods ended December 31, 1995, 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 1.04% for the
period ended December 31, 1995, .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 5.93%, 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 $669 and $65 for Class B Shares and $0 and $6 for
Class C Shares during the periods ended December 31, 1995 and June 30,
1995, respectively. 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% and 1.69 % for Class B and 1.76% and 1.65% for Class
C Shares during the periods ended December 31, 1995 and June 30, 1995,
respectively. The ratio of net investment income to average daily net
assets would have been 5.04% and 5.41% for Class B Shares and 5.12% and
5.07% for Class C Shares for the periods ended December 31, 1995 and June
30, 1995, respectively.
(g) The Fund's advisor waived, absorbed or reduced expenses representing
voluntary waivers of $84 and $1,066 for Institutional Class Shares during
the periods ended December 31, 1995 and June 30, 1995, respectively. 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 1.05% and
0.94 % for Institutional Class Shares during the periods ended December 31,
1995 and June 30, 1995, respectively. The ratio of net investment income to
average daily net assets would have been 5.93% and 6.39% for Institutional
Class Shares for the periods ended December 31, 1995 and June 30, 1995,
respectively.
<TABLE>
<CAPTION>
VOYAGEUR U.S. GOVERNMENT SECURITIES FUND
INVESTMENTS IN SECURITIES (UNAUDITED) DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE(A)
- -------------------------------------------------------------------------------------------------------------------
(Percentage of each investment category relates to total net assets)
BONDS (99.7%):
U.S. GOVERNMENT AGENCY OBLIGATIONS (44.6%):
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government National Mortgage Association
Mortgage-Backed Pass-Thru Certificates
10.00% due 12/20/02 $ 97,638 $ 101,574
10.00% due 03/15/16 99,270 109,826
8.00% due 01/15/17 76,835 80,909
7.00% due 05/15/23 883,198 895,774
7.00% due 06/15/23 2,637,218 2,670,315
7.00% due 07/15/23 3,882,609 3,931,336
7.00% due 11/15/23 1,073,892 1,087,369
7.00% due 01/15/24 1,860,369 1,885,338
7.00% due 02/15/24 9,309,211 9,427,672
6.50% due 03/15/24 6,034,713 5,988,728
7.00% due 03/15/24 3,002,639 3,040,322
7.00% due 04/15/24 3,058,345 3,096,728
6.50% due 05/15/24 6,029,867 5,983,920
7.00% due 05/15/24 9,426,046 9,544,343
7.00% due 06/15/24 3,877,139 3,925,797
7.00% due 09/15/25 1,956,464 1,981,018
------------
53,750,969
------------
U.S. TREASURY ISSUES (55.1%):
- -------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes
8.75% due 10/15/97 1,000,000 1,059,840
8.00% due 08/15/99 500,000 543,280
8.50% due 02/15/00 500,000 557,185
6.75% due 04/30/00 1,000,000 1,052,330
8.875% due 05/15/00 1,000,000 1,135,000
5.625% due 11/30/00 11,000,000 11,102,520
7.875% due 08/15/01 14,000,000 15,635,620
7.50% due 05/15/02 1,150,000 1,275,063
6.375% due 08/15/02 2,000,000 2,099,080
5.75% due 08/15/03 1,500,000 1,518,045
5.875% due 11/15/05 10,000,000 10,222,200
10.00% due 05/15/10 15,500,000 20,212,930
------------
66,413,093
------------
TOTAL INVESTMENTS IN SECURITIES (cost: $113,630,676) (b) $120,164,062
============
</TABLE>
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 $113,717,716 and
the aggregate gross unrealized appreciation and depreciation based on this
cost was:
Gross unrealized appreciation...... $6,637,117
Gross unrealized depreciation...... (190,771)
----------
Net unrealized appreciation...... $6,446,346
==========
