MISSOURI INSURED TAX FREE FUND
ANNNUAL REPORT
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:
1995 was an excellent year for municipal bond fund investors and I am pleased to
report that your Fund did extremely well.
As you may recall, the previous year, 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. This patience was rewarded in 1995.
Two of the major factors contributing to the resurgence of the municipal bond
market this past year were:
* Progressively lower interest rates throughout the year. (Falling interest
rates directly increases the value of your Fund's portfolio, and hence,
your shares.)
* A narrowing "spread" between yields on higher quality bonds versus lower
quality bonds. (Your Fund benefited from maintaining a large position in
quality bonds.)
In the following pages, Beth Howell, the Portfolio Manager, will elaborate on
these and other points of interest regarding the municipal bond market in 1995.
She will also share Voyageur's economic outlook for the next fiscal year.
Finally, I'd like to apprise you of the amount of capital appreciation and
current income generated by the Fund on your behalf in 1995.
<TABLE>
<CAPTION>
TOTAL NET
NET ASSET NET ASSET ASSETS
VALUE VALUE DIVIDENDS END OF
BEGINNING END PAID PER PERIOD
PERIOD OF PERIOD OF PERIOD SHARE (000'S)
- ------ ----------- --------- ----------- ---------
Period ended December 31, 1995:
<S> <C> <C> <C> <C>
Class A Shares $9.27 $10.54 $0.54 $50,211
Class B Shares 9.27 10.54 0.49 6,195
Class C Shares 10.36* 10.54 0.05 20
_________________________________
* Net asset value at November 11, 1995 (commencement of operations)
</TABLE>
I will be reporting to you again in August, 1996 to review the first half of the
coming year. In the interim, if you have any questions or comments about your
Fund, please call Voyageur's Shareholder Services Department at (800)545-3863 or
your financial advisor.
Thank you for investing with Voyageur.
Sincerely,
John G. Taft
President
Voyageur Missouri Insured Tax Free Fund
FUND INVESTMENT OBJECTIVE AND STRATEGY
The primary objective of the Voyageur Missouri Insured Tax Free Fund is to seek
as high a level of current income exempt from federal income tax and from state
income tax as is consistent with preservation of capital.
The Missouri Insured Tax Free Fund generally invests in long-term, insured
municipal bonds. The Fund is exempt from federal income tax and Missouri state
income tax. We believe that high quality municipal bonds for the Missouri
Insured Tax Free Fund offer the best value in today's interest rate environment.
The Voyageur Missouri Insured Tax Free Fund adopted a modification of an
investment policy which will permit this Fund to retain insured municipal bonds
in its portfolio the rating of which is not lower than AA by Standard & Poor's
Ratings Service or Aa by Moody's Investor Service so long as such AA or Aa
insured municipal bonds do not exceed 35% of the Fund's total assets. Such bonds
must still have a AAA or Aaa rating at the time of initial investment by the
Fund.
DISCUSSION OF FUNDS PERFORMANCE
by Elizabeth H. Howell
MS. HOWELL IS A SENIOR VICE PRESIDENT AND TAX EXEMPT PORTFOLIO MANAGER FOR
VOYAGEUR FUND MANAGERS. SHE HAS MANAGED THE VOYAGEUR MISSOURI INSURED TAX FREE
FUND SINCE ITS INCEPTION.
We at Voyageur are pleased to report the 1995 performance results of the
Voyageur Missouri Insured Tax Free Fund. For the fiscal year ending December 31,
1995, only Class A and Class B Shares were in operation for the entire year. The
Fund achieved a total return of +19.96% (for Class 'A' shares, assuming purchase
of shares at net asset value and reinvestment of dividend and capital gains) and
+19.18% (for Class 'B' shares, assuming reinvestment of dividends and capital
gains). For additional information about total returns achieved by the Fund over
other time frames and including the effect of sales charges, please refer to the
chart on page 7.
FACTORS AFFECTING FUND PERFORMANCE IN 1995
As previously discussed, a general downward trend in prevailing interest rates
had a positive impact on the net asset value of Fund shares in 1995. The Fund
was able to achieve an excellent total return relative to other Missouri insured
tax free funds during this period. (According to Lipper Analytical Services,
your Fund was ranked #1 of 17 Missouri municipal bond funds for total return in
1995. The Lipper Missouri group's total return averaged +17.42% during this
period.) Keep in mind, however, that past performance does not guarantee future
results.
Your Fund was able to capture significant capital appreciation through duration
management. Longer duration funds experience wider fluctuations in market prices
than shorter duration funds. The Voyageur Missouri Insured Tax Free Fund started
1995 with an average weighted duration of over 11.2 years which allowed for a
significant increase in net asset value. After having captured this market
rally, the duration of the Fund was systematically reduced, closing the year at
approximately 7.9 years.
The Voyageur Missouri Insured Tax Free Fund also benefited from relative changes
in value between high quality bonds and lower quality bonds. As interest rate
spreads between these two classes of municipal bonds narrowed, high quality
bonds (which had been dramatically oversold during the 1994 bear market) gained
significant relative value. As of December 31, 1995 the Fund was comprised of
100% AAA and/or Aaa bonds.
Finally, supply and demand trends of Missouri municipal bonds benefited Fund
shareholders. New issuance of municipal bonds remained low. A lower level of
supply of Missouri bonds favors existing bond holders, particularly large
institutional buyers, such as mutual funds.
OUTLOOK FOR 1996
Our outlook for the Missouri municipal bond market remains bullish. However, we
do not anticipate as significant levels of total return in the upcoming year as
was achieved in 1995.
Our 1996 economic outlook calls for:
* CONTINUED LOW RATES OF INFLATION. We expect a Consumer Price Index (CPI)
increase of from 2.5% to 2.8%.
* SLOWING OF ECONOMIC GROWTH. In 1995 U.S. Gross Domestic Product (GDP)
climbed about 3%. Voyageur's 1996 projection for GDP calls for an increase
of about 2.4%.
* STABLE TO SLIGHTLY DECLINING INTEREST RATES. During 1995 the Federal
Reserve Board encouraged lower interest rates by reducing the Federal Funds
Rate by a total of .5%. (Rates were subsequently lowered by an additional
.25% in February 1996.) We expect further reductions of .5% to .75%, which
will likely occur well in advance of the November elections.
In conclusion, Voyageur believes the municipal bond market will have a good year
in 1996. However, we advise against expectations of total return levels achieved
in 1995.
PURSUANT TO RULE 232.304(a) OF REGULATION S-T THE FOLLOWING IS A TABULAR
REPRESENTATION OF A LINE GRAPH FOR VOYAGEUR MISSOURI INSURED TAX FREE FUND
PORTFOLIO ABSTRACT FOR THE PERIOD ENDED DECEMBER 31, 1995. THE DATA REPRESENTS
THE CUMULATIVE TOTAL RETURN OF A HYPOTHETICAL INVESTMENT IN CLASS A SHARES OF
$10,000 MADE ON THE DATE THE FUND COMMENCED OPERATIONS THROUGH DECEMBER 31,
1995.
ENDING VALUE ENDING VALUE ENDING VALUE
WITH SALES WITHOUT SALES LEHMAN BROS.
DATE CHARGE CHARGE BOND INDEX
- ---- ------ ------ ----------
Nov-92 9525 10000 10000
Nov-92 9584.22 10062.18 10229
Dec-92 9712.04 10196.37 10339.4732
Jan-93 9907.35 10401.42 10454.24135
Feb-93 10083.93 10586.81 10878.68354
Mar-93 10104.48 10608.38 10747.05147
Apr-93 10143.14 10648.96 10872.79197
May-93 10261.2 10772.92 10943.46512
Jun-93 10399.48 10918.08 11128.40969
Jul-93 10420.81 10939.15 11151.77935
Aug-93 10630.1 11158.85 11391.54262
Sep-93 10859.76 11399.93 11524.82367
Oct-93 10929.25 11472.88 11539.80594
Nov-93 10766.3 11301.83 11431.33176
Dec-93 11009.19 11556.79 11686.25046
Jan-94 11130.01 11683.63 11821.81097
Feb-94 10841.57 11380.84 11491.98244
Mar-94 10344.85 10859.41 10953.00845
Apr-94 10217.94 10726.19 11064.72914
May-94 10329.25 10843.04 11172.05701
Jun-94 10252.58 10762.55 11089.38379
Jul-94 10459.65 10979.92 11321.1519
Aug-94 10456.46 10976.57 11335.8694
Sep-94 10272.85 10783.83 11148.82755
Oct-94 10024.16 10522.77 10922.50635
Nov-94 9763.17 10248.8 10724.809
Dec-94 10016.74 10514.98 10987.56682
Jan-95 10369.26 10885.04 11352.35403
Feb-95 10777.81 11313.9 11702.00652
Mar-95 10892.27 11434.06 11831.89879
Apr-95 10908.04 11450.62 11842.5475
May-95 11288.2 11849.68 12241.64134
Jun-95 11160.22 11715.34 12106.98328
Jul-95 11187.89 11744.39 12203.83915
Aug-95 11305.26 11867.59 12368.59098
Sep-95 11456.6 12026.46 12453.93426
Oct-95 11676.12 12256.9 12665.65115
Nov-95 11908.19 12500.51 12893.63287
Dec-95 12015.98 12613.67 13026.43729
VOYAGEUR MISSOURI INSURED TAX FREE FUND
AVERAGE ANNUAL TOTAL RETURNS
(CLASS A SHARES)
----------------
SINCE
1 Year 11/2/92**
------ ---------
Without Sales Charge 19.96% 7.61%
With Sales Charge* 14.26% 5.98%
Lehman Bros. Long 18.56% 9.46%
Insured Municipal
Bond Index
VOYAGEUR MISSOURI INSURED TAX FREE FUND
AVERAGE ANNUAL TOTAL RETURNS
(CLASS B SHARES)
----------------
SINCE
1 Year 3/12/94**
------ ---------
Without Contingent 19.18% 6.30%
Deferred Sales Charge
With Contingent 15.18% 4.18%
Deferred Sales Charge***
VOYAGEUR MISSOURI INSURED TAX FREE FUND
TOTAL RETURNS
(CLASS C SHARES)
----------------
SINCE
-----
11/11/95**
2.24%
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
Voyageur Investment Trust:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of Voyageur Missouri
Insured Tax Free Fund (a fund within Voyageur Investment Trust) as of December
31, 1995, the related statement of operations for the year ended December 31,
1995, the statements of changes in net assets for the year ended December 31,
1995, the two-month period ended December 31, 1994 and the year ended October
31, 1994 and the financial highlights for the year ended December 31, 1995, the
two-month period ended December 31, 1994, the year ended October 31, 1994 and
the period from November 2, 1992, commencement of operations, to October 31,
1993. 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 Missouri Insured Tax Free Fund as of December 31, 1995 and
the results of its operations, changes in its net assets and the financial
highlights for the periods stated in the first paragraph above, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 9, 1996
<TABLE>
<CAPTION>
VOYAGEUR MISSOURI INSURED TAX FREE FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at market value (note 1)
(identified cost: $53,201,156)................................................... $55,725,926
Accrued interest receivable......................................................... 1,026,459
-----------
Total assets..................................................................... 56,752,385
-----------
LIABILITIES
Bank overdraft...................................................................... 9,154
Dividends payable to shareholders................................................... 235,362
Payable for Fund shares redeemed.................................................... 43,753
Distribution fees payable........................................................... 4,706
Other accrued expenses.............................................................. 33,133
-----------
Total liabilities ............................................................... 326,108
-----------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES......................................... $56,426,277
===========
Represented by:
Paid-in capital (note 1)......................................................... $54,651,109
Undistributed net investment income.............................................. 79
Accumulated net realized loss on investments (note 1)............................ (749,681)
Unrealized appreciation of investments........................................... 2,524,770
-----------
TOTAL NET ASSETS............................................................... $56,426,277
===========
Net assets applicable to outstanding Class A Shares................................. $50,211,155
===========
Net assets applicable to outstanding Class B Shares................................. $ 6,194,756
===========
Net assets applicable to outstanding Class C Shares................................. $ 20,366
===========
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of beneficial interest outstanding: 4,764,581 (note 4).......... $10.54
======
Class B - Shares of beneficial interest outstanding: 587,970 (note 4)............ $10.54
======
Class C - Shares of beneficial interest outstanding: 1,932 (note 4).............. $10.54
======
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR MISSOURI INSURED TAX FREE FUND
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C>
Interest..................................................................... $2,860,527
----------
Expenses (note 3):
Investment advisory and management fee....................................... 250,578
Dividend-disbursing, administrative and accounting services fees............. 111,588
Printing, postage and supplies............................................... 11,181
Audit and accounting fees.................................................... 10,464
Legal fees................................................................... 1,424
Distribution fees - Class A.................................................. 113,879
Distribution fees - Class B.................................................. 44,885
Distribution fees - Class C.................................................. 28
Directors' fees.............................................................. 2,483
Registration fees............................................................ 2,768
Custodian fees............................................................... 17,128
Other ....................................................................... 2,754
----------
Total expenses............................................................. 569,160
Less: Expenses waived or absorbed........................................... (295,625)
----------
Net expenses before earnings credits on uninvested cash...................... 273,535
Less: Earnings credits on uninvested cash................................... (17,128)
----------
Total net expenses......................................................... 256,407
----------
Investment income - net.................................................... 2,604,120
----------
Realized and unrealized gain (loss) on investments:
Realized loss on security transactions (note 2).............................. (376,865)
Net change in unrealized appreciation or depreciation of investments......... 6,566,685
----------
Net gain on investments.................................................... 6,189,820
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $8,793,940
==========
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR MISSOURI INSURED TAX FREE FUND
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------
YEAR TWO MONTHS YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, OCTOBER 31,
Operations: 1995 1994 (NOTE 1) 1994
----------- ----------- -----------
<S> <C> <C> <C>
Investment income - net...................................... $2,604,120 $390,604 $1,875,036
Realized loss on investments - net........................... (376,865) (372,816) 61,913
Net change in unrealized appreciation or
depreciation of investments................................ 6,566,685 (45,871) (5,009,204)
----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations 8,793,940 (28,083) (3,072,255)
----------- ----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A.................................................... (2,438,655) (350,682) (1,830,799)
Class B.................................................... (212,725) (15,816) (20,912)
Class C.................................................... (92) N/A N/A
Net realized gain on investments:
Class A.................................................... -- -- (102,417)
Class B.................................................... -- -- (100)
----------- ----------- -----------
Total distributions.......................................... (2,651,472) (366,498) (1,954,228)
----------- ----------- -----------
Share transactions (note 4): Proceeds from sale of shares:
Class A (note 3)........................................... 10,539,741 3,142,080 15,148,355
Class B.................................................... 3,109,945 1,061,184 1,778,660
Class C.................................................... 20,010 N/A N/A
Net asset value of shares issued in reinvestment of net
investment income distributions:
Class A.................................................. 1,255,238 93,601 982,956
Class B.................................................. 113,687 4,318 11,630
Class C.................................................. 20 N/A N/A
Payments for redemption of shares:
Class A.................................................... (5,002,357) (2,447,405) (4,070,580)
Class B (note 3)........................................... (284,260) (11,861) (10,462)
Class C.................................................... (10) N/A N/A
----------- ----------- -----------
Increase in net assets from share transactions............... 9,752,014 1,841,917 13,840,559
----------- ----------- -----------
Total increase in net assets............................... 15,894,482 1,447,336 8,814,076
Net assets at beginning of period............................... 40,531,795 39,084,459 30,270,383
----------- ----------- -----------
Net assets at end of period (including undistributed net investment
income of $79, $47,431 and $23,325, respectively)............ $56,426,277 $40,531,795 $39,084,459
=========== =========== ===========
See accompanying notes to financial statements,
</TABLE>
VOYAGEUR MISSOURI INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur Missouri Insured Tax Free Fund (the Fund) is one of a series of
funds within the Voyageur Investment Trust, a Massachusetts business trust
registered under the Investment Company Act of 1940 (as amended) as an open-end
management investment company with an unlimited number of authorized shares of
beneficial interest. The Fund seeks high current income free from both federal
and state income taxes with the added safety of an insured portfolio by
investing in insured 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, which the Fund began offering in 1995, are
not subject to a contingent deferred sales charge or a front-end 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.
The Fund is registered as a non-diversified Fund. Effective December 31,
1994, the Fund changed its fiscal year end from October 31 to December 31.
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 Trustees.
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
Missouri than a portfolio with broader geographical diversification.
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 its
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, at December 31, 1995 the Fund had a capital
loss carryover of $725,320 that will expire in 2002, 2003 and 2004 if not offset
by subsequent capital gains. It is unlikely that the Board of Trustees 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) INVESTMENT SECURITIES TRANSACTIONS
Purchase cost and proceeds of sales of investment securities other than
short-term securities aggregated $26,119,464 and $15,499,503, respectively,
during the year ended December 31, 1995.
(3) EXPENSES
The Fund has an investment advisory and management fee 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 payable monthly and is based on 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. There was no portfolio insurance expense for the Fund.
Portfolio insurance expense, if any, is recognized over the premium period.
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.
During the year ended December 31, 1995, Voyageur voluntarily absorbed fees and
expenses of $170,000, excluding waivers of distribution fees and expense
reductions.
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.
All classes of shares have a Distribution Agreement under Rule 12b-1 of the
Investment Company Act of 1940 with Voyageur Fund Distributors, Inc. (Fund
Distributors). Under this plan, the Fund is obligated to pay Fund Distributors a
monthly distribution fee at an annual rate of .25% of the Fund's average daily
net assets of the Class A Shares and 1.00% of the Fund's 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
December 31, 1995, Fund Distributors voluntarily waived Class A distribution
fees of $103,135 and Class B distribution fees of $22,490. The Fund earned
$17,128 in credits on uninvested cash balances held by the Fund at the custodian
during the year ended December 31, 1995. These credits were used to reduce
certain fees for various custodial, pricing and accounting services provided by
the custodian bank
Sales charges paid by Class A shareholders for the year ended December 31,
1995 were $306,845. Of this amount, Fund Distributors received $43,732.
Contingent deferred sales charges paid by Class B shareholders for the year
ended December 31, 1995 were $9,542.
(4) SHARE TRANSACTIONS
Transactions in shares of beneficial interest during each period were as
follows:
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------
YEAR TWO MONTHS YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, OCTOBER 31,
1995 1994 1994
------------- ------------- -----------
<S> <C> <C> <C>
Shares sold......................... 1,059,164 345,655 1,491,145
Shares issued for reinvested
distributions.................... 125,756 10,364 97,689
Shares redeemed..................... (498,176) (266,483) (398,945)
------------- ------------- -----------
Increase in shares outstanding...... 686,744 89,536 1,189,889
============ ============= ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------------- ---------------
YEAR TWO MONTHS PERIOD FROM PERIOD FROM
ENDED ENDED MARCH 1, 1994* MARCH 1, 1994*
DECEMBER 31, DECEMBER 31, TO OCTOBER 31, TO OCTOBER 31,
1995 1994 1994 1994
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Shares sold......................... 309,066 115,292 181,194 1,931
Shares issued for reinvested
distributions.................... 11,312 476 1,204 2
Shares redeemed..................... (28,293) (1,310) (971) (1)
----------- ---------- ---------- ---------
Increase in shares outstanding...... 292,085 114,458 181,427 1,932
=========== ========== ========== ========
* Commencement of operations.
</TABLE>
(5) FINANCIAL HIGHLIGHTS
Per share data (rounded to the nearest cent) for a share of beneficial
interest outstanding and selected information for each period are as follows:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------
PERIOD FROM
YEAR TWO MONTHS YEAR NOVEMBER 2,
ENDED ENDED ENDED 1992(d) TO
DECEMBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1994 1993
Net asset value: ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Beginning of period......................... $9.27 $9.37 $10.82 $10.00
------ ----- ------ ------
Operations:
Net investment income....................... .52 .10 .55 .55
Net realized and unrealized
gain (loss) on investments .............. 1.29 (.11) (1.43) .89
------ ----- ------ ------
Total from operations................... 1.81 (.01) (.88) 1.44
------ ----- ------ ------
Distributions to shareholders:
From net investment income (a).............. (.54) (.09) (.54) (.55)
From net realized gains..................... -- -- (.03) (.07)
------ ----- ------ ------
Total distributions....................... (.54) (.09) (.57) (.62)
------ ----- ------ ------
Net asset value:
End of period............................... $10.54 $9.27 $ 9.37 $10.82
====== ===== ====== ======
Total investment return (b).................... 19.96% (0.07)% (8.28)% 14.74%
Net assets at end of period (000's omitted).... $50,211 $37,790 $37,384 $30,270
Ratios:
Ratio of expenses to
average daily net assets (f).............. .50% .11%(e) .15% --%
Ratio of net investment income
to average daily net assets............... 5.25 % 6.00%(e) 5.39% 4.82%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)....................... 1.07% 1.12%(e) 1.13% 1.25%(e)
Net investment income.............. 4.68% 4.99%(e) 4.41% 3.57%(e)
Portfolio turnover rate (excluding
short-term securities)...................... 31.69% 8.85% 32.02% 76.51%
See accompanying notes to Financial Highlights.
</TABLE>
(5) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------- ------------
PERIOD FROM PERIOD FROM
YEAR TWO MONTHS MARCH 12, NOVEMBER 11,
ENDED ENDED 1994(d) TO 1995(d) TO
DECEMBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
1995 1994 1994 1995
------------ ------------ ----------- ------------
Net asset value:
<S> <C> <C> <C> <C>
Beginning of period...................... $9.27 $9.37 $10.30 $10.36
----- ----- ------ ------
Operations:
Net investment income.................... .48 .08 .33 .06
Net realized and unrealized
gain (loss) on investments ........... 1.28 (.10) (.94) .17
------ ----- ------ ------
Total from operations................ 1.76 (.02) (.61) .23
------ ----- ------ ------
Distributions to shareholders:
From net investment income (a)........... (.49) (.08) (.32) (.05)
------ ----- ------ ------
Net asset value:
End of period............................ $10.54 $9.27 $ 9.37 $10.54
====== ===== ====== ======
Total investment return (b)................. 19.18% (0.14)% (6.16)% 2.24%
Net assets at end of period
(000's omitted).......................... $6,195 $2,742 $1,701 $20
Ratios:
Ratio of expenses to
average daily net assets (f)........... .97% .60%(e) .49%(e) 1.22%(e)
Ratio of net investment income
to average daily net assets............ 4.70% 5.32%(e) 4.89%(e) 4.09%(e)
Assuming no voluntary waivers and
reimbursements:
Expenses (c).................... 1.81% 1.84%(e) 1.83%(e) 1.55%(e)
Net investment income........... 3.86% 4.08%(e) 3.55%(e) 3.76%(e)
Portfolio turnover rate (excluding
short-term securities)................... 31.69% 8.85% 32.02% 31.69%
See accompanying notes to Financial Highlights.
</TABLE>
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 the year ended October 31, 1993, $.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) Voyageur and Fund Distributors voluntarily waived or reimbursed a portion
of expenses during the periods presented. 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) Adjusted to an annual basis.
(f) Beginning in the year ended December 31, 1995, the expense ratio reflects
the effect of gross expense attributable to earnings credits on uninvested
cash balances received by the Fund. Prior period expense ratios have not
been adjusted.
<TABLE>
<CAPTION>
VOYAGEUR MISSOURI INSURED TAX FREE FUND
INVESTMENTS IN SECURITIES DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE(a)
- -------------------------------------------------------------------------------------------------------------------
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MISSOURI MUNICIPAL BONDS (98.8%):
ESCROWED WITH U.S. GOVERNMENT BONDS (0.7%):
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1,225 Greene County Single Family Mortgage Revenue, Zero Coupon
(Private Mortgage Insurance)........................................ 6.10%(d) 03-01-16 $386,892
-----------
GENERAL OBLIGATION (27.8%):
-----------------------------------------------------------------------------------------------------
1,775 Clark County School District (FSA Insured)............................. 5.75 03-01-15 1,831,179
500 Greene County School District (MBIA Insured)........................... 5.70 03-01-15 512,335
1,000 Kansas City School District (FGIC Insured)............................. 5.00 02-01-14 961,970
1,000 Mehlville School District #9 (MBIA Insured)............................ 6.00 02-15-13 1,060,850
1,000 St. Charles (FSA Insured).............................................. 5.75 03-01-15 1,034,280
1,250 St. Charles School District (FGIC Insured)............................. 6.50 02-01-14 1,378,187
1,490 St. Louis County School District #8 (MBIA Insured)..................... 5.60 02-15-15 1,518,653
1,050 St. Louis School District (FGIC Insured)............................... 5.75 04-01-12 1,086,508
1,000 St. Peters (MBIA Insured).............................................. 5.85 01-01-13 1,041,730
2,000 Springfield School District (MBIA Insured)............................. 5.25 03-01-11 2,007,540
1,235 Troy School District #3 Lincoln County (MBIA Insured).................. 6.10 03-01-14 1,313,682
1,100 Union Reorganized School District (FGIC Insured)....................... 5.75 03-01-13 1,132,252
750 West Platte School District (MBIA Insured)............................. 5.85 03-01-15 781,500
-----------
15,660,666
-----------
UTILITIES (18.5%):
-----------------------------------------------------------------------------------------------------
1,500 Cape Girardeau Waterworks System (FGIC Insured)........................ 5.00 03-01-12 1,465,770
600 Liberty Sewer (MBIA Insured)........................................... 6.00 02-01-08 663,054
1,500 Liberty Sewer (MBIA Insured)........................................... 6.15 02-01-15 1,639,275
920 Moberly Water & Sewer Systems (FGIC Insured)........................... 5.20 08-15-15 912,134
2,200 St. Joseph Environmental Pollution Control Revenue (AMBAC Insured)..... 5.85 02-01-13 2,307,162
2,000 Sikeston Electric Revenue (MBIA Insured)............................... 6.25 06-01-12 2,148,680
1,300 Springfield Waterworks (MBIA Insured).................................. 5.50 05-01-19 1,314,443
-----------
10,450,518
-----------
INDUSTRIAL (7.2%):
-----------------------------------------------------------------------------------------------------
1,000 Kansas City Lease Revenue Muehlebach Hotel (FSA Insured)............... 5.90 12-01-18 1,047,510
1,000 SE Missouri Correctional Facility Lease Revenue (MBIA Insured)......... 5.75 10-15-16 1,024,400
1,850 St. Louis Municipal Finance Corp Leasehold Revenue (FGIC Insured)...... 6.25 02-15-12 1,993,282
-----------
4,065,192
-----------
HEALTH CARE (25.2%):
-----------------------------------------------------------------------------------------------------
1,750 Barnes Jewish/Christian Health Services (AMBAC Insured)................ 5.25 05-15-21 1,702,085
1,000 Cape Girardeau SE Missouri Hospital (MBIA Insured)..................... 5.25 06-01-16 990,680
1,980 Jackson County St. Joseph Hospital (MBIA Insured)...................... 6.50 07-01-12 2,144,083
2,000 Jackson County St. Mary's Hospital (MBIA Insured)...................... 5.75 07-01-24 2,047,820
2,500 Missouri Children's Hospital (MBIA Insured)............................ 5.65 05-15-23 2,530,625
1,500 Missouri State Health & Education Facility (Health Midwest)
(MBIA Insured)....................................................... 6.25 02-15-22 1,593,690
1,250 Missouri State Health & Education Facility (Heartland) (AMBAC Insured). 6.35 11-15-17 1,340,862
1,350 Missouri State Health & Education Facility (St. Luke's) (MBIA Insured). 5.13 11-15-19 1,303,776
500 Missouri State Health & Education Facility SSM (MBIA Insured).......... 6.40 06-01-10 567,930
-----------
14,221,551
-----------
HOUSING (1.6%):
-----------------------------------------------------------------------------------------------------
270 Missouri Single Family Housing AMT (GNMA Insured)...................... 7.20(e) 12-01-17 296,260
540 Missouri Single Family Housing AMT (GNMA Insured)...................... 7.25(e) 12-01-20 592,396
-----------
888,656
-----------
EDUCATION (7.6%):
-----------------------------------------------------------------------------------------------------
1,000 Francis Howell School District (FSA Insured)........................... 5.35 03-01-10 1,002,650
1,000 Missouri Health & Education Central Missouri State University
(AMBAC Insured)...................................................... 5.75 10-01-25 1,019,020
1,000 St. Louis Health & Education University Revenue (AMBAC Insured)........ 4.75 10-01-16 941,410
1,250 SE Missouri State University System Housing Revenue (MBIA Insured)..... 5.88 04-01-21 1,302,788
-----------
4,265,868
-----------
OTHER REVENUE (6.9%):
------------------------------------------------------------------------------------------------------
1,500 Kansas City Municipal Assistance Bartle Convention Center
(MBIA Insured)....................................................... 5.60 04-15-16 1,516,740
2,265 Missouri State Environmental-Branson (FSA Insured)..................... 6.05 07-01-16 2,398,114
-----------
3,914,854
-----------
TRANSPORTATION (3.3%):
-----------------------------------------------------------------------------------------------------
1,675 Kansas City Airport Revenue (FSA Insured).............................. 6.88 09-01-14 1,871,729
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $53,201,156) (c) $55,725,926
===========
See accompanying notes to investments in securities.
</TABLE>
VOYAGEUR MISSOURI INSURED TAX FREE FUND
NOTES TO INVESTMENTS IN SECURITIES
- --------------------------------------------------------------------------------
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) All investments are rated 100% Aaa/AAA (unaudited).
(c) The cost of securities for federal income tax purposes at December 31, 1995
is $53,225,517. The aggregate gross unrealized appreciation and
depreciation of securities based on this cost are as follows:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
------------ ------------ ------------
$2,532,846 $(32,437) $2,500,409
(d) The interest rate disclosed for zero coupon issues represents the effective
yield on the date of acquisition.
(e) These securities are subject to the Alternative Minimum Tax.
FEDERAL INCOME TAX INFORMATION
- --------------------------------------------------------------------------------
Information for federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions for the period ended
December 31, 1995 shown below. Exempt interest dividends are exempt from federal
income tax and should not be included in shareholder's gross income, but need to
be reported on the income tax return for informational purposes. Each
shareholder should consult a tax adviser about reporting this income for state
and local purposes. In January 1996, the Fund separately provided each
shareholder with tax information for calendar year 1995.
<TABLE>
<CAPTION>
PER CLASS PER CLASS PER CLASS
A SHARE B SHARE C SHARE
------------ ------------ -----------------
YEAR YEAR PERIOD FROM
ENDED ENDED NOVEMBER 11, 1995
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
------------ ------------ -----------------
<S> <C> <C> <C>
Net investment income distributions
(none qualifying for corporate dividend
received deduction)........................... $.5411 $.4932 $.0476
====== ====== ======
</TABLE>
For federal income tax purposes, 99.96% of the above net investment income
distributions were derived from interest on securities exempt from federal
income tax.
