[LOGO]
VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
NEW MEXICO TAX FREE FUND
SEMI-ANNUAL REPORT
DATED JUNE 30, 1996
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds as your objectives or market
conditions change.
VOYAGEUR HIGH YIELD FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in medium and
lower grade municipal bonds.
Voyageur MINNESOTA High Yield Municipal Bond Fund
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
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Voyageur ARIZONA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur NATIONAL Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
Voyageur KANSAS Tax Free Fund
</TABLE>
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
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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.
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Voyageur FLORIDA Limited Term Tax Free Fund Voyageur NATIONAL Limited Term Tax Free Fund
Voyageur MINNESOTA Limited Term Tax Free Fund
</TABLE>
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
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Voyageur AGGRESSIVE GROWTH Fund Voyageur GROWTH Stock Fund
Voyageur GROWTH AND INCOME Fund Voyageur INTERNATIONAL Equity Fund
</TABLE>
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
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Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur MUNICIPAL CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur GOVERNMENT CASH Series Voyageur PRIME CASH Series
Voyageur MINNESOTA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
</TABLE>
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
LETTER FROM THE PRESIDENT
[PHOTO] JOHN G. TAFT
PRESIDENT
Dear Shareholder:
Since our last report, the headline story in the municipal bond market has been
the demise of a radical tax reform. One of the best ways to illustrate this
demise is to look at how municipal bonds have traded in relation to Treasury
securities. At the height of the tax reform scare -- when Steve Forbes was
campaigning on his Flat Tax platform in January 1996 -- long municipal
securities were trading at a very cheap 90% of Treasuries. At the time of this
report, market fears have abated and municipal bonds are trading at a more
traditional 81%.
We believe the issue of reforming the tax code is far from thoroughly closed.
And it is likely -- in this a U.S. presidential election year -- that we may see
renewed discussions about less radical tax reforms. However, as is often the
case in the financial markets, we believe these times of short-term volatility
and uncertainty represent good opportunities for long-term investors.
At Voyageur, we continue to stress the importance of maintaining a long-term
view -- in both the investment horizons of our shareholders and in our approach
to purchasing securities for the Voyageur Tax Free Funds. In order to select the
best long-term securities for the funds, we favor purchasing negotiated new
municipal issues over those in the secondary or competitive market.
Unlike the taxable bond market where the structure of new bond issues are
frequently predetermined and fixed, we have more flexibility and negotiating
power in determining how a municipal bond issue will be structured. In many
cases, our credit research analysts -- who are experienced experts in the area
of municipal bond transactions -- work closely with municipal bond issuers to
determine the appropriate structure for new bond issues. Our analysts' intimate
knowledge of what's in the market and their ability to actually dissect
individual municipal securities helps us to determine appropriate prices that
accurately reflect an issuer's strength and value while assisting us in
protecting our shareholders' interests. They also help us pinpoint rising and
falling stars -- bonds whose credits may be upgraded or downgraded -- in the
municipal market.
We remain committed to providing our clients with the best investment products
and services available in today's financial markets. The Voyageur Tax Free Funds
allow you access to a wide variety of national and state-specific municipal bond
funds, all of which are actively managed to meet their individual fund
objectives.
As part of our commitment to you, we have also redesigned our shareholder
reports to provide you with more in-depth information about your Voyageur fund
investments in an easier-to-read format. We welcome any comments you may have
about these changes and encourage you to call our Voyageur Shareholder Services
at 800.543.3863.
If at any time you have questions about your Voyageur fund investments, please
contact your personal financial advisor or Voyageur Shareholder Services. Our
Voyageur Shareholder Services 800 number -- known as Voyageur On Call (TM) --
allows you 24-hour access, seven days a week to an automated voice response
service with shareholder services representatives available from 8 a.m. to 5
p.m. Central Standard Time.
We appreciate your continued patronage of Voyageur Funds and look forward to
working with you and your financial advisors in creating products and services
designed to bring you closer to your investment goals.
Sincerely,
/s/ John G. Taft
John G. Taft
President
Voyageur New Mexico Tax Free Fund
VOYAGEUR NEW MEXICO TAX FREE FUND
[PHOTO] ANDREW M. McCULLAGH, JR. IS
THE SENIOR MUNICIPAL BOND
MANAGER FOR THE VOYAGEUR NEW
MEXICO TAX FREE FUND. MR.
McCULLAGH HAS MORE THAN 23
YEARS OF INVESTMENT INDUSTRY
EXPERIENCE.
For the six months ended June 30, 1996, the total return at net asset value
(NAV) for the Class A shares of Voyageur New Mexico Tax Free Fund was -1.05%.*
Approximately 22% of the Voyageur New Mexico Tax Free Fund was invested in the
housing sector. Housing bonds -- which are often a good source of income within
the municipal market -- have historically exhibited less pricing volatility, and
our overweighting in this sector helped protect the Fund from the impact of
rising interest rates during the first six months of 1996.
AREAS OF OPPORTUNITY
Within the Fund, we remained committed to purchasing municipal bonds with high
credit ratings, emphasizing securities in the housing and industrial sectors. We
also continued to search for areas or sectors where we could add value to the
Fund.
One such area has been to include investments that have added income to the fund
portfolio. Although we still maintain our commitment to total return, we believe
addition of income will assist us in dampening the effects of market volatility
while allowing our shareholders to benefit from higher income streams.
We also continue to take advantage of opportunities to extend call protection in
order to attempt to protect our shareholders' current level of income for a
longer period of time. This emphasis has led to the Fund having an average call
protection of approximately 10 years.
OUTLOOK FOR THE MUNICIPAL MARKET
The supply of municipal bonds in New Mexico is fairly limited, making it
increasingly important to exercise patience in the selection of municipal bond
securities for the Fund. In the Voyageur New Mexico Tax Free Fund, we are
constantly searching for attractively priced high quality issues to add to the
portfolio as well as to replace lower trade yield bonds currently in the Fund.
In the U.S. economy, we are still showing signs of moderate growth with moderate
inflation -- a trend we expect to see continue for the remainder of the year.
Our outlook for the municipal market continues to be favorable, and we expect
interest rates to decline over the long term. This has caused us to position the
Fund to take advantage of this trend.
*Past performance is no guarantee of future results.
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VOYAGEUR NEW MEXICO TAX FREE FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1996
- --------------------------------------------------------------------------------------------
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ASSETS
Investments in securities, at market value (note 1)
(identified cost: $21,127,132)............................................... $21,552,128
Receivable for investment securities sold....................................... 1,135,863
Accrued interest receivable..................................................... 365,693
-----------
Total assets................................................................. 23,053,684
-----------
LIABILITIES
Bank overdraft.................................................................. 9,469
Dividends payable to shareholders............................................... 22,688
Payable for Fund shares redeemed ............................................... 66,875
Payable for investment securities purchased..................................... 1,966,615
Other accrued expenses.......................................................... 24,212
-----------
Total liabilities ........................................................... 2,089,859
-----------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES..................................... $20,963,825
===========
Represented by:
Paid-in capital (note 1)..................................................... $21,493,805
Distributions in excess of net investment income............................. (15,265)
Accumulated net realized loss on investments (note 1)........................ (939,711)
Unrealized appreciation of investments....................................... 424,996
-----------
TOTAL NET ASSETS........................................................... $20,963,825
===========
Net assets applicable to outstanding Class A Shares............................. $20,234,381
===========
Net assets applicable to outstanding Class B Shares............................. $ 552,067
===========
Net assets applicable to outstanding Class C Shares............................. $ 177,377
===========
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of beneficial interest outstanding: 1,925,000 (note 4)...... $ 10.51
===========
Class B - Shares of beneficial interest outstanding: 52,499 (note 4)......... $ 10.52
===========
Class C - Shares of beneficial interest outstanding: 16,876 (note 4)......... $ 10.51
===========
See accompanying notes to financial statements.
</TABLE>
<TABLE>
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VOYAGEUR NEW MEXICO TAX FREE FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1996
- ----------------------------------------------------------------------------------------
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Investment income:
Interest ........................................................... $ 639,085
---------
Expenses (note 3):
Investment advisory and management fee ............................. 54,313
Dividend-disbursing, administrative and accounting services fees ... 21,130
Printing, postage and supplies ..................................... 2,005
Audit and accounting fees .......................................... 4,022
Legal fees ......................................................... 151
Distribution fees - Class A ........................................ 26,403
Distribution fees - Class B ........................................ 2,844
Distribution fees - Class C ........................................ 127
Directors' fees .................................................... 507
Registration fees .................................................. 836
Custodian fees ..................................................... 4,506
Other .............................................................. 146
---------
Total expenses ................................................... 116,990
Less: Expenses waived or absorbed by the distributor .............. (21,309)
---------
Total net expenses ............................................... 95,681
---------
Investment income - net .......................................... 543,404
---------
Realized and unrealized gain (loss) on investments:
Realized loss on security transactions (note 2) .................... (55,568)
Net change in unrealized appreciation or depreciation of investments (707,117)
---------
Net loss on investments .......................................... (762,685)
---------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $(219,281)
=========
See accompanying notes to financial statements.
</TABLE>
<TABLE>
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VOYAGEUR NEW MEXICO TAX FREE FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
------------ ------------
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Operations:
Investment income - net ............................... $ 543,404 $ 1,092,787
Realized loss on investments - net .................... (55,568) (292,719)
Net change in unrealized appreciation or
depreciation of investments ......................... (707,117) 3,022,227
------------ ------------
Net increase (decrease) in net assets
resulting from operations ....................... (219,281) 3,822,295
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A ............................................. (539,988) (1,110,109)
Class B ............................................. (12,478) (22,135)
Class C ............................................. (534) N/A
Distributions in excess of net investment income:
Class A ............................................. (14,838) --
Class B ............................................. (444) --
------------ ------------
Total distributions ................................... (568,282) (1,132,244)
------------ ------------
Share transactions (note 4):
Proceeds from sale of shares:
Class A (note 3) .................................. 1,617,079 2,877,055
Class B ........................................... 1,600 352,644
Class C ........................................... 175,454 N/A
Net asset value of shares issued in reinvestment
of net investment income distributions:
Class A ........................................... 244,409 407,620
Class B ........................................... 8,909 11,104
Class C ........................................... 424 N/A
Payments for redemption of shares:
Class A ............................................. (2,260,591) (4,223,135)
Class B (note 3) .................................... (43,633) (85,405)
------------ ------------
Decrease in net assets from share transactions ........ (256,349) (660,117)
------------ ------------
Total increase (decrease) in net assets ............. (1,043,912) 2,029,934
Net assets at beginning of period ........................ 22,007,737 19,977,803
------------ ------------
Net assets at end of period (including undistributed or
(distributions in excess of) net investment income of
$(15,265) and $9,613 respectively) .................. $ 20,963,825 $ 22,007,737
============ ============
See accompanying notes to financial statements.
</TABLE>
VOYAGEUR NEW MEXICO TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur New Mexico 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) ("1940 Act") 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 by investing in investment grade municipal bonds.
The Fund offers Class A, Class B and Class C Shares. Class A Shares are
sold with a front-end sales charge. Class B Shares may be subject to a
contingent deferred sales charge and such shares automatically convert to Class
A after eight years. Class C Shares 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 a non-diversified Fund as such term is defined in the 1940 Act.
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 New
Mexico than a portfolio with broader geographical diversification.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by the Fund
on a forward commitment or when-issued basis can take place up to a month or
more after the transaction date. During this period, such securities are subject
to market fluctuations and the portfolio maintains, in a segregated account with
its custodian, assets with a market value equal to or greater than the amount of
its purchase commitments.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute 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 capital loss
carryovers of $884,143 that will expire in 2001, 2002, 2003 and 2004 if not
offset by subsequent capital gains. It is unlikely 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 $5,056,595 and $4,439,689, respectively, during
the six months ended June 30, 1996.
(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 the average daily net
assets of the Fund at the annual rate of .50%. In addition, the Fund will pay
most other operating expenses including directors' fees, registration fees,
printing of shareholder reports, legal and auditing services and other
miscellaneous expenses. Voyageur is obligated to pay all expenses of the Fund
(excluding distribution fees, insurance premiums on portfolio securities, taxes,
interest and brokerage commissions) which exceed 1% of average daily net assets,
on an annual basis.
The Fund will also pay a fee to Voyageur for acting as the Fund's
dividend-disbursing, administrative and accounting services agent. The fee is
paid monthly and is equal to the sum of $1.33 per shareholder account per month,
a fixed monthly fee ranging from $1,000 to $1,500 based on the level of the
Fund's average daily net assets and an annualized percentage of average daily
net assets at reducing rates from .11% to .02%. The Fund is also responsible for
reimbursing Voyageur's out-of-pocket expense in connection with the performance
of dividend-disbursing, administrative and accounting services.
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 C Shares. Fund Distributors may waive all or part of
its distribution fee at its sole discretion. During the six months ended June
30, 1996, Fund Distributors voluntarily waived Class A distribution fees of
$20,529 and Class B distribution fees of $780.
Sales charges paid by Class A shareholders for the six months ended June
30, 1996 were $22,991. Of this amount, Fund Distributors received $3,998.
Contingent deferred sales charges paid by Class B shareholders were $817.
(4) SHARE TRANSACTIONS
Transactions in shares of beneficial interest during each period were as
follows:
CLASS A
-------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
-------------------------------
Shares sold .................... 150,375 276,945
Shares issued for
reinvested distributions .... 22,973 39,532
Shares redeemed ................ (214,112) (405,132)
-------- --------
Decrease in shares outstanding.. (40,764) (88,655)
======== ========
CLASS B
-------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
-------------------------------
Shares sold .................. 150 34,057
Shares issued for
reinvested distributions .. 836 1,062
Shares redeemed .............. (4,091) (7,844)
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Increase (decrease) in
shares outstanding ........ (3,105) 27,275
======= =======
CLASS C
----------------
PERIOD FROM
MAY 7, 1996*
TO JUNE 30, 1996
(UNAUDITED)
----------------
Shares sold .................. 16,835
Shares issued for
reinvested distributions .. 41
Shares redeemed .............. --
------
Increase in shares outstanding 16,876
======
* Commencement of operations.
(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:
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CLASS A
---------------------------------------------------------------------------
PERIOD FROM
SIX MONTHS YEAR TWO MONTHS YEAR OCTOBER 5,
ENDED ENDED ENDED ENDED OCTOBER 31, 1992(d) TO
JUNE 30, 1996 DECEMBER 31, DECEMBER 31, ---------------- OCTOBER 31,
(UNAUDITED) 1995 1994 1994 1993 1992
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Net asset value:
Beginning of period.................. $10.89 $ 9.59 $9.77 $10.92 $10.00 $10.00
------ ------ ----- ----- ------ ------
Operations:
Net investment income................ .27 .52 .11 .56 .57 --
Net realized and unrealized
gain (loss) on investments......... (.37) 1.33 (.20) (1.16) .98 --
------ ------ ----- ----- ------ ------
Total from operations............ (.10) 1.85 (.09) (.60) 1.55 --
------ ------ ----- ----- ------ ------
Distributions to shareholders:
From net investment income (a)....... (.27) (.55) (.09) (.55) (.57) --
In excess of net investment income... (.01) -- -- -- -- --
From net realized gains.............. -- -- -- -- (.06) --
------ ------ ----- ----- ------ ------
Total distributions................ (.28) (.55) (.09) (.55) (.63) --
------ ------ ----- ----- ------ ------
Net asset value
End of period........................ $10.51 $10.89 $9.59 $9.77 $10.92 $10.00
====== ====== ===== ===== ====== ======
Total investment return (b)............. (1.05)% 19.64% (0.90)% (5.56)% 15.77% --%
Net assets at end of period
(000's omitted)...................... $20,234 $21,402 $19,706 $23,096 $17,302 $361
Ratios:
Ratio of expenses to
average daily net assets (f)....... .86%(e) .87% .06%(e) .29% --% --%
Ratio of net investment income
to average daily net assets........ 5.02%(e) 5.07% 6.38%(e) 5.26% 5.10% --%
Assuming no voluntary waivers
and reimbursements:
Expenses (c)................. 1.06%(e) 1.09% 1.25%(e) 1.16% 1.25% --%
Net investment income........ 4.82%(e) 4.85% 5.19%(e) 4.39% 3.85% --%
Portfolio turnover rate (excluding
short-term securities)............... 20.64% 55.72% 2.21% 22.94% 30.76% --%
</TABLE>
See accompanying notes to Financial Highlights.
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------------------------------------------- -------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED YEAR TWO MONTHS MARCH 3, MAY 7,
JUNE 30, ENDED ENDED 1994(d) TO 1996(d) TO
1996 DECEMBER 31, DECEMBER 31, OCTOBER 31, JUNE 30, 1996
(UNAUDITED) 1995 1994 1994 (UNAUDITED)
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<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period................... $10.89 $9.59 $9.77 $10.69 $10.41
------ ------ ----- ----- ------
Operations:
Net investment income................. .23 .46 .09 .31 .06
Net realized and unrealized
gain (loss) on investments.......... (.36) 1.32 (.19) (.93) .10
------ ------ ----- ----- ------
Total from operations............. (.13) 1.78 (.10) (.62) .16
------ ------ ----- ----- ------
Distributions to shareholders:
From net investment income (a)........ (.23) (.48) (.08) (.30) (.06)
In excess of net investment income.... (.01) -- -- -- --
------ ------ ----- ----- ------
Total distributions............... (.24) (.48) (.08) (.30) (.06)
------ ------ ----- ----- ------
Net asset value:
End of period......................... $10.52 $10.89 $9.59 $9.77 $10.51
====== ====== ===== ===== ======
Total investment return (b).............. (1.28)% 18.84% (0.98)% (5.84)% 1.48%
Net assets at end of period
(000's omitted)....................... $552 $605 $272 $264 $177
Ratios:
Ratio of expenses to
average daily net assets (f)........ 1.53%(e) 1.53% .75%(e) .98%(e) 1.73%(e)
Ratio of net investment income
to average daily net assets......... 4.35%(e) 4.33% 5.60%(e) 4.57%(e) 4.02%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c).................. 1.81%(e) 1.83% 2.00%(e) 1.86%(e) 1.81%(e)
Net investment income......... 4.07%(e) 4.03% 4.35%(e) 3.69%(e) 3.94%(e)
Portfolio turnover rate (excluding
short-term securities)................ 20.64% 55.72% 2.21% 22.94% 20.64%
</TABLE>
See accompanying notes to Financial Highlights.
NOTES TO FINANCIAL HIGHLIGHTS
(a) For federal income tax purposes, all of the net investment income
distributions were derived from interest on securities exempt from federal
income tax. For Class A Shares for the years ended October 31, 1994 and
1993, $.01 and $.02, respectively, 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. In addition to fee waivers and
reimbursements fund operating expenses were further reduced by earnings
from uninvested cash balances held by the custodian for the year ended
December 31, 1995. 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 expenses attributable to earnings credits on uninvested
cash balances received by the Fund. Prior period expense ratios have not
been adjusted.
<TABLE>
<CAPTION>
VOYAGEUR NEW MEXICO TAX FREE FUND
INVESTMENTS IN SECURITIES (UNAUDITED) JUNE 30, 1996
- -----------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (102.8%):
GENERAL OBLIGATION (4.5%):
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000 Rio Rancho Public School District 94............................... 5.25%(h) 08-01-09 $ 953,720
-----------
UTILITIES (20.5%):
----------------------------------------------------------------------------------------------------
1,000 City of Santa Fe 1994A (AMBAC Insured)............................. 6.30 06-01-24 1,027,790
1,000 Los Alamos Utility System Revenue 1994A (FSA Insured).............. 6.00 07-01-15 1,012,740
350 Puerto Rico Electric Power Authority Revenue....................... 5.50 07-01-25 327,723
1,000 Rio Rancho Water & Wastewater Revenue (FSA Insured)................ 6.00 05-12-22 1,002,720
1,000 Santa Fe Utility Revenue Water & Sewer (AMBAC Insured)............. 5.25 06-01-17 934,030
-----------
4,305,003
-----------
INDUSTRIAL (14.7%):
----------------------------------------------------------------------------------------------------
1,000 Farmington Pollution Control..................................... 7.20 04-01-21 1,098,750
1,000 Las Cruces Solid Waste Authority................................. 6.00 06-01-16 968,360
1,000 Lordsburg Pollution Control...................................... 6.50 04-01-13 1,018,350
-----------
3,085,460
-----------
HEALTH CARE (9.5%):
----------------------------------------------------------------------------------------------------
1,000 Hobbs Health Facility Evangelical Lutheran (AMBAC Insured)....... 5.70 05-01-16 977,850
1,000 State Hospital Equipment - Memorial Medical Center Project....... 6.40 06-01-16 1,004,890
-----------
1,982,740
-----------
HOUSING (22.4%):
----------------------------------------------------------------------------------------------------
1,000 New Mexico Mortgage Finance Agency Series 1994E.................. 6.95 01-01-26 1,076,020
1,000 New Mexico Mortgage Finance Authority............................ 6.75 07-01-25 1,067,960
1,500 New Mexico Mortgage Finance Authority............................ 6.85 01-01-21 1,607,175
1,000 Sante Fe Housing Development Series 1993A........................ 6.00 02-01-18 950,800
-----------
4,701,955
-----------
EDUCATION (7.1%):
----------------------------------------------------------------------------------------------------
1,500 New Mexico State University Improvements......................... 5.75 04-01-16 1,475,520
-----------
LEASE (5.1%):
----------------------------------------------------------------------------------------------------
1,000 University of New Mexico TCCH Dev. Corp Lease Revenue
(MBIA Insured)................................................ 6.55 08-15-25 1,062,530
-----------
OTHER REVENUE (19.0%):
----------------------------------------------------------------------------------------------------
1,000 Albuquerque Special Assesment #223............................... 6.45 01-01-15 1,000,260
1,000 Bernalillo County Gross Tax Receipts............................. 5.75 04-01-26 970,000
1,000 Dona Ana County Tax Reference & Improvement...................... 6.00 06-01-19 1,006,240
1,000 Truth or Consequences Gross Tax Receipts......................... 6.30(d) 07-01-16 1,008,700
-----------
3,985,200
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $21,127,132) (c) $21,552,128
===========
</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) Investments in bonds, by rating category (unaudited) as a percentage of
total bonds, are as follows:
Aaa/AAA Aa/AA A/A Baa/BBB Total
------- ----- --- ------- -----
45% 21% 29% 5% 100%
(c) Also represents the cost of securities for federal income tax purposes and
the aggregate gross unrealized appreciation and depreciation of securities
based on this cost were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation (Depreciation) Appreciation
------------ -------------- ------------
$518,888 $(93,892) $424,996
(d) At June 30, 1996, the cost of securities purchased on a when issued basis
was $1,000,000.
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, MN 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, MN 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, MN 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, MN 55402
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