IOWA TAX FREE FUND
SEMI-ANNUAL REPORT
Dated June 30, 1995
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds as your objectives or market
conditions change.
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
Voyageur ARIZONA Tax Free Fund Voyageur KANSAS Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
<TABLE>
<S> <C>
Voyageur ARIZONA Insured Tax Free Fund Voyageur MISSOURI Insured Tax Free Fund
Voyageur CALIFORNIA Insured Tax Free Fund Voyageur NATIONAL Insured Tax Free Fund
Voyageur FLORIDA Insured Tax Free Fund Voyageur OREGON Insured Tax Free Fund
Voyageur MINNESOTA Insured Fund Voyageur WASHINGTON Insured Tax Free Fund
</TABLE>
VOYAGEUR LIMITED TERM FUNDS seek to preserve original investment principal while
providing income free from both Federal income taxes and state income taxes
(where applicable). The Funds invest in intermediate term investment grade
municipal bonds.
<TABLE>
<S> <C>
Voyageur FLORIDA Limited Term Tax Free Fund Voyageur MINNESOTA Limited Term Tax Free Fund
</TABLE>
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
Voyageur AGGRESSIVE GROWTH Fund Voyageur INTERNATIONAL Equity Fund
Voyageur GROWTH Stock Fund
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur MUNICIPAL CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur GOVERNMENT CASH Series Voyageur PRIME CASH Series
Voyageur MINNESOTA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
Dear Shareholder:
The municipal bond market's dramatic rebound in the first half of 1995 caused
many mutual funds to recover much of the ground they lost in last year's bear
market. This strong rally was evidenced by the Fund's performance. I am pleased
to present a considerably brighter picture of the municipal bond market and the
Fund's performance than was presented in my last letter to you.
The results below summarize the Fund's net asset value, dividends paid and total
net assets for the reporting period.
<TABLE>
<CAPTION>
NET ASSET NET ASSET TOTAL NET
VALUE VALUE DIVIDENDS ASSETS
BEGINNING END PAID PER END OF
PERIOD OF PERIOD OF PERIOD SHARE PERIOD (000'S)
<S> <C> <C> <C> <C>
Period ended June 30, 1995:
Class A Shares $8.56 $9.28 $0.24 $38,114
Class B Shares 9.19* 9.28 0.11 138
Class C Shares 8.56 9.27 0.20 247
</TABLE>
* Net asset value at March 24, 1995 (commencement of operations)
In the pages that follow, the Fund's Manager will update you on how the economy
and the municipal bond market affected the Fund during this reporting period.
The manager will discuss the Fund's performance and some strategies used to
maximize performance.
We assert that a long-range view of investing provides the greatest benefit to
our shareholders. We encourage you to maintain a long-range view of investing;
we believe that you will derive the greatest benefit by doing so.
Thank-you for investing with Voyageur.
Sincerely,
John G. Taft
President
Voyageur Iowa Tax Free Fund
FACTORS AFFECTING FUND PERFORMANCE
During the reporting period, municipal bond funds rebounded strongly and largely
reversed the negative total return performance from 1994. Yields fell a striking
90 basis points (.90%) and long term treasury bond yields fell 125 basis points
(1.25%). Responding to strong economic growth and continued inflation fears, the
Federal Reserve Board raised short term interest rates in February an additional
50 basis points to 6.00%. The market viewed this rate increase as, most likely,
the final increase in the Fed's one-year campaign of tighter monetary policy.
Since February 1995, the market witnessed a dramatic shift in sentiment as the
economy revealed signs of a slow down with no evidence of inflation. As yields
fell, bond prices increased and investment returns on all fixed income classes
were sharply positive.
Several notable events in the reporting period affected the bond market's
performance:
* The Federal Reserve Board continued its restrictive policy and raised short
term interest rates 50 basis points in February. This seemed to prove
successful in slowing domestic growth and curbing the threat of inflation.
As indications of a slowing economy became more evident, market
participants became more comfortable with the fact that the Fed's strategy
had succeeded and that the economy could sustain slow growth and low
inflation. The reversal of sentiment in 1995 resulted in a substantial bond
market rally.
* The reduction of municipal bond issuance in 1995 coupled with strong demand
bolstered municipal bond prices. Bond issuance in the first half of this
year was down 50% from 1994 levels and, in addition, a record $80 billion
in bonds was to be called away from investors in June and July. This
shortage of supply should continue to have a positive technical impact on
municipal bond performance throughout the rest of 1995.
* The issue of radical tax reform, specifically proposals such as a flat tax
or national sales tax, dominated the municipal bond marketplace in the
second quarter of 1995. While municipal bond prices increased, this price
appreciation compared to treasuries did not occur as rapidly in the second
quarter. This price differential (called a risk premium) between treasury
yields and municipal yields resulted from the discussions surrounding tax
reform. We view the current price discrepancies between municipal bonds and
treasuries as an opportunity to purchase quality bonds at a discount to
taxable bond equivalents.
* Radical tax reform proposals caused many investors to fear that the tax
advantage of municipal bonds may erode. While there are numerous proposals
and relative degrees of reform, it is the radical reform proposals that
suggest a drastic restructuring of the current federal tax code and that
have been the subject of much media attention. All of the discussions and
proposals are in preliminary stages. At Voyageur, we believe the likelihood
of radical reform is remote. Clearly some reform is possible, although we
believe that we are at least two to three years away from potential
enactment. We continue to monitor the issue of tax reform and believe that
this discussion will continue to prevail in the months ahead.
* In general, the municipal market recovered from the temporary setback of
prices surrounding the Orange County, California derivative debacle last
year. However, California state-specific bonds continue to lag the overall
market, and volatility remains high due to the county's credit problems.
OUTLOOK
Our outlook for the municipal bond market is optimistic both in the near term
and for the balance of the decade. We anticipate a steeper yield curve (lower
short term rates) for the rest of the year and well into 1996. We believe the
economic fundamentals will affirm our view that inflation is under control and
that the Fed has been successful in slowing the domestic economy. Economic
growth should slow to 3.0% to 3.5% for the year, inflation should remain in
check in the 3.0 to 3.5% range, and unemployment will be in the 5.0% to 5.4%
range.
The "technical" condition of the municipal bond market, or the supply and demand
equation, continues to be very favorable. Currently we are experiencing the
lowest municipal bond supply in five years, while the demand continues to
strengthen prices. In addition, during the summer, volumes of bonds will be
called out of the marketplace. On a net basis, the fewer number of bonds in the
marketplace bodes favorably for the bond prices throughout the balance of the
year.
We expect the bond market to witness lower volatility during the second half of
the year. Throughout 1994 and during the first half of 1995, bond investors
experienced unusually high volatility in both bull and bear market cycles. We
look for bond yields to remain in a narrow trading range and believe lower
interest rates will prevail for the coming year.
Given our expectations for the rest of the year, we will continue to make minor
adjustments to the duration of our portfolios as needed. By maintaining our
longer-than-average duration last year, we were able to capture superior returns
in the bond market rally for the first and second quarters. We continue to
monitor the tax reform discussion and look for opportunities to purchase quality
bonds trading at a discount in the market. We seek bonds with good call
protection, specifically ten-year call protection, to avoid the risk of having
bonds called away in a declining yield environment. We believe that high quality
bonds with call protection will perform the best in the economic environment of
lower rates.
The dramatic change in sentiment from bearish to bullish demonstrated how the
market climate has changed. At Voyageur, we remain committed to the long term
approach to investing. We believe those investors who take a conservative
approach with asset allocation will, over the course of time, be rewarded for
their patience with above average returns.
DISCUSSION OF FUND MANAGEMENT BY ELIZABETH H. HOWELL, PORTFOLIO MANAGER
Ms. Howell is Senior Vice President and Tax Exempt Portfolio Manager for the
Voyageur Iowa Tax Free Fund. She has over ten years experience as a securities
analyst and portfolio manager.
The Voyageur Iowa Tax Free Fund had a total return of 11.23% for the reporting
period. We had relatively stronger performance from owning 100 percent bonds and
holding no cash in the portfolio. When new money came into the fund, we invested
it immediately. This enabled us to lock in higher yields.
We attribute the favorable performance to the following factors. First, the Fund
maintained a long duration of 11.19 years and an average maturity of 22.1 years.
The longer duration and maturity of the securities outperformed bonds with
shorter maturities in a declining interest rate environment. As yields fell in
the first half of 1995, bonds with longer maturities were more sensitive to
changes in long term interest rates. Second, a majority of the bonds were lower
coupon bonds (5.50% and less). In a declining interest environment, these low
coupon securities outperformed high coupon securities as these bonds (with a
greater discount to the market) were less likely to be called or refunded than
were comparable higher coupon issues. Third, consistent with our strategy from
last year, we held and purchased bonds with strong call protection to maintain
the longer duration in the portfolio. This allowed the Fund to take full
advantage of the declining rate environment in the first half of 1995.
There is a thin supply of in-state bonds that are double exempt. A select number
of these issues are available for purchase. We have established core portfolio
positions in these key issues. As a result, we have delivered a stream of income
to shareholders that is exempt from Iowa state tax and federal taxes.
At the end of this reporting period, the Voyageur Iowa Tax Free Fund's portfolio
is comprised of bonds rated in the three highest categories by Standard & Poor's
Corporation and/or Moody's Investor Service (AAA/Aaa, AA/Aa, and A/A). We
believe that the Voyageur Iowa Tax Free Fund is poised to take full advantage of
the current market conditions.
<TABLE>
<CAPTION>
VOYAGEUR IOWA TAX FREE FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1995
<S> <C>
ASSETS
Investments in securities, (note 1) (identified cost: $38,768,886).............. $37,884,541
Cash in bank on demand deposit.................................................. 840
Accrued interest receivable..................................................... 758,271
Receivable for Fund shares sold................................................. 51,054
Organizational costs (note 4)................................................... 19,410
Total assets............................................................... 38,714,116
LIABILITIES
Dividends payable to shareholders............................................... 41,964
Payable for Fund shares redeemed................................................ 104,568
Other accrued expenses.......................................................... 69,412
Total liabilities.......................................................... 215,944
NET ASSETS APPLICABLE TO OUTSTANDING SHARES..................................... $38,498,172
Represented by:
Capital Stock - $.01 par value (note 1)...................................... $ 41,505
Additional paid-in capital................................................... 40,836,967
Distributions in excess of net investment income (note 1).................... (14,612)
Accumulated net realized loss on investments................................. (1,481,343)
Unrealized depreciation of investments....................................... (884,345)
TOTAL - REPRESENTING NET ASSETS APPLICABLE TO OUTSTANDING SHARES........... $38,498,172
Net assets applicable to outstanding Class A Shares............................. $38,113,781
Net assets applicable to outstanding Class B Shares............................. $ 137,680
Net assets applicable to outstanding Class C Shares............................. $ 246,711
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - 4,109,041 Shares of Capital Stock outstanding (note 5)............. $9.28
Class B - 14,841 Shares of Capital Stock outstanding (note 5)................ $9.28
Class C - 26,607 Shares of Capital Stock outstanding (note 5)................ $9.27
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR IOWA TAX FREE FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1995
<S> <C>
Investment income:
Interest................................................................ $1,031,855
Expenses (note 3):
Investment advisory and management fee.................................. 90,203
Dividend-disbursing, administrative and accounting services fees........ 44,476
Distribution fee - Class A.............................................. 44,945
Distribution fee - Class B.............................................. 231
Distribution fee - Class C.............................................. 483
Printing, postage and supplies.......................................... 7,816
Audit and accounting fees............................................... 6,663
Legal fees.............................................................. 3,683
Directors' fees......................................................... 1,393
Registration fees....................................................... 6,843
Custodian fees.......................................................... 4,774
Amortization of organizational costs.................................... 1,681
Other ................................................................. 1,010
Total expenses........................................................ 214,201
Less: Expenses waived, absorbed or reduced............................. (73,296)
Total net expenses ................................................... 140,905
Investment income - net............................................... 890,950
Realized and unrealized gain (loss) on investments:
Realized loss on security transactions (note 2)........................ (102,745)
Net change in unrealized depreciation of investments.................... 2,932,492
Net gain on investments............................................... 2,829,747
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $3,720,697
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
VOYAGEUR IOWA TAX FREE FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
SIX MONTHS FOUR MONTHS
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994 (NOTE 1)
<S> <C> <C>
Operations:
Investment income - net................................................. $ 890,950 $ 647,387
Realized loss on investments - net...................................... (102,745) (145,424)
Net change in unrealized appreciation (depreciation) of investments..... 2,932,492 (2,619,989)
Net increase (decrease) in net assets resulting from operations....... 3,720,697 (2,118,026)
Distributions to shareholders from:
Investment income - net:
Class A............................................................... (958,108) (582,290)
Class B............................................................... (858) N/A
Class C............................................................... (1,617) N/A
Distributions in excess of net investment income:
Class A............................................................... (14,455) N/A
Class B............................................................... (59) N/A
Class C............................................................... (98) N/A
Total distributions................................................. (975,195) (582,290)
Capital share transactions (note 5):
Proceeds from sale of shares (note 3):
Class A............................................................... 4,231,759 5,509,121
Class B............................................................... 136,692 N/A
Class C............................................................... 245,866 N/A
Net asset value of shares issued in reinvestment
of net investment income distributions and distributions
in excess of net investment income:
Class A........................................................... 707,452 291,983
Class B........................................................... 829 N/A
Class C........................................................... 86 N/A
Payments for redemption of shares:
Class A............................................................... (1,942,848) (9,396,688)
Class B............................................................... -- N/A
Class C............................................................... -- N/A
Increase (decrease) in net assets from capital share transactions....... 3,379,836 (3,595,584)
Total increase (decrease) in net assets............................... 6,125,338 (6,295,900)
Net assets at beginning of period.......................................... 32,372,834 38,668,734
Net assets at end of period (including distributions in excess of
net investment income of $14,612 and undistributed net investment
income of $69,633, respectively) $38,498,172 $32,372,834
</TABLE>
See accompanying notes to financial statements.
VOYAGEUR IOWA TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Voyageur Iowa Tax Free Fund (the Fund) is one of a series of several
funds within Voyageur Mutual Funds, Inc., which is registered under the
Investment Company Act of 1940 (as amended) as a non-diversified, open-end
management investment company. 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,
first offered on March 1, 1995, may be subject to a contingent deferred sales
charge and such shares automatically convert to Class A after eight years. Class
C Shares, first offered on December 1, 1994, may be subject to a contingent
deferred sales charge and have no conversion feature. All classes of shares have
identical voting, dividend, liquidation and other rights and the same terms and
conditions except that the level of distribution fees charged differs between
classes - income, expenses (other than expenses incurred under each class'
Distribution Agreement) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets. Pursuant to the articles of incorporation for Voyageur Mutual Funds,
Inc., the Fund has 100 billion shares of authorized capital stock that may be
issued. Effective December 31, 1994, the Fund changed its fiscal year end from
August 31 to December 31.
The significant accounting policies followed by the Fund are summarized as
follows:
Investments in Securities
Securities are valued at fair value as determined by the Board of Directors.
Determination of fair value involves, among other things, using pricing services
or prices quoted by independent brokers. Short-term securities are valued at
amortized cost which approximates market value.
Security transactions are accounted for on the date the securities are
purchased or sold. 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 limited geographical areas, and
therefore may have more credit risk related to the economic conditions of these
areas 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 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, the Fund had capital loss carryovers of
$1,189,260 at December 31, 1994, that will expire in 2001 through 2003 if not
offset by subsequent capital gains. It is unlikely the Board of Directors will
authorize a distribution of any net realized capital gains until the available
capital loss carryover has been offset or expires.
Distributions to Shareholders
Dividends declared daily from net investment income are payable monthly in
cash or reinvested in additional shares of the Fund. Net short-term realized
capital gains, if any, may be paid 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 $6,521,776 and $4,191,076 for the period ended
June 30, 1995, respectively.
(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. During the period ended June 30, 1995, Voyageur voluntarily
absorbed $25,000 excluding waiver 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 period ended
June 30, 1995, Fund Distributors voluntarily waived Class A distribution fees of
$43,431; Class B distribution fees of $61; and Class C distribution fees of $30.
The Fund earned $7,222 in credits on uninvested cash balances held at the
custodian during the six months ended June 30, 1995. Of these credits, $4,774
were used to reduce certain fees for various custodial, pricing and accounting
services provided by the custodian bank and $2,448 are included in interest
income.
Sales charges paid by Class A shareholders were $111,762. Of this amount,
Fund Distributors received $20,742.
(4) ORGANIZATIONAL COSTS
Organizational costs are being amortized over 60 months on an inverse
acceleration (sum-of-the-years' digits) basis. If Voyageur redeems any or all of
its shares in the Fund representing initial capital prior to the end of the
60-month amortization period, Voyageur will reimburse the Fund for the
unamortized balance in the same proportion as the number of shares redeemed bear
to the number of initial shares outstanding at the time of redemption.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock during the periods ended June 30,
1995 and December 31, 1994 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
PERIOD FROM PERIOD FROM
SIX MONTHS FOUR MONTHS MARCH 24, JANUARY 4,
ENDED ENDED 1995* TO 1995* TO
JUNE 30, 1995 DECEMBER 31, JUNE 30, 1995 JUNE 30, 1995
(UNAUDITED) 1994 (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Shares sold...................... 465,261 641,186 14,753 26,598
Shares issued for
reinvested distributions...... 77,854 33,625 88 9
Shares redeemed.................. (213,792) (1,073,107) -- --
Increase (decrease) in
shares outstanding............ 329,323 (398,296) 14,841 26,607
</TABLE>
* Commencement of operations.
(6) 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 CLASS B CLASS C
PERIOD FROM PERIOD FROM
SIX MONTHS FOUR MONTHS YEAR MARCH 24, JANUARY 4,
ENDED ENDED ENDED 1995* TO 1995* TO
JUNE 30, 1995 DECEMBER 31, AUGUST 31, JUNE 30, 1995 JUNE 30, 1995
(UNAUDITED) 1994 1994 (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period ......................... $ 8.56 $ 9.26 $ 10.00 $ 9.19 $ 8.56
Operations:
Net investment income ....................... .22 .17 .49 .11 .20
Net realized and unrealized gain (loss)
on investments ............................. .74 (.72) (.74) .09 .71
Total from operations ..................... .96 (.55) (.25) .20 .91
Distributions to shareholders:
From net investment income .................. (.24) (.15)(a) (.49)(a) (.11) (.20)
Net asset value:
End of period ............................... $ 9.28 $ 8.56 $ 9.26 $ 9.28 $ 9.27
Total investment return (b) .................... 11.23% (5.86)% (2.67)% 2.22% 10.73%
Net assets at end of period (000's omitted) .... $38,114 $32,373 $38,669 $ 138 $ 247
Ratios:
Ratio of expenses to average daily net assets .78%(d) .11%(d) .12% 1.47%(d) 1.64%(d)
Ratio of net investment income to average
daily net assets ........................... 4.94%(d) 5.71%(d) 4.89% 3.72%(d) 3.35%(d)
Assuming no voluntary waivers and
reimbursements and expense reductions:
Expenses (c) .......................... 1.18%(d) 1.25%(d) 1.25% 1.86%(d) 1.82%(d)
Net investment income ................. 4.54%(d) 4.57%(d) 3.76% 3.33%(d) 3.17%(d)
Portfolio turnover rate (excluding short-term
securities) .................................. 12.40% 7.18% 119.35% 12.40% 12.40%
</TABLE>
* Commencement of operations.
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.
(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 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 C Shares.
(d) Annualized.
<TABLE>
<CAPTION>
VOYAGEUR IOWA TAX FREE FUND
INVESTMENTS IN SECURITIES (UNAUDITED) JUNE 30, 1995
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (c) RATE MATURITY VALUE (a)
(Percentage of each investment category relates to total net assets.)
MUNICIPAL BONDS (98.1%):
ESCROWED WITH U.S. GOVERNMENT BONDS (4.5%):
<S> <C> <C> <C> <C>
$1,500 Virgin Island Public Finance Authority Series A........................ 7.30% 10-01-18 $ 1,741,875
GENERAL OBLIGATION (4.5%):
1,755 Puerto Rico Commonwealth (AMBAC Insured)............................... 5.85 07-01-15 1,744,031
UTILITY (28.8%):
300 Iowa Finance Authority State Revolving Fund Series R................... 5.20 05-01-11 287,625
8,055 Iowa Finance Authority State Revolving Fund Series R................... 5.20 05-01-23 7,390,463
1,000 Iowa Finance Authority State Revolving Fund............................ 6.25 05-01-24 1,033,750
1,000 Puerto Rico Electric Power Authority Series R.......................... 6.25 07-01-17 1,006,470
1,450 Puerto Rico Telephone Revenue Authority................................ 5.50 01-01-22 1,359,868
11,078,176
TRANSPORTATION (7.4%):
1,450 Guam Highway (Capital Guaranty Insured)................................ 6.30 05-01-12 1,498,938
1,500 Puerto Rico Commonwealth Highway & Transportation...................... 5.25 07-01-21 1,325,955
2,824,893
INDUSTRIAL (24.9%):
2,000 Iowa Finance Authority Correctional Facility........................... 5.70 06-15-14 1,976,440
90 Iowa Finance Authority Underground Storage Tank........................ 6.00 07-01-10 92,588
7,500 Iowa Finance Authority Underground Storage Tank........................ 5.13 07-01-14 7,003,125
500 Lee County Keokuk Waste Treatment Revenue (LOC Insured)................ 6.40 06-01-07 525,820
9,597,973
EDUCATION (12.9%):
1,000 Iowa State University - Board of Regents............................... 4.60 07-01-10 923,750
500 State University of Iowa - Board of Regents............................ 4.63 07-01-10 463,125
1,000 State University of Iowa - Board of Regents............................ 4.63 07-01-11 917,500
475 University of Northern Iowa - Board of Regents......................... 4.63 07-01-10 439,969
515 University of Northern Iowa - Board of Regents......................... 4.63 07-01-11 472,512
150 University of Northern Iowa - Board of Regents......................... 5.00 07-01-11 143,625
160 University of Northern Iowa - Board of Regents......................... 5.00 07-01-12 152,000
170 University of Northern Iowa - Board of Regents......................... 5.00 07-01-13 160,437
180 University of Northern Iowa - Board of Regents......................... 5.00 07-01-14 168,525
180 University of Northern Iowa - Board of Regents......................... 5.00 07-01-15 168,075
1,000 University of Puerto Rico (MBIA Insured)............................... 5.50 06-01-15 960,000
4,969,518
HEALTH CARE (3.2%):
1,200 Puerto Rico Industrial Hospital Auxiliary (MBIA Insured)............... 6.25 07-01-24 $ 1,230,000
OTHER REVENUE(11.9%):
1,000 Puerto Rico Housing Bank & Finance Agency AMT (GNMA Insured)........... 6.25 04-01-29 978,750
1,700 Puerto Rico Muni Finance Authority (FSA Insured)....................... 6.00 07-01-14 1,706,375
1,000 Puerto Rico Public Building Authority Series L
(Guaranteed by Commonwealth)......................................... 5.75 07-01-16 962,870
1,000 Puerto Rico Public Building Authority.................................. 5.50 07-01-21 920,080
4,568,075
TOTAL MUNICIPAL BONDS (cost: $38,638,886) $37,754,541
SHORT-TERM SECURITIES (0.1%):
CASH EQUIVALENTS:
130 Nuveen Investment Tax Free Fund (cost: $130,000)....................... 3.81(b) 130,000
TOTAL INVESTMENT IN SECURITIES (cost: $38,768,886) $37,884,541
</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 is $38,958,224. The
aggregate gross unrealized appreciation and depreciation of securities
based on this cost are as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Depreciation
318,686 (1,392,369) (1,073,683)
(c) Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
Aaa/AAA Aa/AA BBB Total
26% 1% 73% 100%
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, Minnesota 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota 55402
VOYAGEUR
IOWA TAX FREE FUND
SEMI-ANNUAL REPORT
Dated June 30, 1995
INVESTMENT ADVISER, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
UNDERWRITER
Voyageur Fund Distributors, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, Minnesota 55402
AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota 55402
BULK RATE
U.S. Postage
PAID
Minneapolis, MN.
Permit #3322
VOYAGEUR
90 SOUTH SEVENTH STREET, SUITE 4400
MINNEAPOLIS, MINNESOTA 55402.4115
