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VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
IDAHO 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.
<TABLE>
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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.
<TABLE>
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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.
<TABLE>
<S> <C>
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.
<TABLE>
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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.
<TABLE>
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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
bonds 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 Idaho Tax Free Fund
VOYAGEUR IDAHO TAX FREE FUND
[PHOTO] ELIZABETH H. HOWELL IS THE
SENIOR MUNICIPAL BOND
MANAGER FOR THE VOYAGEUR
IDAHO TAX FREE FUND. MS.
HOWELL HAS MORE THAN 10
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 Idaho Tax Free Fund was -0.92%.* Within
the portfolio, we remained committed to purchasing municipal bonds with
investment-grade credit ratings, emphasizing securities in the general
obligation and housing sectors.
AREAS OF OPPORTUNITY
During the past six months, we 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. Although we still maintain our commitment to
total return, we believe addition of income will allow us to dampen the effects
of market volatility while allowing our shareholders to benefit from higher
income streams.
In order to attempt to protect our shareholders' current level of income for a
longer period of time, we have continued to take advantage of opportunities to
extend the Fund's call protection. This emphasis has led to the Fund having an
average call protection of approximately 10 years.
OUTLOOK FOR THE MUNICIPAL MARKET
The U.S. economy is 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's duration to take advantage of this trend.
*Past performance is no guarantee of future results.
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<CAPTION>
VOYAGEUR IDAHO TAX FREE FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1996
- -----------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, at market value (note 1)
(identified cost, $26,861,249)................................................ $ 26,766,585
Cash in bank on demand deposit................................................... 78,442
Accrued interest receivable...................................................... 546,924
Receivable for Fund shares sold.................................................. 82,707
Organizational costs (note 4).................................................... 6,417
------------
Total assets.................................................................. 27,481,075
------------
LIABILITIES
Dividends payable to shareholders................................................ 30,572
Payable for Fund shares redeemed................................................. 11,688
Other accrued expenses........................................................... 33,052
------------
Total liabilities............................................................. 75,312
------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES...................................... $ 27,405,763
============
Represented by:
Capital stock - $.01 par value (note 1)....................................... $ 25,790
Additional paid-in capital.................................................... 27,553,945
Distributions in excess of net investment income.............................. (21,358)
Accumulated net realized loss on investments.................................. (57,950)
Unrealized depreciation of investments........................................ (94,664)
-------------
TOTAL NET ASSETS............................................................ $ 27,405,763
============
Net assets applicable to outstanding Class A Shares.............................. $ 22,228,125
============
Net assets applicable to outstanding Class B Shares.............................. $ 4,215,419
============
Net assets applicable to outstanding Class C Shares.............................. $ 962,219
============
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of Capital Stock outstanding: 2,091,408 (note 5)............. $ 10.63
============
Class B - Shares of Capital Stock outstanding: 397,028 (note 5)............... $ 10.62
============
Class C - Shares of Capital Stock outstanding: 90,552 (note 5)................ $ 10.63
============
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR IDAHO TAX FREE FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1996
- ---------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Interest.................................................................. $ 641,206
----------
Expenses (note 3):
Investment advisory and management fee.................................... 55,079
Dividend-disbursing, administrative and accounting services fee........... 25,230
Printing, postage and supplies............................................ 2,618
Audit and accounting fees................................................. 4,117
Legal fees................................................................ 202
Distribution fees - Class A............................................... 22,779
Distribution fees - Class B............................................... 15,012
Distribution fees - Class C............................................... 4,090
Directors' fees........................................................... 618
Registration fees......................................................... 5,874
Custodian fees............................................................ 10,156
Amortization of organizational costs...................................... 917
Other..................................................................... 1,791
----------
Total expenses.......................................................... 148,483
Less: Expenses waived or absorbed........................................ (83,799)
-----------
Total net expenses...................................................... 64,684
----------
Investment income - net................................................. 576,522
----------
Realized and unrealized gain (loss) on investments:
Realized loss on security transactions.................................... (57,950)
Net change in unrealized appreciation or depreciation of investments...... (636,571)
-----------
Net loss on investments................................................. (694,521)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $ (117,999)
===========
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR IDAHO TAX FREE FUND
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED JANUARY 4, 1995*
JUNE 30, 1996 TO DECEMBER 31,
Operations: (UNAUDITED) 1995
------------- ----------------
<S> <C> <C>
Investment income - net................................................. $ 576,522 $ 396,749
Realized gain (loss) on investments - net............................... (57,950) 120,997
Net change in unrealized appreciation or depreciation of investments.... (636,571) 541,907
----------- -----------
Net increase (decrease) in net assets resulting from operations....... (117,999) 1,059,653
----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A............................................................... (486,140) (349,633)
Class B............................................................... (72,424) (27,857)
Class C............................................................... (18,364) (20,686)
Distributions in excess of net investment income:
Class A............................................................... (17,926) --
Class B............................................................... (2,193) --
Class C............................................................... (1,239) --
Net realized gain on investments:
Class A............................................................... -- (100,536)
Class B............................................................... -- (14,456)
Class C............................................................... -- (6,005)
----------- -----------
Total distributions................................................. (598,286) (519,173)
----------- -----------
Share transactions (note 5):
Proceeds from sale of shares:
Class A (note 3)...................................................... 9,757,892 13,745,657
Class B............................................................... 2,304,642 1,933,569
Class C............................................................... 300,496 841,585
Net asset value of shares issued in reinvestment of net investment income
and realized gain distributions:
Class A............................................................. 330,627 176,742
Class B............................................................. 30,588 8,012
Class C............................................................. 27,114 16,633
Payments for redemption of shares:
Class A............................................................... (796,761) (855,942)
Class B............................................................... (11,098) (1,063)
Class C............................................................... (128,496) (98,629)
----------- -----------
Increase in net assets from share transactions.......................... 11,815,004 15,766,564
----------- -----------
Total increase in net assets.......................................... 11,098,719 16,307,044
Net assets at beginning of period.......................................... 16,307,044 --
----------- -----------
Net assets at end of period (including undistributed or (distributions in
excess of) net investment income of $(21,358) and $406, respectively)... $27,405,763 $16,307,044
=========== ===========
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
VOYAGEUR IDAHO TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Voyageur Idaho 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 an open-end management investment
company. The Fund seeks high current income free from both federal and state
income taxes by investing in investment grade municipal bonds. The Fund is
classified as a non-diversified 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 may be subject to a
contingent deferred sales charge and such shares automatically convert to Class
A after eight years. Class C Shares 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 its articles of incorporation, Voyageur Mutual Funds, Inc., 10
trillion shares of authorized capital stock that may be issued in one or more
series.
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of net increase (decrease) in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Securities are valued at fair value as determined by the Board of
Directors. Determination of fair value involves, among other things, using
pricing services or prices quoted by independent brokers. Short-term securities
are valued at amortized cost which approximates market value.
Security transactions are accounted for on the 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.
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
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.
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 $12,009,851 and $2,317,727, respectively, for
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. During the six months ended June 30, 1996, Voyageur
voluntarily absorbed $80,000, excluding waiver of distribution fees.
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 six months ended
June 30, 1996, Fund Distributors voluntarily waived Class B distribution fees of
$3,799.
Sales charges paid by Class A shareholders were $233,626. Of this amount,
Fund Distributors received $44,022.
(4) ORGANIZATIONAL COSTS
Organizational costs are being amortized over 60 months on a straight line
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) SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods shown were as
follows:
A SHARES
-----------------------------------
SIX MONTHS PERIOD FROM
ENDED JANUARY 4, 1995*
JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995
------------- ---------------
Shares sold........................ 907,029 1,295,483
Shares issued for
reinvested distributions........ 30,592 16,473
Shares redeemed.................... (74,940) (83,229)
---------- ---------
Increase in shares
outstanding..................... 862,681 1,228,727
========== ==========
B SHARES
-----------------------------------
SIX MONTHS PERIOD FROM
ENDED MARCH 16, 1995*
JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995
------------ ---------------
Shares sold........................ 215,603 179,009
Shares issued for
reinvested distributions........ 2,836 743
Shares redeemed.................... (1,062) (101)
---------- ----------
Increase in shares
outstanding..................... 217,377 179,651
========== ==========
C SHARES
-----------------------------------
SIX MONTHS PERIOD FROM
ENDED JANUARY 11, 1995*
JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995
------------ ----------------
Shares sold........................ 28,399 79,417
Shares issued for
reinvested distributions........ 2,503 1,549
Shares redeemed.................... (11,999) (9,317)
---------- ----------
Increase in shares
outstanding..................... 18,903 71,649
========== ==========
* Commencement of operations.
<TABLE>
<CAPTION>
(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:
A SHARES B SHARES C SHARES
----------------------------- ------------------------------ -----------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
SIX MONTHS JANUARY 4, SIX MONTHS MARCH 16, SIX MONTHS JANUARY 11,
ENDED 1995(d) ENDED 1995(d) ENDED 1995(d)
JUNE 30, 1996 TO DECEMBER 31, JUNE 30, 1996 TO DECEMBER 31, JUNE 30, 1996 TO DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period........... $11.02 $10.00 $11.01 $10.50 $11.02 $10.04
------ ------ ------ ------ ------ ------
Operations:
Net investment income......... .29 .60 .27 .42 .25 .50
Net realized and unrealized
gain (loss) on investments.. (.38) 1.10 (.38) .59 (.38) 1.06
------ ------ ------ ------ ------ ------
Total from operations..... (.09) 1.70 (.11) 1.01 (.13) 1.56
------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income (a) (.29) (.60) (.27) (.42) (.25) (.50)
In excess of net investment
income. .................... (.01) -- (.01) -- (.01) --
From realized gains........... -- (.08) -- (.08) -- (.08)
------ ------ ------ ------ ------ ------
Total distributions....... (.30) (.68) (.28) (.50) (.26) (.58)
------ ------ ------ ------ ------ ------
Net asset value:
End of period................. $10.63 $11.02 $10.62 $11.01 $10.63 $11.02
====== ====== ====== ====== ====== ======
Total investment return (b)...... (.92)% 17.48% (1.17)% 9.86% (1.29)% 15.81%
Net assets at end of period
(000's omitted)............... $22,228 $13,540 $4,215 $1,977 $962 $789
Ratios:
Ratio of expenses to
average daily net assets (f) .49%(e) .26%(e) .99%(e) .79%(e) 1.23%(e) 1.05%(e)
Ratio of net investment income
to average daily net assets. 5.32%(e) 5.24%(e) 4.80%(e) 4.68%(e) 4.61%(e) 4.48%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c).......... 1.22%(e) 1.25%(e) 1.97%(e) 1.90%(e) 1.96%(e) 2.00%(e)
Net investment income. 4.59%(e) 4.25%(e) 3.82%(e) 3.57%(e) 3.88%(e) 3.53%(e)
Portfolio turnover rate (excluding
short-term securities)...... 10.67% 41.97% 10.67% 41.97% 10.67% 41.97%
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. $.01 per share of distributions from net investment income was
subject to state income tax for the period ended December 31, 1995.
(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 period 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) The expense ratio reflects the effect of gross expenses attributable to
earnings credits on uninvested cash balances received by the Fund.
<TABLE>
<CAPTION>
VOYAGEUR IDAHO TAX FREE FUND
INVESTMENTS IN SECURITIES (UNAUDITED) JUNE 30, 1996
- -------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (d) RATE MATURITY VALUE (a)
- -------------------------------------------------------------------------------------------------------------------
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (96.2%):
GENERAL OBLIGATION (24.2%):
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 210 Bingham County Blackfoot School District #55 (MBIA Insured)............ 5.65% 08-01-15 $ 210,878
300 Boise City School District UTGO (AMBAC Insured)........................ 5.40 07-30-14 293,553
215 Boise City Independent School District ................................ 5.50 07-30-16 210,139
150 Bonner County Local Improvement District #93-1......................... 6.20 04-30-05 152,757
185 Bonner County Local Improvement District #93-1......................... 6.35 04-30-06 188,935
195 Bonner County Local Improvement District #93-1......................... 6.40 04-30-07 199,140
110 Bonner County Local Improvement District #93-1......................... 6.50 04-30-08 112,324
100 Bonner County Local Improvement District #93-1......................... 6.50 04-30-10 101,226
450 Bonneville & Bingham County School District #93 (FGIC Insured)......... 5.50 07-30-10 454,068
590 Canyon County Independent School District #131 (MBIA Insured).......... 5.50 07-30-12 590,313
470 Canyon County Independent School District #132 (FSA Insured)........... 5.45 07-30-14 462,551
100 Canyon County Independent School District #139......................... 5.20 08-01-12 95,506
85 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.00 07-01-09 84,621
90 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.05 07-01-10 89,580
40 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.10 07-01-12 39,718
45 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.10 07-01-14 44,420
500 Elmore County Schools (AMBAC Insured).................................. 4.50 07-31-14 432,325
500 Elmore County Schools (AMBAC Insured).................................. 4.50 07-31-15 432,845
250 Fremont/Madison County Independent School District #215 (FSA Insured).. 5.50 08-01-12 250,150
100 Gooding Lincoln Independent School District #231 (FSA Insured)......... 6.30 02-01-14 104,533
120 Jefferson County Independent School District #253 (MBIA Insured)....... 5.50 08-01-14 118,775
300 Madison County (FSA Insured)........................................... 5.40 08-01-14 291,890
85 Post Falls Limited #2 Special Assessment............................... 5.60 09-01-04 83,090
85 Post Falls Limited #2 Special Assessment............................... 5.75 09-01-05 83,102
1,000 Puerto Rico Aqueduct and Sewer Authority............................... 5.00 07-01-15 890,670
180 Sun Valley............................................................. 5.20 08-01-09 179,316
220 Sun Valley............................................................. 5.30 08-01-10 218,053
225 Twin Falls School District #413 (AMBAC Insured)........................ 5.25 07-30-12 219,272
-----------
6,633,750
-----------
UTILITIES (5.7%):
-------------------------------------------------------------------------------------------------------
125 Chubbuck Water Revenue................................................. 6.35 04-01-08 127,265
135 Chubbuck Water Revenue................................................. 6.40 04-01-10 136,242
150 Owyhee Sewer District 95-1............................................. 5.50 05-15-04 152,145
100 Puerto Rico Electric Power Authority (FSA Insured)..................... 6.00 07-01-16 101,125
1,000 Puerto Rico Electric Power Authority................................... 5.25 07-01-21 903,160
150 Puerto Rico Telephone Revenue Authority................................ 5.50 01-01-22 139,787
-----------
1,559,724
-----------
TRANSPORTATION (4.6%):
-------------------------------------------------------------------------------------------------------
150 Guam Highway (FSA Insured)............................................. 6.30 05-01-12 156,317
1,000 Puerto Rico Commonwealth Highway & Transportation...................... 5.50 07-01-26 935,540
175 Puerto Rico Highway Revenue Series W................................... 5.50 07-01-15 169,003
-----------
1,260,860
-----------
INDUSTRIAL (1.0%):
-------------------------------------------------------------------------------------------------------
100 Idaho State Water Resource Boise Water................................. 7.25(e) 12-01-21 107,485
150 Puerto Rico Pepsico Project Series A................................... 6.25 11-15-13 156,384
-----------
263,869
-----------
HEALTH CARE (16.3%):
-------------------------------------------------------------------------------------------------------
500 Idaho Magic Valley Health Facilities (AMBAC Insured)................... 5.63 12-01-13 499,145
590 Idaho St. Alphonsus Health Facility.................................... 6.25 12-01-22 603,894
340 Idaho St. Joseph Regional Medical (MBIA Insured)....................... 5.25 07-01-13 325,192
1,645 Idaho State Health Facility Revenue Bannock Medical Center............. 6.38 05-01-17 1,627,070
1,500 Idaho State Health Facility Revenue Bannock Medical Center............. 6.13 05-01-25 1,419,540
-----------
4,474,841
-----------
HOUSING (16.4%):
-------------------------------------------------------------------------------------------------------
1,000 Idaho State Housing Agency Multi-Family PL. Plaza (FHA Insured)........ 6.50(e) 12-01-36 1,007,690
350 Idaho State Housing Finance Authority Series C-2....................... 6.35(e) 07-01-15 353,224
370 Idaho State Housing Single Family Senior Bonds......................... 6.10(e) 07-01-16 366,837
500 Idaho State Housing Single Family (AMBAC Insured)...................... 6.05(e) 07-01-13 497,375
100 Idaho State Single Family Housing Authority Revenue Series A1.......... 6.85 07-01-12 104,040
255 Idaho State Single Family Housing Finance Authority Series C-2......... 6.35(e) 07-01-15 257,277
1,500 Idaho State Single Family Housing Revenue Series G-2................... 6.15(e) 07-01-15 1,495,005
200 Idaho State Single Family Housing Revenue ............................. 6.60 07-01-11 207,430
200 Idaho State Single Family Mortgage Series 95B (FHA Insured) ........... 6.45(e) 07-01-15 202,890
-----------
4,491,763
-----------
EDUCATION (6.8%):
-------------------------------------------------------------------------------------------------------
550 Idaho State University (MBIA Insured)................................. 5.80 04-01-20 550,072
1,300 University of Idaho Revenue (FSA Insured)............................. 5.85 04-01-11 1,317,459
-----------
1,867,531
-----------
OTHER REVENUE (21.2%):
-------------------------------------------------------------------------------------------------------
350 Ammon Urban Renewal Tax Inc Revenue................................... 5.88 08-01-17 352,891
2,500 Boise Urban Renewal Agency Tax Inc Revenue............................ 6.13 09-01-15 2,401,800
2,040 Boise Urban Renewal Tax Inc Bd-B...................................... 6.13 09-01-15 1,959,869
1,175 Puerto Rico PBA Series M.............................................. 5.50 07-01-21 1,095,687
-----------
5,810,247
-----------
TOTAL MUNICIPAL BONDS (cost: $26,457,249) 26,362,585
-----------
SHORT-TERM SECURITIES (1.5%):
-------------------------------------------------------------------------------------------------------
404 Nuveen Investment Tax-Free Fund (cost: $404,000)...................... 3.10(b) 404,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $26,861,249) (c) $26,766,585
===========
See accompanying notes to investments in securities.
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES (UNAUDITED)
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) Dividend yields change daily to reflect current market conditions. Rate
shown is the quoted yield as of June 30, 1996.
(c) Also represents the cost of securities for federal income tax purposes and
the aggregate gross unrealized appreciation and depreciation in securities
based on these costs were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation (Depreciation) (Depreciation)
------------ -------------- --------------
$219,273 $(313,937) $(94,664)
(d) Investments in bonds, by rating category (unaudited) as a percentage of
total bonds, are as follows:
Non-
Aaa/AAA Aa/AA A/A Baa/BBB rated Total
------- ----- --- ------- ----- -----
38% 8% 10% 38% 6% 100%
(e) These securities are subject to the Alternative Minimum Tax.
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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