IDAHO TAX FREE FUND
ANNUAL REPORT
Dated December 31, 1995
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds
as your objectives or market conditions change.
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
Voyageur ARIZONA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur NATIONAL Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
Voyageur KANSAS Tax Free Fund
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
Voyageur ARIZONA Insured Voyageur MISSOURI Insured
Tax Free Fund Tax Free Fund
Voyageur CALIFORNIA Insured Voyageur NATIONAL Insured
Tax Free Fund Tax Free Fund
Voyageur FLORIDA Voyageur OREGON
Tax Free Fund Tax Free Fund
Voyageur MINNESOTA Insured Fund Voyageur WASHINGTON
Tax Free Fund
VOYAGEUR LIMITED TERM FUNDS seek to preserve original investment principal while
providing income free from both Federal income taxes and state income taxes
(where applicable). The Funds invest in intermediate term investment grade
municipal bonds.
Voyageur FLORIDA Limited Term Tax Free Fund Voyageur NATIONAL Limited
Voyageur MINNESOTA Limited Term Tax Free Fund Term Tax Free Fund
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
Voyageur AGGRESSIVE GROWTH Fund Voyageur GROWTH Stock Fund
Voyageur GROWTH AND INCOME Fund Voyageur INTERNATIONAL Equity Fund
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur MUNICIPAL CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur GOVERNMENT CASH Series Voyageur PRIME CASH Series
Voyageur MINNESOTA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
Dear Shareholder:
1995 was an excellent year for municipal bond fund investors, and I am pleased
to report that your Fund did extremely
well.
As you may recall, the previous year, 1994, represented one of the most
difficult years for fixed income investors since the 1920s. Voyageur's
investment strategy, however, emphasizes total return over the long term.
Shareholders who maintained a long term outlook through 1994 are to be
congratulated for their patience. This patience was rewarded
in 1995.
Two of the major factors contributing to the resurgence of the municipal bond
market this past year were:
* Progressively lower interest rates throughout the year. (Falling interest
rates directly increases the value of your Fund's portfolio, and hence,
your shares.)
* A narrowing "spread" between yields on higher quality bonds versus lower
quality bonds. (Your Fund benefited from maintaining a large position in
quality bonds.)
In the following pages, Beth Howell, the Portfolio Manager, will elaborate on
these and other points of interest regarding the municipal bond market in 1995.
She will also share Voyageur's economic outlook for the next fiscal year.
Finally, I'd like to apprise you of the amount of capital appreciation and
current income generated by the Fund on your
behalf in 1995.
<TABLE>
<CAPTION>
TOTAL NET
NET ASSET NET ASSET ASSETS
VALUE VALUE DIVIDENDS END OF
BEGINNING END PAID PER PERIOD
PERIOD OF PERIOD OF PERIOD SHARE (000'S)
- ------ ----------- --------- ----------- ---------
Period ended December 31, 1995:
<S> <C> <C> <C> <C>
Class A Shares $10.00* $11.02 $0.68 $13,540
Class B Shares 10.50** 11.01 0.50 1,977
Class C Shares 10.04*** 11.02 0.58 789
</TABLE>
_________________________________
* Net asset value at January 4, 1995 (commencement of operations)
** Net asset value at March 16, 1995 (commencement of operations)
*** Net asset value at January 11, 1995 (commencement of operations)
I will be reporting to you again in August, 1996 to review the first half of the
coming year. In the interim, if you have any questions or comments about your
Fund, please call Voyageur's Shareholder Services Department at (800)545-3863 or
your financial advisor.
Thank you for investing with Voyageur.
Sincerely,
John G. Taft
President
Voyageur Idaho Tax Free Fund
FUND INVESTMENT OBJECTIVE AND STRATEGY
The primary objective of the Voyageur Idaho Tax Free Fund is to seek as high a
level of current income exempt from federal income tax and from state income tax
as is consistent with preservation of capital.
The Idaho Tax Free Fund generally invests in long-term, quality municipal bonds.
The Fund is exempt from federal income tax and Idaho state income tax. We
believe that investment grade municipal bonds for the Idaho Tax Free Fund offer
the best value in today's interest rate environment.
DISCUSSION OF FUNDS PERFORMANCE
by Elizabeth H. Howell
MS. HOWELL IS A SENIOR VICE PRESIDENT AND TAX EXEMPT PORTFOLIO MANAGER FOR
VOYAGEUR FUND MANAGERS. SHE HAS MANAGED THE VOYAGEUR IDAHO TAX FREE FUND SINCE
ITS INCEPTION.
We at Voyageur are pleased to report the 1995 performance results of the
Voyageur Idaho Tax Free Fund. For the period ended December 31, 1995, the Fund
achieved a total return of +17.48% (for Class 'A' shares, assuming purchase of
shares at net asset value and reinvestment of dividend and capital gains). For
additional information about total returns achieved by the Fund over the life of
the Fund and including the effect of sales charges, please refer to the chart on
page 7.
FACTORS AFFECTING FUND PERFORMANCE IN 1995
As previously discussed, a general downward trend in prevailing interest rates
had a positive impact on the net asset value of Fund shares in 1995. Your Fund
was able to capture significant capital appreciation through duration
management. Longer duration funds experience wider fluctuations in market prices
than shorter duration funds. The Voyageur Idaho Tax Free Fund had an average
weighted duration of nearly 10 years in the first quarter of 1995, which allowed
for an increase in net asset value. After having captured this market rally, the
duration of the Fund was systematically reduced, closing the year at
approximately 8 years.
The Voyageur Idaho Tax Free Fund also benefited from relative changes in value
between high quality bonds and lower quality bonds. As interest rate spreads
between these two classes of municipal bonds narrowed, high quality bonds (which
had been dramatically oversold during the 1994 bear market) gained significant
relative value. As of December 31, 1995 the Fund was comprised of 46% AAA and/or
Aaa bonds, and 92% of the Fund was held in investment grade securities.
Finally, supply and demand trends of Idaho municipal bonds benefited Fund
shareholders. New issuance of municipal bonds remained low. A lower level of
supply of Idaho bonds favors existing bond holders, particularly large
institutional buyers, such as mutual funds.
OUTLOOK FOR 1996
Our outlook for the Idaho municipal bond market remains bullish. However, we do
not anticipate as significant levels of total return in the upcoming year as was
achieved in 1995.
Our 1996 economic outlook calls for:
* CONTINUED LOW RATES OF INFLATION. We expect a Consumer Price Index (CPI)
increase of from 2.5% to 2.8%.
* SLOWING OF ECONOMIC GROWTH. In 1995 U.S. Gross Domestic Product (GDP)
climbed about 3%. Voyageur's 1996 projection for GDP calls for an increase
of about 2.4%.
* STABLE TO SLIGHTLY DECLINING INTEREST RATES. During 1995 the Federal
Reserve Board encouraged lower interest rates by reducing the Federal Funds
Rate by a total of .5%. (Rates were subsequently lowered by an additional
.25% in February 1996.) We expect further reductions of .5% to .75%, which
will likely occur well in advance of the November elections.
In conclusion, Voyageur believes the municipal bond market will have a good year
in 1996. However, we advise against expectations of total return levels achieved
in 1995.
PURSUANT TO RULE 232.304(a) OF REGULATION S-T THE FOLLOWING IS A TABULAR
REPRESENTATION OF A LINE GRAPH FOR VOYAGEUR IDAHO TAX FREE FUND PORTFOLIO
ABSTRACT FOR THE PERIOD ENDED DECEMBER 31, 1995. THE DATA REPRESENTS THE
CUMULATIVE TOTAL RETURN OF A HYPOTHETICAL INVESTMENT IN CLASS A SHARES OF
$10,000 MADE ON THE DATE THE FUND COMMENCED OPERATIONS THROUGH DECEMBER 31,
1995.
ENDING VALUE ENDING VALUE ENDING VALUE
WITH SALES WITHOUT SALES LEHMAN BROS.
DATE CHARGE CHARGE BOND INDEX
- ---- ------ ------ ----------
Jan-95 9625 10000 10000
Jan-95 9885.13 10270.26 10352.502500876
Feb-95 10167.86 10564.01 10728.298352011
Mar-95 10305.82 10707.34 10850.600953224
Apr-95 10317.58 10719.57 10848.430833033
May-95 10653.03 11068.08 11257.416675438
Jun-95 10525.59 10935.68 11084.052458637
Jul-95 10565.88 10977.54 11141.689531421
Aug-95 10676 11091.95 11294.330678002
Sep-95 10786.65 11206.91 11383.555890358
Oct-95 10958.07 11385 11626.025642206
Nov-95 11150.47 11584.9 11882.960808899
Dec-95 11307.53 11748.08 12049.322260224
VOYAGEUR IDAHO TAX FREE FUND
TOTAL RETURNS
(CLASS A SHARES)
----------------
SINCE
1/4/95**
--------
Without Sales Charge 17.48%
With Sales Charge* 13.08%
Lehman Bros. 20 20.49%
Year Municipal
Bond Index
VOYAGEUR IDAHO TAX FREE FUND
TOTAL RETURNS
(CLASS B SHARES)
----------------
SINCE
3/16/95**
---------
Without Contingent Deferred 9.86%
Sales Charge
With Contingent Deferred 5.86%
Sales Charge***
VOYAGEUR IDAHO TAX FREE FUND
TOTAL RETURNS
(CLASS C SHARES)
----------------
Since
1/11/95**
---------
15.81%
* Average annual total returns include the maximum 3.75% sales charge.
** Commencement of operations.
*** Assumes redemption on December 31, 1995.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Voyageur Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of Voyageur Idaho Tax Free
Fund (a fund within Voyageur Mutual Funds, Inc.) as of December 31, 1995, and
the related statements of operations, changes in net assets and the financial
highlights for the period from January 4, 1995, commencement of operations, to
December 31, 1995. These financial statements and the financial highlights are
the responsibility of Fund management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. As to securities purchased
but not received, we request confirmations from brokers, and where replies are
not received, we carry out other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Voyageur Idaho Tax Free Fund
at December 31, 1995 and the results of its operations, the changes in its net
assets and the financial highlights for the periods stated in the first
paragraph above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 9, 1996
<TABLE>
<CAPTION>
VOYAGEUR IDAHO TAX FREE FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in securities, at market value (note 1)
(identified cost, $17,946,075)................................................ $18,487,982
Cash in bank on demand deposit................................................... 403
Accrued interest receivable...................................................... 312,088
Receivable for Fund shares sold.................................................. 210,875
Organizational costs (note 4).................................................... 7,334
-----------
Total assets.................................................................. 19,018,682
-----------
LIABILITIES
Dividends payable to shareholders................................................ 190,540
Payable for investment securities purchased...................................... 2,494,731
Distribution fees payable........................................................ 11,630
Other accrued expenses........................................................... 14,737
-----------
Total liabilities............................................................. 2,711,638
-----------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES...................................... $16,307,044
===========
Represented by:
Capital stock - $.01 par value (note 1)....................................... $ 14,800
Additional paid-in capital.................................................... 15,749,931
Undistributed net investment income (note 1).................................. 406
Unrealized appreciation of investments........................................ 541,907
-----------
TOTAL NET ASSETS............................................................ $16,307,044
===========
Net assets applicable to outstanding Class A Shares.............................. $13,540,265
===========
Net assets applicable to outstanding Class B Shares.............................. $ 1,977,479
===========
Net assets applicable to outstanding Class C Shares.............................. $ 789,300
===========
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A - Shares of Capital Stock outstanding: 1,228,727 (note 5)............ $11.02
======
Class B - Shares of Capital Stock outstanding: 179,651 (note 5).............. $11.01
======
Class C - Shares of Capital Stock outstanding: 71,649 (note 5)............... $11.02
======
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR IDAHO TAX FREE FUND
STATEMENT OF OPERATIONS PERIOD ENDED DECEMBER 31, 1995*
- ------------------------------------------------------------------------------------------------------------
Investment income:
<S> <C>
Interest.................................................................. $ 422,021
----------
Expenses (note 3):
Investment advisory and management fee.................................... 38,282
Dividend-disbursing, administrative and accounting services fee........... 29,996
Printing, postage and supplies............................................ 3,876
Audit and accounting fees................................................. 5,069
Legal fees................................................................ 1,380
Distribution fees - Class A............................................... 16,620
Distribution fees - Class B............................................... 6,034
Distribution fees - Class C............................................... 4,499
Directors' fees........................................................... 1,260
Registration fees......................................................... 1,327
Custodian fees............................................................ 8,303
Amortization of organizational costs...................................... 1,833
Other..................................................................... 3,228
----------
Total expenses.......................................................... 121,707
Less: Expenses waived or absorbed........................................ (94,866)
----------
Net expenses before earnings credits on uninvested cash................... 26,841
Less: Earnings credits on uninvested cash................................ (1,569)
----------
Total net expenses...................................................... 25,272
----------
Investment income - net................................................. 396,749
----------
Realized and unrealized gain on investments:
Realized gain on security transactions.................................... 120,997
Net change in unrealized appreciation or depreciation of investments...... 541,907
----------
Net gain on investments................................................. 662,904
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $1,059,653
==========
* Period from January 4, 1995 (commencement of operations) to December 31, 1995.
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR IDAHO TAX FREE FUND
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------
PERIOD FROM
JANUARY 4, 1995*
TO DECEMBER 31,
Operations: 1995
----------------
<S> <C>
Investment income - net...................................................... $ 396,749
Realized gain on investments - net........................................... 120,997
Net change in unrealized appreciation or depreciation of investments......... 541,907
-----------
Net increase (decrease) in net assets resulting from operations............ 1,059,653
-----------
Distributions to shareholders from:
Investment income - net:
Class A.................................................................... (349,633)
Class B.................................................................... (27,857)
Class C.................................................................... (20,686)
Net realized gain on investments:
Class A.................................................................... (100,536)
Class B.................................................................... (14,456)
Class C.................................................................... (6,005)
-----------
Total distributions...................................................... (519,173)
-----------
Share transactions (note 5): Proceeds from sale of shares:
Class A (note 3)........................................................... 13,745,657
Class B.................................................................... 1,933,569
Class C.................................................................... 841,585
Net asset value of shares issued in reinvestment of net investment income and
realized gain distributions:
Class A.................................................................. 176,742
Class B.................................................................. 8,012
Class C.................................................................. 16,633
Payments for redemption of shares:
Class A.................................................................... (855,942)
Class B.................................................................... (1,063)
Class C (note 3)........................................................... (98,629)
-----------
Increase in net assets from share transactions............................... 15,766,564
-----------
Total increase in net assets............................................... 16,307,044
Net assets at beginning of period............................................... --
-----------
Net assets at end of period (including undistributed
net investment income of $406)............................................... $16,307,044
===========
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
VOYAGEUR IDAHO TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(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, first offered in 1995, 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.
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.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, reclassification adjustments have been made to increase
undistributed net investment income and decrease additional paid-in capital by
$1,833 for 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 $19,935,367 and $3,233,289, respectively, for
the period ended December 31, 1995.
(3) EXPENSES
The Fund has an investment advisory and management fee agreement with
Voyageur Fund Managers, Inc. (Voyageur) under which Voyageur manages the Fund's
assets and provides other specified services. The fee for investment management
and advisory services is payable monthly and is based on 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 December 31, 1995, Voyageur absorbed
$17,539 pursuant to the contractual 1% expense limitation and, excluding waiver
of distribution fees, voluntarily absorbed $72,461.
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
December 31, 1995, Fund Distributors voluntarily waived Class A distribution
fees of $3,224, Class B distribution fees of $1,549 and Class C distribution
fees of $93. The Fund earned $1,569 in credits on uninvested cash balances held
by the Fund at the custodian during the period ended December 31, 1995. These
credits were used to reduce certain fees for various custodial, pricing and
accounting services provided by the custodian bank.
Sales charges paid by Class A shareholders were $338,762. Of this amount,
Fund Distributors received $62,756. Contingent deferred sales charges paid by
Class C shareholders were $212.
(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.
(5) SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods ended December 31, 1995,
were as follows:
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
---------------- ---------------- -----------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 4, 1995* MARCH 16, 1995* JANUARY 11, 1995*
TO DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
---------------- ---------------- -----------------
<S> <C> <C> <C>
Shares sold...................... 1,295,483 179,009 79,417
Shares issued for
reinvested distributions...... 16,473 743 1,549
Shares redeemed.................. (83,229) (101) (9,317)
----------- ---------- -----------
Increase in shares
outstanding................... 1,228,727 179,651 71,649
=========== ========= ==========
* Commencement of operations.
</TABLE>
(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>
A SHARES B SHARES C SHARES
------------------ ----------------- ----------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 4, 1995(d) MARCH 16, 1995(d) JANUARY 11, 1995(d)
TO DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
------------------ ----------------- ----------------
Net asset value:
<S> <C> <C> <C>
Beginning of period......................... $10.00 $10.50 $10.04
------ ------ ------
Operations:
Net investment income....................... .60 .42 .50
Net realized and unrealized
gain on investments....................... 1.10 .59 1.07
------ ------ -------
Total from operations................... 1.70 1.01 1.56
------ ------ -------
Distributions to shareholders:
From net investment income (a).............. (.60) (.42) (.50)
From realized gains......................... (.08) (.08) (.08)
------ ------ -------
Total distributions..................... (.68) (.50) (.58)
------ ------ -------
Net asset value:
End of period............................... $11.02 $11.01 $11.02
====== ====== ======
Total investment return (b).................... 17.48% 9.86% 15.81%
Net assets at end of period
(000's omitted)............................. $13,540 $1,977 $789
Ratios:
Ratio of expenses to
average daily net assets (f).............. .26%(e) .79%(e) 1.05%(e)
Ratio of net investment income
to average daily net assets............... 5.24%(e) 4.68%(e) 4.48%(e)
Assuming no voluntary waivers
and reimbursements:
Expenses (c)........................ 1.25%(e) 1.90%(e) 2.00%(e)
Net investment income............... 4.25%(e) 3.57%(e) 3.53%(e)
Portfolio turnover rate (excluding
short-term securities).................... 41.97% 41.97% 41.97%
See accompanying notes to Financial Highlights.
</TABLE>
(6) FINANCIAL HIGHLIGHTS (CONTINUED)
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 DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------------
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 (106.5%):
GENERAL OBLIGATION (36.2%):
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$165 Bingham County Blackfoot School District #55 (MBIA Insured)............ 5.40% 08-01-10 $168,831
210 Bingham County Blackfoot School District #55 (MBIA Insured)............ 5.65 08-01-15 216,615
300 Boise City School District UTGO (AMBAC Insured)........................ 5.40 07-30-14 304,467
150 Bonner County Local Improvement District #93-1......................... 6.20 04-30-05 156,461
185 Bonner County Local Improvement District #93-1......................... 6.35 04-30-06 193,493
195 Bonner County Local Improvement District #93-1......................... 6.40 04-30-07 203,328
110 Bonner County Local Improvement District #93-1......................... 6.50 04-30-08 114,678
100 Bonner County Local Improvement District #93-1......................... 6.50 04-30-10 103,592
450 Bonneville & Bingham County School District #93 GO (FGIC Insured)...... 5.50 07-30-10 466,047
590 Canyon County School District #131 (MBIA Insured)...................... 5.50 07-30-12 602,048
470 Canyon County Independent School District #132 (FSA Insured)........... 5.45 07-30-14 479,254
250 Canyon County School District #139..................................... 5.20 08-01-11 251,718
100 Canyon County School District #139..................................... 5.20 08-01-12 100,438
85 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.00 07-01-09 86,572
90 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.05 07-01-10 91,600
40 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.10 07-01-12 40,710
45 Coeur D' Alene Local Improvement District #6 Series 1995............... 6.10 07-01-14 45,798
500 Elmore County Schools (AMBAC Insured).................................. 4.50 07-31-14 458,060
250 Fremont/Madison County Independent School District #215 (FSA Insured).. 5.50 08-01-12 255,645
100 Gooding Lincoln School District #231 (FSA Insured)..................... 6.30 02-01-14 108,338
105 Jefferson County School District #253 (MBIA Insured)................... 5.45 08-01-12 107,376
120 Jefferson County School District #253 (MBIA Insured)................... 5.50 08-01-14 122,797
110 Madison County (FSA Insured)........................................... 5.30 08-01-12 111,396
300 Madison County (FSA Insured)........................................... 5.40 08-01-14 303,903
85 Post Falls Limited #2 Special Assessment............................... 5.60 09-01-04 85,167
85 Post Falls Limited #2 Special Ass...................................... 5.75 09-01-05 85,367
180 Sun Valley............................................................. 5.20 08-01-09 185,283
220 Sun Valley............................................................. 5.30 08-01-10 223,291
225 Twin Falls School District #413 (AMBAC Insured)........................ 5.25 07-30-12 226,949
-----------
5,899,222
-----------
UTILITIES (3.2%):
------------------------------------------------------------------------------------------------------
125 Chubbuck Water Revenue................................................. 6.35 04-01-08 130,024
135 Chubbuck Water Revenue................................................. 6.40 04-01-10 139,255
100 Puerto Rico Electric Authority (FSA Insured)........................... 6.00 07-01-16 105,125
150 Puerto Rico Telephone Revenue Authority................................ 5.50 01-01-22 150,421
-----------
524,825
-----------
TRANSPORTATION (2.1%):
------------------------------------------------------------------------------------------------------
150 Guam Highway (FSA Insured)............................................. 6.30 05-01-12 160,875
175 Puerto Rico Highway Revenue Series W................................... 5.50 07-01-15 175,415
-----------
336,290
-----------
INDUSTRIAL (1.7%):
------------------------------------------------------------------------------------------------------
100 Idaho State Water Resource Boise Water................................. 7.25(e) 12-01-21 110,117
150 Puerto Rico Pepsico Project Series A................................... 6.25 11-15-13 162,028
-----------
272,145
-----------
HEALTH CARE (21.8%):
------------------------------------------------------------------------------------------------------
500 Idaho Magic Valley Health Facilities (AMBAC Insured)................... 5.63 12-01-13 512,915
500 Idaho St. Alphonsus Health Facility.................................... 6.25 12-01-22 535,110
340 Idaho St. Joseph Regional Medical (MBIA Insured)....................... 5.25 07-01-13 340,540
1,645 Idaho State Health Facility Revenue Bannock Medical Center............. 6.38 05-01-17 1,665,136
500 Idaho State Health Facility Revenue Bannock Medical Center............. 6.13 05-01-25 493,910
-----------
3,547,611
-----------
HOUSING (16.4%):
------------------------------------------------------------------------------------------------------
350 Idaho State Housing Finance Authority Series C-2....................... 6.35(e) 07-01-15 361,533
100 Idaho State Single Family Housing Authority Revenue Series A1.......... 6.85 07-01-12 106,915
1,500 Idaho State Single Family Housing Revenue Series G-2................... 6.15(e) 07-01-15 1,522,590
200 Idaho State Single Family Housing Revenue ............................. 6.60 07-01-11 212,848
200 Idaho State Single Family Mortgage Series 95B (FHA Insured) .......... 6.45(e) 07-01-15 207,982
255 Idaho State Single Family Housing Finance Authority Series C-2......... 6.35(e) 07-01-15 263,142
-----------
2,675,010
-----------
EDUCATION (5.3%):
------------------------------------------------------------------------------------------------------
550 Idaho State University (MBIA Insured).................................. 5.80 04-01-20 569,949
300 University of Idaho Revenue Facility Improvement....................... 5.35 04-01-10 303,461
-----------
873,410
-----------
OTHER REVENUE (19.8%):
------------------------------------------------------------------------------------------------------
350 Ammon Urban Renewal Tax Inc Revenue.................................... 5.88 08-01-17 363,475
2,500 Boise Urban Renewal Agency Tax Inc Revenue............................. 6.13(c) 09-01-15 2,508,500
190 Boise Urban Renewal Tax Inc Bd-B....................................... 6.13 09-01-15 190,680
175 Puerto Rico PBA Series M............................................... 5.50 07-01-21 173,814
-----------
3,236,469
-----------
TOTAL MUNICIPAL BONDS (cost: $16,823,075) 17,364,982
-----------
SHORT-TERM SECURITIES (6.9%):
------------------------------------------------------------------------------------------------------
619 Dreyfus Investment Tax-Exempt Money Market............................. 4.37(b) 619,000
504 Nuveen Investment Tax-Free Fund........................................ 4.56(b) 504,000
-----------
TOTAL SHORT-TERM SECURITIES (cost: $1,123,000) 1,123,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $17,946,075) (f) $18,487,982
===========
</TABLE>
NOTES TO INVESTMENTS IN SECURITIES
(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 December 31, 1995.
(c) At December 31, 1995, the cost of securities purchased on a when-issued
basis was $2,487,500.
(d) Investments in bonds, by rating category (unaudited) as a percentage of
total bonds, are as follows:
<TABLE>
<CAPTION>
NON-
AAA/AAA AA/AA A/A BAA/BBB RATED TOTAL
------- ----- --- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
46% 5% 13% 28% 8% 100%
</TABLE>
(e) These securities are subject to the Alternative Minimum Tax.
(f) 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) APPRECIATION
$556,673 $(14,766) $541,907
FEDERAL INCOME TAX INFORMATION
- --------------------------------------------------------------------------------
Information for federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions for the periods ended
December 31, 1995. Net investment income distributions exempt from federal
income tax should not be included in shareholder's gross income, but are
reported on the federal income tax return for informational purposes.
Information needed by shareholders for income tax purposes was sent to them in
January 1996. Shareholders should consult a tax adviser on how to report these
distributions for state and local purposes.
<TABLE>
<CAPTION>
PER CLASS PER CLASS PER CLASS
A SHARE B SHARE C SHARE
--------------- -------------- ----------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 4, 1995 MARCH 16, 1995 JANUARY 11, 1995
TO DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1995 1995 1995
--------------- -------------- ----------------
<S> <C> <C> <C>
Net investment income distributions per share
(none qualifying for corporate dividend
received deduction)............................. $.6038 $.4207 $.4962
Short-term capital gain distributions................ .0838 .0838 .0838
------ ------ ------
Total distribution................................ $.6876 $.5045 $.5800
====== ====== ======
</TABLE>
The short-term capital gain distributions above are taxable as ordinary income
to shareholders for federal and state income tax purposes.
For federal income tax purposes, 99.98% of the above net investment income
distributions were derived from interest on securities exempt from federal
income tax.
