-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, oCUY9ys9s8lypj0Q/wx2sD2T8kSg/y4EYNG14Sf5e89o66OWu/X5cjnzFAIzpq4b zYyPsOLErTrHIAk7B5EN8w== 0000897101-95-000326.txt : 19950830 0000897101-95-000326.hdr.sgml : 19950830 ACCESSION NUMBER: 0000897101-95-000326 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VOYAGEUR TAX FREE FUNDS INC CENTRAL INDEX KEY: 0000733362 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03910 FILM NUMBER: 95568610 BUSINESS ADDRESS: STREET 1: 90 S 7TH ST STREET 2: STE 4400 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6123718684 FORMER COMPANY: FORMER CONFORMED NAME: VOYAGEUR MINNESOTA TAX FREE FUNDS INC DATE OF NAME CHANGE: 19910226 FORMER COMPANY: FORMER CONFORMED NAME: DOUBLE EXEMPT FLEX FUND INC DATE OF NAME CHANGE: 19900131 N-30D 1 NORTH DAKOTA 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. 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
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 MINNESOTA Limited Term Tax Free Fund
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.
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) Period ended June 30, 1995: Class A Shares $9.85 $10.49 $0.29 $35,855 Class B Shares 9.85 10.49 0.27 186
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 North Dakota 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 ANDREW M. MCCULLAGH, JR., PORTFOLIO MANAGER Mr. McCullagh is Senior Vice President and Tax Exempt Portfolio Manager for the Voyageur North Dakota Tax Free Fund. He has over 22 years experience in municipal bond trading, underwriting, and portfolio management. At the state level, economic growth and the employment outlook continued to prosper. Low issuance of municipal bonds was a dominant factor in the first half of 1995, bolstering the price of existing North Dakota bonds. We expect the scarcity of North Dakota bonds to continue for the remainder of the year. The North Dakota Tax Free Funds' Class A total investment return was 9.42% for the reporting period. Moreover, the Fund ranked seventh among its 45 fund competitors in its Lipper objective of other states municipal debt funds for one year, 6/30/94 through 6/30/95. (Note: This Lipper Analytical Services ranking and the total return information that follow represent past performance which is no guarantee of future results. Shares may be worth more or less than their original cost. The total return based on net asset value for the Fund's A-shares was 8.39% at one year and 7.53% since inception.) At the end of the reporting period, the Fund held no cash and was fully invested in long bonds. Industrial, health care and housing were the three largest sectors (19%, 17% and 16% respectively) in which the Fund was invested. We remain committed to quality paper, hence 96% of the Voyageur North Dakota Tax Free Fund's portfolio is comprised of bonds rated in the three highest categories by Standard & Poor's Corporation and/or Moody's Investors Service (AAA/Aaa, AA/Aa, and A/A). We continue to adhere to the strategy of buying quality bonds for the Fund. We expect that favorable returns will continue, although not at the dramatic pace experienced during the first half of this year. We believe that the Voyageur North Dakota Tax Free Fund is poised to take full advantage of current market conditions.
VOYAGEUR NORTH DAKOTA TAX FREE FUND STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1995 ASSETS Investments in securities, at market value (note 1) (identified cost: $36,462,471)............................................... $35,821,971 Accrued interest receivable..................................................... 534,921 Receivable for investment securities sold....................................... 726,226 Receivable for Fund shares sold................................................. 1,795 Organizational costs (note 1)................................................... 2,715 Total assets................................................................. 37,087,628 LIABILITIES Disbursements in excess of cash in bank on demand deposit....................... 125,358 Dividends payable to shareholders............................................... 39,707 Payable for investment securities purchased..................................... 832,538 Payable for Fund shares redeemed................................................ 932 Other accrued expenses.......................................................... 48,122 Total liabilities............................................................ 1,046,657 NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK.............................. $36,040,971 Represented by: Capital Stock - $.01 par value (note 1)...................................... $ 34,361 Additional paid-in capital................................................... 36,631,879 Undistributed net investment income.......................................... 5,152 Accumulated net realized gain on investments................................. 10,079 Unrealized depreciation of investments....................................... (640,500) TOTAL NET ASSETS........................................................... $36,040,971 Net assets applicable to outstanding Class A Shares............................. $35,855,192 Net assets applicable to outstanding Class B Shares............................. $ 185,779 SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE Class A - Shares of Capital Stock outstanding: 3,418,435 (note 4)............ $10.49 Class B - Shares of Capital Stock outstanding: 17,711 (note 4)............... $10.49
See accompanying notes to financial statements.
VOYAGEUR NORTH DAKOTA TAX FREE FUND STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1995 Investment income: Interest................................................................ $1,054,043 Expenses (note 3): Investment advisory and management fee.................................. 88,764 Dividend-disbursing, administrative and accounting services fees........ 38,599 Printing, postage and supplies.......................................... 6,145 Audit and accounting fees............................................... 6,665 Legal fees.............................................................. 2,474 Distribution fees - Class A............................................. 44,192 Distribution fees - Class B............................................. 819 Directors' fees......................................................... 1,168 Registration fees....................................................... 2,150 Custodian fees.......................................................... 4,514 Amortization of organizational costs.................................... 1,725 Other ................................................................ 535 Total expenses........................................................ 197,750 Less: Expenses waived, absorbed or reduced............................. (49,115) Total net expenses.................................................... 148,635 Investment income - net............................................... 905,408 Realized and unrealized gain on investments: Realized gain on security transactions (note 2)......................... 78,270 Net change in unrealized depreciation of investments.................... 2,261,178 Net gain on investments............................................... 2,339,448 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $3,244,856
See accompanying notes to financial statements.
VOYAGEUR NORTH DAKOTA TAX FREE FUND STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) SIX MONTHS YEAR ENDED ENDED JUNE 30, 1995 DECEMBER 31, (UNAUDITED) 1994 Operations: Investment income - net .......................................... $ 905,408 $ 1,935,876 Realized gain on investments - net ............................... 78,270 283,858 Net change in unrealized appreciation or depreciation of investments ................................................. 2,261,178 (4,311,228) Net increase (decrease) in net assets resulting from operations .. 3,244,856 (2,091,494) Distributions to shareholders from: Investment income - net: Class A ........................................................ (1,012,952) (1,816,356) Class B ........................................................ (4,228) (2,596) Net realized gain on investments: Class A ........................................................ -- (282,927) Class B ........................................................ -- (931) Excess distributions of net realized gains: Class A ........................................................ -- (67,967) Class B ........................................................ -- (224) Total distributions .......................................... (1,017,180) (2,171,001) Capital share transactions (note 4): Proceeds from sale of shares: Class A (note 3) ............................................... 1,825,849 7,013,267 Class B ........................................................ 27,900 148,507 Net asset value of shares issued in reinvestment of net investment income and realized gain distributions: Class A ...................................................... 810,280 1,276,264 Class B ...................................................... 4,379 1,955 Payments for redemption of shares: Class A ........................................................ (2,828,419) (5,084,626) Increase (decrease) in net assets from share transactions ........ (160,011) 3,355,367 Total increase (decrease) in net assets ........................ 2,067,665 (907,128) Net assets at beginning of period ................................... 33,973,306 34,880,434 Net assets at end of period (including undistributed net investment income of $5,152, and $116,924, respectively) ......... $ 36,040,971 $ 33,973,306
See accompanying notes to financial statements. VOYAGEUR NORTH DAKOTA TAX FREE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Voyageur North Dakota Tax Free Fund (the Fund), a fund within Voyageur Tax Free Funds, Inc., 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 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 March 1, 1995) are not subject to a front-end sales charge or contingent deferred sales charge and have no conversion feature. There were no Class C Shares outstanding as of June 30, 1995. Each class of shares has 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 amended articles of incorporation, Voyageur Tax Free Funds, Inc. has 10 trillion shares of authorized capital stock that may be issued in one or more series. The significant accounting policies followed by the Funds 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 trade date. Securities gains and losses are calculated on the identified-cost basis. Interest income, including level-yield amortization of premium and original issue discount, is accrued daily. The Fund concentrates its investments in certain 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. Organizational Costs Organizational costs are being amortized over 60 months on an inverse acceleration (sum of the years' digits) basis. 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 all of its taxable income to shareholders in amounts that will avoid or minimize federal income or excise taxes for the Fund. Net investment income and net realized gains (losses) for the Fund may differ for financial statement and tax purposes primarily because of losses deferred for tax purposes due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. The effect on dividend distributions on certain book-to-tax differences is reflected as excess distributions of net realized gains in the statement of changes in net assets. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. For federal income tax purposes, as of December 31, 1994, the Fund had a capital loss carryover of $30,335 that will expire in 2003 if not offset by subsequent capital gains. It is unlikely that 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) SECURITIES TRANSACTIONS Purchase cost and proceeds from sales of securities other than short-term securities aggregated $3,633,466 and $3,946,812 during the six months ended June 30, 1995, respectively. (3) EXPENSES The Fund has an investment advisory and management 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 paid monthly and is based on the average daily net assets of the Fund at the annual rate of .50%. In addition, the Fund will pay most other operating expenses including directors' fees, registration fees, printing of shareholder reports, legal and auditing services and other miscellaneous expenses. Voyageur is obligated to pay all expenses of the Fund (excluding distribution fees, insurance premiums on portfolio securities, taxes, interest and brokerage commissions) which exceed 1% of average daily net assets, on an annual basis. The Fund will also pay a fee to Voyageur for acting as the Fund's dividend disbursing, administrative and accounting services agent. The fee is paid monthly and is equal to the sum of $1.33 per shareholder account per month, a fixed monthly fee ranging from $1,000 to $1,500 based on the level of the Fund's average daily net assets and an annualized percentage of average daily net assets at reducing rates from .11% to .02%. The Fund is also responsible for reimbursing Voyageur's out-of-pocket expense in connection with the performance of dividend-disbursing, administrative and accounting services. Each class of shares has a Distribution Agreement under Rule 12b-1 of the Investment Company Act of 1940 with Voyageur Fund Distributors, Inc. (Fund Distributors). Under these plans the Fund is obligated to pay Fund Distributors a monthly distribution fee at an annual rate of .25% of average daily net assets of the Class A Shares and 1.00% of 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 $44,192 and Class B distributions fees of $409. The Fund earned $9,140 in credits on uninvested cash balances held at the custodian during the six months ended June 30, 1995. Of these credits $4,514 were used to reduce certain fees for various custodial, pricing and accounting services provided by the custodian bank and $4,626 are included in interest income. Sales charges paid by Class A shareholders were $21,415. Of this amount, Fund Distributors received $3,119. (4) SHARE TRANSACTIONS Transactions in shares of capital stock during the periods ended June 30, 1995 and December 31, 1994 were as follows:
(CLASS A) (CLASS B) SIX MONTHS YEAR SIX MONTHS PERIOD FROM ENDED ENDED ENDED MAY 10, 1994* JUNE 30, 1995 DECEMBER 31, JUNE 30, 1995 TO DECEMBER 31, (UNAUDITED) 1994 (UNAUDITED) 1994 Shares sold...................... 175,404 657,610 2,657 14,434 Shares issued for reinvested distributions................. 79,236 121,738 427 193 Shares redeemed.................. (271,796) (495,792) -- -- Increase (decrease) in shares outstanding............ (17,156) 283,556 3,084 14,627
* Commencement of operations. (5) 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:
(CLASS A) PERIOD FROM SIX MONTHS APRIL 1, ENDED 1991(d) TO JUNE 30, 1995 YEAR ENDED DECEMBER 31, DECEMBER 31, (UNAUDITED) 1994 1993 1992 1991 Net asset value: Beginning of period .................. $ 9.85 $ 11.07 $ 10.59 $ 10.34 $ 10.00 Operations: Net investment income ................ .26 .56 .58 .62 .49 Net realized and unrealized gain (loss) on investments ........ .67 (1.15) .58 .34 .41 Total from operations ........... .93 (.59) 1.16 .96 .90 Distributions to shareholders: From net investment income ........... (.29) (.53)(a) (.58)(a) (.62)(a) (.49)(a) From net realized gains .............. -- (.08) (.10) (.09) (.07) In excess of net realized gains ...... -- (.02) -- -- -- Total distributions ............... (.29) (.63) (.68) (.71) (.56) Net asset value: End of period ......................... $ 10.49 $ 9.85 $ 11.07 $ 10.59 $ 10.34 Total investment return (b) ............ 9.42% (5.47)% 11.20% 9.70% 9.23% Net assets at end of period (000's omitted) .............. $35,855 $33,829 $34,880 $15,846 $ 4,914 Ratios: Ratio of expenses to average daily net assets .......... .83%(e) .46% .59% .40% .16%(e) Ratio of net investment income to average daily net assets ....... 5.11%(e) 5.36% 5.11% 5.78% 6.43%(e) Assuming no voluntary waivers and reimbursements and reductions: Expenses (c) ................ 1.11%(e) 1.14% 1.25% 1.25% 1.25%(e) Net investment income ....... 4.83%(e) 4.68% 4.45% 4.93% 5.34%(e) Portfolio turnover rate (excluding short-term securities) ................ 10.47% 32.60% 27.39% 26.27% 126.37%
See accompanying notes to Financial Highlights.
(CLASS B) SIX MONTHS PERIOD FROM ENDED MAY 10, 1994(d) JUNE 30, 1995 TO DECEMBER 31, (UNAUDITED) 1994 Net asset value: Beginning of period .................... $ 9.85 $ 10.31 Operations: Net investment income .................. .24 .30 Net realized and unrealized gain (loss) on investments ........... .67 (.39) Total from operations .............. .91 (.09) Distributions to shareholders: From net investment income ............. (.27) (.27)(a) From net realized gains ................ -- (.08) In excess of net realized gains ........ -- (.02) Total distributions .................. (.27) (.37) Net asset value: End of period .......................... $ 10.49 $ 9.85 Total investment return (b) ............... 9.16% (.77)% Net assets at end of period (000's omitted) $ 186 $ 144 Ratios: Ratio of expenses to average daily net assets........................ 1.34%(e) .99%(e) Ratio of net investment income to average daily net assets..................... 4.58%(e) 4.97%(e) Assuming no voluntary waivers and reimbursements and reductions: Expenses (c).............................. 1.86%(e) 1.89%(e) Net investment income..................... 4.06%(e) 4.07%(e) Portfolio turnover rate (excluding short-term securities)............................ 10.47% 32.60%
See accompanying notes to Financial Highlights. NOTES TO FINANCIAL HIGHLIGHTS (a) For federal income tax purposes, all of the net investment income distributions were derived from interest on securities exempt from federal income tax. For the period ended December 31, 1991 $.01 per share of the distribution from net investment income was subject to state income tax. (b) Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of distributions at net asset value and does not reflect the impact of a sales charge. (c) Voyageur Fund Distributors voluntarily waived or reimbursed expenses during the periods presented. The annual contractual expenses 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) Annualized.
VOYAGEUR NORTH DAKOTA 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 (99.4%): GENERAL OBLIGATION (11.9%): $ 210 Bismarck Tax Increment GO............................................... 5.70% 05-01-07 $ 210,794 110 Devils Lake............................................................. 5.75 05-01-10 107,104 110 Devils Lake............................................................. 5.75 05-01-11 106,442 110 Devils Lake............................................................. 5.75 05-01-12 105,752 100 Devils Lake Public School District #1................................... 6.80 05-01-11 102,567 150 Fargo Park District Improvement......................................... 5.10 05-01-11 138,772 165 Fargo Park District Improvement......................................... 5.10 05-01-12 151,356 170 Fargo Park District Improvement......................................... 5.10 05-01-13 155,166 625 Fargo Public School District #1 (MBIA Insured).......................... 5.75 05-01-10 623,706 650 Fargo Public School District #1 (MBIA Insured).......................... 5.75 05-01-12 641,673 155 Grand Forks Highway Unlimited Tax....................................... 6.00 12-01-10 156,111 165 Grand Forks Highway Unlimited Tax....................................... 6.00 12-01-11 165,741 170 Grand Forks Highway Unlimited Tax....................................... 6.00 12-01-12 170,391 270 Grand Forks Sewer Reserve............................................... 6.70 06-01-07 285,290 250 North Dakota State Real Estate.......................................... 6.00 09-01-96(b) 250,418 1,000 Puerto Rico (MBIA Insured).............................................. 5.38 07-01-22 933,750 4,305,033 UTILITIES (8.2%): 145 Grand Forks Water Revenue.............................................. 5.70 06-01-11(e) 141,005 155 Grand Forks Water Revenue.............................................. 5.75 06-01-12(e) 150,589 165 Grand Forks Water Revenue.............................................. 5.80 06-01-13(e) 160,745 175 Grand Forks Water Revenue.............................................. 5.85 06-01-14(e) 171,021 190 Grand Forks Water Revenue.............................................. 5.85 06-01-15(e) 185,194 2,200 Mercer County Pollution Control (MBIA Insured)......................... 5.85 06-01-23 2,140,908 2,949,462 INDUSTRIAL (19.3%): 200 Fargo Park District Revenue............................................ 7.25 11-01-11 214,030 750 Fargo Trollwood Square Project IDR..................................... 5.63 11-01-16 749,970 2,500 Fargo Trollwood Village................................................ 5.13 11-01-16 2,393,150 500 Mercer County Pollution Control (FGIC Insured)......................... 6.65 06-01-22 523,955 500 Mercer Pollution Control Otter Tail Power.............................. 6.90 02-01-19 528,460 2,250 Morton Pollution Control Montana/Dakota Utility (FGIC Insured)......... 6.65 06-01-22 2,357,796 185 Oliver Pollution Control Square Butte Electric Co-op................... 7.00 12-31-10 185,004 6,952,365 HEALTH CARE (16.8%): 500 Bismarck Hospital Alexius Medical Center (AMBAC Insured)............... 6.90 05-01-06 545,885 250 Bismarck Hospital Medical Center (BIG Insured)......................... 7.50 05-01-13 275,313 1,000 Cass County Health Facility Catholic Health Corp., Villa Nazareth Project............................................... 6.25 11-15-14 1,006,020 1,000 Fargo Hospital Facility St. Luke's Hospital, Series 1992............... 6.50 06-01-15 1,026,270 225 Grand Forks Health Care (MBIA Insured)................................. 6.13 12-01-14 227,043 250 Grand Forks Health Care Revenue (MBIA Insured)......................... 6.25 12-01-19 253,440 1,250 Grand Forks United Hospital (MBIA Insured)............................. 6.63 12-01-10 1,325,487 1,000 Ward County Health Care Facility....................................... 7.50 07-01-21 1,123,750 250 Williston Catholic Health Corporation Mercy Hospital Williston Project (MBIA Insured) 7.20 06-01-14 265,000 6,048,208 HOUSING REVENUE (16.3%): 380 Minot Single Family Mortgage........................................... 7.70 08-01-10 408,922 1,000 North Dakota Housing Finance Authority Single Family Mortgage.......... 6.30 07-01-15 999,990 440 North Dakota State Housing Finance Agency Single Family Mortgage (FHA Insured)....................................................... 6.95 07-01-12 455,941 220 North Dakota State Housing Finance Agency Single Family Mortgage....... 6.75 07-01-12 225,267 1,330 North Dakota State Housing Finance Agency Single Family Mortgage....... 5.55 07-01-24 1,185,841 2,000 North Dakota State Housing Finance Agency Single Family Mortgage....... 5.80 07-01-25 1,845,820 810 North Dakota State Housing Finance Agency (MBIA Insured)............... 5.75 07-01-23 755,050 5,876,831 EDUCATION (6.3%): 250 Burleigh County University Facilities Mary PJ Bank Qualified........... 7.13 12-01-11 250,978 250 North Dakota State University Housing and Auxiliary Facility........... 6.30 04-01-07 260,775 500 North Dakota State University Housing and Auxiliary Facility........... 6.50 04-01-12 514,425 320 University of North Dakota State Board of Higher Education............. 5.25 04-01-08 306,301 340 University of North Dakota State Board of Higher Education............. 5.25 04-01-09 321,504 360 University of North Dakota State Board of Higher Education............. 5.25 04-01-10 336,233 300 University of North Dakota State Board of Higher Education............. 5.25 04-01-13 273,903 2,264,119 CERTIFICATES OF PARTICIPATION (7.9%): 400 North Dakota Building Authority Lease Revenue (AMBAC Insured).......... 6.75 06-01-11 419,752 1,000 North Dakota Building Authority Lease Revenue (AMBAC Insured).......... 5.45 08-15-11 931,910 1,000 North Dakota Building Authority Refunding Lease (AMBAC Insured)........ 6.00 06-01-10 1,008,840 500 North Dakota State Building Authority.................................. 5.40 08-15-08 478,685 2,839,187 OTHER REVENUE (12.7%): 500 Fargo Refunding Improvement ........................................... 5.90 05-01-07 511,455 1,000 Fargo Sales Tax Revenue................................................ 7.25 01-01-09 1,056,740 120 North Dakota Muni Bond Bank............................................ 5.13 06-01-11 109,339 450 North Dakota Muni Bond Bank............................................ 6.25 12-01-11 453,744 120 North Dakota Muni Bond Bank............................................ 5.13 06-01-12 108,239 125 North Dakota Muni Bond Bank............................................ 5.13 06-01-13 112,115 2,000 North Dakota Muni Bond Bank............................................ 6.25 10-01-14 2,020,380 200 North Dakota Student Loan (AMBAC Insured).............................. 7.00 07-01-05 214,754 4,586,766 TOTAL INVESTMENT IN SECURITIES (cost: $36,462,471) (d) $35,821,971
See accompanying notes to investments in securities. NOTES TO INVESTMENTS IN SECURITIES (UNAUDITED) (a) Securities are valued by procedures described in note 1 to the financial statements. (b) The maturity dates for these issues represent mandatory puts or dates on which, in the opinion of the Fund's investment advisor, the issue is likely to be called. (c) Investments in bonds, by rating category as a percentage of total bonds, are as follows: Aaa/AAA Aa/AA A/A Baa/BAA Other Total 35% 20% 41% 3% 1% 100% (d) The cost of securities for federal income tax purposes is $36,500,327 and 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 405,922 (1,084,278) (678,356) (e) At June 30, 1995, the cost of securities purchased on a when-issued basis was $830,000. 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 NORTH DAKOTA 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 -----END PRIVACY-ENHANCED MESSAGE-----