-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5n6IDQa4Q9sVVv4WFGtsp/DycgfXN0H9IHd20+vidclnvZ/vBHJfPRSziZfNydh 8F0MgzyWEEiQRwcwRg4xmA== 0000897101-96-000743.txt : 19960829 0000897101-96-000743.hdr.sgml : 19960829 ACCESSION NUMBER: 0000897101-96-000743 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960828 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: 96621655 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 [LOGO] VOYAGEUR YOUR TAX SENSITIVE INVESTMENT MANAGER NORTH DAKOTA 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. 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 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 NATIONAL 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 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). 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 North Dakota Tax Free Fund VOYAGEUR NORTH DAKOTA TAX FREE FUND [PHOTO] ELIZABETH H. HOWELL IS THE SENIOR MUNICIPAL BOND MANAGER FOR THE VOYAGEUR NORTH DAKOTA 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 Voyageur North Dakota Tax Free Fund's Class A shares was -0.85%.* Within the portfolio, we remained committed to purchasing municipal bonds with high 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 portfolio. Although we still maintain our commitment to total return, we believe this addition of income to the portfolio will help dampen the effects of market volatility while allowing our shareholders to benefit from higher income streams. Also, since our last report, our stringent credit review made us to believe that one of the Fund's municipal bond holdings, Trinity Hospital, was in danger of being downgraded. Due to our research, we sold our holdings in Trinity Hospital, which was downgraded to a BBB rating shortly after. In order to attempt to protect our shareholders' current income level over the long term, 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 nine years. OUTLOOK FOR THE MUNICIPAL MARKET In the U.S. economy, we are still showing signs of moderate growth with moderate inflation -- a trend we expect to see continue for the remainder of the year. Our outlook for the municipal market continues to be favorable, and we expect interest rates to decline over the long term. This has caused us to position the Fund to take advantage of this trend. *Past performance is no guarantee of future results.
VOYAGEUR NORTH DAKOTA TAX FREE FUND STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) JUNE 30, 1996 - --------------------------------------------------------------------------------------- ASSETS Investments in securities, at market value (note 1) (identified cost: $33,794,213) ................................... $ 34,280,656 Accrued interest receivable ......................................... 581,328 Receivable for investment securities sold ........................... 5,000 Receivable for Fund shares sold ..................................... 3,299 ------------ Total assets ..................................................... 34,870,283 ------------ LIABILITIES Bank overdraft ...................................................... 161,937 Dividends payable to shareholders ................................... 36,873 Payable for Fund shares redeemed .................................... 34,728 Other accrued expenses .............................................. 16,188 ------------ Total liabilities ................................................ 249,726 ------------ NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK .................. $ 34,620,557 ============ Represented by: Capital Stock - $.01 par value (note 1) .......................... $ 32,536 Additional paid-in capital ....................................... 34,721,005 Distributions in excess of net investment income ................. (28,419) Accumulated net realized loss on investments ..................... (591,008) Unrealized appreciation of investments ........................... 486,443 ------------ TOTAL NET ASSETS ............................................... $ 34,620,557 ============ Net assets applicable to outstanding Class A Shares ................. $ 34,056,093 ============ Net assets applicable to outstanding Class B Shares ................. $ 546,743 ============ Net assets applicable to outstanding Class C Shares ................. $ 17,721 ============ SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE Class A - Shares of Capital Stock outstanding: 3,200,515 (note 4) $ 10.64 ============ Class B - Shares of Capital Stock outstanding: 51,369 (note 4) .. $ 10.64 ============ Class C - Shares of Capital Stock outstanding: 1,666 (note 4) ... $ 10.64 ============ See accompanying notes to financial statements.
VOYAGEUR NORTH DAKOTA TAX FREE FUND STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 1996 - -------------------------------------------------------------------------------------------- Investment income: Interest ........................................................... $ 1,035,026 ----------- Expenses (note 3): Investment advisory and management fee ............................. 88,418 Dividend-disbursing, administrative and accounting services fees ... 37,265 Printing, postage and supplies ..................................... 2,405 Audit and accounting fees .......................................... 4,286 Legal fees ......................................................... 245 Distribution fees - Class A ........................................ 43,561 Distribution fees - Class B ........................................ 2,446 Distribution fees - Class C ........................................ 89 Directors' fees .................................................... 885 Registration fees .................................................. 254 Custodian fees ..................................................... 8,500 Amortization of organizational costs ............................... 989 Other .............................................................. 116 ----------- Total expenses ................................................. 189,459 Less: Expenses waived or absorbed by the distributor .............. (36,780) ----------- Total net expenses ............................................. 152,679 ----------- Investment income - net ........................................ 882,347 ----------- Realized and unrealized gain (loss) on investments: Realized loss on security transactions (note 2) .................... (435,773) Net change in unrealized appreciation or depreciation of investments (734,496) ----------- Net loss on investments ........................................ (1,170,269) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ...................... $ (287,922) =========== 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, 1996 DECEMBER 31, Operations: (UNAUDITED) 1995 ------------ ------------ Investment income - net ..................................................... $ 882,347 $ 1,813,311 Realized loss on investments - net .......................................... (435,773) (87,044) Net change in unrealized appreciation or depreciation of investments ........ (734,496) 4,122,617 ------------ ------------ Net increase (decrease) in net assets resulting from operations ........... (287,922) 5,848,884 ------------ ------------ Distributions to shareholders from: Investment income - net: Class A ................................................................... (877,050) (1,912,391) Class B ................................................................... (11,139) (10,940) Class C ................................................................... (366) (696) Distributions in excess of net investment income: Class A ................................................................... (28,193) -- Class B ................................................................... (193) -- Class C ................................................................... (33) -- ------------ ------------ Total distributions ..................................................... (916,974) (1,924,027) ------------ ------------ Capital share transactions (note 4): Proceeds from sale of shares: Class A (note 3) .......................................................... 965,152 3,442,030 Class B ................................................................... 179,261 248,571 Class C ................................................................... -- 62,010 Net asset value of shares issued in reinvestment of net investment income distributions: Class A ................................................................. 652,418 1,297,310 Class B ................................................................. 9,158 8,279 Class C ................................................................. 467 611 Payments for redemption of shares: Class A ................................................................... (2,469,946) (6,371,759) Class B ................................................................... -- (49,862) Class C ................................................................... (2,400) (44,010) ------------ ------------ Decrease in net assets from share transactions .............................. (665,890) (1,406,820) ------------ ------------ Total increase (decrease) in net assets ................................... (1,870,786) 2,518,037 Net assets at beginning of period .............................................. 36,491,343 33,973,306 ------------ ------------ Net assets at end of period (including undistributed or (distributions in excess of) net investment income of $(28,419) and $6,208, respectively) ............ $ 34,620,557 $ 36,491,343 ============ ============ 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 seeks high current income free from both federal and state income taxes by investing in investment grade municipal bonds. The Fund offers Class A, Class B and Class C Shares. Class A Shares are sold with a front-end sales charge. Class B Shares may be subject to a contingent deferred sales charge and such shares automatically convert to Class A after eight years. Class C Shares are not subject to a front-end sales charge or contingent deferred sales charge and have no conversion feature. 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: 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 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 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. ORGANIZATIONAL COSTS Organizational costs are being amortized over 60 months on a straight line 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, 1995, the Fund had a capital loss carryover of $122,540 that will expire in 2003 and 2004 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 $12,509,490 and $14,238,161 during the six months ended June 30, 1996, 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 six months ended June 30, 1996, Fund Distributors voluntarily waived Class A distribution fees of $35,619 and Class B distribution fees of $1,161. Sales charges paid by Class A shareholders were $29,041. Of this amount, Fund Distributors received $4,152. (4) SHARE TRANSACTIONS Transactions in shares of capital stock during each period were as follows: CLASS A ------------------------- SIX MONTHS YEAR ENDED ENDED JUNE 30, 1996 DECEMBER 31, (UNAUDITED) 1995 -------- -------- Shares sold .............................. 89,077 325,541 Shares issued for reinvested distributions 60,491 124,904 Shares redeemed .......................... (230,108) (604,981) -------- -------- Decrease in shares outstanding ........... (80,540) (154,536) ======== ======== CLASS B ------------------------- SIX MONTHS YEAR ENDED ENDED JUNE 30, 1996 DECEMBER 31, (UNAUDITED) 1995 -------- -------- Shares sold .............................. 16,439 23,246 Shares issued for reinvested distributions 852 792 Shares redeemed .......................... -- (4,587) -------- -------- Increase in shares outstanding ........... 17,291 19,451 ======== ======== CLASS C ------------------------- SIX MONTHS YEAR ENDED ENDED JUNE 30, 1996 DECEMBER 31, (UNAUDITED) 1995 -------- -------- Shares sold .............................. -- 5,855 Shares issued for reinvested distributions 43 57 Shares redeemed .......................... (223) (4,066) -------- -------- Increase (decrease) in shares outstanding (180) 1,846 ======== ======== * 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 ---------------------------------------------------------------------- SIX MONTHS PERIOD FROM ENDED APRIL 1, 1991(D) JUNE 30, 1996 YEAR ENDED DECEMBER 31, TO DECEMBER 31, (UNAUDITED) 1995 1994 1993 1992 1991 ---------------------------------------------------------------------- Net asset value: Beginning of period...................... $11.00 $ 9.85 $11.07 $10.59 $10.34 $10.00 ------ ------ ------ ------ ------ ------ Operations: Net investment income.................... .27 .54 .56 .58 .62 .49 Net realized and unrealized gain (loss) on investments........... (.35) 1.18 (1.15) .58 .34 .41 ------ ------ ------ ------ ------ ------ Total from operations............ (.08) 1.72 (.59) 1.16 .96 .90 ------ ------ ------ ------ ------ ------ Distributions to shareholders: From net investment income (a)........... (.27) (.57) (.53) (.58) (.62) (.49) In excess of net investment income....... (.01) -- -- -- -- -- From net realized gains.................. -- -- (.08) (.10) (.09) (.07) In excess of net realized gains.......... -- -- (.02) -- -- -- ------ ------ ------ ------ ------ ------ Total distributions.................. (.28) (.57) (.63) (.68) (.71) (.56) ------ ------ ------ ------ ------ ------ Net asset value: End of period............................ $10.64 $11.00 $ 9.85 $11.07 $10.59 $10.34 ====== ====== ====== ====== ====== ====== Total investment return (b)................. (.85)% 17.81% (5.47)% 11.20% 9.70% 9.23% Net assets at end of period (000's omitted). $34,056 $36,096 $33,829 $34,880 $15,846 $4,914 Ratios: Ratio of expenses to average daily net assets (f)......... .86%(e) .81% .46% .59% .40% .16%(e) Ratio of net investment income to average daily net assets.......... 5.00%(e) 5.07% 5.36% 5.11% 5.78% 6.43%(e) Assuming no voluntary waivers and reimbursements: Expenses (c)............... 1.06%(e) 1.05% 1.14% 1.25% 1.25% 1.25%(e) Net investment income...... 4.80%(e) 4.83% 4.68% 4.45% 4.93% 5.34%(e) Portfolio turnover rate (excluding short-term securities)................... 35.74% 45.34% 32.60% 27.39% 26.27% 126.37% See accompanying notes to Financial Highlights.
CLASS B CLASS C ------------------------------------------- ------------------------------ SIX MONTHS YEAR PERIOD FROM SIX MONTHS PERIOD FROM ENDED ENDED MAY 10, 1994(d) ENDED JULY 29, 1995(d) JUNE 30, 1996 DECEMBER 31, TO DECEMBER 31, JUNE 30, 1996 TO DECEMBER 31, (UNAUDITED) 1995 1994 (UNAUDITED) 1995 ------------------------------------------- ------------------------------ Net asset value: Beginning of period.................. $11.00 $ 9.85 $10.31 $11.00 $10.51 ------ ------ ------ ------ ------ Operations: Net investment income................ .25 .48 .30 .21 .17 Net realized and unrealized gain (loss) on investments........ (.36) 1.18 (.39) (.35) .50 ------ ------ ------ ------ ------ Total from operations.......... (.11) 1.66 (.09) (.14) .67 ------ ------ ------ ------ ------ Distributions to shareholders: From net investment income (a)....... (.25) (.51) (.27) (.21) (.18) In excess of net investment income... -- -- -- (.01) -- From net realized gains.............. -- -- (.08) -- -- In excess of net realized gains...... -- -- (.02) -- -- ------ ------ ------ ------ ------ Total distributions............... (.25) (.51) (.37) (.22) (.18) ------ ------ ------ ------ ------ Net asset value: End of period........................ $10.64 $11.00 $ 9.85 $10.64 $11.00 ====== ====== ====== ====== ====== Total investment return (b).............. (1.09)% 17.24% (0.77)% (1.32)% 6.47% Net assets at end of period (000's omitted) $547 $375 $144 $18 $20 Ratios: Ratio of expenses to average daily net assets (f)...... 1.34%(e) 1.29% .99%(e) 1.75%(e) 1.73%(e) Ratio of net investment income to average daily net assets....... 4.52%(e) 4.56% 4.97%(e) 4.11%(e) 4.00%(e) Assuming no voluntary waivers and reimbursements: Expenses (c)............ 1.81%(e) 1.79% 1.89%(e) 1.81%(e) 1.73%(e) Net investment income... 4.05%(e) 4.06% 4.07%(e) 4.05%(e) 4.00%(e) Portfolio turnover rate (excluding short-term securities)............... 35.74% 45.34% 32.60% 35.74% 45.34% 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. (f) Beginning in the year ended December 31, 1995, the expense ratio reflects the effect of gross expenses attributable to earnings credits on uninvested cash balances received by the Fund. Prior period expense ratios have not been adjusted.
VOYAGEUR NORTH DAKOTA TAX FREE FUND INVESTMENTS IN SECURITIES (UNAUDITED) JUNE 30, 1996 - ------------------------------------------------------------------------------------------------------------------- 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 (99.0%): PRE-REFUNDED/ESCROWED TO MATURITY (0.9%): ------------------------------------------------------------------------------------------------------- $ 200 Fargo Park District Revenue.......................................... 7.25% 11-01-00 $ 219,662 100 Devils Lake Public School District #1................................ 6.80 05-01-11 105,565 ----------- 325,227 ----------- GENERAL OBLIGATION (7.9 %): ------------------------------------------------------------------------------------------------------- 210 Bismarck Tax Increment ............................................. 5.70 05-01-07 211,079 110 Devils Lake......................................................... 5.75 05-01-10 109,369 490 Fargo Public School District #1 (MBIA Insured)...................... 5.55 06-01-09 489,392 155 Grand Forks Highway Revenue......................................... 6.00 12-01-10 157,750 165 Grand Forks Highway Revenue ........................................ 6.00 12-01-11 167,440 170 Grand Forks Highway Revenue ........................................ 6.00 12-01-12 172,061 270 Grand Forks Sewer Reserve .......................................... 6.70 06-01-07 284,947 250 North Dakota State Real Estate ..................................... 6.00 09-01-96(b) 251,130 1,000 Puerto Rico Aqueduct & Sewer Authority.............................. 5.00 07-01-15 890,670 ----------- 2,733,838 ----------- UTILITIES (20.1 %): ------------------------------------------------------------------------------------------------------- 145 Grand Forks Water Revenue........................................... 5.70 06-01-11 144,129 155 Grand Forks Water Revenue........................................... 5.75 06-01-12 154,033 165 Grand Forks Water Revenue........................................... 5.80 06-01-13 163,937 175 Grand Forks Water Revenue........................................... 5.85 06-01-14 173,838 190 Grand Forks Water Revenue........................................... 5.85 06-01-15 188,700 3,750 Mercer County Pollution Control Revenue Basin Electric Revenue (AMBAC Insured).................................................. 6.05 01-01-19 3,751,987 500 Mercer County Pollution Control Revenue Montana/Dakota (FGIC Insured)................................................... 6.65 06-01-22 527,145 750 Morton Pollution Control Revenue-Montana/Dakota Utilities (FGIC Insured).................................................. 6.65 06-01-22 787,710 175 Oliver County Pollution Control Revenue, Sq. Butte Electric Co-op... 7.00 12-31-10 175,548 1,000 Puerto Rico Electric Power Authority................................ 5.25 07-01-21 903,160 ----------- 6,970,187 ----------- INDUSTRIAL (1.5%): ------------------------------------------------------------------------------------------------------- 500 Mercer Pollution Control Otter Tail Power.......................... 6.90 02-01-19 529,855 ----------- HEALTH CARE (16.0%): ------------------------------------------------------------------------------------------------------- 500 Bismarck Hospital Alexius Medical Center (AMBAC Insured)........... 6.90 05-01-06 542,965 250 Bismarck Hospital Medical Center One Inc.(BIG Insured)............. 7.50 05-01-13 270,000 500 Carrington Health Facility Revenue................................. 6.25 11-15-15 498,840 1,000 Cass County Health Facility Catholic Health Corp., Villa Nazareth Project.......................................... 6.25 11-15-15 1,011,580 1,000 Fargo Hospital Facility St. Luke's Hospital, Series 1992........... 6.50 06-01-15 1,036,850 225 Grand Forks United Hospital (MBIA Insured)........................ 6.13 12-01-14 228,532 250 Grand Forks United Hospital (MBIA Insured)......................... 6.25 12-01-19 255,548 1,750 Williston Hospital Revenue (MBIA Insured)....................... 5.50 11-15-14 1,670,112 ----------- 5,514,427 ----------- HOUSING REVENUE (22.7%): ------------------------------------------------------------------------------------------------------- 305 Grand Forks Multifamily Housing Authority Revenue - Ryan House Section 8..................................................... 6.30 03-01-22 307,349 320 Minot Single Family Mortgage..................................... 7.70 08-01-10 347,264 415 North Dakota Housing Finance Authority Single Family Mortgage Series A............................................. 6.95 07-01-12 431,920 2,000 North Dakota Housing Finance Authority Single Family Mortgage Series A...................................................... 6.30(e) 07-01-16 1,995,940 205 North Dakota State Housing Finance Agency Single Family Mortgage Series A (FHA Insured)............................... 6.75 07-01-12 211,923 970 North Dakota State Housing Finance Agency Single Family Mortgage Series E............................................. 6.30 07-01-15 980,883 1,000 North Dakota State Housing Finance Agency Single Family Mortgage Series F............................................. 6.00(e) 01-01-15 974,050 500 North Dakota State Housing Finance Agency Revenue (FNMA Insured)................................................ 6.13 12-01-15 504,050 1,300 North Dakota State Housing Finance Agency Revenue Multifamily (FNMA Insured)................................................ 6.15 12-01-17 1,309,243 810 North Dakota State Housing Finance Authority Multifamily Section 8 (MBIA Insured)...................................... 5.75 07-01-23 780,476 ----------- 7,844,098 ----------- EDUCATION (3.0%): ------------------------------------------------------------------------------------------------------- 250 Burleigh County University Facilities Mary PJ Bank Qualified..... 7.13 12-01-11 259,740 250 North Dakota State University Housing and Auxiliary Facility..... 6.30 04-01-07 262,438 500 North Dakota State University Housing and Auxiliary Facility..... 6.50 04-01-12 520,440 ----------- 1,042,618 ------------ TRANSPORTATION (8.8%): ------------------------------------------------------------------------------------------------------- 3,250 Puerto Rico Commonwealth Highway and Transportation.............. 5.50 07-01-26 3,040,505 ----------- OTHER REVENUE (18.1%): ------------------------------------------------------------------------------------------------------- 500 Fargo Refunding Improvement ..................................... 5.90 05-01-07 515,160 1,295 Fargo Sales Tax Revenue (AMBAC Insured).......................... 5.20 01-01-09 1,259,077 1,310 North Dakota Building Authority Revenue (FSA Insured)............ 6.00 12-01-14 1,318,502 1,480 North Dakota Building Authority Revenue (FSA Insured)............ 6.10 12-01-16 1,499,314 450 North Dakota Muni Bond Bank...................................... 6.25 12-01-11 456,782 1,000 North Dakota Muni Bond Bank...................................... 6.25 10-01-14 1,019,560 200 North Dakota Student Loan (AMBAC Insured)........................ 7.00 07-01-05 212,506 ----------- 6,280,901 TOTAL INVESTMENTS IN SECURITIES (cost: $33,794,213) (d) $34,280,656 =========== See accompanying notes to investments in securities.
VOYAGEUR NORTH DAKOTA TAX FREE FUND 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 (unaudited) as a percentage of total bonds, are as follows: Aaa/AAA Aa/AA A/A Baa/BBB NR/NR Total ------- ----- --- ------- ----- ----- 45% 21% 18% 15% 1% 100% (d) The cost of securities for federal income tax purposes is $33,826,908 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) Appreciation ------------ -------------- ------------ $611,682 $(157,934) $453,748 (e) Security 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 [LOGO] VOYAGEUR ON CALL (TM) [LINE DRAWING: TELEPHONE RINGING] 800.545.3863 We invite you to use the Voyageur interactive voice response system, Voyageur On Call (TM) (800.545.3863). The system is designed to give you information about the Fund(s) in your account. It can also provide price and yield information for the Fund(s). 24-hour access available to Touch Tone telephones only. [LOGO] Voyageur Your tax sensitive investment manager 90 South Seventh Street, Suite 4400 Minneapolis, Minnesota 55402-4115 -----END PRIVACY-ENHANCED MESSAGE-----