MINNESOTA MUNICIPAL
BOND FUNDS
[GRAPHIC OMITTED: ILLUSTRATION OF BUILDINGS, BRIDGE, AIRPLANES]
FOR TAX-EXEMPT INCOME
service and guidance
professional management
goals
1998
Semi-Annual Report
TAX-FREE MINNESOTA FUND
MINNESOTA INSURED FUND
TAX-FREE MINNESOTA INTERMEDIATE FUND
MINNESOTA HIGH YIELD MUNICIPAL BOND FUND
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
JULY 13, 1998
DEAR SHAREHOLDER:
DELAWARE INVESTMENTS' FOUR Minnesota municipal bond funds each provided
attractive results for the first half of fiscal 1998 as long-term
interest rates fell to record lows. Minnesota's booming economy helped
the state post its fifth consecutive budget surplus, boosting investor
confidence in the state's bond market.
Each Fund outperformed the average of its peers for the six months
ended June 30, 1998, as shown below. Tax-Free Minnesota Fund and
Minnesota High Yield Municipal Bond Fund also outpaced the unmanaged
Lehman Brothers Municipal Bond Index for the period.
Minnesota municipalities issued 85.9% more bonds between January
and June 1998 than a year earlier according to The Bond Buyer, a trade
publication. The state's leaders took advantage of record low interest
rates to refinance old debt and start new projects. This huge increase
in supply gave your Funds' portfolio manager - Elizabeth H. Howell -
ample opportunity to select new bonds.
MINNESOTA MUNICIPALITIES ISSUED 85.9% MORE BONDS BETWEEN JANUARY AND
JUNE 1998 THAN A YEAR EARLIER. THE STATE LEADERS TOOK ADVANTAGE OF
RECORD LOW INTEREST RATES TO REFINANCE OLD DEBT AND START NEW PROJECTS.
CUMULATIVE TOTAL RETURN
Six Months Ended
June 30, 1998
Tax-Free Minnesota Fund A Class +2.70%
Lipper Minnesota Municipal Debt Fund Average (47 funds) +2.36%
Lehman Brothers Municipal Bond Index +2.69%
Minnesota Insured Fund A Class +2.50%
Lehman Brothers Insured Municipal Bond Index +2.69%
Tax-Free Minnesota Intermediate Fund A Class +2.08%
Lipper Intermediate Municipal Debt Fund Average (81 funds) +1.92%
Merrill Lynch Three-to-Seven Year Municipal Bond Index +2.29%
Minnesota High Yield Municipal Bond Fund A Class +3.51%
Lipper High-Yield Municipal Debt Fund Average (52 funds) +2.88%
All performance shown above is at net asset value with distributions
reinvested. Past performance does not guarantee future results.
Performance of other Fund classes vary due to different charges and
expenses. The unmanaged Lehman Brothers and Merrill Lynch Indexes
are composed of bonds with a variety of quality ratings from
many states. Complete performance information for all funds can be
found on pages 7 and 8.
Strong investor demand helped absorb the bonanza of new
issuance, enabling Minnesota bonds to generally outperform those in
many other states. Still, income was the primary component of total
return during the first half of 1998.
We view the municipal debt market's current prospects as
compelling, especially when viewed against taxable fixed-income
alternatives. Yields on longer term Minnesota municipal bonds
averaged more than 91.5% of U.S. Treasury bond yields as of June 30,
a level not seen since the ill-fated flat tax debate in Washington
two years ago. This occurred because of the large increase in
municipal bond supply, a condition we view as temporary. For
taxpayers willing to accept higher risks, high-yield Minnesota
municipal bonds offered yields as of mid-year that were even higher
than U.S. Treasury bond yields.
Cash flows in bond mutual funds have accelerated in recent
months as some equity investors have sought to diversify their
portfolios and minimize their federal income tax burden. We are
pleased to report that Minnesota High Yield Municipal Bond Fund
maintained an attractive SEC yield (see below) even as assets grew
44% during the first half of fiscal 1998.
On the pages that follow, Ms. Howell reviews each Fund's
performance for the first half of fiscal 1998 and outlines her
approach for the balance of the year. As you review your portfolio
with your financial adviser, keep in mind that Delaware Investments
has a broad array of equity and bond fund options for tax-sensitive
investors.
Sincerely,
/S/Wayne A. Stork
WAYNE A. STORK
Chairman
/S/Jeffrey J. Nick
JEFFREY J. NICK
President and Chief Executive Officer
<TABLE>
<CAPTION>
PORTFOLIO HIGHLIGHTS AND QUALITY
JUNE 30, 1998
Tax-Free Minnesota Tax-Free Minn. Minnesota High
Minnesota Insured Intermediate Yield Municipal
Fund Fund Fund Bond Fund
<S> <C> <C> <C> <C>
AAA 42.2% 100% 39.6% 7.0%
AA 9.9% 0.0% 8.4% 6.8%
A 19.4% 0.0% 9.1% 15.8%
BBB 6.4% 0.0% 23.7% 18.0%
B & Unrated 17.1% 0.0% 19.2% 52.5%
Average Effective
Maturity 9.0 years 9.3 years 5.1 years 11.4 years
Average Effective
Duration 7.2 years 6.8 years 4.2 years 7.6 years
AMT Income* None 21.92% None 15.78%
Current 30-Day SEC Yield
(A Class) 4.19% 3.96% 3.91% 5.01%
Current 30-Day SEC Yield
(B and C Classes) 3.61%** 3.37%*** 3.17% 4.45%
* Percentage of income generated for the six months ended June 30, 1998 that was
subject to the federal alternative minimum tax.
** 3.60% for Class C shares.
*** 3.36% for Class C shares.
</TABLE>
PORTFOLIO MANAGER'S REVIEW
AS OF MID-JULY, MINNESOTA WAS expected to generate $10.3 billion in
revenue during its 1998 fiscal year, 3.2% more than state officials
anticipated when the year began. The state's treasury is projected
to have a $317 million surplus for the year, the fifth in a row.
This was great news for the state's general obligation municipal
bonds, which enjoy a AAA credit rating from Standard & Poor's, the
highest rating available. Prices of many securities have risen modestly
since January as interest rates have fallen nationwide and inflation
has been negligible. Minnesota bonds did not rally as much as
Treasuries during the first half of fiscal 1998 because of the huge
increase in state bond issuance. The yield on 30-year U.S. Treasury
bonds fell to 5.65% as of June 30, the lowest level in a generation.
Still, real yields after inflation remain high. If one subtracts
the U.S. Consumer Price Index (1.7%) from 10-year Treasury bond
yields, the pre-tax yield is nearly 4%, the highest level since
late 1994.
For income-oriented Minnesota residents in high tax brackets,
keeping what you earn requires a tax-savvy investment strategy.
officials said in July that more than two-thirds of the state's
surplus came from individual investors in the form of taxes on
investment income and capital gains. We think such figures make a
compelling argument for tax-exempt investing.
FOR MINNESOTA INVESTORS IN THE HIGHEST FEDERAL TAX BRACKET (39.6%),
MEDIUM-QUALITY, 30-YEAR GENERAL OBLIGATION MUNICIPAL BONDS PROVIDED
A TAXABLE EQUIVALENT YIELD OF 9.32% AS OF JUNE 30.
Given the probable tempering effects of the Asian slump on the
U.S. economy, the Federal Reserve Board is likely to maintain its
current interest rate policy, in our view. This makes a solid case
for bonds' income and total return potential, especially for tax-
sensitive investors seeking to diversify their portfolios. We
anticipate that favorable economic conditions can drive long-term
interest rates even lower through 1999.
ASSET MIX
June 30, 1998
Minnesota
Tax-Free Minnesota Tax-Free Minn. High Yield
Minnesota Insured Intermediate Municipal
Fund Fund Fund Bond Fund
Housing 19.1% 19.4% 7.2% 33.4%
Health Care 21.5% 20.7% 14.4% 29.2%
General Obligation 12.4% 20.3% 2.5% 5.0%
Power Authority 17.5% 9.5% 6.0% 2.8%
Pre-Refunded 12.9% 29.8% 31.3% 0.0%
Education 4.9% 0.0% 6.6% 5.1%
Industrial 8.2% 0.0% 23.4% 11.6%
Cash & Other
Revenue Bonds 3.5% 0.3% 8.6% 12.9%
For Minnesota investors in the highest federal tax bracket
(39.6%), medium-quality, 30-year general obligation bonds provided a
taxable equivalent yield of 9.32% as of June 30. After factoring out
inflation, long-term tax-exempt debt provided an attractive
annualized real rate of return of 7.5%. That compares to an after-
inflation, after tax yield of 1.72% on 30-year Treasuries for
investors in the highest tax bracket.
STRATEGIC POSITIONING
Since January, we positioned each of the Minnesota Funds to benefit
from gradually declining long-term interest rates. The average
effective duration of Tax-Free Minnesota, Minnesota Insured and
Minnesota High Yield Municipal Bond Fund were kept slightly longer
than that of the average of each fund's peers, enabling each Fund to
benefit from the rise in bond prices.
Minnesota
We took a somewhat more conservative approach to interest rate
risk with Tax-Free Minnesota Intermediate Fund, keeping our duration
slightly lower than that of the Fund's unmanaged benchmark. As
occurred last year, the difference in yield between bonds maturing in
two to 10 years and bonds with longer maturities has narrowed since
January. Still, despite our conservative stance, the Fund's SEC yield
(see page 3) was higher than the average of its 80 peers in the
Lipper Intermediate Municipal Debt Fund Average as of June 30.
SINCE JANUARY, WE POSITIONED EACH OF THE MINNESOTA FUNDS TO BENEFIT
FROM GRADUALLY DECLINING LONG-TERM INTEREST RATES.
Lower quality bonds tended to outperform bonds with AAA ratings
during the first half of 1998 as a strong economy helped
municipalities meet their obligations and led to selected credit
upgrades. Hence, the total returns of Tax-Free Minnesota Fund and
Minnesota High Yield Municipal Bond Fund outpaced that of Minnesota
Insured Fund, which invests primarily in bonds rated AAA.
Minnesota High Yield Municipal Bond Fund invests in higher risk
bonds as well as more liquid, investment grade rated bonds. As of
June 30, a majority of the Fund's net assets were invested in bonds
rated BBB or higher while the balance was invested in unrated
securities that in our view show underlying financial strength.
In managing each Fund, we seek good structure - an effective
combination of average coupon, call date, and effective maturity that
represent each portfolio's mathematical underpinnings. As interest
rates fall, we also believe it is important to structure the
portfolio to benefit from a possible interest rate decline.
OUTLOOK
Prospects for Minnesota's economy remain strong, according to the
Mid-America Business Conditions Index, a monthly measure of regional
purchasing manager activity compiled by Creighton University in
Nebraska. Although export orders from Minnesota to Asia appear to be
declining, domestic demand remains firm, according to the Index. As
of mid-year, Minnesota's unemployment rate of 2.7% was among the five
lowest in the country, government statistics show.
Outlook
In St. Paul in April, the State Demographic Center released a
report that says Minnesota's population of 4.7 million, including the
population of rural counties, is growing faster than anticipated. The
state is expected to add more than 600,000 people by the year 2025,
and many economists believe that should help fuel long-term economic
growth.
We believe Minnesota's municipalities will continue to show
positive credit characteristics, provide attractive income and offer
relatively competitive total return opportunities in the months
ahead. While some of the state's large multinational corporations
such as 3M face sluggish earnings because of slumping sales in Asia,
our view is that the diversity of the state's economy should allow it
to weather the fallout from the financial problems of the Pacific
Rim.
THE DIVERSITY OF THE STATE'S ECONOMY SHOULD ALLOW IT TO WEATHER THE
FALLOUT FROM THE FINANCIAL PROBLEMS OF THE PACIFIC RIM.
Historically, Minnesota municipal bond yields have averaged
between 80% and 85% of Treasury yields, making the current
environment - with yields averaging more than 91.5% - unusually
attractive. We believe this investment opportunity is being driven by
the temporary increase in bond supply, a situation that will not, in
our opinion, persist indefinitely.
ELIZABETH H. HOWELL
Vice President/Senior Portfolio Manager
July 13, 1998
[PHOTO OF KEYBOARD]
TAX-FREE MINNESOTA FUND PERFORMANCE
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998
Lifetime Ten Years Five Years One Year
Class A (Est. 2/29/84)
Excluding Sales Charge +8.95% +7.65% +6.00% +8.97%
Including Sales Charge +8.66% +7.23% +5.19% +4.85%
Class B (Est. 3/11/95)
Excluding Sales Charge +7.25% +8.19%
Including Sales Charge +6.47% +4.19%
Class C (Est. 5/4/94)
Excluding Sales Charge +6.57% +8.32%
Including Sales Charge +6.57% +7.32%
MINNESOTA INSURED FUND PERFORMANCE
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998
Lifetime Ten Years Five Years One Year
Class A (Est. 5/1/87)
Excluding Sales Charge +7.52% +7.64% +5.66% +8.28%
Including Sales Charge +7.16% +7.23% +4.85% +4.26%
Class B (Est. 3/7/95)
Excluding Sales Charge +6.77% +7.49%
Including Sales Charge +5.98% +3.49%
Class C (Est. 5/4/94)
Excluding Sales Charge +6.09% +7.48%
Including Sales Charge +6.09% +6.48%
All performance includes reinvestment of distributions and applicable
sales charges as described below. Return and share value will
fluctuate so that shares when redeemed may be worth more or less than
the original cost. Past performance does not guarantee future
results. Performance for Class B and C shares excluding sales charge
assumes either contingent sales charges did not apply or the
investment was not redeemed. Returns reflect a voluntary expense
limitation in effect at the time. Returns would have been lower
without the limitation.
Class A shares of each Fund have a 3.75% maximum front-end sales
charge except Tax-Free Minnesota Intermediate Fund, which has a 2.75%
maximum front-end sales charge. All Funds have a 12b-1 fee.
Class B shares do not have a front-end sales charge, but are subject
to a 1% annual distribution and service fee. They are also subject to
a deferred sales charge of up to 4% if redeemed before the end of the
sixth year for each Fund except Tax-Free Minnesota Intermediate Fund,
which is subject to a deferred sales charge of 2% if redeemed before
the end of the third year.
Class C shares have a 1% annual distribution and service fee. If
shares are redeemed within 12 months, a 1% contingent deferred sales
charge applies.
TAX-FREE MINNESOTA INTERMEDIATE FUND PERFORMANCE
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998
Lifetime Ten Years Five Years One Year
Class A (Est. 10/27/85)
Excluding Sales Charge +6.15% +5.98% +4.90% +6.27%
Including Sales Charge +5.92% +5.68% +4.32% +3.36%
Class B (Est. 8/15/95)
Excluding Sales Charge +4.73% +5.49%
Including Sales Charge +4.41% +3.49%
Class C (Est. 4/30/94)
Excluding Sales Charge +4.83% +5.39%
Including Sales Charge +4.83% +4.39%
MINNESOTA HIGH YIELD MUNICIPAL BOND FUND PERFORMANCE
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1998
Lifetime One Year
Class A (Est. 6/4/96)
Excluding Sales Charge +9.79% +10.75%
Including Sales Charge +7.78% +6.60%
Class B (Est. 6/12/96)
Excluding Sales Charge +10.20% +9.84%
Including Sales Charge +8.87% +5.84%
Class C (Est. 6/7/96)
Excluding Sales Charge +9.05% +9.95%
Including Sales Charge +9.05% +8.95%
Please turn to page 7 for important additional information. All
performance includes reinvestment of distributions. Past performance
is not a guarantee of future results.
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
VOYAGEUR TAX FREE FUNDS, INC.
DELAWARE - VOYAGEUR TAX-FREE MINNESOTA FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
--------- ---------
<S> <C> <C>
MUNICIPAL BONDS - 100.00%
GENERAL OBLIGATION BONDS - 12.43%
Farmington Independent School District Number 192
Capital Appreciation Series B Zero Coupon
2/1/21 $2,500,000 $ 760,025
Farmington Minnesota Independent School District
Number 192 Capital Appreciation Series B
Zero Coupon 2/1/20 2,650,000 850,836
Hennepin County 5.75% 10/1/10 7,990,000 8,522,134
Hutchinson Independent School District Series A
(MN School District Enhanced) 5.85% 2/1/18 1,700,000 1,830,203
Lakeville Independent School District #194,
Inverse Floater 6.47% 2/1/15 (MBIA) 4,250,000 4,349,280
Lakeville Minnesota Independent School District #194
Capital Appreciation Series B Zero Coupon
2/1/19 8,000,000 2,680,240
Mahtomedi Independent School District #832 Series B
Zero Coupon 2/1/14 (MBIA) 1,540,000 715,992
Minneapolis Convention Center Facilities, Inverse
Floater 7.07% 4/1/14 850,000 909,696
Minneapolis Sports Arena Project, Inverse Floater
6.42% 10/1/20 4,220,000 4,305,750
Minneapolis Sports Arena Project, Inverse Floater
6.37% 4/1/14 580,000 610,183
Minneapolis Unlimited Tax Series 1992 6.30%
10/1/08 1,750,000 1,900,588
Minnetonka Independent School District #276 5.75%
2/1/22 (FSA) 4,550,000 4,838,834
North St. Paul, Maplewood Independent School
District #622, Inverse Floater 6.42% 2/1/20 2,250,000 2,265,795
Pine Island Independent School District #255 6.625%
6/1/12 (FSA) 240,000 254,791
Pine Island Independent School District #255 6.625%
6/1/13 (FSA) 310,000 329,976
Pine Island Independent School District #255 6.625%
6/1/14 (FSA) 330,000 351,265
Pine Island Independent School District #255 6.625%
6/1/15 (FSA) 355,000 377,479
Pine Island Independent School District #255 6.625%
6/1/16 (FSA) 380,000 403,742
Richfield Minnesota Independent School District #280
Series C, Inverse Floater 6.65% 2/1/15 1,365,000 1,415,164
Rochester Tax Increment 6.50% 12/1/04 1,000,000 1,010,530
Rosemount - Apple Valley Independent School
District #196 Inverse Floater 7.92%
4/1/15 (FSA) 4,000,000 4,502,480
Rosemount Independent School District #196 Series B
Zero Coupon 4/1/11(FSA) 2,600,000 1,424,592
Rosemount Independent School District #196 Zero
Coupon 4/1/12 (FSA) 1,850,000 953,990
Rosemount Independent School District #196 Zero
Coupon 4/1/13 (FSA) 1,915,000 934,290
Rosemount Independent School District #196,
Inverse Floater 5.875% 4/1/15 1,375,000 1,475,884
Sartell Independent School District #748 Zero Coupon
2/1/13 (MBIA) 540,000 265,599
Sartell Independent School District #748 Zero Coupon
2/1/15 (MBIA) 1,075,000 472,742
Sartell Independent School District #748 Zero Coupon
2/1/16 (MBIA) 1,750,000 718,673
Sartell Independent School District #748 Zero Coupon
2/1/17 (MBIA) 1,600,000 626,880
Spring Lake Park Independent School District #16,
Inverse Floater 6.67% 2/1/17 (MBIA) 1,000,000 1,043,150
Washington County 5.90% 2/1/10 1,680,000 1,758,943
------------
52,859,726
------------
HIGHER EDUCATION REVENUE BONDS - 4.89%
Minnesota Higher Education Augsburg College Series
4F1 6.25% 5/1/23 1,000,000 1,067,960
Minnesota Higher Education Carleton College 5.75%
11/1/12 4,000,000 4,285,360
Minnesota Higher Education Facilities Revenue -
Hamline University 6.00% 10/1/12 1,250,000 1,333,425
Minnesota Higher Education Facilities Revenue -
Hamline University 6.00% 10/1/16 1,790,000 1,890,902
Minnesota Higher Education St. Benedicts College
6.20% 3/1/16 1,000,000 1,043,150
Minnesota Higher Education St. Thomas University
Series R2 5.60% 9/1/14 1,000,000 1,034,640
University Of Minnesota Series A 5.50% 7/1/21 9,500,000 10,158,065
------------
20,813,502
------------
HOSPITAL REVENUE BONDS - 21.49%
Bemidji Hospital Facilities Revenue North County
Health 6.05% 9/1/16 600,000 634,122
Bemidji Hospital Facilities Revenue North County
Health 6.05% 9/1/24 1,825,000 1,916,524
Brainerd Benedictine Health Care Systems for
St. Joseph's Hospital 6.00% 2/15/12 (Connie Lee) 2,250,000 2,409,998
Duluth Economic Development Authority Benedictine
for St. Luke's Hospital 6.40% 5/1/18 (Connie Lee) 3,295,000 3,559,325
Duluth Economic Development Authority St. Luke's
Hospital 6.00% 2/15/20 (Connie Lee) 9,450,000 10,093,545
Little Canada Health Care 1992 (Presbyterian Homes
Guaranteed) 7.25% 7/1/12 1,000,000 1,043,520
Minneapolis Fairview Hospital Series 91B 6.50%
1/1/11 (MBIA) 3,000,000 3,254,100
Minneapolis Health Care-American Baptist Homes
8.70% 11/1/09 2,485,000 2,747,689
Minneapolis/St. Paul HRA Children's Hospital Health
Care, Inverse Floater 7.17% 8/15/25 6,500,000 6,895,330
Minneapolis/St. Paul HRA HealthOne 7.40%
8/15/11 (MBIA) 1,360,000 1,470,609
Minneapolis/St. Paul HRA Health Care System for
Healthspan Series A 4.75% 11/15/18 (AMBAC) 11,030,000 10,584,278
Robbinsdale North Memorial Medical 5.50%
5/15/23 (AMBAC) 10,725,000 10,988,513
Rochester Health Care Facilities Revenue Ref IRS
Series H for Mayo Clinic, Inverse Floater
7.915% 11/15/15 3,500,000 4,054,960
Rochester Minnesota Health Care Facilities Revenue
Mayo Foundation - Series B 5.50% 11/15/27 2,000,000 2,066,780
Springfield St. John's Lutheran Home Revenue
8.50% 11/1/19 600,000 632,484
Spring Park Twin Birch Health Care Center
(Guarantor: Presbyterian Homes of Minnesota)
8.25% 8/1/11 600,000 641,892
St. Cloud Hospital Facilities Revenue for St. Cloud
Hospital 5.30% 10/1/20 (AMBAC) 7,250,000 7,344,975
St. Louis Park Commercial Development Revenue for
G & N, L P Project (Methodist Hospital Guaranteed)
7.25% 6/1/13 1,120,000 1,202,533
St. Louis Park Methodist Hospital 5.20% 7/1/23
(AMBAC) 10,220,000 10,237,681
St. Paul Housing & Redevelopment Hospital Revenue
for Health East Series A 6.625% 11/1/17 8,900,000 9,617,340
------------
91,396,198
------------
HOUSING REVENUE BONDS - 19.11%
Austin Housing & Redevelopment Authority Courtyard
Residence Series 95A 7.25% 1/1/26 500,000 553,250
Bloomington Housing & Redevelopment Authority
Senior Summerhouse Bloomington Project
6.125% 5/1/35 3,420,000 3,471,266
Brooklyn Center Multifamily Housing Revenue Bonds
Family Housing Project - (Section 8) 5.90%
1/1/20 2,250,000 2,338,133
Burnsville Multifamily - Bridgeway Apartments
7.625% 2/1/24 (FHA) 3,370,000 3,528,053
Burnsville Multifamily - Coventry Court Apartments
Project 7.50% 9/1/17 (FHA) 1,000,000 1,040,720
Carver County Housing & Redevelopment Authority
Multifamily Revenue Lake Grace Apartments
6.00% 7/1/28 1,435,000 1,500,780
Dakota County Housing & Redevelopment Authority
Single Family 8.10% 3/1/16 (GNMA) 115,000 118,594
Eagan Forest Ridge Apartments Project 7.50%
9/1/17 (FHA) 1,000,000 1,034,690
Eden Prairie Multifamily Revenue, Eden Investments
7.40% 8/1/25 (FHA) 400,000 421,720
Eden Prairie Multifamily Windslope Apartments -
(Section 8) Housing 7.10% 11/1/17 1,585,000 1,685,790
Eden Prarie Multifamily Homes, Tanager Creek 8.05%
6/20/31 (GNMA) 7,605,000 8,929,335
Edina Park Plaza Multifamily Housing 7.50%
12/1/09 (FHA) 1,490,000 1,561,952
Edina Park Plaza Multifamily Housing 7.70%
12/1/28 (FHA) 1,250,000 1,301,250
Hopkins Renaissance Multifamily Housing - (Section 8)
6.375% 4/1/20 1,000,000 1,064,280
Little Canada Multifamily Housing Revenue, Housing
Alternative Development Company Project Series A
6.10% 12/1/17 1,700,000 1,720,961
Little Canada Multifamily Housing Revenue, Housing
Alternative Development Company Project Series A
6.25% 12/1/27 2,900,000 2,935,728
Minneapolis Housing Facility Revenue 1993 for
Augustana Chapel View Project 7.00% 4/1/18 1,000,000 1,029,040
Minneapolis Multifamily Mortgage for Seward Towers
Project 7.375% 12/20/30 (GNMA) 4,000,000 4,212,160
Minneapolis-Nicollet Towers Multifamily Housing
6.00% 12/1/19 2,000,000 2,120,580
Minnesota Housing Finance Agency Multifamily
Housing 6.95% 2/1/14 1,500,000 1,591,935
Minnesota Housing Finance Agency Multifamily
Housing Series 92A 6.95% 8/1/17 745,000 795,563
Minnesota Housing Finance Agency Rental Housing
Series B 6.25% 8/1/22 985,000 995,411
Minnesota Housing Finance Agency Single Family
Mortgage 86 Series B 7.25% 7/1/16 900,000 901,917
Minnesota Housing Finance Agency Single Family
Mortgage Series B 7.30% 7/1/10 150,000 155,282
Minnesota Housing Finance Agency Single Family
Mortgage Series D 7.30% 7/1/09 325,000 336,762
Minnesota Housing Finance Agency Single Family
Mortgage Series C 7.65% 7/1/08 395,000 416,026
Minnesota Housing Finance Agency Single Family
Mortgage Series 91C 7.10% 7/1/11 1,010,000 1,073,681
Minnetonka Multifamily - Beacon Hill Project
(Presbyterian Homes Guaranteed) 7.70% 6/1/25 2,000,000 2,167,920
Oakdale,Minnesota Housing-Oak Meadows Project
7.00% 4/1/27 6,800,000 7,167,200
Park Rapids Minnesota Multifamily Revenue The Court
Apartments Project - (Section 8) 6.30% 2/1/20 3,275,000 3,348,131
Red Wing Housing & Redevelopment Agency Jordan
Tower - (Section 8) Series 92 7.00% 1/1/19 1,500,000 1,595,790
St. Cloud Germain Towers Housing Series 1993 -
(Section 8) 5.90% 9/1/20 2,000,000 2,074,120
St. Louis Park Residential Mortgage Revenue for
Single Family 7.25% 4/20/23 (GNMA) 1,625,000 1,721,444
St. Louis Park Multifamily Housing Revenue
Community Housing 6.25% 12/1/28 (FHA) 3,855,000 4,120,263
St. Louis Park Multifamily Westwind Apartments
Housing 5.75% 1/1/29 (GNMA) 3,865,000 4,002,633
St. Paul Housing & Redevelopment Agency
(Executive Life G.I.C.) Como Lake Project
7.50% 3/1/26 (FHA) 1,000,000 935,000
St. Paul Housing & Redevelopment Single Family
Mortgage 6.90% 12/1/21 (FNMA) 1,650,000 1,756,062
St. Paul Housing & Redevelopment Single Family
Mortgage 6.90% 12/1/11 (FNMA) 59,000 60,948
Stillwater Multifamily Housing Stillwater Cottages
7.00% 11/1/27 1,000,000 1,037,040
Wadena Housing & Redevelopment Agency Humphrey
Manor - (Section 8) 6.00% 2/1/19 2,130,000 2,220,674
Wells Housing & Redevelopment Agency Broadway
Apartment Project - (Section 8) 7.00% 1/1/19 1,070,000 1,156,681
Willmar Housing & Redevelopment Agency Highland
Apartments - (Section 8) 5.85% 6/1/19 1,050,000 1,088,819
------------
81,287,584
------------
INDUSTRIAL DEVELOPMENT BONDS - 8.20%
Andover Development Revenue - Downtown Center
Project - Series A 7.00% 12/1/12 1,000,000 1,025,970
Anoka Resource Recovery Revenue for NSP Series 85
7.15% 12/1/08 1,000,000 1,058,590
Becker Pollution Control Revenue for NSP Series 89A
6.80% 4/1/07 2,000,000 2,081,580
Cloquet Pollution Control Revenue for Potlatch
Corporation 5.90% 10/1/26 15,000,000 15,823,800
East Grand Forks for American Crystal Sugar Pollution
Control Revenue 7.75% 4/1/18 1,230,000 1,346,789
Richfield CDR for Richfield Shoppes 8.375% 10/1/13 2,200,000 2,543,024
Seaway Port Authority Duluth Industrial Development
Dock & Wharf Revenue (Cargill Project) Series E
6.125% 11/1/14 4,500,000 4,934,250
St. Cloud CDR for Northwest Center Association
7.50% 8/1/12 4,433,971 4,730,870
St. Paul Port Authority CDR Fort Rd Medical 7.50%
9/1/02 (Asset Gty) 1,300,000 1,332,877
------------
34,877,750
------------
LEASE/CERTIFICATES OF PARTICIPATION - 0.67%
Beltrami County Housing & Redevelopment Authority
Revenue 6.20% 2/1/14 1,010,000 1,066,701
West St. Paul Commercial Mortgage K-Mart Lease
7.00% 11/1/07 1,616,913 1,784,296
------------
2,850,997
------------
POLLUTION CONTROL REVENUE BONDS - 0.36%
International Falls Pollution Control Revenue -
Boise Cascade Project 5.65% 12/1/22 1,500,000 1,530,240
------------
1,530,240
------------
POWER AUTHORITY REVENUE BONDS - 17.45%
Northern Municipal Power Agency Minnesota Electric
Systems Revenue 5.40% 1/1/15 2,000,000 2,064,220
Bass Brook Pollution Control Revenue for Minnesota
Power & Light 6.00% 7/1/22 17,490,000 18,384,955
Bass Brook Pollution Control Revenue for Minnesota
Power & Light Company 6.00% 7/1/22 (MBIA) 1,750,000 1,864,835
Northern Minnesota Municipal Power Agency 5.25%
1/1/13 (FSA) 4,000,000 4,103,200
Northern Minnesota Municipal Power Agency Electric
System Revenue 5.50% 1/1/18 (AMBAC) 9,200,000 9,462,292
Northern Minnesota Municipal Power Agency Zero
Coupon 1/1/09 (AMBAC) 3,815,000 2,358,280
Puerto Rico Electric Power Authority 5.25% 7/1/21 1,500,000 1,508,685
Puerto Rico Electric Power Authority Power Revenue
Series DD 4.50% 7/1/19 (FSA) 4,000,000 3,746,800
Puerto Rico Electric Power Authority Series EE 4.75%
7/1/24 3,900,000 3,672,513
Puerto Rico Electric Power Authority Series X 5.50%
7/1/25 2,930,000 2,984,322
Southern Minnesota Municipal Power Agency 5.75%
1/1/18 (FGIC) 2,000,000 2,105,940
Southern Minnesota Municipal Power Agency 4.75%
1/1/16 (MBIA) 7,200,000 6,894,576
Southern Minnesota Municipal Power Agency 5.75%
1/1/18 (MBIA) 7,770,000 8,181,577
Southern Minnesota Municipal Power Agency Supply
System 5.50% 1/1/15 (AMBAC) 1,560,000 1,609,702
Southern Minnesota Municipal Power Agency Zero
Coupon 1/1/19 (MBIA) 4,785,000 1,698,579
Southern Minnesota Municipal Power Agency Zero
Coupon 1/1/21 (MBIA) 5,000,000 1,583,250
Virgin Islands Water & Power Authority Electric
System Revenue 5.30% 7/1/18 500,000 495,130
Virgin Islands Water & Power Authority Electric
Systems Revenue 5.30% 7/1/21 1,000,000 986,910
Western Municipal Power Agency Revenue 6.125%
1/1/16 525,000 527,342
------------
74,233,108
------------
*PRE-REFUNDED BONDS / ESCROWED TO MATURITY - 12.87%
Albert Lea St. John's Lutheran Home Project
(Pre-Refunded) 8.50% 11/1/19-99 1,000,000 1,088,380
Anoka County Capital Improvement (Pre-Refunded)
7.20% 2/1/08-99 1,000,000 1,016,770
Blaine IDR (Ball Corp.) (Escrowed to Maturity)
8.25% 12/1/00 300,000 328,914
Blaine IDR (Ball Corp.) (Escrowed to Maturity)
8.25% 12/1/99 250,000 265,043
Bloomington Tax Increment (Escrowed to Maturity)
9.75% 2/1/08 500,000 652,815
Brainerd Independent School District #181
(Pre-Refunded) 7.00% 6/1/11-01 390,000 416,668
Edina Fairview Hospital Revenue (Pre-Refunded)
7.125% 7/1/19-99 2,500,000 2,616,625
Faribault Independent School District #656 (MN School
District Credit Enhanced) 6.10% 6/1/10-04 1,000,000 1,078,320
Glencoe/McLeod County Health Care (Pre-Refunded)
8.50% 12/1/15-00 500,000 551,025
Kenyon Wanamingo Independent School District
6.00% 2/1/18-05 (MBIA) 2,350,000 2,548,458
Maplewood Independent School District #622 7.10%
2/1/25-05 (FSA) 10,000,000 11,618,300
Minnesota Public Facilities Authority (Water Pollution
Control) Series 90A (Pre-Refunded) 7.10%
3/1/12-00 1,990,000 2,129,161
Minnesota Public Facilities Authority Water Pollution
Control (Pre-Refunded) 6.95% 3/1/13-01 5,220,000 5,697,526
Minnesota Public Facilities Authority Water Pollution
Control 6.25% 3/1/16-05 4,400,000 4,904,988
Northern Minnesota Municipal Power Agency Series 89A
7.25% 1/1/16-99 5,875,000 6,091,318
Owatanna Public Utilities (Pre-Refunded) 6.75%
1/1/16-01 1,000,000 1,063,240
Plainview Independent School District #810 6.70%
2/1/06-03 385,000 420,443
Plainview Independent School District #810 6.75%
2/1/08-03 445,000 486,879
Plainview Independent School District #811 6.75%
2/1/07-03 420,000 459,526
St. Cloud Housing & Redevelopment Agency Northway
A&B Project - (Section 8) 7.50% 12/1/18-00 2,045,000 2,244,490
St. Louis Park Methodist Hospital 7.25% 7/1/18-00
(AMBAC) 775,000 838,504
Southern Minnesota Municipal Power Agency Revenue
(Escrowed to Maturity) 5.75% 1/1/18 (MBIA) 1,000,000 1,060,030
Southern Minnesota Municipal Power Agency Supply
System (Escrowed to Maturity) 5.50% 1/1/15
(AMBAC) 990,000 1,028,768
Stillwater Independent School District #834 5.75%
2/1/15-05 (MBIA) 2,000,000 2,133,720
University Of Minnesota Series A (Escrowed to
Maturity) 6.00% 2/1/11 1,500,000 1,501,980
Wayzata Independent School District #284
(Pre-Refunded) 7.05% 2/1/06-99 625,000 635,206
Wayzata Independent School District #284
(Pre-Refunded) 7.10% 2/1/08-99 1,000,000 1,016,610
Wayzata Independent School District #284
(Pre-Refunded) 7.10% 2/1/09-99 560,000 569,302
Western Minnesota Municipal Power Agency Revenue
(Escrowed to Maturity) 9.75% 1/1/16 185,000 282,038
------------
54,745,047
------------
-------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
WATER & SEWER REVENUE BONDS - 1.16%
Puerto Rico Aqueduct & Sewer Authority 5.00%
7/1/15 2,000,000 1,988,660
Puerto Rico Aqueduct & Sewer Authority 5.00%
7/1/19 3,000,000 2,961,570
------------
4,950,230
------------
OTHER REVENUE BONDS - 1.37%
Minneapolis Community Development Agency Common
Bond Fund 7.95% 12/1/11 855,000 956,309
Minneapolis Community Development Agency Common
Bond Fund 7.40% 12/1/21 795,000 870,549
Minneapolis Community Development Agency Common
Bond Fund 1991-4 Opportunity Workshop Project
7.125% 12/1/05 510,000 556,272
Minneapolis Community Development Agency Tax
Increment Revenue Zero Coupon 9/1/09 5,750,000 3,447,355
------------
5,830,485
------------
Total Municipal Bonds (cost $391,418,398) 425,374,867
------------
NUMBER OF
SHARES
------------
SHORT TERM INVESTMENTS - 0.16%
Federated Minnesota Muncipal Money Market Fund 669,968 669,968
------------
Total Short Term Investments (cost $669,968) 669,968
------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 100.16%
(COST $392,088,366) $426,044,835
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (0.16%) (691,173)
============
NET ASSETS APPLICABLE TO 32,890,358 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% $425,353,662
============
NET ASSET VALUE - TAX FREE MINNESOTA FUND A CLASS
($411,657,137 / 31,831,741 SHARES) $12.93
=======
NET ASSET VALUE - TAX FREE MINNESOTA FUND B CLASS
($9,240,265 / 714,395 SHARES) $12.93
=======
NET ASSET VALUE - TAX FREE MINNESOTA FUND C CLASS
($4,456,260 / 344,222 SHARES) $12.95
=======
-------------------
AMBAC - Insured by the Ambac Indemnity Corporation
Asset Gty - Insured by the Asset Guaranty Insurance Company
Connie Lee - Insured by College Construction Insurance Association
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by the Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common stock $.01 par value, 10,000,000,000 shares
authorized to the Fund with 1,000,000,000 shares
allocated to Tax Free Minnesota Fund A Class,
1,000,000,000 shares allocated to Tax Free
Minnesota Fund B Class, and 1,000,000,000
shares allocated to Tax Free Minnesota
Fund C Class $389,730,261
Accumulated net realized gain on investments 1,666,932
Net unrealized appreciation of investments 33,956,469
------------
Total net assets $425,353,662
============
NET ASSET VALUE AND OFFERING PRICE FOR
TAX-FREE MINNESOTA FUND A CLASS
Net asset value per share (A) $12.93
Sales charge (3.75% of offering price or 3.87% of
amount invested per share) (B) 0.50
-------
Offering price $13.43
=======
------------------------
(A) Net asset value per share illusted is the estimated amount
which would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases
of $100,000 or more for Tax Free Minnesota Fund Class A.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR INSURED FUNDS, INC.
DELAWARE - VOYAGEUR MINNESOTA INSURED FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
--------- ---------
<S> <C> <C>
MUNICIPAL BONDS - 100.34%
GENERAL OBLIGATION BONDS - 20.26%
Anoka County, Minnesota Capital Improvement
Series C 5.90% 2/1/11 (FGIC) $8,045,000 $8,388,039
Becker Minnesota 6.25% 8/1/15 (MBIA) (AMT) 6,300,000 6,782,643
Becker Wastewater Treatment Facility Series A
5.95% 2/1/14 (MBIA) 500,000 530,545
Buffalo Independent School District #887 6.30%
2/1/13 (FSA) 1,775,000 1,091,666
Dakota County 6.40% 2/1/08 (AMBAC) 1,135,000 1,175,293
Dakota County 6.45% 2/1/09 (AMBAC) 1,000,000 1,035,480
Dakota County 6.45% 2/1/10 (AMBAC) 2,500,000 2,588,700
Eden Prairie Minnesota Independent School District
#272 Inverse Floater 6.42% 2/1/14 (FGIC) 1,125,000 1,175,513
Eden Prairie Independent School District #272
5.85% 2/1/13 (FGIC) 2,500,000 2,594,175
Eden Prairie Independent School District #272
5.65% 2/1/13 (MBIA) 3,200,000 3,299,744
Eden Prairie Independent School District #272,
Inverse Floater 6.42% 2/1/15 (MBIA) 1,000,000 1,036,200
Elk River Independent School District #728 Series 92
B 6.00% 2/1/09 (AMBAC) 3,950,000 4,193,755
Farmington Independent School District #192 6.80%
2/1/11(MBIA) 850,000 904,970
Hennepin County 5.75% 10/1/10 (MBIA) 1,800,000 1,909,098
Hopkins Independent School District #270 4.875%
2/1/14 (MBIA) 1,875,000 1,873,913
Lakeville Minnesota Independent School District #194
Capital Appreciation Series B Zero Coupon 2/1/15 2,455,000 1,043,179
Lakeville Minnesota School District #194 Capital
Appreciation Series B Zero Coupon 2/1/17 2,490,000 941,469
North Branch Independent School District #138,
Inverse Floater 7.17% 2/1/11 965,000 1,058,123
Prior Lake Independent School District #719, Inverse
Floater 6.17% 2/1/14 (FGIC) 1,000,000 1,045,710
Rosemount Independent School District #196 Series B
Zero Coupon 4/1/10 (FSA) 2,240,000 1,301,530
Rosemount Independent School District #196 Zero
Coupon 4/1/09 (FSA) 1,860,000 1,143,844
South Washington County Independent School District
#883 6.125% 6/1/09 (FGIC) 1,430,000 1,498,840
South Washington County Independent School District
#883 6.125% 6/1/11 (FGIC) 2,720,000 2,847,160
Spring Lake Park Independent School District #16,
Inverse Floater 6.67% 2/1/14 (MBIA) 2,175,000 2,293,668
St. Cloud Independent School District #742 6.05%
2/1/09 (FGIC) 1,000,000 1,063,760
St. Francis Independent School District #15 5.90%
4/1/10 (FGIC) 1,845,000 1,950,700
Stillwater Independent School District #834 5.50%
2/1/10 (FGIC) 2,995,000 3,083,682
Western Lake Superior Series A 6.00% 10/1/08
(MBIA) (AMT) 400,000 435,644
Western Lake Superior Series A 6.10% 10/1/09
(MBIA) (AMT) 425,000 462,732
Western Lake Superior Series A 6.20% 10/1/10
(MBIA) (AMT) 450,000 492,692
Western Lake Superior Series A 6.20% 10/1/11
(MBIA) (AMT) 475,000 515,508
------------
59,757,975
------------
HOSPITAL REVENUE BONDS - 20.67%
Bloomington Masonic Home Care Center 5.90%
7/1/09 (AMBAC) 1,250,000 1,336,975
Brainerd Benedictine Health Care Systems for
St. Joseph's Hospital 6.00% 2/15/12 (Connie Lee) 1,500,000 1,606,665
Brainerd Benedictine Health Care Systems for
St. Joseph's Hospital 6.00% 2/15/20 (Connie Lee) 2,000,000 2,131,900
Detroit Lakes Benedictine Health for St. Mary's
Hospital 6.00% 2/15/12 (Connie Lee) 1,630,000 1,745,909
Detroit Lakes Benedictine Health for St. Mary's
Hospital 6.00% 2/15/19 (Connie Lee) 1,000,000 1,065,950
Duluth Economic Development Authority Benedictine
for St. Luke's Hospital 6.40% 5/1/18 (Connie Lee) 500,000 540,110
Duluth Economic Development Authority Health Care
Duluth Clinic 6.30% 11/1/22 (AMBAC) 2,690,000 2,928,980
Duluth Economic Development Authority Health Care
Revenue for St. Mary's Hospital, Inverse Floater
8.22% 2/15/17 5,000,000 5,640,800
Duluth Economic Development Authority St. Luke's
Hospital 6.00% 2/15/20 (Connie Lee) 1,300,000 1,388,530
Duluth Economic Development Authority St. Luke's
Hospital 6.40% 5/1/10 (Connie Lee) 3,335,000 3,618,442
Minneapolis Fairview Hospital Series 91B 6.50%
1/1/11 (MBIA) 3,000,000 3,254,100
Minneapolis Minnesota Health Care Facility Revenue
Fairview Hospital & Healthcare Series A 5.25%
11/15/19 (MBIA) 2,750,000 2,778,215
Minneapolis/St. Paul HRA - Childrens Hospital,
Inverse Floater 7.57% 8/15/16 (FSA) 1,310,000 1,450,615
Minneapolis/St. Paul HRA Health Care System for
Healthspan Series 93A 5.00% 11/15/13 (FSA) 6,490,000 6,525,306
Minneapolis/St. Paul HRA HealthOne 7.40%
8/15/05 (MBIA) 600,000 649,182
Minneapolis/St. Paul HRA HealthOne 7.40%
8/15/11 (MBIA) 2,370,000 2,562,752
Minneapolis/St. Paul Minnesota HRA Health Care
System for Healthspan Series A 4.75%
11/15/18 (AMBAC) 4,000,000 3,838,360
Minnesota Agricultural & Economic Development
Fairview Hospital Series 97A 5.75% 11/15/26 8,250,000 8,824,943
Robbinsdale North Memorial Medical 5.50%
5/15/23 (AMBAC) 5,400,000 5,532,678
St. Louis Park Health Care for Methodist Hospital,
Inverse Floater 6.32% 7/1/23 2,500,000 2,523,200
St. Paul Ramsey Medical 5.50% 5/15/13 (AMBAC) 1,000,000 1,036,880
------------
60,980,492
------------
HOUSING REVENUE BONDS - 19.41%
Chaska Waters Edge Multifamily Revenue 7.30%
1/20/30 (GNMA) 3,257,000 3,654,061
Dakota County HRA Single Family Mortgage Revenue
6.70% 10/1/17 (FNMA) 5,040,000 5,419,462
Dakota County HRA Single Family Mortgage Revenue
5.85% 10/1/30 (GNMA/FNMA) 7,000,000 7,274,050
Dakota, Washington and Stearns Counties HRA Single
Family Mortgage Revenue 7.85% 12/1/30
(MBIA) 150,000 157,197
Eagan Multifamily Revenue Woodridge Apartments
5.90% 8/1/20 (GNMA) 1,000,000 1,061,330
Hopkins Multifamily Housing-Auburn Apartments
8.05% 6/20/31 (GNMA) 3,790,000 4,347,206
Minneapolis/St. Paul Housing Finance Board Single
Family Mortgage Revenue 8.30% 8/1/21
(GNMA) 105,000 107,162
Minneapolis/St. Paul Housing Finance Board Single
Family Mortgage Revenue 8.125%
12/1/14 (GNMA) 135,000 139,976
Minneapolis/St. Paul Housing Finance Board Housing
Project Phase IX 7.25% 8/1/21 (GNMA) 1,160,000 1,238,799
Minneapolis/St. Paul Housing Finance Board Housing
Project Phase IX 7.30% 8/1/31 (GNMA) 775,000 822,686
Minneapolis/St. Paul Housing Finance Board Housing
Project Phase V 8.875% 11/1/18 (GNMA) 65,000 66,658
Minneapolis/St. Paul Minnesota Housing Finance
Board Single Family Mortgage - Project Phase XI
5.80% 11/1/30 (GNMA) 2,705,000 2,800,135
Minnesota Housing Finance Agency Single Family
Mortgage Revenue Series B 7.25%
7/1/06 (MBIA) 140,000 140,298
Minnesota Housing Finance Agency Single Family
Mortgage Revenue Series A 7.95% 7/1/22
(MBIA) 305,000 319,878
Minnesota Housing Finance Agency Single Family
Mortgage Revenue Series 7.45% 7/1/22
(AMBAC) 1,395,000 1,469,772
Minnesota Housing Finance Agency Single Family
Mortgage Revenue Series 7.05% 7/1/22
(AMBAC) 505,000 533,952
Minnesota Housing Finance Agency Single Family
Housing Rental 5.95% 2/1/15 (AMBAC) 2,480,000 2,621,236
Minnesota Housing Finance Agency Single Family
Housing Rental 5.95% 2/1/18 (MBIA) 6,950,000 7,311,331
Minnesota Housing Finance Agency Single Family
Housing Rental Series A 5.875% 8/1/28 (AMT) 2,610,000 2,734,340
Minnesota State Housing Finance Agency Single
Family Mortgage Series D 5.80% 7/1/21 (AMT) 4,185,000 4,382,490
Minnetonka Multifamily Housing Cedar Hills Project
Cedar Hills East 7.50% 12/1/27 (FHA) 500,000 519,785
Minnetonka Multifamily Housing Cedar Hills Project
Cedar Hills East 7.50% 12/1/17 (FHA) 400,000 418,412
Scott County, Minnesota Housing & Redevelopment
Authority Facility Lease Revenue - Justice Center
Project 5.50% 12/1/15 1,755,000 1,830,798
South St. Paul, HRA Single Family Housing Mortgage
Series 93 5.75% 9/1/20 (FNMA) 2,410,000 2,492,639
St. Paul HRA Multifamily Housing 6.60% 10/1/12
(FHA) 4,000,000 4,291,800
White Bear Lake Multifamily Housing Lake Square
5.875% 2/1/15 (FHA) 1,055,000 1,112,983
------------
57,268,436
------------
LEASE/CERTIFICATES OF PARTICIPATION - 0.70%
Stearns County HRA Courthouse Project 7.00%
2/1/11 (AMBAC) 2,000,000 2,059,480
------------
2,059,480
------------
*PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 29.81%
Alexandria Independent School District #206 6.30%
2/1/13 Crossover Refunded to 2-1-03
@ 100 (MBIA) 1,775,000 1,915,438
Brainerd Independent School District #181 7.00%
6/1/09-01 (FGIC) 515,000 551,663
Brainerd Independent School District #181 7.00%
6/1/10-01 (FGIC) 550,000 589,155
Carver County HRA Jail Facility Crossover Refunded
to 2/01/02 @ 100 (MBIA) 515,000 548,485
Carver County HRA Jail Facility Crossover Refunded
to 2/01/02 @ 100 (MBIA) 550,000 585,761
Carver County HRA Jail Facility Crossover Refunded
to 2/01/02 @ 100 (MBIA) 585,000 623,037
Carver County HRA Jail Facility Crossover Refunded
to 2/01/02 @ 100 (MBIA) 625,000 665,638
Carver County HRA Jail Facility Crossover Refunded
to 2/01/02 @ 100 (MBIA) 670,000 713,563
Centennial Independent School District #12 7.10%
2/1/09-00 (FSA) 200,000 209,736
Centennial Independent School District #12 7.15%
2/1/11-00 (FSA) 450,000 472,248
Centennial Independent School District #12 7.15%
2/1/12-00 (FSA) 250,000 262,360
Dakota & Washington Counties HRA Single Family
Mortgage Revenue (Escrowed to maturity) 8.375%
9/1/21 (GNMA) 14,115,000 19,815,343
Dakota & Washington Counties HRA Single Family
Mortgage Revenue (Escrowed to maturity) 8.15%
9/1/16 (MBIA) 405,000 537,334
Dakota, Washington & Anoka Counties HRA Single
Family Housing (Escrowed to maturity) 8.45%
9/1/19 (GNMA) 9,000,000 12,550,050
Delano Independent School District #879 7.25%
2/1/10-01 (AMBAC) 500,000 535,370
Duluth EDA Health Care - Duluth Clinic 6.30%
11/1/22-04 (AMBAC) 1,060,000 1,182,345
Elk River Independent School District 7.00%
2/1/10-00 (FSA) 200,000 208,380
Elk River Independent School District #728 6.30%
2/1/14-02 (FSA) 500,000 531,720
Elk River Independent School District #728 6.30%
2/1/15-02 (FSA) 665,000 707,188
Ellendale Geneva Independent School District #762
6.00% 2/1/10-03 (AMBAC) 230,000 245,171
Ellendale Geneva Independent School District #762
6.00% 2/1/11-03 (AMBAC) 245,000 261,160
Ellendale Geneva Independent School District #762
6.00% 2/1/12-03 (AMBAC) 265,000 282,479
Ellendale Geneva Independent School District #762
6.00% 2/1/13-03 (AMBAC) 280,000 298,469
Ellendale Geneva Independent School District #762
6.00% 2/1/14-03 (AMBAC) 300,000 319,788
Ellendale Geneva Independent School District #762
6.00% 2/1/15-03 (AMBAC) 320,000 341,107
Lake Of The Woods Independent School District #390
7.35% 2/1/15-99 (AMBAC) 200,000 203,658
Lake Of The Woods Independent School District #390
7.35% 2/1/16-99 (AMBAC) 250,000 254,573
Maplewood Independent School District #622 7.10%
2/1/25-05 (FSA) 11,525,000 13,390,091
Maplewood Independent School District #622 7.10%
2/1/19-05 (MBIA) 5,935,000 6,895,461
Minnesota Public Facilities Authority Water Pollution
Control Revenue Pre-Refunded 3-1-02
@ 102 (MBIA) 1,500,000 1,648,350
Minnesota State University System 7.40%
6/30/19-99 (MBIA) 760,000 787,649
Moorhead Minnesota Independent School District #152
5.90% 2/1/10 Crossover Refunded to 2/01/01
@ 100 (AMBAC) 475,000 493,164
Moorhead Minnesota Independent School District #152
5.90% 2/1/11 Crossover Refunded to 2/01/01
@ 100 (AMBAC) 505,000 524,310
Moorhead Minnesota Independent School District #152
5.90% 2/1/12 Crossover Refunded to 2/01/01
@ 100 (AMBAC) 540,000 560,650
Moorhead Minnesota Independent School District #152
6.00% 2/1/13 Crossover Refunded to 2/01/01
@ 100 (AMBAC) 575,000 598,373
Moorhead Minnesota Public Utilities 6.25% 11/1/12
Crossover Refunded to 11/1/02 @ 100 (AMBAC) 735,000 789,699
Mora Series A 6.85% 2/1/10 Pre-Refunded 2/1/00
@ 100 (AMBAC) 245,000 256,003
Mora Series A 6.85% 2/1/11 Pre-Refunded 2/1/00
@ 100 (AMBAC) 265,000 276,901
Northern Minnesota Municipal Power Agency Series B
5.90% 1/1/08-03 (AMBAC) 700,000 761,312
Roseau Independent School District #682 7.00%
2/1/16 Crossover Refunded to 2/01/00
@ 100 (AMBAC) 500,000 520,950
South St. Paul Independent School District #6 6.45%
2/1/11 (FGIC) 500,000 516,815
South St. Paul Independent School District #6 6.45%
2/1/12 (FGIC) 300,000 310,089
South St. Paul Independent School District #6 6.25%
2/1/10 Crossover Refunded to 2/01/00
@ 100 (FGIC) 625,000 644,143
South Washington County Independent School District
#883 6.875% 6/1/11-00 (FGIC) 520,000 545,053
Southern Minnesota Municipal Power Agency Revenue
(Escrowed to maturity) 5.75% 1/1/18 (MBIA) 3,790,000 4,017,513
Southern Minnesota Municipal Power Agency Revenue
(Escrowed to maturity) 5.75% 1/1/18 (AMBAC) 670,000 710,220
St. Cloud Hospital Facility Revenue 6.75%
7/1/11-01 (AMBAC) 400,000 438,372
St. Cloud Hospital Facility Revenue 6.75%
7/1/15-01 (AMBAC) 500,000 547,220
St. Cloud Hospital Facility Revenue 7.00%
7/1/07-01 (AMBAC) 500,000 550,705
St. Louis Park Methodist Hospital 7.25%
7/1/18-00 (AMBAC) 500,000 540,970
Stillwater Independent School District #834 6.75%
2/1/10-99 (FGIC) 1,000,000 1,014,660
Warroad Independent School District #690 6.85%
2/1/13-00 (AMBAC) 500,000 519,820
Washington County HRA Jail Facilities 7.00%
2/1/12-02 (MBIA) 500,000 548,195
Western Minnesota Municipal Power Agency Revenue
(Escrowed to Maturity) 9.75% 1/1/16 530,000 808,000
Western Municipal Power Agency Series A (Escrowed
to maturity) 6.60% 1/1/10 (MBIA) 2,000,000 2,273,280
Wright County 7.20% 12/1/12-99 (FSA) (AMT) 1,000,000 1,044,570
------------
87,943,757
------------
POWER AUTHORITY REVENUE BONDS - 9.49%
Bass Brook Pollution Control Revenue for Minnesota
Power & Light Company 6.00% 7/1/22 (MBIA) 2,000,000 2,131,240
Marshall Utility Revenue 6.45% 7/1/10 (FSA) 500,000 546,840
Marshall Utility Revenue 6.45% 7/1/11 (FSA) 100,000 109,133
Marshall Utility Revenue 6.50% 7/1/12 (FSA) 500,000 546,310
Marshall Utility Revenue 6.50% 7/1/13 (FSA) 500,000 547,480
Northern Minnesota Municipal Power Agency 5.25%
1/1/13 (FSA) 4,750,000 4,872,550
Northern Minnesota Municipal Power Agency Electric
System Revenue 5.50% 1/1/18 (AMBAC) 4,200,000 4,319,741
Puerto Rico Electric Power Authority Power Revenue
Series DD 4.50% 7/1/19 (FSA) 4,000,000 3,746,800
Puerto Rico Commonwealth Highway & Transportation
Authority Revenue Series A Zero Coupon 7/1/18 5,000,000 1,845,350
Southern Minnesota Municipal Power Agency 5.75%
1/1/18 (FGIC) 4,570,000 4,812,072
Southern Minnesota Municipal Power Agency 4.75%
1/1/16 (MBIA) 2,400,000 2,298,191
Southern Minnesota Municipal Power Agency Revenue
5.75% 1/1/18 (AMBAC) 1,330,000 1,400,450
Power Authority Revenue Bonds - (Continued)
Southern Minnesota Municipal Power Agency, Inverse
Floater 7.67% 1/1/18 750,000 808,350
------------
27,984,507
------------
Total Municipal Bonds (cost $ 273,536,618) 295,994,647
------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 100.34%
(COST $273,536,618) $295,994,647
LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (.34%) (1,012,042)
============
NET ASSETS APPLICABLE TO 26,946,914 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% $294,982,605
============
NET ASSETS VALUE - MINNESOTA INSURED FUND A CLASS
($282,301,136 / 25,787,793 SHARES) $10.95
======
NET ASSETS VALUE - MINNESOTA INSURED FUND B CLASS
($9,573,586 / 875,287 SHARES) $10.94
======
NET ASSETS VALUE - MINNESOTA INSURED FUND C CLASS
($3,107,883 / 283,834 SHARES) $10.95
======
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common Stock, $ .01 par value, 10,000,000 shares
authorized to the Fund with 1,000,000 shares
allocated to Minnesota Insured Fund A Class,
1,000,000,000 shares allocated to Minnesota Insured
Fund B Class and 1,000,000,000 shares allocated to
Minnesota Insured Fund C Class $279,017,981
Accumulated net realized loss on investments (6,493,405)
Net unrealized appreciation on investments 22,458,029
------------
Total Net Assets $294,982,605
============
NET ASSET VALUE AND OFFERING PRICE FOR
TAX - FREE MINNESOTA INSURED FUND A CLASS
Net asset value per share (A) $10.95
Sales charge ( 3.75% of offering price or 3.93% of
amount invested per share)(B) 0.43
------
Offering price $11.38
======
------------------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or
more for Minnesota Insured Fund Class A.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
Connie Lee - Insured by the College Construction Insurance Asscociation
FGIC - Insured by the Financial Guaranty Insurance Company
FHA - Insured by the Federal Housing Authority
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by the Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR INTERMEDIATE TAX-FREE FUNDS, INC.
DELAWARE - VOYAGEUR TAX FREE MINNESOTA INTERMEDIATE FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
--------- ---------
<S> <C> <C>
MUNICIPAL BONDS - 97.79%
GENERAL OBLIGATION BONDS - 2.50%
Olmstead County Resource Recovery Series A
5.90% 2/1/05 $ 1,175,000 $ 1,239,331
Western Lake Superior Sanitation District 6.10%
10/1/00 225,000 226,312
------------
1,465,643
------------
HIGHER EDUCATION REVENUE BONDS - 6.57%
Minnesota Higher Education Facility Authority
Augsburg College Series 4F2 5.75% 5/1/16 3,700,000 3,852,625
------------
3,852,625
------------
HEALTH CARE/HOSPITAL REVENUE BONDS - 14.37%
Fergus Falls Health Care Facility Broen Memorial
Home Project 6.20% 11/1/05 100,000 104,467
Fergus Falls Health Care Facility Broen Memorial
Home Project 6.30% 11/1/06 200,000 209,866
Fergus Falls Health Care Facility Broen Memorial
Home Project 6.40% 11/1/07 200,000 209,826
Fergus Falls Health Care Facility Broen Memorial
Home Project 6.60% 11/1/09 240,000 251,698
Fergus Falls Health Care Facility Broen Memorial
Home Project 6.70% 11/1/10 260,000 272,620
Maplewood Healthcare Facility For Healtheast
5.70% 11/15/02 1,000,000 1,046,140
Maplewood Healthcare Facility For Healtheast
5.95% 11/15/06 2,200,000 2,313,564
Minneapolis Minnesota Health Care Facilities Jones -
Harrison Residence Project 5.90% 10/1/16 125,000 124,986
Rochester Nursing Home & Multifamily Housing
Revenue Samaritan Bethany, Inc. 6.00% 5/1/04 300,000 306,270
Rochester Nursing Home & Multifamily Housing
Revenue Samaritan Bethany, Inc. 6.10% 5/1/05 250,000 255,215
St. Paul Minnesota Housing & Redevelopment for
Healtheast Authority Hospital Revenue 5.70%
11/1/15 2,100,000 2,143,722
St. Paul Minnesota Housing & Redevelopment for
Healtheast Authority Hospital Revenue 5.85%
11/1/17 1,160,000 1,188,849
------------
8,427,223
------------
HOUSING REVENUE BONDS - 7.16%
Burnsville Multifamily Housing Revenue Burnsville Apts.
Project, (LOC:TCF) Mandatory Put 9/1/99
@ 100 7.00% 9/1/19 580,000 582,175
Minnesota HFA Single Family Mortgage Revenue
Series C 6.30% 1/1/99 70,000 70,425
Oakdale Minnesota Elderly Housing Revenue
PHM/Oakdale Project 5.75% 3/1/18 1,400,000 1,413,160
Oakdale, Minnesota Housing - Oak Meadows Project
6.50% 4/1/10 295,000 308,989
Oakdale, Minnesota Housing - Oak Meadows Project
6.20% 4/1/07 150,000 157,191
Oakdale, Minnesota Housing - Oak Meadows Project
6.30% 4/1/08 260,000 272,420
Park Rapids, Minnesota Multifamily Revenue The Court
Apartments Project (Section 8) 6.05% 8/1/12 1,175,000 1,193,882
St. Paul HRA Minnesota Public Radio, (LOC: First Bank)
6.60% 6/1/99 100,000 101,574
St. Paul Housing & Redevelopment Single Family
Mortgage 6.90% 12/1/21 (FNMA) 95,000 101,107
------------
4,200,923
------------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 23.36%
Andover, Minnesota Development Revenue Downtown
Center Project-Series A 6.50% 12/1/06 1,795,000 1,842,478
Brooklyn Center CDR Brookdale Association Mandatory
Put 6/1/01 @ 100 5.70% 12/1/07
(NWNL Guaranteed) 1,000,000 1,047,780
Duluth Gross Revenue Bond - Duluth Entertainment
Project 6.00% 12/1/98 275,000 277,063
Duluth Gross Revenue Bond - Duluth Entertainment
Project 7.00% 12/1/03 1,250,000 1,380,050
Duluth Gross Revenue Bond - Duluth Entertainment
Project 7.30% 12/1/06 250,000 283,635
Metropolitan Council HHH Metrodome Sports Facility
Revenue Series 92 6.00% 10/1/09 3,520,000 3,773,933
Minnesota Public Facilities Authority Pollution
Control Revenue Series A 6.55% 3/1/03 1,720,000 1,852,956
Richfield Shoppes CDR - Richfield Shoppes Project
7.50% 10/01/04 1,070,000 1,192,290
St. Paul Minnesota Port Authority CDR Fort Rd
Medical 7.50% 9/1/02 (Asset Gty) 2,000,000 2,050,580
------------
13,700,765
------------
LEASE/CERTIFICATES OF PARTICIPATION - 2.83%
Beltrami County Housing & Redevelopment Authority
Revenue 5.90% 2/1/08 355,000 376,151
Beltrami County Housing & Redevelopment Authority
Revenue 6.00% 2/1/09 380,000 402,564
Beltrami County Housing & Redevelopment Authority
Revenue 6.00% 2/1/10 405,000 426,728
Beltrami County Housing & Redevelopment Authority
Revenue 6.10% 2/1/11 430,000 454,218
------------
1,659,661
------------
*PRE-REFUNDED/ESCROWED TO MATURITY BONDS - 31.25%
Austin Independent School District #492 6.875%
2/1/12-01 (MBIA) 1,205,000 1,279,361
Braham Independent School District #314 6.30%
2/1/19-01 (AMBAC) 3,015,000 3,159,328
Duluth EDA St. Mary's Hospital (Escrowed to Maturity)
7.90% 2/15/99 150,000 153,837
Eden Valley Watkins Independent School District #463
6.55% 2/1/11-02 (FSA) 250,000 267,905
Eden Valley Watkins Independent School District #463
6.60% 2/1/16-02 (FSA) 615,000 660,055
Mankato Independent School District #77 6.35%
2/1/13-02 (FSA) (MBIA) 1,750,000 1,863,890
Minneapolis/St. Paul HealthOne Series B (Escrowed
to Maturity) 7.55% 8/15/00 325,000 348,767
Minneapolis/St. Paul HealthOne Series C (Escrowed
to Maturity) 7.45% 8/15/99 400,000 416,116
Minnesota State 6.25% 8/1/10-02 4,000,000 4,323,840
Olmstead County 6.85% 2/1/02-01 800,000 855,112
Olmstead County 6.90% 2/1/03-01 900,000 963,090
Olmstead County 6.95% 2/1/04-01 950,000 1,017,745
St. Cloud Hospital Facility Revenue 7.00%
7/1/20-01 (AMBAC) 2,740,000 3,013,780
------------
18,322,826
------------
POWER AUTHORITY REVENUE BONDS - 6.04%
Eveleth IDR for Minnesota Power & Light Company
6.125% 1/1/04 2,500,000 2,665,525
Northern Minnesota Municipal Power Agency
7.20% 1/1/99 860,000 874,981
------------
3,540,506
------------
OTHER REVENUE BONDS - 2.93%
Hibbing Economic Development Authority Revenue
6.10% 2/1/08 650,000 678,587
Richfield Minnesota Independent School District #280
Series C, Inverse Floater 6.65% 2/1/15 1,000,000 1,036,750
------------
1,715,337
------------
TERRITORIAL REVENUE BONDS - 0.78%
Puerto Rico Commonwealth Public Improvement
4.50% 7/1/23 500,000 457,225
------------
457,225
------------
Total Municipal Bonds (cost $54,877,673) 57,342,734
------------
NUMBER OF
SHARES
---------
SHORT TERM INVESTMENTS - 2.38%
Federated Minnesota Municipal Money Market Fund 1,398,518 1,398,518
------------
Total Short Term Investments (cost $1,398,518) 1,398,518
------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 100.17%
(COST $56,276,191) $58,741,252
LIABILITIES NET OF RECEIVABLES AND OTHER
ASSSETS - (.017%) (101,552)
------------
NET ASSETS APPLICABLE TO 5,270,132 SHARES
($.01 PAR VALUE) OUTSTANDING - 100% $58,639,700
============
NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND
A CLASS ($55,905,263 / 5,024,501 SHARES) $11.13
======
NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND
B CLASS ($1,160,508 / 104,204 SHARES) $11.14
======
NET ASSET VALUE - TAX-FREE MINNESOTA INTERMEDIATE FUND
C CLASS ($1,573,929 / 141,427 SHARES) $11.13
======
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common Stock, $.01 par value, 10,000,000,000 shares
authorized to the fund with 1,000,000,000 shares
allocated to Tax-Free Minnesota Intermediate Fund A Class,
1,000,000,000 shares allocated to Tax-Free Minnesota
Intermediate Fund B Class, and 1,000,000,000 shares
allocated to Tax-Free Minnesota Intermediate Fund C Class $56,237,508
Distributions in excess of net investment income (887)
Accumulated net realized loss on investments (61,982)
Net unrealized appreciation of investments 2,465,061
------------
Total Net Assets $58,639,700
============
NET ASSET VALUE AND OFFERING PRICE FOR TAX-FREE MINNESOTA
INTERMEDIATE FUND A CLASS
Net asset value per share (A) $11.13
Sales charge (2.75% of offering price or 2.79%
of amount invested per share) (B) 0.31
------
Offering price $11.44
======
------------------------
(A) Net asset value per share illustrated is the estimated amount which would be
paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases of $100,000 or
more for Minnesota Intermediate Fund A Class.
AMBAC - Insured by the AMBAC Indemnity Corporation
Asset Gty - Insured by the Asset Guaranty Insurance Company
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
MBIA - Insured by the Municipal Bond Insurance Association
NWNL - Insured by the Northwestern National Life Insurance Company
------------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
VOYAGEUR MUTUAL FUNDS, INC.
DELAWARE - VOYAGEUR MINNESOTA HIGH YIELD MUNICIPAL BOND FUND
STATEMENT OF NET ASSETS
JUNE 30, 1998 (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
--------- ---------
<S> <C> <C>
MUNICIPAL BONDS - 102.65%
GENERAL OBLIGATION BONDS - 5.01%
Esko Independent School District #99 5.75%
4/1/17 (FSA) $ 100,000 $ 106,827
Inver Grove Heights - MN School District Enhanced
Series A 5.75% 2/1/13 100,000 107,211
Puerto Rico Commonwealth 5.375% 7/1/25 500,000 505,140
Puerto Rico Commonwealth Public Improvement
4.50% 7/1/23 1,370,000 1,252,797
Stewartville Independent School District - MN
School District Enhanced Series A 5.75% 2/1/12 100,000 106,744
Waconia Independent School District Series 93A
5.45% 2/1/15 (FSA) 100,000 102,992
------------
2,181,711
------------
HIGHER EDUCATION REVENUE BONDS - 5.08%
Minnesota State Higher Education Facility Macalester
College 4C 5.50% 3/1/12 100,000 104,228
Minnesota State Higher Education Facility St. Mary's
College Series 3Q 6.15% 10/1/23 900,000 932,985
Minnesota State University System Revenue Bonds
93A 6.10% 6/30/23 100,000 104,661
University Of Minnesota Series A 5.50% 7/1/21 1,000,000 1,069,270
------------
2,211,144
------------
HOSPITAL REVENUE BONDS - 29.20%
Cambridge Healthcare Facility Revenue - Grandview
Christian Home 7.25% 9/1/26 125,000 131,636
Cannon Falls Nursing Home - Franciscan Health
Community Project 7.25% 7/1/21 100,000 103,089
Duluth Econ BSM - A - MN 5.875% 12/1/28 500,000 501,890
Duluth, Minnesota Economic Development Authority
Health Care Facilities - St. Francis Health Care
Facility 6.75% 12/1/17 325,000 343,558
Fergus Falls Health Care Facility Revenue - Lake
Region Hospital 6.50% 9/1/18 750,000 821,085
Glencoe Minnesota Health Care Revenue 6.40%
12/1/15 275,000 284,204
Little Canada Senior Facility Residence 92 -
(Presbyterian Homes Guaranteed) 7.25% 7/1/12 250,000 260,880
Mankato Health Facilities Revenue Series A -
Lutheran Homes 6.875% 10/1/26 300,000 312,867
Minneapolis Health Care - American Baptist Homes
8.70% 11/1/09 150,000 165,857
Minneapolis Minnesota Health Care Facility Revenue
Jones-Harrison Residence Project 6.00% 10/1/27 1,565,000 1,564,812
Minneapolis, Minnesota Housing & Health Care Facility
Revenue (Augustana Chapel View Homes)
6.50% 6/1/17 1,370,000 1,415,977
Northfield Minnesota Health Care Facilities Revenue
Refunding & Improvement Retirement Center
Series A 6.00% 5/1/28 1,405,000 1,423,658
Perham Minnesota Hospital District Congregate
Housing Facilities Briarwood Project 6.25%
2/1/22 620,000 630,875
Robbinsdale North Memorial Medical 5.50%
5/15/23 (AMBAC) 100,000 102,457
Rochester Health Care Facilities Revenue Reg IRS
Series H for Mayo Clinic, Inverse Floater 7.92%
11/15/15 1,500,000 1,737,840
Springfield St. John's Lutheran Home Revenue
8.50% 11/1/19 150,000 158,121
St. Paul Housing & Redevelopment Hospital Revenue
for Health East Series B 6.625% 11/1/17 500,000 540,300
St. Paul Housing & Redevelopment Hospital Revenue
for Health East Series A 6.625% 11/1/17 250,000 270,150
Waconia Housing & Redevelopment Revenue
for the Envangelical Lutheran Good Samaritan
Series A 6.00% 6/1/14 660,000 685,601
Wadena County Health Care Facility Gross Revenue
Series B 7.75% 9/1/24 250,000 273,055
Washington County Minnesota Housing &
Redevelopment Authority Hospital Facilities
5.50% 11/15/27 1,000,000 975,040
------------
12,702,952
------------
HOUSING REVENUE BONDS - 33.42%
Brooklyn Center Four Court Multifamily Housing
7.50% 6/1/25 370,000 383,305
Carver Multifamily Housing Lake Grace 6.25%
7/1/28 330,000 344,939
Carver Multifamily Housing Lake Grace 8.00%
7/1/28 200,000 206,032
Chanhassen Multifamily Housing Heritage Park
6.20% 7/1/30 300,000 319,269
Coon Rapids Minnesota Multifamily Revenue -
Margaret Place Series A 6.50% 5/1/25 500,000 510,450
Eden Prairie Minnesota Health Care Facilties Revenue
Ref - Castle Ridge Care Center 5.70% 7/1/28 1,555,000 1,518,069
Eden Prairie Multifamily Housing Subordinated -
Tanager Creek 8.00% 6/20/31 780,000 816,426
Minneapolis Multifamily Housing - Olson Townhomes
6.00% 12/1/19 800,000 826,952
Minneapolis - Nicollet Towers Multifamily Housing
6.00% 12/1/19 300,000 318,087
Minnesota Housing Finance Authority Single Family
Mortgage Series E 6.25% 1/1/23 90,000 95,551
Minnesota Housing Finance Authority Single Family
Housing 5.875% 1/1/17 100,000 105,852
Minnesota State Housing Finance Agency Single
Family Mortgage Series K 5.75% 1/1/26 1,000,000 1,030,380
Minnetonka Multifamily Housing Beacon Hill Senior
Housing Project 7.55% 6/1/19 200,000 216,362
Minnetonka, Minnesota Senior Housing Revenue -
Westridge Senior Housing Project 6.30% 9/1/08 110,000 112,317
Minnetonka, Minnesota Senior Housing Revenue -
Westridge Senior Housing Project 6.50% 9/1/12 285,000 290,965
Minnetonka, Minnesota Westridge Housing Revenue -
Westridge Senior Housing Project 7.00% 9/1/27 1,275,000 1,298,358
Moorhead Minnesota Economic Development Authority
Multifamily Revenue Reference & Improvement
Housing Development Eventide B 6.00% 6/1/18 870,000 875,446
New Brighton Multifamily Polynesian Village 7.60%
4/1/25 300,000 321,069
Oakdale Minnesota Elderly Housing Revenue PHM/
Oakdale Project 6.00% 3/1/28 1,800,000 1,828,944
Oakdale,Minnesota Housing-Oak Meadows Project
6.75% 4/1/15 1,500,000 1,581,720
St. Anthony Multifamily Housing Chandler 6.05%
11/20/16 (GNMA) 135,000 144,408
St. Louis Park Multifamily Mortgage Revenue
Tamarind Project 5.50% 11/1/13 (FNMA) 125,000 128,243
Stillwater Multifamily Housing Stillwater Cottages
6.75% 11/1/11 205,000 211,535
Stillwater Multifamily Housing Stillwater Cottages
7.00% 11/1/27 340,000 352,594
Stillwater Multifamily Housing Stillwater Cottages
7.00% 11/1/16 680,000 705,187
------------
14,542,460
------------
INDUSTRIAL DEVELOPMENT REVENUE BONDS - 11.60%
Andover, Minnesota Development Revenue -
Downtown Center Project-Series A 7.00%
12/1/12 1,640,000 1,682,591
International Falls Minnesota Pollution Control
Revenue - Boise Cascade Project 5.65%
12/1/22 3,000,000 3,060,480
Red Wing Industrial Development Revenue Kmart
(First Mortgage) 5.50% 7/1/08 300,000 303,279
------------
5,046,350
------------
LEASE/CERTIFICATES OF PARTICIPATION - 6.39%
Beltrami County, Minnesota Housing & Redevelopment
Authority Revenue Lease 6.10% 2/1/12 460,000 484,596
Rice County, Minnesota - Certificate of Participation
6.00% 12/1/21 125,000 132,515
Saint Cloud, Minnesota Certificate of Participation
5.90% 12/1/17 400,000 410,572
Stearns County Minnesota Housing & Redevelopment
Authority Lease Revenue Administration Building
Project Series A 5.15% 2/1/11 1,705,000 1,751,615
------------
2,779,298
------------
POWER AUTHORITY REVENUE BONDS - 2.84%
Bass Brook Pollution Control Revenue for Minnesota
Power & Light 6.00% 7/1/22 805,000 846,192
Southern Minnesota Municipal Power Agency 5.75%
1/1/18 (FGIC) 100,000 105,297
Western Municipal Power Agency Revenue 6.125%
1/1/16 285,000 286,271
------------
1,237,760
------------
OTHER REVENUE BONDS - 9.11%
Hibbing Economic Development Authority 6.40%
2/1/12 530,000 553,023
Minneapolis Minnesota Community Development
Agency Revenue - Holiday Inn Metrodome Project
6.00% 12/1/01 1,100,000 1,110,428
Minneapolis, Minnesota Community Development
Agency(Common Bond Fund - Series 2) 6.20%
6/1/17 750,000 802,365
Minneapolis, Minnesota Community Development
Agency Revenue Limited Tax - Series 4 6.20%
6/1/17 1,055,000 1,111,675
Woodbury Golf Course Revenue 6.75% 2/1/22 365,000 385,064
------------
3,962,555
------------
Total Municipal Bonds (cost $43,169,084) 44,664,230
------------
SHORT TERM INVESTMENTS - 3.07%
Norwest Federated Municipal Money Market Fund 1,334,368 1,334,368
------------
Total Short Term Investments (cost $1,334,368) 1,334,368
------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 105.72%
(COST $44,503,452) 45,998,598
LIABILITIES NET OF RECEIVABLES AND OTHER
ASSETS - (5.72%) (2,489,485)
------------
NET ASSETS APPLICABLE TO 4,058,844 SHARES
($.01 PAR VALUE) OUTSTANDING - 100.00% $43,509,113
============
NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND
FUND A CLASS ($26,641,744 / 2,485,976 SHARES) $10.72
======
NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND
FUND B CLASS ($12,359,485 / 1,152,403 SHARES) $10.72
======
NET ASSET VALUE - MINNESOTA HIGH YIELD MUNICIPAL BOND
FUND C CLASS ($4,507,884 / 420,465 SHARES) $10.72
======
------------------------
AMBAC - Insured by the Ambac Indemnity Corporation
FGIC - Insured by the Financial Guaranty Insurance Company
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
FNMA - Insured by the Federal National Mortgage Association
COMPONENTS OF NET ASSETS AT JUNE 30, 1998:
Common Stock, $.01 par value, 100,000,000,000 shares
authorized to the Fund with 10,000,000,000 shares allocated
to Minnesota High Yield Municipal Bond Fund A Class
10,000,000,000 shares allocated to Minnesota High Yield
Municipal Bond Fund B Class 10,000,000,000 shares
allocated to Minnesota High Yield Municipal Fund C Class $42,002,374
Underdistributed net investment income 23,400
Accumulated net realized loss on investments (11,807)
Net unrealized appreciation of investments 1,495,146
------------
Total Net Assets $43,509,113
============
NET ASSET VALUE AND OFFERING PRICE FOR MINNESOTA
HIGH YIELD MUNICIPAL BOND FUND A CLASS
Net asset value per share (A) $10.72
Sales charge (3.75% of offering price or 3.92% of
amount invested per share) (B) 0.42
-------
Offering price $11.14
=======
------------------------
(A) Net asset value per share illustrated is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See How to Buy Shares in the current Prospectus for purchases of
$100,000 or more for Minnesota High Yield Municipal Bond Fund Class A.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,1998
(UNAUDITED)
TAX-FREE MINNESOTA
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
MINNESOTA INSURED INTERMEDIATE MUNICIPAL
FUND FUND FUND BOND FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $12,549,985 $8,459,311 $1,676,068 $1,070,550
----------- ---------- ---------- ----------
EXPENSES:
Management fees 1,065,240 740,396 117,522 117,681
Distribution expense 578,922 415,986 55,001 98,938
Dividend disbursing and
transfer agent fees
and expenses 163,920 91,350 20,040 19,286
Registration fees 6,738 6,900 7,260 13,939
Reports and statements to
shareholders 20,475 23,220 9,000 11,677
Accounting and administration 103,977 90,930 17,736 8,726
Professional fees 27,257 11,520 7,774 8,316
Custodian fees 746 8,550 4,590 5,600
Taxes (other than taxes on
income) 20,750 12,550 2,790 2,780
Directors' fees 4,210 3,540 3,300 459
Other 39,845 47,682 7,115 1,142
----------- ---------- ---------- ----------
2,032,080 1,452,624 252,128 288,544
Less expenses waived or
absorbed (86,757) (39,455) -- (171,914)
----------- ---------- ---------- ----------
Total net expenses 1,945,323 1,413,169 252,128 116,630
----------- ---------- ---------- ----------
NET INVESTMENT INCOME 10,604,662 7,046,142 1,423,940 953,920
----------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss)
on investments 954,826 33,297 88,998 (664)
Net change in unrealized
appreciation/
depreciation of
investments (127,667) 200,934 (295,762) 240,205
----------- ---------- ---------- ----------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON INVESTMENTS 827,159 234,231 (206,764) 239,541
----------- ---------- ---------- ----------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $11,431,821 $7,280,373 $1,217,176 $1,193,461
=========== ========== ========== ==========
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND
-------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
6/30/98 12/31/97 6/30/98 12/31/97
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 10,604,662 $ 22,233,984 $ 7,046,142 $ 14,992,728
------------ ------------ ------------ ------------
Net realized gain
(loss) on investments 954,826 3,216,993 33,297 1,476,574
Net change in unrealized
appreciation/
depreciation of
investments (127,667) 13,746,414 200,934 7,964,819
------------ ------------ ------------ ------------
Net increase in net
assets resulting
from operations 11,431,821 39,197,391 7,280,373 24,434,121
------------ ------------ ------------ ------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class (10,395,371) (21,801,997) (6,830,136) (14,559,667)
B Class (186,350) (342,308) (185,615) (326,611)
C Class (78,644) (121,569) (62,764) (135,307)
------------ ------------ ------------ ------------
(10,660,365) (22,265,874) (7,078,515) (15,021,585)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 11,445,013 30,690,547 6,597,334 16,105,669
B Class 1,166,722 2,901,401 959,009 2,803,647
C Class 1,657,419 1,258,502 213,307 726,891
Net asset value of shares
issued upon reinvestment
of dividends from net
investment income
A Class 6,844,430 14,861,153 4,592,925 10,480,178
B Class 140,484 265,963 129,774 249,513
C Class 66,035 108,591 48,712 114,902
------------ ------------ ------------ ------------
21,320,103 50,086,157 12,541,061 30,480,800
------------ ------------ ------------ ------------
Cost of shares repurchased:
A Class (24,737,471) (73,076,182) (17,577,317) (52,017,149)
B Class (300,127) (1,502,411) (447,107) (1,207,521)
C Class (362,562) (1,472,994) (251,406) (973,441)
------------ ------------ ------------ ------------
(25,400,160) (76,051,587) (18,275,830) (54,198,111)
------------ ------------ ------------ ------------
Decrease in net assets
derived from capital
share transactions (4,080,057) (25,965,430) (5,734,769) (23,717,311)
------------ ------------ ------------ ------------
NET DECREASE IN NET
ASSETS (3,308,601) (9,033,913) (5,532,911) (14,304,775)
NET ASSETS:
Beginning of period 428,662,263 437,696,176 300,515,516 314,820,291
------------ ------------ ------------ ------------
End of period $425,353,662 $428,662,263 $294,982,605 $300,515,516
============ ============ ============ ============
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
INTERMEDIATE FUND MUNICIPAL BOND FUND
-------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
6/30/98 12/31/97 6/30/98 12/31/97
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,423,940 $ 2,988,988 $ 953,920 $ 1,229,469
Net realized gain
(loss) on investments 88,998 638,280 (664) (4,334)
Net change in unrealized
appreciation/
depreciation of
investments (295,762) 321,114 240,205 1,166,080
------------ ------------ ------------ ------------
Net increase in net
assets resulting
from operations 1,217,176 3,948,382 1,193,461 2,391,215
------------ ------------ ------------ ------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income:
A Class (1,372,804) (2,915,016) (609,543) (783,576)
B Class (20,795) (26,474) (253,746) (312,756)
C Class (31,227) (52,600) (93,626) (109,945)
------------ ------------ ------------ ------------
(1,424,826) (2,994,090) (956,915) (1,206,277)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class 3,328,324 7,081,491 9,207,831 12,612,422
B Class 397,513 669,318 4,487,801 5,453,844
C Class 485,959 810,790 1,606,643 2,470,327
Net asset value of
shares issued upon
reinvestment of
dividends from net
investment income
A Class 1,035,207 2,185,735 416,033 503,798
B Class 17,737 23,336 142,114 160,239
C Class 28,558 52,025 70,902 89,364
------------ ------------ ------------ ------------
5,293,298 10,822,695 15,931,324 21,289,994
------------ ------------ ------------ ------------
Cost of Shares Repurchased:
A Class (5,785,104) (18,684,272) (2,146,554) (903,309)
B Class (160,569) (205,353) (536,123) (475,668)
C Class (446,631) (510,897) (372,119) (405,467)
------------ ------------ ------------ ------------
(6,392,304) (19,400,522) (3,054,796) (1,784,444)
------------ ------------ ------------ ------------
Increase/decrease in
net assets derived
from capital share
transactions (1,099,006) (8,577,827) 12,876,528 19,505,550
------------ ------------ ------------ ------------
NET INCREASE/DECREASE
IN NET ASSETS (1,306,656) (7,623,535) 13,113,074 20,690,488
NET ASSETS:
Beginning of period 59,946,356 67,569,891 30,396,039 9,705,551
------------ ------------ ------------ ------------
End of period $58,639,700 $59,946,356 $43,509,113 $30,396,039
============ ============ ============ ============
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for each share of the Fund outstanding throughout each period
were as follows:
TAX-FREE MINNESOTA FUND - CLASS A
----------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $12.910 $12.400 $12.630 $11.330 $12.850 $12.210
Income from
investment
operations:
Net investment
income 0.325 0.654 0.630 0.620 0.630 0.640
Net realized and
unrealized gain
(loss) on
investment
transactions 0.022 0.511 (0.230) 1.320 (1.480) 0.870
-------- -------- -------- -------- -------- --------
Total from
investment
operations 0.347 1.165 0.400 1.940 (0.850) 1.510
-------- -------- -------- -------- -------- --------
Less dividends and
distributions:
Dividends from
net investment
income (0.327) (0.655) (0.630) (0.640) (0.610) (0.640)
Distributions
from net
realized gain
on investments -- -- -- -- (0.050) (0.230)
In excess of net
realized gains -- -- -- -- (0.010) --
-------- -------- -------- -------- -------- --------
Total
dividends and
distributions (0.327) (0.655) (0.630) (0.640) (0.670) (0.870)
-------- -------- -------- -------- -------- --------
Net asset value,
end of period $12.930 $12.910 $12.400 $12.630 $11.330 $12.850
======== ======== ======== ======== ======== ========
Total Return2 2.70% 9.68% 3.33% 17.49% (6.73%) 12.70%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $411,658 $417,365 $428,380 $455,220 $406,497 $458,145
Ratio of
expenses to
average net
assets 0.90% 0.91% 0.92% 0.93% 0.90% 1.02%
Ratio of
expenses to
average net
assets prior
to expense
limitation 0.94% 0.95% 0.92% 0.93% 0.90% 1.02%
Ratio of net
investment
income to
average net
assets 5.04% 5.22% 5.13% 5.11% 5.29% 5.02%
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 5.00% 5.18% 5.13% 5.11% 5.29% 5.02%
Portfolio turnover 14% 19% 28% 51% 24% 32%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE MINNESOTA FUND - CLASS B
-------------------------------------------
PERIOD FROM
SIX MONTHS YEAR YEAR 8/15/954
ENDED ENDED ENDED TO
6/30/981 12/31/973 12/31/96 12/31/95
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset
value,
beginning
of period $12.910 $12.400 $12.620 $11.900
Income from
investment
operations:
Net investment
income 0.274 0.574 0.560 0.450
Net realized
and unrealized
gain (loss) on
investment
transactions 0.025 0.508 (0.220) 0.710
-------- -------- -------- --------
Total from
investment
operations 0.299 1.082 0.340 1.160
-------- -------- -------- --------
Less dividends
and distributions:
Dividends from
net investment
income (0.279) (0.572) (0.560) (0.440)
-------- -------- -------- --------
Total
dividends and
distributions (0.279) (0.572) (0.560) (0.440)
-------- -------- -------- --------
Net asset
value, end
of period $12.930 $12.910 $12.400 $12.620
======== ======== ======== ========
Total Return2 2.32% 8.95% 2.83% 9.95%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $9,240 $8,215 $6,233 $2,701
Ratio of
expenses to
average net
assets 1.65% 1.56% 1.50% 1.38%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 1.69% 1.60% 1.67% 1.63%5
Ratio of net
investment
income to
average net
assets 4.29% 4.57% 4.53% 4.43%5
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 4.25% 4.53% 4.36% 4.18%5
Portfolio
turnover 14% 19% 28% 51%
- -----------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc., as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE MINNESOTA FUND - CLASS C
-----------------------------------------------------
PERIOD FROM
SIX MONTHS YEAR YEAR YEAR 5/4/944
ENDED ENDED ENDED ENDED TO
6/30/981 12/31/973 12/31/96 12/31/95 12/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset
value,
beginning of
period $12.920 $12.410 $12.630 $11.330 $11.960
Income from
investment
operations:
Net
investment
income 0.277 0.564 0.540 0.530 0.340
Net realized
and unrealized
gain (loss)
on investment
transactions 0.032 0.508 (0.220) 1.320 (0.610)
-------- -------- -------- -------- --------
Total from
investment
operations 0.309 1.072 0.320 1.850 (0.270)
-------- -------- -------- -------- --------
Less dividends
and distributions:
Dividends from
net investment
income (0.279) (0.562) (0.540) (0.550) (0.320)
Distributions
from net
realized gain
on investments -- -- -- -- (0.040)
-------- -------- -------- -------- --------
Total
dividends
and
distributions (0.279) (0.562) (0.540) (0.550) (0.360)
-------- -------- -------- -------- --------
Net asset
value, end
of period $12.950 $12.920 $12.410 $12.630 $11.330
======== ======== ======== ======== ========
Total Return2 2.39% 8.82% 2.64% 16.62% (2.30%)
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $4,456 $3,083 $3,083 $2,319 $1,061
Ratio of
expenses to
average net
assets 1.65% 1.65% 1.67% 1.67% 1.72%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 1.69% 1.69% 1.67% 1.67% 1.72%5
Ratio of net
investment
income to
average net
assets 4.29% 4.48% 4.38% 4.33% 4.56%5
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 4.25% 4.44% 4.38% 4.33% 4.56%5
Portfolio
turnover 14% 19% 28% 51% 24%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc., as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA INSURED FUND - CLASS A
-----------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning
of period $10.940 $10.600 $10.730 $ 9.610 $11.020 $10.270
Income from
investment
operations:
Net investment
income 0.260 0.533 0.520 0.510 0.540 0.540
Net realized
and unrealized
gain (loss) on
investment
transactions 0.011 0.341 (0.130) 1.140 (1.390) 0.840
-------- -------- -------- -------- -------- --------
Total from
investment
operations 0.271 0.874 0.390 1.650 (0.850) 1.380
-------- -------- -------- -------- -------- --------
Less dividends
and distributions:
Dividends
from net
investment
income (0.261) (0.534) (0.520) (0.530) (0.520) (0.540)
Distributions
from net
realized
gain on
investments -- -- -- -- (0.040) (0.090)
-------- -------- -------- -------- -------- --------
Total
dividends
and
distributions (0.261) (0.534) (0.520) (0.530) (0.560) (0.630)
-------- -------- -------- -------- -------- --------
Net asset
value, end
of period $10.950 $10.940 $10.600 $10.730 $9.610 $11.020
======== ======== ======== ======== ======== ========
Total Return2 2.50% 8.49% 3.75% 17.52% (7.88%) 13.80%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $282,300 $288,494 $304,877 $307,734 $284,132 $311,187
Ratio of
expenses to
average
net assets 0.92% 0.92% 0.92% 0.87% 0.61% 0.70%
Ratio of
expenses to
average net
assets prior
to expense
limitation 0.95% 0.94% 0.92% 0.92% 0.94% 1.02%
Ratio of net
investment
income to
average net
assets 4.79% 5.01% 4.93% 4.92% 5.29% 4.93%
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 4.76% 4.99% 4.93% 4.87% 4.96% 4.61%
Portfolio
turnover 7% 21% 14% 54% 25% 18%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc., as the Fund's investment manager.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA INSURED FUND - CLASS B
------------------------------------------
SIX MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset
value,
beginning
of period $10.930 $10.580 $10.720 $10.140
Income from
investment
operations:
Net
investment
income 0.219 0.454 0.450 0.380
Net realized
and
unrealized
gain (loss)
on investment
transactions 0.011 0.348 (0.140) 0.580
-------- -------- -------- --------
Total from
investment
operations 0.230 0.802 0.310 0.960
-------- -------- -------- --------
Less dividends
and distributions:
Dividends
from net
investment
income (0.220) (0.452) (0.450) (0.380)
-------- -------- -------- --------
Total
dividends
and
distributions (0.220) (0.452) (0.450) (0.380)
-------- -------- -------- --------
Net asset
value, end
of period $10.940 $10.930 $10.580 $10.720
======== ======== ======== ========
Total Return2 2.13% 7.77% 3.03% 9.59%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $9,574 $8,926 $6,817 $4,655
Ratio of
expenses to
average net
assets 1.67% 1.67% 1.56% 1.34%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 1.70% 1.69% 1.68% 1.64%5
Ratio of net
investment
income to
average net
assets 4.04% 4.26% 4.29% 4.15%5
Ratio of
net investment
income to
average net
assets prior
to expense
limitation 4.01% 4.24% 4.17% 3.85%5
Portfolio
turnover 7% 21% 14% 54%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA INSURED FUND - CLASS C
-----------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95 12/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset
value,
beginning
of period $10.940 $10.600 $10.730 $ 9.610 $10.230
Income from
investment
operations:
Net investment
income 0.219 0.454 0.440 0.430 0.300
Net realized
and unrealized
gain (loss)
on investment
transactions 0.011 0.338 (0.130) 1.140 (0.620)
-------- -------- -------- -------- --------
Total from
investment
operations 0.230 0.792 0.310 1.570 (0.320)
-------- -------- -------- -------- --------
Less dividends
and
distributions:
Dividends
from net
investment
income (0.220) (0.452) (0.440) (0.450) (0.280)
Distributions
from net
realized gain
on investments -- -- -- -- (0.020)
-------- -------- -------- -------- --------
Total
dividends
and
distributions (0.220) (0.452) (0.440) (0.450) (0.300)
-------- -------- -------- -------- --------
Net asset
value, end
of period $10.950 $10.940 $10.600 $10.730 $9.610
-------- -------- -------- -------- --------
Total Return2 2.13% 7.66% 2.98% 16.63% (3.14%)
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $3,108 $3,096 $3,126 $3,166 $1,525
Ratio of
expenses to
average net
assets 1.67% 1.67% 1.68% 1.66% 1.36%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 1.70% 1.69% 1.68% 1.67% 1.68%5
Ratio of net
investment
income to
average net
assets 4.04% 4.26% 4.18% 4.11% 4.68%5
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 4.01% 4.24% 4.18% 4.10% 4.36%5
Portfolio
turnover 7% 21% 14% 54% 25%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc. as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE MINNESOTA INTERMEDIATE FUND - CLASS A
---------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning
of period $11.170 $10.990 $11.140 $10.500 $11.160 $10.830
Income from
investment
operations:
Net investment
income 0.270 0.535 0.510 0.510 0.450 0.470
Net realized
and unrealized
gain (loss) on
investment
transactions (0.040) 0.180 (0.150) 0.640 (0.660) 0.370
-------- -------- -------- -------- -------- --------
Total from
investment
operations 0.230 0.715 0.360 1.150 (0.210) 0.840
-------- -------- -------- -------- -------- --------
Less dividends
and distributions:
Dividends from
net investment
income (0.270) (0.535) (0.510) (0.510) (0.450) (0.470)
Distributions
from net
realized gain
on investments -- -- -- -- -- (0.040)
-------- -------- -------- -------- -------- --------
Total
dividends
and
distributions (0.270) (0.535) (0.510) (0.510) (0.450) (0.510)
-------- -------- -------- -------- -------- --------
Net asset
value, end
of period $11.130 $11.170 $10.990 $11.140 $10.500 $11.160
======== ======== ======== ======== ======== ========
Total Return2 2.08% 6.69% 3.46% 11.00% (1.91%) 7.88%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $55,905 $57,524 $66,024 $72,405 $84,168 $75,374
Ratio of
expenses to
average net
assets 0.82% 0.91% 0.89% 0.91% 0.92% 0.99%
Ratio of
expenses to
average net
assets prior
to expense
limitation 0.82% 0.95% 0.89% 0.91% 0.92% 0.99%
Ratio of net
investment
income to
average net
assets 4.89% 4.86% 4.69% 4.61% 4.18% 4.18%
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 4.89% 4.82% 4.69% 4.61% 4.18% 4.18%
Portfolio
turnover 15% 21% 28% 40% 42% 19%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc., as the Fund's investment manager.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE MINNESOTA
INTERMEDIATE FUND - CLASS B
------------------------------------------
SIX MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset
value,
beginning
of period $11.170 $10.990 $11.140 $10.950
-------- -------- -------- --------
Income from
investment
operations:
Net investment
income 0.225 0.437 0.440 0.170
Net realized
and unrealized
gain (loss) on
investment
transactions (0.032) 0.190 (0.150) 0.190
-------- -------- -------- --------
Total from
investment
operations 0.193 0.627 0.290 0.360
-------- -------- -------- --------
Less dividends:
Dividends
from net
investment
income (0.223) (0.447) (0.440) (0.170)
-------- -------- -------- --------
Total
dividends (0.223) (0.447) (0.440) (0.170)
-------- -------- -------- --------
Net asset
value, end
of period $11.140 $11.170 $10.990 $11.140
======== ======== ======== ========
Total Return2 1.75% 5.84% 2.74% 3.26%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $1,161 $910 $408 $27
Ratio of
expenses to
average net
assets 1.67% 1.81% 1.56% 1.30%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 1.67% 1.85% 1.62% 1.55%5
Ratio of net
investment
income to
average net
assets 4.04% 3.96% 3.99% 3.93%5
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 4.04% 3.92% 3.93% 3.68%5
Portfolio
turnover 15% 21% 28% 40%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc., as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE MINNESOTA INTERMEDIATE FUND - CLASS C
-----------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95 12/31/94
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $11.170 $10.990 $11.130 $10.500 $10.740
Income from
investment
operations:
Net investment
income 0.224 0.440 0.430 0.420 0.240
Net realized
and unrealized
gain (loss) on
investment
transactions (0.041) 0.187 (0.140) 0.630 (0.240)
-------- -------- -------- -------- --------
Total from
investment
operations 0.183 0.627 0.290 1.050 --
-------- -------- -------- -------- --------
Less dividends:
Dividends
from net
investment
income (0.223) (0.447) (0.430) (0.420) (0.240)
-------- -------- -------- -------- --------
Total
dividends (0.223) (0.447) (0.430) (0.420) (0.240)
-------- -------- -------- -------- --------
Net asset
value, end
of period $11.130 $11.170 $10.990 $11.130 $10.500
======== ======== ======== ======== ========
Total Return2 1.66% 5.84% 2.69% 10.18% (0.03%)
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $1,574 $1,512 $1,137 $694 $341
Ratio of
expenses to
average net
assets 1.67% 1.77% 1.64% 1.63% 1.71%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 1.67% 1.81% 1.64% 1.63% 1.71%5
Ratio of net
investment
income to
average net
assets 4.04% 4.00% 3.94% 3.82% 3.35%5
Ratio of
net investment
income to
average net
assets prior
to expense
limitation 4.04% 3.96% 3.94% 3.82% 3.35%5
Portfolio
turnover 15% 21% 28% 40% 42%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur
Fund Managers, Inc., as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA HIGH YIELD MINNESOTA HIGH YIELD
MUNICIPAL BOND FUND - CLASS A MUNICIPAL BOND FUND - CLASS B
-------------------------------- -------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96 12/31/95 12/31/94 12/31/93
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period $10.650 $10.180 $10.000 $10.660 $10.190 $ 9.780
Income from
investment
operations:
Net investment
income 0.297 0.643 0.350 0.262 0.557 0.290
Net realized
and unrealized
gain on
investment
transactions 0.074 0.463 0.180 0.062 0.470 0.410
-------- -------- -------- -------- -------- --------
Total from
investment
operations 0.371 1.106 0.530 0.324 1.027 0.700
-------- -------- -------- -------- -------- --------
Less dividends:
Dividends
from net
investment
income (0.301) (0.636) (0.350) (0.264) (0.557) (0.290)
-------- -------- -------- -------- -------- --------
Total
dividends: (0.301) (0.636) (0.350) (0.264) (0.557) (0.290)
-------- -------- -------- -------- -------- --------
Net asset
value, end
of period $10.720 $10.650 $10.180 $10.720 $10.660 $10.190
======== ======== ======== ======== ======== ========
Total Return2 3.51% 11.26% 5.40% 3.04% 10.41% 7.29%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $26,642 $19,017 $6,068 $12,359 $8,201 $2,738
Ratio of
expenses to
average net
assets 0.36% 0.09% 0.24%5 1.11% 0.85% 0.95%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 1.32% 1.24% 1.25%5 2.07% 2.00% 2.00%5
Ratio of net
investment
income to
average net
assets 5.60% 6.16% 5.78%5 4.85% 5.40% 5.14%5
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 4.64% 5.01% 4.77%5 3.89% 4.25% 4.09%5
Portfolio
turnover 5% 23% 15% 5% 23% 15%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
<TABLE>
<CAPTION>
MINNESOTA HIGH YIELD
MUNICIPAL BOND FUND - CLASS C
--------------------------------
SIX MONTHS YEAR YEAR
ENDED ENDED ENDED
6/30/981 12/31/973 12/31/96
(UNAUDITED)
<S> <C> <C> <C>
Net asset
value,
beginning
of period $10.650 $10.180 $ 9.990
Income from
investment
operations:
Net
investment
income 0.269 0.572 0.300
Net
realized and
unrealized
gain from
investment
transactions 0.063 0.455 0.190
-------- -------- --------
Total from
investment
operations 0.332 1.027 0.490
-------- -------- --------
Less dividends:
Dividends
from net
investment
income (0.262) (0.557) (0.300)
-------- -------- --------
Total
dividends: (0.262) (0.557) (0.300)
-------- -------- --------
Net asset
value, end
of period $10.720 $10.650 $10.180
======== ======== ========
Total Return2 3.14% 10.41% 5.02%
Ratios and
supplemental
data:
Net assets,
end of period
(000 omitted) $4,508 $3,178 $900
Ratio of
expenses to
average net
assets 1.11% 0.83% 0.99%5
Ratio of
expenses to
average net
assets prior
to expense
limitation 2.07% 1.98% 2.00%5
Ratio of net
investment
income to
average net
assets 4.85% 5.42% 4.90%5
Ratio of net
investment
income to
average net
assets prior
to expense
limitation 3.89% 4.27% 3.89%5
Portfolio
turnover 5% 23% 15%
- ------------------------
1 Ratios have been annualized and total return has not been annualized.
2 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.
3 Commencing May 1, 1997, Delaware Management Company replaced Voyageur Fund
Managers, Inc., as the Fund's investment manager.
4 Commencement of operations.
5 Annualized.
See accompanying notes
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
Delaware-Voyageur Tax-Free Minnesota Fund (formerly Voyageur
Minnesota Tax Free Fund) ("Tax-Free Minnesota Fund"), a series of the
Voyageur Tax Free Funds, Inc.; Delaware-Voyageur Minnesota Insured
Fund (formerly Voyageur Minnesota Insured Fund)("Minnesota Insured
Fund"), a series of the Voyageur Insured Funds, Inc.; Delaware-
Voyageur Tax-Free Minnesota Intermediate Fund (formerly Voyageur
Minnesota Limited Term Tax Free Fund)("Tax-Free Minnesota
Intermediate Fund"), a series of the Voyageur Intermediate Tax Free
Funds, Inc.; and Delaware-Voyageur Minnesota High Yield Municipal
Bond Fund (formerly Voyageur Minnesota High Yield Municipal Bond
Fund)("Minnesota High Yield Municipal Bond Fund") a series of
Voyageur Mutual Funds, Inc., (each referred to as a "Fund" or
collectively as the "Funds") are registered under the Investment
Company Act of 1940 (as amended) as open-end management investment
companies. The Tax-Free Minnesota Fund, Minnesota Insured Fund, and
Tax-Free Minnesota Intermediate Fund are registered as diversified
funds. The Minnesota High Yield Municipal Bond Fund is registered as
a non-diversified fund.
The Tax-Free Minnesota Fund seeks high current income free from both
federal and state income taxes by investing in investment grade
municipal bonds. Minnesota Insured Fund seeks high current income
free from both federal and state income taxes with the added safety
of an insured portfolio by investing in insured municipal bonds. The
Tax-Free Minnesota Intermediate Fund seeks to preserve original
investment principal while providing income free from both federal
and state income taxes by investing in intermediate term investment
grade municipal bonds. The Minnesota High Yield Municipal Bond Fund
seeks high current income free from both federal and state income
taxes by investing in medium and lower-grade municipal bonds. The
Funds each offer 3 classes of shares.
1. Fund Reorganization
On April 30, 1997, Lincoln National Corporation ("LNC") acquired
Voyageur Fund Manager Inc.'s ("Voyageur") parent, Dougherty Financial
Group, Inc. ("DFG") pursuant to an agreement and plan of merger dated
January 15, 1997, in which LNC would acquire DFG including the mutual
fund investment advisory business of DFG conducted by Voyageur. Upon
completion of the acquisition, Delaware Management Company ("DMC")
became the investment adviser to the Funds, Delaware Distributors,
L.P. ("DDLP") became the distributor for the Funds, Delaware Service
Company, Inc. ("DSC") became the transfer, dividend-disbursing,
shareholder servicing agent and accounting service agent for the
Funds.
2. Significant Accounting Policies
The following accounting policies are in accordance with generally
accepted accounting principles and are consistently followed by the
Funds.
Security Valuation - Long-term debt securities are valued by an
independent pricing service and such prices are believed to reflect
the fair value of such securities. Money market instruments having
less than 60 days to maturity are valued at amortized cost which
approximates market value. Other securities and assets for which
market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Fund's
Board of Directors.
Federal Income Taxes - Each Fund intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has
been made in the financial statements. Income and capital gain
distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting
principles.
Class Accounting - Investment income, common expenses and realized
and unrealized gain (loss) on investments are allocated to the
various classes of the Funds on the basis of daily net assets of each
class. Distribution expenses relating to a specific class are charged
directly to that class.
Other - Expenses common to all Funds within the Delaware Investments
Family of Funds are allocated amongst the Funds on the basis of
average net assets. Security transactions are recorded on the date
the securities are purchased or sold (trade date). Costs used in
calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Interest income
is recorded on the accrual basis. Original issue discounts and market
premium are amortized to interest income over the lives of the
respective securities. The Funds declare dividends from net
investment income daily and pay them monthly. Capital gains, if any,
are distributed annually.
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 at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
3. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement,
the Fund pays DMC the Investment Manager of each Fund, an annual fee,
which is calculated daily on the average daily net assets of each
Fund.
DMC has elected to waive their fees and reimburse each Fund to the
extent that annual operating expenses exclusive of taxes, interest,
brokerage commissions, distribution expenses and extraordinary
expenses do not exceed the following percentages of average daily net
assets through December 31, 1998.
TAX-FREE MINNESOTA
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
MINNESOTA INSURED INTERMEDIATE MUNICIPAL
FUND FUND FUND BOND FUND
------------------------------------------------
Management fee as a
percentage of
average daily
net assets
(per annum) 0.50% 0.50% 0.40% 0.65%
Operating expense
limitation as a
percentage of
average daily net
assets (per annum) 0.69% 0.71% 0.75% 0.25%
Expenses absorbed
by DMC $86,757 $39,455 $-- $171,914
The Funds have engaged Delaware Service Company, Inc. (DSC), an
affiliate of DMC, to serve as dividend disbursing, transfer agent and
accounting and administration agent for each Fund. For the six-months
ended June 30, 1998, the amounts expensed for each Fund were as
follows:
TAX-FREE MINNESOTA
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
MINNESOTA INSURED INTERMEDIATE MUNICIPAL
FUND FUND FUND BOND FUND
------------------------------------------------
Dividend disbursing,
transfer agent
fees and other
expenses $163,920 $91,350 $20,040 $19,286
Accounting and
administration
services $103,977 $90,930 $17,736 $ 8,726
On June 30, 1998, the Funds had payables to affiliates as follows:
TAX-FREE MINNESOTA
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
MINNESOTA INSURED INTERMEDIATE MUNICIPAL
FUND FUND FUND BOND FUND
------------------------------------------------
Investment Management
fee Payable
to DMC $349,973 $254,300 $38,849 $ --
Dividend Disbursing,
transfer agent fees,
accounting fees and
other expenses
payable to DSC $ 48,041 $ 32,724 $ 7,111 $ 7,365
Other expenses
payable to DMC $116,477 $ 84,150 $11,137 $19,583
Pursuant to the Distribution Agreement, the Funds pay DDLP, the
Distributor and an affiliate of DMC, an annual fee not to exceed
0.25% of the average daily net assets of the A Class for the
Tax-Free Minnesota Fund, the Minnesota Insured Fund and the
Minnesota High Yield Municipal Bond Fund and 0.15% of the
average daily net assets of the Tax-Free Minnesota Intermediate
Fund A Class and 1.00% of the average daily net assets of the B and C
Class for each Series.
For the six-months ended June 30, 1998, DDLP earned commissions on
sales of the Fund A Class shares for each Fund as
follows:
TAX-FREE MINNESOTA
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
MINNESOTA INSURED INTERMEDIATE MUNICIPAL
FUND FUND FUND BOND FUND
------------------------------------------------
DDLP earned
commissions on sales
of the Fund A
class shares $34,157 $23,282 $3,842 $17,532
Certain officers of DMC, DSC and DDLP are officers, directors and/or
employees of the Funds. These officers, directors and employees are
paid no compensation by the Funds.
4. Investments
During the six months ended June 30, 1998 the Funds made purchases
and sales of investment securities other than U.S. government
securities and temporary cash investments for each Fund as follows:
TAX-FREE MINNESOTA
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
MINNESOTA INSURED INTERMEDIATE MUNICIPAL
FUND FUND FUND BOND FUND
------------------------------------------------------
Purchases $30,562,514 $10,324,760 $4,230,275 $14,835,972
Sales $36,229,238 $13,534,260 $5,144,415 $ 939,020
At June 30, 1998, the aggregate cost of securities and unrealized
appreciation (depreciation) for federal income tax purposes for each
Fund were as follows:
TAX-FREE MINNESOTA
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
MINNESOTA INSURED INTERMEDIATE MUNICIPAL
FUND FUND FUND BOND FUND
------------------------------------------------------
Cost of
Investments $392,088,366 $273,536,618 $56,276,191 $44,503,452
------------ ------------ ----------- -----------
Aggregate
unrealized
appreciation $ 34,035,174 $ 22,458,029 $ 2,465,200 $ 1,495,146
Aggregate
unrealized
depreciation $ 78,705 $ -- $ 139 $ --
------------ ------------ ----------- -----------
Net unrealized
appreciation $ 33,956,469 $ 22,458,029 $ 2,465,061 $ 1,495,146
For federal income tax purposes, as of December 31, 1997, Minnesota
Insured Fund had a capital loss carryover of $6,053,203 that will
expire in 2001, through 2003, Tax Free Minnesota Intermediate Fund
had had a capital loss carryover of $11,494 that will expire in 2004,
and Minnesota High Yield Municipal Bond Fund had a capital loss
carryover of $11,143 that will expire in 2004 and 2005.
5. Capital Stock
Transactions in Capital Stock were as follows:
TAX-FREE MINNESOTA FUND MINNESOTA INSURED FUND
------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
6/30/98 12/31/97 6/30/98 12/31/97
(UNAUDITED) (UNAUDITED)
Shares sold:
A Class 877,686 2,445,000 602,866 1,511,145
B Class 90,471 230,517 87,885 262,553
C Class 128,516 99,577 19,471 68,641
Shares issued upon reinvestment of
dividends from net investment
income:
A Class 529,112 1,191,155 419,496 983,624
B Class 10,872 21,253 11,863 23,426
C Class 5,109 8,668 4,449 10,782
--------- --------- --------- ---------
1,641,766 3,996,170 1,146,030 2,860,171
--------- --------- --------- ---------
Shares repurchased:
A Class (1,908,966) (5,840,279) (1,607,475) (4,894,549)
B Class (23,298) (118,151) (41,146) (113,408)
C Class (28,056) (118,065) (23,031) (91,495)
--------- --------- --------- ---------
(1,960,320) (6,076,495) (1,671,652) (5,099,452)
--------- --------- --------- ---------
Net Increase
(Decrease) (318,554) (2,080,325) (525,622) (2,239,281)
--------- --------- --------- ---------
TAX-FREE MINNESOTA MINNESOTA HIGH YIELD
INTERMEDIATE FUND MUNICIPAL BOND FUND
- ------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
6/30/98 12/31/97 6/30/98 12/31/97
(UNAUDITED) (UNAUDITED)
Shares sold:
A Class 298,502 642,232 861,998 1,228,700
B Class 35,564 60,795 419,640 531,417
C Class 43,564 73,831 150,367 240,090
Shares issued upon reinvestment of
dividends from net investment
income:
A Class 92,774 198,390 38,930 48,680
B Class 1,588 2,115 13,289 15,493
C Class 2,560 4,721 6,633 8,637
--------- --------- --------- ---------
474,552 982,084 1,490,857 2,073,017
--------- --------- --------- ---------
Shares repurchased:
A Class (518,576) (1,698,909) (200,803) (87,722)
B Class (14,411) (18,602) (50,163) (46,061)
C Class (40,077) (46,700) (34,876) (38,834)
--------- --------- --------- ---------
(573,064) (1,764,211) (285,842) (172,617)
--------- --------- --------- ---------
Net Increase
(Decrease) (98,512) (782,127) 1,205,015 1,900,400
--------- --------- --------- ---------
6. Credit and Market Risk
The Funds concentrate their investments in securities issued by
municipalities, mainly in Minnesota. The value of these investments
may be adversely affected by new legislation within the states,
regional or local economic conditions, and differing levels of supply
and demand for municipal bonds. Many municipalities insure repayment
for their obligations. Although bond insurance reduces the risk of
loss due to default by an issuer, such bonds remain subject to the
risk that market value may fluctuate for other reasons and there is
no assurance that the insurance company will meet its obligations.
These securities have been identified in the Statement of Net Assets.
DELAWARE INVESTMENTS FAMILY OF FUNDS
FOR GROWTH OF CAPITAL
Aggressive Growth Fund
Trend Fund
DelCap Fund
Small Cap Value Fund
U.S. Growth Fund
Growth Stock Fund
Tax-Efficient Equity Fund
FOR TOTAL RETURN
Social Awareness Fund
Blue Chip Fund
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
REIT Fund
Delaware Fund
FOR INTERNATIONAL DIVERSIFICATION
Emerging Markets Fund
New Pacific Fund
Overseas Equity Fund
International Equity Fund
Global Equity Fund
Global Bond Fund
FOR CURRENT INCOME
Delchester Fund
High-Yield Opportunities Fund
Strategic Income Fund
U.S. Government Fund
Delaware-Voyageur
U.S. Government Securities Fund
Limited-Term Government Fund
FOR TAX-EXEMPT INCOME
National High Yield Municipal Bond Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
State Tax-Free Funds*
MONEY MARKET FUNDS
Delaware Cash Reserve
Tax-Free Money Fund
ASSET ALLOCATION FUNDS
Growth Portfolio
Balanced Portfolio
Income Portfolio
* Available for the following states: Arizona, California, Colorado,
Florida, Idaho, Iowa, Kansas, Minnesota, Missouri, North Dakota, New
Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Utah,
Washington, Wisconsin. Insured and intermediate bond funds are
available in selected states.
Complete information on any fund offered by Delaware Investments can
be found in each fund's current prospectus. Prospectuses for all
funds offered by Delaware Investments are available from your
financial adviser. Please read the prospectus carefully before you
invest or send money.
[GRAPHIC OMITTED: PHOTO OF KEYBOARD]
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF SHAREHOLDERS OF THE
MINNESOTA MUNICIPAL BOND FUNDS, BUT IT MAY be used with prospective
investors when preceded or accompanied by a current Prospectus for
Minnesota Funds, which sets forth details about charges, expenses,
investment objectives and operating policies of each Fund. You should
read the prospectus carefully before you invest. Summary investment
results are documented in each Fund's current Statement of Additional
Information. The figures in this report represent past results which
are not a guarantee of future results. The return and principal value
of an investment in each Fund will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
INVESTMENT MANAGER
Delaware Management Company
Philadelphia
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawarefunds.com
Be sure to consult your financial adviser when making investments.
Mutual funds can be a valuable part of your financial plan; however,
shares of the Fund are not FDIC or NCUSIF insured, are not guaranteed
by any bank or any credit union, and involve investment risk, including
the possible loss of the principal. Shares of the Fund are not bank or
credit union deposits.
[copyright] Delaware Distributors, L.P.
[PHOTO OMITTED: ASSORTED GLOBES]
[GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS
----------------------------
Philadelphia * London]
Printed in the USA
on recycled paper
SA-MNALL [6/98] PP8/98
(934)
