<PAGE>
DELAWARE(SM)
INVESTMENTS Delaware Minnesota Municipal Bond Funds
------------
Tax-Exempt Income
2000 ANNUAL REPORT
[TAX-EXEMPT INCOME ARTWORK]
<PAGE>
TABLE OF CONTENTS
-----------------
Letter to Shareholders 1
Portfolio Management
Review 3
Performance Summary 7
Financial Statements
Statements of Net Assets 11
Statements of Operations 25
Statements of Changes in
Net Assets 26
Financial Highlights 28
Notes to Financial
Statements 40
Report of Independent
Auditors 45
A TRADITION OF SOUND INVESTING SINCE 1929
-----------------------------------------
A Commitment To Our Investors
Experienced
[] Our seasoned investment professionals average more than 15 years' experience.
[] We began managing investments in 1929 and opened our first mutual fund in
1938. Over the past 70 years, we have weathered a full range of economic and
market environments.
Disciplined
[] We follow strict investment policies and clear buy/sell guidelines.
[] We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
[] We clearly articulate our investment policies and follow them consistently.
[] Our commitment to consistency has earned us the confidence of discriminating
institutional and individual investors to manage more than $44 billion in
assets as of September 30, 2000.
Comprehensive
[] We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (23 single-state funds)
o International equity o International fixed-income
o Balanced
[] Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
Dear Shareholder
"WE BELIEVE RISING
TREASURY PRICES LEFT
MUNICIPAL BONDS
IN A POSITION OF
RELATIVE VALUE."
October 9, 2000
Recap of Events -- Throughout most of the Funds' fiscal year ended August 31,
2000, the Federal Reserve Board focused on tightening the U.S. money supply,
conducting a prolonged series of interest rate hikes. A strong U.S. economy and
threatening inflation prompted the Fed to bump up short-term interest rates four
times during the period, with the last increase coming on May 16, 2000.
During the fall of 1999, many bond buyers seemed to be ignoring municipal bonds
in favor of the higher-yielding corporate bonds that were flooding the market.
That scenario changed later in our fiscal year when interest rate hikes in
February and March, coupled with the U.S. Treasury buyback and turmoil in the
U.S. stock market in April, led to a marked increase in demand for the safety of
U.S. Treasury securities. We believe rising Treasury prices left municipal bonds
in a position of relative value. Investors began to recognize this value as
Treasury yields dropped and AAA-rated municipal bond yields exceeded 6% in March
(Source: Bloomberg). Since then, we have generally seen demand for municipal
bonds on the upswing.*
Increased tax revenue resulting from the strong economy and higher borrowing
costs resulting from rising interest rates caused many state and local
governments to reduce the number of municipal bonds they issued during our
fiscal year. This caused demand to exceed supply as we ended our year (Source:
Moody's Investors Service Inc.).
The flip-flop between supply and demand in the municipal markets happened
gradually throughout 2000. The Fed's latest interest rate hike in May supported
that trend. By the end of our fiscal year, demand for municipal bonds remained
high while municipal bond issuance for 2000 declined by about 19%, a reduction
of about $33 billion from the same period one year prior (Source: Thomson
Financial).
Total Return
For Period Ended August 31, 2000 One Year
--------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Fund Class A +4.39%
--------------------------------------------------------------------------------
Delaware Minnesota Insured Fund Class A +4.63%
--------------------------------------------------------------------------------
Lipper Minnesota Municipal Debt Funds Average (51 funds) +4.43%
--------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Intermediate Fund Class A +2.77%
--------------------------------------------------------------------------------
Lipper Other States Intermediate Municipal Debt Funds Average (76 funds) +4.74%
--------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund Class A +0.32%
--------------------------------------------------------------------------------
Lipper High-Yield Municipal Debt Funds Average (68 funds) +0.90%
--------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index +6.77%
Lehman Brothers Insured Municipal Bond Index +7.40%
Lehman Brothers Five-Year Municipal Bond Index +5.39%
--------------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of all dividends. Performance information for
all Fund classes can be found on pages 7 through 10. The Lipper categories
represent the average returns of municipal bond funds with similar investment
objectives tracked by Lipper (Source: Lipper, Inc.). The unmanaged Lehman
Brothers Indexes are composed of bonds with a variety of quality ratings from
many states. You cannot invest directly in an index. Past performance does not
guarantee future results.
*The U.S. government does not guarantee principal and interest of municipal
bonds, unlike Treasuries.
1
<PAGE>
"WE ARE ENCOURAGED
BY THE CURRENT
MARKET ENVIRONMENT."
[TAX-EXEMPT INCOME ARTWORK]
Long-term interest rates began to decline during the summer months, with the
30-year mortgage rate at 7.64% on August 31, 2000, about three quarters of a
percentage point off its spring 2000 high for the year. The average yield on
30-year AAA-rated municipal bonds, which rarely is more than the yield for the
30-year Treasury bond, stood at 5.68% on August 31, 2000. By comparison, the
30-year Treasury bond was yielding 5.66% and two-year Treasury notes 6.16% on
August 31, 2000 (Source: Bloomberg). For municipal bond tax-equivalent yields,
see the chart on page 6.
Delaware's Municipal Bond Funds for Minnesota struggled during the first half of
the fiscal year, but then rode the municipal market rally to positive returns as
of August 31, 2000.
The Funds' portfolios are managed in a long-term perspective and relatively few
changes were made to the Funds during the fiscal year. This long-term investment
approach tends to minimize trading costs and limit realized capital gains. As a
result, investors may get to keep more of what they earn. While there was a
relatively small supply of bonds in some states, the scant supply of new bonds
often helped improve the value of the bonds we held.
Market Outlook -- We are encouraged by the current market environment. As of
this writing, the predominant opinion on Wall Street is that the Fed is firmly
in a holding pattern with regard to its actions on interest rates. Evident
slowing in the U.S. economy, which has prompted the Fed to leave rates untouched
at its last three meetings, could eventually lead to lesser revenues for states
and municipalities. In our opinion, this would likely lead to a general increase
in the issuance of municipal bonds.
We believe that municipal bonds will continue to play a role in investors'
well-diversified portfolios. In addition, we believe that in an environment
where interest rates trend downward, investing in municipal bond funds will be
more attractive to investors than buying individual bonds. In such an
environment, municipal bond funds, like Delaware's, are holding slightly older
bonds -- many of which were issued at more attractive rates than most new issues
coming to market.
Thank you for your continued confidence and your commitment to Delaware
Investments.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
------------------------------------- --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds
2
<PAGE>
Elizabeth H. Howell
Senior Portfolio Manager
October 9, 2000
Delaware Tax-Free
Minnesota Fund
Portfolio Characteristics
August 31, 2000
---------------------------------------------------------------
Current 30-Day SEC Yield* +4.68%
---------------------------------------------------------------
Average Effective Duration** 7.0 years
---------------------------------------------------------------
Average Effective Maturity*** 11.1 years
---------------------------------------------------------------
Average Credit Quality A
---------------------------------------------------------------
*For Class A shares measured according
to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC
yield as of 8/31/00 for Class B shares
was +4.12%. For Class C shares, the
30-day SEC yield was +4.11%.
**Duration is a common measure of a bond
or bond fund's sensitivity to interest rate
changes.
***Average effective maturity is the average
time remaining until scheduled
repayment by issuers of portfolio
securities.
PORTFOLIO MANAGEMENT REVIEW
---------------------------
The Funds' Results
During the year ended August 31, 2000 we began to see strong performance in
municipal markets despite changing interest rates. While municipal bond funds
cash flows are negative year-to-date, July 2000 brought positive numbers that we
hope to see continue, with investors pouring a net $850 million dollars into
municipal bond funds (Source: Investment Company Institute).
The period was characterized by a continued diminishing of municipal bond
supply, as states, counties and municipalities issued fewer bonds, likely due to
strong local economies and tax bases, as well as the dramatic decline in bond
refunding. Although healthcare bonds were weak during the period, bond issues
for public projects such as transportation and higher education often exhibited
strength. Furthermore, credit upgrades for bonds were substantial -- especially
among tax-backed bonds (Source: Moody's Investors Service).
While new bond issuance was down more than 30% from a year ago, we believe there
was ample supply in Minnesota (Source: Standard & Poor's), and we were generally
able to purchase bonds with solid credit ratings and the potential for price
appreciation. The uncertainty surrounding interest rates, meanwhile, dictated
the need throughout our fiscal year for managing portfolio duration, a common
measure of a bond or bond fund's sensitivity to interest rate changes.
Delaware Tax-Free Minnesota Fund
Delaware Tax-Free Minnesota Fund had a total return of +4.39% (Class A shares at
net asset value with distributions reinvested) for the one-year period ended
August 31, 2000. The Fund performed slightly lower than its peer group, the
Lipper Minnesota Municipal Debt Funds Average, which returned +4.43% for the
same period.
We anticipated the decline in long-term interest rates late in the fiscal year,
and kept the duration of the Fund slightly longer than that of its competitors.
Duration is a common measure of a bond or bond fund's sensitivity to interest
rate changes. The longer the duration, the more the bond's price will change for
a given increase or decrease in interest rates. Our goal was to increase the
Fund's income potential to the greatest extent as is consistent with
preservation of capital. In our opinion, funds with a longer average duration
are poised to perform well over the coming months.
3
<PAGE>
Delaware Minnesota Insured Fund
Portfolio Characteristics
August 31, 2000
-------------------------------------------------
Current 30-Day SEC Yield* +4.25%
-------------------------------------------------
Average Effective Duration** 4.8 years
-------------------------------------------------
Average Effective Maturity*** 7.0 years
-------------------------------------------------
Average Credit Quality AAA
-------------------------------------------------
*For Class A shares measured according
to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC
yield as of 8/31/00 for Class B shares
was +3.68%. For Class C shares, the
30-day SEC yield was +3.67%.
**Duration is a common measure of a bond
or bond fund's sensitivity to interest rate
changes.
***Average effective maturity is the average
time remaining until scheduled
repayment by issuers of portfolio
securities.
[TAX EXEMPT INCOME ARTWORK]
Delaware Tax-Free Minnesota Fund
Sector Allocation
August 31, 2000
Sector Percentage of Net Assets
--------------------------------------------------------------------------------
Hospitals 21.32%
--------------------------------------------------------------------------------
Housing 18.70%
--------------------------------------------------------------------------------
Power Authority 17.16%
--------------------------------------------------------------------------------
Pre-Refunded/Escrowed to Maturity 11.74%
--------------------------------------------------------------------------------
General Obligation 8.95%
--------------------------------------------------------------------------------
Miscellaneous 8.51%
--------------------------------------------------------------------------------
Industrial Development 8.05%
--------------------------------------------------------------------------------
Higher Education 5.57%
--------------------------------------------------------------------------------
Delaware Minnesota Insured Fund
Delaware Minnesota Insured Fund had a total return of +4.63% (Class A shares at
net asset value with distributions reinvested) for the one-year period ended
August 31, 2000. We attribute the Fund's strong return to its investment in
exclusively insured bonds rated AAA by Standard & Poor's, which is the highest
bond credit rating available.
At the beginning of the fiscal year, more than 30% of the Fund's holdings were
in pre-refunded bonds. Issuers often pre-refund their bonds when interest rates
are decreasing in order to reduce their interest costs. New bonds are issued at
a lower interest rate and the proceeds are placed in escrow, invested in U.S.
Treasury securities, and used to pay off principal and interest on the original
bond issue.
Delaware Minnesota Insured Fund
Sector Allocation
August 31, 2000
Sector Percentage of Net Assets
--------------------------------------------------------------------------------
Pre-Refunded/Escrowed to Maturity 37.02%
--------------------------------------------------------------------------------
General Obligation 19.10%
--------------------------------------------------------------------------------
Hospitals 16.99%
--------------------------------------------------------------------------------
Housing 14.31%
--------------------------------------------------------------------------------
Power Authority 10.52%
--------------------------------------------------------------------------------
Miscellaneous 2.06%
--------------------------------------------------------------------------------
4
<PAGE>
Delaware Tax-Free Minnesota
Intermediate Fund
Portfolio Characteristics
August 31, 2000
----------------------------------------------------------------------
Current 30-Day SEC Yield* +4.50%
----------------------------------------------------------------------
Average Effective Duration** 4.2 years
----------------------------------------------------------------------
Average Effective Maturity*** 5.2 years
----------------------------------------------------------------------
Average Credit Quality BBB
----------------------------------------------------------------------
*For Class A shares measured according
to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC
yield as of 8/31/00 for Class B shares
was +3.77%. For Class C shares, the
30-day SEC yield was +3.78%.
**Duration is a common measure of a bond
or bond fund's sensitivity to interest rate
changes.
***Average effective maturity is the average
time remaining until scheduled
repayment by issuers of portfolio
securities.
Delaware Tax-Free Minnesota Intermediate Fund
Delaware Tax-Free Minnesota Intermediate Fund had a total return of +2.77%
(Class A shares at net asset value with distributions reinvested) for the
one-year period ended August 31, 2000. Although the Fund's performance was
strong, it underperformed compared to its peer group, as measured by the Lipper
Other States Intermediate Municipal Debt Funds Average, which posted +4.74% for
the same period. We believe the Fund's return was lower because it did not
participate in the rally as much as funds with longer durations.
The Fund's relatively high yield resulted from an almost 41% allocation to
pre-refunded bonds. In addition, a majority of the bonds in the portfolio had
average maturities in the five-year to ten-year range, which benefited the Fund
in two ways. The shorter-term bonds helped reduce price volatility, while the
longer-term bonds generated attractive income.
Delaware Tax-Free Minnesota Intermediate Fund
Sector Allocation
August 31, 2000
Sector Percentage of Net Assets
--------------------------------------------------------------------------------
Pre-Refunded/Escrowed to Maturity 40.59%
--------------------------------------------------------------------------------
Industrial Development 17.58%
--------------------------------------------------------------------------------
Health Care/Hospital 13.80%
--------------------------------------------------------------------------------
Housing 11.61%
--------------------------------------------------------------------------------
Power Authority 6.55%
--------------------------------------------------------------------------------
Lease/Certificates of Participation 4.42%
--------------------------------------------------------------------------------
General Obligation 3.70%
--------------------------------------------------------------------------------
Miscellaneous 1.75%
--------------------------------------------------------------------------------
Delaware Minnesota High-Yield Municipal Bond Fund
Delaware Minnesota High-Yield Municipal Bond Fund had a total return of +0.32%
(Class A shares at net asset value with distributions reinvested) for the
one-year period ended August 31, 2000. The Fund's performance was slightly lower
than that of its peers, represented by the Lipper High-Yield Municipal Debt
Funds Average, which returned +0.90% for the same period.
High-yield municipal bonds, in general, struggled throughout the fiscal year. In
August 1999, the default of Allegheny Health Systems, a municipal bond issuer in
Pennsylvania, had a ripple effect throughout the high-yield bond market, as
investors seemed to grow increasingly concerned about credit risk. As a result,
many investors also abandoned high-yield issues and sought the higher quality
offered by investment-grade and government bonds. Toward the end of the fiscal
year, there was some improvement and renewed interest in high-yield bonds, but
in general they remained out of favor with investors.
5
<PAGE>
Delaware Minnesota High-Yield
Municipal Bond Fund
Portfolio Characteristics
August 31, 2000
----------------------------------------------------------------------
Current 30-Day SEC Yield* +5.92%
----------------------------------------------------------------------
Average Effective Duration** 10.2 years
----------------------------------------------------------------------
Average Effective Maturity*** 20.7 years
----------------------------------------------------------------------
Average Credit Quality C
----------------------------------------------------------------------
*For Class A shares measured according
to Securities and Exchange Commission
(SEC) guidelines. Current 30-day SEC
yield as of 8/31/00 for Class B shares
was +5.40%. For Class C shares, the
30-day SEC yield was +5.41%.
**Duration is a common measure of a bond
or bond fund's sensitivity to interest rate
changes.
***Average effective maturity is the average
time remaining until scheduled
repayment by issuers of portfolio
securities.
--------------------------------------------------
As of August 31, 2000, the yield on 30-year
AAA-rated municipal bonds nationally was
5.68% (Source: Bloomberg). The chart shows
what the equivalent yield would be on a
taxable investment for investors in each tax
bracket.+
--------------------------------------------------
30-Year AAA-Rated Municipal Bonds
Tax-Equivalent Yields
As of August 31,2000
10% 9.40%
9% 8.88%
8% 7.88% 8.23%
7% 6.68%
6%
5%
4%
3%
2%
1%
0%
-------------------------------------
15% 28% 31% 36% 39.6%
Income Tax Bracket
+Principal and interest of municipal bonds, unlike
U.S. Treasury securities, are not guaranteed by
the U.S. government. The above illustration is
not intended to represent the yield of any
mutual fund from Delaware Investments
(Tax-Exempt Income Artwork)
<PAGE>
When selecting bonds for the Fund, we analyze each bond on an individual basis.
Although we are confident in our selection of bonds and their ability to make
interest payments, since the prices on bonds in the Fund are likely to move in
line with the market, we will probably see relatively flat total returns until
investors return to the market. However, for the period ended August 31, 2000
Delaware Minnesota High-Yield Municipal Bond Fund paid the highest dividend
compared to the Lipper Minnesota peer group (Source: Lipper, Inc.).
Delaware Minnesota High-Yield Municipal Bond Fund
Sector Allocation
August 31, 2000
Sector Percentage of Net Assets
--------------------------------------------------------------------------------
Housing 52.92%
--------------------------------------------------------------------------------
Hospitals 20.90%
--------------------------------------------------------------------------------
Miscellaneous 8.08%
--------------------------------------------------------------------------------
Industrial Development 5.34%
--------------------------------------------------------------------------------
General Obligation 3.82%
--------------------------------------------------------------------------------
Higher Education 3.61%
--------------------------------------------------------------------------------
City Agency 3.31%
--------------------------------------------------------------------------------
Lease/Certificates of Participation 2.02%
--------------------------------------------------------------------------------
Outlook
In the months ahead, we anticipate a positive environment for municipal bonds.
We think it is possible that the strong performance seen in the first half of
2000 could continue through the fall.
As always with municipal bonds, this depends largely on interest rate trends, as
well as supply and demand in the municipal markets. The Federal Reserve Board
has promised to remain vigilant about keeping inflation under control and could
continue with interest rate increases in the future. As of this writing,
however, many analysts and investors seem to believe that the Fed may be
finished with increases -- at least for the rest of this year. Long-term
interest rates, meanwhile, are generally trending downward.
We believe that a non-inflationary U.S. economy that has less-robust growth is
likely to boost the demand for capital funding. This would be a positive for
municipal bonds and for the Funds. In our opinion, municipal bond funds will
continue to be an important investment vehicle -- providing excellent
diversification for investors' overall portfolios, as well as providing
individual investors the potential to preserve their own capital and generate
tax-free income.*
* A portion of the income from tax-exempt funds may be subject to the
alternative minimum tax.
6
<PAGE>
FUND BASICS
Fund Objective
The Fund seeks to provide as high a level of current income exempt from federal
and Minnesota state personal income taxes, as is consistent with preservation of
capital.
Total Fund Assets
As of August 31, 2000
$375.14 million
Number of Holdings
147
Fund Start Date
February 29, 1984
Your Fund Manager
Elizabeth H. Howell joined Delaware Investments via its acquisition of Voyageur
Fund Managers in 1997. She previously held management positions at Windsor
Financial Group, Loomis Sayles and Eaton Vance Management. She holds a
bachelor's degree from Skidmore College, an MBA degree from Babson College and
is a member of the Twin Cities Securities Analysts Society.
Nasdaq Symbols
Class A DEFFX
Class B DMOBX
Class C DMOCX
<PAGE>
DELAWARE TAX-FREE MINNESOTA FUND PERFORMANCE
Growth of a $10,000 Investment
August 31, 1990 through August 31, 2000
Lehman Brothers Delaware Tax-Free
Municipal Bond Minnesota Fund
Index Class A
Aug-90 $10,000 $9,625
Aug-91 $11,179 $10,626
Aug-92 $12,400 $11,745
Aug-93 $13,944 $13,118
Aug-94 $13,963 $13,071
Aug-95 $15,201 $13,982
Aug-96 $15,997 $14,751
Aug-97 $17,476 $16,113
Aug-98 $18,987 $17,525
Aug-99 $19,091 $17,338
Aug-00 $20,376 $18,098
Chart assumes $10,000 invested on August 31, 1990 and includes the effect of a
3.75% front-end sales charge and the reinvestment of all dividends and capital
gains. Performance of other Fund classes will vary due to differing charges and
expenses. Returns plotted on the chart were as of the last day of each
successive month. Past performance does not guarantee future results.
Average Annual Total Returns
Through August 31, 2000 Lifetime 10 Years Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 2/29/84)
Excluding Sales Charge +8.05% +6.53% +5.29% +4.39%
Including Sales Charge +7.80% +6.12% +4.49% +0.45%
--------------------------------------------------------------------------------
Class B (Est. 3/11/95)
Excluding Sales Charge +4.94% +4.57% +3.50%
Including Sales Charge +4.79% +4.23% -0.47%
--------------------------------------------------------------------------------
Class C (Est. 5/4/94)
Excluding Sales Charge +4.81% +4.53% +3.60%
Including Sales Charge +4.81% +4.53% +2.61%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
share results, excluding sales charges, assume either that contingent deferred
sales charges did not apply or the investment was not redeemed. Past performance
is not a guarantee of future results.
Class A shares have a 3.75% maximum front-end sales charge and 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 contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Tax-Free
Minnesota Fund during the periods shown. Performance would have been lower if
the expense limitation was not in effect.
7
<PAGE>
FUND BASICS
Fund Objective
The Fund seeks to provide as high a level of current income exempt from federal
and Minnesota state personal income taxes, as is consistent with preservation of
capital.
Total Fund Assets
As of August 31, 2000
$252.59 million
Number of Holdings
111
Fund Start Date
May 1, 1987
Your Fund Manager
Elizabeth H. Howell
Nasdaq Symbols
Class A MNINX
Class B DVMBX
Class C DVMCX
DELAWARE MINNESOTA INSURED FUND PERFORMANCE
Growth of a $10,000 Investment
August 31, 1990 through August 31, 2000
Lehman Brothers Delaware
Insured Municipal Bond Minnesota Insured
Index Fund Class A
Aug-90 $10,000 $9,625
Aug-91 $11,245 $10,555
Aug-92 $12,541 $11,765
Aug-93 $14,191 $13,460
Aug-94 $14,122 $13,350
Aug-95 $15,409 $14,341
Aug-96 $16,245 $15,105
Aug-97 $17,773 $16,355
Aug-98 $19,409 $17,686
Aug-99 $19,352 $17,655
Aug-00 $20,787 $18,473
Chart assumes $10,000 invested on August 31, 1990 and includes the effect of a
3.75% front-end sales charge and the reinvestment of all dividends and capital
gains. Performance of other Fund classes will vary due to differing charges and
expenses. Returns plotted on the chart were as of the last day of each
successive month. Past performance does not guarantee future results.
Average Annual Total Returns
Through August 31, 2000 Lifetime 10 Years Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 5/1/87)
Excluding Sales Charge +6.75% +6.58% +5.20% +4.63%
Including Sales Charge +6.44% +6.18% +4.41% +0.71%
--------------------------------------------------------------------------------
Class B (Est. 3/7/95)
Excluding Sales Charge +4.89% +4.46% +3.86%
Including Sales Charge +4.74% +4.13% -0.13%
--------------------------------------------------------------------------------
Class C (Est. 5/4/94)
Excluding Sales Charge +4.70% +4.42% +3.85%
Including Sales Charge +4.70% +4.42% +2.86%
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
share results, excluding sales charges, assume either that contingent deferred
sales charges did not apply or the investment was not redeemed. Past performance
is not a guarantee of future results.
Class A shares have a 3.75% maximum front-end sales charge and 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 contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Minnesota
Insured Fund during the periods shown. Performance would have been lower if the
expense limitation was not in effect.
8
<PAGE>
FUND BASICS
Fund Objective
The Fund seeks to provide investors with preservation of capital and,
secondarily, current income exempt from federal income tax and the Minnesota
state personal income tax, by maintaining a weighted average portfolio maturity
of 10 years or less.
Total Fund Assets
As of August 31, 2000
$51.26 million
Number of Holdings
49
Fund Start Date
October 27, 1985
Your Fund Manager
Elizabeth H. Howell
Nasdaq Symbols
Class A DXCCX
Class B DVSBX
Class C DVSCX
<PAGE>
DELAWARE TAX-FREE MINNESOTA INTERMEDIATE
FUND PERFORMANCE
Growth of a $10,000 Investment
August 31, 1990 through August 31, 2000
Lehman Brothers Delaware Tax-Free
Five-Year Municipal Minnesota Intermediate
Bond Index Fund Class A
Aug-90 $10,000 $ 9,725
Aug-91 $11,049 $10,508
Aug-92 $12,176 $11,402
Aug-93 $13,272 $12,254
Aug-94 $13,514 $12,452
Aug-95 $14,582 $13,326
Aug-96 $15,122 $13,783
Aug-97 $16,121 $14,661
Aug-98 $17,189 $15,583
Aug-99 $17,574 $15,561
Aug-00 $18,518 $15,991
Chart assumes $10,000 invested on August 31, 1990 and includes the effect of a
2.75% front-end sales charge and the reinvestment of all dividends and capital
gains. Performance of other Fund classes will vary due to differing charges and
expenses. Returns plotted on the chart were as of the last day of each
successive month. Past performance does not guarantee future results.
Average Annual Total Returns
Through August 31, 2000 Lifetime 10 Years Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 10/27/85)
Excluding Sales Charge +5.49% +5.08% +3.67% +2.77%
Including Sales Charge +5.30% +4.79% +3.09% -0.05%
--------------------------------------------------------------------------------
Class B (Est. 8/15/95)
Excluding Sales Charge +3.06% +2.91% +1.89%
Including Sales Charge +3.06% +2.91% -0.06%
--------------------------------------------------------------------------------
Class C (Est. 5/4/94)
Excluding Sales Charge +3.46% +2.83% +1.98%
Including Sales Charge +3.46% +2.83% +1.00%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
share results, excluding sales charges, assume either that contingent deferred
sales charges did not apply or the investment was not redeemed. Past performance
is not a guarantee of future results.
Class A shares have a 2.75% maximum front-end sales charge and 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 contingent
deferred sales charge of up to 2% if redeemed before the end of the third year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Tax-Free
Minnesota Intermediate Fund during the periods shown. Performance would have
been lower if the expense limitation was not in effect.
9
<PAGE>
FUND BASICS
Fund Objective
To provide as high a level of current income exempt from federal and Minnesota
state personal income taxes, primarily through investment in medium- and
lower-grade municipal obligations.
Total Fund Assets
As of August 31, 2000
$56.03 million
Number of Holdings
66
Fund Start Date
June 4, 1996
Your Fund Manager
Elizabeth H. Howell
Nasdaq Symbols
Class A DVMHX
Class B DVMYX
Class C DVMMX
<PAGE>
DELAWARE MINNESOTA HIGH-YIELD MUNICIPAL BOND
FUND PERFORMANCE
Growth of a $10,000 Investment
June 4, 1996 through August 31, 2000
Lehman Brothers Delaware Minnesota
Municipal Bond High-Yield Municipal Bond
Index Fund Class A
Jun-96 $10,000 $ 9,625
Aug-96 $10,088 $ 9,730
Feb-97 $10,606 $10,260
Aug-97 $11,021 $10,754
Feb-98 $11,575 $11,421
Aug-98 $11,974 $11,876
Feb-99 $12,287 $12,105
Aug-99 $12,039 $11,844
Feb-00 $12,031 $11,170
Aug-00 $12,849 $11,882
Chart assumes $10,000 invested on June 4, 1996 and includes the effect of a
3.75% front-end sales charge and the reinvestment of all dividends and capital
gains. Performance of other Fund classes will vary due to differing charges and
expenses. Returns plotted on the chart were as of the last day of each
successive month. Past performance does not guarantee future results.
Average Annual Total Returns
Through August 31, 2000 Lifetime One Year
--------------------------------------------------------------------------------
Class A (Est. 6/4/96)
Excluding Sales Charge +5.13% +0.32%
Including Sales Charge +4.18% -3.46%
--------------------------------------------------------------------------------
Class B (Est. 6/12/96)
Excluding Sales Charge +4.88% -0.49%
Including Sales Charge +4.48% -4.27%
--------------------------------------------------------------------------------
Class C (Est. 6/12/96)
Excluding Sales Charge +4.36% -0.49%
Including Sales Charge +4.36% -1.43%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
share results, excluding sales charges, assume either that contingent deferred
sales charges did not apply or the investment was not redeemed. Past performance
is not a guarantee of future results.
Class A shares have a 3.75% maximum front-end sales charge and 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 contingent
deferred sales charge of up to 4% if redeemed before the end of the sixth year.
Class C shares have a 1% annual distribution and service fee. If redeemed within
12 months, a 1% contingent deferred sales charge applies.
An expense limitation was in effect for all classes of Delaware Minnesota
High-Yield Municipal Bond Fund during the periods shown. Performance would have
been lower if the expense limitation was not in effect.
10
Statements of Net Assets
DELAWARE TAX-FREE MINNESOTA FUND
Principal Market
August 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.85%
Continuing Care/Retirement Revenue
Bonds - 1.05%
Eden Prairie Health Care Facilities
Revenue Refunding Castle Ridge Care
Center 5.70% 7/1/28 ........................... $ 1,740,000 $1,367,675
Minnesota Agriculture & Economic
Development Board - Benedictine
Health Systems 5.75% 2/1/29 ................... 1,195,000 952,845
New Hope Housing & Health Minnesota
Masonic Home North Ridge
5.875% 3/1/29 ................................. 2,000,000 1,621,820
----------
3,942,340
----------
General Obligation Bonds - 8.95%
***Farmington Independent School District
#192 Capital Appreciation
Series B 5.75% 2/1/20 ......................... 2,650,000 882,185
***Farmington Independent School District
#192 Capital Appreciation
Series B 5.77% 2/1/21 ......................... 2,500,000 783,250
Hennepin County Solid Waste
5.75% 10/1/10 ................................. 4,990,000 5,193,692
***Lakeville Independent School District #194
Capital Appreciation Series B
5.74% 2/1/19 .................................. 8,000,000 2,823,519
***Mahtomedi Independent School
District #832 Series B
5.28% 2/1/14 (MBIA) ........................... 1,540,000 764,903
Minneapolis Unlimited Sales Tax
Series 1992 6.30% 10/1/08 ..................... 1,750,000 1,830,325
**Minnesota State Inverse Floater ROLS
5.39% 11/1/16 ................................. 2,420,000 2,294,692
**Minnesota State Inverse Floater ROLS
5.39% 11/1/17 ................................. 1,135,000 1,056,333
**Minnesota State Inverse Floater ROLS
5.39% 11/1/18 ................................. 1,145,000 1,049,954
Puerto Rico Commonwealth
Public Improvement 5.25% 7/1/18 ............... 1,250,000 1,258,550
Rochester Tax Increment 6.50% 12/1/04 ........... 1,000,000 1,005,110
+Rockford Independent School
District #883 Floater ROC
4.33% 2/1/23 .................................. 3,510,000 3,510,000
**Rockford Independent School
District #883 Inverse Floater ROLS
6.67% 2/1/23 .................................. 3,510,000 3,578,445
***Rosemont Independent School
District #196 5.10% 4/1/12 (FSA) .............. 1,850,000 1,031,912
***Rosemont Independent School
District #196 5.19% 4/1/13 (FSA) .............. 1,915,000 1,004,475
***Rosemont Independent School
District #196 Series B
5.00% 4/1/11 (FSA) ............................ 2,600,000 1,541,124
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
General Obligation Bonds (continued)
***Sartell Independent School District #748
5.19% 2/1/13 (MBIA) ......................... $ 540,000 $ 285,676
***Sartell Independent School District #748
5.36% 2/1/15 (MBIA) ......................... 1,075,000 501,821
***Sartell Independent School District #748
5.42% 2/1/16 (MBIA) ......................... 1,750,000 766,745
***Sartell Independent School District #748
5.48% 2/1/17 (MBIA) ......................... 1,600,000 659,168
St. Paul Tax Increment - Block 39
Project A 4.75% 2/1/25 ...................... 2,000,000 1,741,600
-----------
33,563,479
-----------
Higher Education Revenue Bonds - 5.57%
Minnesota Higher Education Augsburg
College Series 4F1 6.25% 5/1/23 ............. 1,000,000 1,013,230
Minnesota Higher Education Facilities
Revenue Hamline University
6.00% 10/1/12 ............................... 1,250,000 1,281,175
Minnesota Higher Education Facilities
Revenue Hamline University
6.00% 10/1/16 ............................... 1,790,000 1,812,572
Minnesota Higher Education St. Benedict's
College 6.20% 3/1/16 ........................ 1,000,000 1,022,320
Minnesota Higher Education
St. Thomas University Series 3-R2
5.60% 9/1/14 ................................ 1,100,000 1,113,805
+University of Minnesota Floater ROC
4.33% 7/1/21 ................................ 7,170,000 7,170,000
**University of Minnesota Inverse Floater
ROLS 6.42% 7/1/21 ........................... 5,250,000 5,392,590
**University of Minnesota Inverse Floater
ROLS 6.92% 7/1/18 ........................... 1,920,000 2,112,000
-----------
20,917,692
-----------
Hospital Revenue Bonds - 21.32%
Bemidji Hospital Facilities Revenue
North County Health 6.05% 9/1/16 ............ 600,000 606,666
Bemidji Hospital Facilities Revenue
North County Health 6.05% 9/1/24 ............ 1,825,000 1,815,838
Brainerd Benedictine Health Care Systems
for St. Joseph's Hospital
6.00% 2/15/12 (Connie Lee) .................. 2,250,000 2,354,175
Duluth Economic Development Authority
Benedictine for St. Mary's Hospital
6.00% 2/15/20 (Connie Lee) .................. 9,450,000 9,611,311
Duluth Economic Development Authority
for St. Luke's Hospital
6.40% 5/1/18 (Connie Lee) ................... 3,295,000 3,410,720
Marshall Medical Center Weiner
Memorial Medical Center Project
6.00% 11/1/28 ............................... 1,000,000 810,250
11
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free Minnesota Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds (continued)
Minneapolis Fairview Hospital Series 91B
6.50% 1/1/11 (MBIA) ......................... $ 3,000,000 $ 3,124,470
Minneapolis/St. Paul Housing &
Redevelopment Authority Health Care
System for Healthspan Series A
4.75% 11/15/18 (AMBAC) ...................... 4,000,000 3,614,840
Robbinsdale North Memorial Medical
5.50% 5/15/23 (AMBAC) ....................... 10,725,000 10,492,911
**Rochester Health Care Facilities Revenue
Reg IRS for Mayo Clinic, Series H
Inverse Floater 7.479% 11/15/15 ............. 3,500,000 3,705,345
**Rochester Minnesota Health Care
Facilities Inverse Floater ROLS
6.45% 11/15/27 .............................. 10,475,000 10,010,748
+Rochester Minnesota Health Care
Facilities Revenue Floater ROC
4.30% 5/15/22 ............................... 10,475,000 10,475,000
St. Louis Park Commercial Development
Revenue for G & N, L P Project
(Methodist Hospital Guaranteed)
7.25% 6/1/13 ................................ 1,120,000 1,144,830
St. Louis Park Methodist Hospital
5.20% 7/1/23 (AMBAC) ........................ 10,220,000 9,583,703
St. Paul Housing & Redevelopment
Authority for HealthEast Authority
Hospital Revenue 5.70% 11/1/15 .............. 1,300,000 1,066,637
St. Paul Housing & Redevelopment
Hospital Revenue for HealthEast
Series A 6.625% 11/1/17 ..................... 8,440,000 7,415,806
Washington County Housing &
Redevelopment Authority for
HealthEast 5.50% 11/15/27 ................... 1,000,000 727,830
-----------
79,971,080
-----------
Housing Revenue Bonds - 18.70%
Austin Housing & Redevelopment
Authority Courtyard Residence
Series 95A 7.25% 1/1/26 ..................... 500,000 518,855
Bloomington Housing & Redevelopment
Authority Senior Summerhouse
Bloomington Project 6.125% 5/1/35 ........... 3,420,000 2,918,765
Brooklyn Center Multifamily Housing
Revenue Ponds Family Housing
Project Section 8 5.90% 1/1/20 .............. 2,250,000 2,269,170
Burnsville Multifamily Bridgeway
Apartments 7.625% 2/1/24 (FHA) .............. 3,370,000 3,414,585
Carver County Housing & Redevelopment
Authority Multifamily Revenue Lake
Grace Apartments 6.00% 7/1/28 ............... 1,435,000 1,446,580
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Dakota County Housing & Redevelopment
Authority Multifamily Revenue,
Affordable Housing View Point
Project 6.125% 11/1/17 ......................... $ 2,475,000 $ 2,307,071
Dakota County Housing & Redevelopment
Authority Single Family
8.10% 3/1/16 (GNMA) ............................ 15,000 15,431
Eden Prairie Multifamily Homes Tanager
Creek 8.05% 6/20/31 (GNMA) ..................... 7,605,000 8,507,790
Eden Prairie Multifamily Revenue, Eden
Investments 7.40% 8/1/25 (FHA) ................. 400,000 410,240
Eden Prairie Multifamily Windslope
Apartments Section 8 Housing
7.10% 11/1/17 .................................. 1,585,000 1,638,066
Hopkins Renaissance Multifamily Housing
Section 8 6.375% 4/1/20 ........................ 1,000,000 1,040,400
Little Canada Multifamily Housing
Revenue Housing Alternative
Development Company Project
Series A 6.10% 12/1/17 ......................... 1,600,000 1,534,032
Little Canada Multifamily Housing
Revenue Housing Alternative
Development Company Project
Series A 6.25% 12/1/27 ......................... 2,900,000 2,758,045
Minneapolis Housing Facility Revenue for
Augustana Chapel View Project
Series 1993 7.00% 4/1/18 ....................... 1,000,000 970,490
Minneapolis Multifamily Housing - Trinity
Apartments Series A 6.75% 5/1/21 ............... 2,080,000 2,082,974
Minneapolis Multifamily Mortgage for
Seward Towers Project
7.375% 12/20/30 (GNMA) ......................... 4,000,000 4,092,360
Minnesota Housing Finance Agency
Multifamily Housing 6.95% 2/1/14 ............... 1,500,000 1,539,045
Minnesota Housing Finance Agency
Multifamily Housing Series 92A
6.95% 8/1/17 ................................... 745,000 772,945
Minnesota Housing Finance Agency
Rental Housing Series B
6.25% 8/1/22 ................................... 935,000 936,449
Minnesota Housing Finance Agency
Single Family Mortgage Series 91C
7.10% 7/1/11 ................................... 220,000 225,524
Minnetonka Multifamily Beacon Hill
Project (Presbyterian Homes
Guaranteed) 7.70% 6/1/25 ....................... 2,000,000 2,015,240
Oakdale Housing Oak Meadows Project
7.00% 4/1/27 ................................... 6,800,000 6,694,804
12
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free Minnesota Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Park Rapids Multifamily Revenue The
Court Apartments Project Section 8
6.30% 2/1/20 .................................. $ 3,170,000 $ 3,090,179
Rochester Multifamily Revenue,
Wedum-Shorewood Campus
6.60% 6/1/36 .................................. 2,000,000 1,863,200
St. Louis Park Multifamily Housing
Revenue Community Housing
6.25% 12/1/28 (FHA) ........................... 3,855,000 3,992,739
St. Louis Park Multifamily Westwind
Apartments Housing
5.75% 1/1/29 (GNMA) ........................... 3,865,000 3,848,574
St. Louis Park Residential Mortgage
Revenue for Single Family
7.25% 4/20/23 (GNMA) .......................... 900,000 924,543
St. Paul Housing & Redevelopment
Agency (Executive Life Guaranteed
Investment Contract) Como Lake
Project 7.50% 3/1/26 (FHA) .................... 1,000,000 980,000
St. Paul Housing & Redevelopment Single
Family Mortgage
6.90% 12/1/11 (FNMA) .......................... 26,000 26,668
St. Paul Housing & Redevelopment Single
Family Mortgage
6.90% 12/1/21 (FNMA) .......................... 1,070,000 1,105,599
Stillwater Multifamily Housing Stillwater
Cottages 7.00% 11/1/27 ........................ 1,000,000 958,950
Wadena Housing & Redevelopment
Agency Humphrey Manor - Section 8
6.00% 2/1/19 .................................. 2,130,000 2,155,943
Washington County Housing &
Redevelopment Authority Revenue
Briar Pond - Series C
7.25% 8/20/34 (GNMA) .......................... 1,015,000 983,890
Wells Housing & Redevelopment Agency
Broadway Apartments Project
Section 8 7.00% 1/1/19 ........................ 1,010,000 1,054,854
Willmar Housing & Redevelopment
Agency Highland Apartments
Section 8 5.85% 6/1/19 ........................ 1,050,000 1,058,358
-----------
70,152,358
-----------
Industrial Development Revenue Bonds - 8.05%
Andover Development Revenue
Downtown Center Project Series A
7.00% 12/1/12 ................................. 1,000,000 1,021,310
Cloquet Pollution Control Revenue for
Potlatch Corporation 5.90% 10/1/26 ............ 15,000,000 14,181,000
East Grand Forks for American Crystal
Sugar Pollution Control Revenue
7.75% 4/1/18 .................................. 1,230,000 1,265,436
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Industrial Development Revenue
Bonds (continued)
International Falls Pollution Control
Revenue Boise Cascade Project
5.65% 12/1/22 ................................. $ 1,500,000 $ 1,334,880
Richfield Commercial Development
Revenue for Richfield Shoppes
8.375% 10/1/13 ................................ 2,200,000 2,385,614
Seaway Port Authority Duluth Industrial
Development Dock & Wharf Revenue
Cargill Project Series E
6.125% 11/1/14 ................................ 4,500,000 4,667,670
St. Cloud Commercial Development
Revenue for Northwest Center
Association 7.50% 8/1/12 ...................... 3,943,971 4,022,614
St. Paul Port Authority Commercial
Development Revenue Fort Road
Medical/Irvine Park
7.50% 9/1/02 (Asset Gty) ...................... 1,300,000 1,303,380
-----------
30,181,904
-----------
Lease/Certificates of Participation - 0.66%
Beltrami County Housing &
Redevelopment Authority Revenue
6.20% 2/1/14 .................................. 1,010,000 1,042,017
West St. Paul Commercial Mortgage
Kmart Lease 7.00% 11/1/07 ..................... 1,381,927 1,446,490
-----------
2,488,507
-----------
Power Authority Revenue Bonds - 17.16%
Bass Brook Pollution Control Revenue for
Minnesota Power & Light Company
6.00% 7/1/22 ................................. 17,000,000 16,754,350
Bass Brook Pollution Control Revenue for
Minnesota Power & Light Company
6.00% 7/1/22 (MBIA) ........................... 750,000 763,980
Guam Power Authority Revenue Bonds,
99A 5.125% 10/1/29 ............................ 1,000,000 916,130
Northern Minnesota Municipal Power
Agency Electric System Revenue
5.50% 1/1/18 (AMBAC) .......................... 9,200,000 9,148,388
***Northern Minnesota Municipal Power
Agency 4.83% 1/1/09 (AMBAC) ................... 3,815,000 2,562,726
Northern Minnesota Municipal Power
Agency Electric Systems
4.75% 1/1/20 .................................. 4,500,000 4,043,835
**Puerto Rico Electric Power Authority
Inverse Floater ROLS
4.79% 7/1/19 (FSA) ............................ 3,050,000 2,464,949
Puerto Rico Electric Power Authority
Series EE 4.75% 7/1/24 ........................ 3,250,000 2,900,593
13
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free Minnesota Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Power Authority Revenue Bonds (continued)
Puerto Rico Electric Power Authority
Series X 5.50% 7/1/25 ....................... $ 2,930,000 $ 2,898,444
Puerto Rico Electric Power Authority
Series Z 5.25% 7/1/21 ....................... 1,600,000 1,548,720
Southern Minnesota Municipal Power
Agency 4.75% 1/1/16 (MBIA) .................. 6,200,000 5,777,036
Southern Minnesota Municipal Power
Agency 5.75% 1/1/18 (MBIA) .................. 7,770,000 7,860,909
Southern Minnesota Municipal Power
Agency Supply System
5.50% 1/1/15 (AMBAC) ........................ 1,560,000 1,572,371
***Southern Minnesota Municipal Power
Agency 5.57% 1/1/19 (MBIA) .................. 8,210,000 3,000,919
***Southern Minnesota Municipal Power
Agency 5.60% 1/1/21 (MBIA) .................. 5,000,000 1,627,750
Western Municipal Power Agency
Revenue 6.125% 1/1/16 ....................... 525,000 526,066
-----------
64,367,166
-----------
*Pre-Refunded/Escrowed to
Maturity Bonds - 11.74%
Blaine Industrial Development Revenue
(Ball Corp.) 8.25% 12/1/00
(Escrowed to Maturity) ...................... 300,000 302,655
Bloomington Tax Increment 9.75% 2/1/08
(Escrowed to Maturity) ...................... 500,000 601,095
Brainerd Independent School District #181
7.00% 6/1/11-01 ............................. 390,000 396,887
Faribault Independent School
District #656 (MN School District
Credit Enhanced) 6.10% 6/1/10-04 ............ 1,000,000 1,049,120
Glencoe/McLeod County Health Care
8.50% 12/1/15-00 ............................ 500,000 504,710
Kenyon Wanamingo Independent School
District #2172
6.00% 2/1/18-05 (MBIA) ...................... 2,350,000 2,471,048
Maplewood Independent School
District #622 7.10% 2/1/25-05 (FSA) ......... 10,000,000 11,040,000
Minneapolis Health Care American
Baptist Homes 8.70% 11/1/09-01 .............. 2,485,000 2,650,849
Minneapolis/St. Paul Housing &
Redevelopment Authority HealthOne
7.40% 8/15/11-00 (MBIA) ..................... 1,360,000 1,402,106
Minnesota Public Facilities Authority
Water Pollution Control
6.95% 3/1/13-01 ............................. 5,220,000 5,388,815
Minnesota Public Facilities Authority
Water Pollution Control
6.25% 3/1/16-05 ............................. 4,400,000 4,715,172
Owatonna Public Utilities
6.75% 1/1/16-01 ............................. 1,000,000 1,007,490
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded/Escrowed to Maturity
Bonds (continued)
Pine Island Independent School
District #255 6.625% 6/1/12-01 (FSA) ........ $ 240,000 $ 243,682
Pine Island Independent School
District #255 6.625% 6/1/13-01 (FSA) ........ 310,000 314,755
Pine Island Independent School
District #255 6.625% 6/1/14-01 (FSA) ........ 330,000 335,062
Pine Island Independent School
District #255 6.625% 6/1/15-01 (FSA) ........ 355,000 360,446
Pine Island Independent School
District #255 6.625% 6/1/16-01 (FSA) ........ 380,000 385,829
Plainview Independent School
District #810 6.70% 2/1/06-03 ............... 385,000 401,925
Plainview Independent School
District #810 6.75% 2/1/08-03 ............... 445,000 465,061
Plainview Independent School
District #811 6.75% 2/1/07-03 ............... 420,000 438,934
Red Wing Housing & Redevelopment
Agency Jordan Tower Section 8
Series 92 7.00% 1/1/19-02 ................... 1,500,000 1,576,470
**Richfield Independent School
District #280 Series C, Inverse Floater
5.34% 2/1/15-03 ............................. 1,365,000 1,417,034
Southern Minnesota Municipal Power
Agency Revenue 5.75% 1/1/18
(Escrowed to Maturity) (MBIA) ............... 1,000,000 1,054,620
Southern Minnesota Municipal Power
Agency Supply System 5.50% 1/1/15
(Escrowed to Maturity) (AMBAC) .............. 990,000 1,008,167
Spring Park, Minnesota Twin Birch Health
Care Center (Guarantor: Presbyterian
Homes of Minnesota)
8.25% 8/1/11-01 ............................. 600,000 631,614
St. Cloud Housing & Redevelopment
Authority Northway A&B Project -
Section 8 7.50% 12/1/18-00 .................. 2,045,000 2,100,276
University Of Minnesota Series A
6.00% 2/1/11 (Escrowed to Maturity) ......... 1,500,000 1,506,645
Western Minnesota Municipal Power
Agency Revenue 9.75% 1/1/16
(Escrowed to Maturity) (MBIA) ............... 185,000 269,606
-----------
44,040,073
-----------
Water & Sewer Revenue Bonds - 4.05%
+Minnesota Public Facilities Authority
Water Pollution Control Revenue
Floater ROC 4.33% 3/1/14 .................... 5,000,000 5,000,000
**Minnesota Public Facilities Authority
Water Pollution Control Revenue
Inverse Floater ROLS 5.92% 3/1/14 ........... 5,000,000 4,820,450
14
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free Minnesota Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Water & Sewer Revenue Bonds (continued)
Minnesota Public Facilities Authority
Water Pollution Control Revenue
4.75% 3/1/19 .............................. $ 2,000,000 $ 1,802,060
**Minnesota Public Facilities Authority
Water Pollution Control Revenue
Inverse Floater ROLS 4.64% 3/1/16 ......... 2,000,000 1,654,060
Puerto Rico Aqueduct & Sewer Authority
5.00% 7/1/19 .............................. 2,000,000 1,910,600
-----------
15,187,170
-----------
Other Revenue Bonds - 1.60%
Minneapolis Community Development
Agency Common Bond Fund
Opportunity Workshop Project
Series 2A 7.125% 12/1/05 .................. 510,000 536,520
Minneapolis Community Development
Agency Common Bond Fund
7.95% 12/1/11 ............................. 855,000 904,257
Minneapolis Community Development
Agency Common Bond Fund
7.40% 12/1/21 ............................. 795,000 833,550
***Minneapolis Community Development
Agency Tax Increment Revenue
4.83% 9/1/09 .............................. 5,750,000 3,741,352
------------
6,015,679
------------
Total Municipal Bonds
(cost $362,664,372) ....................... 370,827,448
------------
Total Market Value of Securities - 98.85%
(cost $362,664,372) ....................... 370,827,448
Receivables and Other Assets Net
of Liabilities - 1.15% .................... 4,312,509
------------
Net Assets Applicable to 30,956,208
Shares Outstanding - 100.00% .............. $375,139,957
============
<PAGE>
--------------------------------------------------------------------------------
Net Asset Value - Delaware Tax Free
Minnesota Fund A Class
($355,572,684 / 29,342,763 Shares) ....................... $12.12
------
Net Asset Value - Delaware Tax Free
Minnesota Fund B Class
($13,411,720 / 1,106,263 Shares) ......................... $12.12
------
Net Asset Value - Delaware Tax Free
Minnesota Fund C Class
($6,155,553 / 507,182 Shares) ............................ $12.14
------
----------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floater represents a security that pays interest at a rate that
increases (decreases) with a decrease (increase) in a specific index.
Interest rate disclosed is in effect as of August 31, 2000.
***Zero Coupon Bond - The interest rate shown is the effective yield as of
August 31, 2000.
+Floater represents a security that pays interest at a rate that increases
(decreases) with an increase (decrease) in a specific index. Interest rate
disclosed is in effect as of August 31, 2000.
Components of Net Assets at August 31, 2000:
Shares of beneficial interest (unlimited
authorization - no par) .................................... $367,999,230
Undistributed net investment income .......................... 14,139
Accumulated net realized loss
on investments ............................................. (1,036,488)
Net unrealized appreciation
of investments ............................................. 8,163,076
------------
Total net assets ............................................. $375,139,957
============
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
Asset Gty - Insured by the Asset Guaranty Insurance Company
Connie Lee - Insured by College Construction Insurance Association
FHA - Insured by the Federal Housing Authority
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Minnesota Fund
Net asset value A Class (A) ................................... $12.12
Sales charge (3.75% of offering price
or 3.88% of amount invested
per share) (B) .............................................. 0.47
------
Offering price ................................................ $12.59
======
----------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
15
<PAGE>
Statements of Net Assets (continued)
DELAWARE MINNESOTA INSURED FUND
===============================
Principal Market
August 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.70%
General Obligation Bonds - 19.10%
Anoka County Capital Improvement
Series C 5.90% 2/1/11 (FGIC) .................. $ 8,045,000 $ 8,166,480
Becker Refunding Tax Increment Series D
6.25% 8/1/15 (MBIA) (AMT) ..................... 6,300,000 6,409,179
Hennepin County Solid Waste IBC
5.75% 10/1/10 (MBIA) .......................... 1,800,000 1,869,192
Hopkins Independent School District #270
4.875% 2/1/14 (MBIA) .......................... 400,000 389,428
+Rockford Minnesota Independent School
District #883 Floater ROC
4.33% 2/1/23 (FSA) ............................ 1,605,000 1,605,000
**Rockford Minnesota Independent School
District #883 Inverse Floater ROLS
Series II-R-30-B 7.15% 2/1/21 (FSA) ........... 1,605,000 1,639,861
***Rosemount Independent School
District #196 4.832% 4/1/09 (FSA) ............. 1,860,000 1,234,612
***Rosemount Independent School
District #196 Series B
4.903% 4/1/10 (FSA) ........................... 2,240,000 1,408,176
***Sauk Rapids Minnesota Independent
School District #047
5.714% 2/1/15 (FSA) ........................... 2,700,000 1,198,476
***Sauk Rapids Minnesota Independent
School District #047
5.836% 2/1/17 (FSA) ........................... 2,245,000 873,081
+South Washington County Independent
School District #833 Floater ROC
3.98% 2/1/20 (MBIA) ........................... 7,085,000 7,085,000
**South Washington County Independent
School District #833 Inverse Floater
ROLS Series II R-34-A
7.15% 2/1/20 (MBIA) ........................... 3,440,000 3,550,149
**South Washington County Independent
School District #833 Inverse Floater
ROLS Series II R-34-B
7.15% 2/1/21 (MBIA) ........................... 3,645,000 3,734,886
South Washington County Independent
School District #883
6.125% 6/1/09 (FGIC) .......................... 1,430,000 1,444,858
South Washington County Independent
School District #883
6.125% 6/1/11 (FGIC) .......................... 2,720,000 2,756,366
Stillwater Independent School
District #834 5.50% 2/1/10 (FGIC) ............. 2,995,000 3,027,017
Western Lake Superior Series A
6.00% 10/1/08 (MBIA) (AMT) .................... 400,000 421,172
Western Lake Superior Series A
6.10% 10/1/09 (MBIA) (AMT) .................... 425,000 448,409
Western Lake Superior Series A
6.20% 10/1/10 (MBIA) (AMT) .................... 450,000 475,961
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
General Obligation Bonds (continued)
Western Lake Superior Series A
6.20% 10/1/11 (MBIA) (AMT) .................... $ 475,000 $ 500,878
-----------
48,238,181
-----------
Hospital Revenue Bonds - 16.99%
Brainerd Benedictine Health Care
Systems for St. Joseph's Hospital
6.00% 2/15/12 (Connie Lee) .................... 1,500,000 1,569,450
Brainerd Benedictine Health Care
Systems for St. Joseph's Hospital
6.00% 2/15/20 (Connie Lee) .................... 2,000,000 2,038,060
Duluth Economic Development Authority
Benedictine for St. Mary's Hospital
6.00% 2/15/20 (Connie Lee) .................... 1,300,000 1,322,191
Duluth Economic Development Authority
St. Luke's Hospital
6.40% 5/1/10 (Connie Lee) ..................... 3,335,000 3,493,279
Duluth Economic Development Authority
St. Luke's Hospital
6.40% 5/1/18 (Connie Lee) ..................... 500,000 517,560
Minneapolis Fairview Hospital Series 91B
6.50% 1/1/11 (MBIA) ........................... 3,000,000 3,124,470
Minneapolis Health Care Facility Revenue
Fairview Hospital & Healthcare
Series A 5.25% 11/15/19 (MBIA) ................ 2,750,000 2,656,253
Minneapolis/St. Paul Housing &
Redevelopment Authority Children's
Health Care Series
5.50% 8/15/25 (FSA) ........................... 2,250,000 2,190,398
Minneapolis/St. Paul Housing &
Redevelopment Authority HealthOne
7.40% 8/15/05 (MBIA) .......................... 600,000 618,714
Minneapolis/St. Paul Housing &
Redevelopment Authority HealthOne
7.40% 8/15/11 (MBIA) .......................... 2,370,000 2,443,375
Minneapolis/St. Paul Housing &
Redevelopment Authority Health Care
Systems for Healthspan Series 93A
5.00% 11/15/13 (FSA) .......................... 6,490,000 6,360,654
+Minnesota Agriculture & Economic
Development Board Revenue Bond
Floater ROC 3.98% 11/15/26 (MBIA) ............. 5,125,000 5,125,000
**Minnesota Agriculture & Economic
Development Board Inverse Floater
ROLS Series II R-33
7.45% 11/15/26 (MBIA) ......................... 5,125,000 5,152,983
Robbinsdale North Memorial Medical
5.50% 5/15/23 (AMBAC) ......................... 5,400,000 5,283,144
St. Paul Ramsey Medical
5.50% 5/15/13 (AMBAC) ......................... 1,000,000 1,013,090
-----------
42,908,621
-----------
16
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Minnesota Insured Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds - 14.31%
Chaska Waters Edge Multifamily Revenue
7.30% 1/20/30 (GNMA) .......................... $ 3,257,000 $ 3,541,825
Dakota County Housing & Redevelopment
Authority Single Family Mortgage
Revenue 6.70% 10/1/17 (FNMA) .................. 2,790,000 2,871,161
Dakota County Housing &
Redevelopment Authority Single Family
Mortgage Revenue
5.85% 10/1/30 (GNMA/FNMA) ..................... 4,000,000 4,005,360
Duluth Economic Development Authority
6.00% 2/15/17 (Connie Lee) .................... 10,000,000 10,548,500
Eagan Multifamily Revenue Woodridge
Apartments 5.90% 8/1/20 (GNMA) ................ 1,000,000 1,021,170
Hopkins Multifamily Housing Auburn
Apartments 8.05% 6/20/31 (GNMA) ............... 3,790,000 4,172,980
Minneapolis/St. Paul Housing Finance
Board Housing Project Phase V
8.875% 11/1/18 (GNMA) ......................... 35,000 35,060
Minneapolis/St. Paul Housing Finance
Board Housing Project Phase IX
7.25% 8/1/21 (GNMA) ........................... 805,000 830,358
Minneapolis/St. Paul Housing Finance
Board Housing Project Phase IX
7.30% 8/1/31 (GNMA) ........................... 550,000 565,939
Minneapolis/St. Paul Housing Finance
Board Single Family Mortgage Revenue
8.30% 8/1/21 (GNMA) ........................... 55,000 55,098
Minneapolis/St. Paul Housing Finance
Board Trinity Apartments
8.125% 12/1/14 (GNMA) ......................... 85,000 85,519
Minnesota Housing Finance Agency
Single Family Housing Rental
5.95% 2/1/15 (AMBAC) .......................... 2,325,000 2,402,190
Minnesota Housing Finance Agency
Single Family Mortgage Revenue
Series A 7.05% 7/1/22 (AMBAC) ................. 365,000 373,479
Minnesota Housing Finance Agency
Single Family Mortgage Revenue
Series A 7.45% 7/1/22 (AMBAC) ................. 370,000 378,462
St. Paul Housing & Redevelopment
Authority Multifamily Housing
6.60% 10/1/12 (FNMA) .......................... 4,000,000 4,180,280
White Bear Lake Multifamily Housing
Lake Square 5.875% 2/1/15 (FHA) ............... 1,055,000 1,089,731
-----------
36,157,112
-----------
Power Authority Revenue Bonds - 10.52%
Marshall Utility Revenue
6.45% 7/1/10 (FSA) ............................ 500,000 524,290
Marshall Utility Revenue
6.45% 7/1/11 (FSA) ............................ 100,000 104,858
Marshall Utility Revenue
6.50% 7/1/12 (FSA) ............................ 500,000 524,945
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Power Authority Revenue Bonds (continued)
Marshall Utility Revenue
6.50% 7/1/13 (FSA) ............................ $ 500,000 $ 524,945
Northern Minnesota Municipal Power
Agency Electric Systems
4.75% 1/1/20 (AMBAC) .......................... 2,100,000 1,887,123
Northern Minnesota Municipal Power
Agency Electric System Revenue
5.50% 1/1/18 (AMBAC) .......................... 4,200,000 4,176,438
**Northern Municipal Power Agency
Minnesota Electric System Revenue
Inverse Floater ROLS Series II-R-32
6.44% 1/1/13 (FSA) ............................ 4,585,000 4,700,955
+Northern Municipal Power Agency
Minnesota Electric System Revenue
Floater ROC Series II-R-32
3.98% 1/1/13 (FSA) ............................ 4,585,000 4,585,000
**Puerto Rico Electric Power Authority
Inverse Floater ROLS Series RR II 99-3
5.38% 7/1/19 (FSA) ............................ 2,825,000 2,283,109
Puerto Rico Electric Power Authority
Series Revenue EE
4.50% 7/1/18 (MBIA) ........................... 4,500,000 4,112,145
Puerto Rico Electric Power Authority
Revenue Series GG
4.75% 7/1/21 (FSA) ............................ 1,000,000 921,600
Southern Minnesota Municipal Power
Agency 4.75% 1/1/16 (MBIA) .................... 2,400,000 2,236,272
-----------
26,581,680
-----------
*Pre-Refunded/Escrowed to
Maturity Bonds - 37.02%
Alexandria Independent School
District #206 Crossover Refunded
Series A 6.30% 2/1/13-03 (MBIA) ............... 1,775,000 1,841,172
Becker Wastewater Treatment Facility
Series A 5.95% 2/1/14-04 (MBIA) ............... 500,000 520,215
Brainerd Independent School
District #181 7.00% 6/1/09-01(FGIC) ........... 515,000 524,285
Brainerd Independent School
District #181 7.00% 6/1/10-01(FGIC) ........... 550,000 559,917
Buffalo Independent School
District #887 6.10% 2/1/15-03 (FSA) ........... 1,030,000 1,064,948
Carver County Housing & Redevelopment
Authority Jail Facility
6.40% 2/1/10-02 (MBIA) ........................ 515,000 527,494
Carver County Housing & Redevelopment
Authority Jail Facility
6.40% 2/1/11-02 (MBIA) ........................ 550,000 563,343
Carver County Housing & Redevelopment
Authority Jail Facility
6.40% 2/1/12-02 (MBIA) ........................ 585,000 599,192
17
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Minnesota Insured Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded/Escrowed to
Maturity Bonds (continued)
Carver County Housing & Redevelopment
Authority Jail Facility
6.40% 2/1/13-02 (MBIA) ....................... $ 625,000 $ 640,163
Carver County Housing & Redevelopment
Authority Jail Facility
6.40% 2/1/14-02 (MBIA) ....................... 670,000 686,254
Dakota & Washington Counties Housing
& Redevelopment Authority Single
Family Mortgage Revenue
8.375% 9/1/21 (Escrowed to Maturity)
(GNMA) ....................................... 14,115,000 18,705,753
Dakota & Washington Counties Housing
& Redevelopment Authority Single
Family Mortgage Revenue
8.15% 9/1/16 (Escrowed to Maturity)
(MBIA) ....................................... 405,000 502,986
Dakota & Washington Counties Housing
& Redevelopment Authority Single
Family Mortgage Revenue
8.45% 9/1/19 (Escrowed to Maturity)
(GNMA) ....................................... 9,000,000 11,830,140
Delano Independent School District #879
7.25% 2/1/10-01 (AMBAC) ...................... 500,000 505,435
Detroit Lakes Benedictine Health for
St. Mary's Hospital
6.00% 2/15/12-03 (Connie Lee) ................ 1,630,000 1,719,406
Detroit Lakes Benedictine Health for
St. Mary's Hospital
6.00% 2/15/19-03 (Connie Lee) ................ 1,000,000 1,054,850
Duluth Economic Development Authority
Health Care Duluth Clinic
6.30% 11/1/22-04 (AMBAC) ..................... 3,750,000 3,978,917
Eden Prairie Independent School
District #272 5.85% 2/1/13-01 (FGIC) ......... 2,500,000 2,542,200
Eden Prairie Independent School
District #272 5.65% 2/1/13-02 (MBIA) ......... 3,200,000 3,245,408
Elk River Independent School
District #728 6.30% 2/1/14-02 (FSA) .......... 500,000 511,460
Elk River Independent School
District #728 6.30% 2/1/15-02 (FSA) .......... 665,000 680,242
Elk River Independent School
District #728 Series 92 B
6.00% 2/1/09-03 (AMBAC) ...................... 3,950,000 4,075,136
Ellendale Geneva Independent School
District #762
6.00% 2/1/10-03 (AMBAC) ...................... 230,000 237,286
Ellendale Geneva Independent School
District #762
6.00% 2/1/11-03 (AMBAC) ...................... 245,000 252,762
Ellendale Geneva Independent School
District #762
6.00% 2/1/12-03 (AMBAC) ...................... 265,000 273,395
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded/Escrowed to
Maturity Bonds (continued)
Ellendale Geneva Independent School
District #762
6.00% 2/1/13-03 (AMBAC) ...................... $ 280,000 $ 288,870
Ellendale Geneva Independent School
District #762
6.00% 2/1/14-03 (AMBAC) ...................... 300,000 309,504
Ellendale Geneva Independent School
District #762
6.00% 2/1/15-03 (AMBAC) ...................... 320,000 330,138
Farmington Independent School
District #192 6.80% 2/1/11-01 (MBIA) ......... 850,000 857,735
Maplewood Independent School
District #622 7.10% 2/1/19-05 (MBIA) ......... 5,935,000 6,552,240
Maplewood Independent School
District #622 7.10% 2/1/25-05 (FSA) .......... 11,525,000 12,723,600
Minnesota Public Facilities Authority
Water Pollution Control Revenue
6.50% 3/1/14-02 (MBIA) ....................... 1,500,000 1,573,830
Moorhead Independent School
District #152
5.90% 2/1/10-01 (AMBAC) ...................... 475,000 477,641
Moorhead Independent School
District #152
5.90% 2/1/11-01 (AMBAC) ...................... 505,000 507,808
Moorhead Independent School
District #152
5.90% 2/1/12-01 (AMBAC) ...................... 540,000 543,002
Moorhead Independent School
District #152
6.00% 2/1/13-01 (AMBAC) ...................... 575,000 578,421
Moorhead Minnesota Public Utilities
6.25% 11/1/12-02 (MBIA) ...................... 735,000 759,689
Northern Minnesota Municipal Power
Agency Series B
5.90% 1/1/08-03 (AMBAC) ...................... 700,000 735,679
Southern Minnesota Municipal Power
Agency Revenue 5.75% 1/1/18
(Escrowed to Maturity) (AMBAC) ............... 670,000 687,286
Southern Minnesota Municipal Power
Agency Revenue 5.75% 1/1/18
(Escrowed to Maturity) (MBIA) ................ 3,790,000 3,968,206
St. Cloud Hospital Facility Revenue
6.75% 7/1/11-01 (AMBAC) ...................... 400,000 415,600
St. Cloud Hospital Facility Revenue
6.75% 7/1/15-01 (AMBAC) ...................... 500,000 519,500
St. Cloud Hospital Facility Revenue
7.00% 7/1/07-01 (AMBAC) ...................... 500,000 520,495
Washington County Housing &
Redevelopment Authority Jail Facilities
7.00% 2/1/12-02 (MBIA) ....................... 500,000 517,745
18
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Minnesota Insured Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded/Escrowed to
Maturity Bonds (continued)
Western Minnesota Municipal Power
Agency Revenue 6.60% 1/1/10
(Escrowed to Maturity) (MBIA) ............... $ 2,000,000 $ 2,220,140
Western Minnesota Municipal Power
Agency Revenue 9.75% 1/1/16
(Escrowed to Maturity) (MBIA) ............... 530,000 772,385
------------
93,501,873
------------
Transportation Revenue Bonds - 0.76%
***Puerto Rico Commonwealth Highway &
Transportation Authority Revenue
Series A 5.456% 7/1/18 (AMBAC) .............. 5,000,000 1,914,650
------------
1,914,650
------------
Total Municipal Bonds
(cost $239,582,111) ......................... 249,302,117
------------
Number
of Shares
Short-Term Investments - 0.18%
Wells Fargo National Tax-Free Money
Market Fund ................................. 466,959 466,959
------------
Total Short-Term Investments
(cost $466,959) ............................... 466,959
------------
Total Market Value of Securities -
98.88% (cost $240,049,070) .................. 249,769,076
Receivables and Other Assets Net
of Liabilities - 1.12% ...................... 2,822,455
------------
Net Assets Applicable to 24,107,328
Shares Outstanding - 100.00% ................ $252,591,531
============
Net Asset Value - Delaware Minnesota
Insured Fund A Class
($238,485,898 / 22,760,514 Shares) .......... $10.48
------
Net Asset Value - Delaware Minnesota
Insured Fund B Class
($10,490,635 / 1,002,003 Shares) ............ $10.47
------
Net Asset Value - Delaware Minnesota
Insured Fund C Class
($3,614,998 / 344,811 Shares) ............... $10.48
------
----------------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floater represents a security that pays interest at a rate that
increases (decreases) with a decrease (increase) in a specific index.
Interest rate disclosed is in effect as of August 31, 2000.
***Zero Coupon Bond - The interest rate shown is the effective yield as of
August 31, 2000.
+Floater represents a security that pays interest at a rate that increases
(decreases) with an increase (decrease) in a specific index. Interest rate
disclosed is in effect as of August 31, 2000.
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at August 31, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ..................... $249,603,868
Undistributed net investment income ........... 25,228
Accumulated net realized loss
on investments .............................. (6,757,571)
Net unrealized appreciation of investments .... 9,720,006
------------
Total net assets .............................. $252,591,531
============
Summary of Abbreviations:
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Subject to Alternative Minimum Tax
Connie Lee - Insured by the 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 Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
MBIA - Insured by the Municipal Bond Insurance Association
Net Asset Value and Offering Price per Share -
Delaware Minnesota Insured Fund
Net asset value A Class (A) ...................... $10.48
Sales charge (3.75% of offering price or
3.91% of amount invested per share) (B) ........ 0.41
------
Offering price ................................... $10.89
======
---------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
19
<PAGE>
Statements of Net Assets (continued)
DELAWARE TAX-FREE MINNESOTA INTERMEDIATE FUND
Principal Market
August 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 98.25%
General Obligation Bonds - 3.70%
**Minnesota State Inverse Floater
ROLS 5.94% 11/1/16 ........................... $2,000,000 $1,896,440
----------
1,896,440
----------
Health Care/Hospital Revenue
Bonds - 13.80%
Fergus Falls Health Care Facility Broen
Memorial Home Project 6.20% 11/1/05 .......... 100,000 98,479
Fergus Falls Health Care Facility Broen
Memorial Home Project 6.30% 11/1/06 .......... 200,000 196,490
Fergus Falls Health Care Facility Broen
Memorial Home Project 6.40% 11/1/07 .......... 200,000 196,058
Fergus Falls Health Care Facility Broen
Memorial Home Project 6.60% 11/1/09 .......... 240,000 234,353
Fergus Falls Health Care Facility Broen
Memorial Home Project 6.70% 11/1/10 .......... 260,000 253,448
New Hope Housing & Health Minnesota
Masonic Home North Ridge
5.875% 3/1/29 ................................ 1,000,000 810,910
Maplewood Health Care Facility For
HealthEast 5.70% 11/15/02 .................... 1,000,000 977,440
Maplewood Health Care Facility For
HealthEast 5.95% 11/15/06 .................... 2,200,000 2,056,978
Minneapolis Health Care Facilities
Jones-Harrison Residence Project
5.90% 10/1/16 ................................ 125,000 107,958
Rochester Nursing Home & Multifamily
Housing Revenue Samaritan Bethany, Inc.
6.00% 5/1/04 ................................. 300,000 299,991
Rochester Nursing Home & Multifamily
Housing Revenue Samaritan Bethany, Inc.
6.10% 5/1/05 ................................. 250,000 250,070
St. Paul Housing & Redevelopment Authority
for HealthEast Authority Hospital Revenue
5.70% 11/1/15 ................................ 800,000 656,392
St. Paul Housing & Redevelopment Authority
for HealthEast Authority Hospital Revenue
5.85% 11/1/17 ................................ 1,160,000 935,749
----------
7,074,316
----------
Housing Revenue Bonds - 11.61%
Minneapolis Multifamily Housing - Trinity
Apartments Series A 6.75% 5/1/21 ............. 2,970,000 2,974,247
Oakdale Elderly Housing Revenue PHM/
Oakdale Project 5.75% 3/1/18 ................. 1,400,000 1,181,474
Oakdale Housing Oak Meadows Project
6.20% 4/1/07 ................................. 150,000 147,303
Oakdale Housing Oak Meadows Project
6.30% 4/1/08 ................................. 260,000 254,940
Oakdale Housing Oak Meadows Project
6.50% 4/1/10 ................................. 295,000 290,047
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Park Rapids Multifamily Revenue The Court
Apartments Project Section 8
6.05% 8/1/12 ................................. $1,040,000 $1,043,474
St. Paul Housing & Redevelopment Single
Family Mortgage 6.90% 12/1/21 (FNMA) ......... 60,000 61,996
----------
5,953,481
----------
Industrial Development Revenue
Bonds - 17.58%
Andover Development Revenue Downtown
Center Project Series A 6.50% 12/1/06 ........ 1,795,000 1,802,647
Brooklyn Center Commercial Development
Revenue Brookdale Association
5.70% Mandatory Put 12/1/07 .................. 1,000,000 1,009,380
Duluth Gross Revenue Bond Duluth
Entertainment 7.00% 12/1/03 .................. 1,250,000 1,324,475
Duluth Gross Revenue Bond Duluth
Entertainment 7.30% 12/1/06 .................. 250,000 273,525
Minnesota Public Facilities Authority
Pollution Control Revenue Series A
6.55% 3/1/03 ................................. 1,720,000 1,771,411
Richfield Shoppes Commercial Development
Revenue Richfield Shoppes Project
7.50% 10/1/04 ................................ 820,000 823,050
St. Paul Port Authority Commercial
Development Revenue Fort Road
Medical/Irvine Park 7.50% 9/1/02
(Asset Gty) .................................. 2,000,000 2,005,200
----------
9,009,688
----------
Lease/Certificates of Participation - 4.42%
Beltrami County Housing & Redevelopment
Authority Revenue 5.90% 2/1/08 ............... 355,000 365,771
Beltrami County Housing & Redevelopment
Authority Revenue 6.00% 2/1/09 ............... 380,000 391,803
Beltrami County Housing & Redevelopment
Authority Revenue 6.00% 2/1/10 ............... 405,000 415,980
Beltrami County Housing & Redevelopment
Authority Revenue 6.10% 2/1/11 ............... 430,000 443,154
Hibbing Economic Development Authority
Revenue 6.10% 2/1/08 ......................... 650,000 651,320
----------
2,268,028
----------
Power Authority Revenue Bonds - 6.55%
Eveleth Industrial Development Revenue for
Minnesota Power & Light Company
6.125% 1/1/04 ................................ 2,500,000 2,551,125
**Puerto Rico Electric Power Authority
Revenue Series DD Inverse Floater
ROLS 5.380% 7/1/19 (FSA) ..................... 1,000,000 808,180
----------
3,359,305
----------
20
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Tax-Free Minnesota Intermediate Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
*Pre-Refunded/Escrowed To Maturity
Bonds - 40.59%
Austin Independent School District #492
6.875% 2/1/12-01 (MBIA) ...................... $ 1,205,000 $ 1,216,327
Braham Independent School District #314
6.30% 2/1/19-01 (AMBAC) ...................... 3,015,000 3,036,497
Eden Valley Watkins Independent School
District #463 6.55% 2/1/11-02 (FSA) .......... 250,000 256,570
Eden Valley Watkins Independent School
District #463 6.60% 2/1/16-02 (FSA) .......... 615,000 631,574
Mankato Independent School District #77
6.35% 2/1/13-02 (FSA) ........................ 1,350,000 1,381,847
Metropolitan Council Hubert H. Humphrey
Metrodome Sports Facility Revenue
Series 92 6.00% 10/1/09
(Escrowed to Maturity) ....................... 3,520,000 3,680,160
Minnesota State 6.25% 8/1/10-02 ............... 4,000,000 4,136,400
Olmstead County 6.85% 2/1/02-01 ............... 800,000 808,080
Olmstead County 6.90% 2/1/03-01 ............... 900,000 909,270
Olmstead County 6.95% 2/1/04-01 ............... 950,000 959,975
**Richfield Independent School District #280
Series C Inverse Floater 5.34% 2/1/15-03 ..... 1,000,000 1,038,120
St. Cloud Hospital Facility Revenue
7.00% 7/1/20-01 (AMBAC) ...................... 2,640,000 2,748,214
------------
20,803,034
------------
Total Municipal Bonds
(cost $50,644,168) ........................... 50,364,292
------------
Number
of Shares
---------
Short-Term Investments - 0.30%
Federated Minnesota Muni Cash Trust ........... 72,925 72,925
Wells Fargo National Tax-Free
Money Market Fund ............................ 77,748 77,748
------------
Total Short-Term Investments
(cost $150,673) .............................. 150,673
------------
Total Market Value of Securities - 98.55%
(cost $50,794,841) ........................... 50,514,965
Receivables and Other Assets Net
of Liabilities - 1.45% ....................... 745,673
------------
Net Assets Applicable to 4,952,903
Shares Outstanding - 100.00% ................. $ 51,260,638
============
<PAGE>
--------------------------------------------------------------------------------
Net Asset Value - Delaware Tax-Free
Minnesota Intermediate Fund A Class
($46,522,523 / 4,495,598 Shares) ............. $ 10.35
------------
Net Asset Value - Delaware Tax-Free
Minnesota Intermediate Fund B Class
($2,379,985 / 229,592 Shares) ................ $ 10.37
------------
Net Asset Value - Delaware Tax-Free
Minnesota Intermediate Fund C Class
($2,358,130 / 227,713 Shares) ................ $ 10.36
------------
Components of Net Assets at August 31, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ...................... $ 53,436,469
Undistributed net investment income ............. 2,850
Accumulated net realized loss
on investments ............................... (1,898,805)
Net unrealized depreciation of investments ...... (279,876)
------------
Total net assets ................................ $ 51,260,638
============
------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floater represents a security that pays interest at a rate that
increases (decreases) with a decrease (increase) in a specific index. Interest
rate disclosed is in effect as of August 31, 2000.
Summary of Abbreviations:
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
Net Asset Value and Offering Price per Share -
Delaware Tax-Free Minnesota Intermediate Fund
Net asset value A Class (A) ..................... $10.35
Sales charge (2.75% of offering price or
2.80% of amount invested per share) (B) ....... 0.29
------
Offering price .................................. $10.64
======
-------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more
See accompanying notes
21
<PAGE>
Statements of Net Assets (continued)
DELAWARE MINNESOTA HIGH-YIELD MUNICIPAL BOND FUND
Principal Market
August 31, 2000 Amount Value
--------------------------------------------------------------------------------
Municipal Bonds - 97.62%
City Agency Revenue Bonds - 3.31%
Minneapolis Community Development
Agency Common Bond Fund Series 2
6.20% 6/1/17 (AMT) ............................ $ 750,000 $ 775,733
Minneapolis Community Development
Agency Common Bond Fund Series 4
6.20% 6/1/17 (AMT) ............................ 1,055,000 1,081,090
-----------
1,856,823
-----------
General Obligation Bonds - 3.82%
**Minnesota State Inverse Floaters ROLS
5.39% 11/1/17 ................................. 2,300,000 2,140,587
-----------
2,140,587
-----------
Higher Education Revenue Bonds - 3.61%
Minnesota State Higher Education
Facilities Authority College Art &
Design Series 5-D 6.625% 5/1/20 ............... 1,000,000 1,014,470
Minnesota State Higher Education Facility
St. Mary's College Series 3Q
6.15% 10/1/23 ................................. 900,000 907,335
Minnesota State University System
Revenue Bonds Series 93A
6.10% 6/30/23 ................................. 100,000 100,825
-----------
2,022,630
-----------
Hospital Revenue Bonds - 20.90%
Cambridge Health Care Facility Revenue
Grandview Christian Home
7.25% 9/1/26 .................................. 125,000 124,563
Cannon Falls Nursing Home Franciscan
Health Community Project 7.25% 7/1/21 ......... 100,000 99,985
Duluth Economic Development Authority
Health Care Facilities St. Francis Health
Care Facility 6.75% 12/1/17 ................... 325,000 323,645
Fergus Falls Health Care Facility Revenue
Lake Region Hospital 6.50% 9/1/18 ............. 750,000 750,307
Glencoe Health Care Revenue
6.40% 12/1/15 ................................. 275,000 259,652
Mankato Health Facilities Revenue
Mankato Lutheran Homes Series A
6.875% 10/1/26 ................................ 300,000 279,939
Minneapolis Health Care Facility Revenue
Jones-Harrison Residence Project
6.00% 10/1/27 ................................. 1,565,000 1,300,781
Minneapolis Housing & Health Care Facility
Revenue Augustana Chapel View Homes
6.50% 6/1/17 .................................. 1,370,000 1,267,373
Minnesota Agriculture & Economic
Development Board - Benedictine Health
System 5.75% 2/1/29 ........................... 1,000,000 797,360
Minnetonka Multifamily Housing Beacon
Hill Senior Housing Project 7.55% 6/1/19 ...... 200,000 201,070
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Hospital Revenue Bonds (continued)
Moorhead Economic Development Authority
Multifamily Revenue Refunding &
Improvement Housing Development for
Eventide Series B 6.00% 6/1/18 ................ $ 870,000 $ 763,086
New Hope Housing & Health Minnesota
Masonic Home North Ridge Care Facility
5.875% 3/1/29 ................................. 1,000,000 810,910
Northfield Health Care Facilities Revenue
Refunding & Improvement Northfield
Care Center Series A 6.00% 5/1/28 ............. 1,405,000 1,163,326
Perham Hospital District Congregate
Housing Facilities Briarwood Project
6.25% 2/1/22 .................................. 620,000 547,733
**Rochester Health Care Facilities Revenue
Reg IRS for Mayo Clinic, Series H
Inverse Floater 7.479% 11/15/15 ............... 1,500,000 1,588,005
St. Anthony Multifamily Housing Chandler
6.05% 11/20/16 (GNMA) ......................... 135,000 140,978
St. Paul Housing & Redevelopment
Hospital Revenue for HealthEast
Series A 6.625% 11/1/17 ....................... 475,000 417,359
St. Paul Housing & Redevelopment
Hospital Revenue for HealthEast
Series B 6.625% 11/1/17 ....................... 235,000 206,483
Waconia Good Samaritan Housing &
Redevelopment Revenue for
The Evangelical Lutheran Series A
6.00% 6/1/14 .................................. 660,000 668,593
-----------
11,711,148
-----------
Housing Revenue Bonds - 52.92%
Bloomington Multifamily Housing Revenue
Refunding Hampshire Apartments
Series A 6.20% 12/1/31 ........................ 2,500,000 2,244,375
Brooklyn Center Four Court Multifamily
Housing 7.50% 6/1/25 .......................... 370,000 366,652
Carver Multifamily Housing Lake Grace
6.25% 7/1/28 .................................. 320,000 322,768
Carver Multifamily Housing Lake Grace
8.00% 7/1/28 .................................. 320,000 332,013
Chanhassen Multifamily Housing Heritage
Park 6.20% 7/1/30 ............................. 300,000 308,001
Chaska Multifamily West Suburban
Housing Partners 5.875% 3/1/31 ................ 1,000,000 875,910
Coon Rapids Multifamily Revenue
Margaret Place Series A 6.50% 5/1/25 .......... 500,000 485,030
Coon Rapids Senior Housing Revenue
Refunding Epiphany Senior Citizens
Housing Corporation Project
6.00% 11/1/28 ................................. 3,455,000 2,857,458
22
<PAGE>
Statements of Net Assets (continued)
Principal Market
Delaware Minnesota High-Yield Municipal Bond Fund Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Eden Prairie Multifamily Housing Tanager
Creek 8.00% 6/20/31 ........................... $ 755,000 $ 736,336
Hutchinson Multifamily Housing Revenue
Evergreen Apartments Project
5.75% 11/1/28 ................................. 3,500,000 3,264,800
Minneapolis Multifamily Housing Olson
Townhomes 6.00% 12/1/19 ....................... 800,000 800,264
Minneapolis Multifamily Revenue Housing
Grant Street Project Apartments
Series A 7.25% 11/1/29 ........................ 2,835,000 2,810,817
Minneapolis Nicollet Towers Multifamily
Housing 6.00% 12/1/19 ......................... 300,000 306,018
Minnesota Housing Finance Authority
Single Family Housing 5.875% 1/1/17 ........... 90,000 92,199
Minnesota Housing Finance Authority
Single Family Mortgage Series E
6.25% 1/1/23 .................................. 80,000 81,826
Minnetonka Senior Housing Revenue
Westridge Senior Housing Project
6.30% 9/1/08 .................................. 110,000 107,776
Minnetonka Senior Housing Revenue
Westridge Senior Housing Project
6.50% 9/1/12 .................................. 285,000 274,455
Minnetonka Senior Housing Revenue
Westridge Senior Housing Project
7.00% 9/1/27 .................................. 1,275,000 1,208,662
New Brighton Multifamily Polynesian
Village 7.60% 4/1/25 .......................... 300,000 305,544
Oakdale Elderly Housing Revenue
PHM/Oakdale Project 6.00% 3/1/28 .............. 1,800,000 1,494,756
Oakdale Housing Oak Meadows Project
6.75% 4/1/15 .................................. 1,500,000 1,463,310
Rochester Mutlifamily Revenue, Wedum/
Shorewood Campus 6.60% 6/1/36 ................. 3,000,000 2,794,800
Shoreview Elderly Housing PHM/
Shoreview Project 6.15% 12/1/33 ............... 2,955,000 2,450,227
St. Louis Park Multifamily Mortgage
Revenue Tamarind Project
5.50% 11/1/13 (FNMA) .......................... 125,000 126,329
Stillwater Multifamily Housing Stillwater
Cottages 6.75% 11/1/11 ........................ 205,000 199,971
Stillwater Multifamily Housing Stillwater
Cottages 7.00% 11/1/16 ........................ 680,000 659,491
Stillwater Multifamily Housing Stillwater
Cottages 7.00% 11/1/27 ........................ 340,000 326,043
Twin Valley Congregate Housing Revenue
Living Options Incorporated Project
5.95% 11/1/28 ................................. 1,825,000 1,493,270
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Municipal Bonds (continued)
Housing Revenue Bonds (continued)
Washington County Housing - Briarwood
Pond - Subordinated, B
7.125% 8/20/34 (GNMA) ......................... $ 900,000 $ 863,963
-----------
29,653,064
-----------
Industrial Development Revenue
Bonds - 5.34%
Andover Development Revenue Downtown
Center Project Series A 7.00% 12/1/12 ......... 1,640,000 1,674,948
International Falls, Minnesota Solid Waste
Disposal Revenue Boise Cascade Project
6.85% 12/1/29 ................................. 1,000,000 1,021,070
Red Wing Industrial Development Revenue
for Kmart (First Mortgage) 5.50% 7/1/08 ....... 300,000 294,933
-----------
2,990,951
-----------
Lease/Certificates of Participation - 2.02%
Beltrami County Housing & Redevelopment
Authority Revenue Lease 6.10% 2/1/12 .......... 460,000 472,986
Hibbing Economic Development Authority
6.40% 2/1/12 .................................. 530,000 529,110
Rice County Certificates of Participation
6.00% 12/1/21 ................................. 125,000 127,325
-----------
1,129,421
-----------
Power Authority Revenue Bonds - 1.09%
**Puerto Rico Electric Power Authority
Revenue Series DD Inverse Floater
4.79% 7/1/19 (FSA) ............................ 400,000 323,272
Western Municipal Power Agency Revenue
6.125% 1/1/16 ................................. 285,000 285,579
-----------
608,851
-----------
*Pre-Refunded Bonds - 0.29%
Minneapolis Health Care American Baptist
Homes 8.70% 11/1/09-01 ........................ 150,000 160,011
-----------
160,011
-----------
Other Revenue Bonds - 4.32%
Minneapolis Community Development
Agency Revenue Holiday Inn Metrodome
Project 6.00% 12/1/01 ......................... 1,100,000 1,099,780
St. Paul Housing & Redevelopment Authority
Acorn Dual Language Charter School
6.60% 11/1/24 ................................. 1,000,000 954,700
Woodbury Golf Course Revenue
6.75% 2/1/22 .................................. 365,000 368,741
-----------
2,423,221
-----------
Total Municipal Bonds
(cost $58,645,970) ............................ 54,696,707
-----------
23
<PAGE>
Statements of Net Assets (continued)
Delaware Minnesota High-Yield Municipal Bond Fund
--------------------------------------------------------------------------------
Total Market Value of Securities -
97.62% (cost $58,645,970) ....................... $54,696,707
Receivables and Other Assets Net
of Liabilities - 2.38% .......................... 1,333,574
-----------
Net Assets Applicable to 5,806,850
Shares Outstanding - 100.00% .................... $56,030,281
===========
Net Asset Value - Delaware Minnesota
High-Yield Municipal Bond Fund A Class
($35,688,616 / 3,699,711 Shares) ................ $ 9.65
------
Net Asset Value - Delaware Minnesota
High-Yield Municipal Bond Fund B Class
($13,742,907 / 1,423,512 Shares) ................ $ 9.65
------
Net Asset Value - Delaware Minnesota
High-Yield Municipal Bond Fund C Class
($6,598,758 / 683,627 Shares) ................... $ 9.65
------
-------------
*For Pre-Refunded Bonds, the stated maturity is followed by the year in which
each bond is pre-refunded.
**Inverse Floater represents a security that pays interest at a rate that
increases (decreases) with a decrease (increase) in a specified index.
Interest rate disclosed is in effect as of August 31, 2000.
<PAGE>
--------------------------------------------------------------------------------
Components of Net Assets at August 31, 2000:
Shares of beneficial interest (unlimited
authorization - no par) ................................. $61,423,691
Undistributed net investment income ....................... 44,223
Accumulated net realized loss
on investments .......................................... (1,488,370)
Net unrealized depreciation of investments ................ (3,949,263)
-----------
Total net assets .......................................... $56,030,281
===========
--------------------------
Summary of Abbreviations:
AMT - Subject to Alternative Minimum Tax
FNMA - Insured by the Federal National Mortgage Association
FSA - Insured by Financial Security Assurance
GNMA - Insured by the Government National Mortgage Association
Net Asset Value and Offering Price per Shares -
Delaware Minnesota High-Yield Municipal Bond Fund
Net asset value A Class (A) ............................... $ 9.65
Sales charge (3.75% of offering price
or 3.94% of amount invested
per share ) (B) ......................................... 0.38
------
Offering price ............................................ $10.03
======
------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon the redemption or repurchase of shares.
(B) See the current prospectus for purchases of $100,000 or more.
See accompanying notes
24
<PAGE>
Statements of Operations
<TABLE>
<CAPTION>
Delaware Delaware
Delaware Delaware Tax-Free Minnesota
Tax-Free Minnesota Minnesota High-Yield
Minnesota Insured Intermediate Municipal
Year Ended August 31, 2000 Fund Fund Fund Bond Fund
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest ........................................... $23,746,103 $15,565,343 $3,382,443 $3,926,976
----------- ----------- ---------- ----------
Expenses:
Management fees .................................... 2,101,379 1,312,943 275,313 320,427
Distribution expense ............................... 1,104,320 767,065 124,977 304,161
Dividend disbursing and transfer agent fees
and expenses ..................................... 333,200 208,310 47,997 55,639
Accounting and administration ...................... 179,798 106,779 23,761 25,472
Reports and statements to shareholders ............. 161,763 138,200 21,506 41,185
Registration fees .................................. 54,500 34,000 19,950 26,850
Professional fees .................................. 69,130 43,417 5,400 9,421
Custodian fees ..................................... 32,445 40,359 6,164 7,801
Taxes (other than taxes on income) ................. 38,959 27,826 3,400 5,556
Trustees' fees ..................................... 10,571 8,601 4,017 2,654
Other .............................................. 49,816 50,172 7,598 26,269
----------- ----------- ---------- ----------
4,135,881 2,737,672 540,083 825,435
Less expenses absorbed or waived ................... (162,138) (9,299) (10,237) (228,333)
Less expenses paid indirectly ...................... (8,782) (6,037) (1,264) (1,339)
----------- ----------- ---------- ----------
Total operating expenses ........................... 3,964,961 2,722,336 528,582 595,763
Interest expense ................................... 63,256 17,378 25,764 802
----------- ----------- ---------- ----------
Total expenses ..................................... 4,028,217 2,739,714 554,346 596,565
----------- ----------- ---------- ----------
Net Investment Income .............................. 19,717,886 12,825,629 2,828,097 3,330,411
----------- ----------- ---------- ----------
Net Realized and Unrealized Gain
(Loss) on Investments:
Net realized loss on investments ................... (540,587) (844,589) (1,710,959) (1,274,784)
Net change in unrealized appreciation/
depreciation of investments ...................... (4,228,830) (898,976) 153,713 (2,455,298)
----------- ----------- ---------- ----------
Net Realized and Unrealized Loss
on Investments ................................... (4,769,417) (1,743,565) (1,557,246) (3,730,082)
----------- ----------- ---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations ........................ $14,948,469 $11,082,064 $1,270,851 $ (399,671)
=========== =========== ========== ==========
</TABLE>
See accompanying notes
25
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Minnesota Fund Insured Fund
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
8/31/00 8/31/99 8/31/00 8/31/99
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income ............................................... $ 19,717,886 $ 20,993,346 $ 12,825,629 $ 13,965,097
Net realized gain (loss) on investments ............................. (540,587) (147,117) (844,589) 137,142
Net change in unrealized appreciation/depreciation of investments ... (4,228,830) (25,287,979) (898,976) (14,549,781)
------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations ..... 14,948,469 (4,441,750) 11,082,064 (447,542)
------------------------------------------------------------
Distributions to Shareholders from:
Net investment income:
A Class ........................................................... (18,824,251) (20,174,383) (12,189,775) (13,346,041)
B Class ........................................................... (579,861) (487,034) (449,823) (465,991)
C Class ........................................................... (299,635) (262,572) (160,803) (153,065)
Net realized gain on investments:
A Class ........................................................... -- (1,282,605) -- --
B Class ........................................................... -- (33,499) -- --
C Class ........................................................... -- (17,432) -- --
------------------------------------------------------------
(19,703,747) (22,257,525) (12,800,401) (13,965,097)
------------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ........................................................... 25,145,729 31,725,320 7,311,492 16,615,252
B Class ........................................................... 1,994,017 4,642,678 1,406,890 3,412,545
C Class ........................................................... 1,707,918 3,462,305 477,422 1,749,748
Net asset value of shares issued upon reinvestment of distributions
from net investment income and net realized gain on investments:
A Class ........................................................... 12,144,408 14,191,034 8,131,296 8,915,770
B Class ........................................................... 378,668 358,655 316,682 301,236
C Class ........................................................... 220,483 212,238 132,996 123,826
------------------------------------------------------------
41,591,223 54,592,230 17,776,778 31,118,377
------------------------------------------------------------
Cost of shares repurchased:
A Class ........................................................... (71,311,724) (42,409,234) (43,837,904) (26,476,059)
B Class ........................................................... (2,153,858) (1,147,113) (2,997,506) (1,657,474)
C Class ........................................................... (2,500,312) (1,339,166) (1,219,416) (622,365)
------------------------------------------------------------
(75,965,894) (44,895,513) (48,054,826) (28,755,898)
------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions ................................................ (34,374,671) 9,696,717 (30,278,048) 2,362,479
------------------------------------------------------------
Net Decrease in Net Assets (39,129,949) (17,002,558) (31,996,385) (12,050,160)
Net Assets:
Beginning of year ................................................... 414,269,906 431,272,464 284,587,916 296,638,076
------------------------------------------------------------
End of year ......................................................... $375,139,957 $414,269,906 $252,591,531 $284,587,916
============================================================
</TABLE>
See accompanying notes
26
<PAGE>
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Minnesota High-Yield Municipal
Intermediate Fund Bond Fund
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended
8/31/00 8/31/99 8/31/00 8/31/99
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income ................................................... $ 2,828,097 $ 3,012,051 $ 3,330,411 $ 3,106,508
Net realized loss on investments ........................................ (1,710,959) (140,464) (1,274,784) (201,795)
Net change in unrealized appreciation/depreciation of investments ....... 153,713 (3,073,048) (2,455,298) (3,408,558)
--------------------------------------------------------
Net increase (decrease) in net assets resulting from operations ......... 1,270,851 (201,461) (399,671) (503,845)
--------------------------------------------------------
Distributions to Shareholders from:
Net investment income:
A Class ............................................................... (2,607,962) (2,843,696) (2,214,654) (2,089,853)
B Class ............................................................... (116,238) (86,563) (729,446) (704,387)
C Class ............................................................... (101,047) (79,885) (359,547) (295,807)
--------------------------------------------------------
(2,825,247) (3,010,144) (3,303,647) (3,090,047)
--------------------------------------------------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ............................................................... 2,975,655 11,359,599 7,639,431 13,786,474
B Class ............................................................... 351,648 1,677,583 1,712,975 4,295,037
C Class ............................................................... 814,357 1,224,701 1,529,128 3,126,801
Net asset value of shares issued upon reinvestment of distributions
from net investment income:
A Class ............................................................... 1,954,873 2,116,790 1,261,941 1,146,164
B Class ............................................................... 73,312 56,875 418,201 404,641
C Class ............................................................... 88,862 70,383 243,061 207,133
--------------------------------------------------------
6,258,707 16,505,931 12,804,737 22,966,250
--------------------------------------------------------
Cost of shares repurchased:
A Class ............................................................... (13,202,476) (8,562,397) (12,680,173) (4,114,523)
B Class ............................................................... (846,007) (101,621) (3,293,737) (1,347,167)
C Class ............................................................... (787,503) (494,429) (2,239,580) (580,086)
--------------------------------------------------------
(14,835,986) (9,158,447) (18,213,490) (6,041,776)
--------------------------------------------------------
Increase (decrease) in net assets derived from
capital share transactions ........................................... (8,577,279) 7,347,484 (5,408,753) 16,924,474
--------------------------------------------------------
Net Increase (Decrease) in Net Assets ................................... (10,131,675) 4,135,879 (9,112,071) 13,330,582
Net Assets:
Beginning of year ....................................................... 61,392,313 57,256,434 65,142,352 51,811,770
--------------------------------------------------------
End of year ............................................................. $51,260,638 $61,392,313 $56,030,281 $65,142,352
========================================================
</TABLE>
See accompanying notes
27
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Minnesota Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $12.230 $13.020 $12.910 $12.400 $12.630 $11.330
Income (loss) from investment operations:
Net investment income ................................... 0.617 0.628 0.431 0.654 0.630 0.620
Net realized and unrealized gain
(loss) on investments ................................. (0.110) (0.752) 0.136 0.511 (0.230) 1.320
----------------------------------------------------------------------
Total from investment operations ........................ 0.507 (0.124) 0.567 1.165 0.400 1.940
----------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income .................... (0.617) (0.626) (0.435) (0.655) (0.630) (0.640)
Distributions from net realized gain on investments ..... -- (0.040) (0.022) -- -- --
----------------------------------------------------------------------
Total dividends and distributions ....................... (0.617) (0.666) (0.457) (0.655) (0.630) (0.640)
----------------------------------------------------------------------
Net asset value, end of period ............................ $12.120 $12.230 $13.020 $12.910 $12.400 $12.630
======================================================================
Total return(2) ........................................... 4.39% (1.06%) 4.46% 9.68% 3.33% 17.49%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $355,573 $394,144 $416,113 $417,365 $428,380 $455,220
Ratio of expenses to average net assets ................. 1.01% 0.94% 0.89% 0.91% 0.92% 0.93%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 1.06% 0.94% 0.92% 0.95% 0.92% 0.93%
Ratio of net investment income to
average net assets .................................... 5.20% 4.89% 5.00% 5.22% 5.13% 5.11%
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly .......................... 5.15% 4.89% 4.97% 5.18% 5.13% 5.11%
Portfolio turnover ...................................... 35% 17% 13% 19% 28% 51%
</TABLE>
--------------------------
(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
28
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Minnesota Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Period From
Ended Ended Ended Ended Ended 3/11/95(4) to
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $12.240 $13.020 $12.910 $12.400 $12.620 $11.900
Income (loss) from investment operations:
Net investment income .................................. 0.525 0.527 0.366 0.574 0.560 0.450
Net realized and unrealized gain
(loss) on investments ................................. (0.120) (0.740) 0.136 0.508 (0.220) 0.710
------------------------------------------------------------------------
Total from investment operations ....................... 0.405 (0.213) 0.502 1.082 0.340 1.160
------------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.525) (0.527) (0.370) (0.572) (0.560) (0.440)
Distributions from net realized gain on investments .... -- (0.040) (0.022) -- -- --
------------------------------------------------------------------------
Total dividends and distributions ...................... (0.525) (0.567) (0.392) (0.572) (0.560) (0.440)
------------------------------------------------------------------------
Net asset value, end of period ........................... $12.120 $12.240 $13.020 $12.910 $12.400 $12.620
========================================================================
Total return(2) .......................................... 3.50% (1.74%) 3.94% 8.95% 2.83% 9.95%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $13,412 $13,312 $10,246 $8,215 $6,233 $2,701
Ratio of expenses to average net assets ................ 1.76% 1.69% 1.64% 1.56% 1.50% 1.38%(5)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 1.81% 1.69% 1.67% 1.60% 1.67% 1.63%(5)
Ratio of net investment income to
average net assets ................................... 4.45% 4.14% 4.25% 4.57% 4.53% 4.43%(5)
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly ......................... 4.40% 4.14% 4.22% 4.53% 4.36% 4.18%(5)
Portfolio turnover ..................................... 35% 17% 13% 19% 28% 51%
</TABLE>
------------------------
(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
29
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Minnesota Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $12.250 $13.040 $12.920 $12.410 $12.630 $11.330
Income (loss) from investment operations:
Net investment income .................................. 0.527 0.536 0.374 0.564 0.540 0.530
Net realized and unrealized gain
(loss) on investments ................................. (0.110) (0.756) 0.138 0.508 (0.220) 1.320
------------------------------------------------------------------------
Total from investment operations ....................... 0.417 (0.220) 0.512 1.072 0.320 1.850
------------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income ................... (0.527) (0.530) (0.370) (0.562) (0.540) (0.550)
Distributions from net realized gain on investments .... -- (0.040) (0.022) -- -- --
------------------------------------------------------------------------
Total dividends and distributions ...................... (0.527) (0.570) (0.392) (0.562) (0.540) (0.550)
------------------------------------------------------------------------
Net asset value, end of period ........................... $12.140 $12.250 $13.040 $12.920 $12.410 $12.630
========================================================================
Total return(2) .......................................... 3.60% (1.80%) 4.02% 8.82% 2.64% 16.62%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $6,156 $6,814 $4,914 $3,083 $3,083 $2,319
Ratio of expenses to average net assets ................ 1.76% 1.69% 1.64% 1.65% 1.67% 1.67%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 1.81% 1.69% 1.67% 1.69% 1.67% 1.67%
Ratio of net investment income to
average net assets ................................... 4.45% 4.14% 4.25% 4.48% 4.38% 4.33%
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly ......................... 4.40% 4.14% 4.22% 4.44% 4.38% 4.33%
Portfolio turnover ..................................... 35% 17% 13% 19% 28% 51%
</TABLE>
------------------------
(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
30
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Minnesota Insured Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.520 $11.050 $10.940 $10.600 $10.730 $9.610
Income (loss) from investment operations:
Net investment income ................................... 0.507 0.518 0.349 0.533 0.520 0.510
Net realized and unrealized gain
(loss) on investments ................................. (0.041) (0.530) 0.111 0.341 (0.130) 1.140
---------------------------------------------------------------------
Total from investment operations ........................ 0.466 (0.012) 0.460 0.874 0.390 1.650
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income .................... (0.506) (0.518) (0.350) (0.534) (0.520) (0.530)
---------------------------------------------------------------------
Total dividends ......................................... (0.506) (0.518) (0.350) (0.534) (0.520) (0.530)
---------------------------------------------------------------------
Net asset value, end of period ............................ $10.480 $10.520 $11.050 $10.940 $10.600 $10.730
=====================================================================
Total return(2) ........................................... 4.63% (0.17%) 4.28% 8.49% 3.75% 17.52%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $238,486 $268,507 $283,057 $288,494 $304,877 $307,734
Ratio of expenses to average net assets ................. 1.00% 0.94% 0.92% 0.92% 0.92% 0.87%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 1.01% 0.94% 0.94% 0.94% 0.92% 0.92%
Ratio of net investment income to
average net assets .................................... 4.93% 4.74% 4.79% 5.01% 4.93% 4.92%
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly .......................... 4.92% 4.74% 4.77% 4.99% 4.93% 4.87%
Portfolio turnover ...................................... 35% 4% 6% 21% 14% 54%
</TABLE>
--------------------------
(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
31
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Minnesota Insured Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Period From
Ended Ended Ended Ended Ended 3/7/95(4) to
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $10.510 $11.040 $10.930 $10.580 $10.720 $10.140
Income (loss) from investment operations:
Net investment income ................................. 0.431 0.436 0.294 0.454 0.450 0.380
Net realized and unrealized gain
(loss) on investments ............................... (0.042) (0.529) 0.111 0.348 (0.140) 0.580
---------------------------------------------------------------------
Total from investment operations ...................... 0.389 (0.093) 0.405 0.802 0.310 0.960
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income .................. (0.429) (0.437) (0.295) (0.452) (0.450) (0.380)
---------------------------------------------------------------------
Total dividends ....................................... (0.429) (0.437) (0.295) (0.452) (0.450) (0.380)
---------------------------------------------------------------------
Net asset value, end of period .......................... $10.470 $10.510 $11.040 $10.930 $10.580 $10.720
=====================================================================
Total return(2) ......................................... 3.86% (0.91%) 3.76% 7.77% 3.03% 9.59%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $10,491 $11,827 $10,374 $8,926 $6,817 $4,655
Ratio of expenses to average net assets ............... 1.75% 1.69% 1.67% 1.67% 1.56% 1.34%(5)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ..... 1.76% 1.69% 1.69% 1.69% 1.68% 1.64%(5)
Ratio of net investment income to
average net assets .................................. 4.18% 3.99% 4.04% 4.26% 4.29% 4.15%(5)
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly ........................ 4.17% 3.99% 4.02% 4.24% 4.17% 3.85%(5)
Portfolio turnover .................................... 35% 4% 6% 21% 14% 54%
</TABLE>
------------------------
(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
32
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Minnesota Insured Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.520 $11.050 $10.940 $10.600 $10.730 $9.610
Income (loss) from investment operations:
Net investment income ................................... 0.431 0.438 0.295 0.454 0.440 0.430
Net realized and unrealized gain
(loss) on investments ................................. (0.042) (0.531) 0.110 0.338 (0.130) 1.140
---------------------------------------------------------------------
Total from investment operations .......................... 0.389 (0.093) 0.405 0.792 0.310 1.570
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income .................... (0.429) (0.437) (0.295) (0.452) (0.440) (0.450)
---------------------------------------------------------------------
Total dividends ......................................... (0.429) (0.437) (0.295) (0.452) (0.440) (0.450)
---------------------------------------------------------------------
Net asset value, end of period ............................ $10.480 $10.520 $11.050 $10.940 $10.600 $10.730
=====================================================================
Total return(2) ........................................... 3.85% (0.91%) 3.76% 7.66% 2.98% 16.63%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $3,615 $4,253 $3,207 $3,096 $3,126 $3,166
Ratio of expenses to average net assets ................. 1.75% 1.69% 1.67% 1.67% 1.68% 1.66%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 1.76% 1.69% 1.69% 1.69% 1.68% 1.67%
Ratio of net investment income to
average net assets .................................... 4.18% 3.99% 4.04% 4.26% 4.18% 4.11%
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly .......................... 4.17% 3.99% 4.02% 4.24% 4.18% 4.10%
Portfolio turnover ...................................... 35% 4% 6% 21% 14% 54%
</TABLE>
------------------------
(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
33
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Minnesota Intermediate Fund A Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.610 $11.160 $11.170 $10.990 $11.140 $10.500
Income (loss) from investment operations:
Net investment income ................................... 0.538 0.541 0.363 0.535 0.510 0.510
Net realized and unrealized gain
(loss) on investments ................................. (0.260) (0.550) (0.009) 0.180 (0.150) 0.640
---------------------------------------------------------------------
Total from investment operations .......................... 0.278 (0.009) 0.354 0.715 0.360 1.150
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income .................... (0.538) (0.541) (0.364) (0.535) (0.510) (0.510)
---------------------------------------------------------------------
Total dividends ......................................... (0.538) (0.541) (0.364) (0.535) (0.510) (0.510)
---------------------------------------------------------------------
Net asset value, end of period ............................ $10.350 $10.610 $11.160 $11.170 $10.990 $11.140
=====================================================================
Total return(2) ........................................... 2.77% (0.14%) 3.22% 6.69% 3.46% 11.00%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $46,523 $56,222 $54,281 $57,524 $66,024 $72,405
Ratio of expenses to average net assets ................. 0.93% 0.79% 0.80% 0.91% 0.89% 0.91%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 0.95% 0.79% 0.80% 0.95% 0.89% 0.91%
Ratio of net investment income to
average net assets .................................... 5.22% 4.91% 4.90% 4.86% 4.69% 4.61%
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly .......................... 5.20% 4.91% 4.90% 4.82% 4.69% 4.61%
Portfolio turnover ...................................... 9% 13% 14% 21% 28% 40%
</TABLE>
------------------------
(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
34
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Minnesota Intermediate Fund B Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Period From
Ended Ended Ended Ended Ended 8/15/95(4) to
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $10.630 $11.180 $11.170 $10.990 $11.140 $10.950
Income (loss) from investment operations:
Net investment income .................................. 0.451 0.450 0.301 0.437 0.440 0.170
Net realized and unrealized gain
(loss) on investments ................................ (0.262) (0.552) 0.009 0.190 (0.150) 0.190
---------------------------------------------------------------------
Total from investment operations ......................... 0.189 (0.102) 0.310 0.627 0.290 0.360
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income ................... (0.449) (0.448) (0.300) (0.447) (0.440) (0.170)
---------------------------------------------------------------------
Total dividends ........................................ (0.449) (0.448) (0.300) (0.447) (0.440) (0.170)
---------------------------------------------------------------------
Net asset value, end of period ........................... $10.370 $10.630 $11.180 $11.170 $10.990 $11.140
=====================================================================
Total return(2) .......................................... 1.89% (0.98%) 2.82% 5.84% 2.74% 3.26%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................ $2,380 $2,878 $1,375 $910 $408 $27
Ratio of expenses to average net assets ................ 1.78% 1.64% 1.65% 1.81% 1.56% 1.30%(5)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ...... 1.80% 1.64% 1.65% 1.85% 1.62% 1.55%(5)
Ratio of net investment income to
average net assets ................................... 4.37% 4.06% 4.05% 3.96% 3.99% 3.93%(5)
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly ......................... 4.35% 4.06% 4.05% 3.92% 3.93% 3.68%(5)
Portfolio turnover ..................................... 9% 13% 14% 21% 28% 40%
</TABLE>
------------------------
(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
35
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Tax-Free Minnesota Intermediate Fund C Class
------------------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Year Year
Ended Ended Ended Ended Ended Ended
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.610 $11.170 $11.170 $10.990 $11.130 $10.500
Income (loss) from investment operations:
Net investment income ................................... 0.451 0.449 0.301 0.440 0.430 0.420
Net realized and unrealized gain
(loss) on investments ................................. (0.253) (0.561) (0.001) 0.187 (0.140) 0.630
---------------------------------------------------------------------
Total from investment operations .......................... 0.198 (0.112) 0.300 0.627 0.290 1.050
---------------------------------------------------------------------
Less dividends:
Dividends from net investment income .................... (0.448) (0.448) (0.300) (0.447) (0.430) (0.420)
---------------------------------------------------------------------
Total dividends ......................................... (0.448) (0.448) (0.300) (0.447) (0.430) (0.420)
---------------------------------------------------------------------
Net asset value, end of period ............................ $10.360 $10.610 $11.170 $11.170 $10.990 $11.130
=====================================================================
Total return(2) ........................................... 1.98% (1.08%) 2.73% 5.84% 2.69% 10.18%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $2,358 $2,293 $1,601 $1,512 $1,137 $694
Ratio of expenses to average net assets ................. 1.78% 1.64% 1.65% 1.77% 1.64% 1.63%
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 1.80% 1.64% 1.65% 1.81% 1.64% 1.63%
Ratio of net investment income to
average net assets .................................... 4.37% 4.06% 4.05% 4.00% 3.94% 3.82%
Ratio of net investment income to
average net assets prior to expense limitation
and expenses paid indirectly .......................... 4.35% 4.06% 4.05% 3.96% 3.94% 3.82%
Portfolio turnover ...................................... 9% 13% 14% 21% 28% 40%
</TABLE>
------------------------
(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
36
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Minnesota High-Yield Municipal Bond Fund A Class
--------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Period From
Ended Ended Ended Ended 6/4/96(4) to
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.210 $10.810 $10.650 $10.180 $10.000
Income (loss) from investment operations:
Net investment income ................................... 0.576 0.583 0.392 0.643 0.350
Net realized and unrealized gain
(loss) on investments ................................. (0.564) (0.603) 0.170 0.463 0.180
---------------------------------------------------------
Total from investment operations ........................ 0.012 (0.020) 0.562 1.106 0.530
---------------------------------------------------------
Less dividends:
Dividends from net investment income .................... (0.572) (0.580) (0.402) (0.636) (0.350)
---------------------------------------------------------
Total dividends ......................................... (0.572) (0.580) (0.402) (0.636) (0.350)
---------------------------------------------------------
Net asset value, end of period ............................ $9.650 $10.210 $10.810 $10.650 $10.180
=========================================================
Total return(2) ........................................... 0.32% (0.27%) 5.37% 11.26% 5.40%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $35,689 $41,813 $33,296 $19,017 $6,068
Ratio of expenses to average net assets ................. 0.75% 0.57% 0.40% 0.09% 0.24%(5)
Ratio of expenses to average net assets prior to
expense limitation and expenses paid indirectly ....... 1.14% 1.07% 1.20% 1.24% 1.25%(5)
Ratio of net investment income to average net assets .... 5.99% 5.46% 5.50% 6.16% 5.78%(5)
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly .... 5.60% 4.96% 4.70% 5.01% 4.77%(5)
Portfolio turnover ...................................... 8% 35% 7% 23% 15%
</TABLE>
------------------------
(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
37
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Minnesota High-Yield Municipal Bond Fund B Class
--------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Period From
Ended Ended Ended Ended 6/12/96(4) to
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $10.210 $10.810 $10.660 $10.190 $9.780
Income (loss) from investment operations:
Net investment income ................................... 0.504 0.507 0.343 0.557 0.290
Net realized and unrealized gain
(loss) on investments ................................. (0.570) (0.604) 0.159 0.470 0.410
---------------------------------------------------------
Total from investment operations ........................ (0.066) (0.097) 0.502 1.027 0.700
---------------------------------------------------------
Less dividends:
Dividends from net investment income .................... (0.494) (0.503) (0.352) (0.557) (0.290)
---------------------------------------------------------
Total dividends ......................................... (0.494) (0.503) (0.352) (0.557) (0.290)
---------------------------------------------------------
Net asset value, end of period ............................ $9.650 $10.210 $10.810 $10.660 $10.190
=========================================================
Total return(2) ........................................... (0.49%) (0.99%) 4.77% 10.41% 7.29%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................. $13,743 $15,814 $13,351 $8,201 $2,738
Ratio of expenses to average net assets ................. 1.50% 1.32% 1.15% 0.85% 0.95%(5)
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ............... 1.89% 1.82% 1.95% 2.00% 2.00%(5)
Ratio of net investment income to average net assets .... 5.24% 4.71% 4.75% 5.40% 5.14%(5)
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly .... 4.85% 4.21% 3.95% 4.25% 4.09%(5)
Portfolio turnover ...................................... 8% 35% 7% 23% 15%
</TABLE>
------------------------
(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
38
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Minnesota High-Yield Municipal Bond Fund C Class
--------------------------------------------------------------------------------------------------------------------------
Year Year Eight Months Year Period From
Ended Ended Ended Ended 6/12/96(4) to
8/31/00 8/31/99 8/31/98(1) 12/31/97(3) 12/31/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $10.210 $10.810 $10.650 $10.180 $9.990
Income (loss) from investment operations:
Net investment income .................................... 0.504 0.505 0.340 0.572 0.300
Net realized and unrealized gain
(loss) on investments .................................. (0.570) (0.602) 0.170 0.455 0.190
---------------------------------------------------------
Total from investment operations ........................... (0.066) (0.097) 0.510 1.027 0.490
---------------------------------------------------------
Less dividends:
Dividends from net investment income ..................... (0.494) (0.503) (0.350) (0.557) (0.300)
---------------------------------------------------------
Total dividends .......................................... (0.494) (0.503) (0.350) (0.557) (0.300)
---------------------------------------------------------
Net asset value, end of period ............................. $9.650 $10.210 $10.810 $10.650 $10.180
=========================================================
Total return(2) ............................................ (0.49%) (0.99%) 4.87% 10.41% 5.02%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $6,599 $7,515 $5,165 $3,178 $900
Ratio of expenses to average net assets .................. 1.50% 1.32% 1.15% 0.83% 0.99%(5)
Ratio of expenses to average net assets prior to expense
limitation and expenses paid indirectly ................ 1.89% 1.82% 1.95% 1.98% 2.00%(5)
Ratio of net investment income to average net assets ..... 5.24% 4.71% 4.75% 5.42% 4.90%(5)
Ratio of net investment income to average net assets prior
to expense limitation and expenses paid indirectly ..... 4.85% 4.21% 3.95% 4.27% 3.89%(5)
Portfolio turnover ....................................... 8% 35% 7% 23% 15%
</TABLE>
------------------------
(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
39
<PAGE>
Notes to Financial Statements
August 31, 2000
--------------------------------------------------------------------------------
Delaware Tax-Free Minnesota Fund, a series of the Voyageur Tax-Free Funds;
Delaware Minnesota Insured Fund, a series of the Voyageur Insured Funds;
Delaware Tax-Free Minnesota Intermediate Fund, a series of the Voyageur
Intermediate Tax-Free Funds; and Delaware Minnesota High-Yield Municipal Bond
Fund, a series of the Voyageur Mutual Funds are each organized as a Delaware
business trust. Each series is referred to as a "Fund" or collectively as the
"Funds" and are non-diversified, open-end management investment companies under
the Investment Company Act of 1940, as amended. The Funds offer three classes of
shares. The A Class carries a maximum front-end sales charge of 3.75% for the
Delaware Tax-Free Minnesota Fund, Delaware Minnesota Insured Fund and Delaware
Minnesota High-Yield Municipal Bond Fund, and 2.75% for the Delaware Tax-Free
Minnesota Intermediate Fund. The B Class carries a back-end deferred sales
charge and the C Class carries a level load deferred sales charge.
The Delaware Tax-Free Minnesota Fund seeks high current income free from both
federal and state income taxes by investing in investment grade municipal bonds.
The Delaware 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 Delaware 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 Delaware 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.
1. Significant Accounting Policies
The following accounting policies are in accordance with accounting principles
generally accepted in the United States 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 Funds' Board
of Trustees.
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 accounting
principles generally accepted in the United States.
<PAGE>
Class Accounting - Investment income, common expenses and realized and
unrealized gain (loss) on investments are allocated to the various classes of
each Fund on the basis of daily net assets of each class. Distribution expenses
relating to a specific class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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.
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.
Certain expenses of the Funds are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The expenses
paid under the above arrangement are included in their respective expense
captions in the Statement of Operations with the corresponding expenses offset
shown as "expenses paid indirectly". The amount of these expenses for the year
ended August 31, 2000 were:
<TABLE>
<CAPTION>
Delaware Delaware
Delaware Delaware Tax-Free Minnesota
Tax-Free Minnesota Minnesota High-Yield
Minnesota Insured Intermediate Municipal
Fund Fund Fund Bond Fund
----------------------------------------------------------
<S> <C> <C> <C> <C>
Commission
Reimbursements $8,782 $6,037 $1,264 $1,339
</TABLE>
40
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Funds
pay Delaware Management Company ("DMC"), the Investment Manager of each Fund, an
annual fee, which is calculated daily on the average daily net assets of each
Fund as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
On the first $500 million .................. 0.550% 0.500% 0.500% 0.550%
On the next $500 million ................... 0.500% 0.475% 0.475% 0.500%
On the next $1.5 billion ................... 0.450% 0.450% 0.450% 0.450%
In excess of $2.5 billion .................. 0.425% 0.425% 0.425% 0.425%
</TABLE>
DMC has elected to waive its fees and reimburse each Fund to the extent that
annual operating expenses, exclusive of taxes, interest, brokerage commissions,
distribution expenses and extraordinary expenses exceed the following
percentages of average daily net assets through October 31, 2001.
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating expense limitation as a
percentage of average daily net
assets (per annum) ....................... 0.75% 0.75% 0.75% 0.50%
</TABLE>
The Funds have engaged Delaware Service Company, Inc. ("DSC"), an affiliate of
DMC, to provide dividend disbursing, transfer agent, accounting and
administration services. Each Fund pays DSC a monthly fee based on the number of
shareholder accounts, shareholder transactions and average net assets, subject
to certain minimums.
At August 31, 2000, the Funds had payables to affiliates as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment management fee payable to DMC ... $ 2,988 $32,113 $2,170 $33,115
Dividend disbursing, transfer agent fees,
accounting fees and other expenses
payable to DSC ........................... 45,804 22,833 7,160 7,517
Other expenses payable
to DMC and affiliates .................... 34,687 26,366 5,778 4,716
</TABLE>
Pursuant to the Distribution Agreement, the Funds pay Delaware Distributors,
L.P. ("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 Delaware
Tax-Free Minnesota Fund, the Delaware Minnesota Insured Fund and the Delaware
Minnesota High-Yield Municipal Bond Fund and 0.15% of the average daily net
assets of the Delaware Tax-Free Minnesota Intermediate Fund A Class and 1.00% of
the average daily net assets of the B and C Classes for each Fund.
For the year ended August 31, 2000, DDLP earned commissions on sales of the
Funds' A Class shares as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$33,997 $20,595 $2,793 $18,502
</TABLE>
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Funds. These officers, trustees and employees are paid no compensation by
the Funds.
41
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
3. Investments
During the year ended August 31, 2000, the Funds made purchases and sales of
investment securities other than temporary cash investments for each Fund as
follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases .................................. $131,940,931 $ 90,773,897 $ 4,720,220 $4,821,320
Sales ...................................... 170,015,183 121,407,359 14,916,477 9,948,570
</TABLE>
At August 31, 2000, the aggregate cost of securities and unrealized appreciation
(depreciation) for federal income tax purposes for each Fund were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cost of investments $362,664,372 $240,049,070 $50,794,841 $58,645,970
----------------------------------------------------------------------------------------
Aggregate unrealized appreciation .......... $ 13,103,190 $ 10,293,443 $ 797,475 $ 276,232
Aggregate unrealized depreciation .......... (4,940,114) (573,437) (1,077,351) (4,225,495)
----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation).. $ 8,163,076 $ 9,720,006 $ (279,876) $(3,949,263)
========================================================================================
</TABLE>
For federal income tax purposes, each Fund had accumulated capital losses at
August 31, 2000 as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Year of Expiration Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2003 ....................................... $ -- $5,327,280 $ -- $ --
2004 ....................................... -- 572,208 43,983 6,809
2005 ....................................... -- -- -- 4,334
2006 ....................................... -- -- -- 648
2007 ....................................... -- -- -- 369
2008 ....................................... 595,745 589,183 423,683 201,822
----------------------------------------------------------------------------------------
$595,745 $6,488,671 $467,666 $213,982
========================================================================================
</TABLE>
42
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
4. Capital Shares
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Delaware Tax-Free Delaware Minnesota
Delaware Tax-Free Delaware Minnesota Minnesota High-Yield
Minnesota Fund Insured Fund Intermediate Fund Municipal Bond Fund
-----------------------------------------------------------------------------------------------
Year Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended Ended
8/31/00 8/31/99 8/31/00 8/31/99 8/31/00 08/31/99 8/31/00 08/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold:
A Class ......................... 2,131,731 2,462,224 711,005 1,515,691 285,867 1,024,816 790,605 1,292,595
B Class ......................... 168,565 361,886 137,367 311,761 34,338 151,759 176,001 402,309
C Class ......................... 143,228 268,078 46,115 159,649 79,599 111,369 157,845 293,311
Shares issued upon reinvestment
of distributions from net
investment income and net
realized gain on investments:
A Class ......................... 1,025,547 1,106,511 790,578 816,740 189,780 192,307 131,748 107,761
B Class ......................... 31,962 27,985 30,810 27,641 7,106 5,176 43,626 38,021
C Class ......................... 18,596 16,547 12,924 11,362 8,627 6,397 25,348 19,496
------------------------------------------------------------------------------------------------
3,519,629 4,243,231 1,728,799 2,842,844 605,317 1,491,824 1,325,173 2,153,493
------------------------------------------------------------------------------------------------
Shares repurchased:
A Class ......................... (6,033,289) (3,304,277) (4,267,516) (2,426,865) 1,279,535) (780,045) (1,317,807) (386,064)
B Class ......................... (182,022) (88,793) (291,443) (153,897) (82,665) (9,190) (344,575) (126,553)
C Class ......................... (210,844) (105,337) (118,445) (57,033) (76,532) (45,076) (235,482) (54,733)
------------------------------------------------------------------------------------------------
(6,426,155) (3,498,407) (4,677,404) (2,637,795) (1,438,732) (834,311) (1,897,864) (567,350)
------------------------------------------------------------------------------------------------
Net increase (decrease) ........... (2,906,526) 744,824 (2,948,605) 205,049 (833,415) 657,513 (572,691) 1,586,143
================================================================================================
</TABLE>
43
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
5. Lines of Credit
The Funds, along with certain other funds in the Delaware Investments Family of
Funds (the "Participants"), participate in a $375,400,000 revolving line of
credit facility to be used for temporary or emergency purposes as an additional
source of liquidity to fund redemptions of investor shares. The Participants are
charged an annual commitment fee, which is allocated across the Participants on
the basis of each Fund's allocation of the entire facility. The Participants may
borrow up to a maximum of one third of their net assets under the agreement.
The Funds had no amounts outstanding as of August 31, 2000, or at any time
during the fiscal year.
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 state, 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.
7. Tax Information (unaudited)
The information set forth below is for each Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a Fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in early January of
each year. Please consult your tax advisor for proper treatment of this
information.
For the fiscal year ended August 31, 2000, each Fund designates as long-term
capital gains, ordinary income, and tax-exempt income distributions paid during
the year as follows:
<TABLE>
<CAPTION>
(A) (B) (C) (D)
Long-Term Capital Ordinary Income Tax-Exempt Income Total
Gains Distributions Distributions Distributions Distributions
Funds (Tax Basis) (Tax Basis) (Tax Basis) (Tax Basis)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delaware Tax-Free
Minnesota Fund -- -- 100% 100%
Delaware Minnesota
Insured Fund -- -- 100% 100%
Delaware Tax-Free
Minnesota Intermediate Fund -- -- 100% 100%
Delaware Minnesota High-Yield
Municipal Bond Fund -- -- 100% 100%
</TABLE>
----------------------
(A), (B) and (C) are based on a percentage of each Fund's total distributions.
44
<PAGE>
Report of Independent Auditors
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
Voyageur Tax-Free Funds-- Delaware Tax-Free Minnesota Fund
Voyageur Insured Funds-- Delaware Minnesota Insured Fund
Voyageur Intermediate Tax-Free Funds-- Delaware Tax-Free Minnesota Intermediate
Fund
Voyageur Mutual Funds-- Delaware Minnesota High-Yield Municipal Bond Fund
We have audited the accompanying statements of net assets of Delaware Tax-Free
Minnesota Fund, Delaware Minnesota Insured Fund, Delaware Tax-Free Minnesota
Intermediate Fund and Delaware Minnesota High-Yield Municipal Bond Fund (the
"Funds") as of August 31, 2000, and the related statements of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented from January 1, 1997 through August 31, 2000. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for the periods presented through December 31, 1996 were audited by
other auditors whose reports thereon dated February 14, 1997 expressed
unqualified opinions on such financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of August 31, 2000, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the above listed funds at August 31, 2000, the results of their operations
for the year then ended, the changes in their net assets for each of the two
years in the period then ended, and their financial highlights for each of the
periods presented from January 1, 1997 through August 31, 2000, in conformity
with accounting principles generally accepted in the United States.
Ernst & Young LLP
Philadelphia, Pennsylvania
October 6, 2000
45
<PAGE>
DELAWARE(SM) For Shareholders
INVESTMENTS 1.800.523.1918
---------------------
Philadelphia o London For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This annual report is for the information of Delaware Minnesota Municipal Bond
Funds shareholders, but it may be used with prospective investors when preceded
or accompanied by a current Prospectus for Delaware Minnesota Municipal Bond
Funds and the Delaware Investments Performance Update for the most recently
completed calendar quarter. The prospectus sets forth details about charges,
expenses, investment objectives and operating policies of each Fund. You should
read the prospectus carefully before you invest. 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.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BOARD OF TRUSTEES Charles E. Peck Investment Manager
Retired Delaware Management Company
Wayne A. Stork Fredericksburg, VA Philadelphia, PA
Chairman
Delaware Investments Family of Funds Janet L. Yeomans International Affiliate
Philadelphia, PA Vice President and Treasurer Delaware International Advisers Ltd.
3M Corporation London, England
Walter P. Babich St. Paul, MN
Board Chairman National Distributor
Citadel Constructors, Inc. Delaware Distributors, L.P.
King of Prussia, PA AFFILIATED OFFICERS Philadelphia, PA
David K. Downes Charles E. Haldeman, Jr. Shareholder Servicing,
President and Chief Executive Officer President and Chief Executive Officer Dividend Disbursing and Transfer Agent
Delaware Investments Family of Funds Delaware Management Holdings, Inc. Delaware Service Company, Inc.
Philadelphia, PA Philadelphia, PA Philadelphia, PA
John H. Durham Richard J. Flannery 1818 Market Street
Private Investor Executive Vice President Philadelphia, PA 19103-3682
Horsham, PA and General Counsel
Delaware Investments Family of Funds
Anthony D. Knerr Philadelphia, PA
Consultant, Anthony Knerr & Associates
New York, NY Bruce D. Barton
President and Chief Executive Officer
Ann R. Leven Delaware Distributors, L.P.
Former Treasurer, National Gallery of Art Philadelphia, PA
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
</TABLE>
(3876) Printed in the USA
AR-MNALL [08/00] PPL 10/00 J6384
