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<PAGE> PAGE 2
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
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<PAGE> PAGE 19
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<PAGE> PAGE 20
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<PAGE> PAGE 21
048 K010400 0
048 K020400 0.000
049 000400 N
050 000400 N
051 000400 N
052 000400 N
053 A000400 Y
053 B000400 Y
053 C000400 N
055 A000400 N
055 B000400 N
056 000400 Y
057 000400 N
062 A000400 N
062 B000400 0.0
062 C000400 0.0
062 D000400 0.0
062 E000400 0.0
062 F000400 0.0
062 G000400 0.0
062 H000400 0.0
062 I000400 0.0
062 J000400 0.0
062 K000400 0.0
062 L000400 0.0
062 M000400 0.0
062 N000400 0.0
062 O000400 0.0
062 P000400 0.0
062 Q000400 0.0
062 R000400 0.0
066 A000400 Y
066 B000400 N
066 C000400 N
066 D000400 N
066 E000400 Y
066 F000400 N
066 G000400 N
067 000400 N
068 A000400 N
068 B000400 N
069 000400 N
070 A010400 Y
070 A020400 N
070 B010400 Y
070 B020400 N
070 C010400 N
070 C020400 N
070 D010400 Y
070 D020400 N
070 E010400 N
<PAGE> PAGE 22
070 E020400 N
070 F010400 Y
070 F020400 N
070 G010400 Y
070 G020400 N
070 H010400 Y
070 H020400 N
070 I010400 N
070 I020400 N
070 J010400 Y
070 J020400 N
070 K010400 Y
070 K020400 N
070 L010400 Y
070 L020400 N
070 M010400 N
070 M020400 N
070 N010400 Y
070 N020400 N
070 O010400 Y
070 O020400 N
070 P010400 N
070 P020400 N
070 Q010400 N
070 Q020400 N
070 R010400 N
070 R020400 N
071 A000400 5755
071 B000400 4513
071 C000400 3928
071 D000400 114
072 A000400 12
072 B000400 69
072 C000400 49
072 D000400 0
072 E000400 0
072 F000400 35
072 G000400 28
072 H000400 0
072 I000400 0
072 J000400 6
072 K000400 4
072 L000400 0
072 M000400 0
072 N000400 24
072 O000400 0
072 P000400 0
072 Q000400 0
072 R000400 6
072 S000400 0
072 T000400 13
<PAGE> PAGE 23
072 U000400 6
072 V000400 0
072 W000400 1
072 X000400 123
072 Y000400 40
072 Z000400 35
072AA000400 261
072BB000400 0
072CC010400 209
072CC020400 0
072DD010400 22
072DD020400 0
072EE000400 147
073 A010400 0.0500
073 A020400 0.0200
073 B000400 0.3500
073 C000400 0.0000
074 A000400 61
074 B000400 0
074 C000400 0
074 D000400 538
074 E000400 19
074 F000400 4373
074 G000400 0
074 H000400 0
074 I000400 0
074 J000400 159
074 K000400 9
074 L000400 0
074 M000400 31
074 N000400 5190
074 O000400 0
074 P000400 0
074 Q000400 0
074 R010400 0
074 R020400 0
074 R030400 0
074 R040400 12
074 S000400 0
074 T000400 5178
074 U010400 412065
074 U020400 17765
074 V010400 12.05
074 V020400 11.96
074 W000400 0.0000
074 X000400 310
074 Y000400 0
075 A000400 0
075 B000400 4728
076 000400 0.00
<PAGE> PAGE 24
SIGNATURE KEN LARSEN
TITLE TREASURER
INDEPENDENT AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROL
The Board of Directors and Shareholders
Voyageur Mutual Funds III, Inc.:
In planning and performing our audit of the financial statements of Aggressive
Growth Fund, Growth Stock Fund, Voyageur International Equity Fund, and Voyageur
Growth and Income Fund (funds within Voyageur Mutual Funds III, Inc.) for the
year ended April 30, 1997, we considered their internal control structure,
including procedures for safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form N-SAR, not to provide
assurance on the internal control structure.
The management of Voyageur Mutual Funds III, Inc. is responsible for
establishing and maintaining a system of internal accounting control. In
fulfilling this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance
that assets are safeguarded against loss from unauthorized use or disposition
and that transactions are executed in accordance with management's authorization
and recorded properly to permit preparation of financial statements in
conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be a material weakness as defined above as of
April 30, 1997.
<PAGE>
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 13, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT
OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS, STATEMENT OF CHANGES IN NET
ASSETS AND THE FINANCIAL HIGHLIGHTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000763749
<NAME> VOYAGEUR MUTUAL FUNDS III, INC.
<SERIES>
<NUMBER> 1
<NAME> VOYAGEUR GROWTH STOCK FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 26,994,871
<INVESTMENTS-AT-VALUE> 35,522,500
<RECEIVABLES> 77,206
<ASSETS-OTHER> 647,457
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 36,247,163
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 98,755
<TOTAL-LIABILITIES> 98,755
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,546,258
<SHARES-COMMON-STOCK> 1,428,018
<SHARES-COMMON-PRIOR> 1,247,828
<ACCUMULATED-NII-CURRENT> 129,542
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 944,979
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,527,629
<NET-ASSETS> 36,148,408
<DIVIDEND-INCOME> 668,183
<INTEREST-INCOME> 131,193
<OTHER-INCOME> 0
<EXPENSES-NET> 580,526
<NET-INVESTMENT-INCOME> 218,850
<REALIZED-GAINS-CURRENT> 2,360,603
<APPREC-INCREASE-CURRENT> 2,070,120
<NET-CHANGE-FROM-OPS> 4,649,573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 97,149
<DISTRIBUTIONS-OF-GAINS> 2,325,621
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 311,910
<NUMBER-OF-SHARES-REDEEMED> 225,715
<SHARES-REINVESTED> 93,995
<NET-CHANGE-IN-ASSETS> 6,633,893
<ACCUMULATED-NII-PRIOR> 7,841
<ACCUMULATED-GAINS-PRIOR> 909,997
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 332,347
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 583,671
<AVERAGE-NET-ASSETS> 33,309,121
<PER-SHARE-NAV-BEGIN> 23.66
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 3.36
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 1.76
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 25.34
<EXPENSE-RATIO> 1.720
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT
OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS, STATEMENT OF CHANGES IN NET
ASSETS AND THE FINANCIAL HIGHLIGHTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000763749
<NAME> VOYAGEUR MUTUAL FUNDS III, INC.
<SERIES>
<NUMBER> 2
<NAME> VOYAGEUR INTERNATIONAL EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 77,276
<ASSETS-OTHER> 1,967,126
<OTHER-ITEMS-ASSETS> 14,667
<TOTAL-ASSETS> 2,059,069
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,470
<TOTAL-LIABILITIES> 11,470
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,948,437
<SHARES-COMMON-STOCK> 204,984
<SHARES-COMMON-PRIOR> 273,268
<ACCUMULATED-NII-CURRENT> 4,140
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 88,019
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,003
<NET-ASSETS> 2,047,599
<DIVIDEND-INCOME> 54,392
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 52,503
<NET-INVESTMENT-INCOME> 1,889
<REALIZED-GAINS-CURRENT> 133,797
<APPREC-INCREASE-CURRENT> (190,702)
<NET-CHANGE-FROM-OPS> (55,016)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,229
<DISTRIBUTIONS-OF-GAINS> 44,638
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 83,558
<NUMBER-OF-SHARES-REDEEMED> 156,346
<SHARES-REINVESTED> 4,504
<NET-CHANGE-IN-ASSETS> (797,881)
<ACCUMULATED-NII-PRIOR> 6,212
<ACCUMULATED-GAINS-PRIOR> 197,705
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25,973
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 142,247
<AVERAGE-NET-ASSETS> 2,599,753
<PER-SHARE-NAV-BEGIN> 10.41
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (0.22)
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.18
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 2.470
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT
OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS, STATEMENT OF CHANGES IN NET
ASSETS AND THE FINANCIAL HIGHLIGHTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000763749
<NAME> VOYAGEUR MUTUAL FUNDS III, INC.
<SERIES>
<NUMBER> 3
<NAME> VOYAGEUR AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 4,852,871
<INVESTMENTS-AT-VALUE> 4,929,122
<RECEIVABLES> 715
<ASSETS-OTHER> 331,089
<OTHER-ITEMS-ASSETS> 9,971
<TOTAL-ASSETS> 5,270,897
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,012
<TOTAL-LIABILITIES> 11,012
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,115,237
<SHARES-COMMON-STOCK> 447,693
<SHARES-COMMON-PRIOR> 343,039
<ACCUMULATED-NII-CURRENT> 2,815
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 65,582
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 76,251
<NET-ASSETS> 5,259,885
<DIVIDEND-INCOME> 21,084
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 101,267
<NET-INVESTMENT-INCOME> (80,183)
<REALIZED-GAINS-CURRENT> 1,050,816
<APPREC-INCREASE-CURRENT> (904,641)
<NET-CHANGE-FROM-OPS> 65,992
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 849,553
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 218,184
<NUMBER-OF-SHARES-REDEEMED> 176,227
<SHARES-REINVESTED> 62,697
<NET-CHANGE-IN-ASSETS> 775,533
<ACCUMULATED-NII-PRIOR> 4,223
<ACCUMULATED-GAINS-PRIOR> 980,892
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (823,497)
<GROSS-ADVISORY-FEES> 56,982
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 152,980
<AVERAGE-NET-ASSETS> 5,709,338
<PER-SHARE-NAV-BEGIN> 13.08
<PER-SHARE-NII> (0.18)
<PER-SHARE-GAIN-APPREC> 0.96
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 2.09
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.77
<EXPENSE-RATIO> 1.990
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT
OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS, STATEMENT OF CHANGES IN NET
ASSETS AND THE FINANCIAL HIGHLIGHTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000763749
<NAME> VOYAGEUR MUTUAL FUNDS III, INC.
<SERIES>
<NUMBER> 4
<NAME> VOYAGEUR GROWTH AND INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 4,417,321
<INVESTMENTS-AT-VALUE> 4,929,172
<RECEIVABLES> 168,725
<ASSETS-OTHER> 70,885
<OTHER-ITEMS-ASSETS> 21,270
<TOTAL-ASSETS> 5,190,052
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,523
<TOTAL-LIABILITIES> 12,523
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,450,773
<SHARES-COMMON-STOCK> 429,830
<SHARES-COMMON-PRIOR> 353,519
<ACCUMULATED-NII-CURRENT> 23,030
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 191,875
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 511,851
<NET-ASSETS> 5,177,529
<DIVIDEND-INCOME> 49,343
<INTEREST-INCOME> 69,167
<OTHER-INCOME> 0
<EXPENSES-NET> 83,695
<NET-INVESTMENT-INCOME> 34,815
<REALIZED-GAINS-CURRENT> 260,524
<APPREC-INCREASE-CURRENT> 209,479
<NET-CHANGE-FROM-OPS> 504,818
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22,660
<DISTRIBUTIONS-OF-GAINS> 147,079
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 126,012
<NUMBER-OF-SHARES-REDEEMED> 63,181
<SHARES-REINVESTED> 13,840
<NET-CHANGE-IN-ASSETS> 1,203,973
<ACCUMULATED-NII-PRIOR> 4,494
<ACCUMULATED-GAINS-PRIOR> 302,372
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35,373
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 123,220
<AVERAGE-NET-ASSETS> 4,727,823
<PER-SHARE-NAV-BEGIN> 11.24
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 1.13
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.35
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.05
<EXPENSE-RATIO> 1.750
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
