VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
MINNESOTA MUNICIPAL INCOME FUND, INC.
MINNESOTA MUNICIPAL INCOME FUND II, INC.
MINNESOTA MUNICIPAL INCOME FUND III, INC.
ARIZONA MUNICIPAL INCOME FUND, INC.
FLORIDA INSURED MUNICIPAL INCOME FUND
COLORADO INSURED MUNICIPAL INCOME FUND, INC.
ANNUAL REPORT
[GRAPHIC OF PEN AND PAPER]
Dated March 31, 1997
THE VOYAGEUR FUNDS
GENERAL INFORMATION
- -------------------------------------------------------------------------------
THE FUNDS
Voyageur Minnesota Municipal Income Fund, Inc., Voyageur Minnesota
Municipal Income Fund II, Inc., Voyageur Minnesota Municipal Income Fund III,
Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Florida Insured
Municipal Income Fund and Voyageur Colorado Insured Municipal Income Fund, Inc.
(the "Funds") are each, closed-end management investment companies whose shares
trade on the American Stock Exchange ("ASE") under the symbols VMN, VMM, VYM,
VAZ, VFL and VCF, respectively. Voyageur Minnesota Municipal Income Fund, Inc.,
Voyageur Minnesota Municipal Income Fund III, Inc., and Voyageur Colorado
Insured Municipal Income Fund, Inc. are non-diversified management investment
companies and the remaining Funds are diversified management investment
companies. The investment objective of each Fund is to provide high current
income exempt from federal income tax and from the personal income tax of its
state, if any, consistent with the preservation of capital. In addition,
Voyageur Florida Insured Municipal Income Fund will generally seek investments
that will enable its shares to be exempt from Florida's intangible personal
property tax. Each Fund will seek to achieve its investment objective by
investing substantially all (at least 80%) of its net assets in investment
grade, tax-exempt municipal obligations.
INVESTMENT ADVISER
Voyageur Fund Managers, Inc. (the "Adviser") acts as the Funds'
investment adviser. As of March 31, 1997, the Adviser acted as the investment
adviser to six closed-end investment companies and ten open-end investment
companies (comprising thirty-three separate investment portfolios) and numerous
private accounts with combined total assets of approximately $12.2 billion.
Prior to the close of business on April 30, 1997, Voyageur had been retained
under an investment advisory contract to act as each Fund's investment adviser
subject to the authority of the Board of Directors' or Trustees, as appropriate
for each Fund. Prior to the close of business on April 30, 1997, Voyageur was an
indirect, wholly-owned subsidiary of Dougherty Financial Group, Inc. ("DFG").
After the close of business on April 30, 1997, Voyageur became an indirect,
wholly-owned subsidiary of Lincoln National corporation ("LNC") as a result of
LNC's acquisition of DFG. LNC, headquartered in Fort Wayne, Indiana, owns and
operates insurance and investment management businesses, including Delaware
Management Holdings, Inc. ("DMH"). Affiliates of DMH serve as adviser,
distributor and transfer agent for the Delaware Group of Mutual Funds which
currently includes 16 open-end funds and 2 closed-end funds (comprising 48
separate investment portfolios). DMH, through its subsidiaries, is responsible
for the management of approximately $32 billion.
Because LNC's acquisition of DFG resulted in a change of control of
Voyageur, the Fund's previous investment advisory agreements with Voyageur were
"assigned," as that term is defined by the Investment Company Act of 1940, and
the previous agreements therefore terminated upon the completion of the
acquisition. The Boards of Directors and Trustees of the Funds unanimously
approved new investment advisory agreements at a meeting held in person on
February 14, 1997, and called for a shareholders meeting to approve the new
agreements. At a meeting held on April 11, 1997, the shareholders of each Fund
approved its respective investment advisory agreements with either Voyageur or
Delaware to become effective after the close of business on April 30, 1997, the
date the acquisition was completed.
Following April 30, 1997, VFM continues to serve as investment adviser
to each Fund other than Florida Insured Municipal Income Fund and Delaware
Management Company, Inc. ("DMC"), an indirect wholly-owned subsidiary of DMH,
serves as investment adviser to Florida Insured Municipal Income Fund. Following
the April 30, 1997, Andrew M. McCullagh, Jr. continues to serve as portfolio
manager for Colorado Insured Municipal Income Fund and Arizona Municipal Income
Fund and Elizabeth H. Howell continues to serve as portfolio manager for
Minnesota Municipal Income Fund I, Minnesota Muncicpal Income Fund II, and
Minnesota Municipal Income Fund III. Others involved in the investment process
with Mr. McCullagh and Ms. Howell, including assistant portfolio managers and
research analysts, have also accepted offers of employment with LNC. As of May
1, 1997, Florida Insured Municipal Income Fund will be managed by Patrick P.
Coyne and Mitchell L. Conery. Messrs. Coyne and Conery each serve as Vice
President/Senior Portfolio Manager of the tax-free funds and of the tax-free and
fixed-income investment companies in the Delaware Group, DMC, and Delaware
Capital Management, Inc. Mr. Coyne has served in various capacities within the
Delaware organization for more than five years. Prior to joining the Delaware
Group in 1997, Mr. Conery was an investment officer with Travelers insurance and
a research analyst with CS First Boston.
SHAREHOLDER INFORMATION
Weekly net asset value and market price information for the Funds are
published each Monday in THE WALL STREET JOURNAL, each Sunday in THE NEW YORK
TIMES and each Saturday in BARRON'S, as well as numerous other newspapers.
DISTRIBUTIONS AND DIVIDEND REINVESTMENT PLAN
Under the Funds' current policies, shareholders may elect to receive
all dividends and other distributions in cash paid by check mailed directly to
the shareholders by the dividend paying agent, Norwest Bank Minnesota, N.A.,
(the "Plan Agent"). Under each Fund's Dividend Reinvestment Plan, (collectively
the "Plans"), common shareholders not making such election will be automatically
enrolled in the Funds' Plans. Under the Plans, all distributions to common
shareholders of net investment income and capital gains will be automatically
reinvested in additional shares of the Funds' common shares. The Plan Agent
serves as agent for the common shareholders in administering the Plans. After
each Fund declares a dividend or determines to make a capital gains
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy shares of each Fund's common shares in the open
market, on the ASE or elsewhere, for the participants' accounts. The Funds will
not issue any new shares in connection with the Plans. A participant may
withdraw from a plan at any time by advising the Plan Agent in writing (see
address on back page under "Shareholder Servicing Agent"). Shares held in
nominee name at brokerage firm may not be eligible for automatic dividend
reinvestment. You should contact your financial adviser to determine such firm's
policies. The automatic reinvestment of dividends and capital gains
distributions does not relieve you of any income tax which may be otherwise
payable on dividends or distributions.
STATE OR MUNICIPAL LEASE OBLIGATIONS
Pursuant to Board of Directors or Trustees resolutions, the Funds may
invest without limit in state or municipal leases and participation interests
therein. Municipal leases are obligations issued by state and local governments
or authorities to finance the acquisition of equipment and facilities such as
fire, sanitation or police vehicles or telecommunications equipment, buildings
or other capital assets.
Municipal lease obligations, except in certain circumstances, are
considered illiquid by the staff of the Securities and Exchange Commission.
Municipal lease obligations held by the Funds will be treated as illiquid unless
they are determined to be liquid pursuant to guidelines established by the
Funds' Board of Directors or Trustees. Under these guidelines, the Adviser will
consider factors including, but not limited to (1) whether the lease can be
cancelled, (2) what assurance there is that the assets represented by the lease
can be sold, (3) the municipality's general credit strength (e.g., its debt,
administrative, economic and financial characteristics), (4) the likelihood that
the municipality will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to the operations of the
municipality (e.g., the potential for an "event of nonappropriation"), and (5)
the legal recourse in the event of failure to appropriate. Additionally, the
lack of an established trading market for municipal lease obligations may make
the determination of fair market value more difficult.
OTHER INFORMATION
Since March 31, 1996, except as stated above, there have been (I) no
material changes in the Funds' investment objectives or policies, (II) no change
to the Funds' charters or by-laws, (III) no material changes in the prinicpal
risk factors associated with investment in the Funds, and (IV) no changes in
persons who are primarily responsible for the day-to-day management of the
Funds' portfolios.
LETTER FROM THE PRESIDENT
Dear Shareholder,
For the municipal bond market, the year 1996 marked the demise of the flat tax.
By the beginning of 1997, the municipal to Treasury yield ratio improved
substantially, declining from 90% to a more traditional 80%. Long-term
tax-exempt investors who held fast to their investments in spite of flat tax
threats and municipal bond market upheaval were rewarded for their patience.
In the beginning of 1997, economic data continued to indicate surprising
strength in the U.S. economy, inciting inflation fears. In March 1997, the
Federal Reserve Chairman Alan Greenspan and the members of the Federal Reserve
made a "preemptive" strike against inflation and voted to raise short-term
interest rates by 0.25%. By increasing short-term rates the Federal Reserve
hopes to slow economic growth and reduce inflationary pressures.
After Alan Greenspan's repeated "warnings" about the U.S. economy's above-target
growth, the increase in federal funds rate -- the rate at which banks lend money
to one another on an overnight basis -- came as no surprise to the markets.
Perhaps the most apparent short-run fallout from this rate hike was its negative
impact on the stock market. However, after a 10% decline, stocks have since
attained new all-time highs.
History has shown that once the Federal Reserve starts raising short-term rates,
more increases are generally on the way. It typically takes anywhere from six to
nine months for the effects of a rate hike to become apparent. We believe a
sound approach is not to fight the Federal Reserve during this time. Until the
Federal Reserve is satisfied that it has successfully reduced inflationary
pressures, the markets will be volatile. During this time, we urge investors to
maintain a long-term perspective -- especially since historically the markets
have rewarded investors for their patience.
Despite the short-term volatility caused by rising interest rates, our outlook
for the bond market continues to be favorable. We believe that the Federal
Reserve will be diligent in slowing the economy to a more sustainable rate. We
continue to emphasize a long-term, high credit quality style of management in
our closed-end municipal bond funds. Over the long term, we believe our
shareholders should be pleased with the overall results of this approach -- an
approach that keeps what's best for our shareholders foremost in our mind.
Sincerely,
Wayne A. Stork
President
Voyageur Minnesota Municipal Income Fund, I, II, III, Inc.
Voyageur Arizona Municipal Income Fund, Inc.
Voyageur Florida Insured Municipal Income Fund
Voyageur Colorado Insured Municipal Income Fund, Inc.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUNDS -- I, II, III
[PHOTO BOX]
ELIZABETH H. HOWELL IS THE SENIOR MUNICIPAL BOND PORTFOLIO MANAGER FOR THE
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUNDS -- I, II, III. MS. HOWELL HAS MORE
THAN 13 YEARS OF INVESTMENT INDUSTRY EXPERIENCE.
The Minnesota Municipal Income Funds and the overall municipal bond market
finished the fiscal year ended March 31, 1997, with positive total returns. In
the spring of 1996, bond prices continued the price decline that began in the
first quarter. However, by mid-year the tax-exempt bond market rebounded and
prices rose steadily until the end of December. Throughout the first quarter of
1997, municipal bond prices fluctuated, but on March 31, 1997, returns on the
Voyageur Minnesota Municipal Income Funds were modestly positive.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND
The Voyageur Minnesota Municipal Income Fund continues to be well diversified by
sector. At the Fund's fiscal year, we continued to maintain a very high credit
quality in the Fund. More than half (52%) of the Fund's holdings were invested
in AAA-rated securities as of March 31, 1997. Another 32% of the Fund's holdings
were invested in securities rated A or higher.
The Fund is fully invested in long-term Minnesota tax-exempt municipal bonds.
Many of the Fund's holdings are in older, higher coupon bonds and are trading at
a premium. This has helped dampen the impact of price swings on the portfolio
during the past 12 months and has contributed to the positive total return of
the Fund.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II
The Voyageur Minnesota Municipal Income Fund II continues to be well diversified
by sector. At the Fund's fiscal year end, we continued to maintain a very high
credit quality in the Fund. More than half (56%) of the Fund's holdings were
invested in AAA-rated securities as of March 31, 1997. Another 28% of the Fund's
holdings were invested in securities rated A or higher.
The Fund is fully invested in long-term Minnesota tax-exempt municipal bonds.
The average call protection on the portfolio is approximately seven to eight
years. Due to its duration of 9.77 years, the Fund's performance generally moves
in line with the market for longer-dated Minnesota municipal bonds. In order to
improve coupon income for the portfolio -- thereby creating a cushion against
market fluctuations -- we have been adding bonds that are now trading at a
premium and generating an above-market rate of tax-free income.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III
The Voyageur Minnesota Municipal Income Fund III continues to be well
diversified by sector. At the Fund's fiscal year end, we continued to maintain a
very high credit quality in the Fund. More than half (58%) of the Fund's
holdings were invested in AAA-rated securities as of March 31, 1997. Another 10%
were invested in securities rated AA.
The Fund is fully invested in long-term Minnesota tax exempt municipal bonds.
The average call protection on the portfolio is approximately seven to eight
years. As of March 31, 1997, the duration for the Fund was 8.85 years. This
means the Fund's performance generally moves in line with the market for
longer-dated Minnesota municipal bonds. In order to improve coupon income for
the portfolio -- thereby creating a cushion against market fluctuations -- we
have been adding bonds that are now trading at a premium and generating an
above-market rate of tax free income.
OUTLOOK
Overall, our general outlook for the 1997 municipal market remains favorable.
The diligent efforts of the Federal Reserve should help keep the rate of
inflation low and slow the U.S. economy to a more modest and sustainable growth
rate. Due to increases in interest rates, we expect the stock markets to lose a
little steam in 1997 and, as a result, investors should begin allocating more of
their investment dollars into fixed income investments.
For the first half of 1997, we expect municipal bonds to experience some
temporary weakness as the Federal Reserve continues to try to keep inflation
under control by increasing the federal funds rate. In spite of this short-term
weakness, we believe the long-term trend of downward interest rates remains
intact.
As a result of the recent interest rate increases, investors can expect some
price relief in their tax-free investments due to the dynamics of supply and
demand. In the past few years, a large portion of the municipal bond supply has
been generated by refundings -- where municipalities have replaced old municipal
bond issues with a new ones in order to lower their interest rate costs. As
interest rates increase, refundings become economically infeasible for
municipalities. We believe this decline in supply should be advantageous for tax
free investors -- acting as a cushion for municipal bond prices.
We believe the overall credit quality of the municipal bond market remains
strong, consistent with reasonable growth in the economy. In 1996, Standard &
Poor's upgraded two credits for every one it downgraded while Moody's Investor
Services upgraded four for every one downgraded.
The Minnesota economy continues to be strong. The economy is well diversified in
comparison to other states and has historically been less cyclical than that of
the coasts. As a result, the overall credit quality of Minnesota bonds remains
very good.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
ALL QUALITY RATINGS ARE BY MOODY'S INVESTORS SERVICE AND/OR STANDARD & POOR'S
RATINGS SERVICES.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND
[PHOTO BOX]
ANDREW M. MCCULLAGH, JR. IS THE SENIOR MUNICIPAL BOND PORTFOLIO MANAGER FOR THE
VOYAGEUR ARIZONA MUNICIPAL INCOME AND VOYAGEUR COLORADO INSURED MUNICIPAL INCOME
FUNDS. MR. MCCULLAGH HAS MORE THAN 25 YEARS OF INVESTMENT INDUSTRY EXPERIENCE.
During the fiscal year ended March 31, 1997, long-term interest rates climbed
approximately 44 basis points from 6.65% on March 29, 1996 to 7.09% on March 31,
1997, as measured by the Bond Buyer Index. In spite of the down market, the
Voyageur Arizona Municipal Income Fund ended its fiscal year with positive total
returns. This positive return was primarily due to our defensive strategy of
adding income to the Fund's portfolio by selling lower trade yield bonds and
replacing them with higher coupon bonds.
At its fiscal year end, the Voyageur Arizona Municipal Income Fund continued to
maintain a high credit quality -- with 80% of the Fund's holdings were invested
in municipal bond securities rated AAA as of March 31, 1997. The remaining
holdings in the Fund are invested in securities rated A or higher. The Fund is
well diversified in a wide variety of municipal bond sectors -- with the
heaviest sector weightings in general obligation, health care, and water and
sewer bonds. In an attempt to protect our shareholders' income streams for a
longer period of time, we continue to emphasize investing in municipal bonds
with longer call protection.
Arizona's economy continues to be vibrant, making it an attractive investment
for municipal bond investors across the state. The supply of municipal bonds in
Arizona, however, continues to be limited. Due to the strong demand for its
municipal bonds, the price of Arizona municipal bonds has a tendency to be less
volatile than other state issues.
OUTLOOK
Overall, our general outlook for the 1997 municipal market remains favorable.
The diligent efforts of the Federal Reserve should help keep the rate of
inflation low and slow the U.S. economy to a more modest and sustainable pace.
Due to increases in interest rates, we expect the stock markets to lose a little
steam in 1997 and, as a result, investors should begin allocating more of their
investment dollars into fixed income investments.
For the first half of 1997, we expect the municipal bonds to experience some
temporary weakness as the Federal Reserve continues to try to keep inflation
under control by increasing the federal funds rate. In spite of this short-term
weakness, we believe the long-term trend of interest rates is downward.
As a result of the recent interest rate increases, investors can expect some
price relief in their tax-free investments due to the dynamics of supply and
demand. In the past few years, a large portion of the municipal bond supply has
been generated by refundings -- where municipalities have replaced old municipal
bond issues with new ones in order to lower their interest rate costs. As
interest rates increase, refundings become economically not feasible for
municipalities. We believe this decline in supply should be advantageous for tax
free investors -- enhancing municipal bond prices.
We believe the overall credit quality of the municipal bond market remains
strong, consistent with reasonable growth in the economy. In 1996, Standard &
Poor's upgraded two credits for every one it downgraded while Moody's Investor
Services upgraded four for every one downgraded.
Spurred by the influx of people and businesses moving into the state, especially
from California, Arizona continues to be one of the strongest economies in the
United States. We continue to believe the supply of Arizona municipal bonds will
continue to be limited in 1997. This limited supply -- in light of the strong
demand for Arizona's municipal bonds issues -- should ultimately continue to
help bolster the Fund's performance.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
ALL QUALITY RATINGS ARE BY MOODY'S INVESTORS SERVICE AND/OR STANDARD & POOR'S
RATINGS SERVICES.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
[PHOTO BOX]
STEVEN P. ELDREDGE WAS SENIOR PORTFOLIO MANAGER OF VOYAGEUR INSURED MUNICIPAL
BOND FUND DURING THE PAST FISCAL YEAR. ON MAY 1, 1997, PATRICK P. COYNE AND
MITCHELL CONERY OF DELAWARE MANAGEMENT CO. IN PHILADELPHIA BEGAN CO-MANAGING THE
FUND.
During the fiscal year ended March 31, 1997, long-term interest rates climbed
approximately 44 basis points from 6.65% on March 29, 1996 to 7.09% on March 31,
1997, as measured by the Bond Buyer Index. In spite of the down market, the
Voyageur Florida Insured Municipal Income Fund ended its fiscal year with
positive total returns. This positive return was primarily due to our defensive
strategy of adding income to the Fund's portfolio.
At its fiscal year end, the Voyageur Florida Insured Municipal Income Fund
continued to maintain a high credit quality -- with 100% of the Fund invested in
municipal bond securities rated AAA as of March 31, 1997. The Fund is well
diversified in a wide variety of municipal bond sectors -- with the top sector
weightings in general revenue, health care, and lease/COP bonds. In an attempt
to protect our shareholders' income streams for a longer period of time, we
continue to emphasize investing in municipal bond securities with longer call
protection.
OUTLOOK
Overall, our general outlook for the 1997 municipal market remains favorable.
The diligent efforts of the Federal Reserve should help keep the rate of
inflation low and slow the U.S. economy to a more modest and sustainable growth
rate. Due to increases in interest rates, we expect the stock markets to lose a
little steam in 1997 and, as a result, investors should begin allocating more of
their investment dollars into fixed income investments.
For the first half of 1997, we expect municipal bonds to experience some
temporary weakness as the Federal Reserve continues to try to keep inflation
under control by increasing the federal funds rate. In spite of this short-term
weakness, we believe the long-term trend of downward interest rates remains
intact.
However, even though we expect some modest interest rate increases by the
Federal Reserve, investors can expect some price relief in their tax-free
investments due to the dynamics of supply and demand. In the past few years, a
large portion of the municipal bond supply has been generated by refundings --
where municipalities have replaced old municipal bond issues with a new ones in
order to lower their interest rate cost. As interest rates have increased
recently, refundings have become economically infeasible for municipalities. We
believe this decline in supply should be advantageous for tax free investors --
acting as a cushion for municipal bond prices.
The overall credit quality of the municipal bond market remains strong,
consistent with reasonable growth in the economy. In 1996, Standard & Poor's
upgraded two credits for every one it downgraded while Moody's Investor Services
upgraded four for every one downgraded.
Likewise, the Florida's economy continues to be relatively strong, as evidenced
by the Standard & Poor's upgrade of the state from AA to AA+. This grade is a
reflection of the economic strength and good balance sheets of the individual
cities and counties in Florida.
The year 1996 was a good one for Florida, according to the April 1997 issue of
Florida Trend. Tourists flocked to Florida in record numbers -- 42.5 million --
while activity in the real estate industry reached boom levels not seen since
the late 1980s. Although some people express a concern about Florida's ongoing
reliance on these two economic sectors -- tourism and real estate -- the first
hints of diversification within the state are becoming apparent. In order to
attract new industries and businesses, economic development efforts are
intensifying and broadening on a community and state level.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
ALL QUALITY RATINGS ARE BY MOODY'S INVESTORS SERVICE AND/OR STANDARD & POOR'S
RATINGS SERVICES.
INSURANCE PERTAINS ONLY TO THE TIMELY PAYMENT OF PRINCIPAL AND INTEREST BY THE
SECURITIES IN THE FUND'S PORTFOLIO. THE VALUE OF THE INSURED SECURITIES AND THE
FUND ITSELF WILL FLUCTUATE DUE TO CHANGING MARKET CONDITIONS. NO REPRESENTATION
IS MADE AS TO ANY INSURER'S ABILITY TO MEET ITS COMMITMENTS.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND
[PHOTO BOX]
ANDREW M. MCCULLAGH, JR. IS THE SENIOR MUNICIPAL BOND PORTFOLIO MANAGER FOR THE
VOYAGEUR ARIZONA MUNICIPAL INCOME AND VOYAGEUR COLORADO INSURED MUNICIPAL INCOME
FUNDS. MR. MCCULLAGH HAS MORE THAN 25 YEARS OF INVESTMENT INDUSTRY EXPERIENCE.
During the fiscal year ended March 31, 1997, long-term interest rates climbed
approximately 44 basis points from 6.65% on March 29, 1996 to 7.09% on March 31,
1997, as measured by the Bond Buyer Index. In spite of the down market, the
Voyageur Colorado Insured Municipal Income Fund ended its fiscal year with
positive total returns. This positive return was primarily due to our defensive
strategy of adding income to the Fund's portfolio by selling lower trade yield
bonds and replacing them with higher coupon bonds.
At its fiscal year end, the Voyageur Colorado Insured Municipal Income Fund
continued to maintain a high credit quality -- 100% of the Fund's holdings were
invested in municipal bond securities rated AAA as March 31, 1997.
The Fund is well diversified in a wide variety of municipal bond sectors -- with
the top sector weightings in general obligation, transportation, and education
bonds. In an attempt to protect our shareholders' income streams for a longer
period of time, we continue to emphasize investing in municipal bonds with
longer call protection.
Colorado's economy continues to be one of the strongest in the United States,
making it an attractive investment for municipal bond investors across the
state. The supply of municipal bonds in Colorado, however, continues to be
limited. Due to the strong demand for its municipal bonds, the price of Colorado
municipal bonds has a tendency to be less volatile than other state issues.
OUTLOOK
Overall, our general outlook for the 1997 municipal market remains favorable.
The diligent efforts of the Federal Reserve should help keep the rate of
inflation low and slow the U.S. economy to a more modest and sustainable growth
rate. Due to increases in interest rates, we expect the stock markets to lose a
little steam in 1997 and, as a result, investors should begin allocating more of
their investment dollars into fixed income investments.
For the first half of 1997, we expect the municipal bonds to experience some
temporary weakness as the Federal Reserve continues to try to keep inflation
under control by increasing the federal funds rate. In spite of this short-term
weakness, we believe the long-term trend of interest rates is downward.
Due to recent interest rate increases, investors can expect some price relief in
their tax-free investments due to the dynamics of supply and demand. In the past
few years, a large portion of the municipal bond supply has been generated by
refundings -- where municipalities have replaced old municipal bond issues with
new ones in order to lower their interest rate costs. As interest rates
increase, refundings become economically not feasible for municipalities. We
believe this decline in supply should be advantageous for tax free investors --
enhancing municipal bond prices.
We believe the overall credit quality of the municipal bond market remains
strong, consistent with reasonable growth in the economy. In 1996, Standard &
Poor's upgraded two credits for every one it downgraded while Moody's Investor
Services upgraded four for every one downgraded.
Although Colorado's growth is showing some signs of slowing, there are still
signs of strength in the state. Colorado has a much more broad-based economy
than it has had in the past -- due to a strong influx of people and businesses
from the state of California. This broad-based economy should help dampen the
effects of any future economic recession.
We continue to believe the supply of Colorado municipal bonds will continue to
be limited in 1997. This limited supply -- in light of the strong demand for
Colorado's municipal bonds issues -- should ultimately continue to help bolster
the Fund's performance.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
ALL QUALITY RATINGS ARE BY MOODY'S INVESTORS SERVICE AND/OR STANDARD & POOR'S
RATINGS SERVICES.
INSURANCE PERTAINS ONLY TO THE TIMELY PAYMENT OF PRINCIPAL AND INTEREST BY THE
SECURITIES IN THE FUND'S PORTFOLIO. THE VALUE OF THE INSURED SECURITIES AND THE
FUND ITSELF WILL FLUCTUATE DUE TO CHANGING MARKET CONDITIONS. NO REPRESENTATION
IS MADE AS TO ANY INSURER'S ABILITY TO MEET ITS COMMITMENTS.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND
Market Price/NAV Fluctuation form 4/1/96 through 3/31/97
[LINE GRAPH]
Market Price NAV
April '96 15 14.4
14.9 14.2
14.5 14.2
14.6 14.3
14.6 14.4
14.8 14.3
14.8 14.5
14.6 14.7
14.9 14.9
14.6 14.8
14.5 14.8
14.5 14.8
March '97 14.4 14.5
Sector Weightings/Credit Quality as of 3/31/97
(as a percentage of total net assets)
[PIE GRAPH]
Industrial 6%
Transportation 1%
Pollution Control 3%
Pre-Refunded/Escrow 10%
Education 9%
General Obligation 16%
Health Care 15%
Utility 14%
Housing 23%
Aaa/AAA 52%
Aa/AA 15%
A/A 17%
Baa/BBB 5%
NR/NR 11%
Portfolio Statistics as of 3/31/97
(excluding short-term securities)
Average Effective Maturity 20.0 Years
Duration 7.5 Years
% AMT 18.7%
Total Market Value $56.0 Million
Average Coupon 6.5%
Average Annual Fund Performance
Market Value *
One Year 2.01%
Since Inception (5/1/92) 7.11%
Net Asset Value **
One Year 6.90%
Since Inception (5/1/92) 7.55%
Past performance is no guarantee of future results.
* Assumes purchase of common shares at market price on the first day and
sale on the last day of the period and reinvestment of dividends at
market price, if any.
Performance does not reflect initial sales charge or brokerage
commissions.
** Assumes purchase of common share at net asset value on the first day
and sale on the last day of the period and reinvestment of dividends at
net asset value, if any.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II
Market Price/NAV Fluctuation form 4/1/96 through 3/31/97
[LINE GRAPH]
Market Price NAV
April '96 15 14.4
14.9 14.2
14.5 14.2
14.6 14.3
14.6 14.4
14.8 14.3
14.8 14.5
14.6 14.7
14.9 14.9
14.6 14.8
14.5 14.8
14.5 14.8
March '97 14.4 14.5
Sector Weightings/Credit Quality as of 3/31/97
(as a percentage of total net assets)
[PIE GRAPH]
Transportation 4%
Industrial 6%
Pollution Control 6%
Pre-Refunded/Escrow 13%
Education 10%
Utility 8%
Health Care 16%
General Obligation 15%
Housing 21%
Aaa/AAA 56%
Aa/AA 17%
A/A 11%
Baa/BBB 10%
NR/NR 6%
Portfolio Statistics as of 3/31/97
(excluding short-term securities)
Average Effective Maturity 22.8 Years
Duration 9.8 Years
% AMT 19.8%
Total Market Value $156.4 Million
Average Coupon 6.1%
Average Annual Fund Performance
Market Value *
One Year 1.47%
Since Inception (2/26/93) 3.59%
Net Asset Value **
One Year 6.97%
Since Inception (2/26/93) 5.32%
Past performance is no guarantee of future results.
* Assumes purchase of common shares at market price on the first day and
sale on the last day of the period and reinvestment of dividends at
market price, if any.
Performance does not reflect initial sales charge or brokerage
commissions.
** Assumes purchase of common share at net asset value on the first day
and sale on the last day of the period and reinvestment of dividends at
net asset value, if any.
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III
Market Price/NAV Fluctuation form 4/1/96 through 3/31/97
[LINE GRAPH]
Market Price NAV
April '96 12 12.54
11.75 12.34
12 12.31
11.63 12.47
11.5 12.54
11.75 12.46
11.88 12.7
11.88 12.83
12.25 13.16
11.5 13.01
12 12.95
12.5 13.05
March '97 12.25 12.71
Sector Weightings/Credit Quality as of 3/31/97
(as a percentage of total net assets)
[PIE GRAPH]
Transportation 3%
Pollution control 3%
Pre-Refunded/Escrow 12%
Education 9%
Industrial 11%
General Obligation 11%
Utility 9%
Health Care 14%
Housing 25%
Aaa/AAA 58%
Aa/AA 10%
A/A 14%
Baa/BBB 13%
NR/NR 5%
Portfolio Statistics as of 3/31/97
(excluding short-term securities)
Average Effective Maturity 22.8 Years
Duration 9.0 Years
% AMT 17.2%
Total Market Value $37.2 Million
Average Coupon 6.3%
Average Annual Fund Performance
Market Value *
One Year 8.62%
Since Inception (10/29/93) 2.09%
Net Asset Value **
One Year 7.50%
Since Inception (10/29/93) 2.93%
Past performance is no guarantee of future results.
* Assumes purchase of common shares at market price on the first day and
sale on the last day of the period and reinvestment of dividends at
market price, if any.
Performance does not reflect initial sales charge or brokerage
commissions.
** Assumes purchase of common share at net asset value on the first day
and sale on the last day of the period and reinvestment of dividends at
net asset value, if any.
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND
Market Price/NAV Fluctuation form 4/1/96 through 3/31/97
[LINE GRAPH]
Market Price NAV
April '96 12.75 13.74
12.625 13.59
12.375 13.47
12.25 13.66
12.25 13.86
12.5 13.68
12.5 13.95
12.625 14.1
13 14.39
12.625 14.21
13 14.1
13.125 14.2
March '97 13 13.78
Sector Weightings/Credit Quality as of 3/31/97
(as a percentage of total net assets)
[PIE GRAPH]
Industrial 4%
Other 7%
Housing 8%
Education 3%
Transportation 11%
Health Care 16%
Utility 17%
General Obligation 33%
Aaa/AAA 80%
Aa/AA 13%
A/A 7%
Portfolio Statistics as of 3/31/97
(excluding short-term securities)
Average Effective Maturity 17.9 Years
Duration 9.1 Years
% AMT 1.5%
Total Market Value $65.2 Million
Average Coupon 5.8%
Average Annual Fund Performance
Market Value *
One Year 8.20%
Since Inception (2/26/93) 4.32%
Net Asset Value **
One Year 5.94%
Since Inception (2/26/93) 5.55%
Past performance is no guarantee of future results.
* Assumes purchase of common shares at market price on the first day and
sale on the last day of the period and reinvestment of dividends at
market price, if any.
Performance does not reflect initial sales charge or brokerage
commissions.
** Assumes purchase of common share at net asset value on the first day
and sale on the last day of the period and reinvestment of dividends at
net asset value, if any.
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
Market Price/NAV Fluctuation form 4/1/96 through 3/31/97
[LINE GRAPH]
Market Price NAV
April '96 12.75 13.71
12.625 13.51
12.25 13.43
12.625 13.67
12.625 13.81
12.875 13.52
12.375 13.91
12.625 14.12
13.125 14.42
12.75 14.22
12.875 14
13.125 14.07
March '97 12.5 13.67
Sector Weightings/Credit Quality as of 3/31/97
(as a percentage of total net assets)
[PIE GRAPH]
General Obligation 2%
Education 5%
Transportation 6%
Housing 10%
Lease/C.O.P. 13%
Utility 16%
Health Care 20%
Other Revenue 26%
Aaa/AAA 100%
Portfolio Statistics as of 3/31/97
(excluding short-term securities)
Average Effective Maturity 23.7 Years
Duration 10.6 Years
% AMT 13.6%
Total Market Value $51.9 Million
Average Coupon 5.7%
Average Annual Fund Performance
Market Value *
One Year 3.94%
Since Inception (2/26/93) 2.91%
Net Asset Value **
One Year 5.23%
Since Inception (2/26/93) 4.86%
Past performance is no guarantee of future results.
* Assumes purchase of common shares at market price on the first day and
sale on the last day of the period and reinvestment of dividends at
market price, if any.
Performance does not reflect initial sales charge or brokerage
commissions.
** Assumes purchase of common share at net asset value on the first day
and sale on the last day of the period and reinvestment of dividends at
net asset value, if any.
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND
Market Price/NAV Fluctuation form 4/1/96 through 3/31/97
[LINE GRAPH]
Market Price NAV
April '96 12.625 13.61
12.625 13.46
12.375 13.36
12.625 13.53
12.5 13.68
12.625 13.49
12.375 13.71
12.625 13.88
13 14.2
13 14.01
13.125 13.84
13.25 14
March '97 12.5 13.58
Sector Weightings/Credit Quality as of 3/31/97
(as a percentage of total net assets)
[PIE GRAPH]
Lease/C.O.P. 2%
Pollution Control 1%
Pre-Refunded/Escrow 5%
Housing 7%
Utility 9%
Health Care 9%
Education 9%
Other Revenue 5%
Transportation 20%
General Obligation 31%
Aaa/AAA 100%
Portfolio Statistics as of 3/31/97
(excluding short-term securities)
Average Effective Maturity 18.3 Years
Duration 9.3 Years
% AMT 0.0%
Total Market Value $103.7 Million
Average Coupon 5.8%
Average Annual Fund Performance
Market Value *
One Year 4.77%
Since Inception (7/29/93) 2.22%
Net Asset Value **
One Year 5.19%
Since Inception (7/29/93) 4.35%
Past performance is no guarantee of future results.
* Assumes purchase of common shares at market price on the first day and
sale on the last day of the period and reinvestment of dividends at
market price, if any.
Performance does not reflect initial sales charge or brokerage
commissions.
** Assumes purchase of common share at net asset value on the first day
and sale on the last day of the period and reinvestment of dividends at
net asset value, if any.
INDEPENDENT AUDITORS' REPORT
The Board of Directors or Trustees and Shareholders
Voyageur Minnesota Municipal Income Fund, Inc.
Voyageur Minnesota Municipal Income Fund II, Inc.
Voyageur Minnesota Municipal Income Fund III, Inc.
Voyageur Arizona Municipal Income Fund, Inc.
Voyageur Florida Insured Municipal Income Fund
Voyageur Colorado Insured Municipal Income Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments in securities of Voyageur Minnesota
Municipal Income Fund, Inc., Voyageur Minnesota Municipal Income Fund II, Inc.,
Voyageur Minnesota Municipal Income Fund III, Inc., Voyageur Arizona Municipal
Income Fund, Inc., Voyageur Florida Insured Municipal Income Fund and Voyageur
Colorado Insured Municipal Income Fund, Inc. (the Funds) as of March 31, 1997
and the related statements of operations for the year then ended and the
statements of changes in net assets for each of the years in the two-year period
ended March 31, 1997 and the financial highlights for each of the periods
presented. These financial statements and the financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the 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. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold, but not received or delivered,
we request confirmations from brokers, and where replies are not received, we
carry out other appropriate auditing procedures. 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 the financial highlights
referred to above present fairly, in all material respects, the financial
position of Voyageur Minnesota Municipal Income Fund, Inc., Voyageur Minnesota
Municipal Income Fund II, Inc., Voyageur Minnesota Municipal Income Fund III,
Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur Florida Insured
Municipal Income Fund and Voyageur Colorado Insured Municipal Income Fund, Inc.
as of March 31, 1997 and the results of their operations, changes in their net
assets and the financial highlights for the periods stated in the first
paragraph above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 9, 1997
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------
VOYAGEUR
MINNESOTA
MUNICIPAL
INCOME
FUND, INC.
------------
<S> <C>
ASSETS
Investments in securities (note 2) (identified cost:
$54,391,035, $155,624,292, $36,901,305, $64,389,685,
$52,281,746 and $104,131,095, respectively) ....................... $ 56,387,769
Cash in bank on demand deposit ........................................ 68
Receivable for investment securities sold ............................. 2,276,076
Accrued interest receivable ........................................... 1,029,021
------------
Total assets ...................................................... 59,692,934
------------
LIABILITIES
Payable for investment securities purchased ........................... 2,043,407
Dividends payable to preferred shareholders ........................... 51,856
Administration fee payable ............................................ 8,333
Adviser fee payable ................................................... --
Other accrued expenses ................................................ 45,147
------------
Total liabilities ................................................. 2,148,743
------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL SHARES ............... $ 57,544,191
============
Represented by:
Preferred shares (note 5) ......................................... $ 20,000,000
Common shares:
Par value ..................................................... 25,947
Additional paid-in capital .................................... 35,452,118
------------
55,478,065
Undistributed or (distributions in excess of) net investment income (4,007)
Accumulated net realized gain (loss) from investments ............. 73,399
Unrealized net appreciation (depreciation) of investments ......... 1,996,734
------------
TOTAL REPRESENTING NET ASSETS APPLICABLE TO OUTSTANDING
CAPITAL SHARES ........................................... $ 57,544,191
============
TOTAL REPRESENTING NET ASSETS APPLICABLE TO OUTSTANDING
COMMON SHARES ............................................ $ 37,544,191
============
NET ASSET VALUE PER COMMON SHARE:
(2,594,700, 7,252,200, 1,837,200, 2,982,200, 2,422,200 and
4,837,100 common shares issued and outstanding, respectively) ..... $ 14.47
============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR VOYAGEUR VOYAGEUR FLORIDA COLORADO
MINNESOTA MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
INCOME INCOME INCOME INCOME INCOME
FUND II, INC. FUND III, INC. FUND, INC. FUND FUND, INC.
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 156,462,251 $ 37,709,335 $ 65,186,314 $ 52,164,707 $ 103,652,327
3,649 961 112,803 6,756 58,908
-- -- -- -- 1,036,491
2,451,856 716,929 925,764 1,040,467 2,095,491
------------- ------------- ------------- ------------- -------------
158,917,756 38,427,225 66,224,881 53,211,930 106,843,217
------------- ------------- ------------- ------------- -------------
-- -- -- -- 1,014,684
157,644 42,576 64,760 52,574 105,248
20,371 4,930 8,511 6,843 13,610
47,533 -- -- -- --
120,159 31,819 49,153 42,566 22,963
------------- ------------- ------------- ------------- -------------
345,707 79,325 122,424 101,983 1,156,505
------------- ------------- ------------- ------------- -------------
$ 158,572,049 $ 38,347,900 $ 66,102,457 $ 53,109,947 $ 105,686,712
============= ============= ============= ============= =============
$ 60,000,000 $ 15,000,000 $ 25,000,000 $ 20,000,000 $ 40,000,000
72,522 18,372 29,822 24,222 48,371
99,637,480 25,228,358 40,809,071 33,337,167 67,189,739
------------- ------------- ------------- ------------- -------------
159,710,002 40,246,730 65,838,893 53,361,389 107,238,110
675,420 182,527 362,681 332,659 536,803
(2,651,332) (2,889,387) (895,746) (467,062) (1,609,433)
837,959 808,030 796,629 (117,039) (478,768)
------------- ------------- ------------- ------------- -------------
$ 158,572,049 $ 38,347,900 $ 66,102,457 $ 53,109,947 $ 105,686,712
============= ============= ============= ============= =============
$ 98,572,049 $ 23,347,900 $ 41,102,457 $ 33,109,947 $ 65,686,712
============= ============= ============= ============= =============
$ 13.59 $ 12.71 $ 13.78 $ 13.67 $ 13.58
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------
VOYAGEUR
MINNESOTA
MUNICIPAL
INCOME
FUND, INC.
-----------
<S> <C>
Investment income:
Interest ............................................................. $ 3,221,344
-----------
Expenses (note 4):
Investment advisory and management fees .............................. 230,187
Administration fees .................................................. 100,000
Remarketing agent fees ............................................... 50,000
Custodian and transfer agent fees .................................... 26,394
Audit and legal fees ................................................. 21,190
Other expenses ....................................................... 40,610
-----------
Total expenses .................................................. 468,381
Less: Earnings credits on uninvested cash ........................... (407)
-----------
Total net expenses .............................................. 467,974
-----------
Investment income - net .................................. 2,753,370
-----------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) on investments - net (note 3) ................... 101,820
Change in unrealized appreciation or depreciation of investments - net 374,814
-----------
Net gain (loss) on investments .................................. 476,634
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..... $ 3,230,004
===========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1997
- -------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR VOYAGEUR VOYAGEUR FLORIDA COLORADO
MINNESOTA MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
INCOME INCOME INCOME INCOME INCOME
FUND II, INC. FUND III, INC. FUND, INC. FUND FUND, INC.
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 9,351,847 $ 2,286,842 $ 3,725,311 $ 3,043,563 $ 5,855,777
----------- ----------- ----------- ----------- -----------
633,680 152,965 265,235 213,722 424,556
237,632 57,363 99,463 80,146 159,210
150,000 37,500 62,500 50,000 100,000
49,282 13,725 26,225 18,087 35,969
38,881 17,312 22,500 18,576 33,888
70,521 31,266 40,605 38,190 62,390
----------- ----------- ----------- ----------- -----------
1,179,996 310,131 516,528 418,721 816,013
(1,571) (1,452) (10,929) (1,027) (18,240)
----------- ----------- ----------- ----------- -----------
1,178,425 308,679 505,599 417,694 797,773
----------- ----------- ----------- ----------- -----------
8,173,422 1,978,163 3,219,712 2,625,869 5,058,004
----------- ----------- ----------- ----------- -----------
(122,342) (485,545) (169,429) 55,988 (1,395,905)
732,771 752,657 192,773 (263,919) 1,100,880
----------- ----------- ----------- ----------- -----------
610,429 267,112 23,344 (207,931) (295,025)
----------- ----------- ----------- ----------- -----------
$ 8,783,851 $ 2,245,275 $ 3,243,056 $ 2,417,938 $ 4,762,979
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
MINNESOTA MINNESOTA
MUNICIPAL MUNICIPAL
INCOME INCOME
FUND, INC. FUND II, INC.
------------------------------ ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income - net ................................ $ 2,753,370 $ 3,061,031 $ 8,173,422 $ 8,010,373
Realized gain (loss) on investments - net .............. 101,820 131,577 (122,342) 4,015
Change in unrealized appreciation or
depreciation of investments - net .................. 374,814 536,027 732,771 2,666,757
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations .................................... 3,230,004 3,728,635 8,783,851 10,681,145
------------- ------------- ------------- -------------
DISTRIBUTIONS TO:
Common shareholders from investment income - net ....... (2,413,073) (2,413,073) (5,860,687) (5,765,503)
Preferred shareholders from investment income - net .... (702,068) (766,760) (2,106,108) (2,299,902)
------------- ------------- ------------- -------------
Total distributions ................................ (3,115,141) (3,179,833) (7,966,795) (8,065,405)
------------- ------------- ------------- -------------
Total increase (decrease) in net assets ............ 114,863 548,802 817,056 2,615,740
Net assets at beginning of year ........................ 57,429,328 56,880,526 157,754,993 155,139,253
------------- ------------- ------------- -------------
Net assets at end of year (including undistributed or
(distributions in excess of) net investment income of
$(4,007) and $357,764, $675,298 and $468,671,
$182,527 and $148,042, $362,609 and $273,140,
$332,659 and $221,731, and $536,803 and $398,026,
respectively) ...................................... $ 57,544,191 $ 57,429,328 $ 158,572,049 $ 157,754,993
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR VOYAGEUR FLORIDA COLORADO
MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
INCOME INCOME INCOME INCOME
FUND III, INC. FUND, INC. FUND FUND, INC.
----------------------------- ----------------------------- ----------------------------- -----------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1997 1996 1997 1996 1997 1996
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,978,163 $ 1,934,216 $ 3,219,712 $ 3,239,205 $ 2,625,869 $ 2,579,556 $ 5,058,004 $ 4,987,033
(485,545) (431,936) (169,429) 125,368 55,988 (45,483) (1,395,905) 92,188
752,657 1,031,280 192,773 1,304,899 (263,919) 1,282,076 1,100,880 1,902,659
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
2,245,275 2,533,560 3,243,056 4,669,472 2,417,938 3,816,149 4,762,979 6,981,880
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
(1,374,458) (1,327,377) (2,275,793) (2,180,735) (1,812,111) (1,750,040) (3,509,923) (3,385,973)
(569,220) (578,328) (854,450) (937,463) (702,830) (750,558) (1,409,304) (1,534,220)
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
(1,943,678) (1,905,705) (3,130,243) (3,118,198) (2,514,941) (2,500,598) (4,919,227) (4,920,193)
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
301,597 627,855 112,813 1,551,274 (97,003) 1,315,551 (156,248) 2,061,687
38,046,303 37,418,448 65,989,644 64,438,370 53,206,950 51,891,399 105,842,960 103,781,273
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
$ 38,347,900 $ 38,046,303 $ 66,102,457 $ 65,989,644 $ 53,109,947 $ 53,206,950 $ 105,686,712 $ 105,842,960
============= ============= ============= ============= ============= ============= ============= =============
See accompanying notes to financial statements.
</TABLE>
THE VOYAGEUR FUNDS
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Voyageur Minnesota Municipal Income Fund, Inc. ("Minnesota Municipal");
Voyageur Minnesota Municipal Income Fund II, Inc. ("Minnesota Municipal II");
Voyageur Minnesota Municipal Income Fund III, Inc. ("Minnesota Municipal III");
Voyageur Arizona Municipal Income Fund, Inc. ("Arizona Municipal"); Voyageur
Florida Insured Municipal Income Fund ("Florida Insured Municipal"); and
Voyageur Colorado Insured Municipal Income Fund, Inc. ("Colorado Insured
Municipal") (collectively the "Funds") are registered under the Investment
Company Act of 1940 ("1940 Act") (as amended) as closed-end, diversified
management investment companies (except Minnesota Municipal, Minnesota Municipal
III and Colorado Insured Municipal, which are non-diversified management
investment companies). Shares of the Funds are listed on the American Stock
Exchange.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of net increases (decreases) in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
The values of fixed-income securities are determined using pricing
services or prices quoted by independent brokers. When market quotations are not
readily available, securities are valued at fair value according to methods
selected in good faith by the Board of Directors or Trustees. Short-term
securities with maturities less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued at amortized cost which
approximates market value.
Security transactions are accounted for on the date securities are purchased or
sold. Realized gains and losses are calculated on the identified cost basis.
Interest income, including level-yield amortization of premium and original
issue discount, is accrued daily.
The Funds concentrate their investments in limited geographical areas.
Therefore, there may be more credit risk related to the economic conditions of
these areas than a portfolio with broader geographical diversification.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by the
Funds on a forward commitment or when-issued basis can take place up to a month
or more after the transaction date. During this period, such securities are
subject to market fluctuations and the portfolio maintains, in a segregated
account with its custodian, assets with a market value equal to or greater than
the amount of its purchase commitments.
FEDERAL TAXES
The Funds intend to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable net investment income and net realized
capital gains, if any, to shareholders in amounts that will avoid or minimize
federal income or excise taxes. Net investment income and net realized gains
(losses) may differ for financial statement and tax purposes primarily because
of losses deferred for tax purposes due to "wash sale" transactions. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Furthermore, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Funds.
On the statements of assets and liabilities, as a result of permanent
book-to-tax differences, reclassification adjustments have been made to increase
undistributed net investment income and decrease additional paid-in capital by
$122 for Minnesota Municipal and $72 for Arizona Municipal.
DISTRIBUTIONS TO SHAREHOLDERS
The Funds intend to pay monthly dividends from net investment income.
Net realized capital gains, if any, will be distributed on an annual basis.
These distributions are recorded as of the close of business on the ex-dividend
date. Such distributions are payable in cash or, pursuant to the Funds' Dividend
Reinvestment Plans, reinvested in additional common shares of the Funds. Under
the Plans, shares of the Funds will be purchased in the open market.
(3) INVESTMENT SECURITIES TRANSACTIONS
Purchases of securities and proceeds from sales, other than investments
in short-term securities, for Minnesota Municipal, Minnesota Municipal II,
Minnesota Municipal III, Arizona Municipal, Florida Insured Municipal and
Colorado Insured Municipal were $2,381,275 and $3,360,198, $30,803,557 and
$30,596,717, $14,553,535 and $15,019,259, $20,456,602 and $20,699,433,
$36,128,928 and $36,196,927, and $92,478,155 and $92,665,440, respectively, for
the year ended March 31, 1997.
(4) FEES AND EXPENSES
The Funds have entered into the following agreements with Voyageur Fund
Managers, Inc. (the "Adviser") and with Mitchell Hutchins Asset Management Inc.
(Princeton Administrators, L.P. on Colorado Insured Municipal only) (the
"Administrators").
The investment advisory agreements provide the Adviser with a monthly
investment management fee computed at an annual rate of .40% of each Fund's
average daily net assets, including assets attributable to any preferred stock
that may be outstanding. For its fee, the Adviser provides investment advice
and, in general, conducts the management and investments of the Funds.
The administration agreements provide the Administrators with a monthly
fee computed at an annual rate of .15% of each Fund's average daily net assets,
including assets attributable to any preferred stock that may be outstanding.
Certain Funds have minimum annual fees payable to the Administrators. Minnesota
Municipal paid the minimum fee for the year ended March 31, 1997. For their
fees, the Administrators provide certain administrative, clerical and
recordkeeping services to the Funds.
In addition to advisory and administrative fees, the Funds are
responsible for paying most of the other operating expenses, including outside
directors' or trustees' fees and expenses, custodian fees, registration fees,
printing of shareholder reports, transfer agent fees and expenses, legal,
auditing and accounting services, insurance, interest and other miscellaneous
expenses.
During the year ended March 31, 1997, Minnesota Municipal earned $407,
Minnesota Municipal II earned $1,571, Minnesota Municipal III earned $1,452,
Arizona Municipal earned $10,929, Florida Insured Municipal earned $1,027 and
Colorado Insured Municipal earned $18,240 in credits on uninvested cash balances
held by each Fund at the custodian. These credits were used to reduce various
custodial services provided by the custodial bank.
(5) CAPITAL SHARE TRANSACTIONS
Pursuant to their articles of incorporation, Minnesota Municipal,
Minnesota Municipal II, Minnesota Municipal III, Arizona Municipal and Colorado
Insured Municipal each have 200 million shares of $0.01 par value common shares
authorized. Florida Insured Municipal has been authorized to issue an unlimited
amount of $0.01 par value common shares. The common shares outstanding at March
31, 1997 were 2,594,700 for Minnesota Municipal, 7,252,200 for Minnesota
Municipal II, 1,837,200 for Minnesota Municipal III, 2,982,200 for Arizona
Municipal, 2,422,200 for Florida Insured Municipal and 4,837,100 for Colorado
Insured Municipal.
For the years ended March 31, 1997 and 1996, there were no transactions
in common shares for the Funds.
The Funds each have one million shares of $0.01 par value preferred
shares authorized, except for Florida Insured Municipal which has an unlimited
amount of $0.01 par value preferred shares authorized. Under resolutions adopted
by the Board of Directors or Trustees, Minnesota Municipal is allowed to issue
up to 400 preferred shares, of which the entire amount was issued on August 6,
1992. On May 14, 1993, Minnesota Municipal II, Arizona Municipal and Florida
Insured Municipal issued 1,200, 500 and 400 preferred shares, respectively. On
December 10, 1993, Minnesota Municipal III issued 300 preferred shares and on
September 23, 1993, Colorado Insured Municipal issued 800 preferred shares. The
preferred shares have a liquidation preference of $50,000 per share plus an
amount equal to accumulated but unpaid dividends.
Dividends for the outstanding preferred shares of each Fund are
cumulative at a rate established at the initial public offering and are
typically reset every 28 days based on the results of an auction. Dividend rates
(adjusted for capital gains distributions) ranged from 3.38% to 3.80% on
Minnesota Municipal, from 3.39% to 3.85% on Minnesota Municipal II, from 3.38%
to 3.80% on Minnesota Municipal III, from 3.20% to 3.80% on Arizona Municipal,
from 3.35% to 3.80% on Florida Insured Municipal and from 3.29% to 4.125% on
Colorado Insured Municipal during the year ended March 31, 1997. Smith Barney
Inc. and Merrill Lynch Pierce, Fenner & Smith Inc. (on Colorado Insured
Municipal only), as the remarketing agents, receive an annual fee from each of
the Funds of .25% of the average amount of preferred stock outstanding.
Under the 1940 Act, the Funds may not declare dividends or make other
distributions on common shares or purchase any such shares if, at the time of
the declaration, distribution or purchase, asset coverage with respect to the
outstanding preferred stock is less than 200%.
Each of the Fund's preferred shares are redeemable at the option of the
Fund, in whole or in part, on any dividend payment date at $50,000 per share
plus any accumulated but unpaid dividends whether or not declared. The preferred
shares are also subject to mandatory redemption at $50,000 per share plus any
accumulated but unpaid dividends, whether or not declared, if certain
requirements relating to the composition of the assets and liabilities of each
Fund is not satisfied. The holders of preferred shares have voting rights equal
to the holders of common shares (one vote per share) and will vote together with
holders of common shares as a single class. However, holders of preferred shares
are also entitled to elect two of each Fund's directors or trustees. In
addition, the 1940 Act requires that along with approval by shareholders that
might otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares, and (b) take any action requiring a vote of security holders pursuant to
Section 13(a) of the 1940 Act, including, among other things, changes in each of
the Fund's subclassification as a closed-end investment company or changes in
their fundamental investment restrictions.
(6) CAPITAL LOSS CARRYFORWARDS
For federal income tax purposes, Minnesota Municipal II, Minnesota
Municipal III, Arizona Municipal, Florida Insured Municipal and Colorado Insured
Municipal had capital loss carryforwards of $2,612,098, $2,889,387, $895,746,
$467,062 and $1,609,433, respectively, at March 31, 1997, that will expire in
years 2002 through 2005 if not offset by subsequent realized capital gains. It
is unlikely the Board of Directors or Trustees will authorize a distribution of
any net realized capital gains until the available capital loss carryforwards
have been offset or expire.
(7) FUND REORGANIZATION
On January 15, 1997 Voyageur's parent, Dougherty Financial Group. Inc.
("DFG"), executed an agreement and plan of merger with Lincoln National
Corporation ("LNC") pursuant to which LNC would acquire DFG, including the
mutual fund investment advisory business of DFG conducted by Voyageur. The
"assignment" of advisory agreement relating to the merger has been approved by
the Funds' Board of Directors and Trustees and shareholders. LNC acquired DFG on
April 30, 1997.
(8) FINANCIAL HIGHLIGHTS
Per share data (rounded to the nearest cent) for a share of common
stock outstanding and selected information for each period are as follows:
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL
--------------------------------------------------------------
PERIOD FROM
YEAR YEAR YEAR YEAR MAY 1,
ENDED ENDED ENDED ENDED 1992* TO
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995 1994 1993**
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period .................................... $ 14.43 $ 14.21 $ 13.89 $ 14.67 $ 13.95
-------- -------- -------- -------- --------
Operations:
Investment income - net ................................ 1.06 1.18 1.21 1.20 0.90
Realized and unrealized gain (loss) on investments - net 0.18 0.26 0.34 (0.68) 1.00
-------- -------- -------- -------- --------
Total from operations .............................. 1.24 1.44 1.55 0.52 1.90
-------- -------- -------- -------- --------
Distributions to:
Common shareholders from investment income - net ....... (0.93) (0.93) (0.93) (0.93) (0.70)
Preferred shareholders from investment income - net .... (0.27) (0.29) (0.27) (0.18) (0.12)
Common shareholders from realized capital gains - net .. -- -- (0.02) (0.16) (0.06)
Preferred shareholders from realized capital gains - net -- -- (0.01) (0.03) (0.02)
-------- -------- -------- -------- --------
Total distributions ................................ (1.20) (1.22) (1.23) (1.30) (0.90)
-------- -------- -------- -------- --------
Capital share transactions:
Capital charge with respect to issuance of shares ...... -- -- -- -- (0.28)
-------- -------- -------- -------- --------
Net asset value:
End of period .......................................... $ 14.47 $ 14.43 $ 14.21 $ 13.89 $ 14.67
======== ======== ======== ======== ========
Market value:
End of period .......................................... $ 14.38 $ 15.00 $ 14.50 $ 15.63 $ 16.00
======== ======== ======== ======== ========
Total investment return:
Market value (a) ....................................... 2.01% 10.31% (0.71)% 4.28% 20.31%
Net asset value (b) .................................... 6.90% 8.20% 9.72 % 1.63% 10.91%
Net assets applicable to outstanding capital shares
at end of period (000's omitted) ....................... $ 57,544 $ 57,429 $ 56,881 $ 56,034 $ 58,075
Ratios/Supplemental Data:
Ratio of expenses to average net assets (c) (f) ........ 0.81% 0.82% 0.85% 0.78% 0.88%(d)
Ratio of expenses to average net assets
applicable to common shares (f) .................... 1.24% 1.24% 1.33% 1.17% 1.21%(d)
Ratio of investment income - net to
average net assets (c) ............................. 4.78% 5.28% 5.66% 5.22% 4.92%(d)
Ratio of investment income-net to average net
assets applicable to common shares (g) ............. 5.45% 6.04% 6.93% 6.68% 6.62%(d)
Portfolio turnover rate (excluding
short-term securities) ............................. 5% 7% 13% 11% 43%
Value of preferred shares outstanding (000's omitted) .. $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000
Net asset coverage per share of preferred
shares, end of period .............................. $143,860 $143,573 $142,201 $140,086 $145,188
Liquidation value per share of preferred shares (e) .... $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
* Commencement of investment operations
** Initial period
</TABLE>
See accompanying notes to financial highlights.
(8) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL II
--------------------------------------------------------------
PERIOD FROM
YEAR YEAR YEAR YEAR FEBRUARY 26,
ENDED ENDED ENDED ENDED 1993* TO
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995 1994 1993**
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period .................................... $ 13.48 $ 13.12 $ 12.73 $ 13.84 $ 13.95
-------- -------- -------- -------- --------
Operations:
Investment income - net ................................ 1.13 1.10 1.11 0.98 0.03
Realized and unrealized gain (loss) on investments - net 0.08 0.38 0.39 (0.96) (0.11)
-------- -------- -------- -------- --------
Total from operations .............................. 1.21 1.48 1.50 0.02 (0.08)
-------- -------- -------- -------- --------
Distributions to:
Common shareholders from investment income - net ....... (0.81) (0.80) (0.83) (0.76) --
Preferred shareholders from investment income - net .... (0.29) (0.32) (0.28) (0.18) --
Common shareholders from realized capital gains - net .. -- -- -- (0.02) --
Preferred shareholders from realized capital gains - net -- -- -- (0.00) --
-------- -------- -------- -------- --------
Total distributions ................................ (1.10) (1.12) (1.11) (0.96) --
-------- -------- -------- -------- --------
Capital share transactions:
Capital charge with respect to issuance of shares ....... -- -- -- (0.17) (0.03)
-------- -------- -------- -------- --------
Net asset value:
End of period .......................................... $ 13.59 $ 13.48 $ 13.12 $ 12.73 $ 13.84
======== ======== ======== ======== ========
Market value:
End of period .......................................... $ 12.63 $ 13.25 $ 12.38 $ 14.63 $ 15.13
======== ======== ======== ======== ========
Total investment return:
Market value (a) ....................................... 1.47% 14.16% (9.59)% 1.71% 8.42%
Net asset value (b) .................................... 6.97% 8.88% 10.16% (2.93)% (0.79)%
Net assets applicable to outstanding capital shares
at end of period (000's omitted) ....................... $158,572 $157,755 $155,139 $152,326 $100,392
Ratios/Supplemental Data:
Ratio of expenses to average net assets (c) (f) ........ 0.74% 0.77% 0.77% 0.76% 0.83%(d)
Ratio of expenses to average net assets
applicable to common shares (f) .................... 1.19% 1.23% 1.28% 1.15% 0.83%(d)
Ratio of investment income - net to
average net assets (c) ............................. 5.15% 5.03% 5.39% 4.54% 2.29%(d)
Ratio of investment income-net to average net
assets applicable to common shares (g) ............. 6.15% 5.76% 6.69% 5.58% 2.29%(d)
Portfolio turnover rate (excluding
short-term securities) ............................. 20% 11% 32% 27% 11%
Value of preferred shares outstanding (000's omitted) .. $ 60,000 $ 60,000 $ 60,000 $ 60,000 --
Net asset coverage per share of preferred
shares, end of period .............................. $132,143 $131,462 $129,283 $126,938 --
Liquidation value per share of preferred shares (e) .... $ 50,000 $ 50,000 $ 50,000 $ 50,000 --
</TABLE>
* Commencement of investment operations
** Initial period
See accompanying notes to financial highlights.
(8) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
MINNESOTA MUNICIPAL III
------------------------------------------------------------
PERIOD FROM
YEAR YEAR YEAR OCTOBER 29,
ENDED ENDED ENDED 1993* TO
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995 1994**
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period ........................................ $ 12.54 $ 12.20 $ 11.86 $ 14.03
----------- ----------- ----------- -----------
Operations:
Investment income - net .................................... 1.08 1.05 1.06 0.32
Realized and unrealized gain (loss) on investments - net ... 0.15 0.33 0.28 (1.88)
----------- ----------- ----------- -----------
Total from operations .................................. 1.23 1.38 1.34 (1.56)
----------- ----------- ----------- -----------
Distributions to:
Common shareholders from investment income - net ........... (0.75) (0.72) (0.73) (0.25)
Preferred shareholders from investment income - net ........ (0.31) (0.32) (0.28) (0.06)
----------- ----------- ----------- -----------
Total distributions .................................... (1.06) (1.04) (1.01) (0.31)
----------- ----------- ----------- -----------
Capital share transactions:
Capital charge/adjustment with respect to issuance of shares -- -- 0.01 (0.30)
----------- ----------- ----------- -----------
Net asset value:
End of period .............................................. $ 12.71 $ 12.54 $ 12.20 $ 11.86
=========== =========== =========== ===========
Market value:
End of period .............................................. $ 12.25 $ 12.00 $ 11.25 $ 14.00
=========== =========== =========== ===========
Total investment return:
Market value (a) ........................................... 8.62% 13.51% (14.27)% 1.53%
Net asset value (b) ........................................ 7.50% 8.79% 9.55% (13.85)%
Net assets applicable to outstanding capital shares
at end of period (000's omitted) ........................... $ 38,348 $ 38,046 $ 37,418 $ 36,785
Ratios/Supplemental Data:
Ratio of expenses to average net assets (c) (f) ............ 0.81% 0.81% 0.82% 0.90%(d)
Ratio of expenses to average net assets
applicable to common shares (f) ........................ 1.33% 1.33% 1.40% 1.30%(d)
Ratio of investment income - net to
average net assets (c) ................................. 5.17% 5.05% 5.37% 3.95%(d)
Ratio of investment income-net to average net
assets applicable to common shares (g) ................. 6.05% 5.81% 6.79% 4.62%(d)
Portfolio turnover rate (excluding
short-term securities) ................................. 39% 35% 47% 21%
Value of preferred shares outstanding (000's omitted) ...... $ 15,000 $ 15,000 $ 15,000 $ 15,000
Net asset coverage per share of preferred
shares, end of period .................................. $ 127,826 $ 126,821 $ 124,728 $ 122,616
Liquidation value per share of preferred shares (e) ........ $ 50,000 $ 50,000 $ 50,000 $ 50,000
</TABLE>
* Commencement of investment operations
** Initial period
See accompanying notes to financial highlights.
(8) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
ARIZONA MUNICIPAL
-------------------------------------------------------------
PERIOD FROM
YEAR YEAR YEAR YEAR FEBRUARY 26,
ENDED ENDED ENDED ENDED 1993* TO
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995 1994 1993**
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period .................................... $ 13.74 $ 13.22 $ 12.70 $ 13.77 $ 13.95
-------- -------- -------- -------- --------
Operations:
Investment income - net ................................ 1.08 1.09 1.08 0.95 0.01
Realized and unrealized gain (loss) on investments - net 0.01 0.47 0.56 (0.79) (0.13)
-------- -------- -------- -------- --------
Total from operations .............................. 1.09 1.56 1.64 0.16 (0.12)
-------- -------- -------- -------- --------
Distributions to:
Common shareholders from investment income - net ....... (0.76) (0.73) (0.78) (0.75) --
Preferred shareholders from investment income - net .... (0.29) (0.31) (0.28) (0.18) --
Common shareholders from realized capital gains - net .. -- -- (0.05) (0.09) --
Preferred shareholders from realized capital gains - net -- -- (0.01) (0.02) --
-------- -------- -------- -------- --------
Total distributions ................................ (1.05) (1.04) (1.12) (1.04) --
-------- -------- -------- -------- --------
Capital share transactions:
Capital charge with respect to issuance of shares ...... -- -- -- (0.19) (0.06)
-------- -------- -------- -------- --------
Net asset value:
End of period .......................................... $ 13.78 $ 13.74 $ 13.22 $ 12.70 $ 13.77
======== ======== ======== ======== ========
Market value:
End of period .......................................... $ 13.00 $ 12.75 $ 12.13 $ 13.88 $ 15.13
======== ======== ======== ======== ========
Total investment return:
Market value (a) ....................................... 8.20% 11.52% (6.43)% (2.91)% 8.42%
Net asset value (b) .................................... 5.94% 9.55% 11.29% (2.20)% (1.29)%
Net assets applicable to outstanding capital shares
at end of period (000's omitted) ....................... $ 66,102 $ 65,990 $ 64,438 $ 62,881 $ 41,063
Ratios/Supplemental Data:
Ratio of expenses to average net assets (c) (f) ........ 0.78% 0.78% 0.79% 0.82% 0.90%(d)
Ratio of expenses to average net assets
applicable to common shares (f) .................... 1.25% 1.26% 1.32% 1.24% 0.90%(d)
Ratio of investment income - net to
average net assets (c) ............................. 4.85% 4.88% 5.19% 4.41% 1.29%(d)
Ratio of investment income-net to average net
assets applicable to common shares (g) ............. 5.71% 5.57% 6.42% 5.45% 1.29%(d)
Portfolio turnover rate (excluding
short-term securities) ............................. 31% 30% 18% 15% 0%
Value of preferred shares outstanding (000's omitted) .. $ 25,000 $ 25,000 $ 25,000 $ 25,000 --
Net asset coverage per share of preferred
shares, end of period .............................. $132,205 $131,979 $128,877 $125,762 --
Liquidation value per share of preferred shares (e) .... $ 50,000 $ 50,000 $ 50,000 $ 50,000 --
</TABLE>
* Commencement of investment operations
** Initial period
See accompanying notes to financial highlights.
(8) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FLORIDA INSURED MUNICIPAL
--------------------------------------------------------------
PERIOD FROM
YEAR YEAR YEAR YEAR FEBRUARY 26,
ENDED ENDED ENDED ENDED 1993* TO
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995 1994 1993**
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period .................................... $ 13.71 $ 13.17 $ 12.46 $ 13.73 $ 14.05
-------- -------- -------- -------- --------
Operations:
Investment income - net ................................ 1.08 1.06 1.07 0.96 0.01
Realized and unrealized gain (loss) on investments - net (.08) 0.51 0.69 (1.10) (0.25)
-------- -------- -------- -------- --------
Total from operations .............................. 1.00 1.57 1.76 (0.14) (0.24)
-------- -------- -------- -------- --------
Distributions to:
Common shareholders from investment income - net ....... (0.75) (0.72) (0.77) (0.74) --
Preferred shareholders from investment income - net .... (0.29) (0.31) (0.28) (0.19) --
-------- -------- -------- -------- --------
Total distributions ................................ (1.04) (1.03) (1.05) (0.93) --
-------- -------- -------- -------- --------
Capital share transactions:
Capital charge with respect to issuance of shares ...... -- -- -- (0.20) (0.08)
-------- -------- -------- -------- --------
Net asset value:
End of period .......................................... $ 13.67 $ 13.71 $ 13.17 $ 12.46 $ 13.73
======== ======== ======== ======== ========
Market value:
End of period .......................................... $ 12.50 $ 12.75 $ 12.25 $ 12.50 $ 15.13
======== ======== ======== ======== ========
Total investment return:
Market value (a) ....................................... 3.94% 10.39% 4.69% (13.04)% 7.65%
Net asset value (b) .................................... 5.23% 9.66% 12.56% (4.40)% (2.28)%
Net assets applicable to outstanding capital shares
at end of period (000's omitted) ....................... $ 53,110 $ 53,207 $ 51,891 $ 50,189 $ 33,247
Ratios/Supplemental Data:
Ratio of expenses to average net assets (c) (f) ........ 0.78% 0.80% 0.81% 0.85% 0.90%(d)
Ratio of expenses to average net assets
applicable to common shares (f) .................... 1.25% 1.27% 1.35% 1.28% 0.90%(d)
Ratio of investment income - net to
average net assets (c) ............................. 4.91% 4.82% 5.21% 4.49% 1.24%(d)
Ratio of investment income-net to average net
assets applicable to common shares (g) ............. 5.74% 5.45% 6.37% 5.46% 1.24%(d)
Portfolio turnover rate (excluding
short-term securities) ............................. 68% 22% 10% 20% 0%
Value of preferred shares outstanding (000's omitted) .. $ 20,000 $ 20,000 $ 20,000 $ 20,000 --
Net asset coverage per share of preferred
shares, end of period .............................. $132,775 $133,017 $129,728 $125,473 --
Liquidation value per share of preferred shares (e) .... $ 50,000 $ 50,000 $ 50,000 $ 50,000 --
</TABLE>
* Commencement of investment operations
** Initial period
See accompanying notes to financial highlights.
(8) FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
COLORADO INSURED MUNICIPAL
-----------------------------------------------------------
PERIOD FROM
YEAR YEAR YEAR JULY 29,
ENDED ENDED ENDED 1993* TO
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995 1994**
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period .................................... $ 13.61 $ 13.19 $ 12.80 $ 14.10
----------- ----------- ----------- -----------
Operations:
Investment income - net ................................ 1.05 1.03 1.02 0.59
Realized and unrealized gain (loss) on investments - net (0.06) 0.41 0.44 (1.19)
----------- ----------- ----------- -----------
Total from operations .................................. 0.99 1.44 1.46 (0.60)
----------- ----------- ----------- -----------
Distributions to:
Common shareholders from investment income - net ....... (0.73) (0.70) (0.76) (0.39)
Preferred shareholders from investment income - net .... (0.29) (0.32) (0.27) (0.11)
Common shareholders from realized capital gains - net .. -- -- (0.03) --
Preferred shareholders from realized capital gains - net -- -- (0.01) --
----------- ----------- ----------- -----------
Total distributions .................................... (1.02) (1.02) (1.07) (0.50)
----------- ----------- ----------- -----------
Capital share transactions:
Capital charge with respect to issuance of shares ........... -- -- -- (0.20)
----------- ----------- ----------- -----------
Net asset value:
End of period .......................................... $ 13.58 $ 13.61 $ 13.19 $ 12.80
=========== =========== =========== ===========
Market value:
End of period .......................................... $ 12.50 $ 12.63 $ 12.25 $ 14.50
=========== =========== =========== ===========
Total investment return:
Market value (a) ....................................... 4.77% 8.99% (10.05)% 5.52%
Net asset value (b) .................................... 5.19% 8.55% 9.67% (6.66)%
Net assets applicable to outstanding capital shares
at end of period (000's omitted) ....................... $ 105,687 $ 105,843 $ 103,781 $ 101,923
Ratios/Supplemental Data:
Ratio of expenses to average net assets (c) (f) ........ 0.77% 0.75% 0.76% 0.78%(d)
Ratio of expenses to average net assets
applicable to common shares (f) .................... 1.23% 1.21% 1.27% 1.13%(d)
Ratio of investment income - net to
average net assets (c) ............................. 4.76% 4.68% 4.88% 4.26%(d)
Ratio of investment income-net to average net
assets applicable to common shares (g) ............. 5.51% 5.18% 5.88% 5.02%(d)
Portfolio turnover rate (excluding
short-term securities) ............................. 88% 39% 7% 3%
Value of preferred shares outstanding (000's omitted) .. $ 40,000 $ 40,000 $ 40,000 $ 40,000
Net asset coverage per share of preferred
shares, end of period .............................. $ 132,109 $ 132,304 $ 129,727 $ 127,404
Liquidation value per share of preferred shares (e) .... $ 50,000 $ 50,000 $ 50,000 $ 50,000
</TABLE>
* Commencement of investment operations
** Initial period
See accompanying notes to financial highlights.
(8) FINANCIAL HIGHLIGHTS (CONTINUED)
Notes to Financial Highlights
(a) Total investment return is calculated assuming a purchase of common
shares at the current market value on the first day and a sale at the
current market value on the last day of each period reported.
Underwriting discounts and commissions are not reflected in the total
investment return for the initial period of each Fund. If underwriting
discounts and commissions had been reflected, total investment returns
for the initial period would have been 11.89%, 0.83%, (5.07)%, 0.83%,
0.83% and (0.81)% for Minnesota Municipal, Minnesota Municipal II,
Minnesota Municipal III, Arizona Municipal, Florida Insured Municipal
and Colorado Insured Municipal, respectively. Distributions, if any,
are assumed for purposes of this calculation, to be reinvested at
prices obtained under the Funds' dividend reinvestment plans. Total
investment returns for periods of less than one year are not
annualized.
(b) Total investment return is calculated assuming a purchase of common
shares at the current net asset value on the first day and a sale at
the current net asset value on the last day of each period reported.
Distributions, if any, are assumed for purposes of this calculation, to
be reinvested at net asset value as of dividend payable date. Total
investment returns for periods of less than one year are not
annualized. These percentages are not an indication of the performance
of a shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset
value of the Fund.
(c) Ratios calculated on the basis of expenses and net investment income
applicable to both the common and preferred shares relative to the
average net assets of common and preferred shareholders.
(d) Annualized.
(e) Excluding any accumulated but unpaid dividends.
(f) Beginning in the year ended March 31, 1996, the expense ratio reflects
the effect of gross expenses attributable to earnings credits on
uninvested cash balances received by the Funds. Prior period expense
ratios have not been adjusted.
(g) Ratio reflects total net investment income less dividends paid to
preferred shareholders from net investment income dividend by average
net assets applicable to common stock.
<TABLE>
<CAPTION>
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
INVESTMENTS IN SECURITIES MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (97.3%):
EDUCATION REVENUE (9.2%):
-----------------------------------------------------------------------------------------------------------------------
$1,000 Minnesota Higher Education Facilities Authority Revenue, Series 3-C,
St. Thomas University ............................................................. 6.25% 09-01-16 $ 1,023,500
1,000 Minnesota Higher Education Facilities Authority Revenue, Series 3-J,
Macalester College................................................................. 6.40 03-01-22 1,050,540
250 Minnesota State University Board Revenue, State University System, Series A............ 6.05 06-30-18 253,895
1,075 Northfield, St. Olaf College Revenue................................................... 6.30 10-01-12 1,122,042
1,750 Northfield, St. Olaf College Revenue................................................... 6.40 10-01-21 1,831,515
-----------
5,281,492
-----------
GENERAL OBLIGATION (16.0%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Carver County, Series 1992-A........................................................... 5.88 02-01-14 1,005,950
305 Edina Recreational Facilities Bonds, Series 1992-A..................................... 6.00 01-01-09 313,577
320 Edina Recreational Facilities Bonds, Series 1992-A..................................... 6.00 01-01-10 327,651
1,600 Minneapolis............................................................................ 6.00 03-01-16 1,627,216
1,500 Minneapolis-St. Paul, Metro Airport Commission, AMT.................................... 6.60(f) 01-01-11 1,596,960
2,000 Puerto Rico Commonwealth............................................................... 6.00(e) 07-01-26 2,008,400
1,000 Rosemount Independent School District #196............................................. 5.70 04-01-12 1,005,030
1,250 St. Francis Independent School District #15 (FSA Insured).............................. 6.30 02-01-11 1,329,000
-----------
9,213,784
-----------
HEALTH CARE REVENUE (14.9%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Bloomington Health Care Facilities, Masonic Home Care Center (AMBAC Insured) 5.88 07-01-22 1,001,350
1,270 Duluth Economic Development Authority, Health Care Facilities Revenue, Series 1992,
Duluth Clinic (AMBAC Insured)...................................................... 6.30 11-01-22 1,307,656
1,000 Duluth Economic Development Authority, Health Care Facilities Revenue, Series 1993-C,
St. Mary's Hospital (Connie Lee Insured)........................................... 6.00 02-15-20 990,100
1,000 Duluth Economic Development Authority, Hospital Facilities Revenue, Series 1992-B,
St. Luke's Hospital (Connie Lee Insured)........................................... 6.40 05-01-18 1,031,460
2,210 Minneapolis Hospital System Revenue, Fairview Hospital, Series 1991-A
(MBIA Insured)..................................................................... 6.50 01-01-11 2,342,821
1,500 Minneapolis Hospital System Revenue, Fairview Hospital, Series 1993-A
(MBIA Insured)..................................................................... 5.25 11-15-19 1,356,465
500 Minneapolis-St. Paul HRA, Health One (MBIA Insured).................................... 6.75 08-15-14 534,790
-----------
8,564,642
-----------
HOUSING REVENUE (23.5%):
-----------------------------------------------------------------------------------------------------------------------
1,800 Brooklyn Center, Multi-Family Housing Revenue, Four Courts, AMT........................ 7.50(f) 06-01-25 1,802,340
1,430 Minnesota HFA, Single Family Mortgage Revenue, Series 1991-A, AMT (FHA Insured)........ 7.45(f) 07-01-22 1,498,282
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND, INC.
INVESTMENTS IN SECURITIES (CONTINUED) MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 560 Minnesota HFA, Single Family Mortgage Revenue, Series 1992-G........................... 6.50% 07-01-06 $ 574,549
2,725 Minnetonka Senior Housing Project (Guaranteed by Presbyterian Homes of Minnesota)...... 7.70 06-01-25 2,805,660
1,400 New Brighton, Multi-Family Mortgage Revenue, Polynesian Village Apartments,
Series 1995-A, AMT................................................................. 7.60(f) 04-01-25 1,412,656
2,265 St. Anthony Multi-Family Housing Development (Asset Guaranty Insured).................. 6.88 07-01-22 2,366,336
2,950 St. Paul HRA, Multi-Family Housing Revenue, Pointe of St. Paul Project,
Series 1992 (FNMA Backed) ......................................................... 6.60 10-01-12 3,062,867
-----------
13,522,690
-----------
INDUSTRIAL REVENUE (6.2%):
-----------------------------------------------------------------------------------------------------------------------
2,575 Bass Brook PCR, Minnesota Power and Light.............................................. 6.00 07-01-22 2,553,550
1,000 Metropolitan Council Sports Facilities Commission, Hubert H. Humphrey Metrodome........ 6.00 10-01-09 1,021,770
-----------
3,575,320
-----------
POLLUTION CONTROL REVENUE (2.8%):
-----------------------------------------------------------------------------------------------------------------------
1,500 Minnesota Public Facilities Authority, Water Pollution Control Revenue Bonds,
Series 1992........................................................................ 6.50 03-01-14 1,608,900
-----------
PRE-REFUNDED/ESCROWED (9.8%):
-----------------------------------------------------------------------------------------------------------------------
2,555 Dakota & Washington Counties HRA, Single Family Mortgage Revenue,
Bloomington, AMT (GNMA Backed)..................................................... 8.38(f) 09-01-21 3,355,354
730 Duluth Economic Development Authority, Health Care Facilities Revenue, Series 1992,
Duluth Clinic (AMBAC Insured)..................................................... 6.30 11-01-04 791,641
1,000 St. Cloud Hospital Revenue (AMBAC Insured)............................................. 6.75 07-01-01 1,092,440
390 Southern Minnesota Municipal Power Agency (AMBAC Insured).............................. 5.50 01-01-15 386,825
-----------
5,626,260
-----------
TRANSPORTATION REVENUE (1.1%):
-----------------------------------------------------------------------------------------------------------------------
700 Puerto Rico Commonwealth, Highway & Transportation Authority........................... 5.50 07-01-26 651,945
-----------
UTILITY REVENUE (13.8%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Anoka County Solid Waste Disposal, National Rural Co-Op Utility, AMT................... 6.95(f) 12-01-08 1,070,400
1,500 Northern Minnesota Municipal Power Agency, Electric System, Series A................... 5.00 01-01-21 1,311,255
1,250 Northern Minnesota Municipal Power Agency, Electric System, Series B
(AMBAC Insured).................................................................... 5.50 01-01-18 1,197,700
1,000 Southern Minnesota Municipal Power Agency (FGIC Insured)............................... 5.75 01-01-11 1,029,650
610 Southern Minnesota Municipal Power Agency (AMBAC Insured).............................. 5.50 01-01-15 588,516
580 Southern Minnesota Municipal Power Agency (FGIC Insured)............................... 5.00 01-01-16 526,101
2,275 Western Minnesota Municipal Power Agency (MBIA Insured)................................ 5.50 01-01-15 2,207,114
-----------
7,930,736
-----------
TOTAL MUNICIPAL BONDS (cost: $53,979,035) 55,975,769
-----------
SHORT-TERM SECURITIES (0.7%):
-----------------------------------------------------------------------------------------------------------------------
412 Federated Minnesota Municipal Cash Trust............................................... 3.27(c) 412,000
-----------
TOTAL SHORT-TERM SECURITIES (cost: $412,000) 412,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $54,391,035)(d) $56,387,769
===========
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
INVESTMENTS IN SECURITIES MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (98.7%):
EDUCATION REVENUE (9.5%):
-----------------------------------------------------------------------------------------------------------------------
$1,250 Minnesota Higher Education Facilities Authority Revenue, Macalester College............ 5.55% 03-01-16 $ 1,221,337
1,000 Minnesota Higher Education Facilities Authority Revenue, Series 4A-1,
St. Thomas University.............................................................. 5.63 10-01-21 963,350
1,050 Minnesota Higher Education Facilities Authority Revenue, Series R1,
St. Thomas University.............................................................. 5.60 10-01-15 1,028,696
275 Minnesota Higher Education Facilities Authority Revenue, Series R2,
St. Thomas University.............................................................. 5.60 09-01-14 270,782
1,150 Minnesota State University Board Revenue, Series 1993-A, State University System....... 6.10 06-30-23 1,163,743
4,115 Minnesota State University Board Revenue, Series 1993-C, State University System
(MBIA Insured)..................................................................... 5.60 06-30-16 3,955,379
3,720 Minnesota State University Board Revenue, Series 1993-C, State University System
(MBIA Insured)..................................................................... 5.60 06-30-19 3,564,578
3,000 University of Minnesota, Series A...................................................... 5.50 07-01-21 2,887,080
-----------
15,054,945
-----------
GENERAL OBLIGATION (15.2%):
-----------------------------------------------------------------------------------------------------------------------
3,700 Becker, AMT (MBIA Insured)............................................................. 6.25(f) 08-01-15 3,817,993
4,030 Buffalo Independent School District (FSA Insured)...................................... 6.15 02-01-22 4,098,591
550 Esko Independent School District (FSA Insured)......................................... 5.65 04-01-12 554,867
1,000 Hawley Independent School District (FSA Insured)....................................... 5.75 02-01-17 1,002,660
3,225 Melrose Independent School District #740, Series A (FSA Insured)....................... 5.63 02-01-13 3,219,711
3,000 Minneapolis Convention Center Facilities............................................... 5.40 04-01-12 2,951,580
1,000 Minnesota State........................................................................ 5.38 08-01-11 990,080
2,925 Red Wing Independent School District #256, Series 1993-A............................... 5.70 02-01-12 2,942,316
1,625 Red Wing Independent School District #256, Series 1993-A............................... 5.70 02-01-13 1,630,606
1,270 Rosemount Independent School District #196............................................. 5.70 04-01-12 1,276,388
1,705 Stewartville Independent School District #534.......................................... 5.75 02-01-17 1,681,045
-----------
24,165,837
-----------
HEALTH CARE REVENUE (16.1%):
-----------------------------------------------------------------------------------------------------------------------
4,000 Bloomington Health Care Facilities, Masonic Home Care Center (AMBAC Insured)........... 5.88 07-01-22 4,005,400
1,195 Brainerd Lutheran Hospital, Health Care Facilities, Series A (FSA Insured)............. 6.65 03-01-17 1,272,269
1,250 Detroit Lakes Benedictine Health Systems, St. Mary's Hospital (Connie Lee Insured)..... 6.00 02-15-19 1,249,900
720 Duluth Economic Development Authority, Health Care Facilities Revenue,
Duluth Clinic (AMBAC Insured)...................................................... 6.20 11-01-12 747,706
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
INVESTMENTS IN SECURITIES (CONTINUED) MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$3,890 Duluth Economic Development Authority, Health Care Facilities Revenue, Series 1992,
Duluth Clinic (AMBAC Insured) ..................................................... 6.30% 11-01-22 $ 4,005,338
6,000 Duluth Economic Development Authority, Health Care Facilities Revenue, Series 1993-C,
St. Mary's Hospital (Connie Lee Insured)........................................... 6.00 02-15-20 5,940,600
1,000 Minneapolis Health Care Facilities, Series 1993-A, Fairview Hospital (MBIA Insured).... 5.25 11-15-19 904,310
2,105 Minneapolis HRA, Health One (MBIA Insured)............................................. 7.40 08-15-11 2,298,892
1,500 Minneapolis-St. Paul HRA, Childrens Health Care (FSA Insured )......................... 5.50 08-15-25 1,404,045
4,000 Robbinsdale, North Memorial Medical Center, Series 1993-B (AMBAC Insured).............. 5.50 05-15-23 3,727,560
-----------
25,556,020
-----------
HOUSING REVENUE (21.4%):
-----------------------------------------------------------------------------------------------------------------------
1,105 Chanhassen Multi-Family Housing, Heritage Park Project, AMT (FHA Insured).............. 6.20(f) 07-01-30 1,107,608
1,880 Dakota County HRA, Multi-Family Mortgage Revenue, Imperial Ridge Project,
Series 1993-A (GNMA Backed)........................................................ 6.10 12-15-28 1,891,844
1,115 Minnesota HFA, Multi-Family Rental Housing, Series-D................................... 5.90 02-01-14 1,115,624
2,295 Minnesota HFA, Multi-Family Rental Housing, Series-D................................... 6.00 08-01-22 2,282,951
1,550 Minnesota HFA, Single Family Housing, Series 1994-F.................................... 6.30 07-01-25 1,588,533
1,715 Minnesota HFA, Single Family Mortgage Revenue, AMT..................................... 7.05(f) 07-01-22 1,774,339
4,070 Minnesota HFA, Single Family Mortgage Revenue, Series 1992-B2, AMT..................... 6.15(f) 01-01-26 4,064,058
4,110 Minnesota HFA, Single Family Mortgage Revenue, Series 1992-C2, AMT..................... 6.15(f) 07-01-23 4,104,205
3,795 Minnesota HFA, Single Family Mortgage Revenue, Series 1994-J, AMT...................... 6.95(f) 07-01-26 3,953,327
1,225 Minnetonka Senior Housing Project (Guaranteed by Presbyterian Homes of Minnesota)...... 7.25 06-01-09 1,267,887
760 Minnetonka Senior Housing Project (Guaranteed by Presbyterian Homes of Minnesota)...... 7.50 06-01-14 784,768
2,365 Minnetonka Senior Housing Project (Guaranteed by Presbyterian Homes of Minnesota)...... 7.55 06-01-19 2,478,449
3,820 New Brighton, Multi-Family Mortgage Revenue, Polynesian Village Apartments,
Series 1995-A, AMT................................................................. 7.60(f) 04-01-25 3,854,533
2,000 St. Paul HRA, Single Family Mortgage Revenue (FNMA Backed)............................. 6.40 03-01-21 2,056,000
1,540 Stillwater Minnesota, Multi-Family Mortgage Revenue, AMT............................... 7.25(f) 11-01-27 1,537 983
-----------
33,862,109
-----------
INDUSTRIAL REVENUE (6.1%):
-----------------------------------------------------------------------------------------------------------------------
7,660 Bass Brook PCR, Minnesota Power and Light.............................................. 6.00 07-01-22 7,596,192
2,000 Metropolitan Council Sports Facilities Commission, Hubert H. Humphrey Metrodome........ 6.00 10-01-09 2,043,540
-----------
9,639,732
-----------
POLLUTION CONTROL REVENUE (6.0%):
-----------------------------------------------------------------------------------------------------------------------
5,000 Cloquet-Minnesota Pollution Control Revenue, Potlach Corporation Project............... 5.90 10-01-26 4,983,350
1,000 Minnesota Public Facilities Authority, Water Pollution Control Revenue Bonds........... 6.25 03-01-16 1,039,760
3,300 Minnesota Public Facilities Authority, Water Pollution Control Revenue Bonds,
Series 1992....................................................................... 6.50 03-01-14 3,539,580
-----------
9,562,690
-----------
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND II, INC.
INVESTMENTS IN SECURITIES (CONTINUED) MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRE-REFUNDED/ESCROWED (12.9%):
-----------------------------------------------------------------------------------------------------------------------
$5,500 Dakota & Washington Counties HRA, Single Family Mortgage Revenue,
Bloomington, AMT (GNMA Backed)..................................................... 8.38%(f)09-01-21 $ 7,222,875
280 Duluth Economic Development Authority, Hospital Facilities Revenue,
Duluth Clinic (AMBAC Insured)...................................................... 6.20 11-01-12 301,890
960 Duluth Economic Development Authority, Health Care Facilities Revenue,
(AMBAC Insured).................................................................... 6.30 11-01-22 1,041,062
4,200 St. Paul HRA, Sales Tax Revenue, Civic Center (MBIA Insured)........................... 5.55 11-01-23 4,144,056
2,300 St. Paul HRA, Sales Tax Revenue, Civic Center.......................................... 5.55 11-01-23 2,269,364
3,715 Southern Minnesota Municipal Power Agency Power Supply................................. 5.75 01-01-18 3,723,583
1,535 Western Minnesota Municipal Power Agency............................................... 6.63 01-01-16 1,700,089
------------
20,402,919
------------
TRANSPORTATION REVENUE (3.5%):
-----------------------------------------------------------------------------------------------------------------------
6,000 Puerto Rico Commonwealth, Highway & Transportation Authority........................... 5.50 07-01-26 5,588,100
------------
UTILITY REVENUE (8.0%):
-----------------------------------------------------------------------------------------------------------------------
5,955 Northern Minnesota Municipal Power Agency, Electric System, Series B
(AMBAC Insured).................................................................... 5.50 01-01-18 5,705,843
2,000 Puerto Rico Electric, Power Authority.................................................. 5.25 07-01-21 1,797,660
3,565 Southern Minnesota Municipal Power Agency (FGIC Insured)............................... 5.75 01-01-18 3,543,289
1,605 Western Minnesota Municipal Power Agency (MBIA Insured)................................ 5.50 01-01-15 1,557,107
------------
12,603,899
------------
TOTAL MUNICIPAL BONDS (cost: $155,598,292) 156,436,251
------------
SHORT-TERM SECURITIES (0.0%):
-----------------------------------------------------------------------------------------------------------------------
26 Federated Minnesota Municipal Cash Trust............................................... 3.27(c) 26,000
------------
TOTAL SHORT-TERM SECURITIES (cost: $26,000) 26,000
------------
TOTAL INVESTMENTS IN SECURITIES (cost: $155,624,292) (d) $156,462,251
============
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
INVESTMENTS IN SECURITIES MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
MUNICIPAL BONDS (97.1%):
EDUCATION REVENUE (9.0%):
-----------------------------------------------------------------------------------------------------------------------
$1,010 Minnesota Higher Education Facilities Authority Revenue, Series 4-A1,
St. Thomas University.............................................................. 5.63% 10-01-21 $ 972,984
1,000 Minnesota Higher Education Facilities, Series 3-Q, St. Mary's College.................. 6.15 10-01-23 989,690
1,275 Minnesota Higher Education Facilities, Series 3-W, St. Benedict College................ 6.38 03-01-20 1,296,611
200 Minnesota Higher Education Facilities, Series 4-C, Macalester College.................. 5.50 03-01-12 194,832
-----------
3,454,117
-----------
GENERAL OBLIGATION (10.9%):
-----------------------------------------------------------------------------------------------------------------------
2,245 Esko Independent School District (FSA Insured)......................................... 5.75 04-01-17 2,250,410
1,000 North Branch Independent School District (FGIC Insured)................................ 5.63 02-01-17 984,800
1,000 Prior Lake Independent School District (FGIC Insured).................................. 5.25 02-01-16 946,160
-----------
4,181,370
-----------
HEALTH CARE REVENUE (14.0%):
-----------------------------------------------------------------------------------------------------------------------
1,080 Duluth Economic Development Authority, Hospital Facilities Revenue,
Duluth Clinic (AMBAC Insured)...................................................... 6.20 11-01-12 1,121,558
2,000 Princeton, Fairview Hospital Revenue, Series 1991-C (MBIA Insured)..................... 6.25 01-01-21 2,056,200
1,500 Robbinsdale, North Memorial Medical Center, Series 1993-B (AMBAC Insured).............. 5.50 05-15-23 1,397,835
750 Wadena County Health Care Facilities Revenue........................................... 7.75 09-01-24 786,143
-----------
5,361,736
-----------
HOUSING REVENUE (25.5%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Brooklyn Center, Multi-Family Housing Revenue, Four Courts, AMT........................ 7.50(f) 06-01-25 1,001,300
2,000 Burnsville Multi-Family Mortgage Revenue, Series A (FSA Insured) ...................... 7.10 01-01-30 2,151,080
1,000 Edina HRA, Edina Park Plaza (FHA Insured).............................................. 7.70 12-01-28 1,046,430
1,000 Minneapolis, Findley Place, Series 1994, AMT........................................... 7.00(f) 12-01-16 1,044,100
2,175 Minneapolis Multi-Family Housing Revenue, Olson Townhomes, AMT......................... 6.00(f) 12-01-19 2,109,337
1,585 Minnesota HFA, Single Family Mortgage Revenue, Series 1991-A, AMT (FHA Insured)........ 7.45(f) 07-01-22 1,660,684
750 Minnesota HFA, Single Family Mortgage Revenue, Series C, AMT (FHA Insured)............. 9.00(f) 08-01-18 770,520
-----------
9,783,451
-----------
INDUSTRIAL REVENUE (11.0%):
-----------------------------------------------------------------------------------------------------------------------
1,505 Bass Brook PCR, Minnesota Power and Light.............................................. 6.00 07-01-22 1,492,463
2,820 Minnesota Public Facility Authority, Water Pollution Control........................... 5.40 03-01-15 2,734,272
-----------
4,226,735
-----------
POLLUTION CONTROL REVENUE (2.6%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Cloquet-Minnesota, Pollution Control Revenue, Potlach Corporation Project ............. 5.90 10-01-26 996,670
-----------
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR MINNESOTA MUNICIPAL INCOME FUND III, INC.
INVESTMENTS IN SECURITIES (CONTINUED) MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRE-REFUNDED/ESCROW (12.2%):
-----------------------------------------------------------------------------------------------------------------------
$ 420 Duluth Economic Development Authority, Hospital Facilities Revenue,
Duluth Clinic (AMBAC Insured)...................................................... 6.20% 11-01-12 $ 452,836
1,300 St. Paul HRA, Sales Tax Revenue, Civic Center (MBIA Insured)........................... 5.55 11-01-23 1,282,684
2,580 University of Minnesota Hospital....................................................... 6.75 12-01-16 2,928,403
-----------
4,663,923
-----------
TRANSPORTATION REVENUE (3.2%):
-----------------------------------------------------------------------------------------------------------------------
1,300 Puerto Rico Commonwealth, Highway & Transportation Authority........................... 5.50 07-01-26 1,210,755
-----------
UTILITY REVENUE (8.7%):
-----------------------------------------------------------------------------------------------------------------------
1,500 Moorhead Public Utilities Revenue (MBIA Insured)....................................... 6.25 11-01-12 1,566,540
1,800 Southern Minnesota Municipal Power Agency (FGIC Insured)............................... 5.75 01-01-18 1,789,038
-----------
3,355,578
-----------
TOTAL MUNICIPAL BONDS (cost: $36,426,305) 37,234,335
-----------
SHORT-TERM SECURITIES (1.2%):
-----------------------------------------------------------------------------------------------------------------------
475 Federated Minnesota Municipal Cash Trust............................................... 3.27(c) 475,000
-----------
TOTAL SHORT-TERM SECURITIES (cost: $475,000) 475,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $36,901,305) (d) $37,709,335
===========
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
INVESTMENTS IN SECURITIES MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
ARIZONA MUNICIPAL BONDS (98.6%):
CERTIFICATES OF PARTICIPATION (1.6%)
-----------------------------------------------------------------------------------------------------------------------
$1,100 Tucson................................................................................. 5.60% 07-01-11 $ 1,074,590
-----------
EDUCATION REVENUE (3.2%):
-----------------------------------------------------------------------------------------------------------------------
1,000 University of Arizona.................................................................. 6.25 06-01-11 1,053,510
1,000 University of Arizona.................................................................. 6.35 06-01-14 1,051,200
-----------
2,104,710
-----------
GENERAL OBLIGATION (32.4%):
-----------------------------------------------------------------------------------------------------------------------
1,500 Eagle Mountain Community Facilities, District A2....................................... 6.40 07-01-17 1,526,430
3,400 Maricopa County, Alhambra Elementary School District #68 (AMBAC Insured)............... 5.63 07-01-13 3,372,868
2,000 Maricopa County Unified School District #4 (FGIC Insured).............................. 5.55 07-01-10 2,008,820
3,000 Maricopa County Unified School District #11............................................ 5.50 07-01-10 2,974,680
1,400 Maricopa County Unified School District #38 (MBIA Insured)............................. 5.50 07-01-10 1,399,874
1,500 Maricopa County Unified School District #41 (FSA Insured).............................. 6.25 07-01-15 1,565,130
1,000 Maricopa County, Washington Elementary Unified School District #6 (AMBAC Insured)...... 5.38 07-01-14 969,850
1,800 Mesa General Obligation Project of 1987 (MBIA Insured)................................. 5.70 07-01-08 1,847,448
1,500 Mohave County Unified School District #1 (FGIC Insured)................................ 5.90 07-01-15 1,524,510
575 Mohave County Unified School District #1 (FGIC Insured)................................ 5.70 07-01-09 588,375
2,000 Pima County Unified School District #6 (FGIC Insured).................................. 5.75 07-01-12 2,022,040
600 Santa Cruz Valley Unified School District #35 (AMBAC Insured).......................... 5.80 07-01-09 617,280
1,000 Tempe, Series B........................................................................ 6.00 07-01-12 1,024,450
-----------
21,441,755
-----------
HEALTH CARE REVENUE (15.7%):
-----------------------------------------------------------------------------------------------------------------------
1,500 Arizona Hospital Health Facilities Authority (MBIA Insured)............................ 6.25 09-01-11 1,589,535
1,750 Maricopa County Health Facilities, Catholic Health Care West, Series A (MBIA Insured).. 5.75 07-01-11 1,761,147
1,100 Maricopa County Health Facilities, Catholic Health Care West, Series A (MBIA Insured).. 6.00 07-01-21 1,083,302
300 Maricopa County Industrial Development Authority, Baptist Hospital (MBIA Insured)...... 5.50 09-01-13 294,267
500 Mohave County Industrial Development Authority, Baptist Hospital (MBIA Insured)........ 5.50 09-01-21 471,190
150 Mohave County Baptist Hospital (MBIA Insured).......................................... 5.75 09-01-26 148,521
1,100 Phoenix Industrial Development Authority, John C. Lincoln Hospital (FSA Insured)....... 5.50 12-01-13 1,070,674
1,250 Scottsdale Industrial Development Authority, Scottsdale Memorial Hospital
(AMBAC Insured).................................................................... 5.25 09-01-18 1,141,950
1,360 University of Arizona Medical Center (MBIA Insured).................................... 5.00 07-01-13 1,251,744
700 University of Arizona Medical Center (MBIA Insured).................................... 6.25 07-01-16 720,853
1,000 University of Arizona Medical Center (MBIA Insured).................................... 5.00 07-01-21 877,610
-----------
10,410,793
-----------
HOUSING REVENUE (7.9%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Maricopa County Industrial Development Authority, Tempe Grove Apartments, AMT
(GNMA Backed)..................................................................... 6.15(f) 07-20-28 995,760
1,230 Peoria Multi-Family Housing Mortgage Revenue (GNMA Backed)............................. 7.30 02-20-28 1,330,184
500 Phoenix Industrial Development Authority, Multi-Family Mortgage Revenue
(FHA Insured)...................................................................... 6.80 11-01-25 518,935
2,305 Tempe Industrial Development Authority, Multi-Family Mortgage Revenue
(FHA Insured)...................................................................... 6.13 06-01-10 2,357,462
-----------
5,202,341
-----------
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR ARIZONA MUNICIPAL INCOME FUND, INC.
INVESTMENTS IN SECURITIES (CONTINUED) MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDUSTRIAL REVENUE (4.0%):
-----------------------------------------------------------------------------------------------------------------------
$1,750 Maricopa County Stadium District (MBIA Insured)........................................ 5.50% 07-01-13 $ 1,716,697
1,000 Navajo County Pollution Control Corporation (AMBAC Insured)............................ 5.50 08-15-28 930,960
-----------
2,647,657
-----------
LEASE REVENUE (2.0%):
-----------------------------------------------------------------------------------------------------------------------
1,300 Scottsdale Municipal Property Corporation (FGIC Insured)............................... 6.25 11-01-14 1,346,254
-----------
SALES TAX REVENUE (3.4%):
-----------------------------------------------------------------------------------------------------------------------
2,290 Oro Valley, Canada Hills Water Revenue (MBIA Insured).................................. 5.45 07-01-14 2,236,757
-----------
TRANSPORTATION REVENUE (11.1%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Arizona State Transportation Board..................................................... 5.25 07-01-09 992,780
1,300 City of Phoenix, Junior Lien Street & Highway (FGIC Insured)........................... 6.25 07-01-11 1,355,939
2,000 Tucson Airport Authority Revenue Funding (MBIA Insured)................................ 5.70 06-01-13 2,001,640
3,000 Tucson Street & Highway User Revenue (MBIA Insured).................................... 5.50 07-01-12 2,960,160
-----------
7,310,519
-----------
UTILITY REVENUE (17.3%):
-----------------------------------------------------------------------------------------------------------------------
1,150 Chandler Water & Sewer (FGIC Insured).................................................. 5.00 07-01-09 1,103,103
2,000 Phoenix Civic Improvement Corporation (AMBAC Insured).................................. 5.50 07-01-21 1,880,160
1,000 Phoenix Civic Improvement Corporation, Water System Revenue, Junior Lien............... 5.60 07-01-18 969,710
2,000 Phoenix Water System Revenue........................................................... 5.50 07-01-22 1,900,460
2,000 Salt River Project, Electric System Revenue............................................ 6.25 01-01-27 2,066,360
3,500 Tucson Water Revenue Refunding, Series A (FGIC Insured)................................ 5.75 07-01-18 3,491,145
-----------
11,410,938
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $64,389,685) (d) $65,186,314
===========
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
INVESTMENTS IN SECURITIES MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
FLORIDA MUNICIPAL BONDS (97.8%):
CERTIFICATES OF PARTICIPATION (13.0%)
-----------------------------------------------------------------------------------------------------------------------
$1,000 Dade County School Board Revenue (AMBAC Insured)....................................... 5.60% 08-01-17 $ 972,720
5,000 Escambia County School District Revenue (MBIA Insured)................................. 5.50 02-01-22 4,740,550
1,250 St. Lucie School Board Revenue (FSA Insured)........................................... 5.38 07-01-19 1,167,688
-----------
6,880,958
-----------
EDUCATION (5.0%):
-----------------------------------------------------------------------------------------------------------------------
1,250 State of Florida Board of Regents, University System Improvements Revenue
(MBIA Insured)..................................................................... 5.63 07-01-21 1,204,275
1,500 Volusia Education Facilities Authority Revenue, Stetson Univeristy
(MBIA Insured)..................................................................... 5.50 06-01-17 1,439,895
-----------
2,644,170
-----------
GENERAL OBLIGATION (2.0%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Dade County Seaport (AMBAC Insured).................................................... 6.25 10-01-21 1,069,910
-----------
HEALTH CARE (20.2%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Hillsborough County Industrial Development Authority Revenue, Alleghany Health System
(MBIA Insured)..................................................................... 5.75 12-01-21 975,470
2,500 Lakeland Hospital System Revenue, Lakeland Regional Medical Center
(FGIC Insured)..................................................................... 5.75 11-15-15 2,474,475
1,500 Orange County Health Facilities Authority Revenue, Adventist Health System
(AMBAC Insured)................................................................... 5.75 11-15-25 1,460,880
2,000 Orange County Health Facilities Authority Revenue, Orlando Regional Health
(MBIA Insured).................................................................... 6.25 10-01-18 2,130,200
1,500 Palm Beach County Health Facilities Authority Revenue, Jupiter Medical Center
Project (FSA Insured).............................................................. 5.25 08-01-18 1,368,855
2,405 Venice Health Care Revenue, Bon Secours Health System Project (MBIA Insured)........... 5.60 08-15-16 2,322,172
-----------
10,732,052
-----------
HOUSING (9.7%):
-----------------------------------------------------------------------------------------------------------------------
2,510 Florida State Housing Revenue, Leigh Meadows Project, AMT (AMBAC Insured).............. 6.30(f) 09-01-36 2,526,064
1,120 Florida State Housing Revenue, Woodbridge Project, AMT (AMBAC Insured)................. 6.05(f) 12-01-16 1,127,347
1,500 Florida State Housing Revenue, Woodbridge Project, AMT (AMBAC Insured)................. 6.25(f) 06-01-36 1,503,540
-----------
5,156,951
-----------
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR FLORIDA INSURED MUNICIPAL INCOME FUND
INVESTMENTS IN SECURITIES (CONTINUED) MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES TAX & MISCELLANEOUS REVENUE (26.2%):
-----------------------------------------------------------------------------------------------------------------------
$1,500 Boca Raton Community Redevelopment Tax Increment Revenue, Minzer Park Project
(FGIC Insured)..................................................................... 5.88% 03-01-13 $ 1,517,730
1,000 Dade County Professional Sports Franchise Facilities Revenue (FGIC Insured)............ 6.00 10-01-22 1,007,190
2,250 Florida Ports Financing Commission Revenue, AMT (MBIA Insured)......................... 5.38(f) 06-01-27 2,054,812
1,000 Miami Beach Resort Tax Revenue (AMBAC Insured)......................................... 5.50 10-01-16 960,730
3,000 Orange County Public Service Tax Revenue (FGIC Insured)................................ 6.00 10-01-24 3,027,900
1,000 Orange County Sales Tax Revenue (FGIC Insured)......................................... 6.13 01-01-19 1,011,150
2,300 Reedy Creek Improvement District Revenue (MBIA Insured)................................ 5.75 06-01-13 2,317,664
1,000 Tampa Utilities Tax Revenue (AMBAC Insured)............................................ 6.00 10-01-15 1,010,580
1,000 Village Center Community Development District Revenue (MBIA Insured)................... 5.85 11-01-16 1,007,470
-----------
13,915,226
-----------
TRANSPORTATION (5.6%):
-----------------------------------------------------------------------------------------------------------------------
1,500 Dade County Aviation Revenue (MBIA Insured)............................................ 5.60 10-01-26 1,435,440
1,600 Hillsborough County Aviation Authority Revenue, Tampa International Airport
(FGIC Insured)..................................................................... 5.60 10-01-19 1,531,040
-----------
2,966,480
-----------
UTILITY REVENUE (16.1%):
-----------------------------------------------------------------------------------------------------------------------
1,000 City of Panama, Beach Water & Sewer (AMBAC Insured).................................... 5.50 06-01-18 950,760
1,700 Florida Keys Aqueduct Water Revenue (AMBAC Insured).................................... 5.25 09-01-21 1,551,760
1,250 Florida State Municipal Power Agency Revenue, St. Lucie Project
(FGIC Insured)..................................................................... 5.70 10-01-16 1,236,950
1,000 Indian River County Water & Sewer Revenue (FGIC Insured)............................... 5.50 09-01-16 960,770
1,500 Sarasota County Utility System Revenue (FGIC Insured).................................. 5.50 10-01-22 1,410,120
2,500 Sunrise Utility System Revenue (AMBAC Insured)......................................... 5.75 10-01-26 2,461,600
-----------
8,571,960
-----------
TOTAL FLORIDA MUNICIPAL BONDS (cost: $52,054,746) 51,937,707
-----------
SHORT-TERM SECURITIES (0.4%):
-----------------------------------------------------------------------------------------------------------------------
227 Federated Tax-Free Obligations Fund.................................................... 3.27(c) 227,000
-----------
TOTAL SHORT-TERM SECURITIES (cost: $227,000) 227,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $52,281,746) (d) $52,164,707
===========
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
INVESTMENTS IN SECURITIES MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(PERCENTAGE OF EACH INVESTMENT CATEGORY RELATES TO TOTAL NET ASSETS.)
COLORADO MUNICIPAL BONDS (98.1%):
CERTIFICATES OF PARTICIPATION (1.9%):
-----------------------------------------------------------------------------------------------------------------------
$2,000 Arapahoe County Colorado Library District (MBIA Insured).............................. 5.70% 12-15-10 $ 2,028,980
-----------
EDUCATION REVENUE (9.5%):
-----------------------------------------------------------------------------------------------------------------------
2,500 Aurora Educational Development Revenue (Connie Lee Insured)............................ 6.00 10-15-15 2,509,850
1,000 Colorado Mountain College Residence Hall Authority Revenue (MBIA Insured).............. 5.75 06-01-23 998,570
4,000 Colorado Postsecondary Education Facility Authority Revenue,
University of Denver Project (Connie Lee Insured).................................. 6.00 03-01-16 4,009,720
500 Colorado State Board Community College & Occupational Education Revenue
(AMBAC Insured).................................................................... 5.75 11-01-11 512,320
2,000 Colorado State Colleges Board of Trustees, Adams State College (MBIA Insured).......... 5.75 05-15-19 1,994,880
-----------
10,025,340
-----------
GENERAL OBLIGATION (31.5%):
-----------------------------------------------------------------------------------------------------------------------
2,350 Adams & Weld Counties School District #27J, Brighton (FGIC Insured).................... 5.60 12-01-12 2,343,984
2,000 Adams County School District #12, Five Star (FGIC Insured)............................. 5.40 12-15-16 1,926,120
1,250 Adams County School District #12, Five Star (FGIC Insured)............................. 5.40 12-15-15 1,209,325
1,000 Archuleta & Hinsdale Counties School District #50JT (MBIA Insured)..................... 5.50 12-01-14 976,700
4,000 Archuleta & Hinsdale Counties School District #50JT (MBIA Insured)..................... 5.55 12-01-20 3,846,920
1,200 Brighton County (FSA Insured).......................................................... 5.50 12-01-11 1,198,704
1,000 Eagle Garfield & Routt Counties School District #Re-50J (FGIC Insured)................. 6.30 12-01-12 1,055,430
1,000 El Paso County School District #20 (MBIA Insured)...................................... 5.63 12-15-16 987,600
3,000 El Paso County School District #20 (AMBAC Insured)..................................... 5.63 12-15-16 2,924,790
2,435 Jefferson County School District #R-001 (AMBAC Insured )............................... 6.25 12-15-12 2,530,111
1,575 Jefferson County School District #R-001 (AMBAC Insured)................................ 6.00 12-15-12 1,622,770
1,000 Larimer County School District #R 1, Poudre Improvement (MBIA Insured)................. 5.63 12-15-12 1,002,550
1,000 Larimer & Weld Counties School District #Re-5J (AMBAC Insured)......................... 5.75 11-15-20 994,810
1,700 Larimer & Weld Counties School District #Re-5J (MBIA Insured).......................... 5.75 11-15-20 1,691,177
1,500 Larimer, Weld, & Boulder Counties School District #R-2J Thompson
(FGIC Insured)..................................................................... 5.45 12-15-16 1,458,225
1,100 Mesa County Colorado Valley School District #51 Grand Junction
(MBIA Insured)..................................................................... 5.50 12-01-16 1,070,289
1,675 Mesa County Colorado Valley School District #51 Grand Junction
(MBIA Insured)..................................................................... 5.50 12-01-15 1,636,676
1,405 Pueblo County (MBIA Insured)........................................................... 5.80 06-01-11 1,429,854
3,500 Stonegate Metropolitan District (FSA Insured).......................................... 5.50 12-01-21 3,336,410
-----------
33,242,445
-----------
HEALTH CARE REVENUE (8.9%):
-----------------------------------------------------------------------------------------------------------------------
2,625 Colorado Health Facilities Authority Revenue, Boulder Community
Hospital Project, Series 1994 B (MBIA Insured)..................................... 5.88 10-01-23 2,637,311
250 Colorado Health Facilities Authority Revenue, Childrens Hospital Association
(MBIA Insured)..................................................................... 5.25 10-01-26 229,695
2,000 Colorado Health Facilities Authority Revenue, North Colorado Medical Center
(MBIA Insured)..................................................................... 5.95 05-15-12 2,034,600
1,000 Colorado Health Facilities Authority Revenue, North Colorado Medical Center
(MBIA Insured).................................................................... 6.00 05-15-20 997,440
1,000 Colorado Springs Memorial Hospital Revenue (MBIA Insured).............................. 6.00 12-15-24 998,550
2,510 Logan County Health Care Facilities Revenue, Western Health Network Inc.
(MBIA Insured)..................................................................... 5.90 01-01-19 2,522,123
-----------
9,419,719
-----------
</TABLE>
See accompanying notes to investments in securities.
<TABLE>
<CAPTION>
VOYAGEUR COLORADO INSURED MUNICIPAL INCOME FUND, INC.
INVESTMENTS IN SECURITIES (CONTINUED) MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT COUPON MARKET
($000) NAME OF ISSUER (b) RATE MATURITY VALUE (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING REVENUE (6.5%):
-----------------------------------------------------------------------------------------------------------------------
$5,000 Colorado Housing Finance Authority-Single-Family Housing Series AA
(MBIA Insured)..................................................................... 5.63% 11-01-23 $ 4,855,500
2,000 Snowmass Village Multi-Family Housing, Revenue Refunding
Essential Function Housing (FSA Insured).......................................... 6.25 12-15-16 2,052,580
------------
6,908,080
------------
MISCELLANEOUS & SALES TAX REVENUE (5.0%):
-----------------------------------------------------------------------------------------------------------------------
1,755 Castle Rock Sales & Use Tax Revenue (FSA Insured)...................................... 5.90 06-01-16 1,778,377
3,500 Douglas County Sales & Use Tax Revenue (MBIA Insured).................................. 5.50 10-15-11 3,486,035
------------
5,264,412
------------
POLLUTION CONTROL REVENUE (1.4%):
-----------------------------------------------------------------------------------------------------------------------
1,500 Adams County Pollution Control Revenue Refunding, Public
Service Company Project, Series A (MBIA Insured)................................... 5.88 04-01-14 1,520,595
------------
PRE-REFUNDED/ESCROW (5.1%):
-----------------------------------------------------------------------------------------------------------------------
5,000 City of Westminster County Sales & Use Tax Refunding Revenue, Series A
(FGIC Insured)..................................................................... 6.25 12-01-02 5,355,600
------------
TRANSPORTATION REVENUE (19.5%):
-----------------------------------------------------------------------------------------------------------------------
4,700 Arapahoe County Capital Improvements Revenue (MBIA Insured)............................ 6.05 08-31-15 4,832,399
1,300 Colorado Springs Airport Revenue, Series A (MBIA Insured).............................. 5.25 01-01-17 1,220,817
6,000 Denver City & County Airport Revenue, Series A (MBIA Insured).......................... 5.50 11-15-25 5,646,180
2,500 Denver City & County Airport Revenue, Series A (MBIA Insured).......................... 5.60 11-15-20 2,374,375
2,000 Denver City & County Airport Revenue, Series D (MBIA Insured).......................... 5.50 11-15-25 1,882,060
4,500 Regional Transportation District Sales Tax Revenue Refunding
& Improvement (FGIC Insured)....................................................... 6.25 11-01-12 4,671,405
------------
20,627,236
------------
UTILITY REVENUE (8.8%):
-----------------------------------------------------------------------------------------------------------------------
1,000 Left Hand Water District Colorado Water Revenue (MBIA Insured)......................... 5.70 11-15-15 999,240
5,000 Municipal Subdistrict Northern Colorado Water Conservancy District Revenue
Series F (AMBAC Insured)........................................................... 6.50 12-01-12 5,407,950
3,000 Platte River Power Authority Colorado Power Revenue (MBIA Insured)..................... 5.38 06-01-17 2,852,730
------------
9,259,920
------------
TOTAL INVESTMENTS IN SECURITIES (cost: $104,131,095) (d) $103,652,327
============
</TABLE>
See accompanying notes to investments in securities.
THE VOYAGEUR FUNDS
NOTES TO INVESTMENTS IN SECURITIES
- -------------------------------------------------------------------------------
(a) Securities are valued by procedures described in note 2 to the
Financial Statements.
(b) Investments in bonds, by rating category as a percentage of total
bonds, are as follows:
<TABLE>
<CAPTION>
Aaa/AAA Aa/AA A/A Baa Unrated Total
------- ----- --- --- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Minnesota Municipal Income Fund, Inc............... 52% 15% 17% 5% 11% 100%
Minnesota Municipal Income Fund II, Inc............ 56% 17% 11% 10% 6% 100%
Minnesota Municipal Income Fund III, Inc........... 58% 10% 14% 13% 5% 100%
Arizona Municipal Income Fund, Inc................. 80% 13% 7% -- -- 100%
Florida Insured Municipal Income Fund.............. 100% -- -- -- -- 100%
Colorado Insured Municipal Income Fund, Inc........ 100% -- -- -- -- 100%
</TABLE>
(c) Dividend yields change daily to reflect current market conditions. Rate
shown is the quoted yield as of March 31, 1997.
(d) The cost of securities for federal income tax purposes for Minnesota
Municipal, Minnesota Municipal II, Minnesota Municipal III, Arizona
Municipal, Florida Insured Municipal and Colorado Insured Municipal was
$54,391,035, $155,663,526, $36,901,305, $64,389,685, $52,281,746 and
$104,131,095, respectively. The aggregate gross unrealized appreciation
and depreciation of securities based on these costs were as follows:
<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation/
Appreciation (Depreciation) (Depreciation)
------------ -------------- --------------
<S> <C> <C> <C>
Minnesota Municipal Income Fund, Inc............... $2,047,857 $ (51,123) $1,996,734
Minnesota Municipal Income Fund II, Inc............ 2,045,083 (1,246,358) 798,725
Minnesota Municipal Income Fund III, Inc........... 991,042 (183,012) 808,030
Arizona Municipal Income Fund, Inc................. 1,263,550 (466,921) 796,629
Florida Insured Municipal Income Fund.............. 254,585 (371,624) (117,039)
Colorado Insured Municipal Income Fund, Inc........ 853,699 (1,332,467) (478,768)
</TABLE>
(e) At March 31, 1997, the cost of securities purchased on a when-issued
basis was $2,032,740 for Minnesota Municipal Income Fund.
(f) Securities represent private activity bonds issued after August 7,
1986. The interest on these securities is a tax preference item for
Alternative Minimum Tax purposes. The ratio of private activity bonds
to total net assets as of March 31, 1997 was as follows:
Minnesota Municipal Income Fund, Inc............... 18.7%
Minnesota Municipal Income Fund II, Inc............ 19.8%
Minnesota Municipal Income Fund III, Inc........... 17.2%
Arizona Municipal Income Fund, Inc................. 1.5%
Florida Insured Municipal Income Fund.............. 13.6%
Colorado Municipal Income Fund, Inc................ 0.0%
THE VOYAGEUR FUNDS
SHAREHOLDER MEETING RESULTS
- -------------------------------------------------------------------------------
A meeting of the fund's shareholders was held on April 11, 1997. The meeting
results including the number of votes cast for, against or withheld, the number
of abstentions, and the number of broker non-voters with the respect to such
matter, are set forth below.
1. The funds' common and preferred shareholders (preferred
shareholders only for Messrs. Longstreth and Madison) elected
the following directors:
<TABLE>
<CAPTION>
ARIZONA MUNICIPAL INCOME FUND, INC.
Shares Shares Withholding
Voted "For" Authority to Vote
----------- -----------------
<S> <C> <C>
Walter P. Babich................................. 2,815,996 34,684
Anthony D. Knerr................................. 2,816,330 34,350
Ann R. Leven..................................... 2,820,267 30,413
W. Thacher Longstreth............................ 500 --
Thomas F. Madison................................ 500 --
Jeffrey J. Nick.................................. 2,815,330 35,350
Charles E. Peck.................................. 2,815,531 35,149
Wayne A. Stork................................... 2,813,730 36,950
COLORADO INSURED MUNICIPAL INCOME FUND, INC.
Shares Shares Withholding
Voted "For" Authority to Vote
----------- -----------------
Walter P. Babich................................. 4,479,722 82,054
Anthony D. Knerr................................. 4,477,622 84,154
Ann R. Leven..................................... 4,477,622 84,154
W. Thacher Longstreth............................ 800 --
Thomas F. Madison................................ 800 --
Jeffrey J. Nick.................................. 4,477,622 84,154
Charles E. Peck.................................. 4,478,822 82,954
Wayne A. Stork................................... 4,477,622 84,154
FLORIDA INSURED MUNICIPAL INCOME FUND
Shares Shares Withholding
Voted "For" Authority to Vote
----------- -----------------
Walter P. Babich................................. 2,168,706 31,231
Anthony D. Knerr................................. 2,168,706 31,231
Ann R. Leven..................................... 2,168,306 31,631
W. Thacher Longstreth............................ 334 --
Thomas F. Madison................................ 334 --
Jeffrey J. Nick.................................. 2,168,706 31,231
Charles E. Peck.................................. 2,168,706 31,231
Wayne A. Stork................................... 2,168,706 31,231
MINNESOTA MUNICIPAL INCOME FUND, INC.
Shares Shares Withholding
Voted "For" Authority to Vote
----------- -----------------
Walter P. Babich................................. 2,234,609 21,199
Anthony D. Knerr................................. 2,235,668 20,140
Ann R. Leven..................................... 2,235,668 20,140
Jeffrey J. Nick.................................. 2,234,614 21,194
Charles E. Peck.................................. 2,233,555 22,253
Wayne A. Stork................................... 2,235,668 20,140
MINNESOTA MUNICIPAL INCOME FUND II, INC.
Shares Shares Withholding
Voted "For" Authority to Vote
----------- -----------------
Walter P. Babich................................. 6,517,785 79,146
Anthony D. Knerr................................. 6,521,930 75,002
Ann R. Leven..................................... 6,521,679 75,253
W. Thacher Longstreth............................ 1,103 --
Thomas F. Madison................................ 1,103 --
Jeffrey J. Nick.................................. 6,523,407 76,544
Charles E. Peck.................................. 6,518,492 78,440
Wayne A. Stork................................... 6,520,741 76,191
MINNESOTA MUNICIPAL INCOME FUND III, INC.
Shares Shares Withholding
Voted "For" Authority to Vote
----------- -----------------
Walter P. Babich................................. 1,640,820 30,921
Anthony D. Knerr................................. 1,640,903 30,838
Ann R. Leven..................................... 1,640,903 30,838
W. Thacher Longstreth............................ 1,640,903 30,838
Thomas F. Madison................................ 1,640,903 30,838
Jeffrey J. Nick.................................. 1,640,903 30,838
Charles E. Peck.................................. 1,632,028 39,713
Wayne A. Stork................................... 1,640,603 30,838
</TABLE>
THE VOYAGEUR FUNDS
SHAREHOLDER MEETING RESULTS (CONTINUED)
- -------------------------------------------------------------------------------
2. The funds' common and preferred shareholders voted to approve
a new Investment Advisory Agreement. The following votes were
cast regarding this matter:
Shares Shares
Voted "For" Voted "Against" Abstentions
----------- --------------- -----------
Arizona 2,722,840 49,846 77,994
Colorado 4,359,048 72,603 130,123
Florida 2,092,093 67,074 40,435
Minnesota 2,164,340 27,115 64,352
Minnesota II 6,332,488 121,988 142,455
Minnesota III 1,609,666 29,645 32,429
3. The funds' common and preferred shareholders ratified the
selection by a majority of the independent members of the
funds' Board of Directors of Ernst and Young as the
independent public accountants for the funds. The following
votes were cast regarding this matter:
Shares Shares
Voted "For" Voted "Against" Abstentions
----------- --------------- -----------
Arizona 2,791,684 20,035 38,961
Colorado 4,484,702 28,029 49,044
Florida 2,162,642 20,175 16,785
Minnesota 2,204,055 6,681 45,071
Minnesota II 6,496,251 28,749 71,931
Minnesota III 1,631,889 21,598 18,253
There were no broker non-votes with this proxy.
VOYAGEUR FUNDS
FEDERAL INCOME TAX INFORMATION
- -------------------------------------------------------------------------------
Information for federal income tax purposes is presented as an aid to
shareholders in reporting dividend distributions for the fiscal year ended March
31, 1997 shown below. Shareholders must report distributions on a calendar year
basis for income tax purposes which may include distributions for portions of
two fiscal years. Accordingly, a notification which will reflect the amount to
be used for calendar year taxpayers will be mailed in January 1998. Shareholders
are advised to consult a tax adviser with respect to the tax consequences of
their investment in the Funds.
<TABLE>
<CAPTION>
PER SHARE
-----------------------------------------------------------------------------
VOYAGEUR VOYAGEUR
VOYAGEUR VOYAGEUR VOYAGEUR VOYAGEUR FLORIDA COLORADO
MINNESOTA MINNESOTA MINNESOTA ARIZONA INSURED INSURED
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
INCOME INCOME INCOME INCOME INCOME INCOME
FUND, INC. FUND II, INC. FUND III, INC. FUND, INC. FUND FUND, INC.
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Distributions to
Common shareholders from:
Investment income - net (none qualifying for
for the corporate dividend received deduction): $ .9300 $ .8081 $ .7481 $ .7631 $ .7481 $ .7256
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Distributions to
Preferred shareholders from:
Investment income - net (none qualifying for the
corporate dividend received deduction):
Series A..................................... $1,755.17* $1,752.37 $1,897.40* $1,714.41 $1,756.89 $1,749.69
Series B..................................... -- $1,757.81 -- $1,703.39 $1,757.26 $1,773.57
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</TABLE>
* Represents the single class of preferred stock outstanding.
For federal income tax purposes, 100% for Minnesota Municipal Income Fund,
Minnesota Municipal Income Fund II, Florida Insured Municipal Income Fund,
99.95% for Minnesota Municipal Income Fund III, 99.99% for Arizona Municipal
Income Fund and 99.75% for Colorado Insured Municipal Income Fund of the above
net investment income distributions were derived from interest on securities
exempt from federal income tax.
INVESTMENT ADVISER AND
ACCOUNTING SERVICES AGENT
Voyageur Fund Managers, Inc.
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402-4115
(612) 376-7000 / (800) 553-2143
ADMINISTRATORS
Mitchell Hutchins Asset Management Inc.
New York, New York
Princeton Administrators L.P.
Plainsboro, New Jersey
(on Colorado Insured Municipal
Income Fund, Inc. only)
CUSTODIAN
First Trust, N.A.
St. Paul, Minnesota
SHAREHOLDER SERVICING AGENT
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
South St. Paul, Minnesota 55075
(612) 450-4064 / (800) 468-9716
PREFERRED SHARES
REMARKETING AGENTS
Smith Barney Inc.
New York, New York
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
New York, New York
(on Colorado Insured Municipal
Income Fund, Inc. only)
COUNSEL
Dorsey & Whitney P.L.L.P
Minneapolis, Minnesota
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase at
market prices shares of its common stock in the open market.
This report, including the financial statements herein, is sent to the
shareholders of the Funds for their information. It is not a prospectus,
circular or representation intended for use in the purchase or sale of shares of
the Funds or any securities mentioned in this report.
VOYAGEUR
YOUR TAX SENSITIVE INVESTMENT MANAGER
90 South Seventh Street, Suite 4400
Minneapolis, Minnesota 55402-4115
VOY-CESA 3/97
